Exhibit 10.1a
EXECUTION COPY
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CENEX HARVEST STATES COOPERATIVES
NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
$25,000,000
7.90% Series B Senior Notes due January 10, 2011
$55,000,000
Private Shelf Facility
Dated as of January 10, 2001
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TABLE OF CONTENTS
(not part of agreement)
Page
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1. AUTHORIZATION OF ISSUE OF NOTES............................................1
1A. Authorization of Issue of Series B Notes......................1
1B. Authorization of Issue of Shelf Notes.........................2
2. PURCHASE AND SALE OF NOTES.................................................2
2A. Purchase and Sale of Series B Notes...........................2
2B. Purchase and Sale of Shelf Notes..............................2
2B(1). Facility......................................................2
2B(2). Issuance Period...............................................3
2B(3). Request for Purchase..........................................3
2B(4). Rate Quotes...................................................3
2B(5). Acceptance....................................................4
2B(6). Market Disruption.............................................4
2B(7). Facility Closings.............................................4
2B(8). Fees..........................................................5
2B(8)(i). Structuring Fee...............................................5
2B(8)(ii). Issuance Fee..................................................5
2B(8)(iii). Delayed Delivery Fee..........................................5
2B(8)(iv). Cancellation Fee..............................................6
3. CONDITIONS OF CLOSING......................................................6
3A. Certain Documents.............................................7
3B. Opinion of Purchaser's Special Counsel........................8
3C. Representations and Warranties; No Default....................8
3D. Purchase Permitted by Applicable Laws.........................8
3E. Payment of Fees...............................................8
4. PREPAYMENTS
4A. Required Prepayments of Series B Notes........................8
4B. Required Prepayments of Shelf Notes...........................9
4C. Optional Prepayment With Yield-Maintenance Amount.............9
4D. Notice of Optional Prepayment.................................9
4E. Application of Prepayments....................................9
4F. Retirement of Notes...........................................9
5. AFFIRMATIVE COVENANTS.....................................................10
5A. Financial Statements; Notice of Defaults.....................10
5B. Information Required by Rule 144A............................11
5C. Inspection of Property.......................................12
5D. Covenant to Secure Notes Equally.............................12
5E. Offer to Prepay Notes in the Event of a Change in Control....12
5E(1). Notice of Impending Change in Control........................12
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5E(2). Notice of Occurrence of Change in Control....................12
5E(3). Notice of Acceptance of Offer under Paragraph 5E(2)..........12
5E(4). Offer to Prepay Notes........................................12
5E(5). Rejection; Acceptance........................................13
5E(6). Prepayment...................................................13
5E(7). Officer's Certificate........................................13
5F. Compliance with Law..........................................13
5G. Insurance....................................................14
5H. Maintenance of ▇▇▇▇▇▇▇▇▇▇....................................▇▇
▇▇. Payment of Taxes.............................................14
5J. Corporate Existence, etc.....................................14
5K. Liens of Business............................................15
5L. Agreement Assuming Liability on Notes........................15
6. NEGATIVE COVENANTS........................................................15
6A. Intentionally Left Blank.....................................15
6B. Financial Covenants..........................................15
6B(1). Working Capital..............................................15
6B(2). Funded Debt to Consolidated Cash Flow........................15
6B(3). Adjusted Consolidated Funded Debt to Consolidated
Members' and Patrons' Equity.................................15
6C. Priority Debt................................................16
6D. Liens........................................................16
6E. Merger and Consolidation ....................................17
6F. Sale of Assets...............................................18
6G. Transactions with Affiliates.................................19
6H. Subsidiary Dividend ▇▇▇▇▇▇▇▇▇▇▇▇.............................▇▇
▇▇. Subsidiary Preferred Stock...................................19
6J. Issuance of Stock by Subsidiaries............................19
7. EVENTS OF DEFAULT.........................................................19
7A. Acceleration.................................................19
7B. Rescission of Acceleration...................................22
7C. Notice of Acceleration or Rescission.........................23
7D. Other Remedies...............................................23
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.................................23
8A. Organization.................................................23
8A(2). Power and Authority..........................................23
8B. Financial Statements.........................................24
8C. Actions Pending..............................................24
8D. Outstanding Debt.............................................24
8E. Title to Properties..........................................24
8F. Taxes........................................................25
8G. Conflicting Agreements and Other Matters.....................25
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8H. Offering of Notes............................................25
8I. Use of Proceeds..............................................26
8J. ERISA........................................................26
8K. Governmental Consent.........................................26
8L. Environmental Compliance.....................................26
8M. Regulatory Status............................................27
8N. Permits and Other Operating Rights...........................27
8O. Disclosure...................................................27
8P. Hostile Tender Offers........................................27
9. REPRESENTATIONS OF THE PURCHASERS.........................................28
9A. Nature of Purchase...........................................28
9B. Source of Funds..............................................28
10. DEFINITIONS; ACCOUNTING MATTERS...........................................28
10A. Yield-Maintenance Terms......................................28
10B. Other Terms..................................................29
10C. Accounting Principles, Terms and Determinations..............37
11. MISCELLANEOUS.............................................................37
11A. Note Payments................................................37
11B. Expenses.....................................................38
11C. Consent to Amendments........................................38
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes...................................................39
11E. Persons Deemed Owners; Participations........................39
11F. Survival of Representations and Warranties;
Entire Agreement.............................................40
11G. Successors and Assigns.......................................40
11H. Independence of Covenants....................................40
11I. Notices......................................................40
11J. Payments Due on Non-Business Days............................41
11K. Severability.................................................41
11L. Descriptive Headings.........................................41
11M. Satisfaction Requirement.....................................41
11N. Governing Law................................................41
11O. Severalty of Obligations.....................................41
11P. Counterparts.................................................42
11Q. Binding Agreement............................................42
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Exhibits and Schedules
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Purchaser Schedule
Information Schedule
Exhibit A-1 --Form of Series B Note
Exhibit A-2 --Form of Shelf Note
Exhibit B --Form of Request for Purchase
Exhibit C --Form of Confirmation of Acceptance
Exhibit D-1 --Form of Opinion of Company Counsel
Exhibit D-2 --Form of Opinion of Company Counsel
Schedule 6D --List of Existing Liens
Schedule 8G --Agreements Restricting Debt
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CENEX HARVEST STATES COOPERATIVES
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
As of January 10, 2001
The Prudential Insurance Company
of America ("PRUDENTIAL")
Pruco Life Insurance Company ("PRUCO")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential and Pruco
collectively, the "PURCHASERS")
c/o Prudential Capital Group
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, CENEX HARVEST STATES COOPERATIVES, a nonstock
agricultural cooperative corporation organized under the laws of Minnesota
(herein called the "COMPANY"), hereby agrees with you as set forth below.
Reference is made to paragraph 10 hereof for definitions of capitalized terms
used herein and not otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF SERIES B NOTES. The Company will
authorize the issue of its senior promissory notes (the "SERIES B NOTES") in the
aggregate principal amount of $25,000,000, to be dated the date of issue
thereof, to mature January 10, 2011, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become due
and payable at the rate of 7.90% per annum and on overdue principal,
Yield-Maintenance Amount and interest at the rate specified therein, and to be
substantially in the form of Exhibit A-1 attached hereto. The terms "SERIES B
NOTE" and "SERIES B NOTES" as used herein shall include each Series B Note
delivered pursuant to any provision of this Agreement and each Series B Note
delivered in substitution or exchange for any such Series B Note pursuant to any
such provision.
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1B. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company will authorize
the issue of its additional senior promissory notes (the "SHELF NOTES") in the
aggregate principal amount of $55,000,000, to be dated the date of issue
thereof, to mature, in the case of each Shelf Note so issued, no more than 15
years after the date of original issuance thereof, to have an average life, in
the case of each Shelf Note so issued, of no more than 12 years after the date
of original issuance thereof, to bear interest on the unpaid balance thereof
from the date thereof at the rate per annum, and to have such other particular
terms, as shall be set forth, in the case of each Shelf Note so issued, in the
Confirmation of Acceptance with respect to such Shelf Note delivered pursuant to
paragraph 2B(5), and to be substantially in the form of Exhibit A-2 attached
hereto. The terms "SHELF NOTE" and "SHELF NOTES" as used herein shall include
each Shelf Note delivered pursuant to any provision of this Agreement and each
Shelf Note delivered in substitution or exchange for any such Shelf Note
pursuant to any such provision. The terms "NOTE" and "NOTES" as used herein
shall include each Series B Note and each Shelf Note delivered pursuant to any
provision of this Agreement and each Note delivered in substitution or exchange
for any such Note pursuant to any such provision. Notes which have (i) the same
final maturity, (ii) the same principal prepayment dates, (iii) the same
principal prepayment amounts (as a percentage of the original principal amount
of each Note), (iv) the same interest rate, (v) the same interest payment
periods and (vi) the same date of issuance (which, in the case of a Note issued
in exchange for another Note, shall be deemed for these purposes the date on
which such Note's ultimate predecessor Note was issued), are herein called a
"SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE AND SALE OF SERIES B NOTES. The Company hereby agrees to
sell to Prudential and, subject to the terms and conditions herein set forth,
Prudential agrees to purchase from the Company $25,000,000 aggregate principal
amount of Series B Notes at 100% of such aggregate principal amount. On January
10, 2001 or any other date prior to January 10, 2001, upon which the Company and
Prudential may agree (herein called the "SERIES B CLOSING DAY"), the Company
will deliver to Prudential at the offices of Prudential Capital Group, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, one or more Series B
Notes registered in its name, evidencing the aggregate principal amount of
Series B Notes to be purchased by Prudential and in the denomination or
denominations specified with respect to Prudential in the Purchaser Schedule
attached hereto, against payment of the purchase price thereof by transfer of
immediately available funds for credit to the Company's account as specified in
the Disbursement Direction Letter delivered to Prudential as of the Series B
Closing Day.
