DOLLAR TREE DISTRIBUTION, INC.
DOLLAR TREE STORES, INC.
COMPOSITE CONFORMED COPY OF THE NOTE AGREEMENT
RE: $30,000,000 7.29% Senior Guaranteed Notes,
Due April 30, 2004
PPN: 25674# AA 6
Closing Date: April 30, 1997
Separate and several Note Sgreements, each dated as of April 15, 1997, each
in the form attached hereto, were entered into by Dollar Tree Distribution,
Inc., a Virginia corporation, and the Dollar Tree Stores, Inc., a Virginia
corporation, and each of the institutions named below, respectively. The Note
Agreements were executed and delivered on behalf of Dollar Tree Distribution,
Inc. by Macon F. Brock, Jr., President, and on behalf of Dollar Tree Stores,
Inc. by Macon F. Brock, Jr., President. The separate Note Agreements were
addressed to each of the institutions as shown onm Schedule I attached thereto
and were accepted by the officers of the respective institutions as shown below.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ John Litchfield
Director-Private Placements
NORTHERN LIFE INSURANCE COMPANY
By: /s/ James Wittich
Assistant Treasurer
WASHINGTON SQUARE ADVISERS PRIVATE
PLACEMENT TRUST FUND
By: /s/ Frank P. Pintens
Investment Advisor and
Authorized Signatory
SOUTHERN FARM BUREAU LIFE INSURANCE
COMPANY
By: /s/ Carol Robertson
Portfolio Manager, Fixed Income
===============================================================================
DOLLAR TREE DISTRIBUTION, INC.
DOLLAR TREE STORES, INC.
NOTE AGREEMENT
Dated as of April 15, 1997
RE: $30,000.000 7.29% Senior Guaranteed Notes
Due April 30, 2004
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING Page
SECTION 1 DESCRIPTION OF NOTES AND COMMITMENT 1
Section 1.1 Description of Notes 1
Section 1.2 Commitment, Closing Date 2
Section 1.3 Guaranty of Notes 2
Section 1.4 Other Agreements 2
SECTION 2 REPAYMENT OF NOTES 2
Section 2.1 Required Prepayments 2
Section 2.2 Optional Prepayment with Premium 3
Section 2.3 Prepayment of Notes upon Change of Control 3
Section 2.4 Prepayment Upon Asset Disposition 4
Section 2.5 Notice of Optional Prepayment 5
Section 2.6 Application of Prepayments 5
Section 2.7 Direct Payment 5
SECTION 3 REPRESENTATIONS 5
Section 3.1 Representations of the Issuer & the Parent
Guarantor 5
Section 3.2 Representations of the Purchaser 6
SECTION 4 CLOSING CONDITIONS 7
Section 4.1 Conditions 7
Section 4.2 Waiver of Conditions 9
SECTION 5 PARENT GUARANTOR AND ISSUER CONVENANTS 9
Section 5.1 Compliance with Law 9
Section 5.2 Insurance 10
Section 5.3 Maintenance of Properties 10
Section 5.4 Payment of Taxes and Claims 10
Section 5.5 Corporate Existence, Etc. 10
Section 5.6 Nature of Business 11
Section 5.7 Consolidated Net Worth 11
Section 5.8 Fixed Charges Coverage Ratio 11
Section 5.9 Limitations on Debt 11
Section 5.10 Limitations on Liens 12
Section 5.11 [Intentionally Reserved] 15
Section 5.12 Mergers, Consolidations and Sales of Assets 15
Section 5.13 Ownership and Assets of the Issuer and
Subsidiary Guarantor 19
Section 5.14 Guaranties 19
Section 5.15 Repurchase of Notes 19
Section 5.16 Transactions with Affiliates 19
Section 5.17 Termination of Pension Plans 20
Section 5.18 Reports and Rights of Inspections 20
Section 5.19 Notes and Guaranty to Rank Pari Passu 24
Section 5.20 Release of Subsidiary Guaranty 24
SECTION 6 GUARANTY OF THE NOTES 25
Section 6.1 Guaranty 25
Section 6.2 Guaranty of Payment and Performance 25
Section 6.3 Consent of the Parent Guarantor 26
Section 6.4 Obligations Absolute and Unconditional 26
Section 6.5 Subrogation 30
Section 6.6 Preference 30
Section 6.7 Marshalling 30
SECTION 7 EVENTS OF DEFAULT AND REMEDIES THEREFOR 31
Section 7.1 Events of Default 31
Section 7.2 Notice to Holders 33
Section 7.3 Acceleration of Maturities 33
Section 7.4 Rescession of Acceleration 33
SECTION 8 AMENDMENTS, WAIVERS, AND CONSENTS 34
Section 8.1 Consent Required 34
Section 8.2 Solicitation of Holders 34
Section 8.3 Effect of Amendment or Waiver 34
SECTION 9 INTERPRETATION OF AGREEMENT 35
Section 9.1 Definition 35
Section 9.2 Accounting Principles 47
Section 9.3 Directly or Indirectly 47
SECTION 10 MISCELLANEOUS 47
Section 10.1 Registered Notes 47
Section 10.2 Exchange of Notes 47
Section 10.3 Loss, Theft, Etc. of Notes 48
Section 10.4 Expenses, Stamp Tax Indemnity 48
Section 10.5 Powers and Right Not Waived;
Remedies Cumulative 48
Section 10.6 Notices 48
Section 10.7 Successors and Assigns 49
Section 10.8 Survival of Covenants and Representations 49
Section 10.9 Severability 49
Section 10.10 Governing Law 49
Section 10.11 Submission to Jurisdiction 49
Section 10.12 Captions 50
SIGNATURE PAGE 51
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Names and Addresses of Purchasers and Amounts of Commitments
Schedule II -- Funded Debt; Liens(including Capitalized Leases);
Subsidiaries as of the Closing Date
Schedule III -- SIC Code Classification 5331
Exhibit A -- Form of 7.29% Senior Guaranteed Notes, Due April 30, 2004
Exhibit B-1 -- Representations and Warranties of the Issuer
Exhibit B-2 -- Representations and Warranties of the Parent Guarantor
Exhibit B-3 -- Representations and Warranties of the Subsidiary Guarantor
Exhibit C -- Form of Subsidiary Guaranty
Exhibit D -- Description of Special Counsel's Closing Opinion
Exhibit E -- Description of Closing Opinion of Counsel to the Issuer, the
parent Guarantor and the Subsidiary Guarantor
Dollar Tree Distribution, Inc.
2555 Ellsmere Avenue
Norfolk, Virginia 23513
Dollar Tree Stores, Inc.
2555 Ellsmere Avenue
Norfolk, Virginia 23513
NOTE AGREEMENT
Re: $30,000,000 7.29% Senior Guaranteed Notes
Due April 30, 2004
Dated as of April 15, 1997
To the Purchaser named in Schedule I hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, DOLLAR TREE DISTRIBUTION, INC., a Virginia
corporation (the "Issuer"), and DOLLAR TREE STORES, INC., a Virginia corporation
(the "Parent Guarantor"), hereby jointly and severally agree with you as
follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes;. The Issuer will authorize the
issue and sale of $30,000,000 aggregate principal amount of its 7.29% Senior
Guaranteed Notes, Due April 30, 2004 (the "Notes") to be dated the date of
issue, to bear interest from such date at the rate of 7.29% per annum, payable
semiannually on the thirtieth day of April and October in each year (commencing
October 30, 1997) and at maturity and to bear interest on overdue principal
(including any overdue required or optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest at the Overdue Rate after the date due, whether by
acceleration or otherwise, until paid, to be expressed to mature on April 30,
2004, and to be substantially in the form attached hereto as EXHIBIT A. Interest
on the Notes shall be computed on the basis of a 360-day year of twelve 30-day
months.
The Notes are not subject to prepayment or redemption at the
option of the Issuer prior to their expressed maturity dates except on the terms
and conditions and in the amounts and with the premium, if any, set forth in
SECTION 2 of this Agreement. The term "Notes" as used herein shall include each
Note delivered pursuant to this Agreement and the separate agreements with the
other purchasers named in SCHEDULE I. You and the other purchasers named in
Schedule I are hereinafter sometimes referred to as the "Purchasers". The terms
which are capitalized herein shall have the meanings set forth in SECTION 9.1
unless the context shall otherwise require.
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Issuer agrees to issue and sell to you, and you agree
to purchase from the Issuer, Notes in the principal amount set forth opposite
your name on SCHEDULE I hereto at a price of 100% of the principal amount
thereof on the Closing Date hereafter mentioned.
Delivery of the Notes will be made to you or your agent at the
offices of Chapman and Cutler, against payment therefor in Federal Reserve or
other funds current and immediately available at the principal office of Signet
Bank, N.A., Richmond, Virginia (ABA #051006778), Account #7000033089 in the
amount of the purchase price at 10:00 A.M., New York, New York time, on April
30, 1997 (the "Closing Date"). The Notes delivered to you on the Closing Date
will be delivered to you in the form of a single registered Note in the form
attached hereto as EXHIBIT A for the full amount of your purchase (unless
different denominations are specified by you), registered in your name or
in the name of such nominee, as may be specified in SCHEDULE I attached hereto.
Section 1.3. Guaranty of Notes. The payment by the Issuer of all
amounts due with respect to the Notes and the performance by the Issuer of its
obligations under this Agreement are fully and unconditionally guaranteed by the
Parent Guarantor pursuant to SECTION 6 and by the Subsidiary Guarantor pursuant
to a guaranty agreement substantially in the form attached hereto as EXHIBIT C
(the "Subsidiary Guaranty").
Section 1.4. Other Agreements. Simultaneously with the execution and
delivery of this Agreement, the Issuer is entering into similar agreements with
the other Purchasers under which such other Purchasers agree to purchase from
the Issuer the principal amount of Notes set forth opposite such Purchasers'
names in SCHEDULE I, and your obligation hereunder is subject to the execution
and delivery of the similar agreements by the other Purchasers. This Agreement
and said similar agreements with the other Purchasers are herein collectively
referred to as the "Agreements". The obligations of each Purchaser shall be
several and not joint and no Purchaser shall be liable or responsible for the
acts of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Required Prepayments. In addition to paying the
entire outstanding principal amount and the interest due on the Notes on the
maturity date thereof, the Issuer agrees that on April 30, 2000 and on each
April 30 thereafter to and including April 30, 2003, it will prepay and apply
and there shall become due and payable on the principal indebtedness evidenced
by the Notes $6,000,000 principal amount (or such lesser principal amount as
shall then be outstanding) of the Notes at par and without payment of the
Make-Whole Amount or any premium applied ratably among all of the outstanding
Notes in accordance with the unpaid principal amounts thereof provided that
upon any partial prepayment of the Notes pursuant to SECTION 2.2 or SECTION 2.4
the principal amount of each required prepayment of the Notes becoming due under
this SECTION 2.1 on and after the date of such prepayment or purchase shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such prepayment or purchase.
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Section 2.2. Optional Prepayment with Premium. In addition to the
payments required by SECTION 2.1, upon compliance with SECTION 2.5, the Issuer
shall have the privilege, at any time and from time to time of prepaying the
outstanding Notes, either in whole or in part (but if in part then in a minimum
principal amount of $3,000,000), by payment of the principal amount of Notes, or
portion thereof to be prepaid, and accrued interest thereon to the date of such
prepayment, together with a premium equal to the Make-Whole Amount, determined
as of two Business Days prior to the date of such prepayment pursuant
to this SECTION 2.2.
Section 2.3. Prepayment of Notes upon Change of Control. (a) In
the event that any Change of Control (as hereinafter defined) shall occur or the
Issuer shall have knowledge of any proposed Change of Control, the Issuer will
give written notice (the "Issuer Notice") of such fact in the manner provided in
SECTION 10.6 hereof to the holders of the Notes. The Issuer Notice shall be
delivered promptly upon receipt of such knowledge by the Issuer and in any event
no later than three Business Days following the occurrence of any Change of
Control. The Issuer Notice shall (1) describe the facts and circumstances of
such Change of Control in reasonable detail, (2) make reference to this SECTION
2.3 and the right of the holders of the Notes to require prepayment of the Notes
on the terms and conditions provided for in this SECTION 2.3, (3) offer in
writing to prepay the outstanding Notes, together with accrued interest to the
date of prepayment, but without premium, and (4) specify a date for such
prepayment (the "Change of Control Prepayment Date"), which Change of Control
Prepayment Date shall be not more than 60 days nor less than 30 days following
the date of such Issuer Notice. Each holder of the then outstanding Notes shall
have the right to accept such offer and require prepayment of the Notes held by
such holder in full by written notice to the Issuer (a "Noteholder Notice")
given not later than 10 days prior to the Change of Control Prepayment Date. The
Issuer shall on the Change of Control Prepayment Date prepay in full all of the
Notes held by holders which have so accepted such offer of prepayment, and such
Notes shall thereupon become due and payable on such Change of Control
Prepayment Date. The prepayment price of the Notes payable upon the occurrence
of any Change of Control shall be an amount equal to 100% of the outstanding
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of such prepayment, but without a premium.
(b)(1) Without limiting the foregoing, notwithstanding any failure on
the part of the Issuer to give the Issuer Notice herein required as a
result of the occurrence of a Change of Control, each holder of the Notes shall
have the right by delivery of written notice to the Issuer to require the Issuer
to prepay, and the Issuer will prepay, such holder's Notes in full, together
with accrued interest thereon to the date of prepayment provided that such
holder of the Notes shall so notify the Issuer of its election to require the
Issuer to prepay its Notes in accordance with this SECTION 2.3(B)(1) within 90
days after such holder has actual knowledge of any such Change of Control.
