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Exhibit 4.K
TRUSERV CORPORATION
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
As of November 13, 1997
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
Xxx Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned, TRUSERV CORPORATION, a Delaware corporation formerly
known as Xxxxxx & Company (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. AMENDMENT AND RESTATEMENT; AUTHORIZATION.
1A. AMENDMENT AND RESTATEMENT. Effective as of the date hereof, the
parties hereto agree that this Agreement amends and restates in its entirety
that certain Private Shelf Agreement dated as of December 29, 1995 (as amended
prior to the date hereof, the "EXISTING 1995 AGREEMENT") between the Company
and Prudential. Among other things, this amendment and restatement is intended
to increase the maximum amount that may be outstanding under the Existing 1995
Agreement (inclusive of the Series A Notes previously issued, and the Initial
Shelf Notes being issued on the date hereof and any other Shelf Notes issued
after the date hereof) from $50,000,000 to $150,000,000. After giving effect
to the purchase and sale of the Series A Notes and the Initial Shelf Notes, the
Available Facility Amount hereunder is $50,000,000 as described in greater
detail in paragraph 2B(1) below. From and after the effectiveness of this
Agreement, the Existing 1995 Agreement shall be of no force or effect
whatsoever except to evidence the terms pursuant to which the Series A Notes
were originally issued.
1B. 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 $150,000,000,
to be dated the date
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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", "INITIAL SHELF NOTE",
"INITIAL SHELF 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].
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. The parties hereto agree that after giving effect to the
purchase and sale of the Series A Notes and the Initial Shelf Notes, the
Available Facility Amount as of the date hereof is $50,000,000.
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".
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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"). 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 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.
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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, Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, 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 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, 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 $50,000.
2B(8)(ii). ISSUANCE FEE. The Company will pay to Prudential in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day 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 Initial Shelf Notes or with respect to the next
$25,000,000 drawn under the Facility if such draw is consummated on or before
December 31, 1997.
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
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where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, i.e., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from
and including the original Closing Day with respect to such Accepted Note (in
the case of the first such payment with respect to such Accepted Note) or from
and including the date of the next preceding payment (in the case of any
subsequent delayed delivery fee payment with respect to such Accepted Note) to
but excluding the date of such payment; and "PA" means Principal Amount, i.e.,
the principal amount of the Accepted Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less than zero. Nothing
contained herein shall obligate any Purchaser to purchase any Accepted Note on
any day other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company in writing
under the circumstances set forth in the last sentence of paragraph 2B(5) or
the penultimate sentence of paragraph 2B(7) that the closing of the purchase
and sale of such Accepted Note is to be canceled, or if the closing of the
purchase and sale of such Accepted Note is not consummated on or prior to the
last day of the Issuance Period (the date of any such notification, or the last
day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay to Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as 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
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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 Xxxxxx X. Xxxxx, general counsel
of the Company (or such other counsel designated by the Company and
acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-1 attached hereto, in the case of the
Series B Notes, and Exhibit D-2 attached hereto, in the case of future Shelf
Notes, and as to such other matters as such Purchaser may reasonably
request. The Company hereby directs each such counsel to deliver such
opinion, agrees that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to rely on
such opinion.
(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 X. Xxxxx, 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.
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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
(including, without limitation, the Series A Notes and the Initial Shelf Notes)
shall be subject to required prepayments, if any, set forth in the Notes of
such Series.
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
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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:
500000000 (i) 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 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;
(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
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and what action the Company proposes to take with respect thereto. 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 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.
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6. NEGATIVE COVENANTS.
6A. [INTENTIONALLY OMITTED.]
