AMERON INTERNATIONAL
CORPORATION
245 South Los Robles
Avenue
Pasadena,
California 91101-3638
$50,000,000 5.36% Senior Secured
Notes due November 30, 2009
January 24, 2003
TO EACH OF THE
PURCHASERS LISTED ON
THE ATTACHED SIGNATURE PAGES:
Ladies and
Gentlemen:
Ameron International Corporation, a Delaware
corporation (the “Company” ), agrees with you as
follows:
1.
AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of
$50,000,000 aggregate principal amount of its 5.36% Senior Secured
Notes due November 30, 2009 (the “Notes” , such
term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement). The Notes shall be
substantially in the form set out in Exhibit 1 , with such
changes therefrom, if any, as may be approved by you and the
Company. The Notes shall be secured by the Collateral
pursuant to the Collateral Documents and guaranteed by the
Subsidiary Guarantors pursuant to the Subsidiary
Guaranty. Certain capitalized terms used in this
Agreement are defined in Schedule B ; references to a
“Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
2.
SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this
Agreement, the Company will issue and sell to you and you will
purchase from the Company, at the Closing provided for in Section
3, Notes in the principal amount specified opposite your name in
Schedule A at the purchase price of 100% of the principal
amount thereof. Each of your obligations hereunder are
several and not joint obligations and you shall have no obligation
and no liability to any Person for the performance or
non-performance by any Other Purchaser hereunder.
3.
CLOSING.
The sale and purchase of the Notes to be
purchased by you and the Other Purchasers shall occur at the
offices of O’Melveny & Myers LLP, 400 South Hope Street,
Los Angeles, California 90071-2899, at 9:00 a.m., Los Angeles time,
at a closing (the “Closing” ) on January 24,
2003 or on such other Business Day thereafter on or prior to
January 31, 2003 as may be agreed upon by the Company and you and
the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a
single Note (or such greater number of Notes in denominations of at
least $500,000 as you may request) dated the date of the Closing
and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds as directed by the
Company in a funding instruction letter delivered to you at least
two Business Days prior to Closing. If at the Closing
the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations
under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4.
CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the
Notes to be sold to you at the Closing is subject to the
fulfillment to your satisfaction, prior to or at the Closing, of
the following conditions:
4.1.
Representations and Warranties.
The representations and warranties of the Note
Parties in the Note Documents shall be correct when made and at the
time of the Closing.
4.2.
Performance; No Default.
Each Note Party shall have performed and
complied with all agreements and conditions contained in the Note
Documents required to be performed or complied with by it prior to
or at the Closing and after giving effect to the issue and sale of
the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14 ) no Default or Event of
Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any
transaction since August 31, 2002 that would have been prohibited
by Section 10 hereof had such Section applied since such
date.
4.3.
Compliance Certificate.
The Company shall have delivered to you an
Officer’s Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and
4.9 have been fulfilled.
4.4.
Opinions of Counsel.
You shall have received opinions in form and
substance satisfactory to you, dated the date of the Closing (
a ) from Javier Solis, Esq. and Gibson, Dunn & Crutcher
LLP, General Counsel and Special Counsel, respectively, for the
Company and the other Note Parties, covering the matters set forth
in Exhibit 2(a) and Exhibit 2(b) , respectively, and
covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such
opinion to you) and ( b ) from O’Melveny &
Myers LLP, your special counsel in connection with such
transactions, covering such matters incident to such transactions
as you may reasonably request.
4.5.
Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of
Notes shall ( i ) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, ( ii ) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of
the Board of Governors of the Federal Reserve System) and (
iii ) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer’s
Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase
is so permitted.
4.6.
Sale of Other Notes.
Contemporaneously with the Closing the Company
shall sell to the Other Purchasers and the Other Purchasers shall
purchase the Notes to be purchased by them at the Closing as
specified in Schedule A .
4.7.
Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1,
the Company shall have paid on or before the Closing the fees,
charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the
Closing.
4.8.
Private Placement Number.
A Private Placement number issued by Standard
& Poor’s CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the
Notes.
4.9.
Changes in Corporate Structure.
Except as specified in Schedule 4.9 , the
Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent
financial statements referred to in Section 5.5.
4.10.
Security Interests in Personal and Mixed
Property.
To the extent not otherwise satisfied pursuant
to Section 4.11, you shall have received evidence satisfactory to
you that the Note Parties shall have taken or caused to be taken
all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings and recordings (other
than the filing or recording of items described in clauses (b), (c)
and (d) below) that may be necessary or, in your opinion or the
opinion of the Collateral Agent, desirable in order to create in
favor of the Collateral Agent, for the benefit of the Intercreditor
Lenders, a valid and (upon such filing and recording) perfected
First Priority security interest in the entire personal and mixed
property Collateral. Such actions shall include the
following:
(a)
Stock Certificates . Delivery to the Collateral
Agent of certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in
blank and otherwise satisfactory in form and substance to the
Collateral Agent) representing all Capital Stock pledged pursuant
to the Security Agreement;
(b)
Lien Searches and UCC Termination Statements
. Delivery to the Collateral Agent of (a) the results of
a recent search, by a Person satisfactory to the Collateral Agent,
of all effective UCC financing statements and fixture filings and
all judgment and tax lien filings which may have been made with
respect to any personal or mixed property of any Note Party,
together with copies of all such filings disclosed by such search,
and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or
fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect of Liens
permitted to remain outstanding pursuant to the terms of this
Agreement);
(c)
UCC Financing Statements and Fixture Filings
. Delivery to the Collateral Agent of UCC financing
statements and, where appropriate, fixture filings, identifying
each applicable Note Party, as debtor, with respect to all personal
and mixed property Collateral of such Note Party, for filing in all
jurisdictions as may be necessary or, in the opinion of the
Collateral Agent, desirable to perfect the security interests
created in such Collateral pursuant to the Collateral
Documents;
(d)
PTO Cover Sheets, Etc . Delivery to the
Collateral Agent of all cover sheets or other documents or
instruments required to be filed with the United States Patent and
Trademark Office in order to create or perfect Liens in respect of
any Collateral; and
(e)
Opinions of Local Counsel . Delivery to you and
the Collateral Agent of an opinion of counsel (which counsel shall
be reasonably satisfactory to you and the Collateral Agent) under
the laws of each jurisdiction in which any Note Party or any real
property Collateral is located with respect to the creation and
perfection of the security interests in favor of the Collateral
Agent in such Collateral and such other matters governed by the
laws of such jurisdiction regarding such security interests as you
or the Collateral Agent may reasonably request, in each case in
form and substance reasonably satisfactory to you and the
Collateral Agent.
