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EXHIBIT 4.H
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▇▇▇▇▇▇ & COMPANY
$50,000,000
PRIVATE SHELF AGREEMENT
DATED AS OF DECEMBER 29, 1995
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▇▇▇▇▇▇ & COMPANY
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As of December 29, 1995
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential
the "PURCHASERS")
c/o Prudential Capital Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇ & COMPANY, a Delaware corporation (herein called
the "COMPANY"), hereby agrees with you as set forth below. Reference is made
to paragraph 10 hereof for definitions of capitalized terms used herein and not
otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF SHELF NOTES.
The Company will authorize the issue of its senior promissory notes (the
"SHELF NOTES") in the aggregate principal amount of $50,000,000, to be dated
the date of issue thereof, to mature, in the case of each Shelf Note so issued,
no more than 15 years after the date of original issuance thereof, to have an
average life, in the case of each Shelf Note so issued, of no more than 15
years after the date of original issuance thereof, to bear interest on the
unpaid balance thereof from the date thereof at the rate per annum, and to have
such other particular terms, as shall be set forth, in the case of each Shelf
Note so issued, in the Confirmation of Acceptance with respect to such Shelf
Note delivered pursuant to paragraph 2B(5), and to be substantially in the form
of Exhibit A attached hereto. The terms "NOTE", "NOTES", "SHELF NOTE" and
"SHELF NOTES" as used herein shall include each Shelf Note delivered pursuant
to any provision of this Agreement and each Shelf Note delivered in
substitution or exchange for any such Shelf Note pursuant to any such
provision. Notes which have (i) the same final maturity, (ii) the same
principal prepayment dates, (iii) the same principal prepayment amounts (as a
percentage of the original principal amount of each Note), (iv) the same
interest rate, (v) the same interest payment periods and (vi) the same date of
issuance (which, in the case of a Note issued in exchange for another Note,
shall be deemed for these purposes the date on which such Note's ultimate
predecessor Note was issued), are herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. [INTENTIONALLY LEFT BLANK]
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2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Shelf Notes
pursuant to this Agreement. The willingness of Prudential to consider such
purchase of Shelf Notes is herein called the "FACILITY". At any time, the
aggregate principal amount of Shelf Notes stated in paragraph 1B, minus the
aggregate principal amount of Shelf Notes purchased and sold pursuant to this
Agreement prior to such time, minus the aggregate principal amount of Accepted
Notes (as hereinafter defined) which have not yet been purchased and sold
hereunder prior to such time, is herein called the "AVAILABLE FACILITY AMOUNT"
at such time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER
PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS
UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES,
SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND
THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY
PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold pursuant to
this Agreement until the earlier of (i) the third anniversary of the date of
this Agreement (or if such anniversary date is not a Business Day, the Business
Day next preceding such anniversary) and (ii) the thirtieth day after
Prudential shall have given to the Company, or the Company shall have given to
Prudential, a written notice stating that it elects to terminate the issuance
and sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is
not a Business Day, the Business Day next preceding such thirtieth day). The
period during which Shelf Notes may be issued and sold pursuant to this
Agreement is herein called the "ISSUANCE PERIOD".
2B(3). REQUEST FOR PURCHASE. The Company may from time to time during the
Issuance Period make requests for purchases of Shelf Notes (each such request
being herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase shall
be made to Prudential by telecopier or overnight delivery service, and shall
(i) specify the aggregate principal amount of Shelf Notes covered thereby,
which shall not be less than $5,000,000 and not be greater than the Available
Facility Amount at the time such Request for Purchase is made, (ii) specify the
principal amounts, final maturities, principal prepayment dates and amounts of
the Shelf Notes covered thereby, (iii) specify the use of proceeds of such
Shelf Notes, (iv) specify the proposed day for the closing of the purchase and
sale of such Shelf Notes, which shall be a Business Day during the Issuance
Period not less than 10 days and not more than 25 days after the making of such
Request for Purchase, (v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of such
Shelf Notes are to be transferred on the Closing Day for such purchase and
sale, (vi) certify that the representations and warranties contained in
paragraph 8 are true on and as of the date of such Request for Purchase and
that there exists on the date of such Request for Purchase no Event of Default
or Default, and (vii) be substantially in the form of Exhibit B attached
hereto. Each Request for Purchase shall be in writing and shall be deemed made
when received by Prudential.
2B(4) RATE QUOTES. Not later than five Business Days after the Company
shall have given Prudential a Request for Purchase pursuant to paragraph 2B(3),
Prudential may, but shall be under no obligation to, provide to the Company by
telephone or telecopier, in each case between 9:30 A.M. and 1:30 P.M. New York
City local time (or such later time as Prudential may elect) interest rate
quotes for the several principal amounts, maturities and principal prepayment
schedules of Shelf Notes specified in such Request for Purchase. Each quote
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shall represent the interest rate per annum payable on the outstanding
principal balance of such Shelf Notes at which Prudential or a Prudential
Affiliate would be willing to purchase such Shelf Notes at 100% of the
principal amount thereof.
2B(5). ACCEPTANCE. Within the ACCEPTANCE WINDOW, the Company may, subject
to paragraph 2B(6), elect to accept such interest rate quotes as to not less
than $5,000,000 aggregate principal amount of the Shelf Notes specified in the
related Request for Purchase. Such election shall be made by an Authorized
Officer of the Company notifying Prudential by telephone or telecopier within
the Acceptance Window that the Company elects to accept such interest rate
quotes, specifying the Shelf Notes (each such Shelf Note being herein called an
"ACCEPTED NOTE") as to which such acceptance (herein called an "ACCEPTANCE")
relates. The day the Company notifies an Acceptance with respect to any
Accepted Notes is herein called the "ACCEPTANCE DAY" for such Accepted Notes.
Any interest rate quotes as to which Prudential does not receive an Acceptance
within the Acceptance Window shall expire, and no purchase or sale of Shelf
Notes hereunder shall be made based on such expired interest rate quotes.
Subject to paragraph 2B(6) and the other terms and conditions hereof, the
Company agrees to sell to Prudential or a Prudential Affiliate, and Prudential
agrees to purchase, or to cause the purchase by a Prudential Affiliate of, the
Accepted Notes at 100% of the principal amount of such Notes. As soon as
practicable following the Acceptance Day, the Company, Prudential and each
Prudential Affiliate which is to purchase any such Accepted Notes will execute
a confirmation of such Acceptance substantially in the form of Exhibit C
attached hereto (herein called a "CONFIRMATION OF ACCEPTANCE"). If the Company
should fail to execute and return to Prudential within three Business Days
following receipt thereof a Confirmation of Acceptance with respect to any
Accepted Notes, Prudential may at its election at any time prior to its receipt
thereof cancel the closing with respect to such Accepted Notes by so notifying
the Company in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of paragraph
2B(5), if Prudential shall have provided interest rate quotes pursuant to
paragraph 2B(4) and thereafter prior to the time an Acceptance with respect to
such quotes shall have been notified to Prudential in accordance with paragraph
2B(5) the domestic market for U.S. Treasury securities or derivatives shall
have closed or there shall have occurred a general suspension, material
limitation, or significant disruption of trading in securities generally on the
New York Stock Exchange or in the domestic market for U.S. Treasury securities
or derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Shelf Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies Prudential of the Acceptance of any
such interest rate quotes, such Acceptance shall be ineffective for all
purposes of this Agreement, and Prudential shall promptly notify the Company
that the provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York City local
time) on the Closing Day for any Accepted Notes, the Company will deliver to
each Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of the Prudential Capital Group, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Law Department, the Accepted Notes to be
purchased by such Purchaser in the form of one or more Notes in authorized
denominations as such Purchaser may request for each Series of Accepted Notes
to be purchased on the Closing Day, dated the Closing Day and registered in
such Purchaser's name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account specified in the Request for Purchase of such Notes. If
the Company fails to tender to any Purchaser the Accepted Notes to be purchased
by such Purchaser on the scheduled Closing Day for such Accepted Notes as
provided above in this paragraph 2B(7), or any of the conditions specified in
paragraph 3 shall not have been fulfilled by the time required on such
scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York
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City local time, on such scheduled Closing Day notify Prudential (which
notification shall be deemed received by each Purchaser) in writing whether (i)
such closing is to be rescheduled (such rescheduled date to be a Business Day
during the Issuance Period not less than one Business Day and not more than 10
Business Days after such scheduled Closing Day (the "RESCHEDULED CLOSING DAY"))
and certify to Prudential (which certification shall be for the benefit of each
Purchaser) that the Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled Closing Day
and that the Company will pay the Delayed Delivery Fee in accordance with
paragraph 2B(8)(iii) or (ii) such closing is to be canceled. In the event that
the Company shall fail to give such notice referred to in the preceding
sentence, Prudential (on behalf of each Purchaser) may at its election, at any
time after 1:00 P.M., New York City local time, on such scheduled Closing Day,
notify the Company in writing that such closing is to be canceled.
Notwithstanding anything to the contrary appearing in this Agreement, the
Company may not elect to reschedule a closing with respect to any given
Accepted Notes on more than one occasion, unless Prudential shall have
otherwise consented in writing.
2B(8). FEES.
