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Exhibit 10.18(a)
ALLEGHANY CORPORATION
ALLEGHANY PROPERTIES, INC.
NOTE PURCHASE AGREEMENT
DATED AS OF DECEMBER 11, 1998
$40,000,000 6.83% SENIOR NOTES DUE DECEMBER 11, 2004
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TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF NOTES............................................................................... 1
1.1 Issue of Notes.................................................................................. 1
1.2 The Closing..................................................................................... 1
1.3 Purchase for Investment......................................................................... 2
1.4 Failure To Deliver, Failure of Conditions....................................................... 4
1.5 Expenses........................................................................................ 4
2. WARRANTIES AND REPRESENTATIONS........................................................................... 5
2.1 Nature of Business.............................................................................. 5
2.2 Financial Statements; Indebtedness; Material Adverse Change..................................... 5
2.3 Subsidiaries and Affiliates..................................................................... 6
2.4 Pending Litigation.............................................................................. 6
2.5 Title to Properties............................................................................. 6
2.6 Patents, Trademarks, Licenses, etc.............................................................. 7
2.7 Taxes........................................................................................... 7
2.8 Full Disclosure................................................................................. 7
2.9 Corporate Organization and Authority............................................................ 8
2.10 Restrictions on Parent, Company and SPHI........................................................ 8
2.11 Compliance with Law............................................................................. 9
2.12 Pension Plans................................................................................... 9
2.13 Certain Laws.................................................................................... 10
2.14 Environmental Compliance........................................................................ 10
2.15 Sale is Legal and Authorized; Obligations are Enforceable....................................... 11
2.16 Governmental Consent............................................................................ 12
2.17 Private Offering................................................................................ 12
2.18 No Defaults..................................................................................... 12
2.19 Use of Proceeds................................................................................. 13
2.20 Year 2000 Compliant............................................................................. 13
3. CLOSING CONDITIONS....................................................................................... 13
3.1 Opinions of Counsel............................................................................. 13
3.2 Warranties and Representations True............................................................. 14
3.3 Officers' Certificates.......................................................................... 14
3.4 Legality........................................................................................ 14
3.5 Private Placement Number........................................................................ 14
3.6 Expenses........................................................................................ 15
3.7 Other Purchasers................................................................................ 15
3.8 Proceedings Satisfactory........................................................................ 15
3.9 Compliance with this Agreement.................................................................. 15
4. PURCHASERS' SPECIAL RIGHTS............................................................................... 15
4.1 Direct Payment.................................................................................. 15
4.2 Delivery Expenses............................................................................... 16
4.3 Issuance Taxes.................................................................................. 16
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5. PREPAYMENTS.............................................................................................. 16
5.1 Required Prepayments............................................................................ 16
5.2 Optional Prepayments............................................................................ 16
5.3 Prepayment upon a Downgrade Event............................................................... 17
5.4 Partial Prepayment Pro Rata..................................................................... 18
5.5 Notation of Notes on Prepayment................................................................. 19
5.6 No Other Optional Prepayments................................................................... 19
6. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................................................ 19
6.1 Registration of Notes........................................................................... 19
6.2 Exchange of Notes............................................................................... 19
6.3 Replacement of Notes............................................................................ 20
7. COVENANTS................................................................................................ 20
7.1 Payment of Taxes and Claims..................................................................... 20
7.2 Maintenance of Properties; Corporate Existence; etc............................................. 21
7.3 Payment of Notes and Maintenance of Office...................................................... 22
7.4 Pension Plans................................................................................... 22
7.5 Line of Business................................................................................ 23
7.6 Indebtedness.................................................................................... 23
7.7 Restricted Investments and Restricted Payments.................................................. 24
7.8 Operating Expenses.............................................................................. 25
7.9 Merger and Consolidation........................................................................ 25
7.10 Transfers of Property........................................................................... 26
7.11 Purchase Obligation of the Parent............................................................... 27
7.12 Transactions with Affiliates.................................................................... 27
7.13 Liens........................................................................................... 27
7.14 Private Offering................................................................................ 29
7.15 Defeasance...................................................................................... 29
7.16 Performance of Agreement........................................................................ 31
8. INFORMATION AS TO PARENT AND COMPANY..................................................................... 31
8.1 Financial and Business Information.............................................................. 31
8.2 Officers' Certificates.......................................................................... 37
8.3 Accountants' Certificates....................................................................... 38
8.4 Inspection...................................................................................... 38
8.5 Confidential Information........................................................................ 38
9. EVENTS OF DEFAULT........................................................................................ 40
9.1 Nature of Events................................................................................ 40
9.2 Default Remedies................................................................................ 42
9.3 Annulment of Acceleration of Notes.............................................................. 44
10. INTERPRETATION OF THIS AGREEMENT......................................................................... 44
10.1 Terms Defined................................................................................... 44
10.2 GAAP............................................................................................ 60
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10.3 Directly or Indirectly.......................................................................... 60
10.4 Section Headings and Table of Contents and Construction......................................... 60
10.5 Governing Law................................................................................... 60
11. MISCELLANEOUS............................................................................................ 61
11.1 Communications.................................................................................. 61
11.2 Reproduction of Documents....................................................................... 62
11.3 Survival........................................................................................ 62
11.4 Successors and Assigns.......................................................................... 62
11.5 Amendment and Waiver............................................................................ 63
11.6 Payments, When Received......................................................................... 64
11.7 Entire Agreement................................................................................ 64
11.8 Duplicate Originals, Execution in Counterpart................................................... 65
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing
Annex 3 -- Information as to Parent and Company
Annex 4 -- Designated Disposition Values and Reserves for
Disposition
Exhibit A -- Form of 6.83% Senior Note Due December 11, 2004
Exhibit B1 -- Form of Company Counsel's Closing Opinion
Exhibit B2 -- Form of Special Counsel's Closing Opinion
Exhibit C1 -- Form of Officers' Certificate - Parent
Exhibit C2 -- Form of Officers' Certificate - Company
Exhibit D1 -- Form of Secretary's Certificate - Parent
Exhibit D2 -- Form of Secretary's Certificate - Company
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ALLEGHANY CORPORATION
ALLEGHANY PROPERTIES, INC.
NOTE PURCHASE AGREEMENT
$40,000,000 6.83% SENIOR NOTES DUE DECEMBER 11, 2004
Dated as of December 11, 1998
UNITED OF OMAHA LIFE INSURANCE COMPANY
MUTUAL OF ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
ALLEGHANY CORPORATION (together with its successors and assigns, the
"Parent"), a Delaware corporation, and ALLEGHANY PROPERTIES, INC. (together with
its successors and assigns, the "Company"), a Delaware corporation, hereby agree
with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 ISSUE OF NOTES.
The Company will authorize the issuance of Forty Million Dollars
($40,000,000) in aggregate principal amount of its six and eighty-three
one-hundredths percent (6.83%) Senior Notes due December 11, 2004 (the "Notes").
Each Note shall be in the form of the Note set out in Exhibit A. The term "Note"
as used herein shall include each Note delivered pursuant to this Agreement and
each Note delivered in substitution or exchange for any such Note pursuant to
Section 6.2 or Section 6.3.
1.2 THE CLOSING.
(a) PURCHASE AND SALE OF NOTES. The Company hereby agrees to
sell to you and you hereby agree to purchase from the Company, in
accordance with the provisions hereof, the aggregate principal amount
of Notes set forth below your name on Annex 1 at one hundred percent
(100%) of the principal amount thereof.
(b) THE CLOSING. The closing (the "Closing") of the Company's
sale of Notes
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shall be held on December 11, 1998 (the "Closing Date") at 10:00 a.m.,
Hartford, Connecticut time, at the office of your special counsel, ▇▇▇▇
& ▇▇▇▇▇▇, a Professional Corporation (the "Special Counsel"), ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At the Closing, the Company shall
deliver to you one or more Notes (as set forth below your name on Annex
1), in the denominations indicated on Annex 1, in the aggregate
principal amount of your purchase, dated the Closing Date and payable
to you or payable as indicated on Annex 1, against payment by federal
funds wire transfer in immediately available funds of the purchase
price thereof, as directed by the Company on Annex 2. All transactions
contemplated by this Agreement will be considered to have taken place
simultaneously on the Closing Date and no delivery of documents or
payments will be considered to have been made until all such
transactions are completed.
(c) OTHER PURCHASERS. Contemporaneously with the execution and
delivery hereof, the Company is entering into a separate Note Purchase
Agreement identical (except for the name and signature of the
purchaser) hereto (this Agreement and such other separate Note Purchase
Agreements being herein sometimes referred to collectively as the "Note
Purchase Agreement") with each other purchaser (the "Other Purchasers")
listed on Annex 1, providing for the sale to each Other Purchaser of
Notes in the aggregate principal amount set forth below its name on
such Annex. The sales of the Notes to you and to each Other Purchaser
are to be separate sales.
1.3 PURCHASE FOR INVESTMENT.
(a) PURCHASE FOR INVESTMENT. You represent to the Company that
you are purchasing the Notes listed on Annex 1 below your name for your
own account for investment and with no present intention of
distributing the Notes or any part thereof, but without prejudice to
your right at all times to
(i) sell or otherwise dispose of all or any part of
the Notes under a registration statement filed under the
Securities Act, or in a transaction exempt from the
registration requirements of the Securities Act, and
(ii) have control over the disposition of all of your
assets to the fullest extent required by any applicable
insurance law.
It is understood that, in making the representations set out in Section
2.15(a) and Section 2.16, the Company is relying, to the extent
applicable, upon your representation in the immediately preceding
sentence.
(b) ERISA. You represent that at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to
be purchased by you hereunder.
(i) the Source is an "insurance company general
account" as defined in Department of Labor Prohibited
Transaction Exemption ("PTE") 95-60 (60 FR
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35925, July 12, 1995) and in respect thereof you represent
that there is no "employee benefit plan" (as defined in
section 3(3) of ERISA and section 4975(e)(1) of the IRC,
treating as a single plan all plans maintained by the same
employer or employee organization or affiliate thereof) with
respect to which the amount of the general account reserves
and liabilities of all contracts held by or on behalf of such
plan exceed 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 filed with your state of domicile and that
such acquisition is eligible for and satisfies the other
requirements of such exemption; or
(ii) the Source is either (A) an insurance company
pooled separate account, within the meaning of ▇▇▇ ▇▇-▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇ (▇) a bank collective investment
fund, within the meaning of the PTE 1-38 (issued July 12,
1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (ii), 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
(iii) 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 (A) the identity of such QPAM and (B) the names of all
employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) 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 (v); or
(vi) the Source is an insurance company separate
account maintained solely in connection with 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
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annuitant) are not affected in any manner by the investment
performance of the separate account; or
(vii) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the
coverage of ERISA.
As used in this Section 1.3(b), the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
1.4 FAILURE TO DELIVER, FAILURE OF CONDITIONS.
If at the Closing the Company fails to tender to you the Notes to be
purchased by you thereat, or if the conditions specified in Section 0 to be
fulfilled at the Closing have not been fulfilled, you may thereupon elect to be
relieved of all further obligations hereunder. Nothing in this Section 0 shall
operate to relieve the Parent or the Company from any of its obligations
hereunder or to waive any of your rights against the Parent or the Company.
1.5 EXPENSES.
(a) GENERALLY. Whether or not the Notes are sold, the Company
shall promptly (and in any event within thirty (30) days of receiving
any statement or invoice therefor) pay all reasonable fees, expenses
and costs relating hereto, including but not limited to:
(i) the cost of reproducing this Agreement and the
Notes;
(ii) the reasonable fees and disbursements of the
Special Counsel;
(iii) the cost of delivering to your home office or
custodian bank, insured to your satisfaction, the Notes
purchased by you at the Closing;
(iv) the reasonable fees, expenses and costs incurred
complying with each of the conditions to closing set forth in
Section 0; and
(v) the expenses relating to the consideration,
negotiation, preparation or execution of any amendments,
waivers or consents pursuant to the provisions hereof
(including, without limitation, the reasonable allocated cost
of your counsel who are your employees or your affiliates'
employees), whether or not any such amendments, waivers or
consents are executed.
(b) COUNSEL. Without limiting the generality of the foregoing,
it is agreed and understood that the Company will pay, at the Closing,
the statement for reasonable fees and disbursements of the Special
Counsel presented at the Closing and the Company will also pay upon
receipt of any statement thereof, each additional statement for
reasonable fees and disbursements of the Special Counsel rendered after
the Closing in connection
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with the issuance of the Notes or of your other counsel rendered after
the Closing in connection with the matters referred to in Section
0(a)(v).
(c) SURVIVAL. The obligations of the Company under this
Section 0 shall survive the payment or prepayment of the Notes and the
termination hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes
listed on Annex 1 below your name, each of the Parent and the Company warrants
and represents, as of the Closing Date, as follows:
2.1 NATURE OF BUSINESS.
The Placement Memorandum (together with all exhibits and annexes
thereto, the "Placement Memorandum"), dated October 1998 and prepared by
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC (a copy of which previously has been
delivered to you), correctly describes the general nature of the business and
principal Properties of the Parent, the Company and the Subsidiaries as of the
Closing Date, other than the sale, paydown or repayment of certain of the Real
Estate Assets as described in Part 2.1 of Annex 3. The Company received net
proceeds from such sale, paydown or repayment of Real Estate Assets in the
aggregate amount of approximately Five Hundred Seventy-One Thousand Dollars
($571,000), all of which was retained by the Company in cash or Permitted
Investments or used for Operating Expenses.
2.2 FINANCIAL STATEMENTS; INDEBTEDNESS; MATERIAL ADVERSE CHANGE.
(a) FINANCIAL STATEMENTS. The following financial statements
(copies of which have been delivered to you):
(i) the consolidated balance sheets of the Parent and
its consolidated subsidiaries as of December 31 in the years
1997, 1996 and 1995, and the related consolidated statements
of earnings, stockholders' equity and cash flows for the
fiscal years ended on such dates, all accompanied by opinions
thereon by KPMG Peat Marwick, independent certified public
accountants, and
(ii) the unaudited consolidated balance sheet of the
Parent and its consolidated subsidiaries as of June 30, 1998,
and the related unaudited consolidated statements of earnings
and cash flows for the six (6) months ended on such date,
have been prepared in accordance with GAAP consistently applied, as at
the end of, and for, each such period (with respect to the financial
statements referenced in Section 2.2(a)(ii) above, subject to normal
year-end adjustments) and present fairly, in all material respects, the
consolidated financial position of the Parent and its consolidated
subsidiaries as of such dates and the results of their operations and
cash flows for such periods.
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(b) INDEBTEDNESS. Part 2.2(b) of Annex 3 correctly lists all
outstanding Indebtedness of the Parent, the Company and SPHI as of the
Closing Date, and provides the following information with respect to
each item of such Indebtedness:
(i) the type thereof,
(ii) the holder thereof,
(iii) the outstanding amount,
(iv) the current portion, if any, and
(v) the collateral securing such Indebtedness, if
any.
(c) MATERIAL ADVERSE CHANGE. Since December 31, 1997, other
than the spin-off of Chicago Title Corporation, excluding Alleghany
Asset Management, Inc., there has been no material change in the
business, profits, Properties or condition (financial or otherwise) of
the Parent, the Company or any of the Subsidiaries except changes in
the ordinary course of business that, in the aggregate, have not had a
Material Adverse Effect.
2.3 SUBSIDIARIES AND AFFILIATES.
Part 2.3 of Annex 3 sets forth:
(a) the name of each of the Significant Subsidiaries, its
jurisdiction of incorporation and the percentage of its Voting Stock
owned by the Parent and each other Subsidiary, and
(b) the name of each of the Affiliates that are corporations,
partnerships or joint ventures (other than Subsidiaries) and the nature
of the affiliation.
