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MIDAMERICAN REALTY SERVICES COMPANY
$35,000,000
7.12% Senior Notes due November 1, 2010
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NOTE PURCHASE AGREEMENT
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DATED AS OF NOVEMBER 1, 1998
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES................................................1
SECTION 2. SALE AND PURCHASE OF NOTES............................................1
SECTION 3. CLOSING...............................................................1
SECTION 4. CONDITIONS TO CLOSING.................................................2
Section 4.1. Representations and Warranties........................................2
Section 4.2. Performance; No Default...............................................2
Section 4.2. Performance; No Default...............................................2
Section 4.3. Compliance Certificates...............................................2
Section 4.4. Opinions of Counsel...................................................2
Section 4.5. Purchase Permitted by Applicable Law, Etc.............................3
Section 4.6. Related Transactions..................................................3
Section 4.7. Payment of Special Counsel Fees.......................................3
Section 4.8. Private Placement Number..............................................3
Section 4.9. Changes in Corporate Structure........................................3
Section 4.10. Proceedings and Documents.............................................3
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................4
Section 5.1. Organization; Power and Authority.....................................4
Section 5.2. Authorization, Etc....................................................4
Section 5.3. Disclosure............................................................4
Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates......5
Section 5.5. Financial Statements..................................................5
Section 5.5. Financial Statements..................................................5
Section 5.6. Compliance with Laws, Other Instruments, Etc..........................6
Section 5.7. Governmental Authorizations, Etc......................................6
Section 5.8. Litigation; Observance of Agreements; Statutes and Orders.............6
Section 5.9. Taxes.................................................................6
Section 5.10. Title to Property Leases..............................................7
Section 5.11. Licenses, Permits, Etc................................................7
Section 5.12. Compliance with ERISA.................................................7
Section 5.13. Private Offering by the Company.......................................8
Section 5.14. Use of proceeds; Margin Regulations...................................8
Section 5.15. Existing Debt; Future Liens...........................................9
Section 5.16. Foreign Assets Control Regulations, Etc...............................9
Section 5.17. Status under Certain Statutes.........................................9
Section 5.18. Environmental Matters.................................................9
SECTION 6. REPRESENTATIONS OF THE PURCHASER.....................................10
Section 6.1. Purchase for Investment..............................................10
Section 6.2. Source of Funds......................................................10
SECTION 7. INFORMATION AS TO COMPANY............................................12
Section 7.1. Financial and Business Information...................................12
Section 7.2. Officer's Certificate................................................14
Section 7.3. Inspection...........................................................15
SECTION 8. PREPAYMENT OF THE NOTES..............................................15
SECTION 8.1. REQUIRED PREPAYMENTS.................................................15
Section 8.2. Optional Prepayments with Make-Whole Amount..........................16
Section 8.3. Allocation of Partial Prepayments....................................16
Section 8.4. Maturity; Surrender, Etc.............................................16
Section 8.5. Purchase of Notes....................................................16
Section 8.6. Make-Whole Amount....................................................17
SECTION 9. AFFIRMATIVE COVENANTS................................................20
Section 9.1. Compliance with Law..................................................20
Section 9.2. Insurance............................................................21
Section 9.3. Maintenance of Properties............................................21
Section 9.4. Payment of Taxes.....................................................21
Section 9.5. Corporate Existence, Etc.............................................21
SECTION 10. NEGATIVE COVENANTS...................................................22
Section 10.1. Transactions with Affiliates.........................................26
SECTION 11. EVENTS OF DEFAULT....................................................26
SECTION 12. REMEDIES ON DEFAULT, ETC.............................................29
Section 12.1. Acceleration.........................................................29
Section 12.2. Other Remedies.......................................................29
Section 12.3. Rescission...........................................................29
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc....................30
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................30
Section 13.1. Registration of Notes................................................30
Section 13.2. Transfer and Exchange of Notes.......................................30
Section 13.3. Replacement of Notes.................................................31
SECTION 14. PAYMENTS ON NOTES....................................................31
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Section 14.1. Place of Payment.....................................................31
Section 14.2. Home Office Payment..................................................31
SECTION 15. EXPENSES, ETC........................................................32
Section 15.1. Transaction Expenses.................................................32
Section 15.2. Survival.............................................................32
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........32
SECTION 17. AMENDMENT AND WAIVER.................................................32
Section 17.1. Requirements.........................................................32
Section 17.2. Solicitation of Holders of Notes.....................................33
Section 17.3. Binding Effect, Etc..................................................33
Section 17.4. Notes Held by Company, Etc...........................................33
SECTION 18. NOTICES..............................................................34
SECTION 19. REPRODUCTION OF DOCUMENTS............................................34
SECTION 20. CONFIDENTIAL INFORMATION.............................................35
SECTION 21. SUBSTITUTION OF PURCHASER............................................36
SECTION 22. MISCELLANEOUS........................................................36
Section 22.1. Successors and Assigns...............................................36
Section 22.2. Payments Due on Non-Business Days....................................36
Section 22.3. Severability.........................................................36
Section 22.4. Construction.........................................................36
Section 22.5. Counterparts.........................................................36
Section 22.6. Governing Law........................................................37
Signature............................................................................................38
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.15 -- Existing Consolidated Debt and Priority Debt
SCHEDULE 10.5 -- Existing Investments
SCHEDULE 10.6 -- Existing Liens
EXHIBIT 1 -- Form of 7.12% Senior Note due November 1, 2010
EXHIBIT 4.4(a) -- Form of Opinion of In-House Counsel of the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.4(c) -- Form of Opinion of Special Counsel for the Purchasers
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MIDAMERICAN REALTY SERVICES COMPANY
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
7.12% SENIOR NOTES DUE NOVEMBER 1, 2010
Dated as of
November 1, 1998
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
MIDAMERICAN REALTY SERVICES COMPANY, an Iowa corporation (the
"Company"), agrees with the Purchasers listed in the attached Schedule A as
follows:
SECTION 1. AUTHORIZATION OF NOTES
The Company will authorize the issue and sale of $35,000,000 aggregate
principal amount of its 7.12% Senior Notes due November 1, 2010 (the "Notes",
such term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement (as hereinafter defined)). The Notes shall be
substantially in the form set out in Exhibit 1, with such changes therefrom, if
any, as may be approved by each Purchaser and the Company. Certain capitalized
terms used in this Agreement are defined in Schedule B; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
specified opposite such Purchaser's name in Schedule A at the purchase price of
100% of the principal amount thereof. The obligations of each Purchaser
hereunder are several and not joint obligations and each Purchaser shall have no
obligation and no liability to any Person for the performance or nonperformance
by any other Purchaser hereunder.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by each
Purchaser shall occur at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on November 4, 1998 or on such other Business Day thereafter on or
prior to November 6, 1998 as may be agreed upon by the Company and the
Purchasers. At the Closing, the Company will deliver to each Purchaser the Notes
to be
purchased by such Purchaser in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as such Purchaser may
request) dated the date of the Closing and registered in such Purchaser's name
(or in the name of such Purchaser's nominee), against delivery by such Purchaser
to the Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Company to account number 064807 at Bankers Trust Company, ABA
#▇▇▇▇▇▇▇▇▇. If, at the Closing, the Company shall fail to tender such Notes to
any Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to any Purchaser's
reasonable satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING
The obligation of each Purchaser to purchase and pay for the Notes to
be sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's reasonable satisfaction, prior to or at the Closing, of the
following conditions:
Section 4.1 The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.
Section 4.2 The Company shall have performed and complied in all
material respects with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by the covenants contained in Section
10 hereof had such covenants applied since such date.
Section 4.3. Compliance Certificates
(a) Officer's Certificate. The Company shall have delivered to
such Purchaser an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.9
have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered
to such Purchaser a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this Agreement.
Section 4.4 Such Purchaser shall have received opinions in form and
substance satisfactory to such Purchaser, dated the date of the Closing (a) ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq., in-house counsel of the Company, (b) from Winthrop,
Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ counsel for the Company, covering the matters set
forth in Exhibits 4.4(a) and 4.4(b), respectively, and covering such other
matters incident to the transactions contemplated hereby as
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such Purchaser or such Purchaser's counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to such Purchaser)
and (c) from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Purchasers' special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(c)
and covering such other matters incident to such transactions as such Purchaser
may reasonably request.
Section 4.5 On the date of the Closing each purchase of Notes shall (a)
be permitted by the laws and regulations of each jurisdiction to which each
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(b) not violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject any Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof. If requested by any Purchaser, such Purchaser shall
have received an Officer's Certificate certifying as to such matters of fact as
such Purchaser may reasonably specify to enable such Purchaser to determine
whether such purchase is so permitted.