4.11.
Mortgages.
The Collateral Agent shall have received from
the Company:
(a)
Mortgages . Fully executed and notarized
Mortgages in proper form for recording in all appropriate places in
all applicable jurisdictions, encumbering the Mortgaged
Property.
(b)
Title Insurance . (a) Title insurance policies in
ALTA form (standard lenders’ policy with survey exception) or
unconditional commitments therefor (the “Mortgage
Policies” ) issued by the Title Company with respect to
the Mortgaged Property, including a 1970 policy jacket or a policy
jacket of later date which includes a waiver of arbitration, in
amounts not less than the respective amounts designated therein
with respect to the Mortgaged Property, insuring fee simple title
to the Mortgaged Property vested in the applicable Note Party and
insuring that the Mortgages create a valid and enforceable First
Priority mortgage Lien on the Mortgaged Property encumbered
thereby, subject only to Liens permitted by this Agreement and the
other Note Documents, which Mortgage Policies shall provide for
affirmative insurance and such reinsurance and endorsements as the
Collateral Agent may reasonably request, all of the foregoing in
form and substance reasonably satisfactory to the Collateral Agent;
and (b) evidence satisfactory to the Collateral Agent that the
Company has paid to the Title Company or to the appropriate
governmental authorities all expenses and premiums of the Title
Company in connection with the issuance of the Mortgage Policies
and all recording and stamp taxes (including mortgage recording and
intangible taxes) payable in connection with recording the
Mortgages in the appropriate real estate records.
4.12.
Evidence of Insurance.
You and the Collateral Agent shall have received
a certificate from the Company’s insurance broker or other
evidence satisfactory to you that all insurance required to be
maintained pursuant to the Collateral Documents is in full force
and effect and that the Collateral Agent has been named as
additional insured and/or loss payee thereunder to the extent
required under the Collateral Documents.
4.13.
Note Party Documents.
On or before the date of the Closing, the
Company shall, and shall cause each other Note Party, to have
delivered to you with respect to the Company or such Note Party, as
the case may be, each, unless otherwise noted, dated the date of
the Closing:
(a) Certified
copies of the Organizational Documents of such Person, together
with a good standing certificate from the Secretary of State of its
jurisdiction of organization, and each other state in which the
Company or such Subsidiary Guarantor has major operations or
manufacturing facilities and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing
authority of each of such states, each to be dated a recent date
prior to the date of the Closing;
(b) Resolutions
of the Governing Body of such Person approving and authorizing the
execution, delivery and performance of the Note Documents to which
it is a party, certified as of the date of the Closing by the
secretary or similar officer of such Person as being in full force
and effect without modification or amendment;
(c) Signature
and incumbency certificates of the officers of the Note Party
executing the documents referred to in item (b) above, and any
other documents, instruments and certificates required to be
executed by such Note Party in connection herewith or
therewith;
(d) Copies
of the Note Documents, duly executed by each party thereto;
and
(e) Such
other documents or certificates as you may reasonably
request.
4.14.
Collateral Agency and Intercreditor Agreement.
On
or before the date of the Closing, the Collateral Agency and
Intercreditor Agreement shall have been duly executed and delivered
by the parties thereto.
4.15.
Structuring Fee.
In connection with this transaction, and as set
forth in that certain commitment letter dated December 27, 2002,
the Company shall have paid to the Purchasers a structuring fee in
the aggregate amount of $50,000, and the Purchasers hereby confirm
receipt of such structuring fee.
4.16.
Proceedings and Documents.
All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and
all documents and instruments incident to such transactions shall
be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals
or certified or other copies of such documents as you or they may
reasonably request.
5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you
that:
5.1.
Organization; Power and Authority.
The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries has the
corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and
deliver this Agreement, the Notes and the other Note Documents to
which it is a party and to perform the provisions hereof and
thereof.
5.2. Authorization,
etc.
This Agreement, the Notes and the other Note
Documents have been duly authorized by all necessary corporate
action on the part of each Note Party party thereto, and this
Agreement and the other Note Documents constitute, and upon
execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of the each Note Party party thereto
enforceable against such Note Party in accordance with its terms,
except as such enforceability may be limited by ( i )
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’
rights generally and ( ii ) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3.
Disclosure.
This Agreement, the documents, certificates or
other writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby and the
financial statements listed in Section 5.5, taken as a whole, do
not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were
made. Except as otherwise disclosed in Schedule
5.3 , since November 30, 2001 there has been no change in the
financial condition, operations, business, properties or prospects
of the Company or any Subsidiary except changes that individually
or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the other
documents, certificates and other writings delivered to you by or
on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
5.4.
Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a)
Schedule 5.4 contains (except as noted therein) complete and
correct lists ( i ) of the Company’s Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary, (
ii ) of the Company’s Affiliates, other than
Subsidiaries, and ( iii ) of the Company’s directors
and senior officers. As of the date of this Agreement,
all such Subsidiaries are Restricted Subsidiaries.
(b) All
of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being
owned by the Company and its Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by the Company or
another Subsidiary free and clear of any Lien (except as otherwise
disclosed in Schedule 5.4 ).