Each of the Parent and the Company has good and marketable title to all
of the shares it purports to own of the stock of each Significant Subsidiary,
free and clear in each case of any Lien except as described in Part 2.3 of Annex
3, and all such shares have been duly issued and are fully paid and
nonassessable. To the best of the Parent's knowledge, each of the Parent and the
Subsidiaries has good and marketable title to all of the shares it purports to
own of the stock of each other Subsidiary and all such shares have been duly
issued and are fully paid and nonassessable.
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2.4 PENDING LITIGATION.
There are no proceedings, actions or investigations pending or, to the
knowledge of the Parent or the Company, threatened against or affecting the
Parent, the Company or any Subsidiary in any court or before any Governmental
Authority or arbitration board or tribunal that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect. None of the Parent,
the Company or any Subsidiary is in default with respect to any judgment, order,
writ, injunction, or decree of any court, Governmental Authority or arbitration
board or tribunal that, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
2.5 TITLE TO PROPERTIES.
Each of the Parent, the Company and the Subsidiaries has good and
marketable title, of a quality commensurate with prudent standards of business
practice, to all of the Property reflected in the most recent audited statement
of financial condition referred to in Section 0(a) (except Chicago Title
Corporation which was disposed of by the Parent in a spin-off and such other
Properties which were sold or otherwise disposed of in the ordinary course of
business), free from Liens not otherwise permitted by Section 7.13. Each Real
Estate Property owned of record and beneficially by the Company (and not held
through or on behalf of a joint venture or other contracting parties) is covered
by an owners title insurance policy insuring the Company's title in fee simple
to such Real Estate Property in substantially the amount of the Designated
Disposition Value of such Real Estate Property.
2.6 PATENTS, TRADEMARKS, LICENSES, ETC.
Each of the Parent, the Company and the Subsidiaries owns, possesses or
has the right to use all of the patents, trademarks, service marks, trade names,
copyrights, licenses, and rights with respect thereto, necessary for the present
and currently planned future conduct of its business, without any known conflict
with the rights of others, except where the failure to own, possess or have such
right, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
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2.7 TAXES.
(a) RETURNS FILED; TAXES PAID. All federal and state income
tax returns and all other material tax returns required to be filed by
each of the Parent and the Company and all federal and material state
income tax returns and all other material tax returns required to be
filed by each Subsidiary in any jurisdiction have in fact been filed on
a timely basis (giving effect to any timely extensions), and all taxes,
assessments, fees and other governmental charges in respect of such
returns upon each of the Parent, the Company and such Subsidiary, and
upon any of their respective Properties, income or franchises, that are
due and payable have been paid, except for any taxes, proposed
assessments, fees or charges (i) the amount of which is not
individually or in the aggregate material in relation to the business,
profits, Properties or condition (financial or otherwise) of the
Parent, the Company and the Subsidiaries, taken as a whole, or (ii)
that are being contested in good faith and by appropriate proceedings
and for which adequate reserves have been established and exist.
Neither the Parent nor the Company knows of any other proposed
additional tax assessment against it or any such Person. All
liabilities of the Parent, the Company and such Subsidiaries with
respect to federal income taxes have been finally determined for the
fiscal years ending prior to December 31, 1992.
(b) BOOK PROVISIONS ADEQUATE. The amount of the liability for
taxes reflected in the consolidated balance sheet of the Parent and its
consolidated subsidiaries as of June 30, 1998 referred to in Section
0(a) is an adequate provision for taxes (including, without limitation,
any payment due pursuant to any tax sharing agreement) as are or may
become payable by any one or more of the Parent and its consolidated
subsidiaries in respect of all tax periods ending on or prior to such
date.
2.8 FULL DISCLOSURE.
The financial statements referred to in Section 0(a) do not, nor does
this Agreement, the Placement Memorandum or any written statement furnished by
or on behalf of the Parent or the Company to you in connection with the
negotiation of the sale of the Notes, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact known to the Parent or the Company
that the Parent or the Company has not disclosed to you in writing that has had
or, so far as the Parent or the Company can now reasonably foresee, will have a
Material Adverse Effect.
2.9 CORPORATE ORGANIZATION AND AUTHORITY.
Each of the Parent, the Company and the Significant Subsidiaries:
(a) is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
(b) has all legal and corporate power and authority to own and
operate its
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Properties and to carry on its business as now conducted and as
presently proposed to be conducted,
(c) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates and permits, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state where the failure to be so qualified or
licensed and authorized and in good standing could reasonably be
expected to have a Material Adverse Effect.
2.10 RESTRICTIONS ON PARENT, COMPANY AND SPHI.
None of the Parent, the Company or SPHI:
(a) is a party to any contract or agreement, or subject to any
charter or other corporate restriction that could reasonably be
expected to have a Material Adverse Effect,
(b) is a party to any contract or agreement that restricts the
right or ability of such corporation to incur Indebtedness, other than
this Agreement and the agreements listed in Part 2.10(b) of Annex 3,
the terms of none of which is violated by the issuance and sale of the
Notes or the execution and delivery of, or compliance with, this
Agreement by the Parent and the Company, and true, correct and complete
copies of each of which have been provided to you, and
(c) has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of the Property
of the Company or SPHI, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 7.13.
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2.11 COMPLIANCE WITH LAW.
None of the Parent, the Company or any Subsidiary is in violation of
any law, ordinance, governmental rule or regulation to which it is subject,
which violations, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
2.12 PENSION PLANS.
(a) DISCLOSURE.
(i) MATERIAL EVENTS. There are no events or
circumstances under ERISA or the IRC relating to any Pension
Plan or Multiemployer Plan that currently exist that the
Parent or the Company has not disclosed to you in writing,
except for events and circumstances that, in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect.
(ii) PLANS AND ERISA AFFILIATES. There are no Pension
Plans maintained by any one or more of the Parent, the Company
or any ERISA Affiliate whose assets, in whole or in part, are
currently managed or invested by any one or more of the
Purchasers.
(b) PROHIBITED TRANSACTIONS. Neither the execution of this
Agreement nor the purchase of the Notes by you will constitute a
"prohibited transaction" (as such term is defined in section 406 of
ERISA or section 4975 of the IRC). The representation by the Parent and
the Company in the immediately preceding sentence is made in reliance
upon and subject to the accuracy of the representations in Section
1.3(b) as to the source of funds used by you.
(c) COMPLIANCE WITH ERISA. The Parent, the Company and the
ERISA Affiliates and each Pension Plan are in compliance with ERISA,
except for such failures to comply that in the aggregate for all such
failures could not reasonably be expected to have a Material Adverse
Effect.
(d) PENSION PLAN FUNDING STATUS AND LIABILITIES.
(i) FUNDING STATUS. The present value of all
benefits, as reflected in the most recent actuarial valuation
report issued in accordance with Section 7.4, vested under
each Pension Plan does not exceed, by more than Five Hundred
Thousand Dollars ($500,000), the value of the assets of such
Pension Plan allocable to such vested benefits, as reflected
in such report.
(ii) CLOSING DATE LIABILITIES. All contributions to
all Pension Plans arising under the terms of such Pension
Plans that are due and payable by the plan sponsor as of the
Closing Date have been paid. Neither the Parent, the Company
nor any ERISA Affiliate has incurred any liability pursuant to
Title I or Title IV of
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ERISA or the penalty or excise tax or security provisions of
the IRC relating to "employee benefit plans" (as defined in
section 3 of ERISA), and no event, transaction, or condition
has occurred or exists that could result in the imposition of
any Lien on any of the Properties of the Parent, the Company
or any ERISA Affiliate, in either case pursuant to Title I or
Title IV of ERISA or pursuant to such penalty, excise tax or
security provisions of the IRC, except for such liabilities
and Liens that, in the aggregate for all such liabilities and
Liens, could not reasonably be expected to have a Material
Adverse Effect.
(iii) PBGC. No circumstance exists that constitutes
grounds under section 4042 of ERISA entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to
administer, any Pension Plan or trust created thereunder, nor
has the PBGC instituted any such proceeding.
(e) REPORTABLE EVENTS. No Pension Plan or trust created
thereunder has been terminated, and there have been no "reportable
events" (as such term is defined in section 4043 of ERISA) with respect
to any Pension Plan or trust created thereunder, which reportable event
or events will or could result in the termination of such Pension Plan
and give rise to a material liability of the Parent, the Company or any
ERISA Affiliate in respect thereof.
(f) MULTIEMPLOYER PLANS. Neither the Parent, the Company nor
any ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability with respect to any Multiemployer Plan.
(g) MULTIPLE EMPLOYER PENSION PLANS. Neither the Parent, the
Company nor any ERISA Affiliate has ever been a "contributing sponsor"
(as such term is defined in section 4001 of ERISA) in any Multiple
Employer Pension Plan.
(h) FOREIGN PENSION PLANS. Neither the Parent nor the Company
has any Foreign Pension Plans.
2.13 CERTAIN LAWS.
(a) INVESTMENT COMPANY ACT. None of the Parent, the Company or
SPHI is, or is directly or indirectly controlled by, or acting on
behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(b) HOLDING COMPANY STATUS. None of the Parent, the Company or
SPHI is a "holding company" or an "affiliate" of a "holding company,"
or a "subsidiary company" of a "holding company," or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
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2.14 ENVIRONMENTAL COMPLIANCE.
(a) COMPLIANCE. Each of the Parent, the Company and the
Subsidiaries is in compliance with all Environmental Protection Laws in
effect in each jurisdiction where it is presently doing business, and
with which the failure so to comply, in the aggregate for all such
failures, could reasonably be expected to have a Material Adverse
Effect.
(b) LIABILITY. None of the Parent, the Company or any of the
Subsidiaries is subject to any liability under any Environmental
Protection Law that, in the aggregate for all such liabilities, could
reasonably be expected to have a Material Adverse Effect.
(c) NOTICES. None of the Parent, the Company or any Subsidiary
has received any
(i) notice from any Governmental Authority by which
any of its present or previously-owned or leased Properties
has been designated, listed, or identified in any manner by
any Governmental Authority charged with administering or
enforcing any Environmental Protection Law as a Hazardous
Substance disposal or removal site, "Super Fund" clean-up
site, or candidate for removal or closure pursuant to any
Environmental Protection Law,
(ii) notice of any Lien arising under or in
connection with any Environmental Protection Law that has
attached to any revenues of, or to, any of its owned or leased
Properties, or
(iii) summons, citation, notice, directive, letter,
or other communication, written or oral, from any Governmental
Authority concerning any intentional or unintentional action
or omission by the Parent, the Company or such Subsidiary in
connection with its ownership or leasing of any Property
resulting in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying, dumping, or otherwise disposing
of any Hazardous Substance into the environment resulting in
any material violation of any Environmental Protection Law,
where the effect of which, in the aggregate for all such notices and
communications, could reasonably be expected to have a Material Adverse
Effect.
2.15 SALE IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(a) SALE IS LEGAL AND AUTHORIZED. Each of the issuance, sale
and delivery of the Notes by the Company, the execution and delivery
hereof by the Parent and the Company and compliance by the Parent and
the Company with all of the provisions hereof and of the Notes:
(i) is within the corporate powers of the Parent and
the Company; and
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(ii) is legal and does not conflict with, result in
any breach in any of the provisions of, constitute a default
under, or result in the creation of any Lien upon any Property
of the Parent, the Company or SPHI under the provisions of,
any agreement, charter instrument, bylaw or other instrument
to which they are a party or by which they or any of their
Property may be bound.
(b) OBLIGATIONS ARE ENFORCEABLE. Each of this Agreement and
the Notes has been duly authorized by all necessary action on the part
of the Parent and the Company, has been executed and delivered by duly
authorized officers of the Parent and the Company, and constitutes a
legal, valid and binding obligation of the Parent and the Company,
enforceable in accordance with its terms, except that the
enforceability hereof and of the Notes may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium, or other similar laws
affecting the enforceability of creditors' rights generally;
and
(ii) subject to the availability of equitable
remedies.
2.16 GOVERNMENTAL CONSENT.
Neither the nature of the Parent, the Company or any Subsidiary, or of
any of their respective businesses or Properties, nor any relationship between
the Parent, the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offer, issuance, sale or delivery of the
Notes and the execution and delivery of this Agreement, is such as to require a
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority on the part of the Parent or the Company as a
condition to the execution and delivery of this Agreement or the offer,
issuance, sale or delivery of the Notes.
2.17 PRIVATE OFFERING.
None of the Parent, the Company or NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities
LLC (the only Person authorized or employed by the Parent or the Company as
agent, broker, dealer or otherwise in connection with the offering or sale of
the Notes or any similar Security of the Company, other than employees of the
Parent and the Company) has offered any of the Notes or any similar Security
(other than the 1995 Notes) of the Company for sale to, or solicited offers to
buy any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than the Purchasers and three (3) other
institutional investors, each of whom was offered all or a portion of the Notes
at private sale for investment.
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2.18 NO DEFAULTS.
(a) THE NOTES. No event has occurred and no condition exists
that, upon the issuance of the Notes and the execution and delivery of
this Agreement, would constitute a Default or an Event of Default.
(b) CHARTER INSTRUMENT, OTHER AGREEMENTS. None of the Parent,
the Company or SPHI is in violation in any respect of any term of any
charter instrument or bylaw. No other Subsidiary is in violation in any
respect of any term of any charter instrument or bylaw and none of the
Parent, the Company or any Subsidiary is in violation in any respect of
any term in any agreement or other instrument to which it is a party or
by which it or any of its Property may be bound, which violations, in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
2.19 USE OF PROCEEDS.
(a) USE OF PROCEEDS. The Company will apply the proceeds from
the sale of the Notes in the manner specified in Part 2.19(a) of Annex
3.
(b) MARGIN SECURITIES. None of the transactions contemplated
herein and in the Notes (including, without limitation, the use of the
proceeds from the sale of the Notes) violates, will violate or will
result in a violation of section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. None of
the Parent, the Company or SPHI owns, or with the proceeds of the sale
of the Notes intends to own, carry or purchase, or refinance borrowings
that were used to own, carry or purchase, any Margin Security,
including Margin Securities originally issued by the Parent, the
Company or SPHI. The respective obligations of the Parent and the
Company under the Financing Documents are not and will not be secured
by any Margin Security, and no Notes are being sold on the basis of any
such collateral.
(c) ABSENCE OF FOREIGN OR ENEMY STATUS. Neither the Parent,
the Company nor any Subsidiary is an "enemy" or an "ally of the enemy"
within the meaning of section 2 of the Trading with the Enemy Act (50
U.S.C. App. Sec. 1 et seq.), as amended. Neither the Parent, the
Company nor any Subsidiary is in violation of, and neither the issuance
and sale of the Notes by the Company nor its use of the proceeds
thereof as contemplated by this Agreement, will violate, the Trading
with the Enemy Act, as amended, or any executive orders, proclamations
or regulations issued pursuant thereto, including, without limitation,
regulations administered by the Office of Foreign Asset Control of the
Department of the Treasury (31 C.F.R., Subtitle B, Chapter V).
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2.20 YEAR 2000 COMPLIANT.
Each of the Parent's, the Company's and the Significant Subsidiaries'
has reviewed their material internal computer systems and expect such systems to
be year 2000 compliant in a timely manner and the advent of the year 2000 and
its impact on such computer systems is not expected to have a Material Adverse
Effect.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to be delivered to
you at the Closing is subject to the following conditions precedent:
3.1 OPINIONS OF COUNSEL.
You shall have received from
(a) ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Senior Vice President and General
Counsel of the Parent and counsel to the Company, and
(b) ▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, your special
counsel,
closing opinions, each dated as of the Closing Date, and substantially in the
respective forms set forth in Exhibit B1 and Exhibit B2, and as to such other
matters as you may reasonably request. This Section 3.1 shall constitute
direction by the Parent and the Company to such counsel named in the foregoing
clause (a) to deliver such closing opinion to you.