2B(8)(i). STRUCTURING FEE. In consideration for the time, effort and
expense involved in the preparation, negotiation and execution of this
Agreement and the amendment of the Existing Agreement, the Company agrees to
pay to Prudential on the date of the execution of this Agreement in immediately
available funds a fee (herein called the "STRUCTURING FEE") in the amount of
$25,000.
2B(8)(ii). ISSUANCE FEE. The Company will pay to Prudential in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day in an amount equal to 0.10% of the aggregate principal amount of
Notes sold on such Closing Day; provided, however, that no Issuance Fee shall
be payable with respect to the first $25,000,000 in aggregate principal amount
of Notes issued under the Facility.
2B(8)(iii). DELAYED DELIVERY FEE. If the closing of the purchase and sale
of any Accepted Note is delayed for any reason beyond the original Closing Day
for such Accepted Note, the Company will pay to Prudential (a) on the
Cancellation Date or actual closing date of such purchase and sale and (b) if
earlier, the next Business Day following 90 days after the Acceptance Day for
such Accepted Note and on each Business Day following 90 days after the prior
payment hereunder, a fee (herein called the "DELAYED DELIVERY FEE") calculated
as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, i.e., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from
and including the original Closing Day with respect to such Accepted Note (in
the case of the first such payment with respect to such Accepted Note) or from
and including the date of the next preceding payment (in the case of any
subsequent delayed delivery fee payment with respect to such Accepted Note) to
but excluding the date of such payment; and "PA" means Principal Amount, i.e.,
the principal amount of the Accepted Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less than zero. Nothing
contained herein shall obligate any Purchaser to purchase any
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Accepted Note on any day other than the Closing Day for such Accepted Note, as
the same may be rescheduled from time to time in compliance with paragraph
2B(7).
2B(8)(iv). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company in writing
under the circumstances set forth in the last sentence of paragraph 2B(5) or
the penultimate sentence of paragraph 2B(7) that the closing of the purchase
and sale of such Accepted Note is to be canceled, or if the closing of the
purchase and sale of such Accepted Note is not consummated on or prior to the
last day of the Issuance Period (the date of any such notification, or the last
day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay to Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as reasonably determined
by Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the
bid price (as reasonably determined by Prudential) of the Hedge Treasury
Notes(s) on the Acceptance Day for such Accepted Note by (b) such bid price;
and "PA" has the meaning ascribed to it in paragraph 2B(8)(iii). The foregoing
bid and ask prices shall be as reported by Telerate Systems, Inc. (or, if such
data for any reason ceases to be available through Telerate Systems, Inc., any
publicly available source of similar market data). Each price shall be based
on a U.S. Treasury security having a par value of $100.00 and shall be rounded
to the second decimal place. In no case shall the Cancellation Fee be less
than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to purchase and
pay for any Notes is subject to the satisfaction, on or before the Closing Day
for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the following,
each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of Directors
of the Company authorizing the execution and delivery of this Agreement
and the issuance of the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant Secretary
certifying the names and true signatures of the officers of the Company
authorized to sign this Agreement and the Notes and the other documents
to be delivered hereunder.
(iv) Certified copies of the Certificate of Incorporation and
By-laws of the Company.
(v) A favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel of the
Company (or such other counsel designated by the Company and acceptable
to the Purchaser(s)) satisfactory to such Purchaser and substantially in
the form of Exhibit D attached hereto and as to such other matters as
such Purchaser may
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reasonably request. The Company hereby directs each such counsel to
deliver such opinion, agrees that the issuance and sale of any Notes will
constitute a reconfirmation of such direction, and understands and agrees
that each Purchaser receiving such an opinion will and is hereby
authorized to rely on such opinion.
(vi) Good standing certificates for the Company from the Secretaries
of State of Delaware and Illinois dated of a recent date and such other
evidence of the status of the Company as such Purchaser may reasonably
request.
(vii) Additional documents or certificates with respect to legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall have
received from Wiley ▇. ▇▇▇▇▇, Assistant General Counsel of Prudential or such
other counsel who is acting as special counsel for it in connection with this
transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 shall be true on and as of such Closing
Day, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on such Closing Day no Event of Default or
Default; and the Company shall have delivered to such Purchaser an Officer's
Certificate, dated such Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by such Purchaser on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the
Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such certificates or other evidence as
it may request to establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to Prudential any fees
due it pursuant to or in connection with this Agreement, including any
Structuring Fee due pursuant to paragraph 2B(8)(i), any Issuance Fee due
pursuant to paragraph 2B(8)(ii) and any Delayed Delivery Fee due pursuant to
paragraph 2B(8)(iii).
4. PREPAYMENTS. Each Shelf Note shall be subject to required prepayment
as and to the extent provided in paragraph 4A. Each Shelf Note shall also be
subject to prepayment under the circumstances set forth in paragraph 4B. Any
prepayment made by the Company pursuant to any other provision of this
paragraph 4 shall not reduce or otherwise affect its obligation to make any
required prepayment as specified in paragraph 4A.
4A. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of Shelf Notes shall
be subject to required prepayments, if any, set forth in the Notes of such
Series.
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4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes of each
Series shall be subject to prepayment, in whole at any time or from time to
time in part (in integral multiples of $100,000 and in a minimum amount of
$1,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial prepayment of a
Series of the Notes pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note of a Series to be prepaid pursuant to paragraph 4B irrevocable
written notice of such prepayment not less than 10 Business Days prior to the
prepayment date, specifying such prepayment date, the aggregate principal
amount of the Notes of such Series to be prepaid on such date, the principal
amount of the Notes of such Series held by such holder to be prepaid on that
date and that such prepayment is to be made pursuant to paragraph 4B. Notice
of prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment date
and together with the Yield-Maintenance Amount, if any, herein provided, shall
become due and payable on such prepayment date. The Company shall, on or
before the day on which it gives written notice of any prepayment pursuant to
paragraph 4B, give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which shall have
designated a recipient for such notices in the Purchaser Schedule attached
hereto or the applicable Confirmation of Acceptance or by notice in writing to
the Company.
4D. APPLICATION OF PREPAYMENTS. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Notes of any Series
pursuant to paragraphs 4A or 4B, the amount to be prepaid shall be applied pro
rata to all outstanding Notes of such Series (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates
other than by prepayment pursuant to paragraph 4A or 4B) according to the
respective unpaid principal amounts thereof.
4E. NO ACQUISITION OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole
or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraphs 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder. Any notes so prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
each Significant Holder in duplicate:
(a) as soon as practicable and in any event within 60 days after the
end of each quarterly period (other than the last quarterly period) in
each fiscal year, consolidated statements of operations, capital stock
and retained earnings and cash flows of the Company and its Subsidiaries
for the period from the beginning of the current fiscal year to the end
of such quarterly period, and a consolidated balance
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sheet of the Company and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in form to the Required Holder(s) and certified
by an authorized financial officer of the Company, subject to changes
resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 120 days after
the end of each fiscal year, consolidated statements of operations,
capital stock and retained earnings and cash flows of the Company and its
Subsidiaries for such year, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail and satisfactory in
scope to the Required Holder(s) and, as to such consolidated statements,
certified by independent public accountants of recognized national
standing selected by the Company whose certificate shall be in scope and
substance satisfactory to the Required Holder(s) and, as to such
consolidated statements, certified by an authorized financial officer of
the Company; provided, however, that, in addition and not in limitation
of the foregoing, in the event that during any fiscal quarter of the
Company, the Company's sales or earnings constitute less than ninety
percent (90%) of the Company's sales or earnings on a consolidated basis,
the Company shall also deliver at the times specified above unaudited
quarterly and annual (as appropriate for the applicable period)
consolidating financial statements of the Company and its Subsidiaries
for the applicable period, certified by an authorized financial officer
of the Company;
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its stockholders and copies of all registration statements
(without exhibits) and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission); and
(iv) with reasonable promptness, such other financial data as such
Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses
(i) and (ii) above, the Company will deliver to each Significant Holder an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of paragraph
6 and stating that there exists no Event of Default or Default, or, if any
Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by
clause (ii) above, the Company will deliver to each Significant Holder a
certificate of such accountants stating that, in making the audit necessary for
the certification of such financial statements, other than any consolidating
financial statements required to be delivered by such clause (ii), they have
obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature
and period of existence thereof. The Company also covenants that immediately
after any Responsible Officer obtains knowledge of an Event of Default or
Default, it will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company proposes to take with respect thereto. For purposes of this paragraph,
the Purchasers agree and acknowledge that the detail and form of the financial
statements delivered to the Purchasers prior to the closing date are
satisfactory to the Purchasers. So long as the Company continues its present
format and level of specificity with respect to
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future financial statements, then such future financial statements shall be
deemed to comply with the detail and form requirements of this paragraph 5A.
5B. INSPECTION OF PROPERTY. The Company covenants that it will permit any
Person (other than an employee of a competitor of the Company or a former
employee of the Company) designated by any Significant Holder in writing, at
such Significant Holder's expense, to visit and inspect any of the properties
of the Company and its Subsidiaries, to examine the corporate books and
financial records of the Company and its Subsidiaries and make copies thereof
or extracts therefrom and to discuss the affairs, finances and accounts of any
of such corporations with the principal officers of the Company and its
independent public accountants, all at such reasonable times and as often as
such Significant Holder may reasonably request.
