EX-4.1






Exhibit 4.1




EXECUTION COPY



 



Calamos Holdings, Inc.




$150,000,000




5.24% Senior Notes due 2011




NOTE PURCHASE AGREEMENT




Dated April 29, 2004





 


 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Section	 	Page
	 
	 	 	 	 
	1. AUTHORIZATION OF NOTES
	 	 	1	 
	 
	 	 	 	 
	2. SALE AND PURCHASE OF NOTES
	 	 	1	 
	 
	 	 	 	 
	3. CLOSING
	 	 	1	 
	 
	 	 	 	 
	4. CONDITIONS TO CLOSING
	 	 	2	 
	 
	 	 	 	 
	4.1. Representations and Warranties
	 	 	2	 
	4.2. Performance; No Default
	 	 	2	 
	4.3. Compliance Certificates
	 	 	2	 
	4.4. Opinions of Counsel
	 	 	2	 
	4.5. Purchase Permitted By Applicable Law, etc.
	 	 	3	 
	4.6. Sale of Other Notes
	 	 	3	 
	4.7. Payment of Special Counsel Fees
	 	 	3	 
	4.8. Private Placement Number
	 	 	3	 
	4.9. Changes in Corporate Structure
	 	 	3	 
	4.10. Proceedings and Documents
	 	 	3	 
	 
	 	 	 	 
	5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	4	 
	 
	 	 	 	 
	5.1. Organization; Power and Authority
	 	 	4	 
	5.2. Authorization, etc.
	 	 	4	 
	5.3. Disclosure
	 	 	4	 
	5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates
	 	 	5	 
	5.5. Financial Statements
	 	 	6	 
	5.6. Compliance with Laws, Other Instruments, etc.
	 	 	6	 
	5.7. Governmental Authorizations, etc.
	 	 	6	 
	5.8. Litigation; Observance of Agreements, Statutes and Orders
	 	 	6	 
	5.9. Taxes
	 	 	7	 
	5.10. Title to Property; Leases
	 	 	7	 
	5.11. Licenses, Permits, etc.
	 	 	7	 
	5.12. ERISA
	 	 	8	 
	5.13. Private Offering by the Company
	 	 	8	 
	5.14. Use of Proceeds; Margin Regulations
	 	 	8	 
	5.15. Existing Indebtedness; Future Liens
	 	 	9	 
	5.16. Foreign Assets Control Regulations, etc.
	 	 	9	 
	5.17. Status under Certain Statutes
	 	 	9	 
	5.18. Environmental Matters
	 	 	9	 
	5.19. Pari Passu Ranking
	 	 	10	 
	 
	 	 	 	 
	6. REPRESENTATIONS OF THE PURCHASER
	 	 	10	 
	 
	 	 	 	 
	6.1. Purchase for Investment
	 	 	10	 
	6.2. Source of Funds
	 	 	10	 






 









 






	 	 	 	 	 
	Section	 	Page
	 
	 	 	 	 
	7. INFORMATION AS TO COMPANY
	 	 	11	 
	 
	 	 	 	 
	7.1. Financial and Business Information
	 	 	11	 
	7.2. Officer’s Certificate
	 	 	13	 
	7.3. Inspection
	 	 	14	 
	 
	 	 	 	 
	8. PREPAYMENT OF THE NOTES
	 	 	15	 
	 
	 	 	 	 
	8.1. No Scheduled Prepayments
	 	 	15	 
	8.2. Optional Prepayments with Make-Whole Amount
	 	 	15	 
	8.3. Mandatory Offer to Prepay upon a Change of Control
	 	 	15	 
	8.4. Allocation of Partial Prepayments
	 	 	16	 
	8.5. Maturity; Surrender, etc.
	 	 	17	 
	8.6. Purchase of Notes
	 	 	17	 
	 
	 	 	 	 
	9. AFFIRMATIVE COVENANTS
	 	 	17	 
	 
	 	 	 	 
	9.1. Compliance with Law
	 	 	17	 
	9.2. Insurance
	 	 	17	 
	9.3. Maintenance of Properties
	 	 	18	 
	9.4. Payment of Taxes and Claims
	 	 	18	 
	9.5. Corporate Existence, etc.
	 	 	18	 
	9.6. Ranking
	 	 	18	 
	 
	 	 	 	 
	10. NEGATIVE COVENANTS
	 	 	18	 
	 
	 	 	 	 
	10.1. Maintenance of Consolidated Net Worth
	 	 	19	 
	10.2. Consolidated Total Debt Leverage Ratio
	 	 	19	 
	10.3. Interest Coverage Ratio
	 	 	19	 
	10.4. Limitation on Subsidiary Indebtedness
	 	 	19	 
	10.5. Liens
	 	 	20	 
	10.6. Transactions with Affiliates
	 	 	22	 
	10.7. Nature of Business
	 	 	22	 
	10.8.
Merger, Consolidation, etc.
	 	 	22	 
	 
	 	 	 	 
	11. EVENTS OF DEFAULT
	 	 	23	 
	 
	 	 	 	 
	12. REMEDIES
ON DEFAULT, ETC.
	 	 	25	 
	 
	 	 	 	 
	12.1. Acceleration
	 	 	25	 
	12.2. Other Remedies
	 	 	26	 
	12.3. Rescission
	 	 	26	 
	12.4. No Waivers or Election of Remedies, Expenses, etc.
	 	 	26	 
	 
	 	 	 	 
	13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
	 	 	26	 
	 
	 	 	 	 
	13.1. Registration of Notes
	 	 	26	 
	13.2. Transfer and Exchange of Notes
	 	 	27	 
	13.3. Replacement of Notes
	 	 	27	 
	 
	 	 	 	 
	14. PAYMENTS ON NOTES
	 	 	28	 
	14.1. Place of Payment
	 	 	28	 
	14.2. Home Office Payment
	 	 	28	 
	 ii






 









 






