EXHIBIT 10.48
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Borders Group, Inc.
$50,000,000
6.31% Senior Guaranteed Notes due July 30, 2006
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Note Purchase Agreement
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Dated as of July 30, 2002
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TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES..................................................1
SECTION 2. SALE AND PURCHASE OF NOTES..............................................1
SECTION 3. CLOSING.................................................................2
SECTION 4. CONDITIONS TO CLOSING...................................................2
Section 4.1. Representations and Warranties..........................................2
Section 4.2. Performance; No Default.................................................2
Section 4.3. Compliance Certificates.................................................2
Section 4.4. Opinions of Counsel.....................................................3
Section 4.5. Purchase Permitted by Applicable Law, Etc...............................3
Section 4.6. Sale of Other Notes.....................................................3
Section 4.7. Payment of Special Counsel Fees.........................................3
Section 4.8. Guaranty Agreement......................................................3
Section 4.9. Private Placement Number................................................3
Section 4.10. Changes in Corporate Structure..........................................4
Section 4.11. Proceedings and Documents...............................................4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................4
Section 5.1. Organization; Power and Authority.......................................4
Section 5.2. Authorization, Etc......................................................4
Section 5.3. Disclosure..............................................................4
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates..........................................................5
Section 5.5. Financial Statements....................................................5
Section 5.6. Compliance with Laws, Other Instruments, Etc............................5
Section 5.7. Governmental Authorizations, Etc........................................6
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders...............6
Section 5.9. Taxes...................................................................6
Section 5.10. Title to Property; Leases...............................................6
Section 5.11. Licenses, Permits, Etc..................................................7
Section 5.12. Compliance with ERISA...................................................7
Section 5.13. Private Offering by the Company.........................................8
Section 5.14. Use of Proceeds; Margin Regulations.....................................8
Section 5.15. Existing Indebtedness; Future Liens.....................................8
Section 5.16. Status under Certain Statutes...........................................9
Section 5.17. Environmental Matters...................................................9
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Section 5.18. Foreign Assets Control Regulations, Etc.................................9
Section 5.19. Solvency...............................................................10
Section 5.20. Pari Passu Obligations.................................................10
SECTION 6. REPRESENTATIONS OF THE PURCHASER.......................................10
Section 6.1. Purchase for Investment................................................10
Section 6.2. Source of Funds........................................................10
SECTION 7. INFORMATION AS TO COMPANY..............................................12
Section 7.1. Financial and Business Information.....................................12
Section 7.2. Officer's Certificate..................................................14
Section 7.3. Inspection.............................................................15
SECTION 8. PREPAYMENT OF THE NOTES................................................15
Section 8.1. Prepayments Generally..................................................15
Section 8.2. Optional Prepayments with Make-Whole Amount............................15
Section 8.3. Prepayment of Notes Upon Change of Control.............................16
Section 8.4. Allocation of Partial Prepayments......................................16
Section 8.5. Maturity; Surrender, Etc...............................................17
Section 8.6. Purchase of Notes......................................................17
Section 8.7. Make-Whole Amount......................................................17
SECTION 9. AFFIRMATIVE COVENANTS..................................................18
Section 9.1. Compliance with Law....................................................18
Section 9.2. Insurance..............................................................19
Section 9.3. Maintenance of Properties..............................................19
Section 9.4. Payment of Taxes and Claims............................................19
Section 9.5. Corporate Existence, Etc...............................................19
Section 9.6. Additional Subsidiaries................................................19
Section 9.7. Pari Passu Ranking.....................................................20
SECTION 10. NEGATIVE COVENANTS.....................................................20
Section 10.1. Transactions with Affiliates...........................................20
Section 10.2. Consolidated Net Worth.................................................20
Section 10.3. Consolidated Total Debt Coverage.......................................20
Section 10.4. Fixed Charge Coverage..................................................21
Section 10.5. Permitted Investments..................................................21
Section 10.6. Priority Debt..........................................................21
Section 10.7. Liens..................................................................21
Section 10.8. Merger, Consolidation, etc.............................................22
Section 10.9. Sale of Assets.........................................................23
Section 10.10. Nature of Business.....................................................24
SECTION 11. EVENTS OF DEFAULT......................................................24