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
from time to time, the purchase of Shelf Notes pursuant to this Agreement. The
willingness of Prudential to consider such purchase of Shelf Notes is herein
called the "FACILITY". At any time, the aggregate principal amount of Shelf
Notes stated in paragraph 1B, minus the aggregate principal amount of Shelf
Notes purchased and sold pursuant to this Agreement prior to such time, minus
the aggregate principal amount of Accepted Notes (as hereinafter defined) which
have not yet been purchased and sold hereunder prior to such time, is
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herein called the "AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT
IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold pursuant to
this Agreement until the earlier of (i) the third anniversary of the date of
this Agreement (or if such anniversary date is not a Business Day, the Business
Day next preceding such anniversary) and (ii) the thirtieth day after Prudential
shall have given to the Company, or the Company shall have given to Prudential,
a written notice stating that it elects to terminate the issuance and sale of
Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a
Business Day, the Business Day next preceding such thirtieth day). The period
during which Shelf Notes may be issued and sold pursuant to this Agreement is
herein called the "ISSUANCE PERIOD".
2B(3). REQUEST FOR PURCHASE. The Company may from time to time during
the Issuance Period make requests for purchases of Shelf Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase
shall be made to Prudential by telecopier or overnight delivery service, and
shall (i) specify the aggregate principal amount of Shelf Notes covered thereby,
which without the consent of Prudential shall not be less than $10,000,000 and
not be greater than the Available Facility Amount at the time such Request for
Purchase is made, (ii) specify the principal amounts, final maturities,
principal prepayment dates and amounts and interest payment periods (quarterly
or semi-annual in arrears) of the Shelf Notes covered thereby, (iii) specify the
use of proceeds of such Shelf Notes, (iv) specify the proposed day for the
closing of the purchase and sale of such Shelf Notes, which shall be a Business
Day during the Issuance Period not less than 10 days and not more than 25 days
after the making of such Request for Purchase, (v) specify the number of the
account and the name and address of the depository institution to which the
purchase prices of such Shelf Notes are to be transferred on the Closing Day for
such purchase and sale, (vi) certify that the representations and warranties
contained in paragraph 8 are true on and as of the date of such Request for
Purchase and that there exists on the date of such Request for Purchase no Event
of Default or Default, (vii) specify whether the fee to be due pursuant to
paragraph 2B(8)(ii) should be included in the rate quotes Prudential may provide
pursuant to paragraph 2B(4) or will be paid separately by the Company on the
Closing Day for such purchase and sale, and (viii) be substantially in the form
of Exhibit B attached hereto. Each Request for Purchase shall be in writing and
shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the Company
shall have given Prudential a Request for Purchase pursuant to paragraph 2B(3),
Prudential may, but shall be under no obligation to, provide to the Company by
telephone or telecopier, in each case between 9:30 A.M. and 1:30 P.M. New York
City local time (or such later time as Prudential may elect) interest rate
quotes for the several principal amounts, maturities, principal prepayment
schedules,
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and interest payment periods of Shelf Notes specified in such Request for
Purchase. Each quote shall represent the interest rate per annum payable on the
outstanding principal balance of such Shelf Notes at which Prudential or a
Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of
the principal amount thereof.
2B(5). ACCEPTANCE. Within the Acceptance Window, the Company may,
subject to paragraph 2B(6), elect to accept such interest rate quotes as to not
less than $10,000,000 aggregate principal amount of the Shelf Notes specified in
the related Request for Purchase (or such lesser amount as to which Prudential
in its sole discretion may agree). Such election shall be made by an Authorized
Officer of the Company notifying Prudential by telephone or telecopier within
the Acceptance Window that the Company elects to accept such interest rate
quotes, specifying the Shelf Notes (each such Shelf Note being herein called an
"ACCEPTED NOTE") as to which such acceptance (herein called an "ACCEPTANCE")
relates. The day the Company notifies Prudential of an Acceptance with respect
to any Accepted Notes is herein called the "ACCEPTANCE DAY" for such Accepted
Notes. Any interest rate quotes as to which Prudential does not receive an
Acceptance within the Acceptance Window shall expire, and no purchase or sale of
Shelf Notes hereunder shall be made based on such expired interest rate quotes.
Subject to paragraph 2B(6) and the other terms and conditions hereof, the
Company agrees to sell to Prudential or a Prudential Affiliate, and Prudential
agrees to purchase, or to cause the purchase by a Prudential Affiliate of, the
Accepted Notes at 100% of the principal amount of such Notes. As soon as
practicable following the Acceptance Day, the Company, Prudential and each
Prudential Affiliate which is to purchase any such Accepted Notes will execute a
confirmation of such Acceptance substantially in the form of Exhibit C attached
hereto (herein called a "CONFIRMATION OF ACCEPTANCE"). If the Company should
fail to execute and return to Prudential within three Business Days following
receipt thereof a Confirmation of Acceptance with respect to any Accepted Notes,
Prudential may at its election at any time prior to its receipt thereof cancel
the closing with respect to such Accepted Notes by so notifying the Company in
writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of paragraph
2B(5), if Prudential shall have provided interest rate quotes pursuant to
paragraph 2B(4) and thereafter prior to the time an Acceptance with respect to
such quotes shall have been notified to Prudential in accordance with paragraph
2B(5) the domestic market for U.S. Treasury securities or derivatives shall have
closed or there shall have occurred a general suspension, material limitation,
or significant disruption of trading in securities generally on the New York
Stock Exchange or in the domestic market for U.S. Treasury securities or
derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Shelf Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies Prudential of the Acceptance of any
such interest rate quotes, such Acceptance shall be ineffective for all purposes
of this Agreement, and Prudential shall promptly notify the Company that the
provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Company will deliver
to each Purchaser listed in the Confirmation of Acceptance relating thereto at
the offices of the Prudential Capital Group, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Law Department, the Accepted
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Notes to be purchased by such Purchaser in the form of one or more Notes in
authorized denominations as such Purchaser may request for each Series of
Accepted Notes to be purchased on the Closing Day, dated the Closing Day and
registered in such Purchaser's name (or in the name of its nominee), against
payment of the purchase price thereof by transfer of immediately available funds
for credit to the Company's account specified in the Request for Purchase of
such Notes. If the Company fails to tender to any Purchaser the Accepted Notes
to be purchased by such Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of the conditions
specified in paragraph 3 shall not have been fulfilled by the time required on
such scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York City
local time, on such scheduled Closing Day notify Prudential (which notification
shall be deemed received by each Purchaser) in writing whether (i) such closing
is to be rescheduled (such rescheduled date to be a Business Day during the
Issuance Period not less than one Business Day and not more than 10 Business
Days after such scheduled Closing Day (the "RESCHEDULED CLOSING DAY")) and
certify to Prudential (which certification shall be for the benefit of each
Purchaser) that the Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled Closing Day and
that the Company will pay the Delayed Delivery Fee in accordance with paragraph
2B(8)(iii) or (ii) such closing is to be canceled. In the event that the Company
shall fail to give such notice referred to in the preceding sentence, Prudential
(on behalf of each Purchaser) may at its election, at any time after 1:00 P.M.,
New York City local time, on such scheduled Closing Day, notify the Company in
writing that such closing is to be canceled. Notwithstanding anything to the
contrary appearing in this Agreement, the Company may not elect to reschedule a
closing with respect to any given Accepted Notes on more than one occasion,
unless Prudential shall have otherwise consented in writing.
2B(8). FEES.
2B(8)(i). STRUCTURING FEE. At the time of the execution and delivery of
this Agreement by the Company and Prudential, the Company will pay to Prudential
in immediately available funds a fee (herein called the "STRUCTURING FEE") in
the amount of $50,000.
2B(8)(ii). ISSUANCE FEE. The Company will pay to Prudential in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day (other than the Series B Closing Day) in an amount equal to 0.10% of
the aggregate principal amount of Notes sold on such Closing Day, unless the
Company shall have requested pursuant to the applicable Request for Purchase
that such fee be included in the rate quotes Prudential may provide pursuant to
paragraph 2B(4).