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, assessments, governmental charges or
levies, statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for
sums not yet due or which are being actively contested in good faith by
appropriate proceedings;
(ii) Liens arising out of judgments or awards against the
Company or any Subsidiary which are being actively contested in good
faith by appropriate proceedings;
(iii) Liens incidental to the conduct of its business or the
ownership of its properties and assets (including attorneys' Liens and
Liens in connection with worker's compensation, unemployment insurance and
other like laws, but excluding any Lien imposed by ERISA) and Liens to
secure the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature, all of which were not incurred in connection with the
borrowing of money or the obtaining of advances or credit; provided in
each case, the obligation secured is not overdue, or, if overdue, is
being actively contested in good faith by appropriate proceedings;
(iv) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use of
real property that are necessary for the conduct of the operations of the
Company and its Subsidiaries or that customarily exist on properties of
corporations engaged in similar businesses and are similarly situated and
that do not in any event materially impair their use in the operations
of the Company and its Subsidiaries;
(v) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary;
11
(vi) Liens in existence on the date hereof described on
Schedule 6B;
(vii) after the date hereof, Liens (A) consisting of
Capitalized Lease Obligations, or (B) existing prior to the time of
acquisition upon any property acquired by the Company or any Subsidiary
through purchase, merger or consolidation or otherwise, whether or not
expressly assumed by the Company or such Subsidiary, or (C) placed on
property at the time of acquisition by the Company or any Subsidiary to
secure all or a portion of (or to secure Debt incurred to pay all or a
portion of) the purchase price thereof, provided that (1) in the case of
(B), any such Lien shall not have been created, incurred or assumed in
contemplation of such purchase, merger, consolidation or other event in
(B), (2) all of such property is not or shall not thereby become
encumbered in any amount in excess of the lesser of 100% of the cost
thereof or fair market value thereof (as determined in good faith by the
board of directors of the Company), (3) in the case of (B) and (C), any
such Lien shall be confined solely to the item(s) of property so acquired,
(4) in the case of (C), any such Lien shall have been created or incurred
concurrently with the acquisition of such property, and (5) such Lien is
permitted by the provisions of paragraph 6B(2). Notwithstanding the terms
of this clause (vii) of paragraph 6(B)(1), the Company or any Subsidiary
may not dispose of assets to a third party and repurchase them with Debt
secured in whole or in part by Liens placed on such assets; however, this
subparagraph is not intended to limit the Company's ability to sell
assets and lease such assets back under operating leases;
(viii) Liens renewing or extending any Lien permitted by
clauses (vi) and (vii) of this paragraph 6(B)(1), provided that (A) such
Lien is not extended to other property of the Company or any Subsidiary,
(B) the principal amount of Debt secured by such Lien does not exceed the
principal amount outstanding at the time of such renewal or
extension, and (C) no Default or Event of Default shall exist or result
therefrom;
(ix) Liens securing non-recourse Debt of Subsidiaries
relating to accounts receivable securitization transactions, provided that
the total amount of accounts receivable subject to accounts receivable
securitization transactions does not exceed at any time more than fifteen
percent (15%) of gross receivables of the Company and its Subsidiaries,
and further provided that any such Debt shall have no claim against any
other asset of the Company or its Subsidiaries; and
(x) other Liens securing Funded Debt (other than Funded
Debt that constitutes Subordinated Debt); provided, however, that (a) such
Funded Debt is permitted
12
by the provisions of paragraph 6B(2) and (b) the aggregate amount of all
Secured Funded Debt outstanding together with all Funded Debt of any
Subsidiary (other than as permitted by clause (i) of paragraph 6B(2)) does
not at any time exceed an amount equal to ten percent (10%) of
consolidated total assets of the Company.
6B(2). DEBT. Create, incur, assume or suffer to exist any Debt,
except:
(i) Funded Debt of any Subsidiary to the Company or any
other Subsidiary;
(ii) Subordinated Debt;
(iii) Senior Funded Debt of the Company and its Subsidiaries,
so long as (a) the aggregate principal amount of consolidated Senior
Funded Debt does not exceed at any time an amount equal to fifty percent
(50%) of Consolidated Capitalization and (b) the aggregate amount of all
Funded Debt of Subsidiaries (excluding that permitted by clause (i) of
this paragraph 6B(2)), together with all Secured Funded Debt does not
exceed 10% of consolidated total assets of the Company;
(iv) non-recourse Debt of Subsidiaries relating to accounts
receivable securitization transactions, provided that the total amount of
accounts receivable subject to accounts receivable securitization
transactions does not exceed at any time more than fifteen percent (15%)
of gross receivables outstanding for the Company and its Subsidiaries and,
further provided that any such Debt shall have no claim against any
other asset of the Company or its Subsidiaries; and
(v) Current Debt of the Company provided that commencing on
May 31, 1997 and at all times thereafter there shall have been a period of
at least thirty (30) 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 (iii) of this paragraph
6B(2) as of the close of business on such day.
6B(3). [INTENTIONALLY OMITTED.]
6B(4)(i). SALE OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets of the Company or any Subsidiary (such sale, lease, transfer or
other disposition shall include (A) the sale and/or issuance of stock of any
Subsidiary to Persons other than the Company or any wholly-owned Subsidiary and
(B) any dilution of ownership arising from a merger or consolidation of
13
Subsidiaries as permitted by paragraph 6B(4)(ii)), 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 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.
Excluded from the foregoing limitation are the disposition of assets (x)
relating to accounts receivable securitization transactions, provided that the
total amount of accounts receivable subject to accounts receivable
securitization transactions does not exceed at any time more than fifteen
percent (15%) of gross receivables of the Company and its Subsidiaries and,
further provided that the transferee of such assets shall have no claim against
any other asset of the Company or its Subsidiaries relating to such transfer,
and finally provided that such assets have been transferred for fair market
value, (y) the proceeds of which are, within 180 days of such disposition,
either (i) reinvested in property or assets for use in the existing business of
the Company and its Subsidiaries, or (ii) applied on a pro rata basis to prepay
Senior Funded Debt, including, without limitation, the Notes pursuant to
paragraph 4B hereof, including the Yield-Maintenance Amount provided for in
said paragraph 4B and (z) consisting of Designated Permitted Asset Sales.