Section 4.6 The Company shall have consummated the sale of the entire
principal amount of the Notes scheduled to be sold on the date of Closing
pursuant to this Agreement.
Section 4.7 Without limiting the provisions of Section 15.1, the
Company shall have paid on or before the Closing the reasonable fees, charges
and disbursements of the Purchasers' special counsel referred to in Section 4.4
to the extent reflected in a statement of such counsel rendered to the Company
at least three Business Days prior to the Closing.
Section 4.8 A Private Placement Number issued by Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes.
Section 4.9 The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5. The Purchasers are aware of the contemplated merger between
MidAmerican Energy Holdings Company and CalEnergy Company, Inc. as described in
MidAmerican Energy Holdings Company's Current Report on Form 8-K, dated August
11, 1998, previously provided to the Purchasers.
Section 4.10 All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to such Purchaser and such
Purchaser's special counsel in their reasonable judgment, and such Purchaser and
such Purchaser's special counsel shall have received all such counterpart
originals or certified or other
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copies of such documents as such Purchaser or such Purchaser's special counsel
may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser that, as of the
date of this Agreement and the date of Closing:
Section 5.1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the Notes and to perform the
provisions hereof and thereof.
Section 5.2. This Agreement and the Notes have been duly authorized by
all necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 5.3. The Company, through its agent, Warburg Dillon Read LLC,
has delivered to each Purchaser a copy of a Private Placement Memorandum, dated
August, 1998 (the "Memorandum"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and of its
Subsidiaries. This Agreement, the Memorandum, the documents, certificates or
other writings delivered to each Purchaser by or on behalf of the Company in
connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. In addition, the Company has delivered to each Purchaser,
and each Purchaser acknowledges receipt of, MidAmerican Energy Holdings
Company's Current Report on Form 8-K, dated August 11, 1998, describing the
contemplated merger between MidAmerican Energy Holdings Company and CalEnergy
Company, Inc. (the "Merger") pursuant to which, among other things, CalEnergy
Company, Inc. will reincorporate in the State of Iowa and change its name to
MidAmerican Energy Holdings Company. Since June 30, 1998, there has been no
change in the financial condition, operations, business, properties or prospects
of the Company or any of its Subsidiaries except changes that individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a
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Material Adverse Effect that has not been set forth herein or in the Memorandum
or in the other documents, certificates and other writings delivered to each
Purchaser by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
Section 5.4. (a) Schedule 5.4 contains (except as noted therein)
complete and correct lists (i) of the Company's Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary,
(ii) of the Company's Affiliates, other than Subsidiaries, and (iii) of the
Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
Section 5.5. Financial Statments The Company has delivered to each
Purchaser copies of the financial statements listed on Schedule 5.5. All of said
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the respective companies and their subsidiaries as of the respective dates
specified in such financial statements and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto; provided, however, that the
financial statements titled "AmerUs Home Service, Inc. and Subsidiaries" contain
the financial information of Home Real Estate Company of Omaha and First Edina
Realty Mortgage L.L.C., entities which were a subsidiary or joint venture of
AmerUs Home Services, Inc. or its subsidiaries on December 31, 1997 but which
are not a subsidiary or joint venture on the date hereof; and
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provided further that the financial statements of AmerUs Home Service, Inc.
reflect minority interests which were redeemed prior to the date hereof; and
provided further that the financial statements of AmerUs Home Services, Inc.
include revenues from the management of real estate development operations which
have been discontinued; and provided further that the financial statements of
CBS Real Estate Co. include investments in Georgetowne Development, Ltd.,
ComFed-Dodge Fund VII Ltd. Partnership and Plum Creek L.L.C. which were owned by
CBS Real Estate Co. on December 31, 1997 but were disposed of prior to the date
hereof; and provided further that the effect of the foregoing changes on the
financial statements listed on Schedule 5.5 are excluded from the
representations and warranties made herein.
Section 5.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (c) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorization, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements; Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns (individually or on a consolidated basis) that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable
on such returns (individually or on a consolidated basis) and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (a)
the amount of which is not individually or in the aggregate Material or (b) the
amount, applicability
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or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Company does not have any
income tax liabilities for any fiscal year ending on or prior to December 31,
1997. The Federal income tax liabilities of the Company's Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended December 31, 1994. For all fiscal years
ending on or prior to December 31, 1997, the Company has received indemnities
for the income tax liabilities of its Subsidiaries.
Section 5.10. The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect
in all material respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company or any of its Subsidiaries infringes in any material respect
any license, permit, franchise, authorization, patent, copyright,
service ▇▇▇▇, trademark, trade name or other right owned by any other
Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service ▇▇▇▇,
trademark, trade name or other right owned or used by the Company or
any of its Subsidiaries.
Section 5.12. (a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and could not reasonably
be expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in
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either case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate Material.
(b) For each Plan that is a pension plan within the meaning of Section
3(2) of ERISA, the accumulated benefit obligation did not exceed the fair market
value of the Plan's assets. For this purpose, "accumulated benefit obligation"
shall have the meaning given to that term in paragraph 18 of Statement of
Financial Accounting Standards No. 87.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of each Purchaser's representation in Section
6.2 as to the sources of the funds to be used to pay the purchase price of the
Notes to be purchased by such Purchaser, and, to the extent applicable, each
Purchaser's compliance with the disclosure requirements of Section 6.2.
Section 5.13. Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than the Purchasers and not more than 38 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
Section 5.14. The Company will apply the proceeds of the sale of the
Notes to refinance existing indebtedness the proceeds of which were used to
acquire all of the capital stock of Iowa Realty Co., Inc. and Edina Financial
Services, Inc. No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). The Company
does not own, or presently intend to carry or purchase, any margin stock. As
used in this Section, the terms
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"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation U.
Section 5.15. Existing Debt; Future Liens. (a) Schedule 5.15 sets forth
a complete and correct list of all outstanding Consolidated Debt and Priority
Debt of the Company and its Subsidiaries as of August 31, 1998, since which date
there has been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Debt of the Company or such Subsidiary and no event or condition exists
with respect to any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale
of the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor
any Subsidiary is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.
Section 5.18. Neither the Company nor any Subsidiary has knowledge of
any claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to each Purchaser in writing:
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
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(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them or has disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case
in any manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 6. REPRESENTATIONS OF THE PURCHASER
Section 6.1. Each Purchaser represents that it is purchasing the Notes
for its own account or for one or more separate accounts maintained by it or for
the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's or such
pension or trust funds' property shall at all times be within such Purchaser's
or such pension or trust funds' control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
Section 6.2. Each Purchaser represents that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source") to be used by it to pay the purchase price of the Notes to be
purchased by it hereunder:
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the
same employer or employee organization, with respect to which the
amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceeds ten percent (10%)
of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth
in the NAIC Annual Statement for such Purchaser most recently filed
with such Purchaser's state of domicile; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Company in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
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(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA; or
(g) the Source is an insurance company separate account
maintained solely in connection with the fixed contractual obligations
of the insurance company under which the amounts payable, or credited,
to any employee benefit plan (or its related trust) and to any
participant or beneficiary of such plan (including any annuitant) are
not affected in any manner by the investment performance of the
separate account.