2B(8)(iii). DELAYED DELIVERY FEE. If the closing of the purchase and
sale of any Accepted Note is delayed for any reason beyond the original Closing
Day for such Accepted Note, the Company will pay to Prudential (a) on the
Cancellation Date or actual closing date of such purchase and sale and (b) if
earlier, the next Business Day following 90 days after the Acceptance Day for
such Accepted Note and on each Business Day following 90 days after the prior
payment hereunder, a fee (herein called the "DELAYED DELIVERY FEE") calculated
as follows:
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(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, I.E., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, I.E., the yield per
annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, I.E., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Note) to but
excluding the date of such payment; and "PA" means Principal Amount, I.E., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery Fee be less than zero. Nothing contained
herein shall obligate any Purchaser to purchase any Accepted Note on any day
other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company in writing
under the circumstances set forth in the last sentence of paragraph 2B(5) or the
penultimate sentence of paragraph 2B(7) that the closing of the purchase and
sale of such Accepted Note is to be canceled, or if the closing of the purchase
and sale of such Accepted Note is not consummated on or prior to the last day of
the Issuance Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the "CANCELLATION
DATE"), the Company will pay to Prudential in immediately available funds an
amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, I.E., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid and ask prices
shall be as reported by Telerate Systems, Inc. (or, if such data for any reason
ceases to be available through Telerate Systems, Inc., any publicly available
source of similar market data). Each price shall be based on a U.S. Treasury
security having a par value of $100.00 and shall be rounded to the second
decimal place. In no case shall the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to purchase
and pay for any Notes is subject to the satisfaction, on or before the Closing
Day for such Notes, of the following conditions:
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3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) This Agreement;
(ii) The Note(s) to be purchased by such Purchaser;
(iii) A favorable opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General
Counsel of the Company (or such other counsel designated by the Company
and acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-1 (in the case of the Series B
Notes) or D-2 (in the case of any Shelf Notes) attached hereto and as
to such other matters as such Purchaser may reasonably request. The
Company hereby directs each such counsel to deliver such opinion,
agrees that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion;
(iv) a Secretary's Certificate signed by the Secretary or
an Assistant Secretary and one other officer of the Company certifying,
among other things, (A) as to the names, titles and true signatures of
the officers of the Company authorized to sign this Agreement, the
Notes and the other documents to be delivered in connection with this
Agreement, (B) that attached as Exhibit A thereto is a true, accurate
and complete copy of the Articles of Incorporation of the Company,
certified by the Secretary of State of Minnesota as of a date not more
than ten Business Days from the Closing Day, (C) that attached as
Exhibit B thereto is a true, accurate and complete copy of the
Company's Bylaws which were duly adopted and are presently in effect
and have been in effect immediately prior to and at all times since the
adoption of the resolutions referred to in clause (D) below, (D) that
attached as Exhibit C thereto is a true, accurate and complete copy of
the resolutions of the Company's Board of Directors (authorizing the
issuance and sale of the Notes and the execution, delivery and
performance of this Agreement) duly adopted by written action or at a
meeting of the Company's Board of Directors, and such resolutions have
not been rescinded, amended or modified and (E) that attached as
Exhibit D thereto is a good standing certificate for the Company from
the Secretary of State of Minnesota;
(v) an Officer's Certificate certifying that (A) the
representations and warranties contained in paragraph 8 shall be true
on and as of the Closing Day, except to the extent of changes caused by
the transactions herein contemplated; and (B) on the date of closing no
Event of Default or Default exists;
(vi) certified copies of Requests for Information or
Copies (Form UCC-11) or equivalent reports listing all effective
financing statements which name the Company or any Subsidiary (under
its present name and previous
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names used in the last seven years) as debtor and which are filed in
the office of the Secretary of State of Minnesota together with copies
of such financing statements; and
(vii) additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such
Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall have
received from Wiley ▇. ▇▇▇▇▇, Assistant General Counsel of Prudential or such
other counsel who is acting as special counsel for it in connection with this
transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 shall be true on and as of such Closing Day,
except to the extent of changes caused by the transactions herein contemplated;
there shall exist on such Closing Day no Event of Default or Default; and the
Company shall have delivered to such Purchaser an Officer's Certificate, dated
such Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by such Purchaser on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the Company)
shall not violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation U, T or X of
the Board of Governors of the Federal Reserve System) and shall not subject such
Purchaser to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as it may request to
establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to Prudential any fees
due it pursuant to or in connection with this Agreement, including any
Structuring Fee due pursuant to paragraph 2B(8)(i), any Issuance Fee due
pursuant to paragraph 2B(8)(ii) and any Delayed Delivery Fee due pursuant to
paragraph 2B(8)(iii).
4. PREPAYMENTS. The Series B Notes and any Shelf Notes shall be subject
to required prepayment as and to the extent provided in paragraphs 4A and 4B,
respectively. The Series B Notes and any Shelf Notes shall also be subject to
prepayment under the circumstances set forth in paragraph 4C. Any prepayment
made by the Company pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any required prepayment as
specified in paragraph 4A or 4B.
4A. REQUIRED PREPAYMENTS OF SERIES B NOTES. Until the Series B Notes
shall be paid in full, the Company shall apply to the prepayment of the Series B
Notes, without Yield-Maintenance Amount, the sum of $3,571,428.58 on January 10
of each year commencing on January 10, 2005 through and including January 10,
2011 and such principal amounts of the Series
8
B Notes, together with interest thereon to the payment dates, shall become due
on such payment dates. Any remaining unpaid principal amount of the Series B
Notes, together with any accrued and unpaid interest, shall become due on the
maturity date of the Series B Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of Shelf Notes
shall be subject to required prepayments, if any, set forth in the Notes of such
Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes of
each Series shall be subject to prepayment, in whole at any time or from time to
time in part (in integral multiples of $1,000,000 and in a minimum amount of
$5,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial prepayment of a
Series of the Notes pursuant to this paragraph 4C shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note of a Series to be prepaid pursuant to paragraph 4C irrevocable written
notice of such prepayment not less than 10 Business Days prior to the prepayment
date, specifying such prepayment date, the aggregate principal amount of the
Notes of such Series to be prepaid on such date, the principal amount of the
Notes of such Series held by such holder to be prepaid on that date and that
such prepayment is to be made pursuant to paragraph 4C. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together
with the Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4C, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each Significant Holder which shall have designated a
recipient for such notices in the Purchaser Schedule attached hereto or the
applicable Confirmation of Acceptance or by notice in writing to the Company.
4E. APPLICATION OF PREPAYMENTS. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Notes of any Series
pursuant to paragraphs 4A, 4B or 4C, the amount to be prepaid shall be applied
pro rata to all outstanding Notes of such Series (including, for the purpose of
this paragraph 4E only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A, 4B or 4C) according to the
respective unpaid principal amounts thereof.
4F. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraphs 4A, 4B or 4C or upon exercise of the put option pursuant to
paragraph 5E, or upon acceleration of such final maturity pursuant to paragraph
7A), or purchase or otherwise acquire, directly or indirectly, Notes held by any
holder unless the Company or such Subsidiary or Affiliate shall have offered to
prepay or otherwise retire or purchase or otherwise acquire, as the case may be,
the same proportion of the aggregate
9
principal amount of Notes held by each other holder of Notes at the time
outstanding upon the same terms and conditions. Any such offer shall provide
each holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least 30
Business Days. If the holders of more than 5% of the principal amount of the
Notes then outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days necessary
to give each such remaining holder at least 15 Business Days from its receipt of
such notice to accept such offer. Any notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates shall not be deemed to be outstanding for any purpose under this
Agreement, except as provided in paragraph 4E.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company covenants
that it will deliver to each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year consolidated statements of income, members'
equity and cash flows of the Company and its Subsidiaries for the
period from the beginning of the current fiscal year to the end of such
quarterly period, and a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarterly period, setting forth
in each case in comparative form figures for the corresponding period
in the preceding fiscal year, all in reasonable detail and satisfactory
in form to the Required Holder(s) and certified by an authorized
financial officer of the Company, subject to changes resulting from
year-end adjustments; provided, however, that delivery pursuant to
clause (iii) below of copies of the Quarterly Report on Form 10-Q of
the Company for such quarterly period, if any, including such financial
statements filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 90
days after the end of each fiscal year, consolidating and consolidated
statements of income and cash flows and a consolidated statement of
members' equity of the Company and its Subsidiaries for such year, and
a consolidating and consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and satisfactory in form to the
Required Holder(s) and, as to the consolidated statements, reported on
by independent public accountants of recognized national standing
selected by the Company whose report shall be without limitation as to
scope of the audit and satisfactory in substance to the Required
Holder(s) and, as to the consolidating statements, certified by an
authorized financial officer of the Company provided, however, that
delivery pursuant to clause (iii)
10
below of copies of the Annual Report on Form 10-K of the Company for
such fiscal year including such financial statements filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all
such financial statements and copies of all registration statements
(without exhibits) and all reports which it files with the Securities
and Exchange Commission (or any governmental body or agency succeeding
to the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company by independent accountants in
connection with any annual, interim or special audit made by them of
the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other information as
such Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6B, 6C, 6D
and 6F and stating that there exists no Event of Default or Default, or, if any
Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary for their report on
such financial statements, they have obtained no knowledge of any Event of
Default or Default arising under paragraph 6B or 6C or under paragraph 6E(ii) or
6F(iv) insofar as such Default or Event of Default relates to 6E(ii)(c)(y) or
6F(iv)(b)(y) and existing as of the last day of the Company's fiscal year, or,
if they have obtained knowledge of any Event of Default or Default arising under
any such paragraph, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards. The Company also covenants that immediately after
any Responsible Officer obtains knowledge of an Event of Default or Default, it
will deliver to each Significant Holder an Officer's Certificate specifying the
nature and period of existence thereof and what action the Company proposes to
take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to and in compliance with the reporting requirements
of
11
section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph 5B,
the term "QUALIFIED INSTITUTIONAL BUYER" shall have the meaning specified in
Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense (if no Default or Event of Default then exists) or at the
expense of the Company (if a Default or an Event of Default then exists), to
visit and inspect any of the properties of the Company and its Subsidiaries, to
examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Company and its independent public accountants; provided,
however, that the Company shall have the option to have a representative present
at any meeting between its independent public accountants and such Significant
Holder, all at such reasonable times and as often as such Significant Holder may
reasonably request.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6D (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), it will
make or cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Debt thereby secured so
long as any such other Debt shall be so secured.
