NOTE PURCHASE AGREEMENT

Exhibit 4.1

 

EXECUTION VERSION

 

 

STONEMOR GP LLC,

STONEMOR PARTNERS L.P.,

STONEMOR OPERATING LLC, and

EACH OF THE SUBSIDIARY ISSUERS

LISTED ON THE SIGNATURE PAGES HEREOF

 

 

NOTE PURCHASE AGREEMENT

 

 

Dated as of September 20, 2004

 

7.66% Senior Secured Notes due 2009

 

 

TABLE OF CONTENTS

 

 

 

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STONEMOR GP LLC,

STONEMOR PARTNERS L.P.,

STONEMOR OPERATING LLC, and

EACH OF THE SUBSIDIARY ISSUERS

LISTED ON THE SIGNATURE PAGES HEREOF

 

155 Rittenhouse Circle

Bristol, PA 19007

(215) 826-2800

 

NOTE PURCHASE AGREEMENT

 

7.66% Senior Secured Notes due 2009

 

New York, New York

as of September 20, 2004

 

TO THE SEVERAL PURCHASERS WHOSE

    NAMES APPEAR IN THE ACCEPTANCE

    FORM AT THE END HEREOF

 

Ladies and Gentlemen:

 

The undersigned, STONEMOR GP LLC, a Delaware limited liability company (the “ General Partner ”), STONEMOR PARTNERS L.P., a Delaware limited partnership (the “ Parent ”), STONEMOR OPERATING LLC, a Delaware limited liability company (the “ Company ”), and each other Subsidiary of the Parent listed on the signature pages hereof under the heading “Subsidiary Issuers” (individually a “ Subsidiary Issuer ” and collectively the “ Subsidiary Issuers ”; and the Subsidiary Issuers and the Company individually an “ Issuer ” and collectively the “ Issuers ”) hereby agree with each of you (individually a “ Purchaser ” and collectively the “ Purchasers ”) as follows:

 

1.	THE NOTES, THE GUARANTEES AND SECURITY FOR THE NOTES.

 

1.1.	The Notes.

 

The Issuers have duly authorized an issue of their 7.66% Senior Secured Notes due 2009 in an aggregate principal amount of $80,000,000 (the “ Notes ”), each such note to mature, bear interest and otherwise be substantially in the form of Exhibit 1.1. As used herein, the term “ Notes ” shall include all notes originally issued pursuant to this Agreement and all notes delivered in substitution or exchange for any of said notes and, where applicable, shall include the singular number as well as the plural. Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

 

1.2.	The Guarantees.

 

The obligations of the Issuers under this Agreement and the Notes will be unconditionally guaranteed by the General Partner and the Parent (of which the Company is a wholly-owned subsidiary) pursuant to guarantees substantially in the form of Exhibit 1.2 (individually a “ Guarantee ” and collectively the “ Guarantees ”, which terms shall include at any time all Guarantees theretofore executed and delivered, whether on or before the Closing Date pursuant to Section 4.5 or from time to time thereafter pursuant to Section 9.9).

 

1.3.	Security for the Notes.

 

The Notes will be secured by the Collateral on the terms set forth in the Security Documents, including, inter alia , (a) fee mortgages, deeds of trust and assignments of leases and rents, each substantially in the form of Exhibit 1.3(a) with such changes thereto as may be recommended by local counsel referred to in Schedule 4.4(c) based on local laws or customary local practice, in favor of the Collateral Agent covering the Mortgaged Properties (collectively the “ Mortgages ”), (b) a security agreement, substantially in the form of Exhibit 1.3(b), between the Credit Parties and the Collateral Agent (the “ Security Agreement ”), (c) a pledge agreement, substantially in the form of Exhibit 1.3(c), between the Credit Parties and the Collateral Agent (the “ Pledge Agreement ”), and (d) one or more collateral account control agreements between the Credit Parties and the Collateral Agent (and a sub-agent as appropriate), in the form provided for in the Security Agreement (collectively the “ Collateral Account Agreements ”). The respective rights of the holders of the Notes and the Lenders party to the Credit Agreement with respect to the Collateral and other matters shall be governed by a master collateral agency and intercreditor agreement, substantially in the form of Exhibit 1.3(d), among the Purchasers, such Lenders and the Collateral Agent (the “ Intercreditor Agreement ”).

 

2.	THE TRANSACTIONS.

 

Prior to or on the Closing Date, (a) Cornerstone Family Services LLC, a Delaware limited liability company, Cornerstone Family Services, Inc., a Delaware corporation, and various of their Affiliates will reorganize by forming the General Partner, the Parent, certain of the Issuers and certain other Affiliates, for the purpose of the Parent qualifying as a publicly traded limited partnership under Section 7704 of the Internal Revenue Code, all in accordance with the terms and provisions of the Form S-1, (b) the Parent will sell common units representing limited partner interests in the Parent pursuant to a bona fide underwritten sale pursuant to the Form S-1 that is declared effective by the SEC, (c) the Credit Parties will enter into the Credit Agreement Documents and have the right to incur loans thereunder and issue letters of credit, (d) the Credit Parties will enter into this Agreement and other Finance Documents and the Issuers will sell the Notes to be purchased on the Closing Date as below permitted, and (e) the Credit Parties will pay fees and expenses in connection with the foregoing (the foregoing transactions collectively herein called the “ Transactions ”).

 

3.	PURCHASE OF NOTES; THE CLOSING.

 

Subject to the terms of this Agreement, the Issuers hereby agree to issue and sell to each Purchaser and each Purchaser agrees to purchase from the Issuers Notes in the aggregate

 

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principal amount set forth opposite its name in Schedule A hereto at a price of 100% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

 

The closing of the sale and purchase of the Notes to be purchased under this Agreement shall occur at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on September 20, 2004, or at such other location or on such later date as shall be mutually satisfactory to the Company and the Purchasers (the “ Closing Date ”). On the Closing Date the Issuers will deliver to each Purchaser the Notes to be purchased by it in the form of a single Note (or such greater number of Notes in denominations of at least $100,000 as such Purchaser may request prior to such closing), registered in such Purchaser’s name or the name of its nominee and dated the Closing Date against delivery by such Purchaser to the Issuers or their order of the purchase price therefor by wire transfer of immediately available funds for the account of Wachovia Bank, N.A. (Reference: Cornerstone Family) to account number 5000000017276 (ABA No.: 053 000 219) at Wachovia Bank, N.A., 301 S. College St., Charlotte, NC 28288 (Attn: Allison DeSalvo - Syndication Loan Services). If at such closing the Issuers shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

 

4.	CONDITIONS OF CLOSING.

 

The obligation of each Purchaser to purchase the Notes to be purchased by it hereunder shall be subject to the fulfillment to such Purchaser’s satisfaction on or before the Closing Date of the following conditions:

 

4.1.	Representations and Warranties.

 

The representations and warranties of the Credit Parties in this Agreement and in the other Finance Documents shall (except as expressly affected by the transactions contemplated hereby) be correct when made and correct on the Closing Date.

 

4.2.	Performance; No Default.

 

Each of the Credit Parties shall have performed and complied with all agreements and conditions contained in this Agreement and the other Documents on its or their respective parts required to be performed or complied with under this Agreement and the other Documents on or prior to the Closing Date; since December 31, 2003, no Credit Party shall have consolidated with, merged into, or sold, leased, transferred or otherwise disposed of its properties as an entirety or substantially as an entirety to, any Person, except as contemplated and consummated in connection with the Transactions; and after giving effect to the issue and sale of the Notes (and the substantially concurrent application of the proceeds thereof to repay Indebtedness as contemplated by Section 5.5), no Default or Event of Default shall have occurred and be continuing.

 

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4.3.	Compliance Certificates.

 

(a) Officer’s Certificates . Each Credit Party shall have delivered to such Purchaser an Officer’s Certificate, dated the Closing Date, certifying that the conditions specified in Sections 4.1, 4.2, 4.6 and 4.9 have been fulfilled.

 

(b) Secretary’s Certificates . Each Credit Party shall have delivered to such Purchaser a certificate certifying as to the resolutions attached thereto and other proceedings relating to the authorization, execution and delivery of this Agreement, the Notes and the other Finance Documents to which it is party.