3.2 WARRANTIES AND REPRESENTATIONS TRUE.
The warranties and representations contained in Section 0 shall be true
on the Closing Date with the same effect as though made on and as of that date.
3.3 OFFICERS' CERTIFICATES.
You shall have received
(a) a certificate dated the Closing Date and signed by the
President or a Vice-President and the Treasurer or an Assistant
Treasurer of the Parent, substantially in the form of Exhibit C1,
certifying that the conditions specified in Section 0 and Section 0
have been fulfilled,
(b) a certificate dated the Closing Date and signed by the
President or a Vice-President and the Treasurer or an Assistant
Treasurer of the Company, substantially in the form of Exhibit C2,
certifying that the conditions specified in Section 0 and Section 0
have been fulfilled,
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(c) a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of the Parent, substantially in the
form of Exhibit D1, with respect to the matters therein set forth, and
(d) a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of the Company, substantially in
the form of Exhibit D2, with respect to the matters therein set forth.
3.4 LEGALITY.
The Notes shall on the Closing Date qualify as a legal investment for
you under applicable insurance law (without regard to any "basket" or "leeway"
provisions) and you shall have received such evidence as you may reasonably
request to establish compliance with this condition.
3.5 PRIVATE PLACEMENT NUMBER.
The Company shall have obtained or caused to be obtained a private
placement number for the Notes from the CUSIP Service Bureau of Standard &
Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., and you shall have been informed of
such private placement number.
3.6 EXPENSES.
All fees and disbursements required to be paid pursuant to Section 0(b)
shall have been paid in full.
3.7 OTHER PURCHASERS.
None of the Purchasers other than you shall have failed to execute and
deliver a Note Purchase Agreement or to accept delivery of or make payment for
the Notes to be purchased by it on the Closing Date.
3.8 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issuance and sale of the
Notes and all documents and papers relating thereto shall be satisfactory to you
and the Special Counsel. You and the Special Counsel shall have received copies
of such documents and papers as you or they may reasonably request in connection
therewith or in connection with the Special Counsel's closing opinion, all in
form and substance satisfactory to you and the Special Counsel.
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3.9 COMPLIANCE WITH THIS AGREEMENT.
Each of the Parent and the Company shall have performed and complied
with all agreements and conditions contained herein that are required to be
performed or complied with by the Parent and the Company on or prior to the
Closing Date, and such performance and compliance shall remain in effect on the
Closing Date.
4. PURCHASERS' SPECIAL RIGHTS
4.1 DIRECT PAYMENT.
Notwithstanding anything to the contrary herein or in the Notes, the
Company shall pay all amounts payable to any Institutional Investor with respect
to each Note held by such Institutional Investor (without any presentment of
such Notes and without any notation of such payment being made thereon) by
crediting, by federal funds bank wire transfer, the account of such
Institutional Investor in any bank in the United States of America as may be
designated in writing by such Institutional Investor, or in such other manner as
may be reasonably directed or to such other address in the United States of
America as may be reasonably designated in writing by such Institutional
Investor. Your address on Annex 1 shall be deemed to constitute notice,
direction or designation (as appropriate) to the Company with respect to direct
payments as aforesaid. In all other cases, all amounts payable with respect to
each Note shall be made by check mailed and addressed to the registered holder
of each Note at the address shown in the register maintained by the Company
pursuant to Section 0.
Each holder of Notes agrees that in the event it shall sell or transfer
any Note
(a) it shall, prior to the delivery of such Note (unless it
shall have already done so), make a notation thereon of all principal,
if any, prepaid on such Note and shall also note thereon the date to
which interest shall have been paid on such Note, and
(b) it shall promptly notify the Company of the name and
address of the transferee of any such Note so transferred (or, if such
holder does not have such information, the name and address of the
Person effecting such transfer) and the effective date of such
transfer.
4.2 DELIVERY EXPENSES.
If any holder of Notes surrenders any Note to the Company pursuant
hereto, the Company shall pay the cost of delivering to or from such holder's
home office or custodian bank from or to the Company, insured to the reasonable
satisfaction of such holder, the surrendered Note and any Note issued in
substitution or replacement for the surrendered Note.
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4.3 ISSUANCE TAXES.
The Company shall pay all taxes in connection with the issuance and
sale of the Notes and in connection with any modification of this Agreement and
the Notes and shall save each holder of Notes harmless without limitation as to
time against any and all liabilities with respect to all such taxes. The
obligations of the Company under this Section 0 shall survive the payment or
prepayment of the Notes and the termination hereof.
5. PREPAYMENTS
5.1 REQUIRED PREPAYMENTS.
In addition to paying the entire principal amount and the interest due
on the Notes outstanding on the maturity date thereof, the Company shall prepay,
and there shall become due and payable, Eight Million Dollars ($8,000,000)
principal amount of the Notes on December 11th in each year beginning on
December 11, 2000 and ending on December 11, 2004, inclusive. Each such
prepayment shall be at one hundred percent (100%) of the principal amount
prepaid, together with interest accrued thereon to the date of prepayment.
Without limitation of the foregoing, all of the principal of the Notes remaining
outstanding on December 11, 2004 (if any), together with interest accrued
thereon, shall become due and payable on December 11, 2004.
5.2 OPTIONAL PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. The Company may prepay the principal
amount of the Notes in whole or in part, at any time, in multiples of
One Million Dollars ($1,000,000) (or, if the aggregate outstanding
principal amount of the Notes is less than One Million Dollars
($1,000,000) at such time, then such principal amount), together with
(i) an amount equal to the Make-Whole Amount at such
time in respect of the principal amount of the Notes being so
prepaid, and
(ii) interest on such principal amount then being
prepaid accrued to the prepayment date.
(b) NOTICE OF OPTIONAL PREPAYMENT. The Company will give
notice of any optional prepayment of the Notes to each holder of the
Notes not less than thirty (30) days or more than sixty (60) days
before the date fixed for prepayment, specifying:
(i) such date;
(ii) the Section hereof under which the prepayment is
to be made;
(iii) the principal amount of each Note to be prepaid
on such date;
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(iv) the interest to be paid on each such Note,
accrued to the date fixed for payment; and
(v) a reasonably detailed calculation of an estimated
Make-Whole Amount for such Notes, if any (calculated as if the
date of such notice were the date of prepayment), due in
connection with such prepayment.
Notice of prepayment having been so given, the aggregate principal
amount of the Notes specified in such notice, together with the
Make-Whole Amount, if any, and accrued interest thereon shall become
due and payable on the specified prepayment date. Contemporaneously
with such prepayment the Company shall deliver to each holder of Notes
a certificate of the President, a Vice President or the Treasurer of
the Company specifying the calculation of such Make-Whole Amount as of
the specified prepayment date, accompanied by a copy of the Applicable
H.15 used in determining the Make-Whole Discount Rate (as both such
terms are defined in the definition of Make-Whole Amount) in respect of
such prepayment.
(c) EFFECT OF PARTIAL PREPAYMENTS. Each prepayment of the
Notes pursuant to this Section 5.2 shall be applied to reduce ratably
each of the then unpaid mandatory principal prepayments required by
Section 0 remaining after the date of such prepayment.
5.3 PREPAYMENT UPON A DOWNGRADE EVENT.
(a) NOTICE AND OFFER. In the event a Downgrade Event shall
occur or exist, the Parent and the Company will, within three (3)
Business Days of the first occurrence or existence of such Downgrade
Event, give written notice of such Downgrade Event to each holder of
Notes by registered mail and, simultaneously with the sending of such
written notice, send a copy of such notice to each such holder via an
overnight courier of national reputation. Such written notice shall
contain, and such written notice shall constitute, an irrevocable offer
by the Company to prepay all, but not less than all, the Notes held by
such holder on a date specified in such notice (the "Downgrade
Prepayment Date") that is not less than thirty (30) days and not more
than sixty (60) days after the date of such notice. If the Downgrade
Prepayment Date shall not be specified in such notice, the Downgrade
Prepayment Date shall be the thirtieth (30th) day after the date of
such holder's receipt of such notice.
(b) ACCEPTANCE AND PAYMENT. To accept such offered prepayment,
a holder of Notes shall cause a notice of such acceptance to be
delivered to the Company not later than twenty (20) days after the date
of receipt by such holder of the written offer of such prepayment (it
being understood that the failure by a holder to respond to such
written offer of prepayment within such period of twenty (20) days
shall be deemed to constitute an acceptance of such offer). If so
accepted, such offered prepayment shall be due and payable on the
Downgrade Prepayment Date. Such offered prepayment shall be made at one
hundred percent (100%) of the principal amount of such Notes, together
with any Make-Whole Amount as of the Downgrade Prepayment Date with
respect thereto and
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interest on the Notes then being prepaid accrued to the Downgrade
Prepayment Date. Contemporaneously with the making of any such
prepayment, the Company shall deliver to each holder of such Notes by
facsimile transmission a certificate of the President, a Vice President
or the Treasurer of the Company specifying the details of the
calculation of such Make-Whole Amount as of the specified Downgrade
Prepayment Date, together with a copy of the Applicable H.15 used in
determining the Make-Whole Discount Rate (as both such terms are
defined in the definition of Make-Whole Amount) in respect of such
prepayment.
(c) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 5.3 shall be accompanied by a certificate,
executed by the President or a Vice President of the Company and dated
the date of such offer, specifying:
(i) the Downgrade Prepayment Date;
(ii) the Section hereof under which such offer is
made;
(iii) the principal amount of each Note offered to be
prepaid;
(iv) the unpaid interest that would be due on each
such Note offered to be prepaid, accrued to the date fixed for
payment;
(v) a reasonably detailed calculation of an estimated
Make-Whole Amount, if any (calculated as if the date of such
notice was the date of prepayment), that would be due in
connection with such offered prepayment; and
(vi) in reasonable detail, the cause of the Downgrade
Event.
(d) EFFECT OF PREPAYMENT. Each prepayment of the Notes
pursuant to this Section 5.3 shall be applied to reduce ratably each of
the then unpaid mandatory principal prepayments required by Section 0
remaining after the date of such prepayment.
5.4 PARTIAL PREPAYMENT PRO RATA.
If at the time any required or optional prepayment under Section 5.1 or
Section 5.2 is due there is more than one Note outstanding, the aggregate
principal amount of each required or optional partial prepayment of the Notes
shall be allocated among the holders of the Notes at the time outstanding in
proportion to the respective unpaid principal amounts of the Notes then
outstanding.
5.5 NOTATION OF NOTES ON PREPAYMENT.
Upon any partial prepayment of a Note, such Note may, at the option of
the holder thereof, be
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(a) surrendered to the Company pursuant to Section 0 in
exchange for a new Note in a principal amount equal to the principal
amount remaining unpaid on the surrendered Note,
(b) made available to the Company for notation thereon of the
portion of the principal so prepaid, or
(c) marked by such holder with a notation thereon of the
portion of the principal so prepaid, provided that such holder shall
notify the Company that it has made such notation.
In case the entire principal amount of any Note is prepaid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the prepaid principal amount of any Note.
5.6 NO OTHER OPTIONAL PREPAYMENTS.
Except as provided in Section 5.2, neither the Parent, the Company, any
Subsidiary nor any Affiliate may make any optional prepayment (whether directly
or indirectly by purchase or other acquisition) in respect of the Notes.
6. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
6.1 REGISTRATION OF NOTES.
The Company shall cause to be kept at its office, maintained pursuant
to Section 7.3, a register for the registration and transfer 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
the register. 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.
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6.2 EXCHANGE OF NOTES.
Upon surrender of any Note at the office of the Company maintained
pursuant to Section 7.3 duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or its
attorney-in-fact duly authorized in writing, the Company shall execute and
deliver, at the Company's expense (except as provided below), new Notes 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,
in accordance with the terms of this Agreement, to such Person as such holder
may request and shall be substantially in the form of Exhibit A. 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. As a condition precedent to any such transfer of
Notes, the Company may require the transferee to disclose the source of funds
with which it is acquiring Notes and, if such transfer would constitute a
"prohibited transaction" (as provided for in section 406(a) of ERISA or section
4975 of the IRC), the Company shall not be obligated to effect such transfer.
6.3 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 an Institutional Investor, such holder's own 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.
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7. COVENANTS
Each of the Parent and the Company covenants that on and after the
Closing Date and so long as any of the Notes shall be outstanding:
7.1 PAYMENT OF TAXES AND CLAIMS.
Each of the Parent and the Company will, and the Company will cause
SPHI to, pay before they become delinquent,
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, might
result in the creation of a Lien upon its Property,
provided, that items of the foregoing description need not be paid
(i) while being contested in good faith and by
appropriate proceedings as long as adequate book reserves have
been established and maintained and exist with respect
thereto, and
(ii) so long as the title of the Parent, the Company
or SPHI, as the case may be, to, and its right to use, such
Property, is not materially adversely affected thereby.
7.2 MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE; ETC.
Each of the Parent and the Company will, and the Company will cause
SPHI to,
(a) PROPERTY -- maintain, preserve and keep its Property in
good condition, ordinary wear and tear excepted, and make all necessary
renewals, replacements, additions, betterments and improvements
thereto, except where the failure to do so (i) could not reasonably be
expected to have a Material Adverse Effect and (ii) is in conformity
with the marketing strategy of the Company (A) to maximize proceeds
from the sale of Real Estate Assets or (B) to sell the Real Estate
Assets on an "as is" basis;
(b) INSURANCE -- maintain, with financially sound and
reputable insurers, insurance with respect to its Property and business
against such casualties and contingencies, of such types (including,
without limitation, insurance with respect to losses arising out of
Property loss or damage, public liability, business interruption,
larceny, workers' compensation, embezzlement or other criminal
misappropriation) and in such amounts as is customary in the case of
corporations of established reputations engaged in
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the same or a similar business and similarly situated, it being
understood that the Parent, the Company and SPHI may self-insure
against hazards and risks with respect to which, and in such amounts
as, the Parent, the Company or SPHI in good faith determines to be
prudent and consistent with sound financial and business practice;
(c) FINANCIAL RECORDS -- keep accurate and complete books of
records and accounts in which full and correct entries shall be made of
all its business transactions and which will permit the provision of
accurate and complete financial statements in accordance with GAAP, and
the Parent will cause each other Subsidiary to keep accurate and
complete books of records and accounts in which full and correct
entries shall be made of all its business transactions and which will
permit the provision of accurate and complete financial statements in
accordance with GAAP, to the extent required by the provisions of
Section 8.1(a);
(d) CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises,
subject to Section 7.9, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and
(e) COMPLIANCE WITH LAW -- be in compliance with all laws,
ordinances or governmental rules or regulations to which it is subject
(including, without limitation, any Environmental Protection Law) and
obtain any licenses, certificates, permits, franchises or other
governmental authorizations necessary to the ownership of its
Properties or to the conduct of its business if such non-compliance or
failure to obtain could reasonably be expected to have a Material
Adverse Effect or materially adversely affect the ability of the
Parent, the Company or SPHI to conduct in the future the business it
conducts at the time of such violation or failure to obtain.
7.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal of
and interest (and Make-Whole Amount, if any) on, the Notes, as and when the same
shall become due according to the terms hereof and of the Notes, and will
maintain an office at the address of the Company set forth in Section 0 where
notices, presentations and demands in respect hereof or of the Notes may be made
upon it. Such office will be maintained at such address until such time as the
Company shall notify the holders of the Notes in writing of any change of
location of such office, which will in any event be located within the United
States of America.