Notice of any required prepayment pursuant to this SECTION 2.3(B)(1) shall be
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delivered to the Issuer by any holder of the Notes which was entitled to, but
did not receive, such Issuer Notice after such holder has actual knowledge of
such Change of Control. On the date (the "Change of Control Delayed Prepayment
Date") designated in such holder's notice (which shall be not more than 60 days
nor less than 30 days following the date of such holder's notice), the Issuer
shall prepay in full all of the Notes held by such holder, together with accrued
interest thereon to the date of prepayment, but without premium. If the holder
of any Note gives any notice pursuant to this SECTION 2.3(B)(1), the Issuer
shall give an Issuer Notice within three Business Days of receipt of such notice
and identify the Change of Control Delayed Prepayment Date to all other holders
of the Notes and each of such other holders shall then and thereupon have the
right to accept the Issuer's offer to prepay the Notes held by such holder in
full and require prepayment of such Notes by delivery of a Noteholder Notice not
later than 10 days prior to the Change of Control Delayed Prepayment Date
provided only that any date for prepayment of such holder's Notes shall be the
Change of Control Delayed Prepayment Date. On the Change of Control Delayed
Prepayment Date, the Issuer shall prepay in full the Notes of each holder
thereof which has accepted such offer of prepayment and such Notes shall
thereupon become due and payable on such Change of Control Delayed Prepayment
Date.
(2) Compliance with the provisions of this SECTION 2.3(B) shall not
be deemed to constitute a waiver of, or consent to, any Default or Event of
Default caused by any violation of the provisions of SECTION 2.3(A).
Section 2.4. Prepayment Upon Asset Disposition. In the event the Issuer
shall transfer assets as contemplated in SECTION 5.12(B) and (C) and the Issuer
4
intends to use the net proceeds of the sale of such assets for the prepayment of
the Notes (an "Asset Disposition"), the Issuer will give written notice of such
fact (the "Asset Disposition Prepayment Offer") in the manner provided in
SECTION 10.6 hereof to all Holders. The Asset Disposition Prepayment Offer shall
(1) describe the facts and circumstances of such Asset Disposition in reasonable
detail, (2) make reference to this SECTION 2.4 and to SECTION 5.12 and the right
of the Holders to be prepaid on the terms and conditions provided for in this
SECTION 2.4, (3) offer to prepay the outstanding Notes by an amount equal to the
Holders' pro rata share of the net proceeds of such Asset Disposition, together
with accrued interest to the date of prepayment but without premium, and (4)
specify a date (the "Asset Disposition Prepayment Date"), which Asset
Disposition Prepayment Date shall be not more than 60 days nor less than 30 days
following the date of such Asset Disposition Prepayment Offer. Each Holder shall
have the right to accept such offer and require prepayment of the Notes held by
such Holder by written notice to the Issuer (an "Asset Disposition Noteholder
Notice") given not later than 10 days prior to the Asset Disposition Prepayment
Date. The Issuer shall on the Asset Disposition Prepayment Date prepay the Notes
designated in the Asset Disposition Prepayment Offers and held by Holders who
have so accepted such offer of prepayment, and such Notes shall thereupon become
due and payable on such Asset Disposition Prepayment Date.
Section 2.5. Notice of Optional Prepayments. The Issuer will give
notice of any prepayment of the Notes pursuant to SECTION 2.2 to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (a) such date, (b) the principal amount of
the holder's Notes to be prepaid on such date, (c) that a premium may be
payable, (d) the date when such premium will be calculated, (e) the estimated
premium, together with a reasonably detailed computation of such estimated
premium, and (f) the accrued interest applicable to the prepayment. Such notice
of prepayment shall also certify all facts, if any, which are conditions
precedent to any such prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
accrued interest thereon and the premium, if any, payable with respect thereto
shall become due and payable on the prepayment date specified in said notice.
Two Business Days prior to the prepayment date specified in such notice, the
Issuer shall provide each holder of a Note written notice
of the premium, if any, payable in connection with such prepayment and, whether
or not any premium is payable, a reasonably detailed computation of the
Make-Whole Amount.
Section 2.6. Application of Prepayments. All partial prepayments
of Notes made pursuant to SECTION 2.1 and SECTION 2.2 shall be applied ratably
among all of the outstanding Notes in accordance with the unpaid principal
amounts thereof.
Section 2.7. Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, in the case of any Note owned
by you or your nominee or owned by any subsequent Institutional Holder which has
given written notice to the Issuer requesting that the provisions of this
SECTION 2.7 shall apply, the Issuer will punctually pay when due the principal
thereof, interest thereon and premium, if any, due with respect to said
principal, without any presentment thereof, directly to you, to your nominee or
to such subsequent Institutional Holder at your address or your nominee's
address set forth in SCHEDULE I hereto or such other address as you, your
nominee or such subsequent Institutional Holder may from time to time designate
in writing to the Issuer or, if a bank account with a United States bank is
designated for you or your nominee on SCHEDULE I hereto or in any written notice
to the Issuer from you, from your nominee or from any such subsequent
Institutional Holder, the Issuer will make such payments in immediately
available funds to such bank account, no later than 11:00 a.m. New York, New
York time on the date due, marked for attention as indicated, or in such other
manner or to such other account in any United States bank as you, your nominee
or any such subsequent Institutional Holder may from time to time direct in
writing. If for any reason whatsoever the Issuer does not make any such payment
by such 11:00 a.m. transmittal time, such payment shall be deemed to have been
made on the next following Business Day and such payment shall bear interest at
the Overdue Rate.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Issuer and the Parent Guarantor (a) The
Issuer represents and warrants that all representations and warranties set forth
5
in EXHIBIT B-1 are true and correct as of the date hereof and are incorporated
herein by reference with the same force and effect as though herein set forth in
full.
(b) The Parent Guarantor represents and warrants that all
representations and warranties set forth in EXHIBIT B-2 are true and correct as
of the date hereof and are incorporated herein by reference with the same force
and effect as though herein set forth in full.
Section 3.2. Representations of the Purchaser. (a) You represent,
and in entering into this Agreement the Issuer understands, that (1) you are
acquiring the Notes for the purpose of investment and not with a view to the
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes it being understood, however,
that the disposition of your property shall at all times be and remain within
your control and (2) you are an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
(b) You further represent that either: (1) you are acquiring the
Notes with assets from your general account and not with the assets of any
separate account in which any employee benefit plan has any interest (2) the
source of funds to be used by you to pay the purchase price of the Notes is an
"insurance company general account" within the meaning of Department of Labor
Prohibited Transaction Exemption 95-60 ("PTE") (issued July 12, 1995) and there
is no "employee benefit plan" (within the meaning of Section 3(3) of ERISA or
Section 4975(e)(1) of the Code), treating as a single plan, all plans maintained
by the same employer or employee organization, with respect to which the amount
of the general account reserves and liabilities for all contracts held by or on
behalf of such plan, exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account liabilities)
plus surplus, as set forth in the NAIC Annual Statement filed with your state of
domicile or (3) all or a part of such funds constitute assets of one or more
separate accounts, trusts or a commingled pension trust maintained by you, and
you have disclosed to the Issuer the names of such employee benefit plans whose
assets in such separate account or accounts or pension trusts exceed 10% of the
total assets or are expected to exceed 10% of the
6
total assets of such account or accounts or trusts as of the date of such
purchase and the Issuer has advised you in writing (and in making the
representations set forth in this clause (3) you are relying on such advice)
that the Issuer or any ERISA Affiliate is not a party-in-interest nor are the
Notes employer securities with respect to the particular employee benefit plan
disclosed to the Issuer by you as aforesaid (for the purpose of this clause (3),
all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan). As used in this SECTION 3.2(B),
the terms "separate account," "party-in-interest," "employer securities" and
"employee benefit plan" shall have the respective meanings assigned to them in
ERISA.
(c) You agree that, so long as no Event of Default described in
SECTIONS 7.1(A), (B), (I), (J) or (K) hereof has occurred and is continuing, you
will not resell the Notes purchased by you under this Agreement to a Person
which, to the best of your knowledge, is a Competitor. It is understood and
agreed that in establishing compliance by you with the foregoing, you may rely
upon the written representation of the transferee of a Note to the effect that
such transferee is not a Competitor.
(d) You further represent that you have not retained any brokers in
connection with the transactions contemplated by this Agreement.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on
the Closing Date shall be subject to the performance by the Parent Guarantor and
the Issuer of their respective agreements hereunder which by the terms hereof
are to be performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:
(a) Closing Certificates. (1) You shall have received a certificate
dated the Closing Date, signed by the President or a Vice President of the
Issuer, the truth and accuracy of which shall be a condition to your obligation
to purchase the Notes proposed to be sold to you and to the effect that (i) the
representations and warranties of the Issuer set forth in EXHIBIT B-1 hereto are
true and correct on and with respect to the Closing Date, (ii) the Issuer has
performed all of its obligations hereunder which are to be performed on
or prior to the Closing Date, and (iii) no Default or Event of Default has
occurred and is continuing.
(2) You shall have received a certificate dated the Closing Date,
signed by the President or a Vice President of the Parent Guarantor, the truth
and accuracy of which shall be a condition to your obligation to purchase the
Notes proposed to be sold to you and to the effect that (i) the representations
and warranties of the Parent Guarantor set forth in EXHIBIT B-2 hereto are true
and correct on and with respect to the Closing Date, (ii) the Parent Guarantor
has performed all of its obligations hereunder which are to be performed on or
prior to the Closing Date, and (iii) no Default or Event of Default has occurred
and is continuing.
(3) You shall have received a certificate dated the Closing Date,
signed by the President or a Vice President of the Subsidiary Guarantor, the
truth and accuracy of which shall be a condition to your obligation to purchase
the Notes proposed to be sold to you and to the effect that (i) the
representations and warranties of the Subsidiary Guarantor set forth in EXHIBIT
B-3 hereto are true and correct on and with respect to the Closing Date, (ii)
the Subsidiary Guarantor has performed all of its obligations under the
Subsidiary Guaranty which are to be performed on or prior to the Closing Date,
and (iii) no Default or Event of Default has occurred and is continuing.
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(b) Legal Opinions. You shall have received (1) from Chapman and
Cutler, who are acting as your special counsel in this transaction and (2) from
Hofheimer, Nusbaum, McPhaul & Samuels, a Professional Corporation, counsel to
the Parent Guarantor, the Issuer and the Subsidiary Guarantor their respective
opinions dated the Closing Date, in form and substance satisfactory to you, and
covering the matters set forth in EXHIBITS D and E, respectively, hereto.
(c)(1) Issuer's Existence and Authority. On or prior to the Closing
Date, you shall have received, in form and substance reasonably satisfactory to
you and your special counsel, such documents and evidence with respect to the
Issuer as you and your special counsel may reasonably request in order to
establish the existence and good standing of the Issuer and the authorization of
the transactions contemplated by this Agreement.
(2) Parent Guarantor's Existence and Authority. On or prior to the
Closing Date, you shall have received, in form and substance reasonably
satisfactory to you and your special counsel, such documents and evidence with
respect to the Parent Guarantor as you and your special counsel may reasonably
request in order to establish the existence and, if applicable, good standing of
the Parent Guarantor and the authorization of the transactions contemplated by
this Agreement.
(3) Subsidiary Guarantor Existence and Authority. On or prior to the
Closing Date, you shall have received, in form and substance reasonably
satisfactory to you and your special counsel, such documents and evidence with
respect to the Subsidiary Guarantor as you and your special counsel may
reasonably request in order to establish the existence and good standing of the
Subsidiary Guarantor and the authorization of the transactions contemplated by
the Subsidiary Guaranty.
(d) Guaranty. The Subsidiary Guaranty shall be in form and substance
satisfactory to you, shall have been duly executed and delivered by the
Subsidiary Guarantor and shall be in full force and effect and you shall have
received a true, correct and complete copy thereof.
(e) Related Transactions. The Issuer shall have consummated the sale
of the entire principal amount of the Notes scheduled to be sold on the Closing
Date pursuant to this Agreement and the other agreements referred to in SECTION
1.4.
(f) Private Placement Number. On or prior to the Closing Date,
special counsel to the Purchasers shall have duly made the appropriate filings
with Standard & Poor's CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, in order to obtain a private placement
number for the Notes.
(g) Funding Instructions. At least three Business Days prior to
the Closing Date, you shall have received written instructions executed by a
8
Responsible Officer of the Issuer directing the manner of the payment of funds
and setting forth (1) the name and address of the transferee bank, (2) such
transferee bank's ABA number, (3) the account name and number into which the
purchase price for the Notes is to be deposited, and (4) the name and telephone
number of the account representative responsible for verifying receipt of such
funds.
(h) Special Counsel Fees. Concurrently with the delivery of the
Notes to you on the Closing Date, the charges and disbursements of Chapman
and Cutler, your special counsel, shall have been paid by the Issuer.
(i) Consents. On or prior to the Closing Date, you shall have
received a copy of any consents, approvals or amendments required to be obtained
from the holder or holders of any outstanding security of the Issuer, the Parent
Guarantor or the Subsidiary Guarantor, as the case may be, which shall be
necessary to permit the consummation of any transaction contemplated by this
Agreement, and all such consents, approvals or amendments shall be satisfactory
in form and substance to you and your special counsel.
(j) Security. On or prior to the Closing Date, you shall have
received in form and substance satisfactory to you and your special counsel,
such documents and evidence with respect to the release of all security
interests of the lenders under the Revolving Credit Agreement as you and your
special counsel may reasonably request.
(k) Litigation. Evidence reasonably satisfactory to you and your
special counsel as to the status of any outstanding litigation involving the
Parent Guarantor, the Issuer or any Subsidiary thereof.
(l) Legality of Investment. The Notes to be purchased by you shall be
a legal investment for you under the laws of each jurisdiction to which you may
be subject (without resort to any so-called "basket provisions" to such laws).
(m) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the
Issuer fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in SECTION 4.1 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in SECTION 4.1 have
not been fulfilled, you may waive compliance by the Parent Guarantor or the
Issuer with any such condition to such extent as you may in your sole discretion
determine. Nothing in this SECTION 4.2 shall operate to relieve the Parent
Guarantor or the Issuer of any of its obligations hereunder or to waive any of
your rights against the Parent Guarantor or the Issuer.
SECTION 5. PARENT GUARANTOR AND ISSUER COVENANTS.
From and after the Closing Date and continuing so long as any
amount remains unpaid on any Note:
Section 5.1. Compliance with Law. Each of the Parent Guarantor and
the Issuer will, and will cause each of its respective Subsidiaries to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws and ERISA,
and will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9
Section 5.2. Insurance. Each of the Parent Guarantor and the Issuer will,
and will cause each of its respective Subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated
provided, however, that the Parent Guarantor and the Issuer shall not be
required to maintain casualty insurance coverage for inventory held for resale
which such inventory is physically located at or in any of its retail store
locations.