 

4.4.	Opinions of Counsel.

 

Such Purchaser shall have received opinions of counsel, each dated the Closing Date and addressed to it, from

 

(a) Willkie Farr & Gallagher LLP, who are acting as the Purchasers’ special counsel in connection with this transaction, in form and substance satisfactory to such Purchaser,

 

(b) Blank Rome LLP, counsel for the Credit Parties, substantially in the form of Exhibit 4.4(b), and

 

(c) each firm listed on Schedule 4.4(c), substantially in the form of Exhibit 4.4(c) hereto (with appropriate variations for each state, as contemplated by said Exhibit),

 

and each such opinion shall cover such other matters incident to this transaction as such Purchaser may reasonably request. The Credit Parties hereby instruct such counsel referred to in clauses (b) and (c) above to deliver their respective opinions to the Purchasers.

 

4.5.	Guarantees.

 

A Guarantee, dated on or before the Closing Date, shall have been executed and delivered by the General Partner and the Parent (the General Partner and the Parent are sometimes individually a “ Guarantor ” and collectively the “ Guarantors ”, which term shall include at any time after the date of the Closing each Subsidiary Guarantor) in the form hereinabove recited and shall be in full force and effect.

 

4.6.	The Transactions.

 

The Transactions shall have been consummated in the manner described in the Offering Material, including without limitation pursuant to Documents in form and substance satisfactory to such Purchaser. Such Purchaser shall have received true and complete copies of the Documents and such other evidence of the consummation of the Transactions as such Purchaser shall reasonably request prior to the Closing Date.

 

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4.7.	Credit Agreement.

 

The Credit Parties shall have entered into the Credit Agreement in form and substance satisfactory to such Purchaser, and the Issuers shall have satisfied the conditions precedent to the initial Credit Events (as defined in the Credit Agreement). Such Purchaser shall have received true and complete copies of each certificate, opinion or other writing then or theretofore delivered to any party to the Credit Agreement in respect of the satisfaction of such conditions precedent (without duplication as to conditions specifically set forth in this Section 4), and in the case of opinions of counsel or other experts not addressed to such Purchaser, an appropriate reliance letter addressed to the Purchasers.

 

4.8.	Intercreditor Agreement.

 

The Intercreditor Agreement shall have been duly executed and delivered in the form hereinabove recited and shall be in full force and effect and such Purchaser shall have received a counterpart thereof executed by the Collateral Agent.

 

4.9.

Solvency.

 

Such Purchaser shall have such evidence reasonably requested by such Purchaser of the solvency of the Credit Parties on a consolidated basis after giving effect to the Transactions.

 

4.10.

Pledge Agreement.

 

Each of the following shall have occurred:

 

(a) the Pledge Agreement shall have been duly executed and delivered in the form hereinabove recited and shall be in full force and effect;

 

(b) where applicable certificates representing the Pledge Agreement Collateral), together with undated stock or unit powers for such certificates executed in blank, shall have been delivered to the Collateral Agent or its designee;

 

(c) such other certificates, instruments or documents constituting Collateral pledged thereunder shall have been delivered to the Collateral Agent; and

 

(d) such Purchaser shall have received evidence that all action necessary or, in the opinion of such Purchaser, desirable to create a perfected first priority Lien on the Collateral pledged thereunder shall have been taken.

 

4.11.

Other Security Documents.

 

Each of the following shall have occurred:

 

(a) the Security Agreement (and, to the extent required to be in effect at Closing pursuant to the terms of the Security Agreement, the Collateral Account

 

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Agreements) shall have been duly executed and delivered in the form hereinabove recited and shall be in full force and effect;

 

(b) the filing of proper Financing Statements shall have been duly authorized under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of such Purchaser, desirable to perfect the first priority Liens (and the second priority Lien in respect of Receivable Rights) purported to be created by such Security Documents; and

 

(c) such Purchaser shall have received from the Credit Parties a duly completed perfection certificate in the form of Exhibit 4.11(c).

 

4.12.

Mortgaged Properties; Mortgages.

 

The Collateral Agent shall have received (a) a Mortgage with respect to each Mortgaged Property, in recordable form satisfactory to such Purchaser, duly executed, acknowledged and delivered by the respective Mortgagor, (b) a mortgagee title insurance policy for each Mortgaged Property issued to the Collateral Agent by an insurer satisfactory to such Purchaser and in such form and amount as are acceptable to such Purchaser, insuring that such Mortgage is a valid first priority Lien on such Mortgaged Property subject to only such exceptions to title as shall be acceptable to such Purchaser and containing such endorsements and affirmative insurance as such Purchaser may require and as are obtainable in the applicable jurisdiction, and (c) lien searches satisfactory to such Purchaser with respect to the Issuers and each Guarantor in the applicable jurisdictions.

 

4.13.

Appraisals; Insurance; Environmental Matters.

 

(a) Such Purchaser shall have received satisfactory appraisals for the ten properties listed on Schedule 4.13(a).

 

(b) Such Purchaser shall have received evidence satisfactory to it that all insurance required by Section 9.1 in respect of the Mortgaged Properties is in full force and effect.

 

(c) Such Purchaser shall have received satisfactory copies of “Phase I” environmental reports prepared within 60 days prior to the Closing Date in connection with the ten properties listed on Schedule 4.13(a).

 

4.14.

Legality.

 

On the Closing Date the purchase of Notes by such Purchaser shall (a) be permitted by the laws and regulations of each jurisdiction to which it is 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, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser 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 such

 

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Purchaser, it shall have received an Officer’s Certificate of the Company certifying as to such matters of fact as it may reasonably specify to enable it to determine whether such purchase is so permitted.

 

4.15.

Private Placement Number.

 

A private placement number shall have been obtained with respect to the Notes from Standard & Poor’s CUSIP Service Bureau.

 

4.16.

Payment of Special Counsel Fees.

 

Without limiting the provisions of Section 15.1, the Issuers shall have paid on or before the Closing Date the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4(a) to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing Date.

 

4.17.

Funding Instructions.

 

At least three Business Days prior to the Closing Date such Purchaser shall have received written instructions signed by a Responsible Officer of the Company on letterhead of the Company reciting the details as specified in Section 3 of the manner of payment of the purchase price for the Notes to be purchased on the Closing Date.

 

4.18.

Other Purchases.

 

The other Purchasers shall have purchased Notes in the respective principal amounts to be purchased by them under this Agreement as specified in Schedule A.

 

4.19.

Proceedings Satisfactory.

 

All proceedings taken in connection with the issue of the Notes and the consummation of the transactions contemplated hereby and by the other Documents and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents, all in form and substance satisfactory to such Purchaser and the Purchasers’ special counsel, as such Purchaser or such special counsel may reasonably request in connection therewith.

 

5.	REPRESENTATIONS AND WARRANTIES.

 

Each Credit Party represents and warrants to the Purchasers that:

 

5.1.	Company Status.

 

Each of the Credit Parties (a) is a duly organized and validly existing Organization in good standing under the laws of the jurisdiction of its organization, (b) has the Organization power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (c) is duly qualified and is authorized

 

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to do business and is in good standing in all jurisdictions where it is required to be so qualified and where the failure to be so qualified (i) has had or (ii) could reasonably be expected to have, a Material Adverse Effect. The General Partner is the sole general partner of the Parent.

 

5.2.	Company Power and Authority.

 

Each of the Credit Parties has the Organization power and authority to execute, deliver and carry out the terms and provisions of the Documents to which it is a party and has taken all necessary Organization action to authorize the execution, delivery and performance of the Documents to which it is a party. Each of Credit Parties has duly executed and delivered each Document to which it is a party and each such Document constitutes the legal, valid and binding obligation of such Person enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).

 

5.3.	No Violation.

 

Neither the execution, delivery or performance by any Credit Party of the Documents to which it is a party, nor compliance by any Credit Party with the terms and provisions thereof, nor the consummation of the transactions contemplated herein or therein, will (a) contravene, conflict with or result in a breach or default under any applicable law, statute, rule or regulation, or any order, writ, injunction, judgment, ruling or decree of any court, arbitrator or governmental instrumentality, (b) contravene, constitute a default under, conflict or be inconsistent with or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or (other than pursuant to the Security Documents) result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of any Credit Party pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other agreement or instrument to which any Credit Party is a party or by which it or any of its property or assets are bound or to which it may be subject (including, without limitation, the Existing Indebtedness Agreements) or (c) contravene or violate any provision of the certificate of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of limited liability company, limited liability company agreement or equivalent organizational document, as the case may be, any Credit Party.

 

5.4.	Litigation

 

Except as disclosed on Schedule 5.4 as of the Closing Date, there are no actions, suits, proceedings or investigations pending or, to any Credit Party’s knowledge, threatened against or affecting, nor has any Credit Party received any notices of a claim, (a) with respect to any Document, or any portion of the Transactions, or (b) against any Credit Party (i) as to which the amount in controversy is in excess of $100,000 or (ii) that, if adversely determined, could individually or in the aggregate reasonably be expected to result in a Material Adverse Effect. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon the purchase and sale of the Notes or the other transactions contemplated hereby or by any other Document.