	 	 	 	 	 
	Section	 	Page
	 
	 	 	 	 
	15. EXPENSES, ETC.
	 	 	28	 
	 
	 	 	 	 
	15.1. Transaction Expenses
	 	 	28	 
	15.2. Survival
	 	 	29	 
	 
	 	 	 	 
	16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
	 	 	29	 
	 
	 	 	 	 
	17. AMENDMENT AND WAIVER
	 	 	29	 
	 
	 	 	 	 
	17.1. Requirements
	 	 	29	 
	17.2. Solicitation of Holders of Notes
	 	 	29	 
	17.3. Binding Effect, etc.
	 	 	30	 
	17.4. Notes Held by Company, etc.
	 	 	30	 
	 
	 	 	 	 
	18. NOTICES
	 	 	30	 
	 
	 	 	 	 
	19. REPRODUCTION OF DOCUMENTS
	 	 	31	 
	 
	 	 	 	 
	20. CONFIDENTIAL INFORMATION
	 	 	31	 
	 
	 	 	 	 
	21. SUBSTITUTION OF PURCHASER
	 	 	32	 
	 
	 	 	 	 
	22. MISCELLANEOUS
	 	 	32	 
	 
	 	 	 	 
	22.1. Successors and Assigns
	 	 	32	 
	22.2. Payments Due on Non-Business Days
	 	 	32	 
	22.3. Severability
	 	 	33	 
	22.4. Construction
	 	 	33	 
	22.5. Counterparts
	 	 	33	 
	22.6. Governing Law
	 	 	33	 






	 	 	 	 	 
	SCHEDULE A

	 	–
	 	Information Relating to Purchasers
	 
	 	 	 	 
	SCHEDULE B 

	 	–
	 	Defined Terms
	 
	SCHEDULE 4.9 

	 	–
	 	Changes in Corporate Structure
	 
	SCHEDULE 5.3 

	 	–
	 	Disclosure Materials
	 
	SCHEDULE 5.4 

	 	–
	 	Subsidiaries of the Company and Ownership of Subsidiary Stock
	 
	SCHEDULE 5.5 

	 	–
	 	Financial Statements
	 
	SCHEDULE 5.7 

	 	–
	 	Governmental Authorizations, etc.
	 
	SCHEDULE 5.8

	 	–
	 	Certain Litigation
	 iii






 









 






	 	 	 	 	 
	SCHEDULE 5.11 

	 	–
	 	Patents, etc.
	 
	SCHEDULE 5.14 

	 	–
	 	Use of Proceeds
	 
	SCHEDULE 5.15 

	 	–
	 	Existing Indebtedness
	 
	SCHEDULE 10.5 

	 	–
	 	Liens
	 
	EXHIBIT 1 

	 	–
	 	Form of 5.24% Senior Note due April 29, 2011
	 
	EXHIBIT 4.4(a) 

	 	–
	 	Form of Opinion of Special Counsel for the Company
	 
	EXHIBIT 4.4(b)

	 	–
	 	Form of Opinion of Special Counsel for the Purchasers






 iv




 









 





CALAMOS HOLDINGS, INC.

1111 East Warrenville Road

Naperville, Illinois 60563-1463




5.24% Senior Notes due 2011




April 29, 2004




TO EACH OF THE PURCHASERS LISTED IN




     THE ATTACHED SCHEDULE A:




Ladies and Gentlemen:




          Calamos Holdings, Inc., a Delaware corporation (the “Company”), agrees with you as follows:




1. AUTHORIZATION OF NOTES.




          The Company has authorized the issue and sale of $150,000,000 aggregate principal amount of
its 5.24% Senior Notes due April 29, 2011 (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. 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 each of the other purchasers named in Schedule A (the “Other Purchasers”), and you and the
Other Purchasers will purchase from the Company, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your names in Schedule A at the purchase price of 100% of
the principal amount thereof. Your obligations hereunder and the obligations of the Other
Purchasers 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.




3. CLOSING.




          The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of Gardner Carton & Douglas, 191 North Wacker Drive, Suite 3700, Chicago, Illinois
60606-1698, at 9:00 a.m., Chicago time, at a closing (the “Closing”) on April 29, 2004 or on such
other Business Day thereafter on or prior to May 10, 2004 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 $100,000 as you may request) dated the date of the Closing and registered in your name (or
in the name of your nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of



 









 






immediately available funds for the account of the Company to account number 102 121 at The
Bank of New York, ABA No. 021 000 018. If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the conditions specified in Section 4
shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you may have by reason
of such failure or such nonfulfillment.




4. CONDITIONS TO CLOSING.




          Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject
to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:




4.1. Representations and Warranties.




          The representations and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.




4.2. Performance; No Default.




          The Company shall have performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof
as contemplated by 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
the date of the Memorandum that would have been prohibited by Sections 10.4, 10.5 or 10.6 hereof
had such Sections applied since such date.




4.3. Compliance Certificates.




          (a) Officer’s 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.




          (b) Secretary’s Certificate. The Company shall have delivered to you a certificate
certifying as to the resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this Agreement.




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 Shearman & Sterling LLP, special counsel for the Company, and James S.
Hamman, Jr., General Counsel of the Company, covering the respective matters set forth in Exhibit
4.4(a) (and the Company hereby instructs its counsel to deliver such opinion to you) and
(b) from Gardner Carton & Douglas LLP, special counsel for you and the Other Purchasers
(the “Special Counsel”) in connection with such transactions, substantially in the form set forth
in Exhibit 4.4(b) and covering such other matters incident to such transactions as you may
reasonably request.




2









 








4.5. Purchase Permitted By Applicable Law, etc.




          On the date of the Closing your purchase of Notes shall (i) be permitted by the laws
and regulations of each jurisdiction to which you are subject, without recourse to provisions (such
as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation, Regulation G, T or X of
the Board of Governors of the Federal Reserve System) 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 reasonable fees, charges and disbursements of the Special Counsel to the extent
reflected in a statement of the Special Counsel rendered to the Company at least two Business Days
prior to the Closing; provided that the Special Counsel has provided to the Company a
written estimate of such fees at least five days 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 Schedule 5.5.