Section 5.3. Maintenance of Properties. Each of the Parent
Guarantor and the Issuer will, and will cause each of its respective
Subsidiaries to, maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times provided that this Section shall not
prevent the Parent Guarantor, the Issuer or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Parent
Guarantor has concluded that such discontinuance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.4. Payment of Taxes and Claims. Each of the Parent
Guarantor and the Issuer will, and will cause each of its respective
Subsidiaries to, file all tax returns required to be filed in any jurisdiction
and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies imposed on
them or any of their properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before they have
become delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of the Parent Guarantor or
any Subsidiary provided that neither the Parent Guarantor, the Issuer nor any
Subsidiary need pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by the Parent Guarantor, the
Issuer or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Parent Guarantor, the Issuer or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Parent Guarantor, the Issuer or such Subsidiary or (b) the nonpayment of all
such taxes, assessments and claims in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
Section 5.5. Corporate Existence, Etc. Each of the Parent
Guarantor and the Issuer will, and will cause each of its respective
10
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence. Subject to SECTION 5.12, the Parent Guarantor will at all
times preserve and keep in full force and effect the corporate existence of each
of its Subsidiaries (unless merged into the Parent Guarantor or a Wholly-owned
Subsidiary) and all rights and franchises of the Parent Guarantor, the Issuer
and its Subsidiaries unless, in the good faith judgment of the Parent Guarantor,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
Section 5.6. Nature of Business. Neither the Parent Guarantor,
the Issuer nor any Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which would then
be engaged in by the Parent Guarantor, the Issuer and its Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Parent Guarantor, the Issuer and their respective Subsidiaries on the date of
this Agreement.
Section 5.7. Consolidated Net Worth. (a) From and after the
Closing Date until December 31, 1997, the Parent Guarantor and the Issuer will
not at any time permit Consolidated Net Worth to be an amount less than
$75,000,000.
(b) From and after January 1, 1998 until the Net Worth Reset Date,
the Parent Guarantor and the Issuer will not at any time permit Consolidated Net
Worth to be an amount less than the sum of (1) $75,000,000 plus (2) 50% of
Consolidated Net Income computed on a cumulative basis for each of the elapsed
fiscal quarters beginning after December 31, 1997 provided that notwithstanding
that Consolidated Net Income for any elapsed fiscal quarter may be a deficit
figure, no reduction as a result thereof shall be made in the sum to be
maintained pursuant hereto.
(c) From and after the Net Worth Reset Date, the Parent Guarantor and
the Issuer will not at any time permit Consolidated Net Worth to be an amount
less than the sum of (1) the Reset Net Worth Amount plus (2) 25% of Consolidated
Net Income computed on a cumulative basis for each of the elapsed fiscal
quarters beginning after the Net Worth Reset Date provided that notwithstanding
that Consolidated Net Income for any elapsed fiscal quarter may be a deficit
figure, no reduction as a result thereof shall be made in the sum to be
maintained pursuant hereto.
Section 5.8. Fixed Charges Coverage Ratio. The Parent Guarantor
and the Issuer will keep and maintain the ratio of Consolidated Net Income
Available for Consolidated Fixed Charges to Consolidated Fixed Charges,
determined on a Rolling Four Quarters basis, at the end of each fiscal quarter
at not less than 1.75 to 1.00.
Section 5.9. Limitations on Debt. (a) The Parent Guarantor
and the Issuer will not, and will not permit any of its respective Subsidiaries
thereof to, create, issue, assume, guarantee or otherwise incur any Debt,
except:
(1) Funded Debt evidenced by the Notes
(2) Funded Debt of the Parent Guarantor and its Subsidiaries
outstanding as of the Closing Date and described on SCHEDULE II hereto
(3) additional Debt of the Parent Guarantor, the Issuer or a
Subsidiary thereof incurred after the Closing Date, provided that at the time of
issuance thereof and after giving effect thereto and to the applications of the
proceeds thereof such Debt shall be otherwise permitted pursuant to clauses (b),
(c) and (d) of this SECTION 5.9.
(b) The Parent Guarantor and the Issuer will as of the last day of
each fiscal quarter keep and maintain the ratio of Consolidated Senior Funded
Debt to Consolidated EBITDA for the immediately preceding Rolling Four Quarters
(including the current fiscal quarter) at not more than 1.50 to 1.00.
(c) The Parent Guarantor and the Issuer will as of the last day of
each fiscal quarter keep and maintain the ratio of Consolidated Funded Debt to
Consolidated EBITDA for (1) each Rolling Four Quarters period ending on or
11
before December 31, 1999, at not more than 2.50 to 1.00, and (2) each Rolling
Four Quarters period ending after December 31, 1999, at not more than 2.00 to
1.00.
(d) The Parent Guarantor and the Issuer will not at any time permit
the aggregate amount of all Priority Debt to exceed 15% of Consolidated Net
Worth.
(e) Any Person which becomes a Subsidiary after the date hereof shall
for all purposes of this SECTION 5.9 be deemed to have created, assumed or
incurred at the time it becomes a Subsidiary all Debt of such Person existing
immediately after it becomes a Subsidiary.
Section 5.10. Limitation on Liens. The Parent Guarantor and the
Issuer will not, and will not permit any Subsidiary thereof to, create or incur,
or suffer to be incurred or to exist, any Lien on its or their property or
assets, whether now owned or hereafter acquired, or upon any income or profits
therefrom, or transfer any property for the purpose of subjecting the same to
the payment of obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any Subsidiary thereof to
acquire, any property or assets upon conditional sales agreements or other title
retention devices (unless it concurrently makes, or causes to be made, effective
provision whereby the Notes will be equally and ratably secured with any and all
other obligations thereby secured, such security to be pursuant to such
agreements, including, without limitation, intercreditor agreements, reasonably
satisfactory to the Required Holders providing for such security (including an
opinion of counsel of the Parent Guarantor to the effect that the holders of the
Notes are so equally and ratably secured) and, in any such case, the Notes shall
have the benefit, to the fullest extent that, and with such priority as, the
holders of the Notes may be entitled under applicable law, of an equitable Lien
on such property), except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and materialmen
provided that payment thereof is not at the time required by SECTION 5.4
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
12
respect of which the Parent Guarantor, the Issuer or any Subsidiary thereof
shall at any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and attorneys' liens
and statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general nature, in any such case incurred in the
ordinary course of business and not in connection with the borrowing of money
provided that such Liens do not, individually or in the aggregate, materially
impair the use of the property encumbered by any such Lien in the operation of
the business of the Parent Guarantor and its Subsidiaries, taken as a whole, or
the value of the property so encumbered for the purposes of such business and
provided further in each case, the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or proceedings
(d) survey exceptions or encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real properties, which do not in
any event materially impair the ordinary conduct of the business of the Parent
Guarantor, the Issuer and their Subsidiaries
(e) Liens securing Debt of a Subsidiary to the Issuer, to the
Parent Guarantor or to a Wholly-owned Subsidiary
(f) Liens existing as of the Closing Date and described on
SCHEDULE II hereto
(g) Liens created or incurred after the Closing Date given to secure
the payment of, or to secure Indebtedness incurred or assumed to pay all or any
part of, the purchase price incurred in connection with the acquisition or
purchase of property (or any improvement thereon) or the cost of construction
of improvements to property, in any such case, useful and intended to be used in
carrying on the business of the Parent Guarantor, the Issuer or a Subsidiary
provided that in each such case the portion of the Lien permitted under this
clause (g) shall be limited to the extent: (i) the Lien shall attach solely to
the property (or any improvement thereon) acquired, purchased or constructed
and, if required by the terms of the instrument originally creating such Lien,
other property which is an improvement to or is acquired for specific use in
connection with such acquired or constructed property (or improvement thereon)
or which is real property being improved by such acquired or constructed
property (or improvement thereon), (ii) such Lien shall have been created or
incurred within 120 days of the date of acquisition or purchase of, or the date
of completion of construction of improvements to, such property, as the case may
be, (iii) at the time of the imposition of such Lien, the aggregate amount
remaining unpaid on all Indebtedness secured by such Lien (whether or not
assumed by the Parent Guarantor, the Issuer or a Subsidiary) shall not exceed an
amount equal to the lesser of the total acquisition or purchase price or cost of
construction, as the case may be, or the fair market value at the time of
acquisition, purchase or completion of construction, as the case may be (as
determined in good faith by the Board of Directors or a Responsible Officer of
the Parent Guarantor in the event the fair market value of such Property exceeds
$5,000,000), and (iv) at the time of creation, issuance, assumption, guarantee
or incurrence of the Indebtedness secured by such Lien and after giving effect
thereto and to the application of the proceeds thereof, no Default or Event of
Default would exist
13
(h) Liens on property existing: (i) at the time of acquisition
thereof, whether or not the Indebtedness secured thereby is assumed by the
Parent Guarantor, the Issuer or any Subsidiary or (ii) on the property of a
Person at the time such Person is acquired or merged into or consolidated with
the Parent Guarantor, the Issuer or any Subsidiary or at the time of a sale,
lease or other disposition of the property or outstanding shares or Indebtedness
of the Person in its entirety to the Parent Guarantor, the Issuer or any
Subsidiary provided that in each such case the portion of the Lien permitted
under this clause (h) shall be limited to the extent: (i) the Lien shall attach
solely to such property and, if required by the terms of the instrument
originally creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property, (ii) the
amount of Indebtedness secured by such Lien shall not exceed an amount equal to
the lesser of the acquisition or purchase price or fair market value of such
property (as determined by good faith by the Board of Directors or a Responsible
Officer of the Parent Guarantor in the event the fair market value of such
Property exceeds $5,000,000), (iii) such Lien shall not have been incurred in
contemplation of the acquisition of such property, and (iv) at the time of
creation, issuance, assumption, guarantee or incurrence of the Indebtedness
secured by such Lien and after giving effect thereto and to the application of
the proceeds thereof, no Default or Event of Default would exist
(i) Liens created or incurred after the Closing Date given to secure
Funded Debt of the Parent Guarantor thereof in addition to the Liens or amounts
of Liens permitted by the preceding clauses (a) through (h) and (j) hereof
provided that all Debt secured by such Liens shall have been incurred within the
applicable limitations provided in SECTION 5.9(A)(3) and
(j) any extension, renewal or refunding of any Lien permitted by the
preceding clauses (f), (g) or (h) of this SECTION 5.10 in respect of the same
property theretofore subject to such Lien in connection with the extension,
renewal or refunding of the Indebtedness secured thereby provided that such
extension, renewal, or refunding of any Lien shall be permitted under this
clause (j) to the extent that (1) such extension, renewal or refunding of
Indebtedness shall be without increase in the principal amount remaining unpaid
as of the date of such extension, renewal or refunding, (2) such Lien shall
attach solely to the same such property, and (3) after giving effect to any such
extension, renewal or refunding, no Default or Event of Default would exist.
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Section 5.11. [Intentionally Reserved].
Section 5.12. Mergers, Consolidations and Sales of Assets. (a) Each
of the Parent Guarantor and the Issuer will not, and will not permit any
Subsidiary thereof to, consolidate with or be a party to a merger with any other
Person, or sell, lease or otherwise dispose of all or substantially all of its
assets provided that:
(1) any Subsidiary (other than the Issuer) may merge or consolidate
with or into, or sell or otherwise dispose of all or substantially all of its
assets to, the Parent Guarantor, the Issuer or any Wholly-owned Subsidiary so
long as (i) in any merger, consolidation or sale involving the Parent Guarantor,
the Issuer or a Wholly-owned Subsidiary, the Parent Guarantor, the Issuer or a
Wholly-owned Subsidiary, as the case may be, shall be the surviving or
continuing corporation, (ii) in any merger, consolidation or sale involving a
Wholly-owned Subsidiary, such Wholly-owned Subsidiary shall be organized and
domiciled in the United States of America, any state thereof or the District of
Columbia, (iii) in the event that such Subsidiary is the Subsidiary Guarantor
and unless the Parent Guarantor or the Issuer is the surviving corporation, the
guarantee of the due and punctual payment of the principal of and premium, if
any, and interest on all of the Notes, according to their tenor, and the due and
punctual performance and observation of all of the covenants in the Subsidiary
Guaranty to be performed or observed by the Subsidiary Guarantor are expressly
assumed in writing by the surviving corporation and the surviving corporation
shall furnish to the holders of the Notes an opinion of counsel satisfactory to
such holders to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles and (iv) at the time of such consolidation or
merger and immediately after giving effect thereto no Default or Event of
Default would exist.