 

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5.5.	Use of Proceeds; Margin Regulations

 

(a) The proceeds of the Notes shall be utilized by the Issuers to repay a portion of the Existing Indebtedness under the Existing Credit Agreement.

 

(b) No part of the proceeds of the Notes will be used, and no part of the proceeds of the Existing Credit Agreement was used, directly or indirectly to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the sale of any Note nor the use of the proceeds thereof nor the sale of the Notes will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

5.6.	Governmental Approvals

 

Except as may have been obtained or made on or prior to the Closing Date (and which remain in full force and effect on the Closing Date), no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required in connection with (a) the execution, delivery and performance of any Document (other than filings contemplated by the Security Documents) or (b) the legality, validity, binding effect or enforceability of any Document.

 

5.7.	Investment Company Act

 

None of the Credit Parties is, or has at any time been, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

5.8.	Public Utility Holding Company Act

 

None the Credit Parties is, or has at any time been, a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

 

5.9.	Disclosure.

 

The Issuers, through their agents, Lehman Brothers and Credit Suisse First Boston, have delivered to each Purchaser a copy of a Private Placement Memorandum dated May 2004 (the “ Memorandum ”), relating to the transactions contemplated hereby. The Memorandum, together with Parent’s Form S-1 filed with the SEC on April 9, 2004 (as amended prior to the Closing Date, the “ Form S-1 ” and together with the Memorandum, the “ Offering Material ”) fairly describes, in all material respects, the general nature of the business and principal properties of the Credit Parties after giving effect to the Transactions. The Offering Material, and the financial statements listed in Section 5.10, 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.

 

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All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Credit Parties in writing to any Purchaser (including, without limitation, all information contained in the Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of any such Persons in writing to any Purchaser will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided. It is understood that the Projections and the Pro Forma Balance Sheet and other pro forma calculations and budgets furnished or to be furnished hereunder do not constitute factual information for purposes of this Section 5.9. Since June 30, 2004, there are no facts known to any Credit Party which, either individually or in the aggregate, (x) have had a Material Adverse Effect or (y) could reasonably be expected to have a Material Adverse Effect, which have not been disclosed herein or in such other documents, certificates and statements furnished to the Purchasers for use in connection with the transactions contemplated hereby.

 

5.10.

Financial Condition; Financial Statements

 

(a) On and as of the Closing Date, on a pro forma basis after giving effect to the Transactions, and to all Indebtedness (including the Notes) incurred, and to be incurred, and Liens created, and to be created, by each Credit Party in connection therewith, with respect to (i) the Parent (on a stand-alone basis), (ii) the Company (on a stand-alone basis), (iii) the Parent and its Subsidiaries (on a consolidated basis) and (iv) the Company and its Subsidiaries (on a consolidated basis), in each case, taking into account any rights of subrogation and contribution among the Credit Parties (x) the sum of the assets, at a fair valuation, of the Parent (on a stand-alone basis), the Company (on a stand-alone basis), the Parent and its Subsidiaries (on a consolidated basis) and the Company and its Subsidiaries (on a consolidated basis) will exceed its or their debts, (y) it has or they have not incurred nor intended to, nor believes or believe that it or they will, incur debts beyond its or their ability to pay such debts as such debts mature and (z) it or they will have sufficient capital with which to conduct its or their business. For purposes of this Section 5.10, “debt” means any liability on a claim, and “claim” means (i) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

 

(b) (i) The audited consolidated statements of financial condition of Cornerstone Family Services, Inc. and its Subsidiaries as of December 31, 2003, and the related consolidated statements of income and cash flow for such date, (ii) the unaudited consolidated balance sheet of Cornerstone Family Services, Inc. and its Subsidiaries as of the end of the fiscal quarter of the Parent ended June 30, 2004, and the related consolidated statements income and cash flow for the fiscal quarter then ended, and (iii) the Pro Forma Balance Sheet, all furnished to the Purchasers prior to the Closing Date, in each case present fairly in all material respects the financial condition of the Parent and its Subsidiaries at the date of such statements of financial condition and the results of operations of the Parent and its Subsidiaries for the periods covered

 

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thereby (or, in the case of the Pro Forma Balance Sheet, presents a good faith estimate of the consolidated pro forma financial condition of the Parent as at the date of the preparation thereof after giving effect to the Transactions at the date thereof or for the period covered thereby), subject, in the case of unaudited financial statements, to normal year-end adjustments. All such financial statements (other than the aforementioned Pro Forma Balance Sheet) have been prepared in accordance with GAAP and practices consistently applied, except, in the case of the quarterly and monthly statements, for the omission of footnotes and ordinary end of period adjustments and accruals (all of which are of a recurring nature and none of which individually, or in the aggregate, would be material).

 

(c) After giving effect to the Transactions, since December 31, 2003, nothing has occurred that (x) has had a Material Adverse Effect or (y) could reasonably be expected to have a Material Adverse Effect.

 

(d) Except as fully reflected in the financial statements described in Sections 5.10(b) and as otherwise permitted by Section 10.4, (i) there were as of the Closing Date (and after giving effect to the sale of Notes, and transactions occurring, on such date), no liabilities or obligations with respect to the Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, (x) have had a Material Adverse Effect or (y) could reasonably be expected to have a Material Adverse Effect and (ii) neither the Parent nor any Issuer knows of any basis for the assertion against the Parent or any of its Subsidiaries of any such liability or obligation which, either individually or in the aggregate, (x) have had a Material Adverse Effect or (y) could reasonably be expected to have a Material Adverse Effect.

 

(e) The Projections have been prepared on a basis consistent with the financial statements referred to in Section 5.10(b), and are based on good faith estimates and assumptions made by the management of the Parent, which assumptions such management believed were reasonable on the Closing Date, it being recognized by the Purchasers that such projections of future events are not to be viewed as facts and that actual results during the period or periods covered by any such Projections may differ from the projected results contained therein and such differences may be material.

 

5.11.

Security Interests.

 

On and after the Closing Date, each of the Security Documents creates (or after the execution, delivery and recordation thereof will create), as security for the Obligations, a valid and enforceable perfected security interest in and Lien on all of the Collateral subject thereto, superior to and prior to the rights of all third Persons (except as set forth in the next parenthetical), and subject to no other Liens (except that (i) the Security Agreement Collateral may be subject to Permitted Liens, (ii) the Pledge Agreement Collateral may be subject to the Liens described in clauses (i) and (v) of Section 10.3 and (iii) the security interest and mortgage lien created on any Mortgaged Property may be subject to Permitted Liens), in favor of the Collateral Agent. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings required in connection with any such Security Document which shall have been made on or prior to the Closing Date as

 

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contemplated by Section 4.10 through 4.12 or on or prior to the execution and delivery thereof to the extent contemplated by Sections 9.9 and 10.15.

 

5.12.

Compliance with ERISA.

 

(a) Schedule 5.12 sets forth, as of the Closing Date, each Plan and each Multiemployer Plan that is a pension plan within the meaning of Section 3(2) of ERISA (a “ Pension Plan ”) of the Parent. Each Pension Plan (and each related trust, insurance contract or fund, if any) is in, and the administration thereof has been in, material compliance with its terms and with all applicable laws, including, without limitation, ERISA and the Code; each Pension Plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a determination letter or an opinion letter since January 1, 2001 from the Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred that could reasonably be expected to result in any Material liability for the Parent, any Subsidiary of the Parent or any ERISA Affiliate; no Multiemployer Plan is insolvent or in reorganization; except as set forth on Schedule 5.12 with respect to the Pension Plans set forth therein, no Pension Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans (after taking into account the amount of Unfunded Current Liabilities set forth on Schedule 5.12 with respect to the Pension Plans set forth thereon), exceeds $250,000; no Pension Plan which is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated funding deficiency, within the meaning of such sections of the Code or ERISA, or has applied for or received a waiver of an accumulated funding deficiency or an extension of any amortization period, within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all contributions required to be made with respect to a Plan and a Multiemployer Plan have been timely made; neither the Parent nor any Subsidiary of the Parent nor any ERISA Affiliate has incurred any Material liability (including any indirect, contingent or secondary liability) to or on account of a Pension Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or, to the knowledge of the Parent or any Issuer or Subsidiary Guarantor, reasonably expects to incur any such Material liability under any of the foregoing sections with respect to any Pension Plan or a Multiemployer Plan; no condition exists which presents a Material risk to the Parent or any Subsidiary of the Parent or any ERISA Affiliate of incurring a Material liability to or on account of a Pension Plan or a Multiemployer Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted to terminate or appoint a trustee to administer any Pension Plan which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Pension Plan (other than routine claims for benefits) is pending, expected or, to the knowledge of the Parent, or any Issuer or Subsidiary Guarantor, threatened that could reasonably be expected to result in any Material liability for the Parent, any Subsidiary of the Parent or any ERISA Affiliate; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Parent and its Subsidiaries and ERISA Affiliates would not have any Material liabilities to any Multiemployer Plan in the event of a withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan ended prior to the Closing Date; each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of the Parent, any Subsidiary of the Parent, or