4.10. 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 the Special Counsel, and you and the Special Counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or they may reasonably
request.




3









 








5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.




          The Company represents and warrants to you that:




5.1. Organization; Power and Authority.




          The Company is a 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 would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company 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 and the Notes and to perform the provisions hereof and thereof.
The Company possesses all licenses, registrations and authorizations from and with any Governmental
Authority, self-regulatory organization or securities exchange necessary or material to the conduct
of its business as presently conducted, other than where the failure to possess such licenses,
registrations or authorizations would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.




5.2. Authorization, etc.




          This Agreement and the Notes have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law).




5.3. Disclosure.




          The Company, through its authorized agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
has delivered to you and each Other Purchaser a copy of a Private Placement Memorandum, dated March
2004 (the “Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and principal properties of
the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the
Memorandum, 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 Schedule 5.5, taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents, certificates or other writings identified
therein, or in the financial statements listed in Schedule 5.5, since December 31, 2003 there has
been no change in the financial condition, operations, business or properties of the Company or any
Subsidiary except changes that individually or in the aggregate would not reasonably be expected to
have a Material Adverse



4









 






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 Memorandum 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. Notwithstanding
anything to the contrary in this Agreement, the Company makes no representation with respect to any
projected financial information contained in the Memorandum, except that such projected financial
information is based on information that the Company believes to be accurate as of the date hereof
and was calculated in a manner that the Company believes to be reasonable.




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.




          (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 would 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. Each Subsidiary possesses all licenses, registrations and authorizations
from and with any Governmental Authority, self-regulatory organization or securities exchange
necessary or material to the conduct of its business as presently conducted, other than where the
failure to possess such licenses, registrations or authorizations would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.




          (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 or regulatory requirements imposed by the Commission,
the National Association of Securities Dealers, Inc. or other regulatory authorities) 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









 








5.5. Financial Statements.




          (a) The Company has delivered to each Purchaser copies of the audited financial statements of
the Company and its Subsidiaries listed on Schedule 5.5. All of said audited financial statements
(including in each case the related schedules and notes) fairly present in all material respects
the consolidated financial position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto.




          (b) The Company has delivered to each Purchaser copies of the unaudited pro forma financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of said unaudited pro
forma financial statements fairly present in all material respects the information contained
therein, and the assumptions used in the preparation thereof are reasonable.




5.6. Compliance with Laws, Other Instruments, etc.




          The execution, delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, 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, except, in each case, as would not reasonably be expected to result in a Material
Adverse Effect.




5.7. Governmental Authorizations, etc.




          No consent, approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or performance by the
Company of this Agreement or the Notes, except such as have already been obtained or made, which
are disclosed in Schedule 5.7.




5.8. Litigation; Observance of Agreements, Statutes and Orders.




          (a) Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary
or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.




          (b) Neither the Company nor any Subsidiary is in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order, judgment,



6









 






decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including Environmental Laws and the USA Patriot
Act) of any Governmental Authority, which default or violation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.




5.9. Taxes.




          The Company and its Subsidiaries have filed all 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 would
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. The Company has never been audited by the Internal Revenue Service.




5.10. Title to Property; Leases.




          The Company and its Subsidiaries have good and sufficient title to their respective Material
properties, including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary
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. All Material leases of the Company
and its Subsidiaries are valid and subsisting and are in full force and effect in all material
respects.




5.11. Licenses, Permits, etc.




          Except as disclosed in Schedule 5.11,





     (a) the Company and its Subsidiaries own or possess all Material licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto without known conflict with the rights of others;




     (b) to the 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; and




     (c) to the 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.



7









 





5.12. ERISA.




          (a) Neither the Company nor any ERISA Affiliate has any Pension Plan or Multiemployer Plan.




          (b) The expected postretirement medical 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.




          (c) 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(a)(1)(A)-(D) of ERISA or in connection with which a tax would 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(c) 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 authorized to act on its behalf has offered the Notes or any
similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you, the Other Purchasers
and not more than 125 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone authorized to act 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 for general corporate purposes,
to make investments in new products of the Company and its Subsidiaries and to repay indebtedness
as set forth in Schedule 5.14. Other than as contemplated by the Memorandum, no part of the
proceeds from the sale of the Notes 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). No part of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation of Regulation X of said Board (12
CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR
220). Margin stock does not constitute more than 24.9% of the value of the consolidated assets of
the Company and its Subsidiaries, and the Company does not have any present intention that margin
stock will constitute more than 24.9% of the value of such assets. 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.




8









 








5.15. Existing Indebtedness; Future Liens.




          (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of February 29, 2004, since which
date there has been no Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its Subsidiaries. Neither the Company
nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or
condition exists with respect to any Indebtedness of the Company or any Subsidiary 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.




          (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 not permitted by
Section 10.5.




5.16. Foreign Assets Control Regulations, etc.




          To the knowledge of the Company, neither the sale of the Notes by the Company hereunder nor
its use of the proceeds thereof will violate (a) the Trading with the Enemy Act, as amended, (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,
(c) the Anti-Terrorism Order or (d) the United States Foreign Corrupt Practices Act of 1997, as
amended. Without limiting the foregoing, neither the Company nor any Subsidiary (i) is a blocked
person described in Section 1 of the Anti-Terrorism Order or (ii) to the knowledge of the Company,
engages in any dealings or transactions, or is otherwise associated, with any such person.




5.17. Status under Certain Statutes.




          The Company is not an “investment company” as defined in the Investment Company Act of 1940,
as amended, nor is it subject to regulation under the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended by the ICC Termination 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 would 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



9









 







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 would not reasonably be expected to result in a
Material Adverse Effect;




     (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials
on real properties now or formerly owned, leased or operated by any of them and has not
disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each
case in any manner that would 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 would not reasonably be expected to result in a Material Adverse
Effect.