If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such transferee is relying on any representation contained in
paragraph (b), (c) or (e) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) the Company is neither a party in interest nor a
"disqualified person" (as defined in Section 4975(e)(2) of the Code), with
respect to any plan identified pursuant to paragraphs (b) or (e) above, or (ii)
with respect to any plan, identified pursuant to paragraph (c) above, neither
the Company nor any "affiliate" (as defined in Section V(c) of the QPAM
Exemption) has at such time, and during the immediately preceding one year,
exercised the authority to appoint or terminate said QPAM as manager of any plan
identified in writing pursuant to paragraph (c) above or to negotiate the terms
of said QPAM's management agreement on behalf of any such identified plan. As
used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
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SECTION 7. INFORMATION AS TO COMPANY
Section 7.1. The Company shall deliver to each holder of Notes that is
an Institutional Investor:
(a) Quarterly Statements-- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form, commencing with the
fiscal quarter ending September 30, 1999, the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from normal,
recurring year-end adjustments, provided that delivery within the time
period specified above of copies of the Company's Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefor and
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this Section 7.1(a);
(b) Annual Statements-- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form, commencing with the
fiscal year ending December 31, 1999, the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with
GAAP, and accompanied by
(A) an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion shall state that such financial statements present
fairly, in all material respects, the financial position of
the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity
with
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GAAP, and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion
in the circumstances, and
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether,
in making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or
event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants
shall not be liable, directly or indirectly, for any failure
to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year (together
with the Company's annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate
described in clause (B) above, shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) SEC and Other Reports, if any-- promptly upon their
becoming available, one copy of (i) each financial statement, report,
notice or proxy statement sent by the Company or any Subsidiary to
public securities holders generally, and (ii) each regular or periodic
report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to
the public concerning developments that are Material;
(d) Notice of Default or Event of Default-- promptly, and in
any event within five days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
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(i) with respect to any Plan, any reportable event, as defined
in section 4043(c) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority-- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information-- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance-- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
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(b) Event of Default-- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company
or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
Section 7.3. The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:
(a) No Default-- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing
and so long as such representatives are bound to the provisions of
Section 20 hereof; and
(b) Default-- if a Default or Event of Default then exists, at
the expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PREPAYMENT OF THE NOTES
Section 8.1. Required Prepayments. On November 1, 2004 and on each
November 1 thereafter to and including November 1, 2009 the Company will prepay
$5,000,000 principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole Amount or
any premium, provided that upon any partial prepayment of the Notes pursuant to
Section 8.7 or purchase of the Notes permitted by Section 8.5, the principal
amount of each required prepayment of the Notes becoming due under this Section
8.1 on and after the date of such prepayment or purchase shall be reduced in the
same proportion as the aggregate unpaid principal amount of the Notes is reduced
as a result of such prepayment or purchase. For purposes of this Section 8.1,
any prepayment of less than all
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of the outstanding Notes pursuant to Section 8.2 shall be deemed to be applied
first to the amount of principal scheduled to be repaid on November 1, 2010, and
then to the remaining scheduled principal payments, if any, in inverse
chronological order. The entire outstanding principal amount of the Notes shall
become due and payable on November 1, 2010.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes, in an amount not less than 10% of the
aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, together with
interest accrued thereon to the date of such prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
such date, the aggregate principal amount of the Notes to be prepaid on such
date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
Section 8.3. Allocationof Partial Prepayments. Except if any holder of
a Note declines to accept an offer of prepayment pursuant to Section 8.7, in the
case of each partial prepayment of the Notes, the principal amount of the Notes
to be prepaid shall be allocated among all of the Notes at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.
Section 8.4. Maturity; Surrender, Etc In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
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Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
Section 8.7 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, .50% plus the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "PX1" on the Bloomberg
Financial Market Services Screen (or such other display as may replace
PX1 on the Bloomberg Financial Market Services Screen) for actively
traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury ▇▇▇▇
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
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"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2, Section 8.7 or 12.1.
"Settlement Date" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or Section 8.7 or has become or is declared to
be immediately due and payable pursuant to Section 12.1, as the context
requires.
Section 8.7. Change in Control. (a) Notice of Change in Control or
Control Event. The Company will, within 1 Business Day after any Responsible
Officer has knowledge of the occurrence of any Change in Control or Control
Event, give written notice of such Change in Control or Control Event to each
holder of Notes unless notice in respect of such Change in Control (or the
Change in Control contemplated by such Control Event) shall have been given
pursuant to subparagraph (b) of this Section 8.7. If a Change in Control has
occurred, such notice shall contain and constitute an offer to prepay Notes as
described in subparagraph (c) of this Section 8.7 and shall be accompanied by
the certificate described in subparagraph (g) of this Section 8.7. Any notice
provided under this Section 8.7 shall at all times remain subject to the
provisions of Section 20 hereof.
(b) Condition to Company Action. The Company will not take any action
that consummates or finalizes a Change in Control unless (i) at least 30 days
prior to such action it shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in
subparagraph (c) of this Section 8.7, accompanied by the certificate described
in subparagraph (g) of this Section 8.7, and (ii) contemporaneously with such
action, it prepays all Notes required to be prepaid in accordance with this
Section 8.7.
(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section 8.7 shall be an offer to prepay, in
accordance with and subject to this Section 8.7, all, but not less than all, the
Notes held by each holder (in this case only, "holder" in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the "Proposed
Prepayment Date"). If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this Section 8.7, such date shall be
not less than 10 Business days and not more than 20 Business 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 15th Business day after the
date of such offer).
(d) Acceptance. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.7 by causing a notice of such acceptance to be
delivered to the Company at least 3 Business days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond
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to an offer to prepay made pursuant to this Section 8.7 shall be deemed to
constitute an acceptance of such offer by such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at a price of 100% of the principal amount of such Notes,
plus the Make-Whole Amount determined in Section 8.6 for the date of prepayment
with respect to such principal amount, together with interest on such Notes
accrued to the date of prepayment. On the Business Day preceding the date of
prepayment, the Company shall deliver to each holder of Notes being prepaid a
statement showing the Make-Whole Amount due in connection with such prepayment
and setting forth the details of the computation of such amount. The prepayment
shall be made on the Proposed Prepayment Date except as provided in subparagraph
(f) of this Section 8.7.
(f) Deferral Pending Change in Control. The obligation of the Company
to prepay Notes pursuant to the offers required by subparagraph (b) and accepted
in accordance with subparagraph (d) of this Section 8.7 is subject to the
occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control does
not occur on the Proposed Prepayment Date in respect thereof, the prepayment
shall be deferred until and shall be made on the date on which such Change in
Control occurs. The Company shall keep each holder of Notes reasonably and
timely informed of (i) any such deferral of the date of prepayment, (ii) the
date on which such Change in Control and the prepayment are expected to occur,
and (iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section 8.7 in respect of such Change in Control shall be
deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.7; (iii) the principal amount of each Note offered to be prepaid; (iv)
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation; (v) the interest that would be
due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date;
(vi) that the conditions of this Section 8.7 have been fulfilled; and (vii) in
reasonable detail, the nature and date or proposed date of the Change in
Control.
(h) Effect on Required Payments. The amount of each payment of the
principal of the Notes made pursuant to this Section 8.7 shall be applied
against and reduce each of the then remaining principal payments due pursuant to
Section 8.1 by a percentage equal to the aggregate principal amount of the Notes
so paid divided by the aggregate principal amount of the Notes outstanding
immediately prior to such payment.
(i) "Change in Control" Defined. "Change in Control" means any of the
following events or circumstances:
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(i) the failure of MidAmerican Energy Holdings Company, or
after the consummation of the Merger, the failure of CalEnergy Company,
Inc., or its successors and ultimate parent, to own and control
(directly or indirectly) (A) prior to an IPO, greater than 50% (in the
aggregate) of the Company's shares of voting stock outstanding, or (B)
on or after the consummation of an IPO, at least 25% (in the aggregate)
of the Company's shares of voting stock outstanding, or
(ii) the failure of the Company to be an Affiliate of the
company that owns and controls (directly or indirectly) the Iowa
Electric Retail Distribution Business at any time during the period
beginning on the date of Closing and ending on the fifth anniversary
date of the Closing, or
(iii) any Person, on or after the consummation of an IPO, owns
or controls (directly or indirectly) more shares of the outstanding
voting stock of the Company than is owned and controlled (directly or
indirectly) by MidAmerican Energy Holdings Company or, after the
consummation of the Merger, CalEnergy Company, Inc.
"Control Event" means:
(i) the execution by the Company or any of its Subsidiaries or
Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected to
result in a Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in Control,
or
(iii) on or after the consummation of an IPO, the making of
any written offer by any person (as such term is used in section 13(d)
and section 14(d)(2) of the Exchange Act as in effect on the date of
the Closing) or related persons constituting a group (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the date of
the Closing) to the holders of the common stock of the Company, which
offer, if accepted by the requisite number of holders, would result in
a Change in Control.
(k) "IPO" means the initial public offering by the Company of its
voting shares of common stock.
SECTION 9. AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause each
of its Subsidiaries to, comply with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their
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respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 9.2. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 9.3. Maintenance of Properties. The Company will, and will
cause each of its Subsidiaries to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes. The Company will, and will cause each of
its Subsidiaries to, file all tax returns, individually or on a consolidated
basis, required to be filed in any jurisdiction and to pay and discharge all
taxes, individually or on a consolidated basis, shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any
such tax or assessment or claims if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
Section 9.5. Corporate Existence, Etc. Subject to Sections 10.7 and
10.8, the Company will at all times preserve and keep in full force and effect
its corporate existence, and the Company will at all times preserve and keep in
full force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
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SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Consolidated Net Worth. The Company will maintain, at the
end of each fiscal quarter, Consolidated Net Worth at an amount not less than
the sum of (a) $25,500,000, plus (b) an aggregate amount equal to 25% of its
Consolidated Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ended December 31, 1998.