7.4 PENSION PLANS.
(a) COMPLIANCE. Each of the Parent and the Company will, and
will cause each ERISA Affiliate to, at all times with respect to each
Pension Plan, make timely payment of contributions required to meet the
minimum funding standard set forth in ERISA or the IRC with respect
thereto, and to comply with all other applicable material provisions of
ERISA and the IRC.
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(b) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS.
The Parent or an ERISA Affiliate will contribute sufficient amounts to
each Pension Plan so that the present value of all employee benefits
vested under each Pension Plan at any time will not exceed, by more
than Two Million Five Hundred Thousand Dollars ($2,500,000), the assets
of such Pension Plan allocable to such vested benefits at such time, in
each case determined pursuant to Section 7.4(c).
(c) VALUATIONS. All assumptions and methods used to determine
the actuarial valuation of vested employee benefits under Pension Plans
and the present value of assets of Pension Plans will be reasonable in
the good faith judgment of the Parent, the Company or the actuary
engaged by the Parent or the Company, as the case may be, and will
comply with all requirements of law.
(d) PROHIBITED ACTIONS. Each of the Parent and the Company
will not, and will not permit any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such
term is defined in section 406 of ERISA or section 4975 of the
IRC) that would result in the imposition of a material tax or
penalty;
(ii) incur with respect to any Pension Plan any
material "accumulated funding deficiency" (as such term is
defined in section 302 of ERISA), whether or not waived;
(iii) terminate any Pension Plan in a manner that
could result in the imposition of a Lien on the Property of
the Parent, the Company or any Subsidiary pursuant to section
4068 of ERISA or the creation of any liability under section
4062 of ERISA;
(iv) fail to make any payment required by section 515
of ERISA; or
(v) at any time be an "employer" (as such term is
defined in section 3 of ERISA) required to contribute to any
Multiemployer Plan or a "substantial employer" (as such term
is defined in section 4001 of ERISA) required to contribute to
any Multiple Employer Pension Plan if, at such time, it could
reasonably be expected that the Parent, the Company or any
Subsidiary will incur withdrawal liability in respect of such
Multiemployer Plan or Multiple Employer Pension Plan
if the aggregate amount of the taxes, penalties, funding deficiencies,
interest or other amounts and any other liabilities in respect of any
of the foregoing could reasonably be expected to have a Material
Adverse Effect.
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7.5 LINE OF BUSINESS.
The Company will not, and will not permit SPHI to, engage in any
business other than the ownership, operation and disposition of Real Estate
Assets and activities reasonably related thereto.
7.6 INDEBTEDNESS.
(a) TOTAL INDEBTEDNESS. The Company will not, and will not
permit SPHI to, incur or in any manner be or become liable in respect
of any Indebtedness, on and after the Closing Date, except
(i) Indebtedness evidenced by the Notes,
(ii) Indebtedness evidenced by the 1995 Notes, and
(iii) an additional amount of Indebtedness of the
Company and SPHI, determined on a consolidated basis for such
Persons, not exceeding Ten Million Dollars ($10,000,000) in
the aggregate at any time outstanding.
(b) INDEBTEDNESS COVERAGE. The Company will not at any time
permit the ratio of
(i) Qualified Indebtedness Coverage Assets at such
time to
(ii) the sum of
(A) the aggregate of all Indebtedness of the
Company and SPHI at such time, determined on a
consolidated basis for such Persons, plus
(B) Scheduled Interest Payments at such
time, plus
(C) the amount of Operating Expenses that
the Company and SPHI would be permitted to incur on
such date pursuant to Section 7.8, plus
(D) if such time is on or after the date the
last Real Estate Asset is sold and prior to the first
date of the establishment of the Defeasance Trust
pursuant to Section 7.15, the Make-Whole Amount in
respect of the Notes and the 1995 Notes at such time
to be less than 1.0 to 1.0.
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7.7 RESTRICTED INVESTMENTS AND RESTRICTED PAYMENTS
The Company will not, and will not permit SPHI to, make any Restricted
Investment and the Company will not declare or make, or become obligated to
declare or make, any Restricted Payment (except for the Permitted Extraordinary
Dividend), unless:
(a) immediately after, and after giving effect to, such
Restricted Investment or such Restricted Payment, as the case may be,
the aggregate amount of all Restricted Investments of the Company and
SPHI at such time plus all Restricted Payments declared, made or
obligated to be declared or made by the Company on and after the
Closing Date would not exceed the sum of
(i) Excess Cumulative Net Proceeds at such time, plus
(ii) the greater of
(A) Zero Dollars ($0) and
(B) the result of
(1) Cumulative Non-Essential
Contributions at such time minus
(2) the Transfer Contribution
Amount at such time;
(b) immediately prior to, immediately after, and after giving
effect to, such Restricted Investment or such Restricted Payment, as
the case may be, the ratio of
(i) Qualified Restricted Payment Assets at such time
to
(ii) the aggregate of all Indebtedness of the Company
and SPHI at such time
would not be less than 2.0 to 1.0; and
(c) at the time of such declaration, making or becoming
obligated and immediately before, and after giving effect to, such
Restricted Investment or such Restricted Payment and any concurrent
transactions, no Default or Event of Default exists or would exist.
Notwithstanding the requirements of clause (b) above and provided that
the requirements of clauses (a) and (c) above have been satisfied, a cash
dividend may be declared by the Company in respect of its capital stock in an
amount, when added to the aggregate of other cash dividends made by the Company
after the Closing Date (other than the Permitted Extraordinary Dividend) that
does not exceed the aggregate amount of Cumulative Non-Essential Contributions
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at such time minus the Transfer Contribution Amount at such time.
7.8 OPERATING EXPENSES
The Company will not, and will not permit SPHI to:
(a) incur any Operating Expense unless Cumulative Operating
Expenses at such time would not exceed the sum of
(i) Forty Million Dollars ($40,000,000), plus
(ii) Operating Expense Contributions at such time; or
(b) permit, at any time, the sum of
(i) Cumulative Operating Expenses at such time minus
Operating Expense Contributions at such time, plus
(ii) the aggregate amount outstanding on all Seller
Notes at such time
to exceed Ninety Million Dollars ($90,000,000).
7.9 MERGER AND CONSOLIDATION.
The Company will not, and will not permit SPHI to, merge into,
consolidate with, or sell, lease, transfer or otherwise dispose of all or
substantially all of its Property (except as permitted under Section 7.10) to,
any other Person or permit any other Person to consolidate with or merge into it
(except that SPHI may merge into or consolidate with the Company if the Company
is the surviving corporation); provided that the foregoing restriction does not
apply to the merger or consolidation of the Company with, or the sale, lease,
transfer or other disposition by the Company of all or substantially all of its
Property to, another corporation, if:
(a) the Company is the surviving corporation that results from
such merger or consolidation; and
(b) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto, no
Default or Event of Default exists or would exist.
7.10 TRANSFERS OF PROPERTY
The Company will not, and will not permit SPHI to, sell, lease as
lessor, transfer or otherwise dispose of any Property (collectively,
"Transfers") (provided that "Transfers" shall not include transfers of cash for
the purpose of paying Operating Expenses, interest, principal or Make-Whole
Amount, if any, relating to the Notes and any other Indebtedness, Restricted
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Payments to the Parent and Permitted Investments), except:
(a) Transfers of Property, other than Real Estate Assets, if
the sum of
(i) the book value of such Property at the time of
such Transfer, plus
(ii) the aggregate book value of all other Property
of the Company and SPHI, other than Real Estate Assets, that
has been the subject of a Transfer (in each case measured at
the time of the Transfer of such Property) during the period
commencing on the Closing Date and ended at the time of such
Transfer,
would be less than Two Hundred Thousand Dollars ($200,000), provided
that the Company will not Transfer any shares of the stock (or any
warrants, rights or options to purchase stock or other Securities
exchangeable for or convertible into stock) of SPHI;
(b) any Transfer of Real Estate Assets for cash consideration
or Seller Notes, or a combination of cash consideration and Seller
Notes, so long as the aggregate amount outstanding with respect to all
Seller Notes does not exceed Fifty Million Dollars ($50,000,000) and if
either of the following conditions would be satisfied with respect to
such Transfer:
(i) the Transfer Consideration with respect to such
Transfer is at least equal to the Designated Disposition Value
of the Real Estate Asset which is the subject of such
Transfer, or
(ii) the sum of
(A) the Transfer Consideration with respect
to such Transfer, plus
(B) the aggregate Transfer Consideration
received by the Company and SPHI with respect to all
other Real Estate Assets that have been the subject
of a Transfer on and after the Closing Date, plus
(C) Cumulative Non-Essential Contributions
at such time
would exceed the aggregate Designated Disposition Values of
all Real Estate Assets that have been the subject of Transfers
(in each case measured at the time of such Transfer) on and
after the Closing Date; and
(c) immediately prior to, and immediately after the
consummation of any such Transfer, and after giving effect thereto, no
Default or Event of Default exists or would exist.
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7.11 PURCHASE OBLIGATION OF THE PARENT
The Parent will purchase Real Estate Assets, selected by the Parent and
for cash consideration equal to the Designated Disposition Value of such Real
Estate Assets, in an amount sufficient to provide the Company with net cash
proceeds, as necessary, to pay
(a) the principal of and interest (and Make-Whole Amount, if
any) on, the Notes, and any amounts due under Section 9.2(e) as and
when the same shall become due according to the terms hereof and of the
Notes (including, without limitation, the terms of Section 5.3), or
(b) Operating Expenses due and payable at such time.
7.12 TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit SPHI to, enter into any
material transaction or material arrangement, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with any
Affiliate, except the sales contemplated by Section 7.11 or in the ordinary
course of and pursuant to the reasonable requirements of the Company's or SPHI's
business and upon fair and reasonable terms no less favorable to the Company or
SPHI than would be obtained in a comparable arm's-length transaction with a
Person not an Affiliate.
7.13 LIENS.
(a) NEGATIVE PLEDGE. The Company will not, and will not permit
SPHI to, cause or permit to exist, or agree or consent to cause or
permit to exist 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 except:
(i) Liens described in Part 7.13(a)(i) of Annex 3;
(ii) Liens
(A) arising from judicial attachments and
judgments,
(B) securing appeal bonds or supersedeas
bonds, and
(C) arising in connection with court
proceedings (including, without limitation, surety
bonds and letters of credit or any other instrument
serving a similar purpose),
provided that (1) such Liens are fully released within sixty
(60) days of their creation or the execution or other
enforcement of such Liens is effectively stayed, (2) the
claims secured thereby are being contested in good faith and
by appropriate
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proceedings and (3) adequate book reserves in accordance with
GAAP shall have been established and maintained and shall
exist with respect thereto;
(iii) Liens incurred or deposits made in the ordinary
course of business to secure the performance of letters of
credit, bids, tenders, sales contracts, leases, statutory
obligations, construction obligations, bonds and assessments
or improvements, surety and performance bonds (of a type other
than set forth in Section 7.13(a)(ii)) and other similar
obligations not incurred in connection with the borrowing of
money, the obtaining of advances or the payment of the
deferred purchase price of Property, provided that, after
giving effect to any enhancement in value and use of other
Property related to such Property as a result of such Lien,
(1) such Liens do not in the aggregate materially detract from
the value of such Property and (2) the title of the Company or
SPHI to, and its right to use, such Property, is not
materially adversely affected thereby;
(iv) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance, social security and other like laws;
(v) Liens securing Property taxes, assessments or
governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, vendors,
landlords and other like Persons, provided that the payment
thereof is not at the time required by Section 7.1; and
(vi) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions or
encumbrances affecting real Property, provided that such
exceptions and encumbrances do not in the aggregate detract
from the value of such Property or interfere with the use of
such Property in the ordinary conduct of the business of the
Company and SPHI in a manner that has or could reasonably be
expected to have a Material Adverse Effect.
(b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any
Property shall be subjected to a Lien in violation of this Section 7.13
the Company will forthwith make or cause to be made, to the fullest
extent permitted by applicable law, provision whereby the Notes will be
secured equally and ratably with all other obligations secured thereby
pursuant to such agreements and instruments as shall be approved by the
Required Holders, and the Company will cause to be delivered to each
holder of a Note an opinion of independent counsel to the effect that
such agreements and instruments are enforceable in accordance with
their terms, and in any such case the Notes shall have the benefit, to
the full extent that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable Lien on such
Property securing the Notes. Such violation of this Section 7.13 will
constitute an Event of Default hereunder, whether or not any such
provision is made pursuant to this Section 7.13(b).
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(c) FINANCING STATEMENTS. The Company will not, and will not
permit SPHI to, sign or file a financing statement under the Uniform
Commercial Code of any jurisdiction that names the Company or SPHI as
debtor, or sign any security agreement authorizing any secured party
thereunder to file any such financing statement, except, in any such
case, a financing statement filed or to be filed to perfect or protect
a security interest that the Company or SPHI is entitled to create,
assume or incur, or permit to exist, under the foregoing provisions of
this Section 7.13 or to evidence for informational purposes a lessor's
interest in Property leased to the Company or SPHI.
7.14 PRIVATE OFFERING.
Neither the Parent nor the Company will, nor will they permit any
Person acting on their behalf to, offer the Notes or any part thereof or any
similar Securities for issue or sale to, or solicit any offer to acquire any of
the same from, any Person so as to bring the issuance and sale of the Notes
within the provisions of section 5 of the Securities Act.
7.15 DEFEASANCE.
(a) ESTABLISHMENT OF DEFEASANCE TRUST. If at any time neither
the Company nor SPHI holds any Real Estate Assets, the Company shall
contemporaneously with the sale of last Real Estate Asset and upon
written notice (the "Trust Notice") to the holders of Notes then
outstanding, establish a trust (the "Defeasance Trust"), solely in
favor of all holders of Notes then outstanding, and irrevocably and
absolutely assign, transfer, and convey to, and deposit into, said
Defeasance Trust an amount of United States Governmental Obligations
having interest and principal payments sufficient, in the opinion of
independent certified public accountants of the Company expressed in a
written certification thereof delivered to the holders of the Notes, to
pay in full all remaining principal and interest payments, as the same
shall fall due, in respect of all Notes then outstanding. Anything to
the contrary contained herein notwithstanding, the Company may, at its
sole discretion and at any time upon the delivery of a Trust Notice to
the holders of Notes then outstanding, elect to establish a Defeasance
Trust.
