Exhibit 4.3
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NEW ENGLAND INVESTMENT COMPANIES, L.P.
$110,000,000
6.54% Senior Notes due January 9, 2003
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FORM OF
NOTE PURCHASE AGREEMENT
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Dated as of December 28, 1995
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TABLE OF CONTENTS
Section Page
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1. AUTHORIZATION OF NOTES ................................................. 1
2. SALE AND PURCHASE OF NOTES ............................................. 1
3. CLOSING ................................................................ 2
4. CONDITIONS TO CLOSING .................................................. 2
4.1. Representations and Warranties ................................... 2
4.2. Performance; No Default .......................................... 3
4.3. Compliance Certificates .......................................... 3
4.4. Opinions of Counsel .............................................. 3
4.5. Purchase Permitted By Applicable Law, etc. ....................... 3
4.6. Sale of Other Notes .............................................. 4
4.7. Payment of Special Counsel Fees .................................. 4
4.8. Private Placement Number ......................................... 4
4.9. Changes in Structure ............................................. 4
4.10. Proceedings and Documents ........................................ 4
4.11. Rating ........................................................... 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY .......................... 5
5.1. Organization; Power and Authority ................................ 5
5.2. Authorization, etc. .............................................. 5
5.3. Disclosure ....................................................... 6
5.4. Organization and Ownership of Shares of Subsidiaries ............. 6
5.5. Financial Statements ............................................. 7
5.6. Compliance with Laws, Other Instruments, etc. .................... 7
5.7. Governmental Authorizations, etc. ................................ 8
5.8. Litigation; Observance of Statutes and Orders .................... 8
5.9. Taxes ............................................................ 8
5.10. Title to Property; Leases ........................................ 8
5.11. Licenses, Permits, etc. .......................................... 9
5.12. Compliance with ERISA ............................................ 9
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5.13. Private Offering by the Company ................................. 10
5.14. Use of Proceeds; Margin Regulations ............................. 10
5.15. Existing Indebtedness ........................................... 11
5.16. Foreign Assets Control Regulations, etc. ........................ 11
5.17. Status under Certain Statutes ................................... 11
5.18. Status of Obligations under this Agreement and the Notes ........ 11
5.19. Restrictions on Subsidiaries .................................... 12
6. REPRESENTATIONS OF THE PURCHASER ...................................... 12
6.1. Purchase for Investment ......................................... 12
6.2. Source of Funds ................................................. 12
7. INFORMATION AS TO COMPANY ............................................. 14
7.1. Financial and Business Information .............................. 14
7.2. Officer's Certificate ........................................... 16
7.3. Inspection ...................................................... 17
8. PREPAYMENT OF THE NOTES ............................................... 17
8.1. Optional Prepayments with Make-Whole Amount ..................... 17
8.2. Special Prepayment for Change of Control. ....................... 18
8.3. Prepayments in Connection with Transfers ........................ 19
8.4. Allocation of Partial Prepayments ............................... 20
8.5. Maturity; Surrender, etc. ....................................... 20
8.6. Purchase of Notes ............................................... 20
8.7. Make-Whole Amount ............................................... 21
9. AFFIRMATIVE COVENANTS ................................................. 22
9.1. Compliance with Law ............................................. 22
9.2. Insurance ....................................................... 23
9.3. Maintenance of Properties ....................................... 23
9.4. Payment of Taxes ................................................ 23
9.5. Existence, etc. ................................................. 24
9.6. Keeping of Books. ............................................... 24
10. NEGATIVE COVENANTS .................................................... 24
10.1. Transactions with Affiliates .................................... 24
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10.2. Limitations on Mergers, Consolidations and Sales of Substantially
All Assets ...................................................... 25
10.3. Transfer of Assets .............................................. 25
10.4. Disposal of Ownership of a Subsidiary ........................... 27
10.5. Leverage Ratios ................................................. 28
10.6. Interest Coverage Ratio ......................................... 28
10.7. Liens ........................................................... 28
10.8. Indebtedness .................................................... 28
10.9. Restricted Payments ............................................. 29
10.10.Investments ..................................................... 29
10.11.Limitation on Acquisitions ...................................... 29
10.12.Restrictions Affecting Subsidiaries ............................. 29
11. EVENTS OF DEFAULT ..................................................... 30
12. REMEDIES ON DEFAULT, ETC. ............................................. 32
12.1. Acceleration .................................................... 32
12.2. Other Remedies .................................................. 33
12.3. Rescission ...................................................... 33
12.4. No Waivers or Election of Remedies, Expenses, etc. .............. 34
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ......................... 34
13.1. Registration of Notes ........................................... 34
13.2. Transfer and Exchange of Notes .................................. 35
13.3. Replacement of Notes ............................................ 35
14. PAYMENTS ON NOTES ..................................................... 36
14.1. Place of Payment ................................................ 36
14.2. Home Office Payment ............................................. 36
15. EXPENSES, ETC. ........................................................ 37
15.1. Transaction Expenses ............................................ 37
15.2. Survival ........................................................ 37
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT .......... 37
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17. AMENDMENT AND WAIVER .................................................. 38
17.1. Requirements .................................................... 38
17.2. Solicitation of Holders of Notes ................................ 38
17.3. Binding Effect, etc. ............................................ 39
17.4. Notes held by Company, etc. ..................................... 39
18. NOTICES ............................................................... 39
19. REPRODUCTION OF DOCUMENTS ............................................. 40
20. CONFIDENTIAL INFORMATION .............................................. 40
21. SUBSTITUTION OF PURCHASER ............................................. 41
22. MISCELLANEOUS ......................................................... 42
22.1. Successors and Assigns .......................................... 42
22.2. Payments Due on Non-Business Days ............................... 42
22.3. Severability .................................................... 42
22.4. Construction .................................................... 42
22.5. Counterparts .................................................... 43
22.6. Governing Law ................................................... 43
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS*
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and
Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
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SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.15 -- Existing Indebtedness and Liens
SCHEDULE 10.7 -- Existing Investments
SCHEDULE 13.2 -- Competitors
EXHIBIT 1 -- Form of 6.54% Senior Note due January 9, 2003*
EXHIBIT 4.4(a)(i) -- Form of Opinion of Special Counsel for the
Company
EXHIBIT 4.4(a)(ii) -- Form of Opinion of General Counsel for the General
Partner
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel
for the Purchasers
* Those schedules and exhibits marked with an asterisk are filed herewith.
Except to the extent covered by an application for an order pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended, granting
confidential treatment of certain contractual provisions, which application
may be filed in the future, the Company agrees to furnish supplementally a
copy of any omitted schedule or exhibit to the Commission upon request.
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the Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amount
specified opposite its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance by any
Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Milbank, Tweed, Hadley & McCloy,
One Chase Manhattan Plaza, New York, New York 10005, at 11:00 a.m., New York
time, at a closing (the "CLOSING") on January 9, 1996, or on such other Business
Day thereafter on or prior to January 11, 1996 as may be agreed upon by the
Company and you and the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $1,000,000 (multiples
of $200,000) as you may request) dated the date of the Closing and registered in
your name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Company to account number 53174819 at Bank of Boston, 100 Federal
Street, Boston MA, ABA 011 000 390. If at the Closing the Company shall fail to
tender such Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
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4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Section 5.14) no Default or Event of Default shall have occurred and be
continuing.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. The Company shall have delivered to you an
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Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The General Partner shall have delivered
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to you a certificate certifying as to the resolutions attached thereto and other
partnership proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from Debevoise & Plimpton, special
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counsel for the Company, and from Edward N. Wadsworth, Esq., General Counsel for
the General Partner, covering the matters set forth in Exhibits 4.4(a)(i) and
4.4(a)(ii), respectively, and each covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs such counsel to deliver such opinions to you)
and (b) from Milbank, Tweed, Hadley & McCloy, your special New York counsel in
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connection with such transactions, substantially in the form set forth in
Exhibit 4.4(b) and covering such other matters incident to such transactions as
you may reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System) or
any order, judgment, decree or ruling
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of any court, arbitrator or Governmental Authority and (iii) not subject you to
any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.9. CHANGES IN STRUCTURE.
Except as specified in Schedule 4.9, the Company shall not have
changed its jurisdiction of organization or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.10. PROCEEDINGS AND DOCUMENTS.
All corporate, partnership and other proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and your
special counsel, and you and your special counsel shall have
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received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
4.11. RATING.
You shall have received evidence satisfactory to you that Duff &
Phelps Credit Rating Co. has assigned a credit rating of at least A- to the
Notes.
4.12. TERMINATION OF LETTER OF CREDIT.
The Letter of Credit dated September 29, 1995 issued by Citibank, N.A.
in favor of Old HALP, L.P. and for the account of the Company shall have been
terminated.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 ORGANIZATION; POWER AND AUTHORITY.