5E. OFFER TO PREPAY NOTES IN THE EVENT OF A CHANGE IN CONTROL.
5E(1) NOTICE OF IMPENDING CHANGE IN CONTROL. The Company
will not take any action that consummates or finalizes a Change in
Control unless at least 30 days prior to such action it shall have
given to each holder of the Notes written notice of such impending
Change in Control.
5E(2) NOTICE OF OCCURRENCE OF CHANGE IN CONTROL. The
Company will, within five Business Days after any Responsible Officer
has knowledge of the occurrence of any Change in Control, give written
notice of such Change in Control to each holder of the Notes. If a
Change in Control has occurred, such notice shall contain and
constitute an offer to prepay the Notes as described in paragraph 5E(4)
and shall be accompanied by the certificate described in paragraph
5E(7).
5E(3) NOTICE OF ACCEPTANCE OF OFFER UNDER PARAGRAPH 5E(2).
If the Company shall at any time receive an acceptance to an offer to
prepay Notes under paragraph 5E(2) from some, but not all of, the
holders of the Notes, then the Company will, within two Business Days
after the receipt of such acceptance, give written notice of such
acceptance to each other holder of the Notes.
5E(4) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by paragraph 5E(2) shall be an offer to prepay, in
accordance with and subject to this paragraph 5E, all, but not less
than all, of the Notes held by each holder (in this case
12
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"). Such Proposed Prepayment Date shall be not less than 30 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 30th day after the date of such offer).
Notwithstanding the foregoing, if the Company shall be required to give
a notice of acceptance under paragraph 5E(3) hereof with respect to any
offer to prepay Notes under paragraph 5E(2), then the Proposed
Prepayment Date for such offer shall be the later of (i) the date
specified in the immediately preceding sentences, or (ii) the 10th
Business Day after the date the first such notice of acceptance with
respect to such offer was given by the Company under paragraph 5E(3).
5E(5) REJECTION; ACCEPTANCE. A holder of Notes may accept
the offer to prepay made pursuant to this paragraph 5E by causing a
notice of such acceptance to be delivered to the Company prior to the
Proposed Prepayment Date. A failure by a holder of Notes to so respond
to an offer to prepay made pursuant to this paragraph 5E shall be
deemed to constitute a rejection of such offer by such holder.
5E(6) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this paragraph 5E shall be at 100% of the principal amount
of such Notes, together with interest on such Notes accrued to the date
of prepayment. The prepayment shall be made on the Proposed Prepayment
Date.
5E(7) OFFICER'S CERTIFICATE. Each offer to prepay the
Notes pursuant to this paragraph 5E shall be accompanied by a
certificate, executed by a Responsible 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 paragraph 5E, (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 paragraph 5E
have been fulfilled, and (vi) in reasonable detail, the nature and date
of the Change in Control.
5F. COMPLIANCE WITH LAW. The Company covenants that it 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 (unless such
failure to comply is subject to a good faith contest), 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 reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, condition (financial or otherwise) or operations
of the Company and its Subsidiaries, taken as a whole.
13
5G. INSURANCE . The Company covenants that it 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 as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated; provided,
however, the Company may, to the extent permitted by law, provide for
appropriate self-insurance with respect to workers' compensation.
5H. MAINTENANCE OF PROPERTIES. The Company covenants that it 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 in all material respects at
all times, provided that this paragraph 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 such discontinuance would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
5I. PAYMENT OF TAXES. The Company covenants that it will, and will
cause each of its Subsidiaries to, file all income tax or similar tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges or levies payable by any of them, and to pay and discharge
all amounts payable for work, labor and materials, in each case to the extent
such taxes, assessments, charges, levies and amounts payable have become due and
payable and before they have become delinquent, provided that neither the
Company nor any Subsidiary need pay any such tax, assessment, charge, levy or
amount payable if (i) the amount, applicability or validity thereof is being
actively 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 generally accepted
accounting principles on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes, assessments, charges, levies and amounts payable
in the aggregate would not reasonably be expected to have a materially adverse
effect on the business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
5J. CORPORATE EXISTENCE, ETC. Subject to paragraph 6E, the Company will
at all times preserve and keep in full force and effect its corporate existence
and will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries except to the extent the failure to do so
could not reasonably be expected to result in a material adverse effect on the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole. The Company will at all times preserve and
keep in full force and effect all certificates of convenience and necessity,
rights and franchises, licenses, permits, operating rights and other
authorization from federal, state, foreign, regional, municipal and other local
regulatory bodies or administrative agencies or governmental bodies having
14
jurisdiction over the Company and its Subsidiaries or any of their respective
Properties as are necessary for the ownership, operation and maintenance of its
respective businesses and Properties, unless the termination of or failure to
preserve and keep in full force and effect such corporate existence, right,
certificate or franchise, license, permit, operating right or other
authorization would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
5K. LINES OF BUSINESS. The Company shall not engage in any material
respects in any business activity or operations other than operations or
activities (i) in or reasonably related to the agriculture industry, (ii) in the
food industry, or (iii) which are not substantially different from or related to
its present business activities or operations.
5L. AGREEMENT ASSUMING LIABILITY ON NOTES. The Company covenants that,
if at any time any Person should become liable (as co-obligor, endorser,
guaranty or surety) on any other material obligation of the Company, the Company
will, at the same time, cause such Person to deliver to the holder of the Notes
an agreement pursuant to which such Person becomes similarly liable on the
Notes; provided this paragraph 5L shall not apply to any Person becoming liable
solely as an endorser of a check, or as a signatory to a letter of credit for
trade liabilities of the Company incurred, in the ordinary course of business.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note or other amount due hereunder is outstanding and unpaid,
the Company covenants as follows:
6A. [INTENTIONALLY LEFT BLANK].
6B. FINANCIAL COVENANTS.
6B(1). WORKING CAPITAL. The Company covenants that it will not permit
Working Capital to be less than $150,000,000. As used herein, the term "WORKING
CAPITAL" means consolidated current assets of the Company and its Subsidiaries
minus consolidated current liabilities of the Company and its Subsidiaries, in
each case determined in accordance with generally accepted accounting principles
consistently applied.
6B(2). FUNDED DEBT TO CONSOLIDATED CASH FLOW. The Company shall not
permit the ratio of (i) consolidated Funded Debt of the Company and its
Subsidiaries at such time to (ii) Consolidated Cash Flow determined as of the
end of the four fiscal quarter period then most recently ended, to exceed 3.00
to 1.00 at any time.
6B(3). ADJUSTED CONSOLIDATED FUNDED DEBT TO CONSOLIDATED MEMBERS' AND
PATRONS' EQUITY. The COMPANY shall not permit the ratio of Adjusted Consolidated
Funded Debt to Consolidated Members' and Patrons' Equity to exceed .80 to 1.00
at any time.
15
6C. PRIORITY DEBT . The Company covenants that it will not, and will
not permit any of its Subsidiaries to, directly or indirectly create, issue,
incur or assume any Priority Debt if after giving effect thereto the aggregate
outstanding principal amount of all Priority Debt would exceed 15% of
Consolidated Tangible Net Worth at the time of such creation, issuance,
incurrence or assumption.
6D. LIENS. The Company covenants that it will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
suffer to be created, incurred or assumed or to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any Property of the
Company or any of its Subsidiaries, whether now owned or held or hereinafter
acquired (unless (1) provision is made for the equal and ratable securing of the
Notes in accordance with paragraph 5D, and (2) the obligees of the obligations
secured by such Liens shall have entered into an intercreditor agreement with
the holders of the Notes in form and substance satisfactory to the holders of
the Notes), except:
(i) Liens for taxes, assessments or other governmental
charges or levies securing obligations not overdue, or if overdue,
being actively contested in good faith by appropriate proceedings that
will prevent the forfeiture or sale of any Property, provided that
adequate reserves are established in accordance with generally accepted
accounting principles on the books of the Company or a Subsidiary of
the Company;
(ii) attachment, judgment and other similar Liens arising
in connection with court proceedings, provided the execution or other
enforcement of such Lien(s) is effectively stayed and the claims
secured thereby are being actively contested in good faith in such
manner that the Property subject to such Lien(s) is not subject to
forfeiture or sale, and further provided that adequate reserves are
established in accordance with generally accepted accounting principles
on the books of the Company or a Subsidiary of the Company;
(iii) Liens incidental to the normal conduct of the
business of the Company or a Subsidiary of the Company or to the
ownership by the Company or a Subsidiary of the Company of its Property
which were not incurred in connection with the borrowing of money or
the obtaining of credit or advances and which do not in the aggregate
materially detract from the value of the Property of the Company or any
Subsidiary of the Company for the purpose of such business or
materially impair the use thereof in the operation of the business of
the Company or any Subsidiary of the Company;
(iv) Liens existing as of the date of this Agreement and
set forth on Schedule 6D hereto;
(v) any Lien renewing, extending or refunding any Lien
permitted by clause (iv) of this paragraph 6D, provided that (a) the
principal amount of the Debt secured by such Lien immediately prior to
such extension, renewal or refunding is not increased or the maturity
thereof reduced, (b) such Lien is not extended to any other
16
Property, and (c) immediately after such extension, renewal or
refunding no Default or Event of Default would exist;
(vi) Liens on Property of the Company or any of its
Subsidiaries securing Debt owing to the Company or to any of its
Wholly-Owned Subsidiaries;
(vii) any Lien created to secure all or any part of the
purchase price or cost of construction, or to secure Debt incurred or
assumed to pay all or a part of the purchase price or cost of
construction, of any Property acquired or constructed by the Company or
a Subsidiary of the Company after the date of closing, provided that
(a) any such Lien shall extend solely to the item or items of such
Property so acquired or constructed or rights relating solely to such
item or items or Property, (b) the principal amount of the Debt secured
by any such Lien shall at no time exceed an amount equal to 100% of the
fair market value of the Property acquired or constructed at the time
of such acquisition or construction, and (c) such Lien shall be created
contemporaneously with, or within 180 days after, the acquisition or
completion of construction of such Property;
(viii) any Lien existing on Property acquired by the
Company or any Subsidiary of the Company at the time such Property is
so acquired (whether or not the Debt secured thereby is assumed by the
Company or such Subsidiary) or any Lien existing on Property of a
Person immediately prior to the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company,
provided that (a) no such Lien shall have been created or assumed in
contemplation of such acquisition of Property or such consolidation or
merger, (b) such Lien shall extend only to the Property acquired or the
Property of such Person merged into or consolidated with the Company or
Subsidiary which was subject to such Lien as of the time of such
consolidation or merger, and (c) the principal amount of the Debt
secured by any such Lien shall at no time exceed an amount equal to
100% of the fair market value of the Property subject thereto at the
time of the acquisition thereof or at the time of such merger or
consolidation;
(ix) Liens to CoBank, St. ▇▇▇▇ Bank and other cooperatives
with respect to equity held by Company in such banks or other
cooperatives securing Debt with the aggregate amount of such equity
securing Debt not to exceed $35,000,000 at any one time; and
(x) other Liens not otherwise permitted under clause (i)
through (ix) of this paragraph 6D securing Debt, provided that the
creation, issuance, incurrence or assumption of such Debt is permitted
under paragraphs 6B and 6C hereof.