(2) the Issuer may merge or consolidate with or into, or sell or
otherwise dispose of all or substantially all of its assets to, any other
corporation if (i) the corporation which results from such consolidation or
merger (the "surviving corporation") is not Insolvent, (ii) the surviving
corporation shall be organized and domiciled in the United States of America,
any state thereof or the District of Columbia, (iii) unless the Issuer is the
surviving corporation, the payment of the principal of and premium, if any, and
interest on all of the Notes, according to their tenor, and the due and punctual
performance and observation of all of the covenants in the Notes and this
Agreement to be performed or observed by the Issuer are expressly assumed in
writing by the surviving corporation and the surviving corporation shall furnish
to the holders of the Notes an opinion of counsel reasonably satisfactory to
such holders to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles, (iv) the obligations of the Parent Guarantor under
this Agreement and of the Subsidiary Guarantor under the Subsidiary Guaranty are
expressly affirmed in writing, and (v) at the time of such consolidation or
merger and immediately after giving effect thereto no Default or Event of
Default would exist
(3) the Parent Guarantor may consolidate or merge with or into any
other corporation if (i) the corporation which results from such consolidation
or merger (the "surviving corporation") is not Insolvent, (ii) the surviving
corporation shall be organized and domiciled in the United States of America,
any state thereof or the District of Columbia, (iii) unless the Parent Guarantor
is the surviving corporation, the guarantee of the due and punctual payment of
the principal of and premium, if any, and interest on all of the Notes,
according to their tenor, and the due and punctual performance and
15
observation of all of the covenants in this Agreement to be guaranteed,
performed or observed by the Parent Guarantor are expressly assumed in writing
by the surviving corporation and the surviving corporation shall furnish to the
holders of the Notes an opinion of counsel satisfactory to such holders to the
effect that pursuant to such consolidation or merger the guaranty of the due and
punctual payment of the principal of and premium, if any, and interest on all
the Notes, according to their tenor and the due and punctual performance and
observation of the covenants in this Agreement to be guaranteed, performed or
observed by the Parent Guarantor have been properly assumed by the surviving
corporation, and (iv) at the time of such consolidation or merger and
immediately after giving effect thereto no Default or Event of Default would
exist and
(4) the Parent Guarantor may sell or otherwise dispose of all or
substantially all of its assets to any Person for consideration which represents
the fair market value of such assets (as determined in good faith by the Board
of Directors of the Parent Guarantor, a copy of which determination, certified
by the Secretary or an Assistant Secretary of the Parent Guarantor, shall have
been furnished to the holders of the Notes) at the time of such sale or other
disposition if (i) the acquiring Person is not Insolvent, (ii) the acquiring
Person is organized and domiciled in the United States of America, any state
thereof or the District of Columbia, (iii) the guarantee of the due and punctual
payment of the principal of and premium, if any, and interest on all the Notes,
according to their tenor, and the due and punctual performance and observance of
all of the covenants in this Agreement to be performed or observed by the Parent
Guarantor are expressly assumed in writing by the acquiring corporation and the
acquiring corporation shall furnish to the holders of the Notes an opinion of
counsel satisfactory to such holders to the effect that the instrument of
assumption has been duly authorized, executed and delivered and constitutes the
legal, valid and binding contract and agreement of such acquiring corporation
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy,insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles, and (iv) at the time of such sale
or disposition and immediately after giving effect thereto no Default or Event
of Default would exist.
(b) Each of the Parent Guarantor and the Issuer will not, and will
not permit any Subsidiary thereof to, sell, lease, transfer, abandon or
otherwise dispose of assets (except assets sold in the ordinary course of
business) provided that the foregoing restrictions do not apply to:
(1) subject to compliance with the terms and provisions of SECTION
5.13(B), the sale, lease, transfer or other disposition of assets of a
Subsidiary to the Parent Guarantor, the Issuer or a Wholly-owned Subsidiary or
(2) the sale of assets for cash or other property to a Person or
Persons if all of the following conditions are met:
(i) such assets (valued at net book value) do not, together with all
other assets of the Parent Guarantor and its Subsidiaries previously disposed of
during the immediately preceding twelve month period (other than in the ordinary
course of business) exceed 15% of Consolidated Total Assets, determined as of
the end of the immediately preceding fiscal quarter
(ii) if the fair market value of such property is more than
$5,000,000, in the opinion of the Parent Guarantor's Board of Directors or a
Responsible Officer of the Parent Guarantor the sale is for fair value and is in
the best interests of the Parent Guarantor and its Subsidiaries, taken as a
whole and
(iii) immediately after the consummation of the transaction and after
giving effect thereto no Default or Event of Default would exist provided,
however, that for purposes of the foregoing calculation, there shall not be
included any assets to the extent that the net proceeds of the sale of such
assets were or are applied within 365 days after the date of sale of such assets
to either (A) the acquisition of fixed assets useful and intended to be
16
used in the operation of the business of the Parent Guarantor and its
Subsidiaries as described in SECTION 5.6 and having a fair market value (as
determined in good faith by the Board of Directors of the Parent Guarantor) at
least equal to that of the net proceeds applied from the sale of the assets so
disposed of or (B) the prepayment of Senior Funded Debt on a pro rata basis. It
is understood and agreed by the Parent Guarantor and the Issuer that any such
proceeds paid and applied to the prepayment of the Notes as hereinabove provided
shall be prepaid as and to the extent provided in SECTION 2.4.
Computations pursuant to this SECTION 5.12(B)(2) shall include
dispositions made pursuant to SECTION 5.12(C) and computations pursuant to
SECTION 5.12(C) shall include dispositions made pursuant to this SECTION
5.12(B)(2).
(c) Each of the Parent Guarantor and the Issuer will not, and will
not permit any Subsidiary thereof to, sell, pledge or otherwise dispose of any
shares of the stock (including as "stock" for the purposes of this SECTION
5.12(C) any options or warrants to purchase stock or other Securities
exchangeable for or convertible into stock) of a Subsidiary (said stock,
options, warrants and other Securities herein called "Subsidiary Stock") or any
Indebtedness held by the Parent Guarantor, the Issuer or any Subsidiary of any
other Subsidiary, nor will any Subsidiary issue, sell, pledge or otherwise
dispose of any shares of its own Subsidiary Stock provided that the foregoing
restrictions do not apply to:
(1) the issue of directors' qualifying shares or
(2) subject to compliance with the terms and provisions of SECTION
5.13(B), the issue of Subsidiary Stock or such Indebtedness to the Parent
Guarantor or to another Wholly-owned Subsidiary or
(3) the issue, sale or other disposition at any one time to a Person
(other than directly or indirectly to an Affiliate) of the entire Investment of
the Parent Guarantor and its other Subsidiaries in any Subsidiary if all of the
following conditions are met:
(i) the book value of such Subsidiary Stock does not,
together with all other assets of the Parent Guarantor and its
17
Subsidiaries previously disposed of during the immediately preceding twelve
month period (other than in the ordinary course of business) exceed 15% of
Consolidated Total Assets, determined as of the end of the immediately preceding
fiscal quarter
(ii) if the fair market value of such Subsidiary Stock exceeds
$5,000,000, in the opinion of the Parent Guarantor's Board of Directors or a
Responsible Officer of the Parent Guarantor, the sale is for fair value and is
in the best interests of the Parent Guarantor and its Subsidiaries, taken as a
whole
(iii) immediately after the consummation of the transaction and after
giving effect thereto, such Subsidiary shall have no Indebtedness of or
continuing Investment in the capital stock of the Parent Guarantor, the Issuer
or of any Subsidiary and any such Indebtedness or Investment shall have been
discharged or acquired, as the case may be, by the Parent Guarantor, the Issuer
or a Subsidiary and
(iv) immediately after the consummation of the transaction and after
giving effect thereto no Default or Event of Default would exist provided,
however, that for purposes of the foregoing calculation, there shall not be
included any Subsidiary Stock to the extent that the net proceeds of the sale of
such Subsidiary Stock were or are applied within 365 days of the date of sale of
such Subsidiary Stock to either (A) the acquisition of fixed assets useful and
intended to be used in the operation of the business of the Parent Guarantor and
its Subsidiaries as described in SECTION 5.6 and having a fair market value (as
determined in good faith by the Board of Directors of the Parent Guarantor) at
least equal to that of the net proceeds applied from the sale of the Subsidiary
Stock so disposed of or (B) the prepayment of Senior Funded Debt on a pro rata
basis. It is understood and agreed by the Parent Guarantor and the Issuer that
any such proceeds paid and applied to the prepayment of the Notes as hereinabove
provided shall be prepaid as and to the extent provided SECTION 2.4.
Computations pursuant to this SECTION 5.12(C) shall include
18
dispositions made pursuant to SECTION 5.12(B)(2) and computations pursuant to
SECTION 5.12(B)(2) shall include dispositions made pursuant to this SECTION
5.12(C).
Section 5.13. Ownership and Assets of the Issuer and Subsidiary
Guarantor (a) The Parent Guarantor will at all times beneficially own, directly
or indirectly, free and clear of all Liens, all of the issued and outstanding
capital stock (and any Securities convertible at any time and from time to time
into capital stock) of the Issuer and the Subsidiary Guarantor.
(b) So long as the Subsidiary Guaranty has not been released pursuant
to and in accordance with the terms and provisions of SECTION 5.20 hereof, the
Parent Guarantor will not permit the aggregate amount of non-intercompany assets
of the Subsidiary Guarantor to exceed an amount equal to 3% of Consolidated
Total Assets.
Section 5.14. Guaranties. The Parent Guarantor and the Issuer will
not, and will not permit any Subsidiary thereof to, become or be liable in
respect of any Guaranty except the guaranty by the Parent Guarantor set forth in
SECTION 6 and the Subsidiary Guaranty, and additional Guaranties by the Parent
Guarantor, the Issuer and the Subsidiary Guarantors which are limited in amount
to a stated maximum dollar exposure and subject to the limitations imposed by
this Agreement or which constitute Guaranties of obligations incurred by any
Subsidiary in compliance with the provisions of this Agreement.
Section 5.15. Repurchase of Notes. Neither the Parent Guarantor,
the Issuer nor any Subsidiary or Affiliate thereof, directly or indirectly, may
repurchase or make any offer to repurchase any Notes.
Section 5.16. Transactions with Affiliates. The Parent Guarantor
and the Issuer will not, and will not permit any Subsidiary thereof to, enter
into or be a party to any Material transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate), except
pursuant to the reasonable requirements of the Parent Guarantor's, the Issuer's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Parent Guarantor, the Issuer or such Subsidiary than the Parent
Guarantor, the Issuer or such Subsidiary
19
would obtain in a comparable arm's-length transaction with a Person other than
an Affiliate.
Section 5.17. Termination of Pension Plans. The Parent Guarantor
and the Issuer will not, and will not permit any Subsidiaries thereof to, (a)
engage in any transaction in connection with which the Parent Guarantor, the
Issuer or any such Subsidiary could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code and (b) terminate or withdraw from any Plan, including a Multiemployer
Plan, in a manner, or take any other action with respect to any such Plan
(including, without limitation, a substantial cessation of operations within the
meaning of Section 4062(e) of ERISA), which could result in (1) any liability of
the Parent Guarantor, the Issuer or any such Subsidiary to a Multiemployer Plan,
to the PBGC or to a trustee appointed under Section 4042(b) or (c) of ERISA,
which liability could have a Material Adverse Effect or (2) the imposition of a
Lien on any property of the Parent Guarantor, the Issuer or any such Subsidiary
pursuant to Section 4068 of ERISA.
Section 5.18. Reports and Rights of Inspection. The Parent
Guarantor and the Issuer will keep, and will cause each of its respective
Subsidiaries to keep, proper books of record and account in which full and
correct entries will be made of all dealings or transactions of, or in relation
to, the business and affairs of the Parent Guarantor, the Issuer or such
Subsidiary, in accordance with GAAP consistently applied (except for changes
disclosed in the financial statements furnished to you pursuant to this SECTION
5.18 and concurred in by the independent public accountants referred to in
SECTION 5.18(B)), and will furnish to you so long as you are the holder of any
Note and to each other Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except the last)of
each fiscal year, copies of:
(1) consolidated balance sheets of the Parent Guarantor and its
Subsidiaries as of the close of such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the fiscal year
20
then most recently ended,
(2) consolidated statements of income of the Parent Guarantor and its
Subsidiaries for such quarterly fiscal period and for the portion of the fiscal
year ending with such quarterly fiscal period, in each case setting forth in
comparative form the consolidated figures for the corresponding periods of the
preceding fiscal year, and
(3) consolidated statements of cash flows of the Parent Guarantor and
its Subsidiaries for the portion of the fiscal year ending with such quarterly
fiscal period, setting forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year, all in reasonable detail
and certified as complete and correct by an authorized financial officer of the
Parent Guarantor
(b) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Parent Guarantor, two
copies of:
(1) consolidated balance sheets of the Parent Guarantor and
its Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of income, retained earnings and cash
flows of the Parent Guarantor and its Subsidiaries for such fiscal year, in each
case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by a report
thereon of a firm of independent public accountants of recognized national
standing selected by the Parent Guarantor to the effect that the consolidated
financial statements present fairly, in all material respects, the consolidated
financial position of the Parent Guarantor and its Subsidiaries as of the end of
the fiscal year being reported on and the consolidated results of the operations
and cash flows for said year in conformity with GAAP and that the examination of
such accountants in connection with such financial statements has been conducted
in accordance with generally accepted auditing standards
and included such tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the circumstances
(c) Audit Reports. Promptly upon receipt thereof, any management
letter received from such accountants
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement sent by
the Parent Guarantor to its creditors and stockholders generally and of each
regular or periodic report, and any registration statement or prospectus filed
by the Parent Guarantor or any Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor agency, and copies of any
orders in any proceedings to which the Parent Guarantor or any of its
Subsidiaries is a party, issued by any governmental agency, Federal or state,
having jurisdiction over the Parent Guarantor or any of its Subsidiaries
(e) ERISA Reports. Promptly upon the occurrence thereof, written
notice of (1) a Reportable Event with respect to any Plan (2) the institution
of any steps by the Parent Guarantor, any ERISA Affiliate, the PBGC or any other
Person to terminate any Plan pursuant to Sections 4041(c) or 4042 of ERISA (3)
the institution of any steps by the Parent Guarantor or any ERISA Affiliate to
withdraw from any Plan where such withdrawal could have a Material Adverse
Effect (4) a non-exempt "prohibited transaction" within the meaning of Section
406 of ERISA in connection with any Plan (5) any material increase in the
contingent liability of the Parent Guarantor or any Subsidiary with respect to
any post-retirement welfare liability or (6) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue Service,
the Department of Labor or the PBGC with respect to any of the foregoing
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of the chief financial officer of
the Parent Guarantor stating that such officer has reviewed the provisions of
this Agreement and setting forth: (1) the information and computations (in
21
sufficient detail) required in order to establish whether the Parent Guarantor
was in compliance with the requirements of SECTIONS 5.7 through 5.13 at the end
of the period covered by the financial statements then being furnished, and (2)
whether there existed as of the date of such financial statements and whether,
to the best of such officer's knowledge, there exists on the date of the
certificate or existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such condition or event
exists on the date of the certificate, specifying the nature and period of
existence thereof and the action the Parent Guarantor is taking and proposes to
take with respect thereto
(g) Accountant's Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion with
respect to such financial statements, stating that they have reviewed this
Agreement and stating further whether, in making their audit, such accountants
have become aware of any Default or Event of Default under any of the terms or
provisions of this Agreement insofar as any such terms or provisions pertain to
or involve accounting matters or determinations, and if any such condition or
event then exists, specifying the nature and period of existence thereof
(h) Credit Agreement Notices. Within the periods provided in the
Revolving Credit Agreement or any other evidence of Debt in an aggregate
principal amount in excess of $5,000,000, copies of each notice delivered to the
banks or financial institutions thereunder with respect to any event or
occurrence which has the potential to materially affect the assets, liabilities,
financial condition or operations of the Parent Guarantor or its Subsidiaries
and
(i) Requested Information. With reasonable promptness, such other
data and information, including without limitation, financial projections
prepared by the Parent Guarantor or the Issuer, as you or any such
Institutional Holder may reasonably request.