The Company is a limited partnership duly organized, validly existing
and in good standing under the laws of Delaware, and is duly qualified as a
foreign partnership and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has all requisite partnership power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Other Agreements and the Notes and to perform the provisions hereof and
thereof.
5.2. AUTHORIZATION, ETC.
This Agreement and the Other Agreements and the Notes have been duly
authorized by all necessary corporate or partnership (as the case may be) action
on the part of the Company and the General Partner, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the
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enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.3. DISCLOSURE.
The Company, through its agents, Citicorp Securities, Inc. and
Prudential Securities Incorporated has delivered to you and each Other Purchaser
a copy of a Confidential Private Placement Memorandum, dated November, 1995 (the
"Memorandum"), relating to the transactions contemplated hereby. This Agreement,
the Memorandum, the documents, certificates or other writings identified in
Schedule 5.3 and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in
the Memorandum or as expressly described in Schedule 5.3 or in one of the
documents, certificates or other writings identified therein or in the financial
statements listed in Schedule 5.5, since December 31, 1994, there has been no
change in the financial condition, operations, business or properties of the
Company or any of its Subsidiaries except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) Schedule 5.4 is (except as noted therein) a complete and correct
list of the Company's Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or partnership or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate, partnership or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.
(d) Each Subsidiary of the Company required to register with the
Securities and Exchange Commission as an "investment adviser" (as defined in the
Investment Advisers Act) has so registered and is in compliance in all material
respects with the Investment Advisers Act.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, the Partnership Agreement
or any indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate or partnership charter or by-laws, or any other Material
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
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5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes.
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all income tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which is not individually or in the
aggregate Material or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been paid for all fiscal
years up to and including the fiscal year ended December 31, 1994.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
their respective Material properties, including all such properties reflected in
the most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary
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after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement,
except for those defects in title and Liens that, individually or in the
aggregate, would not have a Material Adverse Effect. All Material leases are
valid and subsisting and are in full force and effect in all material respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11, the Company and its Subsidiaries
own or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
are Material, without known conflict with the rights of others, except for those
conflicts that, individually or in the aggregate, would not have a Material
Adverse Effect.
5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
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(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds to be used to pay the purchase price of the Notes to be
purchased by you.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than you, the Other Purchasers and not more than 65 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes to
finance the Harris Acquisition, to pay related costs and expenses and for
general business purposes. The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock and no
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 25% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 25% of the value of such assets. As used
in this Section, the terms "margin stock"
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and "purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation G.
5.15. EXISTING INDEBTEDNESS.
Except as described therein, Schedule 5.15 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its Subsidiaries
as of December 1, 1995, since which date there has been no Material change in
the amounts, interest rates, sinking funds, instalment payments or maturities of
the Indebtedness of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company or any Subsidiary the outstanding principal amount of which exceeds
$5,000,000 that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
The Company is not subject to regulation as an "investment company"
under the Investment Company Act. Neither the Company nor any Subsidiary is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended, the Interstate Commerce Act, as amended, or the Federal Power Act, as
amended. The Company is registered as an "investment adviser" (as defined in the
Investment Advisers Act).
5.18. STATUS OF OBLIGATIONS UNDER THIS AGREEMENT AND THE NOTES.
All obligations and liabilities of the Company under this Agreement
and the Notes constitute direct, unconditional and general obligations of the
Company and rank in right of payment either pari passu or senior to all other
Indebtedness of the Company, except for such
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Indebtedness which is preferred as a result of being secured (but then only to
the extent of such security).
5.19. RESTRICTIONS ON SUBSIDIARIES.
No Material Subsidiary is subject to any restriction of any kind on
its ability to pay dividends or make other distributions to the Company or any
Subsidiary of the Company or to pay any Indebtedness owed to the Company or any
Subsidiary of the Company.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an insurance company general account as such term
is used in Prohibited Transaction Exemption ("PTE") 95-60 issued by the
United States Department of Labor and your purchase of the Notes hereunder
is entitled to the exemption granted by PTE 95-60; or
(b) the Source is a separate account that is maintained solely in
connection with your fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust)
that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or
12
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (c), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (f); or
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
13
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to you, so long as you shall be obligated to
purchase Notes hereunder, and to each holder of Notes that is an Institutional
Investor:
(a) Quarterly Statements -- within 45 days after the end of each
--------------------
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in owners'
equity and cash flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements -- within 90 days after the end of each fiscal
-----------------
year of the Company, duplicate copies of,
(iii) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(iv) consolidated statements of income, changes in owners'
equity and cash flows of the Company and its Subsidiaries, for such
year,
14
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
and accompanied by an unqualified opinion thereon of Price Waterhouse,
L.L.P. or other independent certified public accountants of recognized
national standing, which opinion shall state that such financial statements
present fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion
in the circumstances, provided that the delivery within the time period
specified above of the Company's Annual Report on Form 10-K for such fiscal
year (together with the Company's annual report to partners, if any,
prepared in accordance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
---------------------
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement that shall have become effective (without exhibits except as
expressly requested by such holder), and each final prospectus and all
amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in any
-------------------------------------
event within five Business Days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default, a written notice
specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five Business
-------------
Days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(v) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
15
(vi) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(vii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
would reasonably be expected to have a Material Adverse Effect; and
(f) Requested Information -- with reasonable promptness, such other
---------------------
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(b) Covenant Compliance -- the information (including detailed
-------------------
calculations) required in order to establish whether the Company was in
compliance with the requirements of Sections 10.5, 10.6 and 10.8 hereof,
inclusive, during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(a) Event of Default -- a statement that such officer has reviewed
----------------
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review
16
of the transactions and conditions of the Company and its Subsidiaries from
the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
----------
the expense of such holder and upon reasonable prior notice to the Company,
to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company's officers, and, with the consent of the Company (which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company, all at such reasonable times and as often as may
be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
-------
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be reasonably
requested.
8. PREPAYMENT OF THE NOTES.
8.1. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 5% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment, at
17
100% of the principal amount so prepaid, plus the Make-Whole Amount determined
for the prepayment date with respect to such principal amount. The Company will
give each holder of Notes written notice of each optional prepayment under this
Section 8.1 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.4), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall
deliver to each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
8.2. SPECIAL PREPAYMENT FOR CHANGE OF CONTROL.
Promptly and in any event within five Business Days after the
occurrence of a Change of Control, the Company will give written notice thereof
to the holders of all outstanding Notes, which notice shall (a) refer
specifically to this Section 8.2 and describe such Change of Control in
reasonable detail, (b) specify the Change of Control Prepayment Date and the
Response Date (as respectively defined below) in respect thereof and (c) offer
to prepay all Notes (at the unpaid principal amount of such Notes, together with
interest accrued thereon to the date fixed for such prepayment plus the Make-
Whole Amount) on the date therein specified (the "CHANGE OF CONTROL PREPAYMENT
DATE"), which shall be not less than 45 nor more than 60 days after the date of
the giving of such notice. Each holder of a Note shall notify the Company of
such holder's acceptance or rejection of such offer by giving written notice of
such acceptance or rejection to the Company on a date (the "RESPONSE DATE") at
least ten Business Days prior to the Change of Control Prepayment Date, and the
Company shall prepay on the Change of Control Prepayment Date all of the Notes
held by the holders who have accepted such offer in accordance with this Section
8.2 at a price in respect of each Note held by such holder equal to the unpaid
principal amount of such Note, together with interest accrued thereon to the
Change of Control Prepayment Date plus the Make-Whole Amount; provided, however,
that the failure by a holder of any Note to respond to such offer in writing on
or before the Response Date shall be deemed to be an acceptance of such offer in
respect of such Change of Control. In connection with any offer to prepay Notes
under this Section 8.2, (x) the notice provided pursuant to the first sentence
of this Section 8.2 shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation and
18
(y) two Business Days prior to such prepayment, the Company shall deliver to
each holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date.