(c) Each
Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is
duly qualified as a foreign corporation or other legal entity and
is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has
the corporate or other power and authority to own or hold under
lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to
transact.
(d) No
Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations
imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.
5.5.
Financial Statements.
The Company has delivered to each Purchaser
copies of (i) audited financial statements of the Company and its
Restricted Subsidiaries for the fiscal years ended November 30,
2000 and 2001 and (ii) unaudited financial statements of the
Company and its Restricted Subsidiaries for the fiscal quarter
ended August 31, 2002 with figures in comparative form for the
corresponding period in the preceding fiscal year. All
such financial statements (including in each case the related
schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Restricted
Subsidiaries as of the respective dates specified and the
consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end
adjustments).
5.6.
Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance of the
Note Documents by each Note Party party thereto will not ( i
) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any
property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
Organizational Document, or any other agreement or instrument to
which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may
be bound or affected, ( ii ) conflict with or result in a
breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Company or any Subsidiary
or ( iii ) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7.
Governmental Authorizations, etc.
No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or
performance by any Note Party of any Note Document.
5.8.
Litigation; Observance of Agreements, Statutes and
Orders.
(a) Except
as disclosed on Schedule 5.8 , there are no actions, suits
or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b) Neither
the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse
Effect.
5.9.
Taxes.
The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and payable
on such returns and all other taxes and assessments levied upon
them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and
before they have become delinquent, except for any taxes and
assessments ( i ) the amount of which is not
individually or in the aggregate Material or ( ii ) the
amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect
to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with
GAAP. The Company knows of no basis for any other tax or
assessment that could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate
in accordance with GAAP.
5.10.
Title to Property; Leases.
The Company and its Subsidiaries have good and
sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in
Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement or any other Note
Document. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full
force and effect in all material respects.
5.11.
Licenses, Permits, etc.
(a) The
Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or
in the aggregate are Material, without known conflict with the
rights of others.
(b) To
the best knowledge of the Company, no product of the Company
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.
(c) To
the best knowledge of the Company, there is no Material violation
by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company
or any of its Subsidiaries.
5.12.
Compliance with ERISA.
(a) The
Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets
of the Company or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The
present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the
end of such Plan’s most recently ended plan year on the basis
of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed
the aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term “benefit
liabilities” has the meaning specified in section 4001 of
ERISA and the terms “current value” and
“present value” have the meaning specified in
section 3 of ERISA.
(c) The
Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are
Material.
(d) The
expected postretirement benefit obligation (determined as of the
last day of the Company’s most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No.
106, without regard to liabilities attributable to continuation
coverage mandated by section 4980B of the Code) of the Company and
its Subsidiaries is not Material.
(e) The
execution and delivery of this Agreement and the other Note
Documents, and the issuance and sale of the Notes hereunder will
not involve any transaction that is subject to the prohibitions of
section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first
sentence of this Section 5.12(e) is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to
the sources of the funds used to pay the purchase price of the
Notes to be purchased by you.
5.13.
Private Offering by the Company.
Neither the Company nor anyone acting on its
behalf has offered the Notes or any similar securities for sale to,
or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other
than you and the Other Purchasers, each of which has been offered
the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take,
any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities
Act.
5.14.
Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale
of the Notes as set forth in Schedule 5.14 . No
part of the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for the purpose of buying or carrying
any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR
220). The Company and its Subsidiaries do not own any
margin stock and the Company does not have any present intention of
acquiring margin stock. As used in this Section, the
terms “margin stock” and “purpose of
buying or carrying” shall have the meanings assigned to
them in said Regulation U.
5.15.
Existing Debt; Future Liens.
(a)
Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt of the Company and its Subsidiaries as of December
31, 2002. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or
such Subsidiary and no event or condition exists with respect to
any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one
or more Persons to cause such Debt to become due and payable before
its stated maturity or before its regularly scheduled dates of
payment.
(b) Except
as disclosed in Schedule 5.15 , neither the Company nor any
Subsidiary 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.
5.16.
Foreign Assets Control Regulations, etc.
Neither
the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V,
as amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, neither the
Company nor any of its Subsidiaries or its Affiliates (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) engages or
will engage in any dealings or transactions, or be otherwise
associated, with any such Person. The Company and its
Subsidiaries and its Affiliates are in compliance, in all Material
respects, with the Uniting And Strengthening America By Providing
Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001). No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly,
for any payments to any governmental official or employee,
political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in
order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.
5.17.
Status under Certain Statutes.
Neither the Company nor any Subsidiary is
subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as
amended, the Interstate Commerce Act, as amended, or the Federal
Power Act, as amended.
5.18.
Environmental Matters.
Neither the Company nor any Subsidiary has
knowledge of any claim or has received any notice of any claim, and
no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them
or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as
could not reasonably be expected to result in a Material Adverse
Effect. Except as otherwise disclosed to you in
writing,
(a) neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public
or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to
real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse
Effect;
(b) neither the Company nor any of its
Subsidiaries has stored, transported or disposed of any Hazardous
Materials on or from any real properties now or formerly owned,
leased or operated by any of them in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably
be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now
owned, leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
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Creation,
Perfection and Priority of Liens.
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The
execution and delivery of the Collateral Documents by the Note
Parties, together with the actions taken on or prior to the date
hereof pursuant to Section 4.10, are effective to create in favor
of the Collateral Agent for the benefit of the Intercreditor
Lenders, as security for the Intercreditor Indebtedness, a valid
First Priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly
made or taken and remain in full force and effect, other than (i)
the filing of any UCC financing statements delivered to the
Collateral Agent for filing (but not yet filed), (ii) the periodic
filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of the Collateral Agent, (iii) the
recordation of PTO cover sheets or other documents and instruments
with the United States Patent and Trademark Office to perfect Liens
in the intellectual property described therein, (iv) the
recordations of the Mortgage in the county in which the
corresponding Mortgaged Property is located, (v) any actions that
may be required under Section 9.12, and (vi) as to any deposit
account not maintained with the Collateral Agent, the execution and
delivery of a control agreement relating to such deposit account if
such control agreement is required to be delivered.