(b) DISCHARGE. Provided that
(i) the Defeasance Trust, the trustee thereof and the
terms and conditions (as well as the form and substance) of
the indenture whereby the Defeasance Trust shall have been
established shall be reasonably satisfactory to all holders of
Notes then outstanding (as evidenced by their written consent
thereto),
(ii) the purchase price of the United States
Governmental Obligations to be deposited into the Defeasance
Trust shall have been fully paid by the Company, and such
United States Governmental Obligations shall have been so
deposited into the Defeasance Trust (and each holder of Notes
then outstanding shall have received written verification
thereof by the trustee of the Defeasance Trust) and
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shall, as so deposited, be unencumbered by any Lien and
sufficient to pay all principal and interest to fall due on
the Notes then outstanding as provided in Section 5.1 and in
the Notes,
(iii) the Company shall have (1) paid in full all
fees, costs and expenses of the trustee of the Defeasance
Trust and of all holders of Notes then outstanding incurred in
connection with the preparation of the trust indenture and the
establishment of the Defeasance Trust, including, without
limitation, all reasonable attorney's fees and disbursements,
and (2) prepaid in full any and all fees, costs and expenses
of the trustee of the Defeasance Trust for the entire term of
the Defeasance Trust,
(iv) the Company shall have no continuing legal or
equitable interest in the Defeasance Trust or the United
States Governmental Obligations deposited into the Defeasance
Trust (other than a reversionary interest in any such United
States Governmental Obligations, or the proceeds therefrom,
remaining after the full, final and indefeasible payment of
all Notes and all interest thereon) and shall have no right to
direct or instruct the trustee of the Defeasance Trust, or to
remove such trustee, or to otherwise require such trustee to
take any action with respect to such United States
Governmental Obligations or otherwise,
(v) no Event of Default shall have occurred and be
continuing at the time of such deposit,
(vi) the Company shall have delivered the Trust
Notice to all holders of Notes then outstanding and a legal
opinion of counsel to the Company, reasonably satisfactory to
all holders of Notes then outstanding (as evidenced by their
written approval thereof), stating, among other things which
any holder of Notes then outstanding may reasonably request,
that (1) the Defeasance Trust is validly created and duly
constituted and that the sole beneficiaries thereof are the
holders of Notes then outstanding, (2) the United States
Governmental Obligations deposited therein were validly
contributed to the Defeasance Trust and constitute a legal and
valid res of the Defeasance Trust, (3) the Company's actions
in creating the Defeasance Trust and contributing the United
States Governmental Obligations thereto were duly authorized
and valid, (4) the Company, as the settlor of the Defeasance
Trust, has no right, title or interest in and to the
Defeasance Trust or the res thereof (other than a reversionary
interest in any United States Governmental Obligations or the
proceeds thereof remaining after the full, final and
indefeasible payment of all Notes and all interest thereon)
and has no power of direction, or right of removal, with
respect to the trustee of the Defeasance Trust, (5) all fees,
costs and expenses of the trustee for the entire term of the
Defeasance Trust have been prepaid in full and (6) the
creation of the Defeasance Trust and the depositing of the
United States Governmental Obligations therein shall not, for
IRC purposes with respect to any holder of Notes then
outstanding, result in a taxable event whereby (x) such holder
may become liable to pay a tax on any gain deemed
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to have arisen with respect to such transaction or (y) such
holder shall have been deemed to have suffered a loss with
respect to such transaction and (7) such holder will be
subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if the Notes
were paid in the accordance with their terms and the terms of
this Agreement and such defeasance and discharge were not to
occur;
(vii) all principal, interest costs, expenses and
other sums due and payable under the this Agreement to the
holders of Notes outstanding on the date the Defeasance Trust
is created shall have been paid in full; and
(viii) the Company shall have delivered to the
holders of Notes then outstanding an opinion of independent
certified public accountants of the Company, reasonably
satisfactory to such holders, stating that (i) the amount of
United States Government Obligations deposited in the
Defeasance Trust are sufficient to pay in full all remaining
principal and interest payments, as the same shall fall due,
in respect of all Notes then outstanding and (ii) under GAAP
the creation of the Defeasance Trust and the depositing of the
United States Governmental Obligations therein shall not
result, with respect to any such holder, in an exchange of the
Note or Notes of such holder for all or part of such United
States Governmental Obligations which exchange would result in
a gain or loss being realized by such holder under GAAP in
respect of such transaction,
then and in that case, all financial and restrictive covenants in
respect of the Company set forth in Section 7 (other than this Section
7.15) of this Agreement shall be discharged; provided, however, if the
contribution to the Defeasance Trust of any United States Governmental
Obligations is invalidated, declared to be fraudulent or preferential,
set aside, or if any such United States Governmental Obligations are
required to be returned or redelivered to the Company, or any
custodian, trustee, receiver or any other Person under any bankruptcy
act, state or federal law, common law or equitable cause, then, to the
extent of such invalidation, return or redelivery, the financial and
restrictive covenants set forth in Section 7 of this Agreement shall be
revived and restored.
As used in this Section 7.15, the term "United States Governmental
Obligations" shall mean any direct obligation of, or obligation guaranteed by,
the United States of America, or any agency controlled or supervised by or
acting as 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.
7.16 PERFORMANCE OF AGREEMENT.
The Parent shall not cause or permit the Company or SPHI to take any
action, or fail to take any action, which would result in a violation of any
term or condition of this Agreement.
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8. INFORMATION AS TO PARENT AND COMPANY
8.1 FINANCIAL AND BUSINESS INFORMATION.
(a) INFORMATION AS TO THE PARENT.
The Parent shall deliver to each holder of Notes:
(i) Quarterly Statements -- as soon as practicable
after the end of each quarterly fiscal period in each fiscal
year of the Parent (other than the last quarterly fiscal
period of each such fiscal year), and in any event within
ninety (90) days thereafter:
(A) an unaudited consolidated balance sheet
of the Parent and its consolidated subsidiaries as at
the end of such quarter, and
(B) unaudited consolidated statements of
earnings and cash flows of the Parent and its
consolidated subsidiaries, for such quarter and (in
the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the
corresponding figures for the corresponding periods in the
previous fiscal year, and certified by a principal financial
officer of the Parent that said financial statements fairly
present the consolidated financial condition and results of
operations and cash flows of the Parent and its consolidated
subsidiaries, in accordance with GAAP consistently applied, as
at the end of, and for, such period (subject to normal
year-end adjustments), and accompanied by the certificate
required by Section 0; and
(ii) Annual Statements -- as soon as practicable
after the end of each fiscal year of the Parent, and in any
event within one hundred twenty (120) days thereafter:
(A) a consolidated balance sheet of the
Parent and its consolidated subsidiaries, as at the
end of such year, and
(B) consolidated statements of earnings,
changes in stockholders' equity and cash flows of the
Parent and its consolidated subsidiaries for such
year,
setting forth in each case in comparative form the
corresponding figures for the previous fiscal year, and
accompanied by
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(1) an opinion thereon of the accountants
named in Section 0(a) or other independent certified
public accountants of recognized national standing
selected by the Parent, which opinion shall, without
qualification, state that such financial statements
present fairly, in all material respects, the
financial position of the companies being reported
upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and
that the examination of such accountants in
connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion,
(2) a certification by a principal financial
officer of the Parent that such consolidated
statements are complete and correct in all material
respects, and
(3) the certificate required by Section 0.
(b) INFORMATION AS TO THE COMPANY.
The Company shall deliver to each holder of Notes:
(i) Quarterly Statements -- as soon as practicable
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), and in any event within
ninety (90) days thereafter:
(A) an unaudited consolidated balance sheet
of the Company and its consolidated subsidiaries as
at the end of such quarter, and
(B) unaudited consolidated statements of
earnings and cash flows of the Company and its
consolidated subsidiaries for such quarter and (in
the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the
corresponding figures for the corresponding periods in the
previous fiscal year, and certified by a principal financial
officer of the Company that said financial statements fairly
present the consolidated financial condition and results of
operations and cash flows of the Company and its consolidated
subsidiaries, in accordance with GAAP consistently applied, as
at the end of, and for, such period (subject to normal
year-end adjustments), and accompanied by the certificate
required by Section 0; and
(ii) Annual Statements -- as soon as practicable
after the end of each fiscal year of the Company, and in any
event within one hundred twenty (120) days thereafter:
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(A) a consolidated balance sheet of the
Company and its consolidated subsidiaries as at the
end of such year, and
(B) consolidated statements of earnings,
changes in stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for such
year,
setting forth in each case in comparative form the
corresponding figures for the previous fiscal year, and
accompanied by
(1) an opinion thereon of the accountants
named in Section 0(a) or other independent certified
public accountants of recognized national standing
selected by the Company, which opinion shall, without
qualification, state that such financial statements
present fairly, in all material respects, the
financial position of the companies being reported
upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and
that the examination of such accountants in
connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion,
(2) a certification by a principal financial
officer of the Company that such consolidated
statements are complete and correct in all material
respects,
(3) the certificates required by Section 0
and Section 0, and
(4) such other information as may be
reasonably be requested by any holder of Notes.
(c) INFORMATION AS TO THE PARENT AND THE COMPANY.
The Parent and the Company shall deliver to each holder of
Notes:
(i) AUDIT REPORTS -- promptly upon receipt thereof, a
copy of each report submitted to the Company or SPHI by
independent accountants in connection with any annual, interim
or special audit made by them of the books of the Company or
SPHI;
(ii) SEC AND OTHER REPORTS -- promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Parent, the
Company or any Subsidiary to stockholders generally, and of
each regular or periodic report and any registration
statement, prospectus or written communication (other than
transmittal letters), and each amendment thereto, in
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respect thereof filed by the Parent, the Company or any
Subsidiary with, or received by, such Person in connection
therewith from, the National Association of Securities
Dealers, any securities exchange or the Securities and
Exchange Commission or any successor agency;
(iii) ERISA -- promptly upon becoming aware of the
occurrence of any
(A) "reportable event" (as such term is
defined in section 4043 of ERISA) and the regulations
thereunder, for which notice thereof has not been
waived pursuant to such regulations, or
(B) "prohibited transactions" (as such term
is defined in section 406 or section 4975 of the IRC)
in connection with any Pension Plan or any trust created
thereunder if the liability to the Parent, the Company or any
ERISA Affiliate, taken together with any other such
liabilities could reasonably be expect to have a Material
Adverse Effect, a written notice specifying the nature
thereof, what action the Parent or the Company, as the case
may be, is taking or proposes to take with respect thereto,
and, when known, any action taken by the IRS, the DOL or the
PBGC with respect thereto;
(iv) ERISA WAIVERS -- prompt written notice of and a
description of any request pursuant to section 303 of ERISA or
section 412 of the IRC for, or notice of the granting pursuant
to said section 303 or section 412 of, a waiver in respect of
all or part of the minimum funding standard set forth in ERISA
or the IRC, as the case may be, of any Pension Plan, and, in
connection with the granting of any such waiver, the amount of
any waived funding deficiency (as such term is defined in said
section 303 or said section 412) and the terms of such waiver,
in each of the cases specified in this clause (iv), where the
effect of such conditions or events or of events or conditions
related thereto would reasonably be expected to have a
Material Adverse Effect;
(v) OTHER ERISA NOTICES -- prompt written notice of
and, where applicable, a description of
(A) any notice from the PBGC in respect of
the commencement of any proceedings pursuant to
section 4042 of ERISA to terminate any Pension Plan
or for the appointment of a trustee to administer any
Pension Plan,
(B) any distress termination notice
delivered to the PBGC under section 4041 of ERISA in
respect of any Pension Plan, and any determination of
the PBGC in respect thereof,
(C) the placement of any Multiemployer Plan
in reorganization
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status under Title IV of ERISA,
(D) any Multiemployer Plan becoming
"insolvent" (as such term is defined in section 4245
of ERISA) under Title IV of ERISA,
(E) the whole or partial withdrawal of the
Parent or the Company or any ERISA Affiliate from any
Multiemployer Plan and the withdrawal liability
incurred in connection therewith, and
(F) the withdrawal of the Parent or the
Company or any ERISA Affiliate from any Multiple
Employer Pension Plan and the withdrawal liability
under ERISA incurred in connection therewith;
and, in each of the cases specified in this clause (v), where
the effect of any such notice, condition or event or of any
event or condition related thereto would reasonably be
expected to have a Material Adverse Effect;
(vi) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within
five (5) Business Days of becoming aware of the existence of
any condition or event which constitutes a Default or an Event
of Default, a written notice specifying the nature and period
of existence thereof and what action the Parent or the
Company, as the case may be, is taking or proposes to take
with respect thereto;
(vii) NOTICE OF CLAIMED DEFAULT -- within five (5)
Business Days of becoming aware that the holder of any Note,
or of any evidence of Indebtedness or other Security of the
Parent, the Company or SPHI, shall have given notice or taken
any other action with respect to a claimed Default, Event of
Default, default or event of default, a written notice
specifying the notice given or action taken by such holder and
the nature of the claimed Default, Event of Default, default
or event of default and what action the Parent or the Company,
as the case may be, is taking or proposes to take with respect
thereto;
(viii) ACTIONS, PROCEEDINGS -- promptly after the
commencement thereof, notice of any action or proceeding
relating to the Parent, the Company or any Subsidiary in any
court or before any Governmental Authority or arbitration
board or tribunal as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, would have a Material Adverse Effect;
(ix) CERTAIN ENVIRONMENTAL MATTERS -- prompt written
notice of and a description of any event or circumstance that,
had such event or circumstance occurred or existed immediately
prior to the Closing Date, would have been required to be
disclosed as an exception to any statement set forth in
Section 2.14; and
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(x) REQUESTED INFORMATION -- with reasonable
promptness, such other data and information as from time to
time may be reasonably requested by any holder of Notes,
including, without limitation,
(A) copies of any statement, report or
certificate furnished to any holder of any
Indebtedness or any Security of the Parent, the
Company or SPHI,
(B) information requested to comply with any
request of the National Association of Insurance
Commissioners in respect of the designation of the
Notes,
(C) information requested to comply with
17 C.F.R. Section 230.144A, as amended from time
to time,
(D) information regarding the impact of the
occurrence of the year 2000 on the Parent, the
Company and its Significant Subsidiaries and plans of
the Company to address any such impact;
provided that any such request with respect to any of the data
and information referred to in the foregoing clauses (A), (B),
(C) and (D) shall be deemed to be reasonable for purposes of
this Section 8.1(c)(x).
8.2 OFFICERS' CERTIFICATES.
Each set of financial statements delivered to each holder of Notes
pursuant to Section 0(a) or Section 0(b) shall be accompanied by a certificate
of the President or a Vice-President and the Treasurer or an Assistant Treasurer
of the Parent (in the case of statements delivered pursuant to Section 8.1(a))
or the Company (in the case of statements delivered pursuant to Section 8.1(b)),
setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Parent or the
Company, as the case may be, was in compliance with the requirements of
Section 7.6 through Section 7.10, inclusive, during the period covered
by the earnings statement 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 amounts,
ratio or percentage then in existence);
(b) EVENT OF DEFAULT -- a statement that the signers have
reviewed the relevant terms hereof and have made, or caused to be made,
under their supervision, a review of the transactions and conditions of
the Parent, the Company and SPHI from the beginning of the accounting
period covered by the earnings statements being delivered therewith to
the date of the certificate and that such review did not disclose the
existence during such period of any condition or event which
constitutes a Default or an Event of Default or, if any
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such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Parent or the Company,
as the case may be, has taken or proposes to take with respect thereto;
and
(c) REAL ESTATE ASSETS -- in the case of certificates of the
officers of the Company, a complete and correct list of each of the
Real Estate Assets and the Designated Disposition Value with respect
thereto, in each case as at the date of such certificate, together with
a detailed calculation and explanation of each reduction in the
Designated Disposition Value of any Real Estate Asset effected during
such period and the "Pro-Rata Basis" on which such reduction shall have
been made. If, at any time within sixty (60) days after receipt by the
holders of the Notes of any certificate containing information required
by this clause (c), the holders of at least fifty percent (50%) in
principal amount of the Notes (exclusive of Notes held by any one or
more of the Parent, the Company, any Subsidiary and any Affiliate) at
the time outstanding shall disagree with the reduction in the
Designated Disposition Value of any Real Estate Asset effected during
the period covered by such certificate, the Company shall, in its
discretion, either (i) adjust such reduction to the satisfaction of
such holders or (ii) employ, at the expense of the Company, an
independent appraiser satisfactory to such holders to determine the
appropriate Pro-Rata Basis of such reduction. Any such determination by
an independent appraiser shall be binding upon the Company and the
holders of the Notes.