8.3. PREPAYMENTS IN CONNECTION WITH TRANSFERS.
If at any time the Company intends to apply any proceeds from a
Transfer pursuant to Section 10.3 or 10.4 (such proceeds referred to herein as
the "DISPOSITION PROCEEDS") to the prepayment of Indebtedness as contemplated by
Section 10.3 or 10.4, the Company will give written notice thereof to the
holders of all outstanding Notes, which notice shall (a) refer specifically to
this Section 8.3, (b) specify the Disposition Prepayment Date and the
Disposition Response Date (as respectively defined below) in respect thereof,
(c) set forth (i) the aggregate amount of Disposition Proceeds to be applied to
the prepayment of the Notes and (ii) the amount of such Proceeds allocable to
each Note and (d) offer to prepay a principal amount of each Note equal to the
amount of such Proceeds so allocable to such Note, together with interest
accrued thereon to the date fixed for such prepayment plus the applicable Make-
Whole Amount, on the date therein specified (the "DISPOSITION PREPAYMENT DATE"),
which shall be not less than 45 nor more than 60 days after the date of the
giving of such notice. Each holder of a Note shall notify the Company of such
holder's acceptance or rejection of such offer by giving written notice of such
acceptance or rejection to the Company on a date (the "DISPOSITION RESPONSE
DATE") at least ten Business Days prior to the Disposition Prepayment Date, and
the Company shall prepay on the Disposition Prepayment Date the applicable
portion of each Note held by each holder by whom such offer has been accepted in
accordance with this Section 8.3 at a price in respect of each Note held by such
holder equal to the principal amount of such Note so to be prepaid as specified
above, together with interest accrued thereon to the Disposition Prepayment Date
plus the Make-Whole Amount; provided, however, that the failure by the holder of
any Note to respond to such offer in writing on or before the Disposition
Response Date shall be deemed to be an acceptance of such offer in respect of
such Disposition. In connection with any offer to prepay Notes under this
Section 8.3, (x) the notice provided pursuant to the first sentence of this
Section 8.3 shall be accompanied by a certificate of a Senior Financial Officer
as to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation and (y) two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a certificate
of a Senior Financial Officer specifying the calculation of such Make-Whole
Amount as of the specified prepayment date.
19
8.4. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding (or, in the case of a prepayment under Section 8.2 or 8.3,
the Notes being so prepaid) in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.5. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make-
Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.6. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of the Notes in
-
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
-
offer to purchase made by the Company or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 15 Business Days. If the holders of more than a majority of the principal
amount of the Notes then outstanding accept such offer, the Company shall
promptly notify the remaining holders of such fact and the expiration date for
the acceptance by holders of Notes of such offer shall be extended by the number
of days necessary to give each such remaining holder at least five Business Days
from its receipt of such notice to accept such offer. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.
20
8.7. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.1, 8.2 or 8.3 or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
-
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Access Service (or such
other display as may replace Page 678 on Telerate Access Service) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date,
or (ii) if such yields are not reported as of such time or the yields
--
reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields
have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
-
accordance with accepted financial practice and (b) interpolating linearly
-
between (1) the actively traded U.S. Treasury security with the duration
-
closest to and greater than the Remaining Average Life and (2) the actively
-
traded U.S. Treasury security with the duration closest to and less than
the Remaining Average Life.
21
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.1, 8.2,
8.3 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.1, 8.2 or 8.3 or has become or is declared to be immediately due
and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as you shall be obligated to
purchase Notes hereunder or any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, ERISA and
the Investment Advisers Act, and will obtain and maintain in effect all
licenses, certificates, permits, registrations, 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, registrations, franchises and other
governmental authorizations would not reasonably be expected, individually or in
the aggregate,
22
to have a materially adverse effect on the business, operations, affairs,
financial condition, properties or assets of the Company and its Subsidiaries
taken as a whole.
9.2. INSURANCE.
The Company will and will cause each of its 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.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its 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 Company 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 Company has concluded that such discontinuance would not, individually
or in the aggregate, have a materially adverse effect on the business,
operations, affairs, financial condition, properties or assets of the Company
and its Subsidiaries taken as a whole.
9.4. PAYMENT OF TAXES.
The Company will and will cause each of its Subsidiaries to file all
income tax or similar 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 payable by any of
them, to the extent such taxes and assessments have become due and payable and
before they have become delinquent, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment if (i) the amount, applicability
-
or validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
--
taxes and assessments in the aggregate would not reasonably be expected to have
a materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Subsidiaries taken as a
whole.
23
9.5. EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its legal existence. Subject to Sections 10.2 and 10.3, the Company will
at all times preserve and keep in full force and effect the legal existence of
each of its Subsidiaries and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such legal
existence, right or franchise would not, individually or in the aggregate, have
a materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Subsidiaries taken as a
whole.
9.6. KEEPING OF BOOKS.
The Company will keep, and will cause each of its Subsidiaries to
keep, proper records and books of account as are necessary to prepare
consolidated financial statements in accordance with GAAP, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each such Subsidiary in accordance with GAAP.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to enter into
directly or indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate. Any transaction or arrangement that has been approved by a
majority of the Disinterested Directors of the Board of Directors of the General
Partner shall be deemed to have satisfied the requirements of the preceding
sentence. For purposes of this Section 10.1, the term "DISINTERESTED DIRECTOR"
means with respect to any transaction, series of transactions or arrangements, a
member of the Board of Directors of the General Partner that does not have any
material financial interest, direct or indirect, in such transaction, series of
transactions or arrangements.
24
10.2. LIMITATIONS ON MERGERS, CONSOLIDATIONS AND SALES OF SUBSTANTIALLY All
ASSETS.
The Company will not, and will not permit any of its Subsidiaries to,
merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to any
Person, except that
(a) any Subsidiary of the Company may merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of all or
substantially all of its assets, (i) to the Company or any Significant
Subsidiary of the Company, provided that in the case of any such
merger or consolidation, the Company or (in the case of a transaction
between a Subsidiary and a Significant Subsidiary) such Significant
Subsidiary is the surviving Person or (ii) as part of a Transfer
permitted under Section 10.3 or 10.4; and
(b) the Company may merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of all or substantially
all of its assets to, any other Person, if (i) the surviving entity of
such consolidation or merger or the transferee or lessee of such
assets (the "Successor Entity") is a solvent corporation or limited
partnership organized under the laws of the United States of America
or any state thereof and, if not the Company, expressly assumes in
writing the due performance of all obligations of the Company under
this Agreement and the Notes and (ii) immediately prior to and after
giving effect to such transaction, no Default or Event of Default
shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company (or any
Successor Entity permitted under this Section 10.2) from its liability under
this Agreement or the Notes.
10.3. TRANSFER OF ASSETS.
The Company will not, and will not permit any of its Subsidiaries to,
make any Transfer, provided that the foregoing restriction does not apply to a
Transfer if:
(a) such Transfer takes place in the ordinary course of business
of the Company or the relevant Subsidiary, including, without
limitation, any Transfer of (i) inventory held for sale or (ii)
equipment, fixtures, supplies or materials that
25
are obsolete or no longer required in the operation of the business of
the Company or such Subsidiary (in each case, an "Ordinary Course
Transfer");
(b) such Transfer is (i) a Transfer from a Subsidiary of the
Company to the Company or a Significant Subsidiary of the Company,
(ii) a Transfer from the Company to a Significant Subsidiary of the
Company or (iii) a Transfer from a Subsidiary of the Company to
another Subsidiary of the Company (including by way of a merger or
consolidation of such Subsidiary with or into such other Subsidiary)
and in either case is for Fair Market Value, as determined in good
faith by the Company or the Subsidiary making such Transfer, as the
case may be; provided that in the case of any Transfer under clause
(i), (ii) or (iii) above, immediately before and after giving effect
to such Transfer, and after giving Pro Forma Effect thereto as if such
transfer has occurred, no Default or Event of Default shall have
occurred and be continuing (each such Transfer, an "Intergroup
Transfer"); or
(c) all of the following conditions shall have been satisfied
with respect thereto: (i) such Transfer does not involve a Substantial
Part of the property of the Company or any of its Subsidiaries, (ii)
in the good faith opinion of the Company, the Transfer is in exchange
for consideration with a Fair Market Value at least equal to that of
the property exchanged and (iii) immediately before and after giving
effect to such Transfer, and after giving Pro Forma Effect thereto, no
Default or Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, but subject to Sections 10.2 and 10.4,
the Company and its Subsidiaries shall be permitted to make a Transfer of a
Substantial Part of their respective property, if in the good faith opinion of
the Company or the Subsidiary making such Transfer, the Transfer is in exchange
for consideration with a Fair Market Value at least equal to the property
exchanged and if contemporaneously with such Transfer, the Company or such
Subsidiary delivers to the holders of the outstanding Notes a certificate of a
Senior Financial Officer certifying that the Net Cash Payments (if any) in
respect of such Transfer will be used in accordance with either of the following
clauses (a) or (b) and, in accordance with such certificate, within six-months
of the receipt of any Net Cash Payments from any such Transfer, the Company
shall, or shall cause such Subsidiary to, either (a) apply such Net Cash
Payments to the purchase of assets useful and intended to be used in the
business of the Company and its Subsidiaries or (b) offer to prepay the Notes in
accordance with Section 8.3 in an amount equal to such Net Cash Payments;
provided that the aggregate principal amount of Notes required to be prepaid in
connection with any such Transfer shall not exceed the product of (A) the
percentage that the
26
revenues of, or attributable to, such assets represents to the consolidated
revenues of the Company and its Subsidiaries and (B) the aggregate outstanding
principal amount of the Notes at the time of such Transfer.