6.
REPRESENTATIONS OF THE PURCHASER.
6.1.
Purchase for Investment.
Each of you represents that you are an
institutional “accredited investor” within the meaning
of subparagraphs (1), (2), (3) or (7) of Rule 501(a) promulgated
under the Securities Act. Each of you represents that
you are purchasing the Notes to be purchased by you for your own
account or for one or more separate accounts maintained by you or
for the account of one or more pension or trust funds and not with
a view to the distribution thereof, provided that the
disposition of your or their property shall at all times be within
your or their control. You understand that the Notes
have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act
or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption
is required by law, and that the Company is not required to
register the Notes.
6.2.
Source of Funds.
Each of you 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 you
to pay the purchase price of the Notes to be purchased by you
hereunder:
(i) the
Source is an “insurance company general account” (as
the term is defined in the United States Department of
Labor’s Prohibited Transaction Exemption (
“PTE” ) 95-60) in respect of which the reserves
and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of
Insurance Commissioners (the “NAIC Annual
Statement” )) for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount
of the reserves and liabilities for the general account contract(s)
held by or on behalf of any other employee benefit plans maintained
by the same employer (or affiliate thereof as defined in PTE 95-60)
or by the same employee organization in the general account do not
exceed 10% of the total reserves and liabilities of the general
account (exclusive of separate account liabilities) plus surplus as
set forth in the NAIC Annual Statement filed with your state of
domicile; or
(ii) the
Source is a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or
to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment
performance of the separate account; or
(iii) the
Source is either (a) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (b) a bank collective investment
fund, within the meaning of the PTE 91-38 and, except as disclosed
by you to the Company in writing pursuant to this clause (iii), no
employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10%
of all assets allocated to such pooled separate account or
collective investment fund; or
(iv) the
Source constitutes assets of an “investment fund”
(within the meaning of Part V of PTE 84-14 (the “QPAM
Exemption” )) managed by a “qualified professional
asset manager” or “QPAM” (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the
meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of “control” in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (a) the identity of such QPAM and (b) 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 clause (iv); or
(v) 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 Company and (a) the
identity of such INHAM and (b) 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 clause (v); or
(vi) the
Source is a governmental plan; or
(vii) 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 clause (vii); or
(viii) 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” , “party in interest” and
“separate account” shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7.
INFORMATION AS TO COMPANY.
7.1.
Financial and Business Information.
The Company shall deliver to each holder of
Notes that is an Institutional Investor:
(a)
Quarterly Statements — as soon as practicable and in
any event within 45 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year,
consolidated statements of income and cash flows of the Company and
its Restricted Subsidiaries for the period from the beginning of
the current fiscal year to the end of such quarterly period, and a
consolidated balance sheet of the Company and its Restricted
Subsidiaries as at the end of such quarterly period, setting forth
in each case in comparative form figures for the corresponding
period in the preceding fiscal year, all in reasonable detail,
prepared in accordance with GAAP, satisfactory in form to the
Required Holders and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position
of the companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end
adjustments; provided , however , that delivery
pursuant to Section 7.1(d) below of copies of the Quarterly Report
on Form 10-Q of the Company for such quarterly period filed with
the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this Section 7.1(a) if such Quarterly Report
contains consolidated financial statements only with regard to the
Company and its Restricted Subsidiaries;
(b)
Annual Statements — as soon as practicable and in any
event within 90 days after the end of each fiscal year,
consolidated statements of income, cash flows and
stockholders’ equity of the Company and its Restricted
Subsidiaries for such year, and a consolidated balance sheet of the
Company and its Restricted Subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding
consolidated figures from the preceding annual audit, all in
reasonable detail, prepared in accordance with GAAP, satisfactory
in form to the Required Holders, and accompanied
(i) by an opinion thereon of independent
certified public accountants of recognized international standing,
which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and
cash flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances,
and
(ii) a certificate of such accountants stating
that they have reviewed this Agreement and stating further whether,
in making their audit, they have become aware of any condition or
event that then constitutes a Default or an Event of Default, and,
if they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or
Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an
audit)
;
provided , however , that delivery pursuant to
Section 7.1(d) below of copies of the Annual Report on Form 10-K of
the Company for such fiscal year filed with the Securities and
Exchange Commission and Annual Report to Stockholders shall be
deemed to satisfy the requirements of this Section 7.1(b) if such
Annual Reports contain consolidated financial statements only with
regard to the Company and its Restricted Subsidiaries;
(c)
Restricted Subsidiary Financial Statements — promptly
upon their becoming available, notice that the Company has, at its
election, arranged for the preparation of any independently audited
consolidated balance sheet and consolidated statements of income,
cash flows and stockholders’ equity of a Restricted
Subsidiary for any fiscal year, and promptly following the
Company’s receipt from any holder of any Note of a written
request for copies of any such financial statements, copies thereof
together with any report thereon by the independent public
accountants auditing such financial statements;
(d)
SEC and Other Reports — promptly upon their becoming
available, one copy of ( i ) each financial statement,
report, notice or proxy statement sent by the Company or any
Restricted Subsidiary to public securities holders generally, (
ii ) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by
the Company or any Restricted Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements
made available generally by the Company or any Restricted
Subsidiary to the public concerning developments that are Material,
and ( iii ) each other report submitted to the Company or
any Restricted Subsidiary that is a Significant Subsidiary by
independent accountants in connection with any material special
audit made by them of the books of the Company or any such
Significant Subsidiary;
(e)
Notice of Default or Event of Default — promptly, and
in any event within five days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or that
any Person has given any notice or taken any action with respect to
a claimed default hereunder or that any Person has given any notice
or taken any action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the
nature and period of existence thereof and what action the Company
is taking or proposes to take with respect thereto;
(f)
ERISA Matters — promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and
the action, if any, that the Company or an ERISA Affiliate proposes
to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(c) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuan to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect;
(g)
Notices from Governmental Authority — promptly, and in
any event within 30 days of receipt thereof, copies of any notice
to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or
other law or regulation that could reasonably be expected to have a
Material Adverse Effect;
(h)
Requested Information — with reasonable promptness,
such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries or relating to the ability
of any of the Note Parties to perform their respective obligations
hereunder, under the other Note Documents and under the Notes as
from time to time may be reasonably requested by any such holder of
Notes; and
(i)
Additional Reporting — if any Unrestricted
Subsidiaries exist on the last day of a fiscal quarter, as soon as
available, but in any event within 45 days (other than the fourth
fiscal quarter, in which case 90 days) after the end of such fiscal
quarter of the Company, a consolidating balance sheet of the
Company and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidating statements of income or operations
and cash flows for such fiscal quarter and for the portion of the
Company’s fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion
of the previous fiscal year, all in reasonable detail and certified
by a Responsible Officer of the Company as fairly presenting in all
material respects the financial condition, results of operations,
shareholders’ equity and cash flows of the Company and its
Subsidiaries in accordance with GAAP.