Without limiting the foregoing, the Parent Guarantor will permit you, so long as
you are the holder of any Note, and each Institutional Holder of the then
outstanding Notes (or such Persons as either you or such Institutional Holder
may designate), (i) to visit and inspect, under the Parent Guarantor's guidance
and if no Default or Event of Default then exists, upon reasonable prior notice
to the Parent Guarantor, any of the properties of the Parent Guarantor or any
Subsidiary, (ii) to examine, if a Default or Event of Default then exists, all
of their books of account, records, reports and other papers, to make copies and
extracts therefrom and (iii) to discuss their respective affairs, finances and
accounts with their respective officers, employees, and (if no Default or Event
of Default then exists, only with the consent of the Parent Guarantor, which
consent will not be unreasonably withheld) independent public accountants, all
at such reasonable times and as often as may be reasonably requested. Any
visitation or inspection shall be at the sole expense of you or such
Institutional Holder, unless a Default or Event of Default shall have occurred
and be continuing or the holder of any Note or of any other evidence of
Indebtedness of the Parent Guarantor or any Subsidiary gives any written notice
or takes any other action with respect to a claimed default, in which case, any
such visitation or inspection shall be at the sole expense of the Parent
Guarantor.
For the purposes of this SECTION 5.18, "Confidential
Information" means information delivered to you by or on behalf of the Parent
Guarantor, the Issuer or any Subsidiary thereof in connection with the
transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential information of
the Parent Guarantor, the Issuer or such Subsidiary, provided that such term
does not include information that (a) was publicly known or otherwise known to
you prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by you or any person acting on your behalf, (c)
otherwise becomes known to you other than through disclosure by the Parent
Guarantor, the Issuer or any Subsidiary or (d) constitutes financial statements
delivered to you under this SECTION 5.18 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good
22
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this SECTION 5.18, (iii) any other
holder of any Note, (iv) any Institutional Holder to which you sell or offer to
sell such Note or any part thereof or any participation therein (if such Person
has agreed in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this SECTION 5.18), (v) any Person from which you
offer to purchase any security of the Parent Guarantor or the Issuer (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this SECTION 5.18), (vi) any
federal or state regulatory authority having jurisdiction over you, (vii) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about your investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to you, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this SECTION 5.18 as though it
were a party to this Agreement. On reasonable request by the Parent Guarantor or
the Issuer in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Parent
Guarantor and the Issuer embodying the provisions of this SECTION 5.18.
23
Section 5.19. Notes and Guaranty to Rank Pari Passu. (a) The Issuer
will keep and maintain the obligations of the Issuer with respect to the Notes
and all other monetary obligations outstanding at any time to the Holders under
this Agreement as direct obligations of the Issuer ranking pari passu as against
the assets of the Issuer with all other present and future Debt of the Issuer,
except to the extent such Debt is secured by a Lien permitted under this
Agreement or such Debt is subordinated to the Notes.
(b) The Parent Guarantor will keep and maintain the obligations of
the Parent Guarantor with respect to the guaranty set forth in SECTION 6 to the
Holders under this Agreement as direct obligations of the Parent Guarantor
ranking pari passu as against the assets of the Parent Guarantor with all other
present and future Debt of the Parent Guarantor except to the extent such Debt
is secured by a Lien permitted under this Agreement or such Debt is subordinated
to the obligations under such guaranty.
(c) The Parent Guarantor will keep and maintain the obligations of
the Subsidiary Guarantor with respect to the Subsidiary Guaranty as direct
obligations of the Subsidiary Guarantor ranking pari passu as against the assets
of the Subsidiary Guarantor with all other present or future Debt of the
Subsidiary Guarantor except to the extent such Debt is secured by a Lien
permitted under this Agreement or such if Debt is subordinated to the
obligations of the Subsidiary Guaranty.
Section 5.20. Release of Subsidiary Guaranty (a) Upon the request of the
Parent Guarantor, the Holders of the Notes shall execute and deliver documents
submitted by the Parent Guarantor which are reasonably satisfactory to such
Holders and their counsel for the purpose of discharging the Subsidiary Guaranty
provided that prior to such execution and delivery and as a condition thereto,
the Holders of the Notes shall have received (1) evidence reasonably
satisfactory to such Holders and their counsel, that the Subsidiary Guarantor is
no longer liable, secondarily or otherwise, for the obligations of the Parent
Guarantor or the Issuer and under the Revolving Credit Agreement or any other
Funded Debt of the Parent Guarantor or any Subsidiary, and (2) an officer's
certificate of the Parent Guarantor (accompanied by reasonably detailed
computations) demonstrating that after giving effect to the release of the
Subsidiary Guaranty and after giving effect to all Funded Debt of such
Subsidiary Guarantor constituting Priority Debt, no Default or Event of Default
would exist.
(b) All fees and expenses of the Holders, including, without
limitation, attorney's fees, incurred in connection with the execution and
delivery of any termination or discharge agreements and all agreements,
certificates and opinions related thereto shall be borne by the Parent Guarantor
and the Issuer.
24
SECTION 6. GUARANTY OF THE NOTES.
From and after the Closing Date and continuance along any
amount remains unpaid on the Note:
Section 6.1. Guaranty. The Parent Guarantor hereby absolutely and
unconditionally guarantees to the Holders: (a) the full and prompt payment of
the principal of all of the Notes and of the interest thereon at the rate
therein stipulated and the Make-Whole Amount, if any, and all additional amounts
and other sums due and owing, from or required to be paid by the Issuer under
the terms of the Notes or this Agreement when and as the same shall become due
and payable, whether by lapse of time, upon redemption or prepayment, by
extension or by acceleration or declaration, or otherwise (including interest
due on overdue payments of principal, Make-Whole Amount, if any, or interest
(including interest accrued after the commencement of any proceeding referred to
in SECTION 6.4(K) at the rate set forth in the Notes) in coin or currency of the
United States of America which at the time of payment or demand therefor shall
be legal tender for the payment of public and private debts in the United States
of America, (b) the full and prompt performance and observance by the Issuer of
each and all of the covenants and agreements required to be performed or
observed by the Issuer under the terms of this Agreement, and (c) payment, upon
demand by any Holder, of all reasonable costs and expenses, legal or otherwise
(including reasonable attorneys fees) and such expenses, if any, as shall have
been expended or incurred in the protection or enforcement of any right or
privilege under this Agreement, including without limitation the protection or
enforcement of any rights, privileges or liabilities under
this SECTION 6 or in any consultation or action in connection therewith, and in
each and every case irrespective of the validity, regularity, or enforcement of
any of the Notes or this Agreement or any of the terms thereof or of any other
like circumstance or circumstances. The Guaranty of the Notes and other
obligations herein provided for is a guaranty of the immediate and timely
payment of the principal, Make-Whole Amount, if any, and interest on the Notes
and other obligations as and when the same are due and payable and shall not be
deemed to be a guaranty only of the collectability of such payments.
Section 6.2. Guaranty of Payment and Performance. This is a
guaranty of payment and performance and the Parent Guarantor hereby waives any
right to require that any action on or in respect of any Note or this Agreement
25
be brought against the Issuer or any other Guarantor or that resort be had to
any direct or indirect security for the Notes or for this Agreement or any other
remedy. Any Holder may, at its option, proceed hereunder against the Parent
Guarantor in the first instance to collect monies when due, the payment of which
is guaranteed hereby, without first proceeding against the Issuer or any other
Guarantor, or any other Person and without first resorting to any remedy. The
liability of the Parent Guarantor hereunder shall in no way be affected or
impaired by any acceptance by any Holder of any direct or indirect security for,
or other Guaranties of, any Indebtedness, liability or obligation of the Issuer
or any other Guarantor, or any other Person to any Holder or by any failure,
delay, neglect or omission by the Holder to realize upon or protect any such
Indebtedness, liability or obligation or any notes or other instruments
evidencing the same or any direct or indirect security therefor or by any
approval, consent, waiver, or other action taken, or omitted to be taken by any
such Holder.
Section 6.3. Consent of the Parent Guarantor. The Parent Guarantor
hereby consents and agrees that any Holder from time to time, with or without
any further notice to or assent from the Parent Guarantor may, without in any
manner affecting the liability of the Parent Guarantor, and upon such terms and
conditions as such Holder may deem advisable:
(a) extend in whole or in part (by renewal or otherwise), modify,
change, compromise, release or extend the duration of the time for the
performance or payment of any Indebtedness, liability or obligation of the
Issuer or any other Guarantor or any other Person secondarily or otherwise
liable for any Indebtedness, liability or obligations of the Issuer on the
Notes, or waive any Default with respect thereto, or waive, modify, amend or
change any provision of any other instruments or
(b) sell, release, surrender, modify, impair, exchange or substitute
any and all property, of any nature and from whomsoever received, held by, or on
behalf of, any such Holder as direct or indirect security for the payment or
performance of any Indebtedness, liability or obligation of the Issuer or any
other Guarantor or of any other Person secondarily or otherwise liable for any
Indebtedness, liability or obligation or the Issuer on the Notes or
(c) settle, adjust or compromise any claim of the Issuer or any other
Guarantor against any other Person secondarily or otherwise liable for any
Indebtedness, liability or obligation of the Issuer on the Notes. The Parent
Guarantor hereby ratifies and confirms any such extension, renewal, change,
sale, release, waiver, surrender, exchange, modification, amendment, impairment,
substitution, settlement, adjustment or compromise and agrees that the same
shall be binding upon it, and hereby waives any and all defenses, counterclaims
or offsets which it might or could have by reason thereof, it being understood
that the Parent Guarantor shall at all times be bound by this Guaranty and
remain liable hereunder.
Section 6.4. Obligations Absolute and Unconditional. The
obligations of the Parent Guarantor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect until the entire
principal, interest and Make-Whole Amount, if any, on the Notes shall have been
paid and such obligations shall not be affected, modified of impaired upon the
happening from time to time of any event, including without limitation any of
the following, whether or not with notice to or the consent of the Parent
Guarantor:
(a) the power or authority or the lack of power or authority of
the Issuer to issue the Notes or to execute and deliver this Agreement, and
26
irrespective of the validity of the Notes or this Agreement or of any defense
whatsoever that the Issuer may or might have to the payment of the Notes
(principal, interest and Make-Whole Amount, if any) or to the performance or
observance of any of the provisions or conditions of this Agreement, or the
existence or continuance of the Issuer as a legal entity
(b) any failure to present the Notes for payment or to demand payment
thereof, or to give the Parent Guarantor or the Issuer notice of dishonor for
non-payment of the Notes, when and as the same may become due and payable, or
notice of any failure on the part of the Issuer to do any act or thing or to
perform or to keep any covenant or agreement by them to be done, kept or
performed under the terms of the Notes or this Agreement
(c) the acceptance of any security or any Guaranty, the advance of
additional money to the Issuer, any extension of the obligation of the Notes,
either indefinitely or for any period of time, or any other modification in the
obligation of the Notes or of this Agreement or the Issuer thereon, or in
connection therewith, or any sale, release, substitution or exchange of any
security
(d) any act or failure to act with regard to the Notes or this
Agreement or the Subsidiary Guaranty or anything which might vary the risk of
the Parent Guarantor
(e) any action taken under this Agreement or the Subsidiary Guaranty,
in the exercise of any right or power thereby conferred or any failure or
omission on the part of any Holder to first enforce any right or security given
under this Agreement or any failure or omission on the part of any Holder to
first enforce any right against the Issuer
(f) the waiver, compromise, settlement, release or termination of any
or all of the obligations, covenants or agreements of the Parent Guarantor or
the Issuer contained in this Agreement or of the Subsidiary Guarantor under the
Subsidiary Guaranty or of the payment, performance or observance thereof
(g) the failure to give notice to the Parent Guarantor or the
Issuer of the occurrence of any Default or Event of Default under the terms and
provisions of this Agreement
(h) the extension of the time for payment of any principal of, or
interest (or Make-Whole Amount, if any), on any Note owing or payable on such
Note or of the time of or for performance of any obligations, covenants or
agreements under or arising out of this Agreement or the extension or the
renewal of any thereof
(i) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in this Agreement or the Notes
or the Subsidiary Guaranty
(j) any failure, omission, delay or lack on the part of the Holders
to enforce, assert or exercise any right, power or remedy conferred on the
Holders in this Agreement or the Notes or any other act or acts on the part of
the Holders
(k) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization or arrangement under bankruptcy or similar
laws, composition with creditors or readjustment of, or other similar procedures
affecting the Parent Guarantor, the Issuer or the Subsidiary Guarantor or any of
the assets of any of them, or any allegation or contest of the validity of this
Agreement or the disaffirmance of this Agreement in any such proceeding (it
being understood that the obligations of the Parent Guarantor under this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment made with respect to the Notes is rescinded or must
otherwise be restored or returned by any Holder upon the insolvency, bankruptcy
or reorganization of the Parent Guarantor, the Issuer or the Subsidiary
Guarantor, all as though such payment had not been made)
(l) any event or action that would, in the absence of this clause,
result in the release or discharge by operation of law of the Parent Guarantor
from the performance or observance of any obligation, covenant or agreement
27
contained in this Agreement
(m) the invalidity or unenforceability of the Notes or this
Agreement or the Subsidiary Guaranty
(n) the invalidity or unenforceability of the obligations of the
Parent Guarantor under this Agreement or the Subsidiary Guarantor under the
Subsidiary Guaranty, the absence of any action to enforce such obligations of
the Parent Guarantor or the Subsidiary Guarantor, any waiver or consent by the
Parent Guarantor with respect to any of the provisions hereof or any other
circumstances which might otherwise constitute a discharge or defense by the
Parent Guarantor, including, without limitation, any failure or delay in the
enforcement of the obligations of the Parent Guarantor with respect to this
Agreement or of notice thereof or any suit or other action brought by any
shareholder or creditor of, or by, the Parent Guarantor or any other Person, for
any reason, including, without limitation, any suit or action by any shareholder
or creditor of, or by, the Parent Guarantor, the Subsidiary Guarantor or any
other Person, for any reason, including, without limitation, any suit or action
in any way attacking or involving any issue, matter or thing in respect of this
Agreement, the Notes, the Subsidiary Guaranty or any other agreement
(o) the default or failure of the Parent Guarantor or the issuer
fully to perform any of its covenants or obligations set forth in this
Agreement
(p) the impossibility or illegality of performance on the part of the
Issuer, any Guarantor or any other Person of its obligations under the Notes,
this Agreement or the Subsidiary Guaranty or any other instruments
(q) in respect of the Issuer, any other Guarantor or any other
Person, any change of circumstances, whether or not foreseen or foreseeable,
whether or not imputable to the Issuer, any other Guarantor or any other Person,
or other impossibility of performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not declared), civil
commotions, acts of God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any Federal or
28
state regulatory body or agency, change of law or any other causes affecting
performance, or other force majeure, whether or not beyond the control of the
Issuer, any other Guarantor or any other Person and whether or not of the kind
hereinbefore specified
(r) any attachment, claim, demand, charge, Lien, order, process,
encumbrance or any other happening or event or reason, similar or dissimilar to
the foregoing, or any withholding or diminution at the source, by reason of any
taxes, assessments, expenses, Indebtedness, obligations or liabilities of any
character, foreseen or unforeseen, and whether or not valid, incurred by or
against any Person, or any claims, demands, charges or Liens of any nature,
foreseen or unforeseen, incurred by any Person, or against any sums payable
under this Guaranty, so that such sums would be rendered inadequate or would be
unavailable to make the payments herein provided
(s) the failure of the Parent Guarantor, or the Subsidiary Guarantor
to receive any benefit from or as a result of their execution, delivery and
performance of this Agreement or the Subsidiary Guaranty or
(t) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Parent Guarantor in respect of the
obligations of the Parent Guarantor under this Agreement provided that the
specific enumeration of the above-mentioned acts, failures or omissions shall
not be deemed to exclude any other acts, failures or omissions, though not
specifically mentioned above, it being the purpose and intent of this paragraph
that the obligations of the Parent Guarantor hereunder shall be absolute and
unconditional to the extent herein specified and shall not be discharged,
impaired or varied except by the payment to the Holders of the principal of,
Make-Whole Amount, if any, and interest on the Notes and all other amounts due
under the Notes or this Agreement, and then only to the extent of such payments.