5.19. Pari Passu Ranking.




          As of the date of this Agreement, the Indebtedness evidenced by the Notes ranks pari passu in
right of payment with all of the Company’s outstanding unsecured senior Indebtedness.




6. REPRESENTATIONS OF THE PURCHASER.




6.1. Purchase for Investment.




          You represent that you are purchasing the Notes for your own account or for one or more
separate accounts maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand that the Notes have
not been registered under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required by law, and that
the Company is not required to register the Notes.




6.2. Source of Funds.




          You represent that at least one of the following statements is, and will remain at all times,
an accurate representation as to each source of funds (a “Source”) to be used by you to pay the
purchase price of, and to be attributed to the holding of, the Notes to be purchased and held by
you hereunder:





     (a) the Source does not include “plan assets” (within the meaning of the United States
Department of Labor Regulation 29 C.F.R. Section 2510.3-101) of any (i) employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (ii) plan
described in Section 4975(e)(1) of the Code, (iii) entity whose assets include “plan assets”
by reason of an employee benefit plan’s or plan’s investment in such entity, or (iv) foreign
plan, governmental plan (as defined in Section 3(32) of ERISA) or church plan (as defined in
Section 3(33) of ERISA) that is subject to any



10









 







federal, state, local or foreign law or regulation that is substantially similar to
Section 406 of ERISA or Section 4975 of the Code (a “Similar Law”); or




     (b) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, and the purchase and holding of the
Notes do not and will not result in a nonexempt prohibited transaction under Section 4975 of
the Code or Section 406 of ERISA, or any Similar Law; or




     (c) the Source is an insurance company pooled separate account and Prohibited
Transaction Class Exemption (“PTCE”) 90-1 applies to exempt the purchase and holding of the
Notes; or




     (d) the Source is an insurance company general account and PTCE 95-60 applies to exempt
the purchase and holding of the Notes; or




     (e) the Source is a bank collective investment fund and PTCE 91-38 applies to exempt
the purchase and holding of the Notes; or




     (f) the Source constitutes assets of an investment fund managed by an “in-house asset
manager” within the meaning of PTCE 96-23 (the “INHAM Exemption”) and the INHAM Exemption
applies to exempt the purchase and holding of the Notes; or




     (g) the Source constitutes assets of an investment fund managed by a “qualified
professional asset manager” within the meaning of PTCE 84-14 (the “QPAM Exemption”) and the
QPAM Exemption applies to exempt the purchase and holding of the Notes.



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 – within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly fiscal
period of each such fiscal year), duplicate copies of,




     (i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and




     (ii) consolidated statements of income, changes in shareholders’ equity and
cash flows of the Company and its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with such
quarter,




setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a Senior Financial



11









 







Officer as fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that, if the Company is
required to file reports with the Commission pursuant to Section 13(a) or Section 15(d)
under the Exchange Act, delivery within the time period specified above of copies of the
Company’s Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Commission shall be deemed to satisfy the requirements of this
Section 7.1(a);




     (b) Annual Statements – within 105 days after the end of each fiscal year of
the Company, duplicate copies of,




     (i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and




     (ii) consolidated statements of income, changes in shareholders’ equity and
cash flows of the Company and its Subsidiaries, for such year,




setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances; provided that, if the Company is required to
file reports with the Commission pursuant to Section 13(a) or Section 15(d) under the
Exchange Act, the delivery within the time period specified above of the Company’s Annual
Report on Form 10-K for such fiscal year (together with the Company’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the Commission shall be deemed to
satisfy the requirements of this Section 7.1(b);




     (c) SEC and Other Reports – if the Company is required to file reports with the
Commission pursuant to Section 13(a) or Section 15(d) under the Exchange Act, promptly upon
their becoming available, one copy of (i) each financial statement, report, notice
or proxy statement sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the Commission and of all
press releases and other statements made available generally by the Company or any
Subsidiary to the public concerning developments that are Material;




     (d) 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



12









 







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;




     (e) 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 Pension 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 Pension 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 pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be expected
to have a Material Adverse Effect;




     (f) 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 would reasonably be expected to have a Material Adverse Effect; and




     (g) Requested Information – with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.



7.2. Officer’s Certificate.




          Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting
forth:




13









 









     (a) Covenant Compliance – the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the requirements
of Section 10.1 through Section 10.5 hereof, inclusive, during the quarterly or annual
period covered by the statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in existence); and




     (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 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 any such event or condition
resulting from the failure of the Company or any Subsidiary to comply with any Environmental
Law), specifying the nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.



7.3. Inspection.




          The Company shall permit the representatives of each holder of Notes that is an Institutional
Investor:





     (a) No Default – if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the principal
executive office of the Company, to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the Company’s officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) 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 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
Subsidiary, to examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries), all at such times and as often as may be
requested.



14









 





8. PREPAYMENT OF THE NOTES.




8.1. No Scheduled Prepayments.




          No regularly scheduled prepayments are due on the Notes prior to their stated maturity.




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 $2,000,000 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 15 days and
not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify
such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal
amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.4),
and the interest to be paid on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of
such notice were the date of the prepayment), setting forth the details of such computation. Two
Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.




8.3. Mandatory Offer to Prepay upon a Change of Control.




          (a) Notice of Change of Control. The Company will, within 10 Business Days after any
Responsible Officer has knowledge of the occurrence of any Change of Control or Control Event, give
written notice of such Change of Control or Control Event to each holder of Notes, unless notice in
respect of such Change of Control (or the Change of Control contemplated by such Control Event)
shall have been given pursuant to subparagraph (b) of this Section 8.3. If a Change of Control has
occurred, such notice shall contain and constitute an offer to prepay Notes as described in
paragraph (c) of this Section 8.3 and shall be accompanied by the certificate described in
paragraph (g) of this Section 8.3.