8.3 ACCOUNTANTS' CERTIFICATES.
Each set of annual financial statements delivered pursuant to Section
0(b)(ii) shall be accompanied by a certificate of the accountants who certify
such financial statements, stating that they have reviewed Section 7.1 through
Section 7.14, inclusive, of this Agreement insofar as such Sections relate to
accounting matters and stating further, whether, in making their audit, such
accountants have become aware of any condition or event which then constitutes a
Default or an Event of Default, and, if such accountants are aware that any such
condition or event then exists, specifying the nature and period of existence
thereof, provided that nothing in this Section 8.3 shall obligate such
accountants to review any Section of this Agreement other than the aforesaid
Section 7.1 through Section 7.14 and the related definitions.
8.4 INSPECTION.
(a) PARENT, COMPANY AND SPHI. The Parent and the Company shall
permit the representatives of each holder of Notes, at the expense of
such holder (or, if a Default or Event of Default shall exist at such
time, at the expense of the Company) to visit and inspect any of the
Properties of the Parent, the Company or SPHI 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, employees and
independent public accountants (and by this provision the Parent and
the Company authorize said accountants to discuss the finances and
affairs of the Parent, the Company and SPHI) all at such reasonable
times and as often as may be reasonably requested.
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(b) OTHER SUBSIDIARIES. The Parent shall use its best efforts
to provide the representatives of each holder of Notes, at the expense
of such holder (or, if a Default or Event of Default shall exist at
such time, at the expense of the Company) access to and inspection of
the Properties of each other Subsidiary to examine such Subsidiary's
books of account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss such Subsidiary's affairs, finances
and accounts with such Subsidiary's officers, employees and independent
public accountants (and by this provision the Parent authorizes said
accountants to discuss the finances and affairs of the Subsidiaries)
all at such reasonable times and as often as may be reasonably
requested.
8.5 CONFIDENTIAL INFORMATION.
For the purposes of this Section 8.5, "Confidential Information" means
information delivered to you by or on behalf of the Parent, the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Parent, the Company or such Subsidiary,
provided that such term does not include information that
(a) was publicly known or otherwise known to you prior to the
time of such disclosure,
(b) subsequently becomes publicly known through no act or
omission by you or any Person acting on your behalf,
(c) otherwise becomes known to you other than through
disclosure by the Parent, the Company or any Subsidiary or
(d) constitutes financial statements delivered to you under
Section 8.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to
(i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment
represented by your Notes) who agree to hold confidential the
Confidential Information substantially in accordance with the
terms of this Section 8.5 to the extent contemplated by such
confidentiality procedures,
(ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this
Section 8.5,
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(iii) any other holder of any Note,
(iv) any Institutional Investor to which you sell or
offer to sell your Notes 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 8.5),
(v) any Person from which you offer to purchase any
Security of the Parent, the Company or any Subsidiary (if such
Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 8.5),
(vi) any federal or state regulatory authority having
jurisdiction over you,
(vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information
about your investment portfolio or
(viii) any other Person to which such delivery or
disclosure may be necessary or appropriate
(A) to effect compliance with any law, rule,
regulation or order applicable to you,
(B) in response to any subpoena or other
legal process,
(C) in connection with any litigation to
which you are a party or
(D) if an Event of Default has occurred and
is continuing, to the extent you may reasonably
determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for
the protection of the rights and remedies under your
Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 8.5 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 Parent and the Company embodying
the provisions of this Section 8.5.
9. EVENTS OF DEFAULT
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9.1 NATURE OF EVENTS.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) PRINCIPAL OR MAKE-WHOLE AMOUNT PAYMENTS -- the Company
shall fail to make any payment of principal or Make-Whole Amount on any
Note on or before the date such payment is due or the Company shall
fail to comply with any of its obligations set forth in Section 5.3;
(b) INTEREST PAYMENTS -- the Company shall fail to make any
payment of interest on any Note on or before five (5) Business Days
after the date such payment is due;
(c) PARTICULAR COVENANT DEFAULTS -- the Parent, the Company or
SPHI shall fail to perform or observe any covenant contained in Section
7.6 through Section 7.13, inclusive, or in Section 0(c)(vi) or Section
0(c)(vii);
(d) OTHER DEFAULTS -- the Parent, the Company or SPHI shall
fail to comply with any other provision hereof and such failure shall
continue for more than thirty (30) days after the date on which such
failure shall first become known to any officer of the Parent or the
Company;
(e) WARRANTIES OR REPRESENTATIONS -- any warranty,
representation or other statement by or on behalf of the Parent or the
Company contained herein or in any document or instrument furnished in
compliance with or in reference hereto shall have been false or
misleading in any material respect when made;
(f) DEFAULT ON INDEBTEDNESS OR SECURITY --
(i) the Parent, the Company or SPHI shall fail to
make any payment on any Indebtedness or any Security at final
maturity, or
(ii) any event shall occur or any condition shall
exist in respect of any Indebtedness or any Security of the
Parent, the Company or SPHI, or under any agreement securing
or relating to any such Indebtedness or Security, that has
caused the holders of such Indebtedness or Security, or a
portion thereof, to accelerate the payment of such
Indebtedness or Security prior to its stated maturity or prior
to its regularly scheduled date or dates of payment,
provided that the aggregate amount of all obligations in respect of all
such Indebtedness and Securities referred to in this clause (f) exceeds
at such time Five Million Dollars ($5,000,000);
(g) INVOLUNTARY BANKRUPTCY PROCEEDINGS --
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(i) a receiver, liquidator, custodian or trustee of
the Parent, the Company, or SPHI, or of all or any of the
Property of any of the foregoing, shall be appointed by court
order and such order remains in effect for more than thirty
(30) days; or an order for relief shall be entered with
respect to the Parent, the Company or SPHI, or the Parent, the
Company or SPHI shall be adjudicated a bankrupt or insolvent;
or
(ii) any of the Real Estate Assets shall be
sequestered by court order and such order remains in effect
for more than thirty (30) days (provided that the temporary
inability of the Company or SPHI to enforce its rights with
respect to any Real Estate Loan resulting from the operation
of the automatic stay in connection with bankruptcy
proceedings of the related obligor on such Real Estate Loan
shall not be deemed to be a sequestration of such Real Estate
Loan), or any other Property of the Parent, the Company or
SPHI shall be sequestered by court order and such order
remains in effect for more than thirty (30) days and the
sequestration of such Property could reasonably be expected to
have a Material Adverse Effect; or
(iii) a petition shall be filed against the Parent,
the Company or SPHI under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter
in effect, and shall not be dismissed within thirty (30) days
after such filing;
(h) VOLUNTARY PETITIONS -- the Parent, the Company or SPHI
shall file a petition in voluntary bankruptcy or seeking relief under
any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or shall consent to
the filing of any petition against it under any such law, excluding any
such filing for the purpose of a reconstruction, reorganization,
merger, consolidation or other arrangement on terms approved, prior to
such filing, by the holders of at least fifty percent (50%) in
principal amount of the Notes (exclusive of Notes held by any one or
more of the Parent, the Company, any Subsidiary and any Affiliate) at
the time outstanding;
(i) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Parent,
the Company or SPHI shall make an assignment for the benefit of its
creditors, or shall admit in writing its inability, or fails, to pay
its debts generally as they become due, or shall consent to the
appointment of a receiver, liquidator or trustee of the Parent, the
Company or SPHI or of all or any part of the Property of the Parent,
the Company or SPHI; or
(j) UNDISCHARGED FINAL JUDGMENTS -- a final judgment or final
judgments for the payment of money aggregating in excess of One Million
Dollars ($1,000,000) shall be outstanding against one or more of the
Parent, the Company and SPHI and any one of such judgments shall have
been outstanding for more than sixty (60) days from the date of its
entry and shall not have been stayed or discharged in full, provided
that the calculation
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of the aforesaid One Million Dollars ($1,000,000) shall exclude any
final judgment to the extent, but only to the extent, such judgment
will be covered by payments from insurance maintained by the Parent,
the Company or SPHI and
(i) the issuer of such insurance has agreed, in
writing, to make such payment in respect of such judgment or
(ii) if the issuer of such insurance has not agreed
to make such payment in respect of such judgment,
(A) the liability of such issuer to make
such payment is being contested in good faith by
appropriate proceedings,
(B) adequate reserves have been established
in respect of such judgment and
(C) nonpayment of such judgment could not
reasonably be expected to have a Material Adverse
Effect.
9.2 DEFAULT REMEDIES.
(a) ACCELERATION ON EVENT OF DEFAULT.
(i) If an Event of Default specified in clause (g),
clause (h) or clause (i) of Section 0 shall exist, all of the
Notes at the time outstanding shall automatically become
immediately due and payable together with interest accrued
thereon and, to the extent permitted by law, the Make-Whole
Amount at such time with respect to the principal amount of
such Notes, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived.
(ii) If an Event of Default other than those
specified in clause (g), clause (h) and clause (i) of Section
0 shall exist, the Required Holders may exercise any right,
power or remedy permitted to such holder or holders by law,
and shall have, in particular, without limiting the generality
of the foregoing, the right to declare the entire principal
of, and all interest accrued on, all the Notes then
outstanding to be, and such Notes shall thereupon become,
forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith pay to the
holder or holders of all the Notes then outstanding the entire
principal of, and interest accrued on, the Notes and, to the
extent permitted by law, the Make-Whole Amount at such time
with respect to such principal amount of such Notes.
(b) ACCELERATION ON PAYMENT DEFAULT. During the existence of
an Event of Default described in Section 0(a) or Section 0(b), and
irrespective of whether the Notes then outstanding shall have been
declared to be due and payable pursuant to Section
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0(a)(ii), any holder of Notes that shall have not consented to any
waiver with respect to such Event of Default may, at such holder's
option, by notice in writing to the Company, declare the Notes then
held by such holder to be, and such Notes shall thereupon become,
forthwith due and payable together with all interest accrued thereon,
without any presentment, demand, protest or other further notice of any
kind, all of which are hereby expressly waived, and the Company shall
forthwith pay to such holder the entire principal of and interest
accrued on such Notes and, to the extent permitted by law, the
Make-Whole Amount at such time with respect to such principal amount of
such Notes.
(c) VALUABLE RIGHTS. The Company acknowledges, and the parties
hereto agree, that the right of each holder to maintain its investment
in the Notes free from repayment by the Company (except as herein
specifically provided for) is a valuable right 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.
(d) OTHER REMEDIES. During the existence of an Event of
Default and irrespective of whether the Notes then outstanding shall
have been declared to be due and payable pursuant to Section 0(a)(ii)
and irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce its rights hereunder
and under such Notes by exercising such remedies as are available to
such holder in respect thereof under applicable law, either by suit in
equity or by action at law, or both, whether for specific performance
of any agreement contained herein or in aid of the exercise of any
power granted herein, provided that the maturity of such holder's Notes
may be accelerated only in accordance with Section 0(a) and Section
0(b).
(e) NONWAIVER AND EXPENSES. No course of dealing on the part
of any holder of Notes nor any delay or failure on the part of any
holder of Notes to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies.
If the Company shall fail to pay when due any principal of, or
Make-Whole Amount or interest on, any Note, or shall fail to comply
with any other provision hereof, the Company shall pay to each holder
of Notes, to the extent permitted by law,
(i) such further amounts as shall be sufficient to
cover the costs and expenses, including but not limited to
reasonable attorneys' fees and expenses, incurred by such
holder in collecting any sums due on such Notes, and
(ii) all expenses incurred by any holder of Notes in
connection with the enforcement, assessment or analysis of any
rights under this Agreement and the Notes and any rights or
remedies that are or may be available to such holder
(including in each such case, without limitation, all
reasonable attorneys' and financial advisors' fees and
expenses and the allocated reasonable cost of such holder's
counsel who are its employees or its affiliates' employees).
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9.3 ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 0(a)(ii), then and in
every such case, the Required Holders may, by written instrument filed with the
Company, rescind and annul such declaration, and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the
payment of any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all the Notes and all other
sums payable hereunder and under the Notes (except any principal of, or
interest or Make-Whole Amount on, the Notes which shall have become due
and payable by reason of such declaration under Section 0(a)(ii)) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall
have been waived pursuant to Section 0 or otherwise made good or cured,
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
10. INTERPRETATION OF THIS AGREEMENT
10.1 TERMS DEFINED.
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, the Parent and any other
Person (other than SPHI)
(a) for the purposes of Section 5.6, Section 8.2(c),
Section 9.1(h), the definition of "Required Holders" in
Section 10.1, Section 11.5(a) and Section 11.5(b)(iii),
(i) that directly or indirectly
through one or more intermediaries controls, or is
controlled by, or is under common control with, the
Parent or the Company,
(ii) that beneficially owns or holds
five percent (5%) or more of any class of the Voting
Stock of the Parent or the Company, or
(iii) five percent (5%) or more of
the Voting Stock (or in the case of a Person that is
not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or
held by the Parent, the Company or a Subsidiary,
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at such time, and
(b) for the purposes of Section 2.3, Section 7.12 and
as otherwise used in this Agreement,
(i) that directly or indirectly
through one or more intermediaries controls, or is
controlled by, or is under common control with, the
Company,
(ii) that beneficially owns or holds
five percent (5%) or more of any class of the Voting
Stock of the Company, or
(iii) five percent (5%) or more of
the Voting Stock (or in the case of a Person that is
not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or
held by the Company,
at such time.
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.
AGREEMENT, THIS -- means this agreement, as it may be amended
and restated from time to time.
BUSINESS DAY -- means, at any time, a day other than a
Saturday, a Sunday or, in the case of any Note with respect to which
the provisions of Section 0 are applicable, a day on which the bank
designated (by the holder of such Note) to receive (for such holder's
account) payments on such Note is required by law (other than a general
banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
CAPITAL LEASE -- means, at any time, a lease with respect to
which the lessee is required to recognize the acquisition of an asset
and the incurrence of a liability at such time.
CLOSING -- Section 0.
CLOSING DATE -- Section 0.
COMPANY -- has the meaning specified in the introductory
sentence.
CONFIDENTIAL INFORMATION -- Section 8.5.
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CONSOLIDATED NET WORTH -- means, at any time, total
stockholders' equity as would be shown on a consolidated balance sheet
of the Parent and the Subsidiaries at such time, determined on a
consolidated basis for such Persons in accordance with GAAP.
CONTRIBUTIONS -- means cash contributions made by the Parent
to the capital of the Company after the Closing Date.
CUMULATIVE NON-ESSENTIAL CONTRIBUTIONS -- means, at any time,
the aggregate of all Contributions (other than Operating Expense
Contributions or Contributions directly or indirectly utilized to
enable the Company to pay principal, interest, Make-Whole Amount or
other amounts due in respect of the Notes) at or prior to such time.
CUMULATIVE OPERATING EXPENSES -- means, at any time, the
aggregate amount of Operating Expenses of the Company and SPHI,
determined on a consolidated basis for such Persons, paid, or due and
payable, from and including the Closing Date to such time.
DEFAULT -- means an event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become
an Event of Default.
DESIGNATED DISPOSITION VALUE -- means, at any time, with
respect to each Real Estate Asset, the amount set forth on Annex 4
pertaining to such Real Estate Asset, adjusted as follows: the
Designated Disposition Value shall, subject to the provisions of
Section 8.2(c), be reduced
(a) with respect to any Real Estate Property, on a
Pro-Rata Basis in the event that a portion or portions of such
Real Estate Property shall have been sold at or prior to such
time, or
(b) with respect to any Real Estate Loan, on a
dollar-for-dollar basis to the extent that principal
reductions shall have been made on such Real Estate Loan at or
prior to such time;
provided that in the case of any Real Estate Loan made by the Company
or SPHI in the form of a Seller Note, the net book value (determined in
accordance with GAAP) of such Seller Note shall in all cases be deemed
to be its Designated Disposition Value. As used herein, the term
"Pro-Rata Basis" means, with respect to any portion of any Real Estate
Property sold, the relationship of such portion sold to the portion
retained by the Company on a basis which is reasonably related to the
respective fair market values of the portions sold and retained at the
time of such sale, provided that the sum of the Designated Disposition
Value assigned to the portion sold plus the Designated Disposition
Value assigned the portion retained shall equal the Designated
Disposition Value of such Real Estate Property prior to adjustment.