7.2.
Officer’s Certificate.
Each set of financial statements delivered to a
holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof
shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a)
Covenant Compliance — the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Sections
10.2(a)(i), 10.2(a)(ii), 10.3(h), 10.4, 10.5, 10.7 and 10.15 hereof
during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and
(b)
Event of Default — a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions
and conditions of the Company and its Restricted Subsidiaries from
the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and
that such review shall not have disclosed the existence during such
period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or
exists (including, without limitation, any such event or condition
resulting from the failure of the Company or any Restricted
Subsidiary to comply with the provisions of any Environmental Laws
where such non-compliance could reasonably be expected to result in
a Material Adverse Effect), specifying the nature and period of
existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3.
Inspection.
The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a)
No Default — if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of
the Company, to discuss the affairs, finances and accounts of the
Company and its Restricted Subsidiaries with the Company’s
officers, and (with the consent of the Company, which consent will
not be unreasonably withheld) its independent public accountants,
and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of
the Company and each Restricted Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing;
and
(b)
Default — if a Default or Event of Default then
exists, at the expense of the Company to visit and inspect any of
the offices or properties of the Company or any Restricted
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Restricted Subsidiaries), all at such times and as
often as may be requested.
8.
PREPAYMENT OF THE NOTES.
8.1.
Required Prepayments.
On November 30, 2005 and on each November 30
thereafter to and including November 30, 2008 the Company will
prepay $10,000,000 principal amount (or such lesser principal
amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium,
provided , that upon any partial prepayment of the Notes
pursuant to Section 8.2, the principal amount of each required
prepayment of the Notes becoming due under this Section 8.1 on and
after the date of any such partial prepayment shall be reduced in
the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such prepayment or
purchase.
8.2.
Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any
part of, the Notes, in an amount not less than $1,000,000 of the
aggregate principal amount of the Notes then outstanding in the
case of a partial prepayment, at 100% of the principal amount so
prepaid, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal
amount. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2
not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall
specify such date, the aggregate principal amount of the Notes to
be prepaid on such date and the principal amount of each Note held
by such holder to be prepaid (determined in accordance with Section
8.3).
8.3.
Allocation of Partial Prepayments.
In the case of each partial prepayment of the
Notes, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for
prepayment.
8.4.
Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant
to this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount
of any Note.
8.5.
[Intentionally Omitted].
8.6.
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 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” shall mean, with respect to the
Called Principal of any Note, 0.50% ( provided that upon the
occurrence of an Unsecured Refinancing Event, such percentage shall
be increased to 2.00%) over the yield to maturity implied by (i)
the yields reported as of 10:00 a.m. (New York City local time) on
the Business Day next preceding the Settlement Date with respect to
such Called Principal for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date on the Treasury Yield
Monitor page of Standard & Poor’s MMS – Treasury
Market Insight (or, if Standard & Poor’s shall cease to
report such yields in MMS – Treasury Market Insight or shall
cease to be Prudential Capital Group’s customary source of
information for calculating yield-maintenance amounts on privately
placed notes, then such source as is then Prudential Capital
Group’s customary source of such information), or if such
yields shall not be reported as of such time or the yields reported
as of such time shall not be ascertainable, or (ii) the Treasury
Constant Maturity Series yields reported, for the latest day for
which such yields shall have been so reported as of the Business
Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15(519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement
Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond
equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between yields reported for various
maturities. The Reinvestment Yield shall be rounded to
that number of decimal places as appears in the coupon of the
applicable Note. For purposes hereof, an
“Unsecured Refinancing Event” shall occur if (x)
at the request of the Company, the lenders party to the Credit
Agreement agree to release the Collateral and refinance, restate or
replace the Credit Agreement with an unsecured credit facility, (y)
within fifteen (15) Business Days following receipt of a written
request from the Company, the holders of the Notes hereunder do not
agree to release such Collateral, and (z) as a result thereof, the
Company prepays in full the outstanding principal amount of the
Notes, together with accrued interest thereon and the applicable
Make-Whole Amount, with the proceeds of such unsecured credit
facility and another unsecured debt facility concurrently with
closing of such unsecured credit facility, which in no event shall
be later than forty-five (45) days after the date of the notice
referenced in clause (y) above.
“Remaining Average Life”
means, with respect to
any Called Principal, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing ( i ) such
Called Principal into ( ii ) the sum of the products
obtained by multiplying ( a ) the principal component of
each Remaining Scheduled Payment with respect to such Called
Principal by ( b ) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
“Remaining Scheduled
Payments” means,
with respect to the Called Principal of any Note, all payments of
such Called Principal and interest thereon that would be due after
the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms
of the Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued
to such Settlement Date and required to be paid on such Settlement
Date pursuant to Section 8.2 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 has become or is declared
to be immediately due and payable pursuant to Section 12.1, as the
context requires.