Without limiting any of the other terms or provisions hereof, it is understood
and agreed that in order to hold the Parent Guarantor liable hereunder, there
shall be no obligation on the part of any Holder to resort, in any manner or
form, for payment, to the Issuer, to any other Person or to the properties or
estates of any of the foregoing.
All rights of any Holder may be transferred or assigned at any
time or from time to time and shall be considered to be transferred or assigned
upon the transfer of such Holder's Note whether with or without the consent of
or notice to the Parent Guarantor or the Issuer. Without limiting the foregoing,
it is understood that repeated and successive demands may be made and recoveries
may be had hereunder as and when, from time to time, the Issuer shall default
under the terms of the Notes or this Agreement and that notwithstanding recovery
hereunder for or in respect of any given Default or Defaults by the Issuer under
the Notes or this Agreement, the provisions of this SECTION 6 shall remain in
full force and effect and shall apply to each and every subsequent Default.
29
Section 6.5. Subrogation. To the extent of any payments made under the
provisions of this SECTION 6, the Parent Guarantor shall be subrogated to the
rights of the Holder receiving such payments, but the Parent Guarantor covenants
and agrees that such right of subrogation shall be subordinate in right of
payment to the rights of any Holders for which full payment has not been made or
provided for and, to that end, the Parent Guarantor agrees not to claim or
enforce any such right of subrogation or any right of setoff or any other right
which may arise on account of any payment made by the Parent Guarantor in
accordance with the provisions of this SECTION 6, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of any
Holder or Holders against the Issuer, or the Subsidiary Guarantor, whether or
not such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuer or the Subsidiary Guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right unless and until all of the Notes owned by Persons
other than the Parent Guarantor and all other sums due or payable under this
Agreement have been fully paid and discharged or payment therefor has been
provided. If any amount shall be paid to the Parent Guarantor in violation of
the preceding sentence at any time prior to the indefeasible cash payment in
full of the Notes and all other amounts payable under this Agreement and this
SECTION 6, such amounts shall be held in trust for the benefit of the Holders
and shall forthwith be paid to the Holders to be credited and applied to the
amounts due or to become due with respect to the Notes and all other amounts
payable under this Agreement and this SECTION 6, whether matured or unmatured.
Section 6.6. Preference. The Parent Guarantor agrees that to the
extent the Issuer makes any payment on the Notes, which payment or any part
thereof is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, or is required to be repaid to a trustee, receiver or
any other Person under any bankruptcy code, common law, or equitable cause, then
and to the extent of such payment, the obligation or the part thereof intended
to be satisfied shall be revived and continued in full force and effect with
respect to the Parent Guarantor's obligations hereunder, as if said payment had
not been made. The liability of the Parent Guarantor hereunder shall not be
reduced or discharged, in whole or in part, by any payment to any Holder from
any source that is thereafter paid, returned or refunded in whole or in part by
reason of the assertion of a claim of any kind relating thereto, including, but
not limited to, any claim for breach of contract, breach of warranty,
preference, illegality, invalidity or fraud asserted by any account debtor or by
any other Person.
Section 6.7. Marshalling. None of the Holders shall be under
any obligation (a) to marshall any assets in favor of the Parent Guarantor or in
payment of any or all of the liabilities of the Issuer under or in respect of
the Notes or the obligation of the Parent Guarantor hereunder or (b) to pursue
any other remedy that the Parent Guarantor may or may not be able to pursue
itself and that may lighten the Parent Guarantor's burden, any right to which
the Parent Guarantor hereby expressly waive.
30
SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 7.1. Events of Default. Any one or more of the
following shall constitute an "Event of Default" as such term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more than
five Business Days or
(b) Default shall occur in the making of any other payment of the
principal of any Note or Make-Whole Amount, if any, thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment, including,
without limitation, pursuant to SECTION 2 hereof or
(c) Default shall occur in the observance or performance of any
covenant or agreement contained in SECTION 5.7 through SECTION 5.10 or
(d) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 Business Days after
the earlier of (1) the day on which a Responsible Officer of the Parent
Guarantor or the Issuer first obtains actual knowledge of such default, or (2)
the day on which written notice thereof is given to the Parent Guarantor or the
Issuer by the holder of any Note or
(e)(1) Default shall be made in the payment when due (whether by lapse
of time, by declaration, by call for redemption or otherwise) of the principal
of or interest on any Debt (other than the Notes) in an aggregate principal
amount in excess of $5,000,000 of the Parent Guarantor, the Issuer or any
Subsidiary thereof and such default shall continue beyond the period of grace,
if any, allowed with respect thereto or
(2) Default or the happening of any event shall occur (i) under the
Revolving Credit Agreement or (ii) under any other indenture, agreement or other
instrument under which any Debt (other than the Notes) in an aggregate principal
amount in excess of $5,000,000 of the Parent Guarantor, the Issuer or any
Subsidiary thereof may be issued and as a consequence of such default or
condition such Debt thereof or under the Revolving Credit Agreement has become,
or has been declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment or
(f) Any representation or warranty made by the Parent Guarantor, the
Issuer, or the Subsidiary Guarantor herein, or made by the Parent Guarantor, the
Issuer, or the Subsidiary Guarantor in any statement or certificate furnished by
the Parent Guarantor, the Issuer, or the Subsidiary
31
Guarantor in connection with the consummation of the issuance and delivery of
the Notes or furnished by the Parent Guarantor, the Issuer, or the Subsidiary
Guarantor pursuant hereto, is untrue in any material respect as of the date of
the issuance or making thereof or
(g) Final judgment or judgments for the payment of money aggregating
in excess of $5,000,000 is or are outstanding against the Parent Guarantor, the
Issuer or any Subsidiary thereof or against any property or assets of either and
any one of such judgments has remained unpaid, unvacated, unbonded or unstayed
by appeal or otherwise for a period of 45 days from the date of its entry or
(h) The guaranty contained in SECTION 6, shall cease to be in full
force and effect for any reason whatsoever, including, without limitation, a
determination by any governmental body or court that such agreement is invalid,
void or unenforceable or the Parent Guarantor shall contest or deny in writing
the validity or enforceability of any its obligations under SECTION 6 or
(i) A custodian, liquidator, trustee or receiver is appointed for the
Parent Guarantor, the Issuer or any Subsidiary other than the Subsidiary
Guarantor or for the major part of the property of either and is not discharged
within 60 days after such appointment or
(j) The Parent Guarantor, the Issuer or any Subsidiary other than the
Subsidiary Guarantor becomes insolvent or bankrupt, is generally not paying its
debts as they become due or makes an assignment for the benefit of creditors, or
shall convey or transfer any of its property or assets with a view to delaying,
defeating or hindering creditors or the Parent Guarantor, the Issuer or any
Subsidiary other than the Subsidiary Guarantor applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver for the Parent
Guarantor, the Issuer or such Subsidiary other than the Subsidiary Guarantor or
for the major part of the property thereof or the Parent Guarantor, the Issuer
or any Subsidiary other than the Subsidiary Guarantor admits to some or all of
its creditors at a meeting or by other means of communication that it is
insolvent or the passing of a resolution by the Parent
32
Guarantor, the Issuer or any Subsidiary other than the Subsidiary Guarantor or
the commencement or the giving of written notice of any intention with respect
to the commencement by the Parent Guarantor, the Issuer or any Subsidiary other
than the Subsidiary Guarantor of any proceeding relative to the Debt of the
Parent Guarantor, the Issuer or any Subsidiary other than the Subsidiary
Guarantor under any reorganization, restructuring, arrangement, compromise,
adjustment or postponement of debt, dissolution, winding-up, composition or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect or
(k) Bankruptcy, reorganization, arrangement, liquidation, winding-up,
adjustment, protection, relief, composition or insolvency proceedings, or other
proceedings for relief under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the Parent Guarantor, the Issuer
or any Subsidiary other than the Subsidiary Guarantor and, if instituted against
the Parent Guarantor, the Issuer or any Subsidiary other than the Subsidiary
Guarantor, are consented to or are not dismissed within 60 days after such
institution.
Section 7.2. Notice to Holders. When any Event of Default
described in the foregoing SECTION 7.1 has occurred, or if the holder of any
Note or of any other evidence of Indebtedness for borrowed money of the Parent
Guarantor or the Issuer gives any notice or takes any other action with respect
to a claimed default, the Issuer agrees to give notice within three Business
Days of such event to all holders of the Notes then outstanding.
Section 7.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a) or (b) of SECTION 7.1 has happened and is
continuing, any holder of any Note may, by notice in writing sent to the Issuer
in the manner provided in SECTION 10.6, declare the entire principal and all
interest accrued on such Note to be, and such Note shall thereupon become
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, but subject to
rescission of acceleration as provided in SECTION 7.4. When any Event of Default
described in paragraphs (a) through (h), inclusive, of said SECTION 7.1 has
happened and is continuing, the holders of 50% or more of the principal amount
of the Notes at the time outstanding may, by notice in writing to the Issuer in
the manner provided in SECTION 10.6, declare the entire principal and all
interest accrued on all Notes to be, and all Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of
Default described in paragraph (i), (j) or (k) of SECTION 7.1 has occurred, then
all outstanding Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the Issuer will
forthwith pay to the holders of the Notes the entire principal and interest
accrued on the Notes and, to the extent not prohibited by applicable law, an
amount as liquidated damages for the loss of the bargain evidenced hereby (and
not as a penalty) equal to the Make-Whole Amount, determined as of the date on
which the Notes shall so become due and payable. No course of dealing on the
part of the holder or holders of any Notes nor any delay or failure on the part
of any holder of Notes to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies. The
Issuer further agrees, to the extent permitted by law, to pay to the holder or
holders of the Notes all costs and expenses incurred by them in the collection
of any Notes upon any default hereunder or thereon, including reasonable
compensation to such holder's or holders' attorneys for all services rendered in
connection therewith.
Section 7.4. Rescission of Acceleration. The provisions of SECTION
7.3 are subject to the condition that if the principal of and accrued interest
on all or any outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default described in paragraphs (a)
through (h), inclusive, of SECTION7.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Issuer, rescind and annul such declaration and the consequences
thereof provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
33
monies due pursuant to the Notes or this Agreement
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal, interest
or premium on the Notes which has become due and payable solely by reason of
such declaration under SECTION 7.3) shall have been duly paid and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to SECTION 8.1 and provided further, that
no such rescission and annulment shall extend to or affect any subsequent
Default or Event of Default or impair any right consequent thereto.
SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS.
Section 8.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Issuer, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Issuer shall have obtained
the consent in writing of the holders of at least 66-2/3% in aggregate principal
amount of outstanding Notes provided that without the written consent of the
holders of all of the Notes then outstanding, no such amendment or waiver shall
be effective (a) which will change the time of payment of the principal of or
the interest on any Note or change the principal amount thereof or change the
rate of interest thereon, or (b) which will change any of the provisions with
respect to optional prepayments, or (c) which will change the percentage of
holders of the Notes required to consent to any such amendment or waiver of any
of the provisions of this SECTION 8, SECTION 7 or SECTION 6.
Section 8.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Issuer will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Issuer and shall be
afforded the opportunity of considering the same and shall be supplied by the
Issuer with sufficient information to enable it to make an informed decision
with respect thereto. The Issuer will not, directly or indirectly, pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as consideration for or as an
inducement to entering into by any holder of Notes of any waiver or amendment of
any of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently offered and paid, on the same terms, ratably to the
holders of all Notes then outstanding. Promptly and in any event within 30 days
of the date of execution and delivery of any such waiver or amendment, the
Issuer shall provide a true, correct and complete copy thereof to each of the
holders of the Notes.