5C. COVENANT TO SECURE NOTE EQUALLY. The Company covenants that, if it or
any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6B hereof (unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to paragraph
11C), it will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all other Debt
thereby secured so long as any such other Debt shall be so secured.
5D. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary will maintain, with financially sound and reputable insurers,
insurance in such amounts and against such liabilities and hazards as
customarily maintained by the Company in accordance with its practices,
policies, and procedures prior to the closing date. Together with each
delivery of financial statements under clause (ii) of paragraph 5A, the Company
will, upon the request of any Significant Holder, deliver an Officer's
Certificate specifying the details of such insurance in effect.
5E. COOPERATIVE STATUS. The Company covenants that it will at all times
maintain its status as a cooperative for purposes of Subchapter T of the Code;
provided, however, in the event that the Code or other applicable law is
modified after the date hereof and as a result of such modification the Company
is unable to satisfy its obligations under this paragraph, then the Required
Holders and the Company shall agree, or in good faith negotiate to agree, to
amend the covenants contained in this Agreement so that the application of such
covenants (following such modification of the Code or other applicable law and
the effect thereof on the Company) will be substantially the same as prior
thereto.
5F COMPLIANCE WITH LAWS. The Company covenants that it shall, and shall
cause each Subsidiary to, comply with all applicable laws, rules, regulations,
decrees and orders of all federal, state, local or foreign courts or
governmental agencies, authorities, instrumentalities or regulatory bodies the
noncompliance with which could be reasonably expected to result in a material
adverse effect on the business, assets, operations or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
6. NEGATIVE COVENANTS.
6A. FIXED CHARGE COVERAGE. The Company will not permit the ratio of (a)
the sum of Consolidated Net Earnings, operating lease expense and interest
expense, to (b) the sum of interest expense and
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operating lease expense, to fall below 1.75 to 1.00, in each case determined at
the end of the most recently ended rolling four fiscal quarter period.
6B. LIEN, DEBT AND OTHER RESTRICTIONS. The Company covenants that it
will not and will not permit any Subsidiary to:
6B(1). LIENS. Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Note in accordance
with the provisions of paragraph 5C), except:
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit,
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary,
(iv) Liens in existence on April 13, 1992 described on Schedule 6B,
and
(v) other Liens (including Liens consisting of capitalized leases)
securing Funded Debt (other than Funded Debt that constitutes
Subordinated Debt); provided, however, that (a) such Funded Debt is
permitted by the provisions of paragraph 6B(2) and (b) the aggregate
amount of all Secured Funded Debt outstanding does not at any time exceed
an amount equal to fifteen percent (15%) of Consolidated Net Worth;
6B(2). DEBT. Create, incur, assume or suffer to exist any Debt, except:
(i) Senior Funded Debt in existence as of the date of the Existing
Agreement in such amounts outstanding as of the date of the Existing
Agreement, and a $10,000,000 unsecured line of credit available to ▇▇▇▇▇▇
Canada Hardware and Variety Company, Inc.,
(ii) Funded Debt represented by the Notes,
(iii) Funded Debt of any Subsidiary to the Company or any other
Subsidiary,
(iv) Subordinated Debt;
(v) additional Senior Funded Debt of the Company, so long as the
aggregate principal amount of consolidated Senior Funded Debt does not
exceed at any time an amount equal to thirty-five percent (35%) of
Consolidated Capitalization; and
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(vi) Current Debt of the Company provided that commencing on
December 29, 1991 and at all times thereafter there shall have been a
period of at least forty-five (45) consecutive days within the twelve
month period immediately preceding the date of determination during which
the aggregate principal amount of Current Debt of the Company outstanding
as of the close of business on any day during such twelve month period
did not exceed an amount equal to the amount of Funded Debt which would
have been permitted as additional Funded Debt under clause (v) of this
paragraph 6B(2) as of the close of business on such day.
6B(3). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise dispose
of, or part with control of, any shares of stock or Debt of any Subsidiary,
except to the Company or another Subsidiary, and except that all shares of
stock and Debt of any Subsidiary at the time owned by or owed to the Company
and all Subsidiaries may be sold as an entirety for such consideration which
represents the fair value (as determined in good faith by the Board of
Directors of the Company) at the time of sale of the shares of stock and Debt
so sold, so long as:
(a) the sum of the following shall not constitute more than 10% of
the consolidated assets of the Company and its Subsidiaries: the assets
of the applicable Subsidiary when added together, without duplication,
with (x) the assets of any other Subsidiaries sold or otherwise disposed
of outside of the ordinary course of business during the most recent
36-month rolling period, plus (y) the assets of the Company and its
Subsidiaries sold, leased or otherwise disposed of outside of the
ordinary course of business during the most recent 36-month rolling
period (together with any assets then proposed to be sold); or
(b) the following shall not have in the aggregate contributed more
than 15% of Consolidated Net Earnings for any of the three fiscal years
then most recently ended: the applicable Subsidiary when added together,
without duplication, with (x) any other Subsidiaries sold or otherwise
disposed of outside of the ordinary course of business during the most
recent 36-month rolling period, plus (y) the assets of the Company and
its Subsidiaries sold, leased or otherwise disposed of outside of the
ordinary course of business during the most recent 36-month rolling
period (together with any assets then proposed to be sold);
and provided that, at the time of such sale, such Subsidiary shall not
own, directly or indirectly, any shares of stock or Debt of any other
Subsidiary (unless all of the shares of stock and Debt of such other Subsidiary
owned, directly or indirectly, by the Company and its Subsidiary are
simultaneously being sold as permitted by this paragraph 6B(3));
6B(4)(i) SALE OF ASSETS. Sell, lease or transfer or otherwise dispose of
any assets of the Company or any Subsidiary other than in the ordinary course
of business, unless all such assets sold, leased or otherwise disposed of
outside of the ordinary course of business during the most recent 36-month
rolling period when added together, without duplication, with (a) any shares of
stock or Debt of any Subsidiary sold or otherwise disposed of, or with respect
to which the Company or any Subsidiary has parted control of, except to the
Company or another Subsidiary, during the most recent 36-month rolling period
or (b) any assets then proposed to be sold outside of the ordinary course of
business, do not constitute more than 10% of the consolidated total assets of
the Company and have not contributed more than 15% of Consolidated Net Earnings
for any of the three fiscal years then most recently ended;
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6B(4)(ii) MERGER. Merge or consolidate with any other Person, except
that Subsidiaries may be merged into the Company or any other Subsidiary and
the Company may merge with another Person provided that the Company is the
surviving corporation and no Event of Default or Default shall exist either
immediately before or after such merger.
6B(5). RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES AND STOCKHOLDERS.
Directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property (other than shares of stock of Company) to, or
otherwise deal with (i) any Affiliate or Substantial Stockholder, or (ii) any
corporation in which an Affiliate, Substantial Stockholder or the Company
(either directly or through Subsidiaries) owns 5% or more of the outstanding
voting stock, except that (a) any such Affiliate or Substantial Stockholder may
be a director, officer or employee of the Company or any Subsidiary and may be
paid reasonable compensation in connection therewith (b) the Company and its
Subsidiaries may perform or engage in any of the foregoing in the ordinary
course of business upon terms no less favorable to the Company or such
Subsidiary (as the case may be) than if no such relationship described in
clauses (i) and (ii) above existed and (c) the Company may sell to or purchase
from any such Person shares of the Company's stock subject to the provisions of
paragraph 6G.
6C. ISSUANCE OF STOCK BY SUBSIDIARIES. Permit any Subsidiary (either
directly, or indirectly by the issuance of rights or options for, or securities
convertible into, such shares) to issue, sell or otherwise dispose of any
shares of any class of its stock (other than directors' qualifying shares)
except to the Company or another Subsidiary; provided, however, ▇▇▇▇▇▇ Canada
Hardware and Variety Cooperative, Inc. may issue and sell shares of its stock
in the ordinary course of business consistent with its practices as of April
13, 1992.
6D. COMPLIANCE WITH ERISA. Engage in any transaction in connection with
which the Company or any Subsidiary could be subject to either a civil penalty
assessed pursuant to section 502(i) of ERISA or a tax imposed by section 4975
of the Code, terminate or withdraw from any Plan (other than a Multiemployer
Plan) in a manner, or take any other action with respect to any such Plan
(including, without limitation, a substantial cessation of operations within
the meaning of section 4062(f) of ERISA), which could result in any liability
of the Company or any Subsidiary to the PBGC, to a trust established pursuant
to section 4041(c)(3)(B)(ii) or (iii) or 4042(i) of ERISA, or to a trustee
appointed under section 4042(b) or (c) of ERISA, incur any liability to the
PBGC on account of a termination of a Plan under section 4064 of ERISA, fail to
make full payment when due of all amounts which, under the provisions of any
Plan, the Company or any Subsidiary is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency, whether or not
waived, with respect to any Plan (other than a Multiemployer Plan), if, in any
such case, such penalty or tax or such liability, or the failure to make such
payment, or the existence of such deficiency, as the case may be, could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
6E. NO CHANGE IN SUBORDINATION TERMS, ETC. Amend, alter or otherwise
change any provision of any of the subordinated promissory notes now or
hereafter issued by the Company or take any other action (or refrain from
taking an action) which would have the effect of eliminating or altering in any
way the effect of the subordination language appearing in such subordinated
promissory notes or the rights of the holders of the Notes arising as a result
thereof.