8.7. Prepayments
under the Collateral Agency and Intercreditor
Agreement.
Any prepayments of the Notes in accordance with
the Collateral Agency and Intercreditor Agreement under
circumstances in which the Notes have not been declared due and
payable under Section 11 hereof shall be treated as optional
prepayments under this Section 8 for purposes of calculating any
Make-Whole Amount due in connection with such
prepayment.
9.
AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the
Notes are outstanding:
9.1.
Compliance with Law.
The Company will and will cause each of its
Subsidiaries to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such
licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
9.2.
Insurance.
The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a
similar business and similarly situated and upon request of any
holder of Notes, the Company will deliver an Officer’s
Certificate specifying the details of such insurance in effect at
that time.
9.3.
Maintenance of Properties.
The Company will and will cause each of its
Restricted Subsidiaries to maintain and keep, or cause to be
maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section
shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of
its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
9.4.
Payment of Taxes and Claims.
The Company will and will cause each of its
Subsidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes
and assessments have become due and payable and before they have
become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of
the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment or
claims if ( i ) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary
or ( ii ) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
9.5.
Corporate Existence, etc.
The Company will at all times preserve and keep
in full force and effect its corporate
existence. Subject to Section 10.2(a), the Company will
at all times preserve and keep in full force and effect the
corporate existence of each of its Restricted Subsidiaries (unless
merged into the Company or a Restricted Subsidiary) and all rights
and franchises of the Company and its Restricted Subsidiaries
unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.
9.6.
Environmental and Safety Laws.
The Company will, and will cause each Subsidiary
to, deliver promptly to each holder of Notes any notice of (
a ) any material enforcement, cleanup, removal or other
material governmental, regulatory or other actions instituted,
completed or, to the Company’s or such Subsidiary’s
best knowledge, threatened pursuant to any Environmental Laws; (
b ) all material Environmental Liabilities and Costs against
or in respect of any property, the Company or any Subsidiary; and (
c ) the Company’s or any Subsidiary’s discovery
of any occurrence or condition on any real property adjoining or in
the vicinity of any property that such Company or Subsidiary has
reason to believe could cause any property or any material part
thereof to be subject to any material restrictions on its
ownership, occupancy, transferability or use under any
Environmental Laws.
9.7.
Information Required by Rule 144A.
The Company will, upon the request of the holder
of any Note, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary
in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of
Notes, except at such times as the Company is subject to the
reporting requirements of section 13 or 15(d) of the Exchange
Act. For the purpose of this Section 9.7, the term
“qualified institutional buyer” shall have the meaning
specified in Rule 144A under the Securities Act, but shall not
include any Person who is engaged in businesses of the type then
being engaged in by the Company or any of its
Subsidiaries.
9.8.
Execution of Subsidiary Guaranty and Collateral
Documents.
In the event that after the date of the Closing
the Company forms or acquires a Domestic Subsidiary that is a
Restricted Subsidiary, the Company will promptly notify the holders
of the Notes of that fact and, promptly (and in no event later than
its execution and delivery of a guaranty or co-obligor agreement
under the Credit Agreement) cause each such Domestic Restricted
Subsidiary to execute and deliver to the holders of the Notes a
counterpart of the Subsidiary Guaranty and all such further
documents and instruments as may be necessary or, in the opinion of
the Required Holders or the Collateral Agent, desirable to create
in favor of the Collateral Agent, for the benefit of the
Intercreditor Lenders, a valid and perfected First Priority Lien on
all of the personal and mixed property assets of such Subsidiary
Guarantor described in the applicable forms of Collateral
Documents. The Company shall deliver to the holders of
the Notes, together with such counterpart of the Subsidiary
Guaranty and other documents and instruments, ( i )
certified copies of such Subsidiary Guarantor’s
Organizational Documents, together with a good standing certificate
from the Secretary of State of the jurisdiction of its
organization, each to be dated a recent date prior to their
delivery to the holders of the Notes, ( ii ) a certificate
executed by the secretary or an assistant secretary of such
Subsidiary Guarantor as to ( a ) the incumbency and
signatures of the officers of such Subsidiary Guarantor executing
the counterpart of the Subsidiary Guaranty and such other documents
and instruments executed in connection therewith and ( b )
the fact that the attached resolutions of the Governing Body of
such Subsidiary Guarantor authorizing the execution, delivery and
performance of the counterpart of the Subsidiary Guaranty and such
other documents and instruments are in full force and effect and
have not been modified or rescinded and ( iii ) a favorable
opinion of counsel to the Company and such Subsidiary Guarantor, in
form and substance reasonably satisfactory to the Required Holders
and their counsel, as to ( a ) the due formation, valid
existence and good standing of such Subsidiary Guarantor, (
b ) the due authorization, execution and delivery by such
Subsidiary Guarantor of the counterpart of the Subsidiary Guaranty
and such other documents and instruments, ( c ) the
enforceability of the counterpart of the Subsidiary Guaranty and
such other documents and instruments and ( d ) any other
matters set forth in Exhibit 2(a) and Exhibit 2(b) ,
all of the foregoing to be satisfactory in form and substance to
the Required Holders and their counsel.
9.9.
Credit Agreement Availability.
The Company shall at all times maintain a
committed bank line or lines with aggregate commitments of not less
than $50,000,000 and having a termination date or dates of not less
than nine (9) months from any date of determination.
9.10.
Annual Perfection Opinion.