Section 10.2. Interest Charges Coverage Ratio. The Company will not at
any time permit the Interest Charges Coverage Ratio for any period of four
consecutive fiscal quarters ending during the periods specified below to be less
than the ratio set forth opposite such period:
PERIOD RATIO
From the date of the Closing through June 30, 1999 2.25 to 1
From July 1, 1999 and thereafter 2.50 to 1
Section 10.3. Incurrence of Debt. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee, or otherwise become directly or indirectly liable with respect to,
any Debt, unless on the date the Company or such Subsidiary becomes liable with
respect to any such Debt and immediately after giving effect thereto and the
concurrent retirement of any other Debt,
(a) no Default or Event of Default exists, and
(b) Consolidated Total Debt does not exceed 65% of
Consolidated Total Capitalization.
For the purposes of this Section 10.3, any Person becoming a Subsidiary after
the date hereof shall be deemed, at the time it becomes a Subsidiary, to have
incurred all of its then outstanding Debt, and any Person extending, renewing or
refunding any Debt shall be deemed to have incurred such Debt at the time of
such extension, renewal or refunding.
Section 10.4. Priority Debt. The Company will not at any time permit
Priority Debt to exceed the greater (a) $7,500,000, or (b) 15% of Consolidated
Net Worth.
Section 10.5. Restricted Payments and Restricted Investments.
(a) Limitation. The Company will not, and will not permit any of its
Subsidiaries to, declare, make or incur any liability to make any Restricted
Payment or make or authorize any Restricted Investment unless immediately after
giving effect to such action:
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(i) the sum of (x) the aggregate value of all Restricted
Investments of the Company and its Subsidiaries (valued immediately
after such action), plus (y) the aggregate amount of Restricted
Payments of the Company and its Subsidiaries declared or made during
the period commencing on June 30, 1998 and ending on the date such
Restricted Payment or Restricted Investment is declared or made,
inclusive, would not exceed the sum of
(A) $5,000,000, plus
(B) 75% of Consolidated Net Income for such period (or minus
100% of Consolidated Net Income for such period if Consolidated Net
Income for such period is a loss), plus
(C) the aggregate amount of Net Proceeds of Capital Stock for
such period; and
(ii) no Default or Event of Default would exist.
(b) Time of Payment. The Company will not, nor will it permit any of
its Subsidiaries to, authorize a Restricted Payment that is not payable within
60 days of authorization.
Section 10.6. Liens. The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or with
respect to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company or any
such Subsidiary, whether now owned or held or hereafter acquired, or any income
or profits therefrom or assign or otherwise convey any right to receive income
or profits (unless it makes, or causes to be made, effective provision whereby
the Notes will be equally and ratably secured with any and all other obligations
thereby secured, such security to be pursuant to an agreement reasonably
satisfactory to the Required Holders and, in any such case, the Notes shall have
the benefit, to the fullest extent that, and with such priority as, the holders
of the Notes may be entitled under applicable law, of an equitable Lien on such
property), except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen incurred in the ordinary course of business, provided
payment thereof is not at the time required by Section 9.4;
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Subsidiary shall at
any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal
or proceeding for review shall have been secured, provided that the
Company or such
-23-
Subsidiary maintains any and all reserves which may be required under
GAAP in connection with any claims secured by such Liens described in
this Section 10.6 (b);
(c) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily
exist on properties of corporations engaged in similar activities and
similarly situated and which do not materially impair their use in the
operation of the business of the Company and its Subsidiaries;
(d) Liens existing as of the date of Closing and reflected in
Schedule 10.6 hereto;
(e) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
Liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other Liens
of like general nature incurred in the ordinary course of business and
not in connection with the borrowing of money; provided in each case,
the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or proceedings and for
which appropriate reserves have been establish;
(f) Liens incurred after the date of Closing given to secure
the payment of the purchase price of fixed assets acquired or purchased
in the ordinary course of business by the Company or any Subsidiary to
be used in carrying on the business of the Company or a Subsidiary,
provided that (i) the Lien shall attach solely to the fixed assets
purchased or acquired, (ii) at the time of the purchase or acquisition
of such fixed assets, the aggregate amount remaining unpaid on all Debt
secured by Liens on such fixed assets shall not exceed an amount equal
to 100% of the lesser of the total purchase price or Fair Market Value
at the time of purchase or acquisition of such fixed assets (as
determined in good faith by the Board of Directors of the Company), and
(iii) the aggregate principal amount of Debt secured by such Lien is
permitted by Sections 10.2 and 10.3; and
(g) any Lien extending, renewing or replacing any Lien
permitted by the immediately preceding subparagraphs (a) through (f),
inclusive, of this Section 10.6, provided that (i) the aggregate
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or replacement is not increased or the maturity
thereof reduced, (ii) such Lien is not extended to any other property,
except for the substitution of property of a similar nature and equal
or lesser value than the property securing the Lien immediately prior
to such extension, renewal or replacement, and (iii) the aggregate
principal amount of Debt being extended, renewed or replaced is
permitted by Sections 10.2 and 10.3;
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For the purposes of this Section 10.6, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person extending,
renewing or refunding any Debt secured by any Lien shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.
Section 10.7. Merger, Consolidation, etc. The Company will not, and
will not permit any of its Subsidiaries to, consolidate with or merge with any
other corporation or convey, transfer or lease substantially all of its assets
in a single transaction or series of transactions to any Person (except that a
Subsidiary of the Company may (x) consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to, the Company or a Wholly-Owned Subsidiary of the
Company and (y) convey, transfer or lease all of its assets in compliance with
the provisions of Section 10.8), provided that the foregoing restriction does
not apply to the consolidation or merger of the Company with, or the conveyance,
transfer or lease of substantially all of the assets of the Company in a single
transaction or series of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as
the case may be (the "Successor Corporation"), shall be 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 Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and the Notes (pursuant
to such agreements and instruments as shall be reasonably satisfactory
to 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 transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be permitted by
the provisions of Section 10.3 hereof to incur at least $1.00
of additional Debt owing to a Person other than a Subsidiary
of the Successor Corporation.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any Successor
Corporation from its liability under this Agreement or the Notes.
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Section 10.8. Sale of Assets, etc. Except as permitted under Section
10.7, the Company will not, and will not permit any of its Subsidiaries to, make
any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the property exchanged and is in the best
interest of the Company or such Subsidiary; and
(b) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition,
(i) the Disposition Value of all property that was
the subject of any Asset Disposition occurring in the period
of 12 calendar months then next ended would not exceed 10% of
Consolidated Total Assets as of the end of the then most
recently ended fiscal quarter of the Company; and
(ii) the Disposition Value of all property that was
the subject of any Asset Disposition occurring on or after the
date of Closing would not exceed 25% of Consolidated Total
Assets as of the end of the then most recently ended fiscal
quarter of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Property
Reinvestment Application within 12 months before or after such Transfer, then
such Transfer, only for the purpose of determining compliance with subsection
(c) of this Section 10.8 as of any date on or after the date of such Transfer,
shall be deemed not to be an Asset Disposition.
Section 10.9. Line of Business. The Company will not, and will not
permit any of its Subsidiaries to, engage in any business if, as a result, the
general nature of the business in which the Company and its Subsidiaries, taken
as a whole, would then be engaged would be materially changed from the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, are engaged on the date of this Agreement as described in the Memorandum.
Section 10.10. Transactions with Affiliates. The Company will not and
will not permit any Subsidiary to enter into directly or indirectly any
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
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(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Section 10; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this Section 11) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $3,000,000 beyond any period of grace provided with
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $3,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), the Company or any Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly scheduled dates
of payment in an aggregate outstanding principal amount of at least $3,000,000;
or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
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respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating
in excess of $3,000,000 (to the extent such judgement or judgments are not
covered by an insurance policy underwritten by a solvent insurer who has
accepted in writing responsibility for such judgment or judgments) are rendered
against one or more of the Company and its Subsidiaries and which judgments are
not, within 30 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 30 days after the expiration of such stay;
or
(j) If (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
Section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under Section 4042 of ERISA to terminate or appoint
a trustee to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) with respect to Plans that are pension plans within the meaning of Section
3(2) of ERISA whose accumulated benefit obligation (determined in accordance
with Statement of Financial Accounting Standards No. 87) exceeds the fair market
value of Plan assets, the aggregate shortfall shall exceed $3,000,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (v) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
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SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect to
the Company described in paragraph (g) or (h) of Section 11 (other than an Event
of Default described in clause (i) of paragraph (g) or described in clause (vi)
of paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of at least 33% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (i) all accrued and unpaid
interest thereon and (ii) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 67% in principal amount of the Notes then outstanding,
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and
-29-
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or its attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $100,000. Any
-30-
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
SECTION 14. PAYMENTS ON NOTES
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of The
Chase Manhattan Bank in such jurisdiction. The Company may at any time, by
notice to each holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office of the
Company or the principal office of a bank or trust company in such jurisdiction.