6B(4)(ii). MERGER. Merge or consolidate with any other Person, except that
(a) Subsidiaries may be merged into the Company or any other Subsidiary, (b)
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 and (c) any Subsidiary may merge with
another Person (other than the Company unless permitted by clause (a) above) so
long as 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. [INTENTIONALLY OMITTED.]
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
14
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 other than those relating directly to its
principal business except for purchases and sales of store locations in the
ordinary course of business.
6G. [INTENTIONALLY OMITTED.]
6H. [INTENTIONALLY OMITTED.]
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of
or Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 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 such obligation to become due (or
15
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 $7,000,000; 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
(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
16
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 $7,000,000
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 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.
17
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 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,
18
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).
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution nor delivery of this Agreement or the Notes,
nor the offering, issuance and sale of the Notes, nor fulfillment of nor
compliance with the terms and provisions hereof and of the Notes will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any
of its Subsidiaries, any award of any arbitrator or any agreement (including
any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject. Neither the Company nor any of its Subsidiaries is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
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
19
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 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
20
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.
9. REPRESENTATIONS AND WARRANTIES OF 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, (ii) a separate account maintained by
such Purchaser in which no employee benefit
21
plan, other than employee benefit plans identified on a list which has been
furnished by such Purchaser to the Company, participates to the extent of 10%
or more, or (iii) an investment fund, the assets of which do not include any
assets of any employee benefit plan. For the purpose of this paragraph 9B,
the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall have the
respective meanings specified in section 3 of ERISA.
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 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
22
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.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which interest on such
Note is payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (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 xxxx quotations to bond-
23
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.
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
24
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).
"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.
25
"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;
(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
26
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 (i)
borrowings under the Company's Credit Agreement dated as of July 1, 1997 (and
any successor revolving bank credit agreement) shall constitute Current Debt and
(ii) Guarantees of Indebtedness of Company members in an aggregate amount not
to exceed $20,000,000 shall not constitute Current Debt, so long as no event
has occurred the result of which would be to cause or permit such Indebtedness
to become due prior to any stated maturity.
"DEBT" shall mean Current Debt and Funded Debt.
"DELAYED DELIVERY FEE" shall have the meaning specified in
paragraph 2B(8)(iii).
"DESIGNATED PERMITTED ASSET SALE" shall mean the sale or other
disposition of up to ten warehouses and/or facilities selected by the Company
for sale or other disposition.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
27
"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 1992 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.
"EXISTING 1995 AGREEMENT" shall have the meaning specified in
paragraph 1A.
"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, provided that,
Guarantees of Indebtedness of Company members in an aggregate amount not to
exceed $20,000,000 shall not constitute Funded Debt, so long as no event has
occurred the result of which would be to cause or permit such Indebtedness to
become due prior to any stated maturity.
"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)
28
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.
"INITIAL SHELF NOTES" shall mean the Series B Notes and the
Series C Notes.
"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 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.
29
"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.
"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.
30
"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.
"SERIES A NOTES" shall mean the 7.38% $50,000,000 Series A
Note executed by the Company dated July 1, 1997 and due July 1, 2012, and any
Note delivered in exchange or substitution therefor pursuant to this Agreement.
"SERIES B NOTES" shall mean the 6.91% $25,000,000 Series B
Note(s) executed by the Company dated November 13, 1997 and due November 13,
2007, and any Note delivered in exchange or substitution therefor pursuant to
this Agreement.
"SERIES C NOTES" shall mean the 6.73% $25,000,000 Series C
Notes executed by the Company dated November 13, 1997 and due November 13,
2002, and any Note delivered in exchange or substitution therefor pursuant to
this Agreement.
"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 (including, without limitation, the Series A Notes and Series B
Notes) or the Existing 1992 Agreement.
"SUBSIDIARY" shall mean any corporation eighty percent (80%) or
more 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, Xxxxxx Canada
Hardware and Variety Cooperative, Inc. will be
31
deemed a Subsidiary of the Company if, in accordance with GAAP, it is
consolidated in the financial statements 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.
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
32
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 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
33
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 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
34
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 to the applicable
Confirmation of Acceptance 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 0000 Xxxx Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000,
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 respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall not be included in the computation of the interest payable on such
Business Day.
11K. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
35
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.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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11S. AMENDMENT OF EXISTING 1992 AGREEMENT. Upon the execution of
this Agreement by Prudential, paragraphs 5 and 6 of the Existing 1992 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 1992 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 1992 Agreement, as amended hereby, shall
mean the notes issued under and pursuant to the Existing 1992 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 1992 Agreement.
Very truly yours,
TRUSERV CORPORATION
By:_________________________________
Xxxxx X. Xxxxx
Executive Vice President and
Chief Financial Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:__________________________________
Vice President