Within
90 days after the end of fiscal year 2003 and each fiscal year
thereafter, the Company shall provide to the holders of the Notes
and the Collateral Agent an opinion or opinions of counsel
addressed to the holders of the Notes and the Collateral Agent (i)
stating that all action has been taken with respect to the filing,
recording, and refiling of the Collateral Documents and/or
financing statements and continuation statements as is necessary to
maintain the perfection of the Liens on and in the Collateral
created by the Collateral Documents and reciting the details of
such action or referring to prior opinions of counsel in which such
details are given; provided , however , that no such
opinion shall be required as to the perfection of any Liens by any
means other than the filing, recording and refiling of the
Collateral Documents and/or financing statements and continuation
statements or with respect to any Lien on or in any patents,
trademarks, copyrights or Mortgaged Property; and (ii) stating
what, if any, action of the foregoing nature may reasonably be
expected to become necessary during the next 15 months in order to
maintain the perfection of the Liens in and to such
Collateral.
9.11.
Pledged Collateral.
Each
Note Party will (i) cause all of its owned real and personal
property other than Excluded Property to be subject at all times to
a First Priority Lien and, in the case of owned real property, a
title insured Lien, in favor of the Collateral Agent to secure the
Obligations pursuant to the terms and conditions of the Collateral
Documents or, with respect to any such property acquired subsequent
to the date of the Closing, such other additional security
documents as the Required Holders shall reasonably request, subject
in any case to Permitted Liens and (ii) deliver such other
documentation as the Required Holders may reasonably request in
connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, real estate title insurance
policies, landlord’s waivers, certified resolutions and other
organizational and authorizing documents of such Person, favorable
opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability
of the documentation referred to above and the perfection of the
Collateral Agent’s Liens thereunder) and other items of the
types required to be delivered pursuant to Section 4.10 and
4.11, all in form, content and scope reasonably satisfactory to the
Required Holders. Without limiting the generality of the
above, the Note Parties will cause (A) 100% of the issued and
outstanding Capital Stock of each direct Domestic Subsidiary of a
Note Party and (B) 65% (or such greater percentage that, due
to a change in an applicable law after the date hereof,
(1) could not reasonably be expected to cause the
undistributed earnings of such Foreign Subsidiary as determined for
United States federal income tax purposes to be treated as a deemed
dividend to such Foreign Subsidiary’s United States parent
and (2) could not reasonably be expected to cause any material
adverse tax consequences) of the issued and outstanding Capital
Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding
Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary
directly owned by the Company or any Domestic Restricted Subsidiary
to be subject at all times to a First Priority Lien in favor of the
Collateral Agent (it being recognized that perfection actions need
only be taken in foreign countries as set forth in Section 9.12
hereof) pursuant to the terms and conditions of the Collateral
Documents or such other security documents as the Required Holders
shall reasonably request.
9.12.
Further Assurances.
Within
90 days following the date of the Closing (or such later date as
the Required Holders may determine in their reasonable discretion),
the Note Parties shall deliver to the Collateral Agent pledge
agreements (or similar documents) effective under the laws of the
respective jurisdictions of organization of the following Foreign
Restricted Subsidiaries, together with a legal opinion of special
foreign counsel for such jurisdiction: Ameron (Pte.)
Ltd., Ameron B.V., Ameron (Australia) PTY Limited, Ameron Holdings
(NZ) Limited and Ameron (UK) Limited. All such documents
shall be in form and substance reasonably satisfactory to the
Required Holders.
9.13.
Control Agreements.
Upon
the request of the Collateral Agent (at the direction of the
Required Holders), with respect to any deposit account, the Company
hereby agrees to (a) deliver to the Collateral Agent an agreement
(including a control agreement), satisfactory in form and substance
to the Required Holders and executed by the financial institution
at which such deposit account is maintained, pursuant to which such
financial institution confirms and acknowledges the Collateral
Agent’s security interest in, and control over, such deposit
account and waives its rights to set-off with respect to amounts in
such deposit account, and (b) take all other steps necessary or, in
the opinion of the Required Holders or the Collateral Agent,
desirable to ensure that the Collateral Agent has control over such
deposit account.
10.
NEGATIVE COVENANTS.
The Company covenants that so long as any of the
Notes are outstanding:
10.1.
Related Party Transactions.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly engage in any
transaction, including the purchase, sale, exchange or other
transfer of property or other assets or the rendering of any
services, or otherwise deal with, any Shareholder, officer,
director or any other Affiliate of the Company (including
Unrestricted Subsidiaries) other than with respect to (a)
intercompany transactions expressly permitted by this Agreement,
(b) normal compensation and reimbursement of expenses and
indemnities of officers and directors, and (c) except as otherwise
expressly limited in this Agreement, other transactions which are
entered into in the ordinary course of business and upon terms that
are materially no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that might be obtained
in an arm’s-length transaction with an unrelated third
party.
10.2.
Merger and Sale of Assets.
(a) The
Company will not, and will not permit any Restricted Subsidiary to,
merge with or into or consolidate with any other Person or sell,
lease or transfer to any Person or otherwise dispose of assets,
which together with all other assets sold, leased, transferred or
otherwise disposed of (including deemed dispositions of assets as
described in clause (b)(iii) of the definition of
“Unrestricted Subsidiary” set forth in Schedule
B ) during ( i ) the immediately preceding 12 months,
have an aggregate net book value exceeding 15% of Consolidated
Tangible Assets (measured as at the fiscal quarter end immediately
preceding such sale or disposition) or ( ii ) the period
beginning on the date hereof and ending on the date of any such
proposed sale or disposition, have an aggregate net book value
exceeding 40% of Consolidated Tangible Assets (measured as at the
fiscal quarter end immediately preceding such sale or disposition)
and in each case, no Default or Event of Default would occur after
giving effect thereto, except that:
(A) any
Restricted Subsidiary may merge with the Company ( provided
that the Company shall be the continuing or surviving corporation)
or with any one or more wholly owned Restricted Subsidiaries
organized in the United States;
(B) any
Restricted Subsidiary organized in the United States may sell,
lease, transfer or otherwise dispose of any of its assets to the
Company or to any wholly owned Restricted Subsidiary organized in
the United States;
(C) any
Restricted Subsidiary organized outside the United States may sell,
lease, transfer or otherwise dispose of any of its assets on
arm’s-length terms to the Company or to any wholly owned
Restricted Subsidiary;
(D) the
Company may merge or consolidate with another Person so long as (
1 ) the Company will be the surviving corporation and (
2 ) immediately after such merger or consolidation and after
giving effect thereto, no Event of Default or Default shall have
occurred; and
(E) the
Company and any Restricted Subsidiary may engage in normal sales or
other dispositions of ( 1 ) inventory and ( 2 )
vehicles or equipment with little or no remaining useful life in
each case on arm’s-length terms and otherwise in the ordinary
course of business.