6F. NATURE OF BUSINESS. Engage in the business of underwriting risks
for insurance purposes, or in any other aspect of insurance related business
other than in the ordinary course of business in accordance with its practices
as of the closing date; or purchase and sell real estate (other than on an
agency basis) for purposes
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other than those relating directly to its principal business except for
purchases and sales of store locations in the ordinary course of business which
in the aggregate for the Company and its Subsidiaries taken as a whole do not
exceed $10,000,000 during any rolling consecutive five year period.
6G. RESTRICTED INVESTMENTS. Make or permit a Subsidiary to make any
Investment except the Company and any Subsidiary may:
(i) make or permit to remain outstanding loans or advances to any
Subsidiary,
(ii) own, purchase or acquire stock, obligations or securities of a
Subsidiary or of a corporation which immediately after such purchase or
acquisition will be a Subsidiary,
(iii) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
the Company or any Subsidiary,
(iv) own, purchase or acquire prime commercial paper, banker's
acceptances and certificates of deposit in United States and Canadian
commercial banks (having combined capital and surplus of not less than
U.S. $100,000,000) and repurchase agreements with respect to the
foregoing, in each case due within one year from the date of purchase and
payable in the United States in United States dollars, obligations of the
government of the United States or any agency thereof, and obligations
guaranteed by the government of the United States,
(v) make or permit to remain outstanding travel and other similar
advances to officers and employees in the ordinary course of business,
(vi) permit to remain outstanding Investments existing on April 13,
1992 described on Schedule 6G, and
(vii) to the extent applicable, make Investments permitted under
paragraph 6H below.
6H. RESTRICTED PAYMENTS. Pay or declare cash dividends, cash patronage
dividends or dividends on any class of its stock (other than dividends in kind)
or redeem, purchase or otherwise acquire, or make any redemptions, purchase, or
other acquisition of any of its stock or apply miscellaneous deductions in lieu
of patronage dividends, or make or permit any Subsidiary to make any Restricted
Investment except out of Consolidated Net Earnings Available for Restricted
Payments.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
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(ii) the Company defaults in the payment of any interest on any Note
for more than 10 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of
or interest on any other obligation for money borrowed (or any
Capitalized Lease Obligation, any obligation under a conditional sale or
other title retention agreement, any obligation issued or assumed as full
or partial payment for property whether or not secured by a purchase
money mortgage or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace provided
with respect thereto, or the Company or any Subsidiary fails to perform
or observe any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or
to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause, such obligation to become due
(or to be repurchased by the Company or any Subsidiary) prior to any
stated maturity, provided that the aggregate amount of all obligations as
to which such a payment default shall occur and be continuing or such a
failure or other event causing or permitting acceleration (or resale to
the Company or any Subsidiary) shall occur and be continuing exceeds
$3,000,000; or
(iv) any representation or warranty made by the Company herein or by
the Company or any of its officers in any writing furnished in connection
with or pursuant to this Agreement shall be false in any material respect
on the date as of which made; or
(v) the Company fails to perform or observe any agreement contained
in paragraph 6; or
(vi) the Company fails to perform or observe any other agreement,
term or condition contained herein and such failure shall not be remedied
within 30 days after any Responsible Officer obtains actual knowledge
thereof; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company or
any Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein
called the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of
the Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Company or any Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
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(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree
is entered appointing any such trustee, receiver, custodian, liquidator
or similar official, or approving the petition in any such proceedings,
and such order, judgment or decree remains unstayed and in effect for
more than 30 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than 60
days; or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets representing
a substantial part, or the divestiture of the stock of a Subsidiary whose
assets represent a substantial part, of the consolidated assets of the
Company and its Subsidiaries (determined in accordance with generally
accepted accounting principles) or which requires the divestiture of
assets, or stock of a Subsidiary, which shall have contributed a
substantial part of the consolidated net income of the Company and its
Subsidiaries (determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most recently ended,
and such order, judgment or decree remains unstayed and in effect for
more than 60 days; or
(xiii) a final judgment in an amount in excess of $1,000,000 is
rendered against the Company or any Subsidiary and, within 60 days after
entry thereof, such judgment is not discharged or execution thereof
stayed pending appeal, or within 60 days after the expiration of any such
stay, such judgment is not discharged;
then (a) if such event is an Event of Default specified in clause (i) or
(ii) of this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held
by such holder shall thereupon be and become, immediately due and payable at
par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause (viii), (ix) or
(x) of this paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Company, and (c)
with respect to any event constituting an Event of Default, the Required
Holder(s) of the Notes of any Series may at its or their option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes of such Series to be, and all of the Notes of such
Series shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if
any, with respect to each Note of such Series, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the Notes
of any Series shall have been declared immediately due and payable pursuant to
paragraph 7A, the Required Holder(s) of the
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Notes of such Series may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes of such Series, the principal of and
Yield-Maintenance Amount, if any, payable with respect to any Notes of such
Series which have become due otherwise than by reason of such declaration, and
interest on such overdue interest and overdue principal and Yield-Maintenance
Amount at the rate specified in the Notes of such Series, (ii) the Company
shall not have paid any amounts which have become due solely by reason of such
declaration, (iii) all Events of Default and Defaults, other than non-payment
of amounts which have become due solely by reason of such declaration, shall
have been cured or waived pursuant to paragraph 11C, and (iv) no judgment or
decree shall have been entered for the payment of any amounts due pursuant to
the Notes of such Series or this Agreement. No such rescission or annulment
shall extend to or affect any subsequent Event of Default or Default or impair
any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance
of any covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows (all references to "Subsidiary" and
"Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company has
no Subsidiaries at the time the representations herein are made or repeated):
8A. ORGANIZATION; SUBSIDIARY PREFERRED STOCK. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware, each Subsidiary is duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated, and
the Company has and each Subsidiary has the corporate power to own its
respective property and to carry on its respective business as now being
conducted. No subsidiary has outstanding any shares of stock of a class which
has priority over any other class as to dividends or in liquidation.
8B. FINANCIAL STATEMENTS. The Company has furnished each Purchaser of any
Note with the following financial statements, identified by a principal
financial officer of the Company: (i) a consolidated balance sheet of the
Company and its Subsidiaries as at fiscal year end in each of the three fiscal
years of the Company most recently completed prior to the date as of which this
representation is made or repeated to such Purchaser (other than fiscal years
completed within 90 days prior to such date for which audited financial
statements have not been released) and consolidated statements of operations
and cash flows and a consolidated statement of capital stock and retained
earnings of the Company and its Subsidiaries for each such year, all reported
on by Ernst & Young (or any independent public accounting firm of recognized
national standing) and (ii) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of the quarterly period (if any) most
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recently completed prior to such date and after the end of such fiscal year
(other than quarterly periods completed within 60 days prior to such date for
which financial statements have not been released) and the comparable quarterly
period in the preceding fiscal year and consolidated statements of operations
and cash flows and a consolidated statement of capital stock and retained
earnings for the periods from the beginning of the fiscal years in which such
quarterly periods are included to the end of such quarterly periods, prepared
by the Company. Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and year-end adjustments),
have been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all liabilities,
direct and contingent, of the Company and its Subsidiaries required to be shown
in accordance with such principles. The balance sheets fairly present the
condition of the Company and its Subsidiaries as at the dates thereof, and the
statements of operations, capital stock and retained earnings and cash flows
fairly present the results of the operations of the Company and its
Subsidiaries and their cash flows for the periods indicated. There has been no
material adverse change in the business, property or assets, condition
(financial or otherwise), operations or prospects of the Company and its
Subsidiaries taken as a whole since the end of the most recent fiscal year for
which such audited financial statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which could be reasonably expected to
result in any material adverse change in the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole or the ability of the Company to perform its
obligations under this Agreement.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries has
outstanding any Debt except as permitted by paragraph 6B(2). There exists no
default under the provisions of any instrument evidencing Debt or the Company
or any of its Subsidiaries in an amount greater than $250,000 or of any
agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries has
good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
most recent audited balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6B(1). All leases
necessary in any material respect for the conduct of the respective businesses
of the Company and its Subsidiaries are valid and subsisting and are in full
force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of the Company and its Subsidiaries, are required to be filed, and
each has paid all taxes as shown on such returns and on all assessments
received by it to the extent that such taxes have become due, except such taxes
(i) as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles or (ii) the non-payment of which (a) could not be
reasonably expected to have a material adverse effect on the business,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole and (b) does not result in the creation of any
Lien other than Liens permitted by paragraph 6B(i).
▇▇
▇▇
▇▇. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution nor delivery of this Agreement or the Notes,
nor the offering, issuance and sale of the Notes, nor fulfillment of nor
compliance with the terms and provisions hereof and of the Notes will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any
of its Subsidiaries, any award of any arbitrator or any agreement (including
any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject. Neither the Company nor any of its Subsidiaries is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating thereto
or any other contract or agreement (including its charter) which limits the
amount of, or otherwise imposes restrictions on the incurring of, Debt of the
Company of the type to be evidenced by the Notes except as set forth in the
agreements listed in Schedule 8G attached hereto (as such Schedule 8G may have
been modified from time to time by written supplements thereto delivered by the
Company and accepted in writing by Prudential).