No Transfer of a Substantial Part of the assets of the Company shall
have the effect of releasing the Company (or any Successor Entity permitted
under Section 10.2) from its liability under this Agreement or the Notes.
10.4. DISPOSAL OF OWNERSHIP OF A SUBSIDIARY.
The Company will not, and will not permit any of its Subsidiaries to,
Transfer any of its Subsidiary Stock nor will the Company permit any such
Subsidiary to Transfer any shares of its own capital stock or equity interests,
provided that the foregoing restriction does not apply to:
(a) the issuance by any such Subsidiary of directors' qualifying
shares;
(b) any Transfer of Subsidiary Stock that constitutes an
Intergroup Transfer; and
(c) any Transfer of Subsidiary Stock of the Company if all of
the following conditions shall have been satisfied with respect thereto:
(i) such Transfer does not involve a Substantial Part of the property of
the Company, (ii) in the good faith opinion of the Company, the Transfer is
in exchange for consideration with a Fair Market Value at least equal to
that of the property exchanged and (iii) immediately before and after
giving effect to such transaction, and after giving Pro Forma Effect
thereto, no Default or Event of Default shall have occurred and be
continuing.
Notwithstanding the foregoing, but subject to Sections 10.2 and 10.3,
the Company shall be permitted to Transfer any of its Subsidiary Stock, if in
the good faith opinion of the Company the Company receives in exchange therefore
consideration with a Fair Market Value at least equal to that of the property
exchanged and if, contemporaneously with any such Transfer, the Company delivers
to the holders of the outstanding Notes a certificate of a Senior Financial
Officer of the Company certifying that the Net Cash Payments (if any) in respect
of such Transfer will be used in accordance with either of the following clauses
(a) or (b), and in accordance with such certificate, within six-months of the
receipt of any Net Cash Payments from any such Transfer, the Company (a) applies
such Net Cash Payments to the purchase of assets useful and
27
intended to be used in the business of the Company and its Subsidiaries or (b)
offers to prepay the Notes in accordance with Section 8.3 in an amount equal to
such Net Cash Payments; provided that the aggregate principal amount of Notes
--------
required to be prepaid in connection with any such Transfer shall not exceed the
product of (A) the percentage that the revenues of, or attributable to, the
Subsidiary Stock so transferred represents to the consolidated revenues of the
Company and its Subsidiaries and (B) the aggregate outstanding principal amount
of the Notes at the time of such Transfer.
No Transfer of substantially all of the assets of the Company shall
have the effect of releasing the Company (or any Successor Entity permitted
under Section 10.2) from its liability under this Agreement or the Notes.
10.5. LEVERAGE RATIOS.
The Company will not permit at any time (a) the Senior Debt Leverage
Ratio to exceed 3.25 to 1 or (b) the Total Debt Leverage Ratio to exceed 4.0 to
1.
10.6. INTEREST COVERAGE RATIO.
The Company will not permit the Interest Coverage Ratio to be less
than 3.5 to 1 as at the end of each fiscal quarter.
10.7. LIENS.
The Company will not, and will not permit any of its Subsidiaries to,
create or suffer to exist, any Lien other than Permitted Liens.
10.8. INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries to,
create, incur, assume, or in any manner become liable, directly or indirectly in
respect of, or suffer to exist any Indebtedness (other than Excluded
Indebtedness) unless at the time such Indebtedness is incurred and after giving
Pro Forma Effect thereto, (a) the total amount of Priority Debt does not exceed
15% of Cash Flow for the most recently completed Rolling Fiscal Period and (b)
no Default or Event of Default shall have occurred and be continuing.
28
10.9. RESTRICTED PAYMENTS.
The Company will not, and will not permit any Subsidiary to, declare,
order, pay, make or set apart any sums or property for Restricted Payments, if
at the time of the making of such Restricted Payment and after giving effect
thereto, (a) any Default or Event of Default shall have occurred and be
continuing or (b) the aggregate amount of Restricted Payments made in the fiscal
quarter in which such Restricted Payment is made and in the three full
immediately preceding fiscal quarters would exceed 105% of Cash Flow for the
Rolling Fiscal Period as of the date of such Restricted Payment. Notwithstanding
the occurrence or continuance of a Default or Event of Default, the Company may
make distributions to any of its limited partners in amounts sufficient to allow
any such limited partner to pay all federal income taxes with respect to the
amount of income and gain of the Company allocated to such limited partner
(assuming for this purpose that such limited partner is taxable at the highest
applicable rate of taxation).
10.10. INVESTMENTS.
The Company will not, and will not permit any of its Subsidiaries to,
make or hold any Investment other than (a) Permitted Investments and (b) Exempt
Investments, provided that at the time of, and after giving effect to any Exempt
Investment, no Default under Section 11(b) or Event of Default shall have
occurred and be continuing.
10.11. LIMITATION ON ACQUISITIONS.
The Company will not, and will not permit any Subsidiary to, acquire
any business or property from, or capital stock or other equity interest of, any
Person, provided that the foregoing restriction does not apply to any
acquisition (whether by asset or stock purchase or pursuant to a merger) if (a)
such acquisition is directly or indirectly related to the principal lines of
business of the Company and its Subsidiaries and (b) after giving effect to such
acquisition, and after giving Pro Forma Effect thereto, no Default or Event of
Default shall have occurred and be continuing.
10.12. RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Material
Subsidiaries to, create or permit to exist any restriction of any kind on the
ability of any such Subsidiary to (a) pay dividends or make other distributions
to the Company or any Subsidiary or (b) pay any Indebtedness owed to the Company
or any Subsidiary.
29
10.13. CHANGE IN NATURE OF BUSINESS.
The Company will not, and will not permit any of its Material
Subsidiaries to, make any material change in the nature or conduct of its
business as carried on as of the date hereof.
10.14. CONSOLIDATED NET WORTH.
The Company will not permit Consolidated Net Worth to be less than
$75,000,000 at any time.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Section 10; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge
-
of such default and (ii) the Company receiving written notice of such
--
default from any holder of a Note (any such written notice to be identified
as a "notice of default" and to refer specifically to this paragraph (d) of
Section 11); or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date
as of which made; or
30
(f) (i) the Company or any Material Subsidiary is in default (as
-
principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least $10,000,000 beyond
any period of grace provided with respect thereto, or (ii) the Company or
--
any Material Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate
outstanding principal amount of at least $10,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness
has become, or has been declared due and payable before its stated maturity
or before its regularly scheduled dates of payment; or
(g) the General Partner, the Company or any Material Subsidiary (i)
-
is generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise to
--
the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for the
---
benefit of its creditors, (iv) consents to the appointment of a custodian,
--
receiver, trustee or other officer with similar powers with respect to it
or with respect to any substantial part of its property, (v) is adjudicated
-
as insolvent or to be liquidated, or (vi) takes partnership or corporate
--
action (as the case may be) for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the General Partner, the
Company or any of its Material Subsidiaries, a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the General Partner, the Company or any of its Material
Subsidiaries, or any such petition shall be filed against the General
Partner, the Company or any of its Material Subsidiaries and such petition
shall not be dismissed within 60 days; or
(i) a final judgment or judgments (either uninsured or insured but as
to which the insurer thereof has not admitted liability) for the payment of
money aggregating in excess of $10,000,000 are rendered against one or more
of the Company and its Material Subsidiaries and which judgments are not,
within 30 days after entry thereof, bonded,
31
discharged or stayed pending appeal, or are not discharged within 30 days
after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
--
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (iii) the aggregate "amount
---
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $10,000,000, (iv) the Company or any ERISA Affiliate shall
--
have incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
-
withdraws from any Multiemployer Plan, or (vi) the Company or any
--
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, would
reasonably be expected to have a Materially Adverse Effect; or
(k) any Regulatory Intervention shall occur.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
32
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
-
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
-
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 60%
in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
-
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than
33
by reason of such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
-
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for the
-
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
34
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred (a) to a Competitor without the prior written consent of the
Company, provided that any holder of a Note may transfer a Note to a Competitor
that is purchasing such Note for resale to a Person that is not a Competitor or
(b) in denominations of less than $1,000,000, provided that if necessary to
enable the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $1,000,000. Any transferee, by
its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is,
or is a nominee for, an original Purchaser or another holder of a Note with
a minimum net worth of at least $50,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
35
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of Citibank, N.A. in such jurisdiction.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal office
of a bank or trust company in such jurisdiction.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
36
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between
37
you and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20 (it being understood that any amendment to Section 10.3 or 10.4 or to the
definition of "Change of Control" in Schedule B that does not terminate the
Company's obligation to offer to prepay Notes in the circumstances contemplated
by Section 8, will not be deemed an amendment of Section 8 or a change in the
amount or time of any prepayment).