(b) If
the net amount of consideration received by the Company or any
Restricted Subsidiary pursuant to any sale or other disposition of
assets described in clauses (i) or (ii) of Section 10.2(a) is
applied to the acquisition by the Company or such Restricted
Subsidiary, within 365 days after such sale or disposition, of
similar assets of the Company or such Restricted Subsidiary to be
used in the ordinary course of business of the Company or such
Restricted Subsidiary, then such sale or disposition shall not be
deemed to be a sale or disposition of assets for the purpose of
determining compliance with clauses (i) or (ii) of Section
10.2(a). Within 30 days of such acquisition of similar
assets (or, if earlier, at the time an officer’s compliance
certificate is delivered pursuant to Sections 7.1(a) or (b)), the
Company shall deliver to each holder of Notes an Officer’s
Certificate certifying in reasonable detail as to such acquisition
of similar assets.
(c) For
purposes of determining compliance by the Company with the
provisions of Section 10.2(a), sales or other dispositions of
assets described in clauses (B), (C) and (E) of Section 10.2(a) are
not included in making the calculations required for clauses (i)
and (ii) of Section 10.2(a).
10.3.
Liens.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, assume or
permit to exist at any time any Lien of any kind (unless prior
written consent to the creation or assumption thereof shall have
been obtained pursuant to Section 17) on or with respect to any of
its property or assets, whether now owned or hereafter acquired,
except
(a) Liens
for taxes not yet delinquent or which are being actively contested
in good faith by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained on the books
of the applicable Person in accordance with GAAP;
(b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business for
sums not yet due or being actively contested in good faith by
appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
(c) Liens
(other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business ( i ) in connection with
workers’ compensation, unemployment insurance and other types
of social security or ( ii ) to secure (or to obtain letters
of credit that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance
bonds, purchase, construction or sales contracts and other similar
obligations; provided , that in each case such Liens are not
incurred or made in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred
purchase price of property, and such Liens do not in the aggregate
materially detract from the value of the Company’s or any
Restricted Subsidiary’s property or assets or materially
impair the use thereof in the operation of its business;
(d) Liens
on property or assets of a Restricted Subsidiary to secure
obligations of such Restricted Subsidiary to the Company or a
wholly-owned Restricted Subsidiary;
(e)
Liens existing on the date hereof as specified by the Company on
Schedule 10.3 attached hereto; provided ,
however , that all Debt secured by such Liens permitted by
this Section 10.3(e) shall be permitted under Section
10.4(e);
(f) any
Lien created to secure all or any part of the purchase price, or to
secure Debt incurred or assumed to pay all or any part of the
purchase price, of property acquired by the Company or a Restricted
Subsidiary after the date hereof; provided , however
, that ( i ) any such Lien shall be confined solely to the
item or items of property so acquired and, if expressly required by
the terms of the instrument originally creating such Lien, other
property which is an improvement to or is acquired for specific use
in connection with such acquired property or which is real property
being improved by such acquired property, ( ii ) the
principal amount of the Debt secured by any such Lien shall
(exclusive of capitalized interest that is treated as Debt for
purposes of Sections 10.4(e)) at no time exceed an amount equal to
100% of the cost to the Company or such Restricted Subsidiary of
the property so acquired, ( iii ) any such Lien shall be
created within 12 months after, in the case of property, its
acquisition, or, in the case of improvements, their completion and
( iv ) all Debt secured by Liens created or existing
pursuant to this Section 10.3(f) shall be permitted under Section
10.4(e);
(g) any
Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a Restricted
Subsidiary or its becoming a Restricted Subsidiary, or any Lien
existing on any property acquired by the Company or any Restricted
Subsidiary at the time of such acquisition (whether or not the Debt
secured thereby shall have been assumed), provided ,
however , that (i) no such Lien shall have been created or
assumed in contemplation of such consolidation or merger or such
Person’s becoming a Restricted Subsidiary or such acquisition
of property, (ii) each such Lien shall at all times be confined
solely to the item or items of property so acquired and, if
required by the terms of the instrument originally creating such
Lien, other property which is an improvement to or is acquired for
specific use in connection with such acquired property and (iii)
all Debt secured by Liens created or existing pursuant to this
Section 10.3(g) shall be permitted under Section
10.4(e);
(h) any
other Liens securing Debt; provided that all Debt secured by
Liens created or existing pursuant to this Section 10.3(h) shall be
permitted under Section 10.4(e);
(i) Liens
granted pursuant to the Collateral Documents;
(j) minor
survey exceptions and the like which do not Materially detract from
the value of the Company’s and its Subsidiaries’
properties taken as a whole;
(k) leases,
subleases, easements, rights-of-way, restrictions and other similar
charges or encumbrances incidental to the ownership of property or
assets or the ordinary conduct of the Company’s and each of
its Subsidiaries’ businesses, provided that the aggregate of
such Liens do not Materially detract from the value of the
Company’s and such Subsidiaries’ properties taken as a
whole;
(l) judgment
Liens securing judgments for the payment of money not constituting
an Event of Default under Section 11(j);