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security
of the Company for sale to, or solicited any offers to buy the Notes or any
similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than institutional investors, and
neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. None of the proceeds of the sale of any Notes will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System (herein called "MARGIN STOCK") or for the purpose of maintaining,
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry any stock that is then currently a margin stock or for any other
purpose which might constitute the purchase of such Notes a "purpose credit"
within the meaning of such Regulation G, unless the Company shall have
delivered to the Purchaser which is purchasing such Notes, on the Closing Day
for such Notes, an opinion of counsel satisfactory to such Purchaser stating
that the purchase of such Notes does not constitute a violation of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or the Notes to
violate Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act, in each
case as in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
PBGC has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
Company, any Subsidiary or any ERISA Affiliate which is or would be materially
adverse to the business, property or assets, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole. Neither
the Company, any Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the
business, property or assets, condition (financial
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or otherwise) or operations of the Company and its Subsidiaries taken as a
whole. The execution and delivery of this Agreement and the issuance and sale
of the Notes will be exempt from or will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under section
502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code.
The representation by the Company in the next preceding sentence is made in
reliance upon and subject to the accuracy of the representation of each
Purchaser in paragraph 9B as to the source of funds to be used by it to
purchase any Notes.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor
any circumstance in connection with the offering, issuance, sale or delivery of
the Notes is such as to require any authorization, consent, approval, exemption
or any action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Closing Day for any
Notes with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all of
their respective properties and facilities have complied at all times and in
all respects with all applicable foreign, federal, state, local and regional
statutes, laws, ordinances and judicial or administrative orders, judgments,
rulings and regulations relating to protection of the environment except, in
any such case, where failure to so comply could not reasonably be expected to
result in a material adverse effect on the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole
or the ability of the Company to perform its obligations under this Agreement.
8M. SECTION 144A. The Notes are not of the same class as securities, if
any, of the Company listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
8N. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely affects or in the
future may (so far as the Company can now foresee) materially adversely affect
the business, property or assets, condition (financial or otherwise) or
operations of the Company or any of its Subsidiaries and which has not been set
forth in this Agreement.
8O. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any Notes
will be used to finance a Hostile Tender Offer.
8P. PRIORITY OF NOTES. The Notes constitute "Superior Indebtedness" as
such term is defined in the Company's Promissory (subordinated) Notes, the form
of which is attached hereto as Exhibit E and the Subordinated Debt is
subordinated to the Indebtedness owing from time to time by the Company to the
holders of the Notes in connection with this Agreement and the Existing
Agreement.
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9. REPRESENTATIONS AND OF WARRANTIES THE PURCHASERS.
Each Purchaser represents and warrants as follows:
9A. NATURE OF PURCHASE. Each Purchaser represents that it is purchasing
the Note purchased by it for its own account or for one or more separate
accounts maintained by it, in each case for investment and not with a view to
the distribution thereof within the meaning of the Securities Act or with any
present intention of distributing or selling any of the Notes, provided that
the disposition of such Purchaser's property shall at all times be and remain
within its control.
9B. SOURCE OF FUNDS. The source of the funds being used by such Purchaser
to pay the purchase price of the Notes being purchased by such Purchaser
hereunder constitutes assets allocated to: (i) the "insurance company general
account" of such Purchaser (as such term is defined under Section V of the
United States Department of Labor's Prohibited Transaction Class Exemption
("PTCE") 95-60), and as of the date of the purchase of the Notes such Purchaser
satisfies all of the applicable requirements for relief under Sections I and IV
of PTCE 95-60 or (ii) a separate account maintained by such Purchaser in which
no employee benefit plan, other than employee benefit plans identified on a
list which has been furnished by such Purchaser to the Company, participates to
the extent of 10% or more. For the purpose of this paragraph 9B, the terms
"SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall have the respective
meanings specified in section 3 of ERISA.
9C. COMPANY REPRESENTATIONS. Each Purchaser acknowledges that it has
not received any representation or warranty (written or oral) from or by the
Company or any Subsidiary other than the representations and warranties
contained in this Agreement and in any document or certificate required to be
delivered pursuant to this Agreement, or from or by any Person purporting to
act on behalf of the Company or any Subsidiary. Each Purchaser acknowledges
and agrees that any representation or warranty not contained in this Agreement
or in any certificate, notice or other document required to be delivered by the
Company or any Subsidiary on or after the date of this Agreement and executed
by an authorized officer thereof shall not be deemed made by or on behalf of
the Company or any Subsidiary and shall not be relied on by such Purchaser, any
Transferee or any Person to which a participation in any Note may be sold. In
furtherance of, and not in limitation of, the foregoing, each Purchaser
acknowledges and agrees that no oral representation or warranty from or by any
director, officer or employee of the Company or any Subsidiary (other than the
President, Chief Executive Officer, Executive Vice President, Senior Vice
President, Vice President-Finance, Controller or Finance Manager of the
Company), or from or by any other Person, shall be deemed made by or on behalf
of the Company or any Subsidiary and that any such purported representations or
warranties are not authorized by the Company or any Subsidiary.
9D. PURCHASER INSPECTION. All documents, records and books of the
Company and each Subsidiary have been made available for inspection by each
Purchaser, their attorneys, accountants, other advisers and agents and each
such Purchaser and such other Persons have made such inspection thereof and of
the Company's and its Subsidiaries' facilities as such Persons have deemed
necessary or advisable in connection with the transactions to be effected by
this Agreement. Each Purchaser, its attorneys, accountants, other advisers and
agents have had the opportunity to confer with the directors, officers,
employees and members of the Company and its Subsidiaries and to ask questions
of, and receive answers from, such Persons concerning the affairs of the
Company and its Subsidiaries and the terms of the transactions to be effected
by this Agreement. All such questions asked have been answered to each
Purchaser's satisfaction. All information requested was furnished to such
Purchaser, its attorneys, accountants, other advisers and agents. At the
Purchasers' request the Company
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has not prepared an offering memorandum, circular or similar offering document
concerning the offer and the sale of the Notes.
9E. APPLICABLE STATE. All actions, communications, correspondence,
negotiations, meetings and other transactions between the Company (or any
Subsidiary) and the Purchasers, and any of the Company's or the Purchasers'
respective advisers and agents, which have taken place on or before the date
hereof with respect to the offer and sale of the Notes have taken place in the
State of Illinois, and the Notes will be purchased, sold and delivered in said
state.
9F. NO REGISTRATION. Each Purchaser understands that the Notes are not
being registered under the Securities Act on the ground that the issuance
thereof is exempt under Sections 4(2) and 4(6) thereof or Regulation D
thereunder. Each Purchaser understands that the Company's reliance on such
exemptions is predicated in part on the Purchasers' representations and
warranties in this Agreement. Each Purchaser acknowledges that the Company has
no obligation or present intention to register the resale of the Notes or to
permit their sale or transfer other than in strict compliance with the
Securities Act and the rules and regulations promulgated thereunder and,
further, that there is not now and may never be a public market for the Notes.
9G. TRANSFER RESTRICTIONS. No Purchaser shall sell or otherwise
transfer the Notes, or grant any participations therein, unless they are
registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration is available. Each Purchaser
acknowledges and agrees that all Notes shall bear a legend referencing the
foregoing transfer restriction.
9H. ACCREDITED STATUS. Each Purchaser is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act.
9I. ORGANIZATION; ENFORCEABILITY. The Prudential Insurance Company of
America is a corporation validly existing under the laws of the State of New
Jersey. This Agreement and the purchase of the Notes by The Prudential
Insurance Company of America have been duly authorized by all requisite
corporate action. This Agreement is enforceable against the Purchasers in
accordance with its terms, except as the enforceability thereof may be limited
by (a) bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in paragraph
10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
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"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be reported
as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
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10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE WINDOW" shall mean, with respect to any interest rate quote
made by Prudential pursuant to paragraph 2B(4), the time period designated by
Prudential during which the Company may elect to accept such interest rate
quote as to not less than $5,000,000 in aggregate principal amount of Shelf
Notes specified in the related Request for Purchase.
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2B(5).
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its chief
executive officer, its chief financial officer, its chief operating officer or
any other officer of the Company designated as an "Authorized Officer" of the
Company for the purpose of this Agreement in an Officer's Certificate executed
by the Company's chief executive officer or chief financial officer and
delivered to Prudential, and (ii) in the case of Prudential, any of the
following officers of Prudential Capital Group (an affiliate of Prudential),
any managing director, senior vice president or vice president or any officer
of Prudential designated as its "Authorized Officer" for the purpose of this
Agreement in a certificate executed by one of its Authorized Officers. Any
action taken under this Agreement on behalf of the Company by any individual
who on or after the date of this Agreement shall have been an Authorized
Officer of the Company and whom Prudential in good faith believes to be an
Authorized Officer of the Company at the time of such action shall be binding
on the Company even though such individual shall have ceased to be an
Authorized Officer of the Company, and any action taken under this Agreement on
behalf of Prudential by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of Prudential and whom the
Company in good faith believes to be an Authorized Officer of Prudential at the
time of such action shall be binding on Prudential even though such individual
shall have ceased to be an Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in paragraph
2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a Sunday,
(ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2B(3) hereof only,
a day on which The Prudential Insurance Company of America is not open for
business.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2B(8)(iv).