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Company will provide each holder of the Notes
------------
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
-------
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and
38
provisions hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Company in writing,
39
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of G. Neal Ryland, Chief Financial
Officer, or at such other address as the Company shall have specified to
the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary 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 Company 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 Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
40
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good 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 20, (iii) any other holder of any Note, (iv) any Institutional Investor
--- --
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
20), (v) any Person from which you offer to purchase any security of the Company
-
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (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 20 as though it were a party to this
Agreement. On reasonable request by the Company 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 Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes
41
then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
42
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
43
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
NEW ENGLAND INVESTMENT COMPANIES,
L.P.
By NEW ENGLAND INVESTMENT COMPANIES,
INC., its General Partner
By KEVIN P. CHARLESTON
Title: Assistant Treasurer and
Manager of Financial Planning
[The forms of signature by each
of the Purchasers, as they appear
in the respective Note Purchase
Agreements, are set forth below.]
The foregoing is hereby
agreed to as of the
date thereof.
THE TRAVELERS INSURANCE THE TRAVELERS INDEMNITY
COMPANY COMPANY
By CRAIG H. FARNSWORTH By CRAIG H. FARNSWORTH
Second Vice President Second Vice President
44
CONNECTICUT GENERAL LIFE LIFE INSURANCE COMPANY OF
INSURANCE COMPANY NORTH AMERICA
By CIGNA Investments, Inc. By CIGNA Investments, Inc.
By LAWRENCE A. DRAKE By LAWRENCE A. DRAKE
Managing Director Managing Director
GREAT-WEST LIFE & ANNUITY PACIFIC MUTUAL LIFE INSURANCE
INSURANCE COMPANY COMPANY
By MARK CORBETT By WILLIAM R. SCHMIDT
Vice President Assistant Vice President
Private Placement Investments
By ERNIE P. FRIESEN
Manager
Private Placement Investments
NORTHERN LIFE INSURANCE NORTHWESTERN NATIONAL LIFE
COMPANY INSURANCE COMPANY
By FRANK P. PINTENS By FRANK P. PINTENS
Assistant Treasurer Authorized Representative
UNITED SERVICES LIFE INSURANCE THE NORTH ATLANTIC LIFE
COMPANY INSURANCE COMPANY OF
AMERICA
By FRANK P. PINTENS
Assistant Treasurer By FRANK P. PINTNES
Assistant Treasurer
45
GENERAL AMERICAN LIFE PROVIDENT MUTUAL LIFE
INSURANCE COMPANY INSURANCE COMPANY
By DOUGLAS R. KOESTER By CRAIG SNYDER
Vice President Vice President
PROVIDENTMUTUAL LIFE AND PROVIDENT MUTUAL LIFE
ANNUITY COMPANY OF AMERICA INSURANCE COMPANY --
COVENANT
By ROSEANNE GATTA
Treasurer By CRAIG SNYDER
Vice President
AMERICAN FAMILY LIFE JOHN ALDEN LIFE INSURANCE
INSURANCE COMPANY COMPANY
By PHILLIP HANNIFAN By MICHAEL E. HALLIGAN
Investment Director Vice President, Investments
JOHN ALDEN LIFE INSURANCE
COMPANY OF NEW YORK
By MICHAEL E. HALLIGAN
Vice President
46
Schedule B
----------
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person (other than an Investment Company) that at such time directly or
indirectly through one or more intermediaries Controls, or is Controlled by, or
is under common Control with, such first Person. As used in this definition,
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"ANNUALIZED BASIS" means the method used to adjust any calculation for
each Rolling Fiscal Period consisting of less than four full fiscal quarters
following the date of Closing as follows:
(a) the Rolling Fiscal Period shall begin on the first day of the
first full fiscal month following the date of Closing; and
(b) the results during such Rolling Fiscal period shall be multiplied
by a fraction, the numerator of which shall be 12 and the
denominator shall be the actual number of full fiscal months
included in such Rolling Fiscal Period under clause (a) above.
"BROKER COMMISSION" means any amount to be paid by the Company or any
of its Subsidiaries to NESC or any broker, dealer or distributor in connection
with the distribution by NESC or such broker, dealer or distributor of any
shares in any Investment Company sponsored by the Company or any Subsidiary of
the Company.
"BROKER COMMISSION DEBT" means any Indebtedness of the Company or any
of its Subsidiaries, the proceeds of which are used, directly or indirectly, to
pay Broker Commissions and which is secured by Collections Rights of the Company
or such Subsidiary.
"BUSINESS Day" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required
1
or authorized to be closed, and (b) for the purposes of any other provision of
this Agreement, any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York or Boston, Massachusetts are required or
authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CASH FLOW" means, for any period, for the Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, net
income (or net loss) for such period plus (a) Interest Expense plus (b) income
---- ----
tax expense plus (c) depreciation expense plus (d) amortization expense plus (e)
---- ---- ----
non-cash expenses to the extent deducted in determining such net income plus (f)
----
capital losses from the sale of assets determined in accordance with GAAP for
such period, plus (g) the Support Charge (not to exceed $20,000,000 in any
----
fiscal year) minus (h) capital gains on the sale of assets determined in
-----
accordance with GAAP for such period minus (i) earnings (only if positive) of
-----
any Person (other than the Company or any of its consolidated Subsidiaries) in
which the Company or any Subsidiary holds an Investment to the extent such
earnings are not distributed or otherwise paid (or are not eligible to be
distributed or paid without restriction) to the Company or any of its
consolidated Subsidiaries minus (j) cash flow attributable to Collection Rights
-----
securing Excluded Broker Commission Debt and minus (k) earnings (only if
-----
positive) attributable to any Support Investment to the extent the holder of any
Support Investment Indebtedness has recourse thereto; provided that upon any
-------- ----
acquisition permitted by Section 10.11, the calculation of Cash Flow for any
Rolling Fiscal Period commencing prior to the effective date of such acquisition
shall be adjusted to give Pro Forma Effect to such acquisition.
"CHANGE OF CONTROL" means the occurrence of any one of the following:
(a) New England Mutual Life Insurance Company (or the survivor of a
merger or consolidation of New England Mutual Life Insurance Company with
or into Metropolitan Life Insurance Company or any successor thereto) shall
cease to have beneficial ownership, directly or indirectly, of at least 50%
of the voting stock of all classes of stock of the General Partner; and
2
Schedule B
(b) New England Mutual Life Insurance Company (or the survivor of a
merger or consolidation of New England Mutual Life Insurance Company with
or into Metropolitan Life Insurance Company or any successor thereto) shall
cease to own directly or indirectly, through one or more of its
Subsidiaries, at least 15% of the limited partnership interests in the
Company.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"COLLECTION RIGHTS" means any amount owed to the Company or any of its
Subsidiaries (a) pursuant to any 12b-1 Plan of, or any similar or successor plan
of, or arrangement with, any Fund, (b) in respect of administrative or
investment advisory services furnished, pursuant to written agreements, to a
Fund by the Company or such Subsidiary or (c) from the payment of contingent
deferred sales charges or other similar charges by the shareholders of a Fund.
"COMPANY" means New England Investment Companies, L.P. , a Delaware
limited partnership.
"COMPETITOR" means any Person listed in Schedule 13.2 or reasonably
designated as such in a written notice to the holder of each Note, provided that
the Company shall not make any such designation more than once in any twelve-
month period and provided further that no more than 20 Persons shall be
Competitors at any one time.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED NET WORTH" means, at any time,
(a) the total assets of the Company and its Subsidiaries which would
be shown as assets on a consolidated balance sheet of the Company and its
Subsidiaries as of such
3
Schedule B
time prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in Subsidiaries, minus
(b) the total liabilities of the Company and its Subsidiaries which
would be shown as liabilities on a consolidated balance sheet of the
Company and its Subsidiaries as of such time prepared in accordance with
GAAP.