6E. MERGER AND CONSOLIDATION . The Company covenants that it will not,
and will not permit any of its Subsidiaries to, merge or consolidate with any
other Person, except that
17
(i) any Subsidiary of the Company may merge into the
Company or any Wholly-Owned Subsidiary, provided that the Company or
such Wholly-Owned Subsidiary is the surviving corporation, and
(ii) the Company may merge or consolidate with any other
Person provided that (a) the successor formed by such consolidation or
the survivor of such merger (the "SURVIVING CORPORATION") is a solvent
corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia, (b) if the
Company is not the Surviving Corporation, the Surviving Corporation
shall have executed and delivered to each holder of the Notes its
written assumption of the due and punctual performance and payment of
each covenant and condition in this Agreement and the Notes, which
assumption shall be in form and substance approved in writing by the
Required Holders, and the Company shall have caused to be delivered to
each holder of 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, and (c) immediately after
giving effect to such merger or consolidation, (x) no Default or Event
of Default shall exist and (y) the Surviving Corporation is able to
incur at least $1.00 of additional Funded Debt under the provisions of
paragraph 6B(2) and (3) and at least $1.00 of additional Priority Debt
under the provisions of ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇.
▇▇. SALE OF ASSETS . The Company covenants that it will not, and will
not permit any of its Subsidiaries to, sell, transfer, convey, lease or
otherwise dispose of (a "TRANSFER") any Property (including capital stock of or
other ownership interests in any Subsidiary of the Company), except that:
(i) the Company or any Subsidiary of the Company may
Transfer any of its inventory, fixtures or equipment in the ordinary
course of business;
(ii) any Subsidiary may Transfer any of its Property to
the Company or a Wholly-Owned Subsidiary; and
(iii) the Company or any Subsidiary of the Company may
lease its assets to any joint venture entity, of which the Company or
any Subsidiary of the Company holds an ownership interest and shares in
the earnings; provided that the terms of any such lease and the
division of the joint venture's earnings, when viewed as a whole, can
be reasonably expected to generate the same or greater book earnings
and cash flow for the Company or Subsidiary of the Company as would be
generated absent such lease;
(iv) the Company or any Subsidiary of the Company may
Transfer any of its Properties at the fair market value thereof
provided that (a) either (1) the aggregate amount of the Disposition
Value of all Property Transferred pursuant to this clause (iv) on or
after the date of closing does not exceed an amount equal to 25% of
Consolidated
18
Total Assets as of the end of the fiscal year of the Company most
recently ended prior to the date of such Transfer, or (2) concurrently
with the making of such Transfer the Net Proceeds Amount for such
Transfer is (A) applied to the acquisition by the Company or the
Subsidiary making such Transfer of other Property of a nature similar
to, and of at least an equivalent value of, the Property Transferred,
or is committed to be applied to such acquisition within one year of
the date of such Transfer, or (B) applied to the payment of the
outstanding principal of all of the Funded Debt of the Company
(excluding any Funded Debt owed to any Subsidiary or Affiliate of the
Company and excluding any Funded Debt in respect of any revolving
credit or similar credit facility providing the Company with the right
to obtain loans or other extensions of credit from time to time, except
to the extent that, in connection with such payment of such Funded
Debt, the availability of loans or other extensions of credit under
such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Funded Debt)
pro rata in proportion to the respective outstanding principal amounts
thereof, and (b) immediately after giving effect to such Transfer (x)
no Default or Event of Default shall exist and (y) the Company is able
to incur at least $1.00 of additional Funded Debt under the provisions
of paragraph 6B(2) and (3) hereof and at least $1.00 of additional
Priority Debt under the provisions of paragraph 6C hereof.
6G. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Subsidiary of the Company to, enter into directly or indirectly any
transaction (including, without limitation, the purchase, lease, sale or
exchange of Properties of any kind or the rendering of any service) with any
Affiliate, except pursuant to the reasonable requirements of the Company's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
6H. SUBSIDIARY DIVIDEND RESTRICTIONS. The Company covenants that it
will not, and will not permit any Subsidiary of the Company to, enter into, or
be otherwise subject to, any contract or agreement (including its certificate of
incorporation) which limits the amount of, or otherwise imposes restrictions on
the payment of, dividends by any Subsidiary of the Company.
6I. SUBSIDIARY PREFERRED STOCK. The Company covenants that it will
not, and will not permit any Subsidiary of the Company to, issue or permit to be
outstanding any class of capital stock which has priority over any other class
of capital stock of such Subsidiary as to dividends or in liquidation.
6J. ISSUANCE OF STOCK BY SUBSIDIARIES. The Company covenants that it
will not permit any Subsidiary of the Company to issue, sell or otherwise
dispose of any shares of any class of its stock (either directly or indirectly
by the issuance of rights or options for, or securities convertible into, such
shares) except to the Company or another Subsidiary of the Company.
19
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal
of, or Yield- Maintenance Amount payable with respect to, any Note when
the same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 5 Business Days after the date due; or
(iii) the Company or any Subsidiary of the Company
defaults (whether as primary obligor or as guarantor or other surety)
in any payment of principal of or interest on any other obligation for
money borrowed (or any Capitalized Lease Obligation, any obligation
under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property
whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of
credit) beyond any period of grace provided with respect thereto, or
the Company or any Subsidiary of the Company fails to perform or
observe any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause,
or a holder or holders of such obligation (or a trustee on behalf of
such holder or holders) causes, such obligation to become due (or to be
repurchased by the Company or any Subsidiary of the Company) prior to
any stated maturity, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing acceleration (or
resale to the Company or any Subsidiary of the Company) shall occur and
be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made or deemed to
have been made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 5E or paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
20
(vii) the Company or any Subsidiary of the Company makes
an assignment for the benefit of creditors or is generally not paying
its debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary of the Company is entered under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called the "BANKRUPTCY
LAW"), of any jurisdiction; or
(ix) the Company or any Subsidiary of the Company
petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Company or any
Subsidiary of the Company, or of any substantial part of the assets of
the Company or any Subsidiary of the Company, or commences a voluntary
case under the Bankruptcy Law of the United States or any proceedings
(other than proceedings for the voluntary liquidation and dissolution
of a Subsidiary) relating to the Company or any Subsidiary of the
Company under the Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary of the
Company and the Company or such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition in
any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days: or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary of the Company
decreeing a split-up of the Company or such Subsidiary which requires
the divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary of the Company whose assets
represent a substantial part, of the consolidated assets of the Company
and its Subsidiaries (determined in accordance with generally accepted
accounting principles) or which requires the divestiture of assets, or
stock of a Subsidiary of the Company, which shall have contributed a
substantial part of the consolidated net income of the Company and its
Subsidiaries (determined in accordance with generally accepted
accounting principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
21
(xiii) a final judgment in an amount in excess of
$5,000,000 is rendered against the Company or any Subsidiary of the
Company and, within 45 days after entry thereof, any such judgment is
not discharged or execution thereof stayed pending appeal, or within 45
days after the expiration of any such stay, such judgment is not
discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity
as an employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $10,000,000 unless paid within 60 days;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note (other than the Company or any of its
Affiliates or Subsidiaries) may at its option, by notice in writing to the
Company, declare all of the Notes held by such holder to be, and all of the
Notes held by such holder shall thereupon be and become, immediately due and
payable at par together with interest accrued thereon, without presentment,
demand, protest or notice of any kind, all of which are hereby waived by the
Company, (b) if such event is an Event of Default specified in clause (viii),
(ix) or (x) of this paragraph 7A with respect to the Company, all of the Notes
at the time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Company, and (c)
with respect to any event constituting an Event of Default, the Required
Holder(s) of the Notes of any Series may at its or their option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes of such Series to be, and all of the Notes of such
Series shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note of such Series, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Company. 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 Yield-Maintenance Amount by the Company in the event 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.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in writing to the Company, rescind and annul such declaration and
its consequences if (i) the Company shall have paid all overdue interest on the
Notes of such Series, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes of such Series which have become due otherwise
than by reason of such declaration, and interest on such overdue interest and
overdue principal and Yield-Maintenance Amount at the rate specified in the
Notes of such Series, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by
22
reason of such declaration, shall have been cured or waived pursuant to
paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows (all references to "Subsidiary" and
"Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company has no
Subsidiaries at the time the representations herein are made or repeated):
8A. ORGANIZATION. The Company is a nonstock agricultural cooperative
corporation duly organized and existing in good standing under the laws of the
State of Minnesota and each Subsidiary of the Company is duly organized and
existing in good standing under the laws of the jurisdiction in which it is
incorporated. The Company and each of its Subsidiaries have duly qualified or
been duly licensed, and are authorized to do business and are in good standing,
in each jurisdiction in which the ownership of their respective properties or
the nature of their respective businesses makes such qualification or licensing
necessary and in which the failure to be so qualified or licensed would be
reasonably likely to have a material adverse effect on the business condition
(financial or otherwise) or operations of the Company and its Subsidiaries,
taken as a whole.