          (b) Condition to Company Action. The Company will not take any action that
consummates or finalizes a Change of Control unless (i) at least 10 Business Days prior to such
action it shall have given to each holder of Notes written notice containing and constituting an
offer to prepay Notes accompanied by the certificate described in paragraph (g) of this
Section 8.3, and (ii) subject to the provisions of paragraph (d) below, contemporaneously with such
action, it prepays all Notes required to be prepaid in accordance with this Section 8.3.




          (c) Offer to Prepay Notes. The offer to prepay Notes contemplated by paragraphs (a)
and (b) of this Section 8.4 shall be an offer to prepay, in accordance with and subject to this
Section 8.3, all, but not less than all, of the Notes held by each holder (in this case only,
“holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial
owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment
Date”).




15









 







If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph
(a) of this Section 8.4, such date shall be not less than 35 days and not more than 60 days after
the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the
Proposed Prepayment Date shall be the 45th day after the date of such offer).




          (d) Acceptance; Rejection. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the Company
at least five Business Days prior to the Proposed Prepayment Date. A failure by a holder of Notes
to respond to an offer to prepay made pursuant to this Section 8.3, or to accept an offer as to all
of the Notes held by the holder, within such time period shall be deemed to constitute rejection of
such offer by such holder.




          (e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.3
shall be at 100% of the principal amount of such Notes, together with interest on such Notes
accrued to the date of prepayment and shall not require the payment of any Make-Whole Amount. The
prepayment shall be made on the Proposed Prepayment Date except as provided in paragraph (f) of
this Section 8.3.




          (f) Deferral Pending Change of Control. The obligation of the Company to prepay Notes
pursuant to the offers required by paragraphs (a) and (b) and accepted in accordance with paragraph
(d) of this Section 8.3 is subject to the occurrence of the Change of Control in respect of which
such offers and acceptances shall have been made. In the event that such Change of Control does
not occur on or prior to the Proposed Prepayment Date in respect thereof, the prepayment shall be
deferred until and shall be made on the date on which such Change of Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date
of prepayment, (ii) the date on which such Change of Control and the prepayment are expected to
occur, and (iii) any determination by the Company that efforts to effect such Change of Control
have ceased or been abandoned (in which case the offers and acceptances made pursuant to this
Section 8.3 in respect of such Change of Control shall be deemed rescinded). Notwithstanding the
foregoing, in the event that (x) the prepayment has not been made within 90 days after such
Proposed Prepayment Date by virtue of the deferral provided for in this Section 8.3(f) and (y) such
Change of Control has not ceased or been abandoned, the Company shall make a new offer to prepay in
accordance with paragraph (c) of this Section 8.3.




          (g) Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the
Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that
such offer is made pursuant to this Section 8.3; (iii) the principal amount of each Note offered to
be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the
Proposed Prepayment Date; (v) that the conditions of this Section 8.3 have been fulfilled; and (vi)
in reasonable detail, the nature and date of the Change of Control.




8.4. Allocation of Partial Prepayments.




          In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at the time



16









 






outstanding in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.




8.5. Maturity; Surrender, etc.




          In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of
each Note to be prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make-Whole Amount, if any,
as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall
be issued in lieu of any prepaid principal amount of any Note.




8.6. Purchase of Notes.




          The Company will not and will not permit any Affiliate to purchase, redeem, prepay or
otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.




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 would 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.




17









 








9.3. Maintenance of Properties.




          The Company will and will cause each of its Subsidiaries to maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order and condition (other
than ordinary wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent the Company
or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if
such discontinuance is desirable in the conduct of its business and the Company has concluded that
such discontinuance would not, individually or in the aggregate, 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 would 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 10.8, the Company will at all times preserve and keep in full force
and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise would not, individually or in the aggregate,
have a Material Adverse Effect.




9.6. Ranking.




          The Indebtedness evidenced by the Notes will rank at least pari passu with all of the
Company’s outstanding unsecured senior Indebtedness.




10. NEGATIVE COVENANTS.




          The Company covenants that so long as any of the Notes are outstanding:




18









 








10.1. Maintenance of Consolidated Net Worth.




          The Company will not, at any time, permit Consolidated Net Worth to be less than the sum of
(a) $35,000,000, plus (b) an aggregate amount equal to 50% of (x) the Company’s
Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal
year beginning with the fiscal year ending December 31, 2004, less (y) any Tax Dividend
paid by the Company during each such completed fiscal year.




10.2. Consolidated Total Debt Leverage Ratio.




          The Company will not permit the Consolidated Total Debt Leverage Ratio to be greater than 2.5
to 1.0 at any time.




10.3. Interest Coverage Ratio.




          The Company will not permit the Interest Coverage Ratio to be less than 3.0 to 1.0, at any
time.




10.4. Limitation on Subsidiary Indebtedness.




          The Company will not at any time permit any Subsidiary to, directly or indirectly, create,
incur, guarantee, or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness other than:





     (a) Indebtedness of a Subsidiary outstanding on the date hereof and listed in Schedule
5.15 and any extension, refinancing, renewal, replacement, defeasance or refund of such
Indebtedness, provided that the principal amount (or accreted value, if applicable) thereof
is not increased;




     (b) Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary
and any extension, refinancing, renewal, replacement, defeasance or refund of such
Indebtedness, provided that the principal amount (or accreted value, if applicable) thereof
is not increased and provided further that (i) such Indebtedness shall not have been
incurred in contemplation of such Subsidiary becoming a Subsidiary and (ii) immediately
before and after such Subsidiary becomes a Subsidiary no Default or Event of Default shall
exist;




     (c) Indebtedness of a Subsidiary owed to the Company or a Wholly-Owned Subsidiary;