 

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any ERISA Affiliate has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code except to the extent that such noncompliance would not result in a Material liability; each group health plan (as defined in 45 Code of Federal Regulations Section 160.103) which covers or has covered employees or former employees of the Parent, any Subsidiary of the Parent or any ERISA Affiliate has at all times been operated in compliance with the provisions of the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder, except to the extent that any such failure could not reasonably be expected to result in a Material liability; no lien imposed under the Code or ERISA on the assets of the Parent or any Subsidiary of the Parent or any ERISA Affiliate exists or to the knowledge of the Parent, or any Issuer or Subsidiary Guarantor, could reasonably be expected to arise on account of any Plan or any Multiemployer Plan; and the Parent and its Subsidiaries do not maintain or contribute to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.

 

(b) 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 Credit Parties to each Purchaser in the first sentence of this Section 5.12(b) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

 

5.13.

Capitalization

 

On the Closing Date and after giving effect to the Transactions and the other transactions contemplated hereby, the outstanding Equity Interests in the Parent shall consist of (i) the general partner interests in the Parent, (ii) the incentive distribution rights, (iii) 4,239,782 common units, (such common units, together with any subsequently issued or issuable common units of the Parent, collectively, the “ Partnership Common Units ”) and (iv) 4,239,782 subordinated units, 4,239,782 of which are issued and outstanding (the “ Partnership Subordinated Units ”). On the Closing Date and after giving effect to the Transactions and the other transactions contemplated hereby, all outstanding Equity Interests in the Parent have been duly and validly issued and are fully paid and free of any preemptive rights. As of the Closing Date, except as set forth on Schedule 5.13, the Parent does not have outstanding any securities convertible into or exchangeable for its units or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims for the issuance of, the Partnership Common Units. All of the outstanding Equity Interests in each Issuer and Subsidiary Guarantor have been validly issued, are fully paid and nonassessable and are (except as set forth on Schedule 5.14) owned by a Credit Party free and clear of any Lien other than any Lien in favor of the Collateral Agent.

 

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5.14.

Subsidiaries

 

On and as of the Closing Date and after giving effect to the Transactions, the Parent has no Subsidiaries other than the Issuers, and the Issuers have no Subsidiaries other than those other Issuers described as such on Schedule 5.14. Schedule 5.14 correctly sets forth, as of the Closing Date and after giving effect to the Transactions, the percentage ownership (direct and indirect) of each Credit Party in each class of capital stock or other Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding shares of Equity Interests of each Issuer and Subsidiary Guarantor have been duly and validly issued, are fully paid and nonassessable (in the case of corporate Issuers and Subsidiary Guarantors) and have been issued free of any preemptive rights. No Issuer or Subsidiary Guarantor has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights. On the Closing Date, no encumbrance or restriction not permitted by Section 10.14 exists.

 

5.15.

Intellectual Property, etc.

 

Each of the Credit Parties owns or has the rights to use all patents, trademarks, permits, service marks, trade names, technology copyrights, licenses, franchises and formulas, or other rights with respect to the foregoing, reasonably necessary for the conduct of its business, without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, (a) has had or (b) could reasonably be expected to have, a Material Adverse Effect. To the best knowledge of the Credit Parties, no product of any Credit Parity infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person, and to the best knowledge of the Credit Parties, there is no material violation by any Person of any right of any Credit Party with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by any Credit Party.

 

5.16.

Compliance with Statutes; Agreements, etc.

 

Each of the Credit Parties is in compliance with (a) all applicable statutes, regulations, rules, administrative orders and other orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property and (b) all contracts and agreements to which it is a party, except such non-compliance as could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

 

5.17.

Environmental Matters

 

(a) Each of the Credit Parties has complied with, and on the Closing Date is in compliance with, applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws and no Credit Party is liable for any Material penalties, fines or forfeitures for failure to comply with any of the foregoing. There are no pending or past Environmental Claims, or, to the best knowledge of any Credit Party, any threatened

 

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Environmental Claims against any Credit Party or any Real Property owned or operated by any Credit Party. There are no facts, circumstances, conditions or occurrences on any Real Property now or formerly owned or operated by any Credit Party or on any property adjoining or in the vicinity of any such Real Property that would reasonably be expected (i) to form the basis of an Environmental Claim against any Credit Party or any such Real Property or (ii) to cause any such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Property by any Credit Party under any applicable Environmental Law. To the extent that the current or former operations of any Credit Party require such Credit Party to apply for and obtain a permit under any Environmental Law, such permit has either been granted to, or timely applied for by, the Credit Party, and such Credit Party, if such permit has not yet been granted, does not have any reason to believe that the application for such a permit will be denied or that compliance with such permit will have a Material Adverse Effect.

 

(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, any Real Property now or formerly owned or operated by any Credit Party except in compliance with applicable Environmental Laws and as may be reasonably required in connection with the operation, use and maintenance of such Real Property by a Credit Party’s business. Hazardous Materials have not at any time been Released or threatened to be Released on or from any Real Property owned or operated by any Credit Party or by any person acting for or under contract to such Credit Party, or to the knowledge of the Credit Party, by any other Person in respect of Real Property owned or operated by such Credit Party, except in compliance with applicable Environmental Laws. At any Real Property formerly owned or operated by any Credit Party or by any person acting for or under contract to such Credit Party, or, to the knowledge of the Credit Party, by any other Person, there was not, during the time such Credit Party, or any Person owning or operating such Real Property for such Credit Party owned or operated such Real Property, any Release or threat of Release of any Hazardous Materials onto or from such Real Property.

 

(c) Notwithstanding anything to the contrary in this Section 5.17, the representations made in this Section 5.17 shall only be untrue if the aggregate effect of all conditions, failures, noncompliances, Environmental Claims, Hazardous Materials, Releases and presence of underground storage tanks, in each case of the types described above, (x) has had or (y) could reasonably be expected to have, a Material Adverse Effect.

 

5.18.

Properties

 

All Real Property owned by any Credit Party and all material Leaseholds leased by any Credit Party, in each case as of the Closing Date and after giving effect to the Transactions, and the nature of the interest therein, is correctly set forth in Schedule 5.18. Each Credit Party has good and marketable title to, or a validly subsisting leasehold interest in, all material properties owned or leased by it, including all Real Property reflected in Schedule 5.18 and in the financial statements (including the Pro Forma Balance Sheet) referred to in Section 5.10(b) (except such properties sold in the ordinary course of business since the dates of the respective financial statements referred to therein), free and clear of all Liens, other than Permitted Liens.

 

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5.19.

Labor Relations

 

No Credit Party is engaged in any unfair labor practice that (x) has had or (y) could reasonably be expected to have, a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against any Credit Party or, to the knowledge of any Credit Party, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any Credit Party or, to the knowledge of any Credit Party, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against any Credit Party or, to the knowledge of any Credit Party, threatened against any Credit Party and (iii) no union representation question existing with respect to the employees of any Credit Party and no union organizing activities are taking place, except (with respect to any matter specified in clause (i), (ii) or (iii) above, either individually or in the aggregate) such as (x) has not had and (y) could not reasonably be expected to have, a Material Adverse Effect.

 

5.20.

Tax Returns and Payments

 

Each Credit Party has timely filed all tax returns required to be filed by it in any jurisdiction and has paid all taxes and assessments payable by it or with respect to its properties, income or franchises which have become due, except for (a) tax returns (other than Federal tax returns), the failure of which to file could not reasonably be expected to be Material and (b) taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) being contested in good faith and adequately disclosed and fully provided for on the financial statements of such Credit Party in accordance with GAAP and with respect to which such Credit Party has established adequate reserves in accordance with GAAP. Each Credit Party has at all times paid, or has provided adequate reserves (in the good faith judgment of the management of such Credit Party) for the payment of, all taxes required to be paid by it for all prior fiscal years and for the current fiscal year to date. There is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of any Credit Party, threatened by any authority regarding any taxes relating to any Credit Party. No Credit Party knows of any basis for any other taxes or assessments that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Credit Party has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of any Credit Party, or is aware of any circumstances that would cause the taxable years or other taxable periods of any Credit Party not to be subject to the normally applicable statute of limitations. The income of the Parent, the Company and the Subsidiaries of the Company that are treated as disregarded entities pursuant to Treasury Regulation Section 301.7701-3 are not subject to federal or state income tax at the company level.