Section 14.2. HomeOffice Payment. So long as any Purchaser or such
Purchaser's nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 14.1 or in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for such purpose
for such Purchaser on Schedule A, or by such other method or at such other
address as such Purchaser shall have from time to time specified to the Company
in writing for such purpose, without the presentation or surrender of such Note
or the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by any Purchaser or such Purchaser's nominee such Purchaser
will, at its election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the
-31-
direct or indirect transferee of any Note purchased by any Purchaser under this
Agreement and that has made the same agreement relating to such Note as such
Purchaser has made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred
by each Purchaser or holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of being a holder of
any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will also pay,
and will save each Purchaser and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by such Purchaser or holder).
Section 15.2. Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5,
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6 or 21 hereof, or any defined term (as it is used therein), will be effective
as to any Purchaser unless consented to by such Purchaser in writing, and (b) no
such amendment or waiver may, without the written consent of the holder of each
Note at the time outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount on,
the Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to or compensation for or otherwise in
connection with the consideration of the entering into by any holder of Notes of
any waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
Section 17.3. Building Effect, Etc. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal
-33-
amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
SECTION 18. NOTICES
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or such Purchaser's nominee, to such
Purchaser or such Purchaser's nominee at the address specified for such
communications for such Purchaser on Schedule A, or at such other
address as such Purchaser or such Purchaser's nominee shall have
specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Chief Financial
Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
-34-
SECTION 20. CONFIDENTIAL INFORMATION
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary or confidential in nature,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any Person acting on such Purchaser's behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (i) such Purchaser's directors,
trustees, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Notes), (ii) such Purchaser's financial advisors
and other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which such Purchaser offers to purchase any Security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (vi)
any federal or state regulatory authority having jurisdiction over such
Purchaser, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser's investment portfolio, or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, Rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and this Agreement. If any
Purchaser receives a request or is aware of any requirement to turn over
Confidential Information pursuant to any order applicable to such Purchaser or
in response to any subpoena or other legal process or in connection with any
litigation to which such Purchaser is a party, such Purchaser, to the extent
permitted by law, will use reasonable efforts to notify the Company of any
request or requirement prior to disclosing such Confidential Information. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
-35-
SECTION 21. SUBSTITUTION OF PURCHASER
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Purchaser's Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall be deemed to refer to such Affiliate in lieu of
such Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to such Purchaser
all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have
all the rights of an original holder of the Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
Section 22.1.Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
-36-
Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
-37-
The execution hereof by the Purchasers shall constitute a contract
among the Company and the Purchasers for the uses and purposes hereinabove set
forth. This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.
Very truly yours,
MIDAMERICAN REALTY SERVICES COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Vice President, Chief
Financial Officer
--------------------------
-38-
Accepted as of the first
date written above.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Its Managing Director
---------------------------
CM LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Its Investment Officer
---------------------------
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
By/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Its Vice President
---------------------------
-39-
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
MASSACHUSETTS MUTUAL LIFE INSURANCE $13,200,000
COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
MidAmerican Realty Services Company, 7.12% Senior Notes due 2010, PPN 59562# AA
0, principal, premium or interest") to:
Citibank, N.A. (ABA #▇▇▇▇▇▇▇▇▇)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
for credit to: MassMutual's Long-Term Pool Account Number 4067-3488
Re: Description of security, principal and interest split
with telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
SCHEDULE A
(to Note Purchase Agreement)
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
MASSACHUSETTS MUTUAL LIFE INSURANCE $2,700,00
COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
MidAmerican Realty Services Company, 7.12% Senior Notes due 2010, PPN 59562# AA
0, principal, premium or interest") to:
Chase Manhattan Bank, N.A. (ABA #▇▇▇▇▇▇▇▇▇)
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
for credit to: MassMutual Pension Management Account Number 910-▇▇▇▇▇▇▇
Re: Description of security, principal and interest split
with telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-2
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
MASSACHUSETTS MUTUAL LIFE INSURANCE $3,600,000
COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
MidAmerican Realty Services Company, 7.12% Senior Notes due 2010, PPN 59562# AA
0, principal, premium or interest") to:
Chase Manhattan Bank, N.A. (ABA #▇▇▇▇▇▇▇▇▇)
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
for credit to: MassMutual IFM Non-Traditional Account Number 910-▇▇▇▇▇▇▇
Re: Description of security, principal and interest split
with telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-3
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
CM LIFE INSURANCE COMPANY $500,000
C/O MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
MidAmerican Realty Services Company, 7.12% Senior Notes due 2010, PPN 59562# AA
0, principal, premium or interest") to:
Citibank, N.A. (ABA #▇▇▇▇▇▇▇▇▇)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
for credit to: Segment 43 - Universal Life Account Number 4068-6561
Re: Description of security, principal and interest split
with telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-4
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA $15,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Investment Department 7B
Fax Number:(▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
MidAmerican Realty Services Company, 7.12% Senior Notes due 2010, PPN 59562# AA
0, principal, premium or interest") to:
The Chase Manhattan Bank
FED ABA #▇▇▇▇▇▇▇▇▇
CHASE/NYC/CTR/BNF
A/C ▇▇▇-▇-▇▇▇▇▇▇
for credit to: Account #G05978 The Guardian
Notices
All notices of payments, on or in respect of the Notes and written confirmation
of each such payment to:
The Guardian Life Insurance Company of America
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Investment Accounting M-1A
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
A-5
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: ▇▇▇▇ & CO.
Taxpayer I.D. Number: ▇▇-▇▇▇-▇▇▇▇
A-6
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Subsidiary to the Company or a Wholly-Owned
Subsidiary;
(ii) Transfer from the Company to a Wholly-Owned Subsidiary; and
(iii) Transfer from the Company to a Subsidiary (other than a
Wholly-Owned Subsidiary) or from a Subsidiary to another Subsidiary (other than
a Wholly-Owned Subsidiary), which in either case is for Fair Market Value, so
long as immediately before and immediately after the consummation of any such
Transfer and after giving effect thereto, no Default or Event of Default exists;
and
(b) any Transfer made in the ordinary course of business other than any
Transfer of accounts receivable.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Des Moines, Iowa or New York, New York are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Change in Control" has the meaning set forth in Section 8.7
SCHEDULE B
(to Note Purchase Agreement)
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means MidAmerican Realty Services Company, an Iowa
corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP.
"Consolidated Net Worth" means, at any time,
(a) the sum of (i) the par value (or value stated on the books
of the corporation) of the capital stock (but excluding treasury stock
and capital stock subscribed and unissued) of the Company and its
Subsidiaries plus (ii) the amount of the paid-in capital and retained
earnings of the Company and its Subsidiaries, in each case as such
amounts would be shown on a consolidated balance sheet of the Company
and its Subsidiaries as of such time prepared in accordance with GAAP,
minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Total Assets" means, at any time, the total assets of the
Company and its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Subsidiaries.
"Consolidated Total Capitalization" means, at any time, the sum of
Consolidated Net Worth and Consolidated Total Debt.
"Consolidated Total Debt" means, as of any date of determination, the
total of all Debt of the Company and its Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
B-2
(b) its liabilities determined in accordance with GAAP for the
deferred purchase price of property acquired by such Person (excluding
any part of such deferred purchase price payable in equity interest of
such Person and excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with
respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (e) hereof; and
(g) any liabilities of a type described in any of clauses (a)
through (f) hereof of such Person resulting from such Person being a
general partner or member of a joint venture, whether by provision of
applicable law, contract or otherwise.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is the greater of (i)
9.12% per annum or (ii) 2% over the rate of interest publicly announced by The
Chase Manhattan Bank in New York, New York as its "base" or "prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that
the book value of such Subsidiary Stock represents of the book value of
all of the outstanding capital stock of such Subsidiary (assuming, in
making such calculations, that all Securities convertible into such
capital stock 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 the disposition thereof, in good
faith by the Company.
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"Distribution" means, in respect of any corporation, association or
other business entity:
(a) dividends or other distributions or payments on capital
stock or other equity interest of such corporation, association or
other business entity (except distributions in such stock or other
equity interest); and
(b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase
such stock or other equity interests (except when solely in exchange
for such stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale of such stock or
other equity interests.