     (d) Indebtedness of a Subsidiary that has entered into a Guaranty of the Company’s
obligations under the Notes and this Agreement (i) reasonably satisfactory in form and
substance to the Required Holders and (ii) as to which Guaranty the holders of outstanding
Notes have received an opinion of independent counsel, in form and substance satisfactory to
them, as to the validity and enforceability of such Guaranty;




     (e) short-term Indebtedness incurred by CFS not exceeding $5 million in the aggregate
at any time;



19









 






     (f) Indebtedness of Subsidiaries constituting short-term cash borrowings under special
memorandum accounts not exceeding $2 million in the aggregate at any time;




     (g) repurchase obligations for underlying securities issued or directly and fully
guaranteed or insured by the United States government or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged in
support thereof), issued by any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any foreign jurisdiction having
at the date of acquisition thereof combined capital and surplus of not less than $500
million;




     (h) Rate Hedging Obligations;




     (i) Indebtedness of a Subsidiary that is non-recourse to the Company or any other
Subsidiary incurred in connection with the sale, disposition or transfer of any right to
future fee payments and/or other revenue streams relating to the payment of advanced sales
commissions; and




     (j) Indebtedness not otherwise permitted by paragraphs (a) through (i) of this Section
10.4, provided that the outstanding aggregate principal amount of all Indebtedness incurred
pursuant to this paragraph (j) plus, (without duplication) the outstanding aggregate
principal amount of Indebtedness secured by Liens not permitted by paragraphs (a) through
(k) of Section 10.5 does not at any time exceed the greater of (x) $15.0 million or (y) 25%
of Consolidated Net Worth.



10.5. Liens.




          The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly
create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any
Lien on or with respect to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary,
whether now owned or held or hereafter acquired, or any income or profits therefrom or assign or
otherwise convey any right to receive income or profits (unless it makes, or causes to be made,
effective provision whereby the Notes will be equally and ratably secured with any and all other
obligations thereby secured, such security to be pursuant to an agreement reasonably satisfactory
to the Required Holders and, in any such case, the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled under applicable
law, of an equitable Lien on such property), except:





     (a) Liens for taxes, assessments or other governmental charges which are not yet due
and payable or the payment of which is not at the time required by Section 9.4;




     (b) 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 retirement benefits, or
(ii) to secure (or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital
Leases), performance bonds, purchase, construction or sale contracts and other similar
obligations,



20









 







in each case 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;




     (c) Liens created by or resulting from any litigation or legal proceeding that is being
contested in good faith by appropriate proceedings and with respect to which the Company or
its Subsidiary, as the case may be, has established adequate reserves in accordance with
GAAP;




     (d) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in the ordinary course of
business for sums not yet due and payable;




     (e) leases or subleases granted to others, easements, rights-of-way, restrictions and
other similar charges or encumbrances, in each case incidental to the ordinary conduct of
business of the Company or any of its Subsidiaries;




     (f) Liens incidental to the normal conduct of the business of the Company or any
Subsidiary or the ownership of its property (i) that are not incurred in connection
with the incurrence of Indebtedness and (ii) that do not in the aggregate materially
impair (x) the use of such property in the operation of the business of the Company
and its Subsidiaries taken as a whole or (y) the value of such property for the
purposes of the business of the Company and its Subsidiaries taken as a whole;




     (g) Liens securing Indebtedness permitted to be incurred under paragraphs (e) through
(i) of Section 10.4 of this Agreement;




     (h) Liens existing on the date of this Agreement that are described in Schedule 10.5;




     (i) Liens on property or assets of the Company or any of its Subsidiaries securing
Indebtedness owing to the Company or to a Wholly-Owned Subsidiary;




     (j) (i) any Liens on property or on rights relating thereto to secure any
rights granted with respect to such property in connection with the provision of all or a
part of the purchase price or cost of the construction of such property created
contemporaneously with, or within 120 days after, such purchase or the completion of such
construction, or (ii) any Lien on property existing on such property at the time of
acquisition thereof, whether or not the Indebtedness secured thereby is assumed by the
Company or such Subsidiary, or (iii) any Lien existing on the property of a Person
at the time such Person is merged into or consolidated with the Company or a Subsidiary or
at the time of a sale, lease or other disposition of the properties of a Person as an
entirety or substantially as an entirety to the Company or a Subsidiary; provided
that, in each case, any Indebtedness secured by such Liens does not exceed 100% of the fair
market value of the related property;




     (k) any Lien renewing, extending or refunding any Lien permitted by paragraph (g), (h),
(i) or (j) of this Section 10.5, provided that (i) the principal amount of
Indebtedness secured by such Lien immediately prior to such extension, renewal or



21









 







refunding is not increased or the maturity thereof reduced, and (ii) such Lien
does not extend to any other property; and




     (l) Liens securing Indebtedness of the Company or a Subsidiary not otherwise permitted
by paragraphs (a) through (k) of this Section 10.5, provided that the outstanding aggregate
principal amount of all Indebtedness secured by Liens pursuant to this paragraph (l) plus
(without duplication) the outstanding aggregate principal amount of all Indebtedness under
paragraph (j) of Section 10.4 does not at any time exceed the greater of (a) $15.0 million
or (b) 25% of Consolidated Net Worth.



          For the purposes of this Section 10.5, any Person becoming a Subsidiary after the date of this
Agreement shall be deemed to have incurred all of its then outstanding Liens at the time it becomes
a Subsidiary, and any Person extending, renewing or refunding any Indebtedness secured by any Lien
shall be deemed to have incurred such Lien at the time of such extension, renewal or refunding.




10.6. Transactions with Affiliates.




          The Company will not and will not permit any Subsidiary to enter into directly or indirectly
any Material transaction or Material group of related transactions (including the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.




10.7. Nature of Business.




          The Company will not, and will not permit any of its Subsidiaries to, engage in any business
if, as a result, the general nature of the business in which the Company and its Subsidiaries,
taken as a whole, would then be engaged would be substantially changed from the general nature of
the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date
of this Agreement as described in the Memorandum.