 

5.21.

Existing Indebtedness.

 

Schedule 5.21 sets forth a true and complete list of all Indebtedness of the Credit Parties as of the Closing Date and which is to remain outstanding after giving effect to the Transactions (excluding the Obligations) (the “ Existing Indebtedness ” ), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any other entity which directly or indirectly guaranteed such debt. No Credit Party is in default and no

 

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waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of such Credit Party and no event or condition exists with respect to any Indebtedness of such Credit Party 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. Except as disclosed in Schedule 5.21, no Credit Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.3.

 

5.22.

Insurance.

 

Set forth on Schedule 5.22 hereto is a true, correct and complete summary of all insurance carried by each Credit Party on and as of the Closing Date (immediately after giving effect to the Transactions), with the amounts insured set forth therein.

 

5.23.

Transaction

 

At the time of consummation thereof, each element of the Transactions shall have been consummated in all material respects in accordance with the terms of the relevant Documents therefor and all applicable laws. At the time of consummation thereof, all consents and approvals of, and filings and registrations with, and all other actions in respect of, all governmental agencies, authorities or instrumentalities required in order to make or consummate each element of the Transactions in all material respects in accordance with the terms of the relevant Documents therefor and all applicable laws have been obtained, given, filed or taken and are or will be in full force and effect (or effective judicial relief with respect thereto has been obtained). All applicable waiting periods with respect thereto have or, prior to the time when required, will have, expired without, in all such cases, any action being taken by any competent authority which restrains, prevents, or imposes material adverse conditions upon the Transactions. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon any element of the Transactions, the purchase and sale of the Notes, or the performance by any Credit Party of their respective obligations under the Documents and all applicable laws.

 

5.24.

Common Enterprise.

 

Each Issuer is engaged solely in a Permitted Business as of the Closing Date. These operations require financing on a basis such that the credit supplied can be made available from time to time to the Issuers, as required for the continued successful operation of the Issuers as a whole. The Issuers have requested the Purchasers to make credit available hereunder primarily for the purposes set forth in Section 5.5. The Credit Parties expect to derive benefit, directly or indirectly, from a portion of the credit extended by the Purchasers hereunder, both in its separate capacity and as a member of the group of companies, since the successful operation and condition of the Credit Parties is dependent on the continued successful performance of the functions of the group as a whole. The Credit Parties acknowledge that, but for the agreement by each of the Credit Parties to execute and deliver this Agreement and the Guarantee, the Purchasers would not have made available the credit facilities established on the terms set forth herein.

 

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5.25.

Compliance with Cemetery Laws.

 

Each of the Credit Parties has complied in all material respects with, and on the Closing Date is in material compliance with, all applicable federal, state, local laws, regulations, administrative orders and other orders governing the operation of cemeteries, the providing of cemetery services, and the sale of cemetery merchandise, including, but not limited to: (a) obtaining and maintaining valid registration, permits, and certificates to conduct the cemetery business from the appropriate governmental authorities; (b) employing qualified representatives, employees, and sales agents who are registered with the appropriate governmental authorities; (c) submitting all required notices, records, statements, affidavits, financial reports and other documents, in form and substance, to the appropriate governmental authorities; (d) selling cemetery merchandise and cemetery services, including making required disclosures, in accordance with applicable laws; (e) using contracts, agreements, and other documents in form, wording and substance that comply with applicable laws; (f) establishing, funding and administering trust or escrow accounts, including, but not limited to, Trust Accounts, in accordance with applicable laws; (g) appointing qualified trustees and escrow agents to manage and administer trust funds established under applicable state laws; (h) maintaining and caring for cemeteries with the standard of care required by applicable laws; (i) constructing columbaria and mausoleums in accordance with applicable laws; (j) canceling contracts for cemetery services and cemetery merchandise, including making refunds to consumers, in accordance with applicable laws; (k) owning no more than the maximum amount of land permitted for cemetery and burial use under applicable laws; and (l) establishing cemeteries in areas permitted by applicable laws. Furthermore, there are no pending or, to the knowledge of any Credit Party, threatened claims or suspensions against the Credit Parties by any Person, entity or governmental authority related to the operation of cemeteries, the providing of cemetery services, and the sale of cemetery merchandise.

 

5.26.

Private Offering by the Company.

 

Neither the Issuers nor anyone acting on their 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 the Purchasers and not more than 110 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Issuers nor anyone acting on their 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.

 

5.27.

Foreign Assets Control Regulations, etc.

 

Neither the sale of the Notes by the Issuers hereunder nor any Issuer’s use of the proceeds thereof will violate (a) the Trading with the Enemy Act, as amended, or (b) 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. Without limiting the foregoing, no Issuer or Subsidiary Guarantor (a) is or will become a person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b)

 

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knowingly engages or will engage in any dealings or transactions, or be otherwise associated, with any such person. The Issuers and the Subsidiary Guarantors are in compliance with the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism Act (USA Patriot Act of 2001).

 

6.	REPRESENTATIONS OF THE PURCHASERS.

 

6.1.	Purchase for Investment.

 

Each Purchaser severally represents that it is purchasing the Notes to be purchased by it for its own account or for one or more separate accounts maintained by it 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 its or their property shall at all times be within its or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act or any applicable state securities or “blue sky” laws 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 Issuers are not required to register the Notes.

 

6.2.	Source of Funds.

 

Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by it to pay the purchase price of the Notes to be purchased by it hereunder:

 

(a) the Source is an “insurance company general account”, as such term is defined in Prohibited Transaction Exemption (“ PTE ”) 95-60 (issued July 12, 1995), and there is no employee benefit plan with respect to which the aggregate amount of such general account’s reserves and liabilities for the contracts held by or on behalf of such plan and all other employee benefit plans maintained by the same employer (and affiliates thereof as defined in section V(a)(1) of PTE 95-60) or by the same employee organization (in each case determined in accordance with PTE 95-60) exceeds or will exceed 10% of the total of all reserves and liabilities of such general account (determined in accordance with PTE 95-60, exclusive of separate account liabilities, plus any applicable surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed in such Purchaser’s state of domicile) as of the Closing Date; or

 

(b) the Source is a separate account that is maintained solely in connection with its 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

 

(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 disclosed by such Purchaser to the Company in writing pursuant to this paragraph (c), no employee benefit plan or group of plans maintained by the same employer or

 

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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 Parent 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 constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in the Parent and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this paragraph (e); or

 

(f) the Source is a governmental plan; or

 

(g) 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 (g); or

 

(h) 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.

 

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7.	INFORMATION AS TO THE PARENT AND THE ISSUERS.

 

7.1.	Information Covenants.

 

The Parent will furnish, or will cause to be furnished, to each holder of Notes that is an Institutional Investor:

 

(a) Quarterly Financial Statements . Within 45 days after the close of the first three quarterly accounting periods in each fiscal year of the Parent, the consolidated balance sheet of the Parent and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of income and retained earnings and of cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, all of which shall be in reasonable detail and certified by a Senior Financial Officer of the General Partner that they fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.

 

(b) Annual Financial Statements . Within 95 days after the close of each fiscal year of the Parent, the audited consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, certified by independent certified public accountants of recognized national standing as shall be reasonably acceptable to the Required Holders, in each case to the effect that such statements fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the dates indicated and the results of their operations and changes in financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, together with a certificate of such accounting firm stating that in the course of its regular audit of the business of the Parent and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, no Default or Event of Default which has occurred and is continuing as a result of Sections 10.8, 10.9 or 10.10 or has come to their attention or, if such a Default or an Event of Default has come to their attention, a statement as to the nature thereof.

 

(c) Monthly Financial Statements . Within 35 days after the last day of each month (or 45 day after the last day of any month that is the end of a fiscal quarter), the consolidated balance sheet of the Parent and its Subsidiaries as at the end of such monthly accounting period and the related consolidated statements of income and retained earnings and of cash flows for such monthly accounting period and accounts receivable and, to the extent requested by the Required Holders or provided to the Lenders, accounts payable agings, all of which shall be in reasonable detail and certified by the Senior Financial Officer of the General Partner that they fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.

 

(d) Budgets, etc. Not more than 60 days after the commencement of each fiscal year of the Parent, consolidated budgets of the Parent and its Subsidiaries in reasonable detail for each of the four fiscal quarters of such fiscal year, in each case as prepared by management in accordance with GAAP and setting forth the principal assumptions upon which such budgets are based.