DOL -- means the Department of Labor and any successor agency.
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DOWNGRADE EVENT -- means the existence or occurrence of any
one or more of the following conditions:
(a) the Parent shall have senior unsecured debt
obligations with an actual credit rating of lower than "BBB-"
by S&P or lower than "Baa3" by Moody's,
(b) the Parent shall have subordinated unsecured debt
obligations with an actual credit rating of lower than "BB+"
by S&P or lower than "Ba1" by Moody's or
(c) the Parent shall fail to have any unsecured debt
obligations with a credit rating issued by S&P or Moody's,
unless
(i) the Company shall have obtained, and
shall maintain on an ongoing basis, at its expense,
private letter ratings of the Notes of at least
"BBB-" from S&P and of at least "Baa3" from Moody's,
or an Issuer Credit Rating (or a comparable rating)
of the Parent of at least "BBB-" from S&P and an
Issuer Rating (or a comparable rating) of the Parent
of at least "Baa3" from Moody's and
(ii) Consolidated Net Worth shall, at all
times, be at least Eight Hundred Million Dollars
($800,000,000).
DOWNGRADE PREPAYMENT DATE -- Section 5.3(a).
ENVIRONMENTAL PROTECTION LAW -- means any federal, state,
county, regional or local law, statute, or regulation (including,
without limitation, CERCLA, RCRA and ▇▇▇▇) enacted in connection with
or relating to the protection or regulation of the environment,
including, without limitation, those laws, statutes, and regulations
regulating the disposal, removal, production, storing, refining,
handling, transferring, processing, or transporting of Hazardous
Substances, and any regulations, issued or promulgated in connection
with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in
connection with any of the foregoing.
As used in this definition:
CERCLA -- means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
from time to time (by ▇▇▇▇ or otherwise), and all rules and
regulations promulgated in connection therewith;
RCRA -- means the Resource Conservation and Recovery
Act of 1976, as amended, and any rules and regulations issued
in connection therewith; and
▇▇▇▇ -- means the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and
all rules and regulations promulgated
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in connection therewith.
ERISA -- means the Employee Retirement Income Security Act of
1974, as amended from time to time.
ERISA AFFILIATE -- means any corporation or trade or business
that
(a) is a member of the same controlled group of
corporations (within the meaning of section 414(b) of the IRC)
as the Parent or the Company,
(b) is under common control (within the meaning of
section 414(c) of the IRC) with the Parent or the Company,
(c) is a member of the same affiliated service group
(within the meaning of section 414(m) of the IRC) as the
Parent or the Company, or
(d) is combined or otherwise aggregated with the
Parent or the Company pursuant to regulations issued under
section 414(o) of the IRC.
EVENT OF DEFAULT -- Section 0.
EXCESS CUMULATIVE NET PROCEEDS -- means, at any time, an
amount equal to the result of
(a) the aggregate net cash proceeds received by the
Company and SPHI from all Real Estate Assets sold, paid down
or repaid at or prior to such time minus
(b) the aggregate of the Designated Disposition
Values for such Real Estate Assets, in each case determined as
of the date of sale, pay down or repayment of such Real Estate
Asset.
FINANCING DOCUMENTS -- means the Note Purchase Agreements, the
Notes, and any other agreements and instruments to be executed pursuant
to the terms of each of such documents, as each may be amended from
time to time.
FOREIGN PENSION PLAN -- means any plan, fund or other similar
program
(a) established or maintained outside of the United
States of America by any one or more of the Parent, the
Company or the Subsidiaries primarily for the benefit of the
employees (substantially all of whom are aliens not residing
in the United States of America) of the Parent, the Company or
such Subsidiaries which plan, fund or other similar program
provides for retirement income for such employees or results
in a deferral of income for such employees in contemplation of
retirement and
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(b) not otherwise subject to ERISA.
GAAP -- means accounting principles as promulgated from time
to time in statements, opinions and pronouncements by the American
Institute of Certified Public Accountants and the Financial Accounting
Standards Board and in such statements, opinions and pronouncements of
such other entities with respect to financial accounting of for-profit
entities as shall be accepted by a substantial segment of the
accounting profession in the United States.
GOVERNMENTAL AUTHORITY -- means
(a) the government of
(i) the United States of America and any
state or other political subdivision thereof, or
(ii) any jurisdiction (y) in which the
Parent, the Company or any Subsidiary conducts all or
any part of its business or (z) that asserts
jurisdiction over the conduct of the affairs or
Properties of the Parent, the Company or any
Subsidiary, and
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
GUARANTY -- means with respect to any Person (for the purposes
of this definition, the "Guarantor") 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 (including, without limitation, by means of a
surety bond, letter of credit or other similar instrument, whether or
not designated as a "guaranty") any indebtedness, dividend or other
obligation of any other Person (the "Primary Obligor") in any manner,
whether directly or indirectly, including, without limitation,
obligations incurred through an agreement, contingent or otherwise, by
the Guarantor:
(a) to purchase such indebtedness or obligation or
any Property or assets constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such
indebtedness or obligation, or
(ii) to maintain working capital or other
balance sheet condition, statement of financial
condition or any income statement condition of the
Primary Obligor or otherwise to advance or make
available funds for the
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purchase or payment of such indebtedness or
obligation;
(c) to lease Property or to purchase Securities or
other Property or services primarily for the purpose of
assuring the owner of such indebtedness or obligation of the
ability of the Primary Obligor to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness
or obligation of the Primary Obligor against loss in respect
thereof.
For purposes of computing the amount of any Guaranty, in connection
with any computation of indebtedness or other liability, it shall be
assumed that the indebtedness or other liabilities that are the subject
of such Guaranty are direct obligations of the issuer of such Guaranty.
HAZARDOUS SUBSTANCES -- means any and all pollutants,
contaminants, toxic or hazardous wastes or any other substances that
might pose a hazard to health or safety, the removal of which is
required, or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of
which is restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam
insulation and polychlorinated biphenyls).
INDEBTEDNESS -- with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money (whether or
not evidenced by a Security);
(b) any liabilities for borrowed money secured by any
Lien existing on Property owned by such Person (whether or not
such liabilities have been assumed);
(c) its liabilities in respect of Capital Leases;
(d) the present value of all its liabilities for
payments due under any arrangement for retention of title or
any conditional sale agreement (other than a Capital Lease)
discounted at the implicit rate, if known, with respect
thereto or, if unknown, at eight percent (8%) per annum; and
(e) all obligations of such Person in respect of
Guaranties, letters of credit or instruments serving a similar
function and endorsements, in each case in respect of or in
support of the obligations of any other Person of the type set
forth in clause (a) through clause (d) of this definition.
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INSTITUTIONAL INVESTOR -- means the Purchasers, any affiliate
of any of the Purchasers, and any holder of Notes that is an
"accredited investor" as defined in section 2(15) of the Securities
Act.
INVESTMENT -- means any investment, made in cash or by
delivery of Property, by the Parent, the Company or SPHI:
(a) in any Person, whether by acquisition of stock,
indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise, or
(b) in any Property.
Investments shall be valued at cost less any net return of capital
through the sale or liquidation thereof or other return of capital
thereon.
IRC -- means the Internal Revenue Code of 1986, together with
all rules and regulations promulgated pursuant thereto, as amended from
time to time.
IRS -- means the Internal Revenue Service and any successor
agency.
LIEN -- means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising
from a mortgage, encumbrance, pledge, conditional sale or trust receipt
or a consignment or bailment for security purposes, and the filing of
any financing statement under the Uniform Commercial Code of any
jurisdiction, or an agreement to give any of the foregoing. The term
"Lien" includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting real property. For the
purposes hereof, the Parent, the Company and each Subsidiary is deemed
to be the owner of any Property that it shall have acquired or holds
subject to a conditional sale agreement, Capital Lease or other
arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes, and such
retention or vesting is deemed a Lien. The term "Lien" does not include
negative pledge clauses in agreements relating to the borrowing of
money.
MAKE-WHOLE AMOUNT -- means, with respect to any date (a
"Prepayment Date") and any principal amount ("Prepaid Principal") of
Notes required or desired for any reason to be paid prior to the
regularly scheduled maturity thereof on such Prepayment Date, the
greater of
(a) Zero Dollars ($0), or
(b) (i) the sum of the present values of the then
remaining
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scheduled payments of principal and interest that
would be payable in respect of such Prepaid Principal
but for such prepayment or acceleration, minus
(ii) the sum of
(A) the amount of such Prepaid
Principal, plus
(B) the amount of interest accrued
on such Prepaid Principal since the
scheduled interest payment date immediately
preceding such Prepayment Date.
In determining such present values, a discount rate equal to the
Make-Whole Discount Rate with respect to such Prepayment Date and
Prepaid Principal divided by two (2), and a discount period of six (6)
months of thirty (30) days each, shall be used.
As used in this definition:
Make-Whole Discount Rate -- means, with respect to
any Prepayment Date and Prepaid Principal, the sum of
(a) the per annum percentage rate (rounded
to the nearest three (3) decimal places) equal to the
bond equivalent yield to maturity derived from the
annual yield to maturity of the United States
Treasury obligation listed in the Applicable H.15 as
of such Prepayment Date for the then most recently
available day in such Applicable H.15 with a Treasury
Constant Maturity (as defined in such Applicable
H.15) equal to the Weighted Average Life to Maturity
of such Prepaid Principal determined as of such
Prepayment Date, plus
(b) fifty one-hundredths percent (0.50%) per
annum.
For purposes of clause (a) of the preceding sentence, if no
United States Treasury obligation with a Treasury Constant
Maturity corresponding exactly to the Weighted Average Life to
Maturity of such Prepaid Principal is listed, the yields for
the two (2) published United States Treasury obligations with
Treasury Constant Maturities most closely corresponding to
such Weighted Average Life to Maturity (one (1) with a longer
maturity and one (1) with a shorter maturity, if available)
shall be calculated pursuant to the immediately preceding
sentence and the Make-Whole Discount Rate shall be
interpolated or extrapolated from such yields on a
straight-line basis.
Applicable H.15 -- means, at any time, United States
Federal Reserve Statistical Release H.15(519) or its successor
publication then most recently published and available to the
public or, if no such successor publication is available, then
any other source of current information in respect of interest
rates
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on securities of the United States of America that is
generally available and, in the judgment of the Required
Holders, provides information reasonably comparable to the
H.15(519) report.
Weighted Average Life to Maturity -- means, with
respect to any Prepayment Date and Prepaid Principal, the
number of years obtained by dividing the Remaining
Dollar-Years of such Prepaid Principal determined on such
Prepayment Date by such Prepaid Principal.
Remaining Dollar-Years -- means, with respect to any
Prepayment Date and Prepaid Principal, the result obtained by
(a) multiplying, in the case of each
required payment of principal (including payment at
maturity) that would be payable in respect of such
Prepaid Principal but for such prepayment,
(i) an amount equal to such
required payment of principal, by
(ii) the number of years (calculated
to the nearest one-twelfth (1/12) that will
elapse between such Prepayment Date and the
date such required principal payment would
be due if such Prepaid Principal had not
been so prepaid, and
(b) calculating the sum of each of the
products obtained in the preceding subsection (a).
MARGIN SECURITY -- means "margin stock" within the meaning of
Regulations T, U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II, as amended from time to time.
MATERIAL ADVERSE EFFECT -- means a material adverse effect on
the business, profits, Properties or condition (financial or otherwise)
of the Parent, the Company and the Subsidiaries, taken as a whole, or
the ability of the Parent or the Company to perform their respective
obligations under the Financing Documents.
MOODY'S -- Section 10.1 (in the definition of "Nationally
Recognized Rating Agency").
MULTIEMPLOYER PLAN -- means any multiemployer plan (as defined
in section 3(37) of ERISA) in respect of which the Parent, the Company
or any ERISA Affiliate is an "employer" (as such term is defined in
section 3 of ERISA).
MULTIPLE EMPLOYER PENSION PLAN -- means any employee benefit
plan within the meaning of section 3(3) of ERISA (other than a
Multiemployer Plan), subject to Title IV of
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ERISA, constituting a "single-employer plan" (as defined in section
4001 of ERISA) which has two (2) or more "contributing sponsors" (as
defined in section 4001 of ERISA), at least two (2) of which are not
under "common control" (as defined in section 4001 of ERISA) and to
which the Parent, the Company or any ERISA Affiliate contribute;
provided that for purposes of this Agreement the Chicago Title & Trust
Pension Plan shall be deemed not to be a Multiple Employer Pension
Plan.
NATIONALLY RECOGNIZED RATING AGENCY -- means either Standard &
Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P"), or
▇▇▇▇▇'▇ Investors Service ("Moody's"), or Duff & ▇▇▇▇▇▇ Credit Rating
Co.
1995 NOTES -- means the Company's 8.62% Senior Notes due
February 23, 2000 issued pursuant to those certain Note Purchase
Agreements, each dated January 15, 1995, between the Company and each
of the purchasers identified on Annex 1 thereto, as amended by the
Amendment to Note Purchase Agreement, dated as of June 23, 1995, the
Amendment No. 2 to Note Purchase Agreement, dated as of November 6,
1995, and the Third Amendment to Note Purchase Agreement, dated as of
the date hereof.
NOTE PURCHASE AGREEMENT -- Section 0(c).
NOTES -- Section 0.
OPERATING EXPENSE CONTRIBUTIONS -- means, at any time, the
aggregate amount of Contributions
(a) directly applied by the Company or SPHI to the
payment of Operating Expenses after the Closing Date and prior
to such time and
(b) which the Company is under no obligation to repay
to the Parent.
OPERATING EXPENSES -- means any and all expenses and other
amounts incurred or expended by the Company or SPHI in the operation of
its business, including, without limitation, property taxes,
construction bonds and assessments, legal expenses, rental and lease
payments, employee salaries, telephone and utility costs and similar
items.
OTHER PURCHASERS -- Section 0(c).
NORTH NATOMAS PROPERTIES -- means the Real Estate Properties
identified on Part 10.1 of Annex 3.
PARENT -- has the meaning specified in the introductory
sentence.
PBGC -- means the Pension Benefit Guaranty Corporation and any
successor corporation or governmental agency.
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PENSION PLAN -- means, at any time, any "employee pension
benefit plan" (as defined in section 3 of ERISA) maintained at such
time by the Parent, the Company or any ERISA Affiliate for employees of
the Parent, the Company or such ERISA Affiliate, excluding any
Multiemployer Plan, but including, without limitation, any Multiple
Employer Pension Plan; provided that for purposes of this Agreement the
Chicago Title & Trust Pension Plan shall be deemed not to be a Pension
Plan.
PERMITTED EXTRAORDINARY DIVIDEND -- means the dividend by the
Company to the Parent, on or about the Closing Date, in the amount of
up to Thirty-Nine Million Five Hundred Thousand Dollars ($39,500,000).