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"CANCELLATION FEE" shall have the meaning specified in paragraph
2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CLOSING DAY" shall mean, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note in
the Request for Purchase of such Accepted Note, provided that (i) if the
Company and the Purchaser which is obligated to purchase such Accepted Note
agree on an earlier Business Day for such closing, the "CLOSING DAY" for such
Accepted Note shall be such earlier Business Day, and (ii) if the closing of
the purchase and sale of such Accepted Note is rescheduled pursuant to
paragraph 2B(7), the Closing Day for such Accepted Note, for all purposes of
this Agreement except references to "original Closing Day" in paragraph
2B(8)(iii), shall mean the Rescheduled Closing Day with respect to such
Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" shall mean any written information delivered or
made available by or on behalf of the Company or any Subsidiary to a Purchaser
or a Transferee (as the case may be), including without limitation any
non-public information obtained pursuant to paragraph 5A or 5B, in connection
with or pursuant to this Agreement which is proprietary in nature and clearly
marked or labeled as being confidential information, but in no event shall
include information (i) which was publicly known or otherwise known to such
Purchaser or Transferee (as the case may be) at the time of disclosure (except
pursuant to disclosure in connection with this Agreement), (ii) which
subsequently becomes publicly known through no act or omission by such
Purchaser or Transferee (as the case may be), or (iii) which otherwise becomes
known to such Purchaser or Transferee, other than through disclosure by the
Company or from a Person obligated not to disclose under this Agreement.
"CONSOLIDATED CAPITALIZATION" shall mean, as of the time of any
determination, the sum of (i) Consolidated Net Worth and (ii) Funded Debt.
"CONSOLIDATED NET EARNINGS" shall mean with respect to any period:
(i) consolidated gross revenues of the Company and its Subsidiaries,
minus
(ii) all operating and non-operating expenses of the Company and its
Subsidiaries including all charges of a proper character (including
current and deferred taxes on income, provision for taxes on unremitted
foreign earnings which are included in gross revenues, and current
additions to reserves), but not including in gross revenues:
(a) any gains (net of expenses and taxes applicable thereto)
in excess of losses resulting from the sale, conversion or other
disposition of capital assets (i.e., assets other than current
assets);
(b) any gains resulting from the appraised write-up of assets;
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(c) any equity of the Company or any Subsidiary in the
unremitted earnings of any corporation which is not a Subsidiary;
(d) any earnings of any Person acquired by the Company or any
Subsidiary through purchase, merger or consolidation or otherwise
for any year prior to the year of acquisition; or
(e) any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary; all determined in accordance with
generally accepted accounting principles.
"CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS" shall mean
an amount equal to (1) $25,000,000 plus 50% (or minus 100% in the case of a
deficit) of Consolidated Net Earnings for the period (taken as one accounting
period) commencing on December 29, 1991 and terminating at the end of the last
fiscal quarter preceding the date of any proposed Restricted Payment, minus (2)
the sum of (a) the aggregate amount of all cash dividends and other
distributions paid or declared by the Company on any class of its stock after
December 28, 1991, (b) 50% of the excess of the aggregate amount expended,
directly or indirectly, after December 28, 1991, for the redemption, purchase
or other acquisition of any shares of its stock, over the aggregate amount
received after December 28, 1991 as the net cash proceeds of the sale of any
shares of its stock until the year in which the Company subordinates succeeding
years' installment notes to the indebtedness evidenced by the Notes and this
Agreement and as a result thereof such installment notes constitute
Subordinated Debt hereunder, (c) the aggregate amount of all miscellaneous
deductions incurred by members and applied against declared patronage
dividends, and (d) the excess of the aggregate amount expended (at original
cost), directly or indirectly, after December 28, 1991 for Restricted
Investments, over the aggregate amount received after December 28, 1991 as the
net cash proceeds from the sale, liquidation or other return of capital
(excluding any interest, dividends or like payments) of, any such Restricted
Investment. For purposes of this definition, there shall not be included in
Restricted Payments or in any computation of Consolidated Net Earnings
Available For Restricted Payments: (x) dividends paid, or distributions made,
in stock or notes of the Company; (y) exchanges of stock of one or more classes
of the Company, except to the extent that cash or other value is involved in
such exchange or (z) so long as no Event of Default shall then be continuing or
would result from the making thereof, cash distributions made by the Company
from gains arising from the Company's disposition of capital assets.
"CONSOLIDATED NET WORTH" shall mean, as of any date of determination, the
sum of (i) the par value (or value stated on the books of the Company) of the
capital stock of all classes of the Company, plus (or minus in the case of a
surplus deficit) (ii) the amount of the consolidated surplus, whether capital
or earned, of the Company and its Subsidiaries, all determined in accordance
with generally accepted accounting principles.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"CURRENT DEBT" shall mean, with respect to any Person, all Indebtedness of
such Person for borrowed money which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or within one year
from the date of the creation thereof and is not directly or indirectly
renewable or extendible at the option of the debtor to a date more than one
year from the date of the creation thereof, provided that Indebtedness for
borrowed money outstanding under a revolving credit or similar agreement which
obligates the
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lender or lenders to extend credit over a period of more than one year shall
constitute Funded Debt and not Current Debt, even though such Indebtedness by
its terms matures on demand or within one year from the date of the creation
thereof.
"DEBT" shall mean Current Debt and Funded Debt.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2B(8)(iii).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation ambient air, surface water,
ground water, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes, and any and all regulations, codes, plans, orders,
decrees, judgments, injunctions, notices or demand letters issued, entered,
promulgated or approved thereunder.
"ERISA AFFILIATE" shall mean any corporation which is a member of the same
controlled group of corporations as the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "DEFAULT" shall mean any of such events,
whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXISTING AGREEMENT" shall mean that certain Note Agreement dated as of
April 13, 1992 between the Company and Prudential pursuant to which the Company
sold and Prudential purchased the Company's 8.60% senior note in the original
principal amount of $50,000,000 due April 1, 2007.
"FACILITY" shall have the meaning specified in paragraph 2B(1).
"FUNDED DEBT" shall mean and include, (i) any obligation payable more than
one year from the date of creation thereof which under generally accepted
accounting principles is shown on a balance sheet as a liability (including
Capitalized Lease Obligations but excluding reserves for deferred income taxes
and other reserves to the extent that such reserves do not constitute an
obligation); (ii) indebtedness payable more than one year from the date of
creation thereof which is secured by any lien on property owned by the Company
or any Subsidiary; and (iii) Guarantees.
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"GUARANTEE" shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (other than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guarantee shall be equal to the outstanding
principal amount of the obligation guaranteed or such lesser amount to which
the maximum exposure of the guarantor shall have been specifically limited.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as reasonably
determined by Prudential) most closely matches the duration of such Accepted
Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital stock of
any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such
shares, equity interests, securities or rights representing less than 5% of the
equity interests or beneficial ownership of such corporation or other entity
for portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company
makes the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, (i) all items (excluding items of contingency reserves or of
reserves for deferred income taxes) which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined, (ii) all indebtedness secured by any
Lien on any property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been assumed, and
(iii) all indebtedness of others with respect to which such Person has become
liable by way of Guarantee.
"INSTITUTIONAL INVESTOR" shall mean any insurance company, pension fund,
mutual fund, investment company, bank, savings bank, savings and loan
association, investment banking company, trust company, or any finance or
credit company, any portfolio or any investment fund managed by any of the
foregoing, or any
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other institutional investor, and any nominee of the foregoing. The term
"Institutional Investor" shall not include any competitor of the Company or its
Subsidiaries or any labor union with which the Company then has a collective
bargaining agreement.
"INVESTMENTS" shall mean any loan or advance to, or ownership, purchase or
acquisition of any security (including stock) or obligations of, or any other
interest in, or any capital contribution made to, any Person.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the
payment or performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA.
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the
Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean with respect to any Accepted Notes, Prudential
and/or the Prudential Affiliate(s), which are purchasing such Accepted Notes.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph
2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least 50.1% of
the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding.
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"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"RESTRICTED INVESTMENTS" shall mean any Investment prohibited by paragraph
6G.
"RESTRICTED PAYMENT" shall mean any payment or transaction which would be
prohibited by paragraph 6H if Consolidated Net Earnings Available for
Restricted Payments equalled zero.
"SECURED FUNDED DEBT" shall mean Funded Debt which is secured by any Lien.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR FUNDED DEBT" shall mean Funded Debt of the Company which is not
Subordinated Debt.
"SERIES" shall have the meaning specified in paragraph 1.
"SHELF NOTES" shall have the meaning specified in paragraph 1.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as Prudential or
any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, and (ii) any other holder of at least 10% of the aggregate
principal amount of the Notes from time to time outstanding.
"SUBORDINATED DEBT" shall mean any Indebtedness of the Company which
contains terms of subordination identical to or, in the reasonable
determination of the holders of the Notes no less favorable to such holders of
the Notes than, the terms of subordination set forth in Exhibit E hereto and,
which by virtue of such language and any necessary action of the Board of
Directors of the Company, is subordinated to the Indebtedness owing from time
to time by the Company to the holders of any Note issued in connection with
this Agreement or the Existing Agreement.