 

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(e) Compliance Certificates . At the time of the delivery of the financial statements provided for in Sections 7.1(a) and (b), a compliance certificate of the Senior Financial Officer of the General Partner, in the form set forth as Exhibit 7.1(e) hereto, to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall, if delivered in connection with the financial statements in respect of a period ending on the last day of a fiscal quarter or fiscal year of the Parent, set forth the calculations required to establish whether the Parent and its Subsidiaries were in compliance with the provisions of Sections 10.8 to 10.10, inclusive, as at the end of such fiscal quarter or year, as the case may be.

 

(f) Notice of Default or Litigation . Promptly, and in any event within five Business Days after an officer of any Credit Party obtains actual knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, which notice shall specify the nature and period of existence thereof and what action such Credit Party proposes to take with respect thereto, (ii) any litigation or proceeding pending or threatened (x) against any Credit Party which (I) has had or (II) could reasonably be expected, to have a Material Adverse Effect, (y) with respect to any material Indebtedness of any Credit Party or (z) with respect to any Document, (iii) any material governmental investigation pending or threatened against any Credit Party and (iv) any other event which (x) has had or (y) could reasonably be expected to have, a Material Adverse Effect.

 

(g) Management Letters . Promptly upon receipt thereof, a copy of any “management letter” submitted to any Credit Party by its independent accountants in connection with any annual, interim or special audit made by them of the books of such Credit Party and management’s responses thereto.

 

(h) Environmental Matters . Promptly after any officer of any Credit Party obtains actual knowledge of any of the following (but only to the extent that any of the following, either individually or in the aggregate, (x) has had or (y) could reasonably be expected to have, (a) a Material Adverse Effect or (b) a cost to such Credit Party in excess of $100,000), written notice of:

 

(i) any pending or threatened Environmental Claim against any Credit Party or any Real Property now, formerly, or hereafter owned or operated by any Credit Party;

 

(ii) any condition or occurrence on any Real Property now, formerly, or hereafter owned or operated by any Credit Party that (x) results in noncompliance by any Credit Party with any applicable Environmental Law or (y) could reasonably be anticipated to form the basis of an Environmental Claim any Credit Party or any such Real Property;

 

(iii) any condition or occurrence on any Real Property now, formerly, or hereafter owned or operated by any Credit Party that could reasonably be anticipated to cause such Real Property to be subject to any restrictions on the

 

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ownership, occupancy, use or transferability by such Credit Party of its interest in such Real Property under any Environmental Law; and

 

(iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property now, formerly, or hereafter owned or operated by any Credit Party.

 

All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Credit Party’s response or proposed response thereto. In addition, the Credit Parties agree to provide the holders of Notes with copies of such detailed reports relating to any of the matters set forth in clauses (i)-(iv) above as may reasonably be requested by the Required Holders.

 

(i) Reports . Promptly upon transmission thereof, (i) copies of any filings and registrations with, and reports to, the SEC by any Credit Party, (ii) copies of all financial information, notices, press releases and reports as the Credit Parties shall send to the Lenders and the Administrative Agent under the Credit Agreement, (iii) copies of all financial statements, proxy statements, notices and reports as such Credit Party shall send generally to analysts and the holders of any class of Equity Interests or Indebtedness in their capacity as such holders (to the extent not theretofore delivered to the holders of Notes pursuant to this Agreement) and (iv) with reasonable promptness, such other information or documents (financial or otherwise) as the Required Holders may reasonably request from time to time.

 

(j) Change in Senior Management . Promptly upon knowledge by any Credit Party of any change or intended change in the person holding any Senior Manager position.

 

(k) Investments . Monthly summaries, prepared by the Parent’s investment advisors, describing all investments of the Trust Funds.

 

(l) Material Adverse Effect . Without duplication of any other provision of this Section 7.1, notice of any event which could reasonably be expected to have a Material Adverse Effect.

 

(m) 144A Information . Promptly upon request therefor by any holder of Notes or by any prospective purchaser of Notes designated by the holder thereof, all information, statements, reports, descriptions of business, products and services, financial statements and other information as such holder or prospective purchaser, may reasonably determine to be required to be delivered in order to comply with Rule 144A promulgated under the Securities Act.

 

(n) Phase II Reports . Within 60 days after the Closing Date, the Parent shall deliver to each holder of Notes satisfactory copies of “Phase II” environmental reports prepared for any of the ten properties listed on Schedule 4.13(a) for which any Phase I environmental for such property delivered pursuant to Section 4.13(c) recommends the undertaking of a “Phase II” report.

 

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(o) Bring Down Opinion . Within 30 days of the anniversary of the Closing Date falling in 2007, the Credit Parties will cause to be delivered to the holders of Notes a “bring down” perfection opinion of Blank Rome LLP (or such other counsel reasonably acceptable to the Required Holders) in form and substance reasonably satisfactory to the Required Holders and their counsel.

 

(p) Other Information . From time to time, with reasonable promptness, such other data, information or documents (financial or otherwise) with respect to the Credit Parties as from time to time may be reasonably requested by any such holder of Notes.

 

7.2.	Books and Records.

 

Each Credit Party keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all material requirements of law shall be made of all dealings and transactions in relation to its business and activities.

 

7.3.	Inspection.

 

Without limiting any additional similar requirements set forth in any Security Document, the Parent will, and will cause each of its Subsidiaries to, permit, upon reasonable prior notice to a Senior Financial Officer or other authorized officer of the Parent or the Company, officers and designated representatives of the holders of Notes, up to twice in any calendar year at the joint and several expense of the Issuers, and at any time after an Event of Default has occurred, at the joint and several expense of the Issuers, to visit and inspect any of the properties or assets of the Parent or any of its Subsidiaries in whomsoever’s possession, and to examine the books of account of the Parent and any of its Subsidiaries and discuss the affairs, finances and accounts of the Parent and of any of its Subsidiaries with, and be advised as to the same by, their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as the holders of Notes may desire.

 

8.	PAYMENT AND PREPAYMENT OF NOTES.

 

8.1.	Payment at Maturity.

 

The entire unpaid principal amount of the Notes shall be due and payable at the final maturity date set forth therein.

 

8.2.	Mandatory Prepayment From Available Proceeds.

 

(a) The Issuers will, promptly upon the occurrence of a Prepayment Event, and in any event within five days thereafter, give written notice thereof to the holders of the Notes, which notice shall contain an irrevocable offer by the Issuers to apply to the prepayment of the Notes an amount (rounded to the nearest $1,000) equal to the Available Proceeds (as below defined), such prepayment to be made on a date (an “ Available Proceeds Prepayment Date ”) specified in such notice (which date shall be a Business Day not less than 15 days and not more than 30 days after the date of such notice), in each case at the principal amount so to be prepaid, together with accrued interest on such principal amount to the Available Proceeds Prepayment Date and the Make-Whole Amount determined for the prepayment date with respect

 

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to such principal amount. Each holder of a Note may reject such offer (in whole but not in part with respect to any Note) and shall be deemed to have accepted such offer unless such holder shall have rejected such offer by notice delivered to the Company in writing or by facsimile (or by telephone promptly confirmed in writing or by facsimile) at least five Business Days prior to the Available Proceeds Prepayment Date. If any such holder shall have rejected such prepayment offer, such holder shall not be deemed to have waived its rights under this Section 8.2 with respect to any later prepayment offer. A holder of more than one Note may accept or reject a prepayment offer under this Section 8.2 in respect of all or any one of its Notes. If any such holder rejects such prepayment offer in respect of any Note, then the Issuers shall promptly offer to all non-rejecting holders to prepay Notes on the Available Proceeds Prepayment Date in an additional principal amount (rounded to the nearest $1,000) equal to the share of such Available Proceeds attributable to the Notes in respect of which such prepayment offer has been rejected by all rejecting holders. Unless a non-rejecting holder rejects such offer within one Business Day after receiving the same, such non-rejecting holder shall be deemed to have accepted such offer in respect of its pro rata share of such offer allocable among all non-rejecting holders.

 

(b) The Company will, at least one Business Day prior to an Available Proceeds Prepayment Date, give each holder of Notes a notice specifying (i) the aggregate principal amount of all Notes to be prepaid on such Available Proceeds Prepayment Date, and (ii) the principal amount, if any, of each Note held by such holder to be prepaid on such Available Proceeds Prepayment Date.

 

(c) As used in this Section 8.2:

 

“ Available Proceeds ” means, at any date of determination with respect to a Prepayment Event, an amount equal to the Pro Rata Share of the holders of the Notes in respect of the Net Cash Proceeds or Net Sale Proceeds, as applicable resulting from such Prepayment Event.