"CURRENCY HEDGING AGREEMENT" means, for any Person, a foreign exchange
contract, currency swap, collar or cap agreement or similar arrangement between
such Person and one or more financial institutions providing for the transfer or
mitigation of currency risks either generally, periodically or under specific
contingencies. The "CREDIT EXPOSURE" at any time of any Person under a Currency
---------------
Hedging Agreement to which such Person is a party shall be determined as of the
end of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Currency Hedging Agreement had terminated at the end of
such fiscal quarter and, in making such determination, if any agreement relating
to such Currency Hedging Agreement 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 credit exposure shall be the net amount so determined.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 1% over the rate of interest publicly announced
by Citibank, N.A. in New York, New York as its "base" or "prime" rate.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Co.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to
4
Schedule B
pollution and the protection of the environment or the release of any materials
into the environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED BROKER COMMISSION DEBT" means Broker Commission Debt (a)
which is secured by, and intended to be repaid solely out of the proceeds of,
Collection Rights except to the extent provided in clause (b) below and (b)
which is otherwise nonrecourse to the Company and its Subsidiaries except in the
event of (i) the amendment or termination of a 12b-1 Plan or similar plan under
which such Collection Rights would arise, (ii) changes in applicable law
relating to 12b-1 Plans which have a material adverse effect on the ability of
the Company or any applicable Subsidiary to satisfy its obligations with respect
to such Broker Commission Debt, (iii) the occurrence of any breach of a covenant
or representation customarily found in an asset-backed transaction of this type
that relate to Collection Rights, including, without limitation, fraud, willful
misconduct or gross negligence by the Company or such Subsidiary or (iv) any
amendment, modification (including any amendment or termination arising from a
change in law) or termination of any underwriting agreement, prospectus or sales
charge arrangement between the Company or such Subsidiary and any Fund relating
to the Collection Rights that secure such Broker Commission Debt; provided that
if any of the circumstances described in clauses (i) through (iv) above occurs
with respect to any Broker Commission Debt, such Broker Commission Debt shall no
longer constitute Excluded Broker Commission Debt.
5
Schedule B
"EXCLUDED INDEBTEDNESS" means any of the following Indebtedness:
(a) Excluded Broker Commission Debt;
(b) Support Investment Indebtedness;
(c) Purchase Money Obligations of the Company and any of its
Subsidiaries in an aggregate principal amount at no time exceeding $10,000,000
and Indebtedness incurred to refinance such Purchase Money obligations, provided
that the unpaid balance thereof is not increased and the Lien securing such
Purchase Money Obligations is not extended to any other assets;
(d) Indebtedness of the Company or any of its Subsidiaries for money
borrowed from any insurance company against the cash surrender value of any
insurance policy issued by such insurance company insuring the life or lives of
one or more senior management employees, which policies are owned by the Company
or such Subsidiary, as to which the Company or such Subsidiary is the named
insured beneficiary and as to which the Company or such Subsidiary is entitled
to the full cash surrender value; provided that such Indebtedness does not
exceed the cash surrender value of such policy;
(e) Indebtedness of the Company under Currency Hedging Agreements and
Interest Rate Protection Obligations of the Company; provided that (i) in the
case of any Interest Rate Protection Agreement, such Interest Rate Protection
Agreement has been entered into to protect the Company or any of its
Subsidiaries from fluctuations either (x) in interest rates in respect of
Indebtedness incurred or to be incurred by the Company or such Subsidiary and
the credit exposure of the Company or such Subsidiary thereunder is at no time
no greater than necessary to hedge its interest rate exposure with respect to
the aggregate principal amount of such Indebtedness or (y) in the value of
investments in fixed income securities that were acquired in the ordinary course
of business and (ii) in the case of any Currency Hedging Agreement, such
Currency Hedging Agreement covers the assets or liabilities of the Company or
any of
6
Schedule B
its Subsidiaries that are denominated in a currency other than dollars of the
United States of America;
(f) Indebtedness of the Company or any of its Subsidiaries to the
Company or any Significant Subsidiary; and
(g) liabilities in respect of letters of credit or bankers
acceptances that are issued or accepted in connection with obligations that do
not constitute Indebtedness.
"EXEMPT INVESTMENTS" means, for the Company and its Subsidiaries:
(a) Investments in Significant Subsidiaries of the Company engaged,
for a fee or other remuneration, in an Investment Management Business;
(b) Seed Money Obligations and other Investments in Funds
constituting partnerships, trusts, limited liability corporations or similar
Persons, which Investments are acquired in the ordinary course of business;
(c) securities acquired from any Fund or any other Person if, in the
case of any such other Person, such securities were held by such Person as a
result of investment management or advisory services provided by the Company or
any of its Subsidiaries, provided that such securities are expected to be
disposed of within twelve months of such acquisition and are not held by the
Company or any of its Subsidiaries for more than twelve months;
(d) securities held by the Company or any of its Subsidiaries pending
the formation of a Fund to which such securities will be transferred, provided
that such securities are expected to be transferred or otherwise disposed of
within twelve months of such investment;
(e) Investments in other Subsidiaries of the Company or joint
ventures engaged in the Investment Management Business, provided that
immediately prior and after giving effect to each such Investment, and after
giving Pro Forma Effect thereto,
7
Schedule B
the aggregate amount of all such Investments does not exceed 25% of Cash
Flow for the most recently completed Rolling Fiscal Period;
(f) Investments by the Company or a Subsidiary of the Company in the
ordinary course of its Investment Management Business (including but not
limited to unit investment trusts); and
(g) other Investments not exceeding $10,000,000 in the aggregate.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an arm's-
length sale at such time between an informed and willing buyer and an informed
and willing seller (neither being under compulsion to buy or sell).
"FITCH" means Fitch Investors' Service Incorporated.
"FUND" means any Investment Company and any Person that would be an
Investment Company but for Section 3(c)(1) of the Investment Company Act that
is, in any such case, managed or sponsored by the Company or any of its
Subsidiaries or for which the Company or any such Subsidiary provides advisory,
administrative, supervisory, management, consulting, underwriting, transfer-
agency, shareholder or share-servicing or similar services.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GENERAL PARTNER" means NEIC and such other Person or Persons as may
be a general partner of the Company from time to time.
"GOVERNMENTAl AUTHORITY" means
(a) the government of
8
Schedule B
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement 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 in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
9
Schedule B
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HARRIS ACQUISITION" means the acquisition by the Company of all of
the assets of Harris Associates L.P., a Delaware limited partnership.
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
determined in accordance with GAAP (other than any part of such price payable in
equity interests of the Company) acquired by such Person (excluding accounts
payable arising in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) its liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) its liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);
10
Schedule B
(f) its credit exposure under Interest Rate Protection Agreements and
Currency Hedging Agreements;
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof; and
(h) all other liabilities of a type described in clause (a) through
(g) above of such Person resulting from such Person being a general partner or a
member of a joint venture, whether by provision of applicable law, contract or
otherwise.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 10% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTEREST COVERAGE RATIO" means, for any date, the ratio of (a) Cash
Flow for the Rolling Fiscal Period ending on or immediately prior to such date
to (b) Interest Expense for such Rolling Fiscal Period.
"INTEREST EXPENSE" means, for the Company and its Subsidiaries, for
any period, gross interest expense for such period (excluding interest on any
Excluded Indebtedness) plus capitalized interest for such period, in each case
determined on a consolidated basis, without duplication, in accordance with
GAAP.
"INTEREST RATE PROTECTION AGREEMENT" means, for any Person, an
interest rate swap, collar or cap agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally, periodically or under specific
contingencies. The "credit exposure" at any time of any Person under an Interest
---------------
Rate Protection Agreement to which such Person is a party shall be determined as
of the end of the then most recently ended fiscal quarter of such Person, based
on the assumption that such Interest Rate Protection Agreement had terminated at
the end of such fiscal quarter and, in making such determination, if any
agreement relating to such
11
Schedule B
Interest Rate Protection Agreement 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 credit exposure shall be the net amount so determined.
"INTERGROUP TRANSFER" has the meaning specified in Section 10.3.
"INVESTMENT" means, for any Person, (a) the acquisition (whether for
cash, property, services, securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person and (b) the making of any advance, loan or other extension
of credit to, any other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such Person, but excluding any such advance, loan or
extension of credit representing the purchase price of inventory or supplies
sold by such Person in the ordinary course of business).
"INVESTMENT ADVISERS ACT" means the Investment Advisers Act of 1940,
as amended.
"INVESTMENT COMPANY" means an "investment company" as such term is
defined in the Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"INVESTMENT MANAGEMENT BUSINESS" means the business of providing
services involving (i) the management of an investment account or fund (or
portions thereof or a group of investment accounts or funds), (ii) the giving of
advice with respect to the investment of specific assets or funds, (iii) the
distribution of investment management products or (iv) broker-dealer operations
associated with the activities or operations described in any of the foregoing
clauses (i), (ii) and (iii).
12
Schedule B
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person.