"SUBSIDIARY" shall mean any corporation all of the stock of every class of
which, except directors' qualifying shares, shall, at the time as of which any
determination is being made, be owned by the Company either directly or through
Subsidiaries. Notwithstanding the foregoing, for purposes of calculating the
financial covenants, ▇▇▇▇▇▇ Canada Hardware and Variety Cooperative, Inc. will
be deemed a Subsidiary of the Company if, in accordance with GAAP, it is
consolidated in the financial statements
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of the Company required to be delivered pursuant to clauses (i) and (ii) of
paragraph 5A hereof.
"SUBSTANTIAL STOCKHOLDER" shall mean (i) any Person owning, beneficially
or of record, directly or indirectly, either individually or together with all
other Persons to whom such Person is related by blood, adoption or marriage,
stock of the Company (of any class having ordinary voting power for the
election of directors) aggregating five percent (5%) or more of such voting
power or (ii) any Person related by blood, adoption or marriage to any Person
described or coming within the provisions of clause (i) of this definition.
"STRUCTURING FEE" shall have the meaning specified in paragraph 2B(8)(i).
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United
States at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on, and
any Yield-Maintenance Amount payable with respect to, such Note, which comply
with the terms of this Agreement, by wire transfer of immediately available
funds for credit (not later than 12:00 noon, New York City local time, on the
date due) (i) the account or accounts of such Purchaser specified in the
Confirmation of Acceptance with respect to such Note in the case of any Shelf
Note or (ii) such other account or accounts in the United States as such
Purchaser may from time to time designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the place of payment.
Each Purchaser agrees that, before disposing of any Note, it will make a
notation thereon (or on a schedule attached thereto) of all principal payments
previously made thereon and of the date to which interest thereon has been
paid. The Company agrees to afford the benefits of this paragraph 11A to any
Transferee which shall have made the same agreement as the Purchasers have made
in this paragraph 11A.
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11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses
of any special counsel engaged by the Purchasers or any Transferee in
connection with this Agreement (other than in connection with the preparation
of this Agreement and the documents related hereto in connection with the
original closing hereunder and the closing of any draw under the Facility), the
transactions contemplated hereby and any subsequent proposed modification of,
or proposed consent under, this Agreement, whether or not such proposed
modification shall be effected or proposed consent granted, and (ii) the costs
and expenses, including attorneys' fees, incurred by any Purchaser or any
Transferee in enforcing (or determining how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or
the transactions contemplated hereby or by reason of any Purchaser's or any
Transferee's having acquired any Note, including without limitation costs and
expenses incurred in any bankruptcy case. The obligations of the Company under
this paragraph 11B shall survive the transfer of any Note or portion thereof or
interest therein by any Purchaser or any Transferee and the payment of any
Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
of the Notes of each Series except that, (i) with the written consent of the
holders of all Notes of a particular Series, and if an Event of Default shall
have occurred and be continuing, of the holders of all Notes of all Series, at
the time outstanding (and such written consents), the Notes of such Series may
be amended or the provisions thereof waived to change the maturity thereof, to
change or affect the principal thereof, or to change or affect the rate or time
of payment of interest on or any Yield-Maintenance Amount payable with respect
to the Notes of such Series, (ii) without the written consent of the holder or
holders of all Notes at the time outstanding, no amendment to or waiver of the
provisions of this Agreement shall change or affect the provisions of paragraph
7A or this paragraph 11C insofar as such provisions relate to proportions of
the principal amount of the Notes of any Series, or the rights of any
individual holder of Notes, required with respect to any declaration of Notes
to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential (and without the
consent of any other holder of the Notes) the provisions of paragraph 2B may be
amended or waived (except insofar as any such amendment or waiver would affect
any rights or obligations with respect to the purchase and sale of Notes which
shall have become Accepted Notes prior to such amendment or waiver), and (iv)
with the written consent of all of the Purchasers which shall have become
obligated to purchase Accepted Notes of any Series (and not without the written
consent of all such Purchasers), any of the provisions of paragraphs 2B and 3
may be amended or waived insofar as such amendment or waiver would affect only
rights or obligations with respect to the purchase and sale of the Accepted
Notes of such Series or the terms and provisions of such Accepted Notes. Each
holder of any Note at the time or thereafter outstanding shall be bound by any
consent authorized by this paragraph 11C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter may bear
a notation referring to any such consent. No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "THIS
AGREEMENT" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES. The
Notes are issuable as registered notes without coupons in denominations of at
least $100,000, except as may be necessary to
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reflect any principal amount not evenly divisible by $100,000. The Company
shall keep at its principal office a register in which the Company shall
provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense, execute and deliver one or more
new Notes of like tenor and of a like aggregate principal amount, registered in
the name of such transferee or transferees. At the option of the holder of any
Note, such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Note to be exchanged at the principal office of the Company. Whenever
any Notes are so surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the exchange is entitled
to receive. Each prepayment of principal payable on each prepayment date upon
each new Note issued upon any such transfer or exchange shall be in the same
proportion to the unpaid principal amount of such new Note as the prepayment of
principal payable on such date on the Note surrendered for registration of
transfer or exchange bore to the unpaid principal amount of such Note. No
reference need be made in any such new Note to any prepayment or prepayments of
principal previously due and paid upon the Note surrendered for registration of
transfer or exchange. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any Note
or upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue, and the Company shall
not be affected by notice to the contrary. Subject to the preceding sentence,
the holder of any Note may from time to time grant participations in all or any
part of such Note to any Person on such terms and conditions as may be
determined by such holder in its sole and absolute discretion, provided that
any such participations shall be in a principal amount of at least $100,000.
.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any Transferee, regardless of any investigation made at
any time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective
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successors and assigns of the parties hereto (including, without limitation,
any Transferee) whether so expressed or not.
11H. DISCLOSURE TO OTHER PERSONS. Each Purchaser (and each Transferee by
its acceptance of an interest in any Note) agrees to use its best efforts to
hold in confidence and not disclose any Confidential Information without the
prior written consent of the Company which consent shall not be unreasonably
denied; provided, however, that nothing contained herein shall prevent the
holder of any Note from delivering copies of any financial statements and other
documents delivered to such holder, and disclosing any other information
disclosed to such holder, by the Company or any Subsidiary in connection with
or pursuant to this Agreement to (i) such holder's directors, officers,
employees, agents and professional consultants, (ii) any other holder of any
Note, (iii) any Institutional Investor to which such holder offers to sell such
Note or any part thereof, (iv) any Institutional Investor to which such holder
sells or offers to sell a participation in all or any part of such Note, (v)
any Institutional Investor from which such holder offers to purchase any
security of the Company, (vi) any federal or state regulatory authority having
jurisdiction over such holder, (vii) the National Association of Insurance
Commissioners or any similar organization or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process or informal investigative
demand, (c) in connection with any litigation to which such holder is a party
or (d) in order to protect such holder's investment; and provided further that
after notice to the Company the holders of the Notes shall be free to correct
any false or misleading information which may become public concerning their
relationship to the Company or any of its Subsidiaries.
11I. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first
class mail or nationwide overnight delivery service (with charges prepaid) and
(i) if to any Purchaser, addressed as specified for such communications in the
Purchaser Schedule attached hereto (in the case of the Series A Notes) or the
Purchaser Schedule attached to the applicable Confirmation of Acceptance (in
the case of any Shelf Notes) or at such other address as any such Purchaser
shall have specified to the Company in writing, (ii) if to any other holder of
any Note, addressed to it at such address as it shall have specified in writing
to the Company or, if any such holder shall not have so specified an address,
then addressed to such holder in care of the last holder of such Note which
shall have so specified an address to the Company and (iii) if to the Company,
addressed to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: Chief Financial Officer and Controller (with duplicate copies to
each), or at such other address in the United States as the Company shall have
specified to the holder of each Note in writing, provided, however, that any
such communication to the Company may also, at the option of the Person sending
such communication, be delivered by any other means either to the Company at
its address specified above or to any Authorized Officer of the Company. Any
communication to Prudential pursuant to paragraph 2 shall be made by the method
specified for such communication in paragraph 2, and shall be effective to
create any rights or obligations under this Agreement only if, in the case of a
telephone communication, an Authorized Officer of the party conveying the
information and of the party receiving the information are parties to the
telephone call, and in the case of a telecopier communication, the
communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized Officer of the party
receiving the information, and in fact received at the telecopier terminal the
number of which the party receiving the communication shall have specified in
writing to the party sending such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on, or Yield-Maintenance Amount payable with
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respect to, any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.
11K. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by
such Purchaser, such holder or the Required Holder(s), as the case may be, in
the sole and exclusive judgment (exercised in good faith) of the Person or
Persons making such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF ILLINOIS.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are
to be several sales, and the obligations of Prudential and the Purchasers under
this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and neither
Prudential nor any Purchaser shall be responsible for the obligations of, or
any action taken or omitted by, any other such Person hereunder.
11P. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11Q. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not avoid (i) the occurrence of a Default or Event of Default if such
action is taken or such condition exists or (ii) in any way prejudice an
attempt by the holder of any Note to prohibit through equitable action or
otherwise the taking of any action by the Company or any Subsidiary which would
result in a Default or Event of Default.