Section 8.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Issuer,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
34
SECTION 9. INTERPRETATION OF AGREEMENT DEFINITIONS'.
Section 9.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Acquiring Person" means a Group or a "person" within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended or any successor provision.
"Affiliate" shall mean any Person (other than the Parent Guarantor or a
Subsidiary) (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Parent
Guarantor or the Issuer, (b) which beneficially owns or holds 5% or more of any
class of the Voting Stock of the Parent Guarantor or the Issuer or (c) 5% or
more of the Voting Stock (or in the case of a Person which is not a corporation,
5% or more of the equity interest) of which is beneficially owned or held by the
Parent Guarantor, the Issuer or a Subsidiary. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Asset Disposition" shall have the meaning assigned thereto in
SECTION 2.4.
"Asset Disposition Noteholder Notice" shall have the meaning assigned
thereto in SECTION 2.4.
"Asset Disposition Prepayment Date" shall have the meaning assigned
thereto in SECTION 2.4.
"Asset Disposition Prepayment Offer" shall have the meaning assigned
thereto in SECTION 2.4.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in Norfolk, Virginia or New York, New York are required
by law to close or are customarily closed.
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such Person
in accordance with GAAP.
"Change of Control" means the earliest to occur of: (a) the date a
tender offer or exchange offer results in an Acquiring Person (other than a
member of the Current Stockholder Group), directly or indirectly, beneficially
owning 50% or more of the Voting Stock of the Parent Guarantor then outstanding,
or (b) the date an Acquiring Person (other than a member of the Current
Stockholder Group) becomes, directly or indirectly, the beneficial owner of 50%
or more of the Voting Stock of the Parent Guarantor then outstanding, or (c) the
date of a merger or statutory share exchange between the Parent Guarantor and
any other Person, a consolidation of the Parent Guarantor with any other Person
or an acquisition of any other Person by the Parent Guarantor, if immediately
after such event, the Acquiring
35
Person (other than a member of the Current Stockholder Group) shall hold 50% or
more of the Voting Stock of the Parent Guarantor outstanding immediately after
giving effect to such merger, statutory share exchange, consolidation or
acquisition.
"Change of Control Delayed Prepayment Date" shall have the meaning
assigned thereto in SECTION 2.3(B).
"Change of Control Prepayment Date" shall have the meaning assigned
thereto in SECTION 2.3(A).
"Closing Date" shall have the meaning assigned thereto in SECTION 1.2.
"Competitor" shall mean any Person which is substantially engaged in
business described under SIC Code Classification 5331, provided that:
(a) the provision of investment advisory services by a
Person to a Plan which is owned or controlled by a Person which would otherwise
be a Competitor shall not of itself cause the Person providing such services to
be deemed to be a Competitor
(b) in no event shall an Institutional Holder be deemed a Competitor
unless such Institutional Holder controls, or is controlled by, or is under
common control with, a Person that is substantially engaged in business
described under SIC Code Classification 5331 and
(c) an Institutional Holder that would otherwise be deemed a Competitor
pursuant to the foregoing provisions of this definition by virtue of its
ownership or control as a portfolio investment of the equity securities of any
Person engaged in business described under SIC Code Classification 5331, shall
not be deemed a Competitor if such Institutional Holder has established
procedures which will prevent confidential information supplied to such
Institutional Holder by the Parent Guarantor or the Issuer from being
transmitted or otherwise made available to such Person.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations from time to time promulgated thereunder.
"Confidential Information" shall have the meaning assigned thereto in
SECTION 5.18.
"Consolidated EBITDA" for any period means the sum of (a) Consolidated
Net Income during such period plus (to the extent deducted in determining
Consolidated Net Income) (b) all provisions for any Federal, state or local
income taxes made by the Parent Guarantor and its Subsidiaries during such
period, plus (c) all provisions for depreciation and amortization (other than
amortization of debt discount) made by the Parent Guarantor and its Subsidiaries
during such period, plus (d) Consolidated Interest Expense during such period
minus (e) extraordinary gains.
"Consolidated Fixed Charges" for any period shall mean on a
consolidated basis the sum of (a) all Rentals (other than Rentals on Capitalized
Leases) payable during such period by the Parent Guarantor and its Subsidiaries,
and (b) all Interest Expense on all Indebtedness of the Parent Guarantor and its
Subsidiaries payable during such period.
"Consolidated Funded Debt" shall mean all Funded Debt of the Parent
Guarantor and its Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"Consolidated Interest Expense" shall mean all Interest Expense of the
Parent Guarantor and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP after eliminating intercompany items.
"Consolidated Net Income" for any period shall mean the net income or
loss of the Parent Guarantor and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Income Available for Consolidated Fixed Charges" for
any period shall mean the sum of (a) Consolidated Net Income during such period
plus (to the extent deducted in determining Consolidated Net Income), (b) all
provisions for any Federal, state or other income taxes made by the Parent
Guarantor and its Subsidiaries for such period in accordance with GAAP, and (c)
Consolidated Fixed Charges during such period.
"Consolidated Net Worth" shall mean the result of (a) Consolidated
Total Assets minus (b) Consolidated Total Liabilities.
"Consolidated Senior Funded Debt" shall mean all Senior Funded Debt of
the Parent Guarantor and its Subsidiaries, determined on a consolidated basis
36
eliminating inter-company items.
"Consolidated Total Assets" shall mean as of the date of any
determination thereof, total assets of the Parent Guarantor and its Subsidiaries
determined on a consolidated basis in accordance with GAAP after eliminating
intercompany items.
"Consolidated Total Debt" shall mean as of the date of any
determination thereof, all Debt of the Parent Guarantor and its Subsidiaries,
determined on a consolidated basis eliminating intercompany items.
"Consolidated Total Liabilities" shall mean as of the date of any
determination thereof, total liabilities of the Parent Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Current Stockholder Group" shall mean any of the following Persons or
any combination of the following Persons: (a) J. Douglas Perry, (b) Macon F.
Brock, Jr., (c) H. Ray Compton, (d) John F. Megrue, (e) Alan L. Wurtzel, (f)
Frank Doczi, (g) the SK Equity Fund, L.P., (h) Thomas A. Saunders III, (i) Allan
W. Karp, (j) the spouse of any Person described in clauses (a) or (b), (k) any
family trust controlled by any of the Persons described in clauses (a) or (b),
(l) any family trust which has as its principle income beneficiaries or
remaindermen any of the Persons described in clauses (a) or (b), or (m) any
Person who is an officer of the Parent Guarantor or the Issuer as described in
SCHEDULE II hereto and holds the office of Vice President, Senior Vice
President, Executive Vice President or President.
"Debt" of any Person shall mean and include all (a) obligations of such
Person for borrowed money or which have been incurred in connection with the
acquisition of property or assets, (b) obligations secured by any Lien upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (c) obligations created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, (d)
Capitalized Rentals, (e) reimbursement obligations of such Person in respect of
credit enhancement instruments including, without limitation, letters of credit
and (f) Guaranties of obligations of others of the
37
character referred to in this definition provided that "Debt" shall not include
Unfunded Pension Liabilities of the Plans of the Parent Guarantor and its
Subsidiaries in an amount not to exceed $5,000,000.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Environmental Law" shall mean any international, federal, state or
local statute, law, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use and handling of polychlorinated biphenyls or
asbestos, to the disposal, treatment, storage or management of hazardous or
solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or
to exposure to toxic or hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid Hazardous Substances and any
regulation, order, notice or demand issued pursuant to such law, statute or
ordinance, in each case applicable to the property of the Issuer and its
Subsidiaries or the operation, construction or modification of any thereof,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous
and Solid Waste Amendments Act of 1984, the Hazardous Materials Transportation
Act, as amended, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act
of 1966, as amended, the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the National Environmental
Policy Act of 1975, the Oil Pollution Act of 1990 and any similar or
implementing state law, and any state statute and any further amendments to
these laws providing for financial responsibility for cleanup or other actions
with respect to the release or threatened release of Hazardous Substances or
crude oil, or any
38
raction thereof, and all rules, regulations, guidance documents and publications
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Parent Guarantor and the Issuer, a member of a controlled
group of corporations or a controlled group of trades or businesses, as
described in section 414(b) and 414(c), respectively, of the Code or Section
4001 of ERISA.
"Event of Default" shall have the meaning set forth in SECTION 7.1.
"Funded Debt" of any Person means (a) all Debt of such Person having a
final maturity of one or more than one year from the date of origin thereof (or
which is renewable or extendible at the option of the obligor for a period or
periods more than one year from the date of origin), including all payments in
respect thereof that are required to be made within one year from the date of
any determination of Funded Debt, whether or not the obligation to make such
payments shall constitute a current liability of the obligor under GAAP, and (b)
all Guaranties by such Person of Funded Debt of others provided, that there
shall be included in such calculation of Funded Debt an amount equal to the
lowest mean of the principal amount outstanding under each revolving credit
agreement of such Person outstanding on the close of each Business Day during
any period of 30 consecutive days during the preceding 13-month period.
"GAAP" shall mean generally accepted accounting principles at the time
in the United States of America.
"Governmental Authority" shall mean
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Parent Guarantor, the Issuer
or any Subsidiary conducts all or any part of its business, or which
39
asserts jurisdiction over any properties of the Parent Guarantor, the
Issuer or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.
"Group" shall mean any group of related persons constituting a "group"
for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended, or any successor provision.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness or obligation, or (2)
to maintain working capital or any balance sheet or income statement condition
or otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, (c) to lease property or to purchase Securities
or other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (d) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Guarantor" shall mean the Parent Guarantor or the Subsidiary Guarantor.
"Hazardous Substance" shall mean any hazardous or toxic material,
40
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
federal authority having jurisdiction over the property of the Issuer and its
Subsidiaries or its use, including but not limited to any material, substance or
waste which is: (a) defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S. Section 1317), as amended (b)
regulated as a hazardous waste under Section 1004 or Section 3001 of the Federal
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act (42 U.S. Section 6901 et seq.), as amended (c) defined as a hazardous
substance under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S. Section 9601 et seq.), as amended or
(d) defined or regulated as a hazardous substance or hazardous waste under any
rules or regulations promulgated under any of the foregoing statutes.
"Holder" shall mean, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Issuer pursuant to
SECTION 10.1.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (a) obligations of such Person for borrowed money or which have been
incurred in connection with the acquisition of property or assets, (b)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of such
obligations, (c) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of property, (d) Capitalized Rentals (e) Guaranties of
obligations of others of the character referred to in this definition, (f)
obligations of such Person in respect of mandatorily redeemable Preferred Stock
and (g) Swaps of such Person.
"Insolvent" with respect to any Person shall mean a time when any of the
41
following events shall have occurred whereby such Person (a) shall generally not
pay, or shall be unable to pay, or shall admit in writing its inability to pay
its debts as such debts become due or (b) shall make an assignment for the
benefit of creditors, or petition or apply to any tribunal for the appointment
of a custodian, receiver, or trustee for it or a substantial part of its assets
or (c) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect or (d) shall have had any
such petition or application filed or any such proceeding commenced against it
in which an order for relief is entered or an adjudication or appointment is
made, and which remains undismissed for a period of sixty (60) days or more or
(e) shall take any corporate action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding, or order for relief
or the appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties or (f) shall suffer any such custodianship,
receivership, or trusteeship to continue undischarged for a period of sixty (60)
days or more.
"Institutional Holder" shall mean any of the following Persons: (a) any
bank, savings and loan association, savings institution, trust company or
national banking association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance company, (d) any
fraternal benefit society, (e) any pension, retirement or profit-sharing trust
or fund within the meaning of Title I of ERISA or for which any bank, trust
company, national banking association or investment adviser registered under the
Investment Advisers Act of 1940, as amended, is acting as trustee or agent, (f)
any investment company or business development company, as defined in the
Investment Issuer Act of 1940, as amended, (g) any small business investment
company licensed under the Small Business Investment Act of 1958, as amended,
(h) any broker or dealer registered under the Securities Exchange Act of 1934,
as amended, or any investment adviser registered under the Investment Advisers
Act of 1940, as amended, (i) any government, any public employees' pension or
retirement system, or any other government agency supervising the investment of
public funds, (j) any other entity
42
all of the equity owners of which are Institutional Holders or (k) any other
Person which may be within the definition of "qualified institutional buyer" as
such term is used in Rule 144A, as from time to time in effect, promulgated
under the Securities Act of 1933, as amended.
"Interest Expense" of any Person for any period shall mean all interest
(including the interest component on Rentals on Capitalized Leases) and all
amortization of debt discount and expense on any particular Indebtedness of such
Person (including, without limitation, payment-in-kind, zero coupon and other
like Securities) for which such calculations are being made, all as determined
in accordance with GAAP.
"Issuer" shall mean Dollar Tree Distribution, Inc., a Virginia
corporation, and any Person who succeeds to all, or substantially all, of the
assets and business of Dollar Tree Distribution, Inc.
"Issuer Notice" shall have the meaning assigned thereto in SECTION 2.3
(A).
"Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. For the purposes of this Agreement, the Parent Guarantor,
the Issuer or a Subsidiary shall be deemed to be the owner of any property which
it has acquired or holds subject to a conditional sale agreement, Capitalized
Lease or other arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security purposes and such
retention or vesting shall constitute a Lien.