 

“ Net Cash Proceeds ” means the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net, without duplication, of the related Credit Party’s (i) reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary discounts and selling commissions and reasonable legal, advisory and other fees and expenses associated therewith) relating to such event at the time of, or within 30 days after, the date of such event and (ii) the estimated marginal increase in income taxes which will be payable by the Parent’s consolidated group with respect to the fiscal year in which the event occurs as a result of such event.

 

“ Net Sale Proceeds ” means for any Asset Sale, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from any sale of assets, net, without duplication, of the related Credit Party’s (i) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary discounts and selling commissions and reasonable legal, advisory and other fees and expenses, including title and recording expenses and sale and transfer taxes, associated therewith) and payments of

 

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unassumed liabilities relating to the assets sold at the time of, or within 30 days after, the date of such sale, (ii) the amount of such gross cash proceeds required to be used to repay any Indebtedness (other than the Notes) which is secured by the respective assets which were sold, and (iii) the estimated marginal increase in income taxes which will be payable by the Partner’s consolidated group with respect to the fiscal year in which the sale occurs as a result of such sale. Net Sale Proceeds shall not include any trade-in-credits or purchase price reductions received by the Partner or any of its Subsidiaries in connection with an exchange of equipment for replacement equipment that is the functional equivalent of such exchanged equipment.

 

“ Prepayment Event ” means (a) any Credit Party receives Net Sale Proceeds from any Asset Sale, (b) any Credit Party receives Net Cash Proceeds from any incurrence of Indebtedness (other than Indebtedness permitted to be incurred pursuant to Section 10.4 as in effect on the Closing Date), (c) any Credit Party receives Net Cash Proceeds from any issuance of Equity Interests by the Parent (other than the cash proceeds of the issuance of Equity Interests to the extent issued in connection with a Permitted Acquisition that is completed within 180 days before or after the date of receipt of such cash proceeds), (d) any Credit Party receives Net Cash Proceeds from any issuance of capital stock or other Equity Interests by, or cash capital contributions to, any Subsidiary of the Parent (other than (x) issuances of common Equity Interests to the Parent or any other Subsidiary of the Parent by the Parent or any other Subsidiary of the Parent, and (y) cash capital contributions to any Subsidiary of the Parent by the Parent or any Subsidiary of the Parent), and (e) any Credit Party receives any proceeds from any Recovery Event (other than proceeds from Recovery Events in an amount less than $500,000 per Recovery Event (net of reasonable costs (including, without limitation, legal costs and expenses) and taxes incurred in connection with such Recovery Event and the amount of such proceeds required to be used to repay any Indebtedness (other than the Notes) which is secured by the respective assets subject to such Recovery Event). Notwithstanding the foregoing:

 

(a) the (i) aggregate Net Sale Proceeds from Assets Sales received during any fiscal year may be retained by the Parent and its Subsidiaries without giving rise to an obligation to offer to prepay the Notes under this Section 8.2, so long as no Default or Event of Default exists at the time such Net Sale Proceeds are received and a Responsible Officer of the Parent has delivered a certificate to the holders of Notes on or prior to such date stating that such Net Sale Proceeds shall be used to purchase capital assets used or to be used in the businesses permitted pursuant to Section 10.1 (including, without limitation (but only to the extent permitted by Section 9.12), the purchase of the Equity Interests of a Person engaged in such businesses) within 180 days following the date of receipt of such Net Sale Proceeds from such Asset Sale (which certificate shall set forth the estimates of the proceeds to be so expended) and (ii) if all or any portion of such Net Sale Proceeds not required to be used to make an offer to prepay Notes under this Section 8.2 are not so used within such 180 day period, the Issuers shall make an offer to prepay the Notes under this Section 8.2 with such remaining portion on the last day of such 180 day period (or such earlier date, if any, as the Board of Directors (or equivalent) of the Parent or such Subsidiary, as the case may be, determines not to reinvest the Net Sale Proceeds relating to such Asset Sale as set forth above); and

 

(b) with respect to proceeds from a Recovery Event, so long as no Default or Event of Default then exists and such proceeds do not exceed $500,000, the Issuers shall

 

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not be required to make an offer to prepay the Notes pursuant to Section 8.2 on such date to the extent that a Responsible Officer of the Parent has delivered a certificate to the holders of Notes on or prior to such date stating that such proceeds shall be used or shall be committed to be used to replace or restore any properties or assets in respect of which such proceeds were paid within 180 days following the date of such Recovery Event (which certificate shall set forth the estimates of the proceeds to be so expended), and (y) so long as no Default or Event of Default then exists and to the extent that (a) the amount of such proceeds exceeds $500,000, and (b) a Responsible Officer of the Parent has delivered to the holders of Notes a certificate on or prior to the date an offer to prepay the Notes would otherwise be required pursuant to Section 8.2 in the form described in clause (x) above, then the entire amount of the proceeds of such Recovery Event and not just the portion in excess of $500,000 shall be deposited with the Collateral Agent pursuant to a cash collateral arrangement reasonably satisfactory to the Collateral Agent whereby such proceeds shall be disbursed to the Parent or the respective Subsidiary from time to time as needed to pay or reimburse the Parent or the respective Subsidiary in connection with the replacement or restoration of the respective properties or assets (pursuant to such certification requirements as may be established by the Collateral Agent); provided further, that at any time while an Event of Default has occurred and is continuing, the Required Holders may direct the Issuers to make an offer to prepay the Notes as would otherwise be required by Section 8.2 with the proceeds then on deposit in such collateral account; and provided further, that if all or any portion of such proceeds not required to be used to make an offer to prepay Notes under this Section 8.2 are not so used within such 180 day period, the Issuers shall make an offer to prepay the Notes under the Section 8.2 with such remaining portion on the date occurring 180 days after the date of the respective Recovery Event.

 

“ Pro Rata Share ” means, in relation to any amount, (a) with respect to the holders of the Notes, a share of such amount determined by multiplying such amount by a fraction, the numerator of which shall be the aggregate unpaid principal amount of Notes at the time outstanding plus any Make-Whole Amount then due, and the denominator of which shall be the sum of the Acquisition Facility Amount referred to below and the aggregate unpaid principal amount of the Notes at the time outstanding plus any Make-Whole Amount then due (the sum of the foregoing amounts being referred to as the “ Denominator Amount ”), (b) with respect to all the Lenders under the Acquisition Facility as a group, a share of such amount determined by multiplying such amount by a fraction, the numerator of which shall be the sum of the aggregate principal amount of outstanding loans under the Acquisition Facility (such amount being referred to as the “ Acquisition Facility Amount ”), and the denominator of which shall be the Denominator Amount. For purposes of the determination of the Pro Rata Share of the Lenders under the Acquisition Facility, a portion of the Current Swap Obligations (as defined in the Intercreditor Agreement) shall be deemed to be principal in the manner contemplated by the definition of “Pro Rata Basis” in the Intercreditor Agreement.

 

The Company will furnish to the holders of the Notes, concurrently with the financial statements and other information furnished pursuant to Sections 7.1(a) and (b), a certificate of a Senior Financial Officer of the Company containing computations in reasonable detail showing whether any Net Cash Proceeds existed during the fiscal period covered by such

 

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financial statements, the source of such Net Cash Proceeds and the resulting amount or amounts of Available Proceeds.

 

(d) Notwithstanding anything to the contrary contained in this Agreement, neither the exercise of the underwriters’ over-allotment option nor the redemption by the Parent of Partnership Common Units or Partnership Subordinated Units in connection with any such exercise, in each case, as exercised within thirty days of the Closing Date and as otherwise described in the prospectus included in the Form S-1 that is declared effective with the SEC will constitute an Event of Default or trigger a requirement for a mandatory prepayment under this Section 8.2.

 

8.3.	Optional Prepayments.

 

The Issuers may, at their option, upon notice as provided in Section 8.4, prepay at any time all, or from time to time any part (in a principal amount not less than $2,500,000 and in integral multiples of $1,000,000) of the Notes, at the principal amount so to be prepaid together with accrued interest on such principal amount to the date of such prepayment and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.

 

8.4.	Notice of Prepayments.

 

The Company will give each holder of Notes written notice of each prepayment under Section 8.2 or 8.3 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify the date fixed for such prepayment (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of Notes held by such holder to be prepaid (determined in accordance with Section 8.5) and the interest to be paid on the prepayment date with respect to such principal amount being prepaid.