11R. BINDING AGREEMENT. When this Agreement is executed and delivered by
the Company, and Prudential, it shall become a binding agreement between the
Company, and Prudential. This Agreement shall also inure to and each such
Purchaser shall be bound by this Agreement to the extent provided in such
Confirmation of Acceptance.
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11S. AMENDMENT OF EXISTING AGREEMENT. Upon the execution of this
Agreement by Prudential, paragraphs 5 and 6 of the Existing Agreement are
hereby amended in their entirety so as to read as set forth, respectively, in
paragraphs 5 and 6 of this Agreement and defined terms and cross references
used in paragraphs 5 and 6 of the Existing Agreement, as amended hereby, shall
be deemed to have the respective meanings ascribed thereto in, and to refer to
paragraphs in, this Agreement; provided, however, that any reference to a
"Note" or "Notes" in the Existing Agreement, as amended hereby, shall mean the
notes issued under and pursuant to the Existing Agreement. No termination of
this Agreement in whole or in part or any modification hereof, shall affect the
continued applicability of this paragraph and the covenants referred to herein
to the Existing Agreement.
Very truly yours,
▇▇▇▇▇▇ & COMPANY
By:____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Treasurer and Vice President -
Finance
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:_______________________
Vice President
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PURCHASER SCHEDULE
▇▇▇▇▇▇ & COMPANY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(1) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Operations Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(2) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Team X
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(3) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(4) Tax identification No.: ▇▇-▇▇▇▇▇▇▇
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EXHIBIT A
[FORM OF SHELF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THE SALE OR TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS
CONTAINED IN PARAGRAPH 9G OF THE PRIVATE SHELF AGREEMENT DATED
AS OF DECEMBER 29, 1995 BETWEEN ▇▇▇▇▇▇ & COMPANY AND THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA.
▇▇▇▇▇▇ & COMPANY
SENIOR SERIES NOTE
No. ____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ & Company (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ___________________________, or registered
assigns, the principal sum of ___________________________ DOLLARS [on the Final
Maturity Date specified above] [, payable on the Principal Prepayment Dates and
in the amounts specified above, and on the Final Maturity Date specified above
in an amount equal to the unpaid balance of the principal hereof,] with
interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the Interest Rate per annum specified above, payable
on each Interest Payment Date specified above and on the Final Maturity Date
specified above, commencing with the Interest Payment Date next succeeding the
date hereof, until the principal hereof shall have become due and payable, and
(b) on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of Yield Maintenance Amount and any overdue payment of
interest, payable on each Interest Payment Date as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum from time to
time equal to the greater of (i) 2% over the Interest Rate specified above or
(ii) 2% over the rate of interest publicly announced by ▇▇▇▇▇▇ Guaranty Trust
Company of New York from time to time in New York City as its Prime Rate.
Payments of principal, Yield Maintenance Amount, if any, and interest
are to be made at the main office of ▇▇▇▇▇▇ Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
A-1
39
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Private Shelf Agreement, dated as of December 29,
1995 (herein called the "Agreement"), between the Company, on the one hand, and
The Prudential Insurance Company of America and each Prudential Affiliate (as
defined in the Agreement) which becomes party thereto, on the other hand, and
is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of Illinois and
shall be construed and enforced in accordance with the internal laws and
decisions (as opposed to the conflicts of law provisions) of such State.
▇▇▇▇▇▇ & COMPANY
By: _____________________________
Title: __________________________
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
[FORM OF REQUEST FOR PURCHASE]
▇▇▇▇▇▇ & COMPANY
Reference is made to the Private Shelf Agreement (the "Agreement"),
dated as of December 29, 1995 between ▇▇▇▇▇▇ & Company (the "Company"), on the
one hand, and The Prudential Insurance Company of America ("Prudential") and
each Prudential Affiliate which becomes party thereto, on the other hand.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings specified in the Agreement.
Pursuant to Paragraph 2B(3) of the Agreement, the Company hereby makes
the following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "Notes") . . . . . . . . . . $
------------
2. Individual specifications of the Notes:
Principal
Final Prepayment Interest
Principal Maturity Dates and Payment
Amount(1) Date Amounts Period
--------- -------- ---------- --------
Quarterly
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the Notes:
--------------------
(1) Minimum principal amount of $5,000,000.
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5. The purchase price of the Notes is to be transferred to:
Name, Address
and ABA Routing Number of
Number of Bank Account
--------------- ---------
6. The Company certifies (a) that the representations and warranties
contained in paragraph 8 of the Agreement are true on and as of the
date of this Request for Purchase except to the extent of changes
caused by the transactions contemplated in the Agreement and (b)
that there exists on the date of this Request for Purchase no Event
of Default or Default.
Dated: ▇▇▇▇▇▇ & COMPANY
By:
------------------
Authorized Officer
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EXHIBIT C
[FORM OF CONFIRMATION OF ACCEPTANCE]
▇▇▇▇▇▇ & COMPANY
Reference is made to the Private Shelf Agreement (the "Agreement"),
dated as of December 29, 1995 between ▇▇▇▇▇▇ & Company (the "Company"), on the
one hand, and The Prudential Insurance Company of America ("Prudential") and
each Prudential Affiliate which becomes party thereto, on the other hand. All
terms used herein that are defined in the Agreement have the respective
meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below as a
Purchaser of Notes hereby confirms the representations as to such Notes set
forth in paragraph 9 of the Agreement, and agrees to be bound by the provisions
of paragraphs 2B(5) and 2B(7) of the Agreement relating to the purchase and
sale of such Notes and by the provisions of the penultimate sentence of
paragraph 11A of the Agreement.
Pursuant to paragraph 2B(5) of the Agreement, an Acceptance with
respect to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal
amount $_______________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period: Quarterly
(g) Payment and notice instructions: As set forth on
attached Purchaser Schedule
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period: Quarterly
(g) Payment and notice instructions: As set forth on
attached Purchaser Schedule
[(C), (D)..... same information as above.]
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II. Closing Day:
Dated: ▇▇▇▇▇▇ & COMPANY
By: _________________________
Title: ______________________
[THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA]
By: _________________________
Vice President
[PRUDENTIAL AFFILIATE]
By: _________________________
Vice President
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EXHIBIT D
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of ▇▇▇▇▇▇ & Company]
[Date of Closing]
[Name(s) and address(es) of
purchaser(s)]
Ladies and Gentlemen:
As Vice President and General Counsel of ▇▇▇▇▇▇ & Company (the
"Company"), I am familiar with the Private Shelf Agreement, dated as of
December 29, 1995 (the "Agreement") between the Company, on the one hand, and
The Prudential Insurance Company of America and each Prudential Affiliate which
becomes a party thereto, on the other hand, pursuant to which the Company has
issued to you today Senior Series ___ Notes of the Company in the aggregate
principal amount of $________ (the "Notes"). Capitalized terms used and not
otherwise defined herein shall have the meanings provided in the Agreement.
This letter is being delivered to you in satisfaction of the condition set
forth in paragraph 3A(v) of the Agreement and with the understanding that you
are purchasing the Notes in reliance on the opinions expressed herein.
In this connection, I have examined such certificates of public
officials, certificates of officers of the Company and copies certified to my
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as I have deemed relevant and
necessary as a basis for my opinion hereinafter set forth. I have relied upon
such certificates of public officials and of officers of the Company with
respect to the accuracy of material factual matters contained therein which
were not independently established. With respect to the opinion expressed in
paragraph 3 below, I have also relied upon the representation made by [each of]
you in paragraph 9A of the Agreement.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware.
2. The Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such
D-1
45
enforceability is considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance, sale
and delivery of the Notes under the circumstances contemplated by the Agreement
to register the Notes under the Securities Act or to qualify an indenture in
respect of the Notes under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit represented by
the Notes do not result in any violation of regulation G, T or X of the Board
of Governors of the Federal Reserve System.
5. The execution and delivery of the Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of and
compliance with the respective provisions of the Agreement and the Notes do not
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, or require any authorization, consent,
approval, exemption, or other action by or notice to or filing with any court,
administrative or governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the Company or any
of its Subsidiaries, any applicable law (including any securities or Blue Sky
law), statute, rule or regulation or (insofar as is known to me after having
made due inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Schedule 8G to the Agreement), instrument,
order, judgment or decree to which the Company or any of its Subsidiaries is a
party or otherwise subject.
6. The Notes constitute "Superior Indebtedness" to the Company's
Promissory (subordinated) Notes, the form of which Promissory (subordinated)
Notes is attached to the Agreement as Exhibit E, and the indebtedness of the
Company's Promissory (subordinated) Notes is subordinate to the Notes.
I am qualified to practice law in the State of Illinois and do not purport
to express any opinion herein concerning any law other than the laws of the
State of Illinois of federal law of the United States.
Very truly yours,
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46
EXHIBIT E
FORM OF PROMISSORY (SUBORDINATED) NOTE
See Attached
47
▇▇▇▇▇▇ & COMPANY
____% PROMISSORY (SUBORDINATED) NOTE
VOID
48
SCHEDULE 6G
EXISTING INVESTMENTS
None.
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49
SCHEDULE 8G
The Revolving Credit Facility Agreement between ▇▇▇▇▇▇ & Company and
Bank of America dated ________________, 1996, which contains identical terms as
set forth in Sections 6 and 8 hereof.