10.8. Merger, Consolidation, etc.




          The Company will not consolidate with or merge with any other corporation or convey, transfer
or lease substantially all of its assets in a single transaction or series of transactions to any
Person unless:




     (a) the successor formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease substantially all of the assets of the
Company as an entirety, as the case may be, shall be a solvent corporation organized and
existing under the laws of the United States or any State thereof (including the District of
Columbia), and, if the Company is not such corporation, (i) such corporation shall
have executed and delivered to each holder of any Notes its assumption of the due and
punctual performance and observance of each covenant and condition of this Agreement and the
Notes and (ii) shall have caused to be delivered to each holder of any


22









 







Notes an opinion of nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Required Holders, to the effect that all agreements
or instruments effecting such assumption are enforceable in accordance with their terms and
comply with the terms hereof;




          (b) immediately after giving effect to such transaction, no Default or Event of Default
shall have occurred and be continuing.



No such conveyance, transfer or lease of substantially all of the assets of the Company shall have
the effect of releasing the Company or any successor corporation that shall theretofore have become
such in the manner prescribed in this Section 10.2 from its liability under this Agreement or the
Notes.




11. EVENTS OF DEFAULT.




          An “Event of Default” shall exist if any of the following conditions or events shall occur and
be continuing:





     (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any,
on any Note when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or




     (b) the Company defaults in the payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or




     (c) the Company defaults in the performance of or compliance with any term contained in
Sections 10.1, 10.2, 10.3, 10.4, 10.5 or 10.8; or




     (d) the Company defaults in the performance of or compliance with any term contained
herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and
such default is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written notice to be
identified as a “notice of default” and to refer specifically to this paragraph (d) of
Section 11); or




     (e) any representation or warranty made in writing by or on behalf of the Company or by
any officer of the Company in this Agreement or in any writing furnished in connection with
the transactions contemplated hereby proves to have been false or incorrect in any material
respect on the date as of which made; or




     (f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or make-whole
amount or interest on any Indebtedness that is outstanding in an aggregate principal amount
of at least $10,000,000 beyond any period of grace provided with respect thereto,
(ii) the Company or any Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any



23









 







other condition exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more Persons are entitled to
declare such Indebtedness to be), due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests), (x) the
Company or any Subsidiary has become obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $10,000,000, or (y) one or more Persons
have the right to require the Company or any Subsidiary so to purchase or repay such
Indebtedness; or




     (g) the Company or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of
any bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or




     (h) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any
such petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or




     (i) a final judgment or judgments for the payment of money aggregating in excess of
$10,000,000 are rendered against one or more of the Company and its Subsidiaries and which
judgments are not, within 60 days after entry thereof, bonded, discharged, satisfied or
stayed pending appeal, or are not discharged or satisfied within 60 days after the
expiration of such stay; or




     (j) if (i) any Pension Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Pension Plan shall have been or
is reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any
Pension Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a
Pension Plan may become a subject of any such proceedings, (iii) the aggregate
“amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of
ERISA) under all Pension Plans, determined



24









 







in accordance with Title IV of ERISA, shall exceed $10,000,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the Company or any
Subsidiary thereunder; and any such event or events described in clauses (i) through (vi)
above, either individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect. As used in this Section 11(j), the terms
“employee benefit plan” and “employee welfare benefit plan” shall have the respective
meanings assigned to such terms in Section 3 of ERISA.



12. REMEDIES ON DEFAULT, ETC.




12.1. Acceleration.




          (a) If an Event of Default with respect to the Company described in paragraph (g) or (h) of
Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in
clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately
due and payable.




          (b) If any other Event of Default has occurred and is continuing, any holder or holders of
more than 50% in principal amount of the Notes at the time outstanding may at any time at its or
their option, by notice or notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.




          (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and
is continuing, any holder or holders of Notes at the time outstanding affected by such Event of
Default may at any time, at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.




          Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by
declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent permitted by applicable law),
shall all be immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company acknowledges, and the
parties hereto agree, that each holder of a Note has the right to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid
or are accelerated as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.




25









 








12.2. Other Remedies.




          If any Default or Event of Default has occurred and is continuing, and irrespective of whether
any Notes have become or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an injunction against
a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.




12.3. Rescission.




          If any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1,
then (x) within 5 days thereafter or (y) at any time thereafter upon written notice
to the Company from the holders of not less than 51% in principal amount of the Notes then
outstanding, such declaration and its consequences will be rescinded and annulled if
(a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole
Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of any monies
due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will
extend to or affect any subsequent Event of Default or Default or impair any right consequent
thereon.




12.4. No Waivers or Election of Remedies, Expenses, etc.




          No course of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s
rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note
upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to cover all costs and expenses of
such holder incurred in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.




13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.




13.1. Registration of Notes.




          The Company shall keep at its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or knowledge




26









 







to the contrary. The Company shall give to any holder of a Note that is an Institutional
Investor promptly upon request therefor, a complete and correct copy of the names and addresses of
all registered holders of Notes.




13.2. Transfer and Exchange of Notes.




          Upon surrender of any Note at the principal executive office of the Company for registration
of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed
or accompanied by a written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver within five
Business Days, at the Company’s expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such
Person as such holder may request and shall be substantially in the form of Exhibit 1. Each such
new Note shall be dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, prior to its acceptance of a Note registered
in its name (or the name of its nominee), shall be required to make in writing the representations
set forth in Sections 6.1 and 6.2.




13.3. Replacement of Notes.




          Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor of such ownership and such loss,
theft, destruction or mutilation), and





     (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the holder of such Note is, or is a nominee for, an original
Purchaser or another holder of a Note with a minimum net worth of at least $150,000,000,
such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or




     (b) in the case of mutilation, upon surrender and cancellation thereof,


the Company at its own expense shall execute and deliver within five Business Days, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.