8A(2). POWER AND AUTHORITY. The Company and each Subsidiary of the
Company has all requisite corporate power to own and operate its respective
properties and to conduct its business as currently conducted and as currently
proposed to be conducted. The Company has all requisite corporate power to
execute, deliver and perform its obligations under this Agreement and the Notes.
The execution, delivery and performance of this Agreement and the Notes has been
duly authorized by all requisite corporate action, and this Agreement and the
Notes have been duly executed and delivered by authorized officers of the
Company and are valid obligations of the Company, legally binding upon and
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy,
23
insolvency, reorganization 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).
8B. FINANCIAL STATEMENTS. The Company has furnished each Purchaser of
any Note with the following financial statements, identified by a principal
financial officer of the Company: (i) a consolidated balance sheet of the
Company and its Subsidiaries as at August 31 in each of the three fiscal years
of the Company most recently completed prior to the date as of which this
representation is made or repeated to such Purchaser (other than fiscal years
completed within 90 days prior to such date for which audited financial
statements have not been released) and consolidated statements of income and
cash flows and a consolidated statement of members' equity of the Company and
its Subsidiaries for each such year, all reported on by either Deloitte &
Touche, L.L.P. or Pricewaterhouse Coopers, LLP or other nationally recognized
independent public accounting firm and (ii) consolidated balance sheet of the
Company and its Subsidiaries as at the end of the quarterly period (if any) most
recently completed prior to such date and after the end of such fiscal year
(other than quarterly periods completed within 60 days prior to such date for
which financial statements have not been released) and the comparable quarterly
period in the preceding fiscal year and consolidated statements of income and
cash flows and a consolidated statement of members' equity for the periods from
the beginning of the fiscal years in which such quarterly periods are included
to the end of such quarterly periods, prepared by the Company. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of the operations
of the Company and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, condition
(financial or otherwise), operations of the Company and its Subsidiaries taken
as a whole since the end of the most recent fiscal year for which such audited
financial statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which, individually or in the aggregate, could reasonably
be expected to result in any material adverse change in the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as permitted by paragraph 6B. There exists no
default under the provisions of any instrument evidencing such Debt or of any
agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good
24
title to all of its other respective properties and assets, including the
properties and assets reflected in the most recent audited balance sheet
referred to in paragraph 8B (other than properties and assets disposed of in the
ordinary course of business), except for defects in title not reasonably
expected to result in a material adverse effect, subject to no Lien of any kind
except Liens permitted by paragraph 6D. All leases necessary in any material
respect for the conduct of the respective businesses of the Company and its
Subsidiaries are valid and subsisting and are in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being actively
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles or with respect to which the failure to so pay could not be
reasonably expected to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole or the ability of the Company to satisfy its obligations under this
Agreement. The Company is a cooperative association taxed under the provisions
of "subchapter T" of the Code and the Company does not presently intend to alter
its status as a subchapter T cooperative association for federal income tax
purposes.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution nor delivery of this Agreement or the Notes,
nor the offering, issuance and sale of the Notes, nor fulfillment of nor
compliance with the terms and provisions hereof and of the Notes will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Company or any of its Subsidiaries is subject.
Neither the Company nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Debt of the
Company or such Subsidiary, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Debt of the Company of the type to be
evidenced by the Notes except as set forth in the agreements listed in Schedule
8G attached hereto (as such Schedule 8G may have been modified from time to time
by written supplements thereto delivered by the Company and accepted in writing
by Prudential).
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which
25
would subject the issuance or sale of the Notes to the provisions of Section 5
of the Securities Act or to the provisions of any securities or Blue Sky law of
any applicable jurisdiction.
8I. USE OF PROCEEDS. The proceeds of the Series B Notes will be used to
retire existing indebtedness. The Company is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying "margin stock" (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and the aggregate market
value of all "margin stock" owned by the Company and its Subsidiaries does not
exceed 25% of the aggregate value of the assets thereof, as determined by any
reasonable method. Neither the Company nor any agent acting on its behalf has
taken or will take any action which might cause this Agreement or the Notes to
violate Regulation U, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act, in each
case as in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan) which could be reasonably
expected to have a material adverse effect on the business condition (financial
or otherwise) or operations of the Company and its Subsidiaries) taken as a
whole or the ability of the Company to satisfy its obligations under this
Agreement. No liability to the PBGC has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole. Neither the Company, any Subsidiary nor any ERISA Affiliate has
incurred or presently expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan which is or would be materially
adverse to the business, property or assets, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole. The
execution and delivery of this Agreement and the issuance and sale of the Notes
will be exempt from or will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence is made in reliance
upon and subject to the accuracy of the representation of each Purchaser in
paragraph 9B as to the source of funds to be used by it to purchase any Notes.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Closing Day for any
Notes with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
26
8L. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all
of their respective properties and facilities have complied at all times and in
all respects with all federal, state, local and regional statutes, laws,
ordinances and judicial or administrative orders, judgments, rulings and
regulations including, without limitation, those relating to protection of the
environment except, in any such case, where failure to comply, individually or
in the aggregate, would not reasonably be expected to result in a material
adverse effect on the business, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole.
8M. REGULATORY STATUS. Neither the Company nor any Subsidiary is (i) an
"Investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" or an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) a "public utility"
within the meaning of the Federal Power Act, as amended.
8N. PERMITS AND OTHER OPERATING RIGHTS. The Company and each Subsidiary
of the Company has all such valid and sufficient certificates of convenience and
necessity, franchises, licenses, permits, operating rights and other
authorizations from federal, state, foreign, regional, municipal and other local
regulatory bodies or administrative agencies or other governmental bodies having
jurisdiction over the Company or any Subsidiary of the Company or any of its
Properties, as are necessary for the ownership, operation and maintenance of its
businesses and Properties, as presently conducted and as proposed to be
conducted while the Notes are outstanding, subject to exceptions and
deficiencies which, individually or in the aggregate, would not reasonably be
expected to materially adversely affect the business and operations of the
Company, any Subsidiary of the Company or any material part thereof, and such
certificates of convenience and necessity, franchises, licenses, permits,
operating rights and other authorizations from federal, state, foreign,
regional, municipal and other local regulatory bodies or administrative agencies
or other governmental bodies having jurisdiction over the Company, any
Subsidiary of the Company or any of its Properties are free from restrictions or
conditions which, individually or in the aggregate, would reasonably be expected
to be materially adverse to the business or operations of the Company and its
Subsidiaries and neither the Company nor any Subsidiary of the Company is in
violation of any restriction or condition thereof in any material respect.
8O. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely affects or in the
future may (so far as the Company can now foresee) materially adversely affect
the business, property or assets, condition (financial or otherwise) or
operations of the Company or any of its Subsidiaries and which has not been set
forth in this Agreement.
27
8P. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
28
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control. Such Purchaser will not sell or otherwise transfer the Notes to be
purchased by it hereunder in violation of the Securities Act.
9B. SOURCE OF FUNDS. The source of the funds being used by such
Purchaser to pay the purchase price of the Notes being purchased by such
Purchaser hereunder constitutes assets allocated to: (i) the "insurance company
general account" of such Purchaser (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction Class Exemption
("PTCE") 95-60), and as of the date of the purchase of the Notes such Purchaser
satisfies all of the applicable requirements for relief under Sections I and IV
of PTCE 95-60, (ii) a separate account maintained by such Purchaser in which no
employee benefit plan, other than employee benefit plans identified on a list
which has been furnished by such Purchaser to the Company, participates to the
extent of 10% or more or (iii) an investment fund, the assets of which do not
include any assets of any employee benefit plan. For the purpose of this
paragraph 9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall
have the respective meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in paragraph
10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4C, is put to
the Company pursuant to paragraph 5E or is declared to be immediately due and
payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which interest on such
Note is payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M.
29
(New York City local time) on the Business Day next preceding the Settlement
Date with respect to such Called Principal, on the display designated as "Page
678" on the Telerate Service (or such other display as may replace page 678 on
the Telerate Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, (ii) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
▇▇▇▇ quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities. The Reinvestment Yield will be rounded to that number of decimal
places as appears in the coupon for the Notes.