"EBITDA" means, with respect to any period, Consolidated Net Income for
such period plus all amounts deducted in the computation thereof on account of
all (a) Interest Charges during such period, (b) income taxes of the Company and
its Subsidiaries during such period, and (c) amortization and depreciation
expense of the Company and its Subsidiaries during such period, all determined
on a consolidated basis in accordance with GAAP.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"European Community Countries" means Belgium, Denmark, France, Germany,
Ireland, Luxembourg, Netherlands, Spain and the United Kingdom.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
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"Governmental Authority" means
(a) the government of the United States of America or any
State or other political subdivision thereof, or
(b) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or
(c) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Debt or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Debt or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such Debt or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of any other Person to make payment of the
Debt or obligation; or
(d) otherwise to assure the owner of such Debt or obligation
against loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor
under any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
B-5
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Subsidiaries in accordance with
GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries
(including imputed interest on Capital Lease Obligations) deducted in
determining Consolidated Net Income for such period, and (b) all debt discount
and expense amortized or required to be amortized in the determination of
Consolidated Net Income for such period, all determined in accordance with GAAP.
"Interest Charges Coverage Ratio" means, at any time, the ratio of (a)
EBITDA for the period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such time to (b) Interest Charges for such period.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, indebtedness or other obligation or Security, or by
loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Investment Company" means any investment company registered under the
Investment Company Act of 1040, as amended.
"Iowa Electric Retail Distribution Business" means all or substantially
all the portion of the non-wholesale, non-industrial electric distribution
business located in Iowa which is currently owned and operated by MidAmerican
Energy Company, a wholly-owned Subsidiary of MidAmerican Energy Holdings
Company.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, profits or prospects of the
Company and its Subsidiaries taken as a whole.
B-6
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, profits, prospects
or properties of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, or (c) the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Merger" is defined in Section 5.3.
"MidAmerican Energy Holdings Company" means MidAmerican Energy Holdings
Company, an Iowa corporation, the beneficial owner of 100% of the outstanding
capital stock of the Company.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Net Proceeds Amount" means, with respect to any Transfer of any
Property by any Person, an amount equal to the difference of
(a) 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
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
"Net Proceeds of Capital Stock" means, with respect to any period, cash
proceeds (net of all costs and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting and brokerage fees and
expenses), received by the Company and its Subsidiaries during such period, from
the sale of all capital stock (other than Redeemable capital stock) of the
Company.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
B-7
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Priority Debt" means, without duplication, the sum of (a) all Debt of
the Company secured by any Lien with respect to any property owned by the
Company or any of its Subsidiaries, (b) all Debt of Subsidiaries (except Debt
owed to the Company or a Wholly-Owned Subsidiary).
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, ▇▇▇▇▇▇
or inchoate.
"Property Reinvestment Application" means, with respect to any Transfer
of property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by the Company or any Subsidiary of
long-term assets of a similar nature.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Redeemable" means, with respect to the capital stock of any Person,
each share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or
otherwise retired or extinguished, or convertible into Debt of such
Person (i) at a fixed or determinable date, whether by operation of
sinking fund or otherwise, (ii) at the option of any Person other than
such Person, or (iii) upon the occurrence of a condition not solely
within the control of such Person; or
(b) convertible into other Redeemable capital stock.
"Restricted Investments" means all Investments except the following:
(a) Investments in commercial paper maturing in 270 days or
less from the date of issuance which, at the time of acquisition by the
Company or any Subsidiary, is accorded the highest rating by Standard &
Poor's Corporation, ▇▇▇▇▇'▇ Investors Service, Inc. or other nationally
recognized credit rating agency of similar standing;
(b) Investments in direct obligations of the United States of
America or any agency or instrumentality of the United States of
America, the payment or guarantee of which constitutes a full faith and
credit obligation of the United States of America, in either case,
maturing in twelve months or less from the date of acquisition thereof,
excluding, however, Investments which constitute derivative securities
such as mortgage-backed "Ios" or "Pos" and mortgage pass-through
certificates or Investments of a similar nature or type;
B-8
(c) Investments in certificates of deposit or similar instruments
maturing within one year from the date of issuance thereof, issued by a bank or
trust company organized under the laws of the:
(i) United States or any state thereof, having capital,
surplus and undivided profits aggregating at least $1,000,000,000 and
whose long-term certificates of deposit or similar instruments are, at
the time of acquisition thereof by the Company or a Subsidiary, rated A
or better by S&P, Duff & ▇▇▇▇▇▇ or ▇▇▇▇▇ Investors' Service
Incorporated or A2 or better by Moody's; or
(ii) Canada, any European Community Country, Japan or any
other country, having capital, surplus and undivided profits
aggregating at least $1,000,000,000 and whose commercial paper is, at
the time of acquisition thereof by the Company or a Subsidiary, rated
a-1 or better by S&P or P1 or better by Moody's or whose long-term
certificates of deposit or similar instruments are, at the time of
acquisition thereof by the Company or a Subsidiary, rated AA or better
by S&P or Aa2 or better by Moody's;
(d) Investments in master note or deposit arrangements or money market
programs which invest solely in Securities of the type described in the
subparagraphs (a), (b) or (c) hereof;
(e) Investments in money market programs of Investment Companies which,
at the time of acquisition by the Company or any Subsidiary, are rated A-1 or
better by S&P or P-1 or better by Moody's or, if such money market programs are
not rated, a substantial majority of the Investments of such money market
programs are rated A-1 or better by S&P or P-1 or better by Moody's;
(f) Investments by the Company and its Subsidiaries in and to
Subsidiaries, including any Investment in a Person which, after giving effect to
such Investment, will become a Subsidiary;
(g) loans or advances of sales commissions and expenses in the usual
and ordinary course of business to real estate sales agents which are incidental
to carrying on the business of the Company or any Subsidiary;
(h) Investments existing on the date of the Closing and disclosed in
Schedule 10.5;
(i) Investments in Repurchase Agreements;
(j) loans or advances to MidAmerican Energy Holdings Company or any of
its Affiliates, provided that the aggregate principal amount of all such loans
or advances shall not exceed $10,000,000;
B-9
(k) Investments in Swaps or interest rate agreements designed
to protect the Company and its Subsidiaries against (i) fluctuations in
interest rates in respect of Debt incurred or to be incurred, which
obligations do not exceed the aggregate principal amount of such Debt,
or (ii) fluctuations in the value of Investments in fixed-rate
Securities resulting from a change in interest rates, in each case
entered into in the ordinary course of business and not for
speculation, provided that the long-term senior unsecured debt
obligations of the counterparty to such Investments are rated, at the
time of the making of such Investments, A- or better by S&P or A3 or
better by Moody's; and
(l) Investments in joint ventures or other entities engaged in
the same business as the Company and its Subsidiaries in which the
Company and its Subsidiaries shall have an equity ownership interest of
less than a majority of all outstanding equity ownership interests of
such entities, provided that the aggregate amount of all such
Investments shall not at any time exceed $10,000,000.
As of any date of determination, each Restricted Investment shall be
valued at the greater of:
(x) the amount at which such Restricted Investment is shown on
the books of the Company or any of its Subsidiaries (or zero if such
Restricted Investment is not shown on any such books); and
(y) either
(i) in the case of any Guaranty of the obligation of
any Person, the amount which the Company or any of its
Subsidiaries has paid on account of such obligation less any
recoupment by the Company or such Subsidiary of any such
payments, or
(ii) in the case of any other Restricted Investment,
the excess of (x) the greater of (A) the amount originally
entered on the books of the Company or any of its Subsidiaries
with respect thereto and (B) the cost thereof to the Company
or its Subsidiary over (y) any return of capital (after income
taxes applicable thereto) upon such Restricted Investment
through the sale or other liquidation thereof or part thereof
or otherwise.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State thereof,
(ii) which has capital, surplus and undivided profits aggregating at least
$1,000,000, and (iii) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank or trust company) shall have been given a rating
of "A" or better by S&P, "A2" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
B-10
"Acceptable Broker-Dealer" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange Act and
(ii) whose long-term unsecured debt obligations shall have been given a rating
of "A" or better by S&P, "A2" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more United States
Governmental Securities in an aggregate principal amount at least equal to the
amount of the Transfer Price (defined below) to the Company or any of its
Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer against a
transfer of funds (the "Transfer Price") by the Company or such Subsidiary to
such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous
agreement by the Company or such Subsidiary, in connection with such transfer of
funds, to transfer to such Acceptable Bank or Acceptable Broker-Dealer the same
or substantially similar United States Governmental Securities for a price not
less than the Transfer Price plus a reasonable return thereon at a date certain
not later than 365 days after such transfer of funds,
(b) in respect of which the Company or such Subsidiary shall have the
right, whether by contract or pursuant to applicable law, to liquidate such
agreement upon the occurrence of any default thereunder, and
(c) in connection with which the Company or such Subsidiary, or an
agent thereof, shall have taken all action required by applicable law or
regulations to perfect a Lien in such United States Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc.