"Make-Whole Amount" shall mean in connection with any prepayment or
acceleration of the Notes the excess, if any, of (a) the aggregate present value
as of the date of such prepayment or payment of each dollar of principal of the
Notes being prepaid or paid (taking into account the application of such
prepayment) and the amount of interest (exclusive of interest accrued to the
date of prepayment or payment) that would have been payable in respect of such
dollar if such prepayment or payment had not been made, determined by
discounting such amounts at the
43
Reinvestment Rate from the respective dates on which they would have been
payable, over (b) 100% of the principal amount of the outstanding Notes being
prepaid or paid. If the Reinvestment Rate is equal to or higher than 7.29%, then
the Make-Whole Amount with respect to the Notes shall be zero. For purposes of
any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the
yield reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen reporting
on-line intraday trading in the United States government Securities) at 11:00
A.M. (New York, New York time) on the date of determination for the actively
traded United States government Securities having a maturity (rounded to the
nearest month) corresponding to the remaining Weighted Average Life to Maturity
of the principal of the Notes being prepaid or paid (taking into account the
application of such prepayment) or (2) in the event that no nationally
recognized trading screen reporting on-line intraday trading in the actively
traded United States government Securities is available, Reinvestment Rate shall
mean the sum of 0.50%, plus the arithmetic mean of the yields for the two
columns under the heading "Week Ending" published in the Statistical Release
under the caption "Treasury Constant Maturities" for the maturity (rounded to
the nearest month) corresponding to the Weighted Average Life to Maturity of the
principal of the Notes being prepaid or paid (taking into account the
application of such prepayment). If no maturity exactly corresponds to such
Weighted Average Life to Maturity, yields for the two published maturities most
closely corresponding to such Weighted Average Life to Maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the "Reinvestment Rate", the most recent Statistical
Release published prior to the date of determination of the Make-Whole Amount
shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which establishes yields on
actively traded U.S. Government Securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be designated
by the holders of 51% in aggregate principal amount of the outstanding Notes of
such series.
"Weighted Average Life to Maturity" of the principal amount of the
Notes being prepaid or paid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal. The
term "Remaining Dollar-Years" of such principal shall mean the amount obtained
by (1) multiplying (i) the remainder of (A) the amount of principal that would
have become due on each scheduled payment date if such prepayment or payment had
not been made, less (B) the amount of principal on the Notes scheduled to become
due on such date after giving effect to such prepayment or payment and the
application thereof in accordance with the provisions of SECTION 2, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and such scheduled payment date, and (2)
totaling the products obtained in (1).
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects of
the Parent Guarantor and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Parent Guarantor and its Subsidiaries, taken as a whole, or (b) the ability of
the Parent Guarantor or the Issuer to perform its obligations under this
Agreement and the Notes, or (c) the validity or enforceability of this Agreement
or the Notes.
"Memorandum" shall mean the Confidential Private Placement Memorandum
dated February 14, 1997 prepared by First Union Capital Markets
44
Corp.
"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Parent Guarantor and/or one or more of its Subsidiaries.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Worth Reset Date" shall mean the last day of the fiscal quarter of
the Parent Guarantor in which the minimum level of Consolidated Net Worth
required to be maintained pursuant to SECTION 5.7(B) equals or exceeds
$150,000,000.
"Noteholder Notice" shall have the meaning assigned thereto in SECTION
2.3(A).
"Overdue Rate" shall mean 9.29% per annum.
"Parent Guarantor" shall mean Dollar Tree Stores, Inc., a Virginia
corporation, and any Person who succeeds to all, or substantially all, of the
assets and business of Dollar Tree Stores, Inc.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Plan" shall mean a "pension plan" that is subject to ERISA, and which
is established or maintained by the Parent Guarantor, Issuer or any ERISA
Affiliate or as to which the Parent Guarantor, Issuer or any ERISA Affiliate
contributed or is a member or otherwise may have any liability.
"Preferred Stock" shall mean in respect of any corporation, shares of
the capital stock of such corporation which are entitled to preference or
priority over any other shares of the capital stock of such corporation in
respect of payment of dividends or distribution of assets upon liquidation.
"Priority Debt" shall mean and include the aggregate principal amount
of (i) all Debt secured by Liens permitted by SECTION 5.10(I) and (ii) all
Funded Debt of Subsidiaries (other than (1) unsecured Funded Debt of the Issuer,
(2) Funded Debt of a Subsidiary to the Parent Guarantor or to a Wholly-owned
Subsidiary, or (3) Qualified Funded Debt of the Subsidiary Guarantor).
"Purchasers" shall have the meaning set forth in SECTION 1.1.
"Qualified Funded Debt" shall mean all Funded Debt of the Subsidiary
Guarantor incurred under and pursuant to a Guaranty which guarantees Funded Debt
of the Issuer otherwise permitted pursuant to SECTION 5.9.
"Rentals" shall mean and include as of the date of any determination
thereof all payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Parent Guarantor or a Subsidiary, as lessee or
sublessee under a lease of real or personal property.
"Reportable Event" shall mean a "reportable event" as described in
Section 4043 of ERISA for which the notice requirement to the PBGC has not been
waived (provided that the loss of qualification of a Plan and the failure to
meet the minimum funding standard of Section 412 of the Code or Section 302 of
ERISA shall be a "Reportable Event" regardless of the issuance of any waiver of
the reporting requirement of PBGC).
"Required Holders" shall mean the holders of 66-2/3% of the aggregate
principal amount of the Note outstanding.
"Reset Net Worth Amount" shall mean the minimum level of Consolidated
Net Worth required to be maintained pursuant to SECTION 5.7(B) on the Net Worth
Reset Date.
"Responsible Officer" shall mean the President, the Chief Executive
Officer, Chief Financial Officer or the Treasurer of the Parent Guarantor or the
Issuer, as the case may be.
"Revolving Credit Agreement" shall mean the Amended and Restated
Revolving Credit Agreement dated as of September 27, 1996 among the Parent
Guarantor, the Issuer, the Subsidiary Guarantor, the First National Bank of
Boston, as agent, and the other banks who are signatories thereto, as amended,
or any replacement, refinancing or extension thereof.
"Rolling Four Quarters" shall mean a period of four consecutive fiscal
quarters treated as a single accounting period.
45
"Securities Act" shall mean the Securities Act of 1993, as amended from
time to time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Funded Debt" shall mean all Funded Debt of a Person other than
Funded Debt which is expressly subordinated or junior in right of payment to the
Notes.
"SIC Code Classification 5331" shall mean the Standard Industrial
Classification Number 5331 prepared by the Office of Management and Budget, as
in effect on the date of the Agreement and set forth in SCHEDULE III hereto.
The term "subsidiary" shall mean, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
subsidiaries or such Person and one or more of its subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its subsidiaries or such Person and one or more
of its subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a subsidiary of the Parent Guarantor.
"Subsidiary Guarantor" shall mean Dollar Tree Management, Inc., a
Virginia corporation, and any Person who succeeds to all, or substantially all,
of the assets and business of Dollar Tree Management, Inc.
"Subsidiary Guaranty" shall mean a guaranty agreement substantially in
the form of EXHIBIT C delivered by the Subsidiary Guarantor.
"Swap" shall mean, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most
recently ended fiscal quarter of such Person, based upon the assumption that
such Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined.
"Unfunded Pension Liability" of any Plan shall mean the amount, if any,
by which the actuarial accumulated plan benefits under the Plan as of the close
of its most recent plan year, determined in accordance with statement of
Financial Accounting Standards No 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan, exceeds
the fair market value of the assets allocable thereto determined in accordance
with Section 412 of the Code.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) shall be beneficially owned by
the Parent Guarantor and/or one or more of its Wholly-owned Subsidiaries.
46
Section 9.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 9.3. Directly or Indirectly. Where any provision in
this Agreement refers to action to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
SECTION 10. MISCELLANEOUS.
Section 10.1. Registered Notes. The Issuer shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes, and the Issuer will register or transfer or cause to be registered or
transferred, as hereinafter provided, any Note issued pursuant to this
Agreement.
At any time and from time to time the holder of any Note which
has been duly registered as hereinabove provided may transfer such Note upon
surrender thereof at the principal office of the Issuer duly endorsed or
accompanied by a written instrument of transfer duly executed by the holder of
such Note or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement.
Payment of or on account of the principal, premium, if any, and interest on any
Note shall be made to or upon the written order of such holder.
Section 10.2. Exchange of Notes. At any time and from time to time,
upon surrender of such Note at its office, the Issuer will deliver in exchange
therefor, without expense to such holder, except as set forth below, a Note for
the same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered, or Notes in the denomination of $750,000 (or such lesser
amount as shall constitute 100% of the Notes of such holder) or any amount in
excess thereof as such holder shall specify, dated as of the date to which
interest has been paid on the Note so surrendered or, if such surrender is prior
to the payment of any interest thereon, then dated as of the date of issue,
registered in the name of such Person or Persons as may be designated by such
holder, and otherwise of the same form and tenor as the Notes so surrendered for
exchange. The Issuer may require the payment of a sum sufficient to cover any
stamp tax or governmental charge imposed upon such exchange or transfer.
47
Section 10.3. Loss, Theft, Etc. of Notes. Upon receipt of
evidence satisfactory to the Issuer of the loss, theft, mutilation or
destruction of any Note, and in the case of any such loss, theft or destruction
upon delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Issuer, or in the event of such
mutilation upon surrender and cancellation of the Note, the Issuer
will make and deliver without expense to the holder thereof, a new
Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent Institutional Holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the Issuer.
Section 10.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Issuer agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to the charges and disbursements of Chapman
and Cutler, your special counsel, duplicating and printing costs and charges for
shipping the Notes, adequately insured to you at your home office or at such
other place as you may designate, and all such expenses relating to any
amendments, waivers or consents pursuant to the provisions hereof (whether or
not the same are actually executed and delivered), including, without
limitation, any such amendments, waivers, or consents resulting from any
work-out, renegotiation or restructuring relating to the performance by the
Issuer of its obligations under this Agreement and the Notes. The Issuer also
agrees to pay, within five Business Days of receipt thereof, supplemental
statements of Chapman and Cutler for disbursements unposted or not incurred as
of the Closing Date. The Issuer further agrees that it will pay and save you
harmless against any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be payable in connection
with the execution and delivery of this Agreement or the Notes, whether or not
any Notes are then outstanding. The Issuer agrees to protect and indemnify you
against any liability for any and all brokerage fees and commissions payable or
claimed to be payable to any Person in connection with the transactions
contemplated by this Agreement. Without limiting the foregoing, the Issuer
agrees to pay the cost of obtaining the private placement number for the Notes
and authorizes the submission of such information as may be required by Standard
& Poor's CUSIP Service Bureau for the purpose of obtaining such number.
Section 10.5. Powers and Rights Not Waived Remedies Cumulative.
No delay or failure on the part of the holder of any
Note in the exercise of any power or right shall operate as a waiver thereof
nor shall any single or partial exercise of the same preclude any other or
further exercise thereof, or the exercise of any other power or right, and the
rights and remedies of the holder of any Note are cumulative to, and are not
exclusive of, any rights or remedies any such holder would otherwise have.
Section 10.6. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed prepaid by registered or
48
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to you at your address appearing on SCHEDULE I to this Agreement
or such other address as you or the subsequent holder of any Note initially
issued to you may designate to the Issuer in writing, and if to the Issuer,
delivered or mailed by registered or certified mail or overnight air courier, or
by facsimile communication, to the Issuer at 2555 Ellsmere Avenue, Norfolk,
Virginia 23513, Attention: Chief Financial Officer and if to the Parent
Guarantor at 2555 Ellsmere Avenue, Norfolk, Virginia 23513, Attention: Chief
Financial Officer or to such other address as the Issuer or the Parent Guarantor
may in writing designate to you or to a subsequent holder of the Note initially
issued to you provided, however, that a notice to you by overnight air courier
shall only be effective if delivered to you at a street address designated for
such purpose in Schedule I, and a notice to you by facsimile communication shall
only be effective if confirmed by transmission of a copy thereof by prepaid
overnight air courier, or, in either case, as you or a subsequent holder of any
Note initially issued to you may designate to the Issuer in writing.
Section 10.7. Successors and Assigns. This Agreement shall be
binding upon the Parent Guarantor and the Issuer and their successors and
assigns and shall inure to your benefit and to the benefit of your successors
and assigns, including each successive holder or holders of any Notes.
Section 10.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Parent Guarantor and the
Issuer herein and in any certificates delivered pursuant hereto, whether or not
in connection with the Closing Dates, shall survive the closing and the delivery
of this Agreement and the Notes.
Section 10.9. Severability. Should any part of this Agreement
for any reason be declared invalid or unenforceable, such decision
shall not affect the validity or enforceability of any remaining
portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid or unenforceable portion
thereof eliminated and it is hereby declared the intention of the parties hereto
that they would have executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for any reason, be
hereafter declared invalid or unenforceable.
SECTION 10.10. GOVERNING LAW. THIS AGREEMENT AND THE NOTES
ISSUED AND SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH NEW YORK LAW, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Section 10.11. Submission to Jurisdiction. Any legal action or
proceeding with respect to this Agreement or the Notes or any document related
thereto may be brought in the courts of the United States of America for the
49
Southern District of New York, and, by execution and delivery of this Agreement,
the Parent Guarantor and the Issuer each hereby accepts for itself and in
respect of its property generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts. The Parent Guarantor and Issuer each
hereby irrevocably and unconditionally waives any objection which it may have
based on improper venue or forum non conveniens to the conduct of any proceeding
in any such court and waives personal service of any and all process upon it,
and consents that all such service of process be made by delivery to the Parent
Guarantor's and the Issuer's agent referred to below at such agent's address set
forth below and that service so made shall be deemed to be completed upon actual
receipt provided, that a copy of such service of process shall be delivered to
the Parent Guarantor as provided in SECTION 10.6 hereof. The Parent Guarantor
and the Issuer hereby irrevocably appoints CT Corporation System, with an office
on the date hereof at 1633 Broadway, New York, New York, 10019, as its
respective agent for the purpose of accepting service of any process within the
State of New York. Nothing contained in this section shall affect the right of
any holder of Notes to serve legal process in any other manner permitted by law
or to bring any action or proceeding in the courts of any jurisdiction against
the Issuer or to enforce a judgment obtained in the courts of any other
jurisdiction.
Section 10.12. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and
shall not affect the meaning or construction of any of the
provisions hereof.
50
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and this Agreement
may be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
DOLLAR TREE DISTRIBUTION, INC.
By: /s/ Macon F. Brock, Jr.
Title: Chief Executive Officer President
DOLLAR TREE STORES, INC.
By: /s/ Macon F. Brock, Jr.
Title: Chief Executive Officer President
Accepted as of April 30, 1997.
51