27









 








14. PAYMENTS ON NOTES.




14.1. Place of Payment.




          Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made in The City of New York, New York at the
principal office of The Bank of New York in such jurisdiction. The Company may at any time, by
notice to each holder of a Note, change the place of payment of the Notes so long as such place of
payment shall be either the principal office of the Company in such jurisdiction or the principal
office of a bank or trust company in such jurisdiction.




14.2. Home Office Payment.




          So long as you or your nominee shall be the holder of any Note, and notwithstanding anything
contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such other method or at
such other address as you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to
any sale or other disposition of any Note held by you or your nominee you will, at your election,
either endorse thereon the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note purchased by you under
this Agreement and that has made the same agreement relating to such Note as you have made in this
Section 14.2.




15. EXPENSES, ETC.




15.1. Transaction Expenses.




          Whether or not the transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys’ fees of the Special Counsel and, if reasonably
required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers or consents under
or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses, including financial advisors’ fees,
incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions



28









 






contemplated hereby and by the Notes. The Company will pay, and will save you and each other
holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).




15.2. Survival.




          The obligations of the Company under this Section 15 will survive the payment or transfer of
any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and
the termination of this Agreement.




16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.




          All representations and warranties contained herein shall survive the execution and delivery
of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you or any other holder
of a Note. All statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of
the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.




17. AMENDMENT AND WAIVER.




17.1. Requirements.




          This Agreement and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or waiver of
any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing, and (b) no
such amendment or waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or payment of principal of,
or reduce the rate or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the
Notes the holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.




17.2. Solicitation of Holders of Notes.




          (a) Solicitation. The Company will provide each holder of the Notes (irrespective of
the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of
the date a decision is required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct copies




29









 







of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to
each holder of outstanding Notes promptly following the date on which it is executed and delivered
by, or receives the consent or approval of, the requisite holders of Notes.




          (b) Payment. The Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for or as an inducement to the entering into by
any holder of Notes or any waiver or amendment of any of the terms and provisions hereof unless
such remuneration is concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver
or amendment.




17.3. Binding Effect, etc.




          Any amendment or waiver consented to as provided in this Section 17 applies equally to all
holders of Notes and is binding upon them and upon each future holder of any Note and upon the
Company without regard to whether such Note has been marked to indicate such amendment or waiver.
No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” and references thereto shall mean this Agreement
as it may from time to time be amended or supplemented.




17.4. Notes Held by Company, etc.




          Solely for the purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.




18. NOTICES.




          All notices and communications provided for hereunder shall be in writing and sent
(a) by telecopy if the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), or (b) by registered or certified
mail with return receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid). Any such notice must be sent:





     (i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have specified to
the Company in writing,




     (ii) if to any other holder of any Note, to such holder at such address as such other
holder shall have specified to the Company in writing, or



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     (iii) if to the Company, to the Company at its address set forth at the beginning
hereof to the attention of the General Counsel, or at such other address as the Company
shall have specified to the holder of each Note in writing.


Notices under this Section 18 will be deemed given only when actually received.




19. REPRODUCTION OF DOCUMENTS.




          This Agreement and all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by you at the Closing (except the Notes themselves), and
(c) financial statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any
such reproduction shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in evidence. This Section
19 shall not prohibit the Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.




20. CONFIDENTIAL INFORMATION.




          For the purposes of this Section 20, “Confidential Information” means information delivered to
you by or on behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary or confidential in
nature and that was clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary (including all financial
information, officers’ certificates and compliance certificates whether marked as confidential or
not), provided that such term does not include information that (a) was publicly
known or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on your behalf,
(c) otherwise becomes known to you other than through disclosure by the Company or any
Subsidiary or any person acting on behalf of the Company or such Subsidiary or (d)
constitutes financial statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confidential information of third parties
delivered to you, provided that you may deliver or disclose Confidential Information to
(i) your directors, trustees, officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration of the investment represented by
your Notes), (ii) your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to
which you sell or offer to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you offer to purchase any
security of the Company (if such Person has agreed in writing prior to its receipt of



31









 






such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information about your investment
portfolio or (viii) any other Person to which such delivery or disclosure may be necessary
or appropriate (w) to effect compliance with any law, rule, regulation or order applicable
to you, (x) in response to any subpoena or other legal process, (y) in connection
with any litigation to which you are a party or (z) if an Event of Default has occurred and
is continuing, to the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights and remedies under
your Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed
to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying the provisions of
this Section 20.




21. SUBSTITUTION OF PURCHASER.




          You shall have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both you and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with
respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever
the word “you” is used in this Agreement (other than in this Section 21), such word shall be deemed
to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “you” is
used in this Agreement (other than in this Section 21), such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original
holder of the Notes under this Agreement.




22. MISCELLANEOUS.




22.1. Successors and Assigns.




          All covenants and other agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or not.




22.2. Payments Due on Non-Business Days.




          Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including the additional
days elapsed in the computation of the interest payable on such next succeeding Business Day.




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22.3. Severability.




          Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall (to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.




22.4. Construction.




          Each covenant contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.




22.5. Counterparts.




          This Agreement may be executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one instrument. Each counterpart may consist
of a number of copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.




22.6. Governing Law.




          This Agreement shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding choice-of-law principles
of the law of such State that would require the application of the laws of a jurisdiction other
than such State.




* * * * *





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          If you are in agreement with the foregoing, please sign the form of agreement on the
accompanying counterpart of this Note Agreement and return it to the Company, whereupon the
foregoing shall become a binding agreement between you and the Company.




	 	 	 	 	 
	 	Very truly yours,


CALAMOS HOLDINGS, INC.

 	 
	 	By:  	/s/ Patrick H. Dudasik
 	 
	 	Name:  	Patrick H. Dudasik 	 
	 	Title:  	EVP, Chief Financial and Administrative
Officer, and Treasurer