"United States Governmental Security" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United States
of America pursuant to authority granted by the Congress of the United States of
America, so long as such obligation or guarantee shall have the benefit of the
full faith and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United States of
America.
"Restricted Payment" means
(a) any Distribution in respect of the Company or any Subsidiary of the
Company (other than on account of capital stock or other equity interests of a
Subsidiary of the Company owned legally and beneficially by the Company or
another Subsidiary of the Company), including, without limitation, any
Distribution resulting in the acquisition by the Company of Securities which
would constitute treasury stock, and
B-11
(b) any payment, repayment, redemption, retirement, repurchase or other
acquisition, direct or indirect, by the Company or any Subsidiary of, on account
of, or in respect of, the principal of any Subordinated Debt (or any installment
thereof) prior to the regularly scheduled maturity date thereof (as in effect on
the date such Subordinated Debt was originally incurred).
For purposes of this Agreement, the amount of any Restricted Payment
made in property shall be the greater of (x) the Fair Market Value of such
property (as determined in good faith by the board of directors (or equivalent
governing body) of the Person making such Restricted Payment) and (y) the net
book value thereof on the books of such Person, in each case determined as of
the date on which such Restricted Payment is made.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security" has the meaning set forth in section 2(1) of the Securities
Act of 1933, as amended.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subordinated Debt" means any Debt that is in any manner subordinated
in right of payment or security in any respect to Debt evidenced by the Notes.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
B-12
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps and similar obligations obligating such Person to
make payments, whether periodically or upon the happening of a contingency.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock. For purposes of determining the
application of the Net Proceeds Amount in respect of any Transfer, the Company
may designate any Transfer as one or more separate Transfers each yielding a
separate Net Proceeds Amount.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
B-13
SCHEDULE 5.4(A)(i)
ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES
SUBSIDIARY NAME STATE OF ORGANIZATION PERCENT OWNED OWNER
CBS HOME Real Estate Company Nebraska 100% The Company
CBS Brokerage Systems, Inc. Nebraska 96.45% CBS HOME Real Estate Company
Select Relocation Services, Inc. Nebraska 100% CBS HOME Real Estate Company
Real Estate Referral Network, Inc. Nebraska 100% CBS HOME Real Estate Company
Leasing Associates, Inc. Nebraska 100% CBS HOME Real Estate Company
MRT. Inc. Nebraska 100% CBS HOME Real Estate Company
▇.▇. ▇▇▇▇▇▇▇ Residential, Inc. Iowa 100% The Company
Plaza Financial Service L.L.C. Kansas 100% ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc.
Plaza Mortgage Services L.L.C. Kansas 100% Plaza Financial Service
▇.▇. ▇▇▇▇▇▇▇ Alliance, Inc. Kansas 100% ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc.
Iowa Realty Co., Inc. Iowa 100% The Company
Iowa Title Company Iowa 100% Iowa Realty Co., Inc.
Iowa Realty Insurance Agency, Inc. Iowa 100% Iowa Realty Co., Inc.
IMO Co., Inc. Missouri 100% Iowa Realty Co., Inc.
Midland Escrow Services, Inc. Iowa 100% Iowa Realty Co., Inc.
The Referral Co. Iowa 100% Iowa Realty Co., Inc.
First Realty, Ltd. Iowa 100% Iowa Realty Co., Inc.
Edina Financial Services, Inc. Minnesota 100% Iowa Realty Co., Inc.
Edina Realty, Inc. Minnesota 100% Edina Financial Services, Inc.
SCHEDULE 5.4
(to Note Purchase Agreement)
SUBSIDIARY NAME STATE OF ORGANIZATION PERCENT OWNED OWNER
Edina Realty Title, Inc. Minnesota 100% Edina Financial Services, Inc.
Edina Realty Insurance Agency, Inc. Minnesota 100% Edina Financial Services, Inc.
Edina Realty Mortgage, Inc. Minnesota 100% Edina Financial Services, Inc.
Edina Realty Inc. Wisconsin 100% Edina Realty, Inc., a Minnesota corporation
SCHEDULE 5.4(A)(ii)
AFFILIATES (OTHER THAN SUBSIDIARIES)
A/C Security, Inc.
AmGas, Inc.
Bettendorf Lock & Security Services, Inc.
CBEC Railway Inc.
CHRS Inc.
Cimmred Leasing Company
Dakota Dunes Development Company
DCCO, Inc.
Diversified Electronics, Ltd.
Edina Realty Mortgage, L.L.C.
Home Real Estate, Inc. (Nebraska)
InterCoast Capital Company
InterCoast Energy Company
InterCoast Global Management, Inc.
InterCoast Power Company
InterCoast Power Marketing Company
InterCoast Sierra Power Company
InterCoast Trade & Resources Inc.
IWG Co. 8
MHC Investment Company
MidAmerican Capital Company
MidAmerican Energy Company
MidAmerican Energy Funding Company
MidAmerican Energy Holdings Company
MidAmerican Rail Inc.
MidAmerican Security Company
MidAmerican Services Company
Midwest Capital Group, Inc.
MRT, Inc.
MWR Capital Inc.
Pro-Tec Alarm Systems & Service, Inc.
▇▇▇▇▇▇ Security, Inc.
The Mortgage Group, LLC
Title Information Services, L.L.C.
TTP, Inc. of South Dakota
SCHEDULE 5.4(A)(iii)
COMPANY'S DIRECTORS AND SENIOR OFFICERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO, Chairman of the Board
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President -- Operations and Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President -- Operations and Director
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, CFO and Director
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Vice President, General Counsel and Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Treasurer and Assistant Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇, Controller
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary and Assistant Treasurer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director
FINANCIAL STATEMENTS
Audited Consolidated Financial Statements and Consolidating Schedules of AmerUs
Home Services, Inc. and Subsidiaries, December 31, 1997.
▇.▇. ▇▇▇▇▇▇▇ Real Estate and Subsidiary. Consolidated Financial Statements, June
30, 1998 and December 31, 1997.
CBS Real Estate Co. Financial Statements and Accountant's Report for the Years
Ended December 31, 1997 and 1996.
Home Real Estate Company of Omaha Financial Statements with Accountant's Review
Report for the Years Ended December 31, 1997 and 1996.
SCHEDULE 5.5
(to Note Purchase Agreement)
PATENTS, ETC.
None
SCHEDULE 5.11
(to Note Purchase Agreement)
SCHEDULE 5.15
CONSOLIDATED DEBT AND PRIORITY DEBT
CONSOLIDATED DEBT 8/31/98
THE COMPANY
Revolving Line of Credit owing to $46,862,000
MidAmerican Energy Holdings Company
Purchase Price contingency re: CBS Real Estate Company $ 1,000,000
and ▇.▇. ▇▇▇▇▇▇▇ Real Estate
PRIORITY DEBT
IOWA REALTY CO., INC. AND SUBSIDIARIES:
▇▇▇▇▇' Non-Compete Agreement $ 766,392
▇▇▇▇▇ Non-Compete Agreement $ 165,756
CBS HOME REAL ESTATE COMPANY:
Revolving Line of Credit, Nebraska State Bank of Omaha. $ 577,850
Debtor: The Mortgage Group, LLC (50% owned by CBS
HOME Real Estate Company)
Guaranteed by CBS HOME Real Estate Company
▇.▇. ▇▇▇▇▇▇▇ RESIDENTIAL, INC.:
Mercantile Bank -
$2,000,000 line of credit $ 0
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Company $ 200,000
Highwoods, Inc. $ 440,347
Capitalized Leases described on Schedule 10.6 $ 56,204
PLAZA MORTGAGE SERVICES
Mercantile Bank Loan
$7,000,000 line of credit $ 1,212,769
TOTAL CONSOLIDATED DEBT $51,281,318
===========
PRIORITY DEBT $ 3,419,318
===========
SCHEDULE 5.15
(to Note Purchase Agreement)
EXISTING INVESTMENTS
▇.▇. ▇▇▇▇▇▇▇ RESIDENTIAL, INC.
Reliance Relocation Services, Inc. 3000 shares common stock
EDINA REALTY, INC.
The Realty Alliance, Inc. 10,000 shares common stock
Reliance Relocation Services, Inc. 3,000 shares Common Stock
EDINA REALTY TITLE, INC. 20% member
Title Information Services, L.L.C.