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company 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
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"MATERIAL SUBSIDIARY" means any Subsidiary of the Company that would
constitute a "significant subsidiary" as such term is used in Regulation S-X of
the Securities and Exchange Commission as in effect on the date of Closing.
"MEMORANDUM" is defined in Section 5.3.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NEIC" means New England Investment Companies, Inc., a Massachusetts
corporation.
"NESC" means the New England Securities Corporation, a Massachusetts
corporation.
13
Schedule B
"NET CASH PAYMENTS" means, with respect to any Transfer, the aggregate
amount of all cash payments, the Fair Market Value of all marketable securities
and the cash proceeds of any non-cash consideration (other than Exempt
Investments) received by the Company and its Subsidiaries directly or indirectly
in connection with such Transfer; provided that (a) Net Cash Payments shall be
net of (i) the amount of any legal, title and recording tax expenses,
commissions and other reasonable fees and expenses (including reasonable
expenses of preparing the relevant property for sale) paid by the Company and
its Subsidiaries in connection with such Transfer and (ii) any Federal, state
and local income or other taxes estimated in good faith to be payable by the
Company and its Subsidiaries as a result of such Transfer and (b) Net Cash
Payments shall be net of any repayments by the Company or any of its
Subsidiaries of Indebtedness to the extent that (i) such Indebtedness is secured
by a Lien on the property that is the subject of such Transfer and (ii) the
transferee of (or holder of a Lien on) such property requires that such
Indebtedness be repaid as a condition to the purchase of such property.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"ORDINARY COURSE TRANSFER" has the meaning specified in Section 10.3.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PARTNERS" means the General Partner and each other Person that is a
party to the Partnership Agreement.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of the Company, as amended from time to time.
14
Schedule B
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PERMITTED INVESTMENTS" means, for the Company and its Subsidiaries,
any of the following:
(a) Investments in commercial paper rated A-1 or better by S&P
or P-1 or better by Moody's, that matures not more than 270 days from
the date of issuance thereof, that is issued by a corporation (other
than an Affiliate of the Company) organized under the laws of the
United States of America or any state thereof, Canada or any state
thereof, any member of the European Union or Japan;
(b) Investments in direct obligations of the United States of
America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or of any
agency thereof, in either case, maturing not more than one year from
the date of acquisition thereof and other than derivative securities
such as interest-only and principal-only mortgage-backed securities
and collateralized mortgage obligations;
(c) Investments in certificates of deposit or banker's
acceptances maturing not more than one year from the date of issuance
thereof that are issued by a bank or trust company that is either (i)
organized under the laws of the United States of America, or any state
thereof, and has capital, surplus and undivided profits of at least
$1,000,000,000 and whose long-term certificates of deposit or long-
term unsecured debt, at the time of acquisition of such Investment,
are rated A or better by S&P, Duff & Phelps or Fitch or A2 or better
by Moody's or (ii) organized under the laws of any other country whose
commercial paper is rated A-1 or better by S&P or P-1 or better by
Moody's or
15
Schedule B
whose long-term debt, at the time of acquisition of such Investment,
is rated AA or better by S&P or Aa2 or better by Moody's and has
capital, surplus and undivided profits of at least $1,000,000,000;
(d) Investments in master note or deposit arrangements involving
securities of the type described in clauses (a), (b) or (c) above;
(e) Investments in money market programs of Investment Companies
registered with the Securities and Exchange Commission, which
Investments, at the time of acquisition thereof, are either rated A-1
or better by S&P or P-1 or better by Moody's (or if such programs are
not rated, the substantial majority of underlying investments of such
program, or issuers of such underlying investments, are so rated) or
invested only in the types of securities described in clauses (a)
through (d) above;
(f) Investments in repurchase agreements maturing not more than
365 days from the creation thereof, with, or accepted by, a bank,
trust company or other financial institution whose long-term unsecured
debt, at the time of acquisition of such Investment, is rated A or
better by S&P, Duff & Phelps or Fitch or A2 or better by Moody's;
(g) Investments by the Company or any of its Subsidiaries made
in (i) Interest Rate Protection Agreements and Currency Hedging
Agreements to the extent any Indebtedness thereunder constitutes
Excluded Indebtedness; provided, in any case, that the long-term
senior unsecured debt of the counterparty thereto is rated A- or
better by S&P or A3 or better by Moody's, at the time the Investment
is made; and
(h) Investments of the Company and its Subsidiaries in existence
on the date hereof and listed in Schedule 10.7 hereto.
"PERMITTED LIENS" means, for the Company and its Subsidiaries, any of
the following:
16
Schedule B
(a) Liens outstanding on the date hereof and listed in Schedule
5.15;
(b) Liens securing Indebtedness of any Subsidiary to the Company
or any Significant Subsidiary of the Company;
(c) Liens for taxes, assessments and governmental charges or
levies which are not yet due or are payable without penalty or of
which the amount, applicability or validity is being contested by the
Company or one of its Subsidiaries in good faith by appropriate
proceedings and as to which adequate reserves are being maintained in
accordance with GAAP;
(d) Liens resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or
which shall in good faith be prosecuted by an appeal or proceeding for
a review and in respect of which a stay of execution pending such
appeal or proceeding shall have been secured, and as to which, in any
case, adequate reserves are being maintained in accordance with GAAP;
(e) Liens imposed by law, such as landlord's, materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other
similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being
contested or defended in good faith by appropriate proceedings and as
to which adequate reserves are being maintained in accordance with
GAAP, or which are suspended or released by the filing of lien bonds,
or deposits to obtain the release of such Liens;
(f) pledges, deposits and other Liens made in the ordinary
course of business to secure obligations under worker's compensation
laws, unemployment insurance, social security legislation or similar
legislation or to secure public or statutory obligations;
(g) Liens to secure the performance of bids, tenders, contracts,
leases or statutory obligations, or to secure surety, stay or appeal
or other
17
Schedule B
similar types of deposits, Liens or pledges, incurred in the ordinary
course of business (to the extent such Liens do not secure obligations
for the payment of Indebtedness for borrowed money and provided that
any such obligation is not overdue or if overdue is being contested in
good faith by appropriate proceedings and as to which adequate
reserves are being maintained in accordance with GAAP);
(h) Liens solely securing Purchase Money Obligations incurred in
the ordinary course of business provided that any such Lien does not
extend to or cover any property or assets other than the property so
financed;
(i) Liens on Collection Rights securing Broker Commission Debt
provided that in the case of any Broker Commission Debt that does not
qualify as Excluded Broker Commission Debt, such Broker Commission
Debt is permitted under Section 10.8;
(j) Liens securing Support Investment Indebtedness and Liens on
the cash value of life insurance policies securing Indebtedness
referred to in clause (d) of the definition of Excluded Indebtedness;
(k) minor survey exceptions or minor encumbrances, easements,
rights-of-way, restrictions and other similar encumbrances incurred in
the ordinary course of business and encumbrances consisting of zoning
restrictions, easements, licenses, restrictions on the use of property
or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(l) all other Liens, provided that, after giving effect to the
creation thereof, the total amount of Priority Debt on the date of
such creation does not exceed 15% of Cash Flow for the mostly recently
completed Rolling Fiscal Period; and
18
Schedule B
(m) any modification, extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted hereunder shall
not be spread to cover any additional Indebtedness or property (other
than a substitution of like property).
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PRIORITY DEBT" means the sum (without duplication) of (a) all
Indebtedness (other than Excluded Indebtedness) of the Company secured by any
Lien on property of the Company or any of its Subsidiaries and (b) all
Indebtedness (other than Excluded Indebtedness) of the Subsidiaries of the
Company.
"PRO FORMA EFFECT" means, for any event, calculating the operating
results for the Rolling Fiscal Period for the date of such event as if such
event had occurred on the first day of such Rolling Fiscal Period.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PURCHASE MONEY OBLIGATIONS" means any Indebtedness secured by a Lien
on assets of the Company or any Subsidiary of the Company, and any additions and
accessions thereto, that are purchased by the Company or any Subsidiary of the
Company at any time after the Notes are issued; provided that (a) the security
agreement or conditional sales or other title retention contract pursuant to
which such Lien is created (a "PURCHASE MONEY SECURITY AGREEMENT") shall be
entered into within 90 days after the purchase or substantial
19
Schedule B
completion of the construction of such assets and the Lien created thereunder
shall at all times be confined solely to the assets so purchased or acquired,
and, if required by such Purchase Money Security Agreement, any additions and
accessions thereto, (b) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and in respect of fees and
other obligations in respect of such Indebtedness and (c)(i) the aggregate
outstanding principal amount of Indebtedness secured thereby (determined on a
per asset basis in the case of any additions and accessions) shall not at the
time such Purchase Money Security Agreement is entered into exceed 100% of the
purchase price to the Company or any Subsidiary of the assets subject thereto or
(ii) the Indebtedness secured thereby shall be with recourse solely to the
assets so purchased or acquired, any accessions thereto and any proceeds
therefrom.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"REGULATORY INTERVENTION" means (i) in the case of the Company and any
Subsidiary that is a registered investment adviser under the Investment Advisers
Act, the giving of any order by the Securities and Exchange Commission or any
state governmental body placing limitations on the activities, functions or
operations of, or suspending or revoking the registration of, the Company or
such Subsidiary or (ii) in the case of any Subsidiary that is a registered
broker-dealer, (a) any revocation by any self-regulatory organization (as
defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended)
of such Subsidiary's membership therein, (b) any revocation by the Securities
and Exchange Commission of such Subsidiary's status as a broker-dealer or (c)
any application by the Securities Investor Protection Corporation for a decree
adjudicating that customers of such Subsidiary are in need of protection under
the Securities Investor Protection Act of 1940, as amended; provided that in any
such case, such event could reasonably be expected to have a Material Adverse
Effect.