 

Each such notice of prepayment pursuant to Section 8.2 or 8.3 shall be accompanied by a certificate of a Senior Financial Officer of the Company 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 (such certificate and computation to be acceptable to the Required Holders). Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer of the Company specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

 

8.5.	Allocation of Partial Prepayments.

 

In the case of each partial prepayment of the Notes pursuant to Section 8.2 or Section 8.3, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

 

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8.6.	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 Issuers 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.

 

8.7.	Note Purchase Prohibition.

 

The Issuers will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. Each Issuer 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.

 

8.8.	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 8.2 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, 1.00% (100 basis points) over the yield to maturity implied by 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 Bloomberg Financial Markets Page “PX1”(or such other display as may replace Bloomberg Financial Markets Page “PX1”) for actively traded U.S. Treasury securities having a maturity equal to the remaining life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have

 

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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 maturity equal to the remaining life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the remaining life and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the remaining life. The Reinvestment Yield shall be rounded upwards to the same number of decimals points as the number of decimal points set forth in the Notes for the interest rate.

 

“ 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 8.2, 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 8.2 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 Credit Parties jointly and severally covenant and agree that, so long as any of the Notes shall remain outstanding:

 

9.1.	Insurance.

 

(a) Each Credit Party will (i) maintain, with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as is consistent and in accordance with industry practice and (ii) furnish to each of the holders of Notes, from time to time upon request, full information as to the insurance carried. In addition to the requirements of the immediately preceding sentence, the Parent will at all times cause insurance of the types described in Schedule 5.22 to be maintained (with the same scope of coverage as that described in Schedule 5.22) at levels which are consistent with its practices immediately before the Closing Date, or otherwise in form, scope and amount reasonably acceptable to the Required Holders. Such insurance shall include physical damage insurance on all real and personal property (whether now owned or hereafter acquired) on an all risk basis and business interruption insurance. The provisions of this Section 9.1 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance.

 

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(b) Each Credit Party, at all times keep all of its property (except real or personal property leased or financed through third parties in accordance with this Agreement) insured in favor of the Collateral Agent, and all policies or certificates with respect to such insurance (and any other insurance maintained by, or on behalf of, any Credit Party) (i) shall be endorsed to the Collateral Agent’s satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as certificate holder, mortgagee and loss payee with respect to real property, certificate holder and loss payee with respect to personal property, additional insured with respect to general liability and umbrella liability coverage and certificate holder with respect to workers’ compensation insurance), (ii) shall state that such insurance policies shall not be canceled or materially changed without at least 30 days prior written notice thereof by the respective insurer to the Collateral Agent and (iii) shall be delivered to the Collateral Agent.

 

(c) If any Credit Party shall fail to maintain all insurance in accordance with this Section 9.1, or if any Credit Party shall fail to so name the Collateral Agent as an additional insured, mortgagee or loss payee, as the case may be, or so deliver all certificates with respect thereto, the Required Holders and/or the Collateral Agent shall have the right (but shall be under no obligation), upon 5 Business Days prior written notice to the Parent, to procure such insurance, and the Credit Parties agree jointly and severally to reimburse the Required Holders or the Collateral Agent, as the case may be, for all costs and expenses of procuring such insurance.

 

9.2.	Payment of Taxes.

 

Each Credit Party will pay and discharge all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, in each case on a timely basis, and all lawful claims for material sums that have become due and payable which, if unpaid, could reasonably be expected to become a Lien not otherwise permitted under Section 10.3(i); provided that no Credit Party shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained and continues to maintain adequate reserves with respect thereto in accordance with GAAP.

 

9.3.	Corporate Franchises.

 

Each Credit Party will do all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, authority to do business, licenses, certifications, accreditations and patents, except for rights, franchises, authority to do business, licenses, certifications, accreditations and patents the loss of which (individually and in the aggregate) (x) have not had and (y) could not reasonably be expected to have, a Material Adverse Effect; provided, however, that any transaction permitted by Section 10.2 (including, without limitation, the dissolution of any Subsidiary of the Parent permitted pursuant to said Section) will not constitute a breach of this Section 9.3.

 

9.4.	Compliance with Statutes; etc.

 

Each Credit Party will comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in

 

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respect of the conduct of its business and the ownership of its property (including without limitation laws, regulations, administrative orders and other orders referred to in Section 5.25), except for such noncompliance as (x) have not had and (y) could not reasonably be expected to have, a Material Adverse Effect.

 

9.5.	Compliance with Environmental Laws.

 

(a) (i) The Parent will comply with all Environmental Laws applicable to the ownership or use of its Real Property now or hereafter owned or operated by the Credit Parties, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws and (ii) no Credit Party will generate, use, treat, store, Release, dispose of, threaten to Release, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Real Property now or hereafter owned or operated by any Credit Party, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, except in material compliance with applicable Environmental Laws and as may be reasonably required in connection with the operation, use and maintenance of such Real Property by any Credit Party’s business, unless any failures to comply with the requirements specified in clause (i) or (ii) above, either individually or in the aggregate, (x) have not had and (y) could not reasonably be expected to have, a Material Adverse Effect. If any Credit Party or any tenant or occupant of any Real Property now or hereafter owned or operated by such Credit Party, causes or permits any intentional or unintentional act or omission resulting in the presence or Release or threat of Release of any Hazardous Material (except in material compliance with applicable Environmental Laws) at or from any Real Property, the Credit Party agrees, if required to do so under any final applicable directive or order of any governmental agency, to undertake, and/or to cause any of its Subsidiaries, tenants or occupants to undertake, at their sole expense, any clean up, removal, remedial or other action required pursuant to Environmental Laws to remove and clean up any Hazardous Materials from any Real Property, and, if required by any governmental agency under applicable law to restore any natural resources, except where the failure to do so could not reasonably be expected to have, a Material Adverse Effect.

 

(b) At the written request of the Required Holders, which request shall specify in reasonable detail the basis therefor, at any time and from time to time, the Parent and the Company will provide, at their sole cost and expense, a Phase I environmental site assessment report (and any additional reports required thereby) which has been prepared, in accordance with the applicable ASTM standard, by an environmental consulting firm approved by the Required Holders, and such approval will not be unreasonably withheld, and which concerns any Real Property now or hereafter owned or operated by any Credit Party, and addresses the matters in clause (i) or (ii) below which give rise to such request (or, in the case of a request pursuant to following clause (i), addresses such matter as may be requested by the Required Holders) and estimates the range of the potential costs of any removal, remedial or other corrective or restorative action in connection with any such matter; provided that in no event shall such request be made unless (i) a Default or Event of Default has occurred and is continuing or (ii) the holders of Notes receive notice under Section 7.1(h) for any event referred to in said Section which, either individually or in the aggregate, (x) has had or (y) could reasonably be expected to have, (a) a Material Adverse Effect or (b) a remedial cost to the Credit Parties in excess of

 

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$100,000. If any Credit Party fail to provide the same within 60 days after such request was made, the Required Holders may order the same, and the Credit Parties shall grant and hereby do grant, to the holders of Notes and their agents reasonable access to such Real Property and specifically grant such holders and their agents an irrevocable non-exclusive license, subject to the right of tenants, to undertake such an assessment, all at the expense of the Credit Parties. In such an event, the Credit Parties shall and hereby do release the holders of Notes and their agents from any and all Environmental Claims concerning any investigation into or assessment of the Real Property which such holders may cause to be made.

 

9.6.

ERISA.

 

As soon as possible and, in any event, within ten (10) Business Days after any Plan, Credit Party or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, the Parent will deliver to the holders of Notes a certificate of a Senior Financial Officer of the General Partner setting forth in reasonable detail information as to such occurrence and the action, if any, that the Plan, such Credit Party or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed by the Plan, the Credit Party, the Plan administrator or such ERISA Affiliate to or with, the PBGC or any other governmental agency, or a Plan or Multiemployer Plan participant, and any notices received by the Parent, such Subsidiary or ERISA Affiliate from the PBGC or other governmental agency or a Plan or Multiemployer Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that the Parent has previously delivered to the holders of Notes a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that an accumulated funding deficiency, within the meaning of Section 412 of the Code or Section 302 of ERISA, has been incurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan; that any contribution required to be made with respect to a Plan or Multiemployer Plan has not been timely made, except to the extent that any failure to make such contribution would not result in a Material liability; that a Plan or Multiemployer Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; that a Plan has a Material Unfunded Current Liability and, to the knowledge of the Parent or any other Credit Party, that a Multiemployer Plan has a Material Unfunded Current Liability (assuming, solely for this purpose, that the term “Unfunded Current Liability” also applies to Multiemployer Plans) not previously disclosed to the holders of Notes prior to the Closing Date; that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan or Multiemployer Plan; that any C