PERMITTED INVESTMENTS -- means, at any time, the following:
(a) Investments in direct obligations of, or
obligations guarantied by, the United States of America or any
agency of the United States of America the obligations of
which agency carry the full faith and credit of the United
States of America, provided that such obligations mature
within three (3) years from the date of acquisition thereof;
(b) Investments in commercial paper of corporations
that at the time of acquisition thereof have an assigned
rating in one of the top two rating classifications by a
Nationally Recognized Rating Agency, provided that such
commercial paper matures within two hundred seventy (270) days
from the date of acquisition thereof;
(c) Investments in any open-ended money market mutual
fund that invests solely in so-called "money market"
instruments maturing not more than one (1) year after the
acquisition thereof, which fund has total assets in excess of
One Billion Dollars ($1,000,000,000) and which is regulated by
the Investment Company Act of 1940, as amended, and which
Investments would be classified as a current asset under GAAP;
(d) Investments in any mutual fund that invests
solely in preferred stocks of corporations that have an
assigned rating in one of the top two rating categories by a
Nationally Recognized Rating Agency and which fund is
regulated by the Investment Company Act of 1940, as amended;
(e) Investments in certificates of deposit,
eurodollar deposits, repurchase agreements and bankers'
acceptances maturing within one (1) year from the date of
acquisition, issued by a commercial bank organized under the
laws of the United States of America or any state thereof and
having capital, surplus and undivided profits aggregating at
least One Hundred Million Dollars ($100,000,000);
(f) Investments in any obligation of any state of the
United States of America, or municipality thereof, that at the
time of acquisition thereof have an
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assigned rating in one of the top two rating categories by a
Nationally Recognized Rating Agency; provided that such
obligations mature within three (3) years of the date of
acquisition thereof;
(g) Investments in local deposit accounts maintained
for operating funds of the Company and SPHI; and
(h) Investments existing on the Closing Date and
disclosed in Part 10.1 of Annex 3.
Investments shall be valued at cost less any net return of capital
through the sale or liquidation thereof or other return of capital
thereon, in any case without giving effect to any write-down in the
value thereof.
PERSON -- means an individual, partnership, corporation,
limited liability company, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
PLACEMENT MEMORANDUM -- Section 0.
PROPERTY -- means any interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible.
PURCHASER -- means the Persons listed as purchasers of Notes
on Annex 1.
QUALIFIED INDEBTEDNESS COVERAGE ASSETS -- means
(a) at any time, when the Company or SPHI holds Real
Estate Assets, the sum (without duplication) of
(i) the aggregate Allowable Value of all
Real Estate Assets held by the Company and SPHI at
such time, plus
(ii) cash of the Company and SPHI at such
time, plus
(iii) Permitted Investments (other than cash
and Real Estate Assets) of the Company and SPHI at
such time, and
(b) at any time, when neither the Company nor SPHI
holds any Real Estate Assets, cash of the Company and SPHI at
such time.
As used in this definition:
Allowable Value -- means,
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(i) with respect to each North Natomas
Property, the Designated Disposition Value of such
Real Estate Property at such time,
(ii) with respect to each Real Estate Loan
which is a Seller Note, the net book value
(determined in accordance with GAAP) of such Seller
Note at such time, and
(iii) with respect to each of the other Real
Estate Assets not covered by subclause (i) or
subclause (ii) above, the lesser of
(A) the Designated Disposition
Value of such Real Estate Asset at such time
and
(B) the net book value (determined
in accordance with GAAP) of such Real Estate
Asset at such time.
QUALIFIED RESTRICTED PAYMENT ASSETS -- means, at any time, the
sum (without duplication) of
(a) the lesser of
(i) the aggregate Designated Disposition
Value of all Real Estate Assets held by the Company
and SPHI at such time and
(ii) the Reserve for Disposition at such
time plus
(A) in the case of all Real Estate
Assets held by the Company and SPHI at such
time other than the North Natomas
Properties, the aggregate net book value
(each as determined in accordance with GAAP)
of such Real Estate Assets, and
(B) in the case of the North
Natomas Properties, the aggregate Designated
Disposition Value of such Real Estate
Properties at such time,
plus
(b) cash of the Company and SPHI at such time, plus
(c) Permitted Investments (other than cash and Real
Estate Assets) of the Company and SPHI at such time.
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As used in this definition:
Reserve for Disposition -- means, at any time, the
lesser of
(i) Four Million Five Hundred Thirty-One
Thousand Three Hundred Seventy-Nine Dollars
($4,531,379) and
(ii) the aggregate amount of reserves for
disposition reflected on Annex 4 and attributable to
Real Estate Assets other than the North Natomas
Properties owned by the Company and SPHI at such
time.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
REAL ESTATE ASSETS -- means the collective reference to Real
Estate Properties, Real Estate Loans and, without duplication, the
Seller Notes.
REAL ESTATE LOANS -- means loans to be repaid to the Company
or SPHI, including, without limitation, loans in the form of Seller
Notes, that are secured by unimproved or improved land with no
significant building improvements, which loans are available for sale
by the Company or SPHI.
REAL ESTATE PROPERTIES -- means real Properties or investments
in real Properties (other than Real Estate Loans) owned by the Company
or SPHI and available for sale by the Company or SPHI.
REQUIRED HOLDERS -- means, at any time, the holders of at
least sixty-six and two-thirds percent (66"%) in principal amount of
the Notes at the time outstanding (exclusive of Notes then owned by any
one or more of the Parent, the Company, any Subsidiary and any
Affiliate).
RESTRICTED INVESTMENTS -- means, at any time, all Investments
except Permitted Investments.
RESTRICTED PAYMENT -- means:
(a) any dividend or other distribution, direct or
indirect, on account of any shares of capital stock of the
Company now or hereafter outstanding, whether in cash or other
Property, except a dividend or other distribution payable
solely in shares of common stock of the Company, and
(b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of capital
stock of the Company now or hereafter outstanding, or of any
warrants, rights or options to acquire any shares of such
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stock.
S&P -- Section 10.1 (in the definition of "Nationally
Recognized Rating Agency").
SCHEDULED INTEREST PAYMENTS -- means, at any time, the sum of
(a) all future unpaid scheduled payments of interest
in respect of the Notes and the 1995 Notes at such time plus
(b) the aggregate amount of all future unpaid
scheduled payments of interest in respect of all other
Indebtedness of the Company and SPHI outstanding at such time,
in each case without application of any "present value" discount
thereto and assuming for such calculation that all principal payments
on the Notes and such other Indebtedness will be paid in accordance
with the regularly scheduled terms.
SECURITIES ACT -- means the Securities Act of 1933, as
amended.
SECURITY -- means "security" as defined by section 2(1) of the
Securities Act.
SELLER NOTE -- means a promissory note received by the Company
or SPHI in connection with, and as consideration for, a Transfer of
Real Estate Assets and
(a) naming the Company or SPHI as the payee,
(b) requiring a monthly or a quarterly payment of
interest at a per annum rate equal to or greater than the
lesser of
(i) nine percent (9%), or
(ii) the rate of interest publicly announced
by Bank of America from time to time as its prime
rate at the time of such Transfer, and
(c) secured by a perfected first priority Lien in
favor of the Company or SPHI in the Real Estate Assets that
are the subject of the Transfer related to the delivery of
such promissory note.
SIGNIFICANT SUBSIDIARY -- means a Subsidiary which is a
"Significant Subsidiary" of the Parent within the meaning set forth in
Regulation S-X of the Securities and Exchange Commission.
SPECIAL COUNSEL -- Section 1.2(b).
SPHI -- means Sacramento Properties Holdings, Inc., a
California corporation and
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a wholly-owned subsidiary of the Company.
SUBSIDIARY -- means, at any time, a corporation of which the
Parent owns, directly or indirectly, more than fifty percent (50%) (by
number of votes) of each class of Voting Stock at such time.
TRANSFER CONSIDERATION -- means, with respect to any Transfer
of any Real Estate Asset, an amount equal to the sum of
(a) cash received by the Company or SPHI at the time
of such Transfer plus
(b) the principal amount of Seller Notes issued to
the Company or SPHI at the time of such Transfer.
TRANSFER CONTRIBUTION AMOUNT -- means, at any time, an amount
equal to the greater of
(a) Zero Dollars ($0) and
(b) the result of
(i) the Designated Disposition Value of all
Real Estate Assets which shall have been the subject
of a Transfer on and after the Closing Date and prior
to such time minus
(ii) the aggregate Transfer Consideration
received by the Company or SPHI in respect of all
Real Estate Assets which shall have been the subject
of a Transfer on and after the Closing Date and prior
to the time of such Transfer.
TRANSFERS -- Section 7.10.
VOTING STOCK -- means capital stock of any class or classes of
a corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect corporate directors (or Persons
performing similar functions).
10.2 GAAP.
Where the character or amount of any asset or liability or item of
income or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in accordance
with GAAP as in effect on the date of, or at the end of the period covered by,
the financial statements from which such asset, liability, item of income, or
item of expense, is derived, or, in the case of any such computation, as in
effect on the date as of which such computation is required to be determined,
provided, that if any term defined herein
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includes or excludes amounts, items or concepts that would not be included in or
excluded from such term if such term were defined with reference solely to GAAP,
such term will be deemed to include or exclude such amounts, items or concepts
as set forth herein.
10.3 DIRECTLY OR INDIRECTLY.
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,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
10.4 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC.. The titles
of the Sections and the Table of Contents appear as a matter of
convenience only, do not constitute a part hereof and shall not affect
the construction hereof. The words "herein," "hereof," "hereunder" and
"hereto" refer to this Agreement as a whole and not to any particular
Section or other subdivision.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
10.5 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, NEW YORK LAW, WITHOUT REFERENCE TO NEW YORK LAW
REGARDING CHOICE OF LAW.
11. MISCELLANEOUS
11.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or under the
Notes (i) shall be in writing, (ii) shall be either (A) hand delivered,
(B) deposited into the United States mail (registered or certified
mail), postage prepaid, (C) sent by overnight courier or (D)
electronically transmitted by way of "telecopy" or "fax transmission"
and, on the date of such electronic transmission, sent by overnight
courier and (iii) shall be addressed,
(1) if to the Parent,
Alleghany Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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New York, New York 10152
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if to the Company,
Alleghany Properties, Inc.
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Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Alleghany Corporation
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Parent and/or the Company, as the case
may be, shall have furnished in writing to all holders of the Notes at
the time outstanding, and
(3) if to any of the holders of the Notes,
(y) if such holders are the Purchasers, at
their respective addresses set forth on Annex 1, and
further including any parties referred to on such
Annex 1 that are required to receive notices in
addition to such holders of the Notes, and
(z) if such holders are not the Purchasers,
at their respective addresses set forth in the
register for the registration and transfer of Notes
maintained pursuant to Section 6.1,
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 0 to the Company
(which other address shall be entered in such register).
(b) WHEN GIVEN. Any communication so addressed and deposited
in the United States mail, postage prepaid, by registered or certified
mail (in each case, with return receipt requested) shall be deemed to
be received on the third (3rd) succeeding Business Day after the day of
such deposit (not including the date of such deposit). Any notice so
addressed and otherwise delivered shall be deemed to be received when
actually received at the address of the addressee.
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11.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation,
(a) consents, waivers and modifications that may hereafter be
executed,
(b) documents received by you at the closing of your purchase
of the Notes (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes,
may be reproduced by any holder of Notes by any photographic, photostatic,
microfilm, micro-card, miniature photographic, digital or other similar process
and each holder of Notes may destroy any original document so reproduced. The
Parent and the Company agree and stipulate that 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 holder of Notes in the regular course of business)
and that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence. Nothing in this Section 0 shall
prohibit the Parent, the Company or any holder of Notes from contesting the
accuracy of any such reproduction.
11.3 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Parent and the Company herein or in any certificate or other instrument
delivered by it or on its behalf hereunder shall be considered to have been
relied upon by you and shall survive the delivery to you of the Notes regardless
of any investigation made by you or on your behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Parent and the Company hereunder.
11.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder, whether or not an express assignment to
such holder of rights hereunder shall have been made by you or your successor or
assign.
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11.5 AMENDMENT AND WAIVER.
(a) REQUIREMENTS. This Agreement may be amended, and the
observance of any term hereof may be waived, with (and only with) the
written consent of the Parent, the Company and the Required Holders;
provided that no such amendment or waiver of any of the provisions of
Section 0 through Section 5, inclusive, or any defined term used
therein, shall be effective as to any holder of Notes unless consented
to by such holder in writing; and provided further that no such
amendment or waiver shall, without the written consent of the holders
of all Notes (exclusive of Notes held by the Parent, the Company, any
Subsidiary or any Affiliate) at the time outstanding,
(i) subject to Section 9, change the amount or time
of any prepayment or payment of principal or Make-Whole Amount
or the rate or time of payment of interest,
(ii) amend Section 0,
(iii) amend the definition of Required Holders, or
(iv) amend this Section 0.
The holder of any Note may specify that any such written consent
executed by it shall be effective only with respect to a portion of the
Notes held by it (in which case it shall specify, by dollar amount, the
aggregate principal amount of Notes with respect to which such consent
shall be effective) and in the event of any such specification such
holder shall be deemed to have executed such written consent only with
respect to the portion of the Notes so specified.
(b) SOLICITATION OF NOTEHOLDERS.
(i) SOLICITATION. Neither the Parent nor the Company
shall solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions hereof
or the Notes unless each holder of the Notes (irrespective of
the amount of Notes then owned by it) shall be provided by the
Parent or the Company with sufficient information to enable it
to make an informed decision with respect thereto. Executed or
true and correct copies of any waiver or consent effected
pursuant to the provisions of this Section 0 shall be
delivered by the Parent or the Company to each holder of
outstanding Notes immediately following the date on which the
same shall have been executed and delivered by all holders of
outstanding Notes required to consent or agree to such waiver
or consent.
(ii) PAYMENT. The Parent and the Company shall not,
directly or indirectly, pay or cause to be paid any
remuneration, whether by way of
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supplemental or additional interest, fee or otherwise, or
grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of
Notes 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 the holders of all Notes then outstanding.
(iii) SCOPE OF CONSENT. Any consent made pursuant to
this Section 0 by a holder of Notes that has transferred or
has agreed to transfer its Notes to the Parent, the Company,
any Subsidiary or any Affiliate and has provided or has agreed
to provide such written consent as a condition to such
transfer shall be void and of no force and effect except
solely as to such holder, and any amendments effected or
waivers granted or to be effected or granted that would not
have been or would not be so effected or granted but for such
consent (and the consents of all other holders of Notes that
were acquired under the same or similar conditions) shall be
void and of no force and effect, retroactive to the date such
amendment or waiver initially took or takes effect, except
solely as to such holder.
(c) BINDING EFFECT. Except as provided in Section 0(b), any
amendment or waiver consented to as provided in this Section 0 shall
apply equally to all holders of Notes and shall be binding upon them
and upon each future holder of any Note and upon the Parent and the
Company whether or not such Note shall have been marked to indicate
such amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any right consequent
thereon.
11.6 PAYMENTS, WHEN RECEIVED.
(a) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with
respect to, any Note shall fall due on a day other than a Business Day,
then such payment shall be made on the first Business Day following the
day on which such payment shall have so fallen due; provided that if
all or any portion of such payment shall consist of a payment of
interest, for purposes of calculating such interest, such payment shall
be deemed to have been originally due on such first following Business
Day, such interest shall accrue and be payable to (but not including)
the actual date of payment, and the amount of the next succeeding
interest payment shall be adjusted accordingly.
(b) PAYMENTS, WHEN RECEIVED. Any payment to be made to the
holders of Notes hereunder or under the Notes shall be deemed to have
been made on the Business Day such payment actually becomes available
to such holder at such holder's bank prior to 1:00 p.m. (Eastern time).
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11.7 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
11.8 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one duplicate
original.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
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If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart hereof and returning such
counterpart to the Parent and the Company, whereupon this Agreement shall become
binding between us in accordance with its terms.
Very truly yours,
ALLEGHANY CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
ALLEGHANY PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Accepted:
UNITED OF OMAHA LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: First Vice President