20
Schedule B
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED PAYMENTS" means for the Company and any of its
Subsidiaries, (a) any dividends or other distributions or payments on or in
respect of any equity interest of the Company or any such Subsidiary or to the
holders of any such equity interests in their capacity as such (other than
payments made solely in equity interests and dividends or distributions payable
to the Company or any Subsidiary), (b) any purchase, redemption or other
acquisition for value of any equity interest of the Company or any such
Subsidiary or (c) any purchase, redemption or other acquisition or retirement
for value, prior to any scheduled maturity, of any Subordinated Indebtedness;
provided that such term shall not include any payment of a type described in
clause (a) or (b) above that is made to the holders of equity interests in the
Company to satisfy deferred obligations (whether liquidated or contingent) with
respect to the Harris Acquisition.
"ROLLING FISCAL PERIOD" means, for any date, until such time as each
of four consecutive fiscal quarters of the Company have commenced and ended
after the date of Closing, the period consisting of each full fiscal month of
the Company that has commenced and ended after the date of Closing on an
Annualized Basis and thereafter the most recently ended full fiscal quarter of
the Company with respect to which the Company has delivered or is required to
have delivered, the financial statements referred to in Section 7.1(a) or (b)
and the three immediately preceding full fiscal quarters.
"S&P" means Standard & Poor's Ratings Group, a Division of McGraw
Hill, Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SEED MONEY OBLIGATION" means an Investment made to provide start-up
capital to a Fund.
21
Schedule B
"SENIOR DEBT" means, for the Company and its Subsidiaries, on a
consolidated basis, all Indebtedness of the Company and its Subsidiaries (other
than Excluded Indebtedness) required to be reported a such on the consolidated
financial statements of the Company in accordance with GAAP other than
Subordinated Indebtedness.
"SENIOR DEBT LEVERAGE RATIO" means, for any date, the ratio of (a) the
aggregate amount of Senior Debt as at such date to (b) Cash Flow for the Rolling
Fiscal Period ending on or immediately prior to such date.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary for which
the Company alone or together with any other Significant Subsidiary beneficially
owns or holds 80% or more of the Voting Interests and an 80% or greater interest
in the profits or capital thereof.
"SUBORDINATED INDEBTEDNESS" means Indebtedness (including perpetual
debt that the Company is not required to repay) that is issued or assumed
pursuant to, or evidenced by, an indenture or other instrument containing
provisions for the subordination of such Indebtedness to the Notes which provide
at a minimum that (v) the weighted average life to maturity of such Indebtedness
is longer than the maturity of the Notes, (w) in the event of any bankruptcy, or
other similar proceeding in respect of the Company, the holders of the Notes
shall be entitled to receive payment in full in cash of all principal, Make-
Whole Amount and interest on the Notes (including all interest arising after the
commencement of such proceeding whether or not an allowed claim in such
proceeding) before the holder or holders of any such Subordinated Indebtedness
shall be entitled to receive any payment of principal, interest or premium
thereon, (x) if Company has defaulted in the payment of principal, Make-Whole
Amount or interest on the Notes, the holder or holders of any such Subordinated
Indebtedness shall not be entitled to payment of any principal, premium or
interest in respect thereof unless or until such default shall have been cured,
(y) if any other Event of Default has occurred and is continuing notice of which
has been given to the Company by the Required Holders, the holders of any such
Subordinated Indebtedness shall not be entitled to payment of any
22
Schedule B
principal, premium or interest in respect thereof unless a period of 179 days
has elapsed after the giving of such notice during which time the Notes have not
been accelerated as provided in Section 12.1 and (z) that the holder or holders
of such Subordinated Indebtedness may not accelerate the maturity thereof
without at least fifteen days notice to the Company (notice of which the Company
must agree to promptly provide to the holders of the Notes); provided that
--------
clause (v) shall not apply to Subordinated Indebtedness issued to a seller or
its affiliates in connection with an acquisition permitted by Section 10.11.
"SUBSIDIARY" means, 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 Company.
"SUBSIDIARY STOCK" means, with respect to any Person, the capital
stock, share capital, partnership interests or other equity interests (or any
options or warrants to purchase, or other securities exchangeable for or
convertible into, any such capital stock, share capital or equity interests) of
or in any Subsidiary of such Person.
"SUBSTANTIAL PART" means, with respect to any Transfer of property of
the Company and its Subsidiaries, any portion of such property if the total
revenues for the most recently ended Rolling Fiscal Period directly attributable
to such property, and all other property sold, leased or otherwise disposed of
by the Company and its Subsidiaries (other than as an Ordinary Course Transfer
or an Intergroup Transfer) during the twelve-month period ending with the date
of such Transfer exceeds 15% of the consolidated revenues of the Company and its
consolidated Subsidiaries during such Rolling Fiscal Period.
23
Schedule B
"SUPPORT CHARGE" means the expense reported by the Company or any of
its Subsidiaries in connection with a Support Investment.
"SUPPORT INVESTMENT" means any Investment that qualifies as an Exempt
Investment under clause (c) of the definition of "Exempt Investment".
"SUPPORT INVESTMENT INDEBTEDNESS" means any Indebtedness of the
Company or any of its Subsidiaries the proceeds of which are used to purchase
any Support Investment and that is limited in recourse to such Support
Investment.
"TOTAL DEBT" means, for the Company and its Subsidiaries, on a
consolidated basis, all Indebtedness (other than Excluded Indebtedness) of the
Company and its Subsidiaries required to be reported as such on the consolidated
financial statements of the Company in accordance with GAAP.
"TOTAL DEBT LEVERAGE RATIO" means, for any date, the ratio of (a) the
aggregate amount of Total Debt as at such date to (b) Cash Flow for the Rolling
Fiscal Period ending on or immediately prior to such date.
"TRANSFER" means, with respect to any Person, any transaction, or
series of transactions in which such Person sells, conveys, transfers, leases
(as lessor) or otherwise disposes of any of its property with an aggregate Fair
Market Value in excess of $2,000,000, including, without limitation, the
issuance or disposition of Subsidiary Stock.
"12b-1 PLAN" means any distribution plan adopted by a Fund pursuant to
Rule 12b-1 under the Investment Company Act.
"VOTING INTERESTS" means, in the case of a corporation, capital stock
of such corporation that entitles the holder thereof to voting or proxy rights
and, in the case of a partnership, a general partnership interest therein.
24
Schedule B
EXHIBIT 1
---------
[FORM OF NOTE]
NEW ENGLAND INVESTMENT COMPANIES, L.P.
6.54% SENIOR NOTE DUE JANUARY 9, 2003
No. [_____] [Date]
$[_______] PPN 644095 A*2
FOR VALUE RECEIVED, the undersigned, NEW ENGLAND INVESTMENT COMPANIES,
L.P. (herein called the "Company"), a limited partnership organized and existing
under the laws of the State of Delaware hereby promises to pay to
[___________________________], or registered assigns, the principal sum of
[___________________________] DOLLARS on January 9, 2003, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 6.54% per annum from the date hereof,
payable quarterly on the 9th day of April, July, October and January in each
year, commencing with the April 9, 1996, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable quarterly as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 8.54% or (ii) 1% over the rate of
interest publicly announced by Citibank, N.A. from time to time in New York, New
York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Citibank, N.A. or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreements referred to below.
1
Exhibit 1
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
December 28, 1995 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
Exhibit 1
This Note shall be construed and enforced in accordance with the laws
of the State of New York.
NEW ENGLAND INVESTMENT COMPANIES,
L.P.
By NEW ENGLAND INVESTMENT
COMPANIES, INC., its General Partner
By_________________________
[Title:]
3
Exhibit 1