"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to paragraph 4C, is put to the Company pursuant to paragraph 5E or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph
2B(5).
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"ACCEPTANCE WINDOW" shall mean, with respect to any interest
rate quote made by Prudential pursuant to paragraph 2B(4), the time period
designated by Prudential during which the Company may elect to accept such
interest rate quote as to not less than $10,000,000 in aggregate principal
amount of Shelf Notes specified in the related Request for Purchase.
"ACCEPTED NOTE" shall have the meaning specified in paragraph
2B(5).
"ADJUSTED CONSOLIDATED FUNDED DEBT" shall mean all
indebtedness for borrowed money of the Company and its Subsidiaries, in each
case maturing by its terms more than one year after, or which is renewable or
extendible for a period ending one year or more after the date of determination,
and shall include Debt of such maturity created or assumed by the Company or any
Subsidiary of the Company either directly or indirectly, including obligations
of such maturity secured by liens upon property of the Company or its
Subsidiaries and upon which such entity customarily pays the interest, and all
rental payments under capital leases of such maturity, and the net present value
of operating leases as discounted by a rate which is 1.5% less than the National
Prime Rate as stated in the WALL STREET JOURNAL.
"AFFILIATE" shall mean (i) any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with such
Person (except, with respect to the Company, a Subsidiary) and (ii) with respect
to Prudential, any investment fund or vehicle for which Prudential or any
Prudential Affiliate acts as investment advisor or portfolio manager. A Person
shall be deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the
Company, its chief executive officer, its chief financial officer, any vice
president of the Company designated as an "Authorized Officer" of the Company in
the Information Schedule attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Prudential, and (ii) in the
case of Prudential, any officer of Prudential designated as its "Authorized
Officer" in the Information Schedule or any officer of Prudential designated as
its "Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers or a lawyer in its law department.
Any action taken under this Agreement on behalf of the Company by any individual
who on or after the date of this Agreement shall have been an Authorized Officer
of the Company and whom Prudential in good faith believes to be an Authorized
Officer of the Company at the time of such action shall be binding on the
Company even though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this Agreement on behalf of
Prudential by any individual who on or after the date of this Agreement shall
have been an Authorized Officer of Prudential and whom the Company in good faith
believes to be an Authorized Officer of Prudential at the time of such action
shall be binding on Prudential even though such individual shall have ceased to
be an Authorized Officer of Prudential.
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"AVAILABLE FACILITY AMOUNT" shall have the meaning specified
in paragraph 2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or
a Sunday, (ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2B(3) hereof only, a
day on which The Prudential Insurance Company of America is not open for
business.
"CANCELLATION DATE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles, is or will be
required to be capitalized on the books of the Company or any Subsidiary, taken
at the amount thereof accounted for as indebtedness (net of interest expenses)
in accordance with such principles.
"CHANGE OF CONTROL" shall mean any Person or Persons acting in
concert, together with the Affiliates thereof, directly or indirectly
controlling or owning (beneficially or otherwise) in the aggregate more than 50%
of the aggregate voting power of the issued and outstanding Voting Interests of
the Company.
"CLOSING DAY" shall mean, with respect to the Series B Notes,
the Series B Closing Day and, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note in
the Request for Purchase of such Accepted Note, provided that (i) if the Company
and the Purchaser which is obligated to purchase such Accepted Note agree on an
earlier Business Day for such closing, the "CLOSING DAY" for such Accepted Note
shall be such earlier Business Day, and (ii) if the closing of the purchase and
sale of such Accepted Note is rescheduled pursuant to paragraph 2B(7), the
Closing Day for such Accepted Note, for all purposes of this Agreement except
references to "original Closing Day" in paragraph 2B(8)(iii), shall mean the
Rescheduled Closing Day with respect to such Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified
in paragraph 2B(5).
"CONSOLIDATED CASH FLOW" for any period shall mean the sum of
(i) earnings before income taxes of the Company and its Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles, plus (ii) the amounts that have been deducted in the
determination of such earnings before income taxes for such period for (a)
interest expense, (b) depreciation, and (c) amortization, minus (iii) the
32
amounts that have been included in the determination of such earnings before
income taxes for such period for (a) one-time gains, (b) extraordinary income,
(c) non-cash patronage income, and (d) non-cash equity earnings in joint
ventures.
"CONSOLIDATED MEMBERS' AND PATRONS' EQUITY" shall mean the
amount of equity accounts plus (or minus in the case of a deficit) the amount of
surplus and retained earnings accounts of the Company and its Subsidiaries and
the minority interest in Subsidiaries, provided that the total amount of
intangible assets of the Company and its Subsidiaries (including, without
limitation, unamortized debt discount and expense, deferred charges and
goodwill) included therein shall not exceed $30,000,000 (and to the extent such
intangible assets exceed $30,000,000, they will not be included in the
calculation of Consolidated Members' and Patrons' Equity); all as determined in
accordance with generally accepting accounting principles consistently applied,
but excluding therefrom any minority interests in any Subsidiaries without
duplication of deduction if already deducted in determining retained earnings
and surplus.
"CONSOLIDATED NET WORTH" shall mean, as of any date, members'
equity of the Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of any date,
Consolidated Net Worth as of such date, less any goodwill or other intangible
assets but, adding back in the minority interests in Subsidiaries of the
Company.
"CONSOLIDATED TOTAL ASSETS" shall mean, as of any date, the
total assets of the Company and its Subsidiaries as of such date, determined on
a consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"DEBT" shall mean, with respect to any Person (i) all
obligations of such Person for borrowed money (including all obligations for
borrowed money secured by any Lien with respect to any Property owned by such
Person whether or not such Person has assumed or otherwise become liable for
such obligations), (ii) all obligations of such Person for the deferred purchase
price of property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
such property), (iii) all Capital Lease Obligations of such Person and (iv) all
Guarantees of such Person with respect to liabilities of the type described in
clause (i), (ii) or (iii) of any other Person, provided that (a) Debt of a
Subsidiary of the Company shall exclude such obligations and Guarantees of such
Subsidiary if owed or guaranteed by a Subsidiary to the Company or a
Wholly-Owned Subsidiary of the Company, (b) Debt of the Company shall exclude
such obligations and Guarantees if owed or guaranteed by the Company to a
Wholly-Owned Subsidiary of the Company and (c) Debt of the Company shall exclude
any unfunded obligations which may exist now and in the future in the Company's
pension plans.
"DELAYED DELIVERY FEE" shall have the meaning specified in
paragraph 2B(8)(iii).
33
"DISPOSITION VALUE" shall mean, with respect to the Transfer
of any Property:
(i) in the case of Property that does not constitute
capital stock of or other ownership interests in any Subsidiary of the
Company, the book value thereof, valued at the time of such Transfer in
good faith by the board of directors of the Company, and
(ii) in the case of Property that constitutes capital
stock of or other ownership interests in any Subsidiary of the Company,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such capital stock or other ownership interests
as is equal to the percentage that the book value that such capital
stock or other ownership interests represents of the book value of all
of the outstanding capital stock of or other ownership interests in
such Subsidiary (assuming, in making such calculations, that all
securities convertible into such capital stock or other ownership
interests are so converted and giving full effect to all transactions
that would occur or be required in connection with such conversion),
determined at the time of such Transfer in good faith by the board of
directors of the Company.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within the meaning
of section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FACILITY" shall have the meaning specified in paragraph
2B(1).
"FUNDED DEBT" shall mean, with respect to any Person, all Debt
which would, in accordance with generally accepted accounting principles, be
required to be classified as a long term liability on the books of such Person,
and shall include, without limitation (i) any Debt which by its terms or by the
terms of any instrument or agreement relating thereto matures, or which is
otherwise payable or unpaid, more than one year from the date of creation
thereof, (ii) any Debt outstanding under a revolving credit or similar agreement
providing for borrowings (and renewals and extensions thereof) which would, in
accordance with generally accepted accounting principles, be required to be
classified as a long term liability of such Person, (iii) any Capital Lease
Obligation of such Person, and (iv) any Guarantee of such Person with respect to
Funded Debt of another Person. Notwithstanding anything to the contrary
contained herein,
34
any Debt outstanding under a revolving credit or similar agreement providing for
borrowings where no amount of such Debt is outstanding for a period of 30
consecutive days during each 12 month period (and which has not been refinanced
with other Debt which does not constitute Funded Debt) will not be deemed to
constitute Funded Debt.
"GUARANTEE" shall mean, with respect to any Person, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any Debt, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or service, regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any
Accepted Note, the United States Treasury Note or Notes whose duration (as
determined by Prudential) most closely matches the duration of such Accepted
Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of
proceeds of any Note, any offer to purchase, or any purchase of, shares of
capital stock of any corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial ownership of, or
rights to acquire, any such shares or equity interests, if such shares, equity
interests, securities or rights are of a class which is publicly traded on any
securities exchange or in any over-the-counter market, other than purchases of
such shares, equity interests, securities or rights representing less than 5% of
the equity interests or beneficial ownership of such corporation or other entity
for portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
"ISSUANCE PERIOD" shall have the meaning specified in
paragraph 2B(2).
35
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction other than solely for notification purposes as opposed to
security purposes), any interest or title of a lessor under a Capital Lease, or
any other type of preferential arrangement for the purpose, or having the
effect, of protecting a creditor against loss or securing the payment or
performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA.