IOWA TITLE COMPANY
Silver Screen Partners IV LP 10 Units
Senior Income Fund, LP 5,000 Units
IMO CO., INC.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
CBS HOME REAL ESTATE COMPANY
Home Real Estate, Inc. (Nebraska) 25 shares
Realty Alliance, Inc. 10,000 shares
Reliance Relocation Services, Inc. 3000 shares
NewCo. Investments, Inc. 600 shares
The Mortgage Group, L.L.C. 50% member
EDINA FINANCIAL SERVICES, INC. 50% member (as of 11/1/98)
Edina Realty Mortgage, L.L.C.
▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇. Onamia
▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇. N.
▇▇▇ ▇▇▇ ▇▇▇. ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Dr.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇ REALTY CO., INC.
▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
SCHEDULE 10.5
(to Note Purchase Agreement)
SCHEDULE 10.6(e)
LIENS
Debtor: Plaza Mortgage Services
Secured Party: Mercantile Bank ($7,000,000 line of credit)
Collateral: Residential first mortgages
Debt: $1,212,769 (August 31, 1998)
Debtor: ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc.
Secured Party: Mercantile Bank ($2,000,000 line of credit)
Collateral: Pending sales
Debt: $0 (August 31, 1998)
Debtor: ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc.
Creditor: ▇▇▇▇▇ Equipment
Collateral: Various office equipment (capitalized lease)
Debtor: ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc. and Plaza Mortgage Service L.L.C.
Creditor: Mid-Continent Leasing Service (lease sold to People's National Bank)
Collateral: Ricoh Copier (capitalized lease)
Debtor: ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc. and Plaza Mortgage Service L.L.C.
Creditor: Allied Capital/College Leasing
Collateral: Konica Copier/Canon Fax (capitalized lease)
Debtor: ▇.▇. ▇▇▇▇▇▇▇ Residential, Inc.
Creditor: Mid-Continent Leasing Service (lease sold to Mercantile Bank)
Collateral: Copiers (capitalized lease)
Debtor: Plaza Mortgage Services L.L.C.
Creditor: ▇▇▇▇▇ Rents
Collateral: Bookcase, file (capitalized lease)
Debtor: Plaza Mortgage Services L.L.C.
Creditor: ▇▇▇▇▇ Rents
Collateral: Executive desk, chairs, file (capitalized lease)
SCHEDULE 10.6
(to Note Purchase Agreement)
[FORM OF NOTE]
MIDAMERICAN REALTY SERVICES COMPANY
7.12% SENIOR NOTE DUE NOVEMBER 1, 2010
No. [_______] [Date]
$[__________] PPN 59562# AA 0
FOR VALUE RECEIVED, the undersigned, MIDAMERICAN REALTY SERVICES
COMPANY (herein called the "Company"), a corporation organized and existing
under the laws of the State of Iowa, hereby promises to pay to
[_____________________] or registered assigns, the principal sum of
[______________] DOLLARS on November 1, 2010 with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 7.12% per annum from the date hereof, payable
semiannually, on the first day of May and November in each year, commencing with
the May 1 or November 1 next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreement referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 9.12% or (ii) 2%
over the rate of interest publicly announced by The Chase Manhattan Bank from
time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at The Chase Manhattan Bank in New York, New York or at such other place
as the Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of November 1,
1998 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
EXHIBIT 1
(to Note Purchase Agreement)
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.
MIDAMERICAN REALTY SERVICES COMPANY
By
--------------------------------
[Title:]
FORM OF OPINION OF IN-HOUSE COUNSEL
OF THE COMPANY
The closing opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq., in-house counsel
of the Company, which is called for by Section 4.4 of the Note Purchase
Agreement, shall be dated the date of Closing and addressed to the Purchasers,
shall be satisfactory in scope and form to each Purchaser and shall be to the
effect that:
1. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, has
the corporate power and the corporate authority to execute and perform the Note
Purchase Agreement and to issue the Notes and has the full corporate power and
the corporate authority to conduct the activities in which it is now engaged and
is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business transacted by it makes such licensing or
qualification necessary except in jurisdictions where the failure to be so
qualified or licensed would not have a material adverse affect on the business
of the Company.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and is
duly licensed or qualified and is in good standing in each jurisdiction in which
the character of the properties owned or leased by it or the nature of the
business transacted by it makes such licensing or qualification necessary except
in jurisdictions where the failure to be so qualified or licensed would not have
a material adverse affect on the business of such Subsidiary, and all of the
issued and outstanding shares of capital stock of each such Subsidiary have been
duly issued, are fully paid and non-assessable and are owned by the Company, by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
3. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by the
Company and
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).
5. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any state governmental body is
necessary in connection with the execution and delivery of the Note Purchase
Agreement or the Notes.
6. The issuance and sale of the Notes and the execution, delivery and
performance by the Company of the Note Purchase Agreement do not conflict with
or violate any provision of any law, statute, rule or regulation applicable to
the Company or conflict with or result in any breach of any of the provisions of
or constitute a default under or result in the creation or imposition of any
Lien upon any of the property of the Company pursuant to the provisions of the
Articles of Incorporation or By-laws of the Company or any agreement or other
instrument known to such counsel to which the Company is a party or by which the
Company may be bound.
7. There are no actions, suits or proceedings pending or, to the
knowledge of such counsel after due inquiry, threatened against or affecting the
Company or any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which, if adversely determined, would have a
Materially Adverse Effect. To the knowledge of such counsel, neither the Company
nor any Subsidiary is in default with respect to any court or governmental
authority, or arbitration board or tribunal.
The opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq. shall cover such other
matters relating to the sale of the Notes as each Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and other officers of the Company.
EXHIBIT 4.4(a)-2
(to Note Purchase Agreement)
FORM OF OPINION OF COUNSEL
TO THE COMPANY
The closing opinion of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to
the Company, which is called for by Section 4.4 of the Note Purchase Agreement,
shall be dated the date of Closing and addressed to the Purchasers, shall be
satisfactory in scope and form to each Purchaser and shall be to the effect
that:
1. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).
2. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors' rights generally,
and general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any Federal governmental body is
necessary in connection with the execution and delivery of the Note Purchase
Agreement or the Notes.
4. The issuance and sale of the Notes and the execution, delivery and
performance by the Company of the Note Purchase Agreement do not conflict with
or violate any provision of any law, statute, rule or regulation applicable to
the Company or conflict with or result in any breach of any of the provisions of
or constitute a default under or result in the creation or imposition of any
Lien upon any of the property of the Company pursuant to the provisions of the
Articles of Incorporation or By-laws of the Company.
5. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under existing
law, require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.
6. Neither the issuance of the Notes nor the application of the
proceeds of the
EXHIBIT 4.4(b)
(to Note Purchase Agreement)
sale of the Notes will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued pursuant
thereto, including, without limitation, Regulation U, T or X of the Board of
Governors of the Federal Reserve System.
7. The Company is not an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
8. The Company is a "subsidiary" of MidAmerican Energy Holdings
Company ("MEHC"), which is a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935. MEHC is exempt from regulation under
such Act pursuant to Section 3(a)(1) thereof (other than Section 9(a)(2)
thereof) and the rules and regulations thereunder promulgated by the Commission
and the Company is similarly exempt from such regulation.
The opinion of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall cover such
other matters relating to the sale of the Notes as each Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and other officers of the Company.
EXHIBIT 4.4(b)-2
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The closing opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the
Purchasers, called for by Section 4.4 of the Note Purchase Agreement, shall be
dated the date of Closing and addressed to each Purchaser, shall be satisfactory
in form and substance to each Purchaser and shall be to the effect that:
1. The Company is a corporation, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the corporate power
and the corporate authority to execute and deliver the Note Purchase Agreement
and to issue the Notes.
2. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the date
hereof have been duly executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under existing
law, require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.
The opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall also state that the opinion of
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Company, is satisfactory in
scope and form to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and that, in their opinion, the Purchasers
are justified in relying thereon.
With respect to matters of fact upon which such opinion is based,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may rely on appropriate certificates of public officials and
officers of the Company and upon representations of the Company and the
Purchasers delivered in connection with the issuance and sale of the Notes.
EXHIBIT 4.4(c)
(to Note Purchase Agreement)
In rendering the opinion set forth in paragraph 1 above, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Articles of Incorporation certified by, and a certificate of
good standing of the Company from, the Secretary of State of the State of Iowa
the By-laws of the Company and the general business corporation law of the State
of Iowa. The opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ is limited to the laws of the State
of Illinois, the general business corporation law of the State of Iowa and the
Federal laws of the United States.