"NET PROCEEDS AMOUNT" shall mean, with respect to any Transfer
of any Property by any Person, an amount equal to the difference of (i) the
aggregate amount of the consideration (valued at the fair market value of such
consideration at the time of the consummation of such Transfer) received by such
Person in respect of such Transfer, minus (ii) all ordinary and reasonable
out-of-pocket costs and expenses actually incurred by such Person in connection
with such Transfer.
"NOTES" shall have the meaning specified in paragraph 1B.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, a limited liability company, an
unincorporated organization and a government or any department or agency
thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate.
"PRIORITY DEBT" shall mean (i) all Debt of the Company or any
Subsidiary of the Company secured by a Lien (other than Debt secured only by
Liens permitted under clauses (i) through (viii) of paragraph 6D hereof), and
(ii) all Funded Debt of the Subsidiaries of the Company.
"PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AFFILIATE" shall mean any Affiliate of Prudential.
36
"PURCHASERS" shall mean Prudential and Pruco with respect to
the Series B Notes and, with respect to any Accepted Notes, Prudential and/or
the Prudential Affiliate(s), which are purchasing such Accepted Notes.
"RELATED PARTY" shall mean (i) any Significant Stockholder,
(ii) all persons to whom any Significant Stockholder is related by blood,
adoption or marriage and (iii) all Affiliates of the foregoing Persons.
"REQUEST FOR PURCHASE" shall have the meaning specified in
paragraph 2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least a majority of the aggregate principal amount of the Notes or of a Series
of Notes, as the context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in
paragraph 2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
the Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES" shall have the meaning specified in paragraph 1B.
"SERIES B CLOSING DAY" shall have the meaning specified in
paragraph 2A.
"SERIES B NOTE(S)" shall have the meaning specified in
paragraph 1A.
"SHELF NOTES" shall have the meaning specified in paragraph
1B.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as
Prudential or any Prudential Affiliate shall hold (or be committed under this
Agreement to purchase) any Note, and (ii) any other holder of at least 5% of the
aggregate principal amount of the Notes from time to time outstanding, or (iii)
any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
"STRUCTURING FEE" shall have the meaning specified in
paragraph 2B(8)(i).
"SUBSIDIARY" shall mean with respect to any Person any other
Person greater than 50% of the total combined voting power of all classes of
Voting Interests of which shall, at the time as of which any determination is
being made, be owned by such first Person either directly or through other
Subsidiaries of such first Person.
37
"TRANSFER" shall have the meaning given in paragraph 6F
hereof.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.
"VOTING INTERESTS" shall mean (a) with respect to any stock
corporation, any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
corporation or persons performing similar functions (irrespective of whether at
the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency), and (b) with respect to
the Company or any other entity, membership or other ownership interests in the
Company or such other entity whose holders are entitled under ordinary
circumstances to vote for the election of the directors of the Company or such
other entity or persons performing similar functions (irrespective of whether at
the time membership or other ownership interests of any other class or classes
shall have or might have voting power by reasoning of the happening of any
contingency).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary of the
Company all of the capital stock or other ownership interests of every class of
which is, at the time as of which any determination is being made, owned by the
Company either directly or through a wholly-owned Subsidiary.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B. Any
reference herein to any specific law, statute, rule or regulation shall refer to
such law, statute, rule or regulation as the same may be may be modified,
amended or replaced from time to time.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on, and any
Yield-Maintenance Amount payable with respect to, such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City local time, on the date due) to
(i) the account or accounts of such Purchaser specified in the Purchaser
Schedule attached hereto in the case of any Series B Note, (ii) the account or
accounts of such Purchaser specified in the Confirmation of Acceptance with
respect to such Note in the case of any Shelf Note
38
or (iii) such other account or accounts in the United States as such Purchaser
may from time to time designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment. Each
Purchaser agrees that, before disposing of any Note, it will make a notation
thereon (or on a schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been paid. The
Company agrees to afford the benefits of this paragraph 11A to any Transferee
which shall have made the same agreement as the Purchasers have made in this
paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses of
any special counsel engaged by the Purchasers or any Transferee in connection
with this Agreement, the transactions contemplated hereby and any subsequent
proposed modification of, or proposed consent under, this Agreement, whether or
not such proposed modification shall be effected or proposed consent granted,
and (ii) the costs and expenses, including attorneys' fees, incurred by any
Purchaser or any Transferee in enforcing (or determining whether or how to
enforce) 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 transactions contemplated hereby or by
reason of any Purchaser's or any Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any bankruptcy case
and (iii) all costs and expenses, including, without limitation, reasonable
attorneys' fees, of obtaining a Private Placement Number from CUSIP Service
Bureau of Standard and Poor's Ratings Group with respect to the Notes. The
obligations of the Company under this paragraph 11B shall survive the transfer
of any Note or portion thereof or interest therein by any Purchaser or any
Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and such written consents), the Notes of such Series may be amended
or the provisions thereof waived to change the maturity thereof, to change or
affect the principal thereof, or to change or affect the rate or time of payment
of interest on or any Yield-Maintenance Amount payable with respect to the Notes
of such Series, (ii) without the written consent of the holder or holders of all
Notes at the time outstanding, no amendment to or waiver of the provisions of
this Agreement shall change or affect the provisions of paragraph 7A or this
paragraph 11C insofar as such provisions relate to proportions of the principal
amount of the Notes of any Series, or the rights of any individual holder of
Notes, required with respect to any declaration of Notes to be due and payable
or with respect to any consent, amendment, waiver or declaration, (iii) with the
written consent of Prudential (and without the consent of any other holder of
the Notes) the provisions of paragraph 2B may be amended or waived (except
insofar as any such amendment or waiver would affect any rights or obligations
with respect to the purchase and sale of Notes which shall have become Accepted
Notes prior to such
39
amendment or waiver), and (iv) with the written consent of all of the Purchasers
which shall have become obligated to purchase Accepted Notes of any Series (and
not without the written consent of all such Purchasers), any of the provisions
of paragraphs 2B and 3 may be amended or waived insofar as such amendment or
waiver would affect only rights or obligations with respect to the purchase and
sale of the Accepted Notes of such Series or the terms and provisions of such
Accepted Notes. Each holder of any Note at the time or thereafter outstanding
shall be bound by any consent authorized by this paragraph 11C, whether or not
such Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. 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 and in the Notes, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $100,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company shall, at its expense,
execute and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Each prepayment of principal payable on each
prepayment date upon each new Note issued upon any such transfer or exchange
shall be in the same proportion to the unpaid principal amount of such new Note
as the prepayment of principal payable on such date on the Note surrendered for
registration of transfer or exchange bore to the unpaid principal amount of such
Note. No reference need be made in any such new Note to any prepayment or
prepayments of principal previously due and paid upon the Note surrendered for
registration of transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest
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on, and any Yield-Maintenance Amount payable with respect to, such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue, and
the Company shall not be affected by notice to the contrary. Subject to the
preceding sentence, the holder of any Note may from time to time grant
participations in all or any part of such Note to any Person on such terms and
conditions as may be determined by such holder in its sole and absolute
discretion, provided that any such participation shall be in a principal amount
of at least $100,000 except as may be necessary to reflect any principal amount
not evenly divisible by $100,000.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not avoid (i) the occurrence of a Default or Event of Default if such
action is taken or such condition exists or (ii) in any way prejudice an attempt
by the holder of any Note to prohibit through equitable action or otherwise the
taking of any action by the Company or any Subsidiary which would result in a
Default or Event of Default.
11I. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first class
mail or nationwide overnight delivery service (with charges prepaid) and (i) if
to any Purchaser, addressed as specified for such communications in the
Purchaser Schedule attached hereto (in the case of the Series B Notes) or the
Purchaser Schedule attached to the applicable Confirmation of Acceptance (in the
case of any Shelf Notes) or at such other address as any such Purchaser shall
have specified to the Company in writing, (ii) if to any other holder of any
Note, addressed to it at such address as it shall have specified in writing to
the Company or, if any such holder shall not have so specified an address, then
addressed to such holder in care of the last holder of such Note which shall
have so specified an address to the Company and (iii) if to the Company,
addressed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: Chief Financial Officer with a copy 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; provided, however, that any such communication
to the Company may also, at the option of the Person sending such communication,
be delivered by any
41
other means either to the Company at its address as determined above or to any
Authorized Officer of the Company. Any communication pursuant to paragraph 2
shall be made by the method specified for such communication in paragraph 2, and
shall be effective to create any rights or obligations under this Agreement only
if, in the case of a telephone communication, an Authorized Officer of the party
conveying the information and of the party receiving the information are parties
to the telephone call, and in the case of a telecopier communication, the
communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized Officer of the party
receiving the information, and in fact received at the telecopier terminal the
number of which is listed for the party receiving the communication in the
Information Schedule or at such other telecopier terminal as the party receiving
the information shall have specified in writing to the party sending such
information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall not be included in the computation of the interest payable on such
Business Day.
11K. SEVERABILITY. Any provision of this Agreement which 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 not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
11N. 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 ILLINOIS.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are
to be several sales, and the obligations of Prudential and the Purchasers under
this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and neither
Prudential nor any Purchaser shall be responsible for the obligations of, or any
action taken or omitted by, any other such Person hereunder.
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11P. 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.
11Q. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between the
Company and Prudential. This Agreement shall also inure to and each such
Purchaser shall be bound by this Agreement to the extent provided in such
Confirmation of Acceptance.
Very truly yours,
CENEX HARVEST STATES COOPERATIVES
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President & CFO
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Vice President
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