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SECTION 12. REMEDIES ON DEFAULT, ETC...............................................27
Section 12.1. Acceleration...........................................................27
Section 12.2. Other Remedies.........................................................27
Section 12.3. Rescission.............................................................27
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc......................28
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES..........................28
Section 13.1. Registration of Notes..................................................28
Section 13.2. Transfer and Exchange of Notes.........................................28
Section 13.3. Replacement of Notes...................................................29
Section 13.4. Legend.................................................................29
SECTION 14. PAYMENTS ON NOTES......................................................29
Section 14.1. Place of Payment.......................................................29
Section 14.2. Home Office Payment....................................................30
SECTION 15. EXPENSES, ETC..........................................................30
Section 15.1. Transaction Expenses...................................................30
Section 15.2. Survival...............................................................30
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
Agreement..............................................................30
SECTION 17. AMENDMENT AND WAIVER...................................................31
Section 17.1. Requirements...........................................................31
Section 17.2. Solicitation of Holders of Notes.......................................31
Section 17.3. Binding Effect, Etc....................................................31
Section 17.4. Notes Held by Company, Etc.............................................32
SECTION 18. NOTICES................................................................32
SECTION 19. REPRODUCTION OF DOCUMENTS..............................................32
SECTION 20. CONFIDENTIAL INFORMATION...............................................33
SECTION 21. SUBSTITUTION OF PURCHASER..............................................34
SECTION 22. MISCELLANEOUS..........................................................34
Section 22.1. Successors and Assigns.................................................34
Section 22.2. Payments Due on Non-Business Days......................................34
Section 22.3. Severability...........................................................34
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Section 22.4. Construction...........................................................34
Section 22.5. Counterparts...........................................................34
Section 22.6. Governing Law..........................................................35
Signature.........................................................................................36
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Litigation
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 10.5 -- Permitted Investments
EXHIBIT 1 -- Form of 6.31% Senior Guaranteed Note due July 30, 2006
EXHIBIT 2 -- Form of Guaranty Agreement
EXHIBIT 4.4(A) -- Form of Opinion of Special Counsel for the Company and
the Guarantors
EXHIBIT 4.4(B) -- Form of Opinion of Special Counsel for the Purchasers
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BORDERS GROUP, INC.
000 XXXXXXX XXXXX
XXX XXXXX, XXXXXXXX 00000
6.31% Senior Guaranteed Notes due July 30, 2006
Dated as of
July 30, 2002
TO EACH OF THE PURCHASERS LISTED IN THE
ATTACHED SCHEDULE A:
Ladies and Gentlemen:
BORDERS GROUP, INC., a Michigan corporation (the "Company"), agrees
with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $50,000,000 aggregate
principal amount of its 6.31% Senior Guaranteed Notes due July 30, 2006 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter
defined)). The Notes shall be substantially in the form set out in Exhibit 1,
with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "Other Purchasers"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder, and the obligations of the
Other Purchasers under the Other Agreements, are several and not joint
obligations, and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or nonperformance by any Other
Purchaser thereunder.
Borders Group, Inc. Note Purchase Agreement
The obligations of the Company under this Agreement and the Notes will
be guaranteed pursuant to the Guaranty Agreement.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. Chicago time, at a closing (the
"Closing") on July 30, 2002 or on such other Business Day thereafter on or prior
to July 31, 2002 as may be agreed upon by the Company and you and the Other
Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $500,000 as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 1001738167 at
PNC Bank, Pittsburgh, ABA Number 000000000, Account Name: Borders Group Inc. If
at the Closing the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement and in the Guaranty Agreement shall
be correct when made and at the time of the Closing.
Section 4.2. Performance; No Default. The Company and each Guarantor
shall have performed and complied with all agreements and conditions contained
in this Agreement and the Guaranty Agreement required to be performed or
complied with by it prior to or at the Closing, and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14), no Default or Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall have
entered into any transaction since the date of the Memorandum that would have
been prohibited by Sections 10.1 or Sections 10.8 through 10.9 hereof had such
Sections applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. The Company and each Guarantor shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.10 have been
fulfilled.
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Borders Group, Inc. Note Purchase Agreement
(b) Secretary's Certificate. The Company and each Guarantor shall have
delivered to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of the Notes, this Agreement and the Other Agreements in the case of
the Company, and the Guaranty Agreement in the case of the Guarantors.
Section 4.4. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Xxxxxxxxx Xxxxxx PLLC, counsel for the Company and the Guarantors, covering the
matters set forth in Exhibit 4.4(a) and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion to
you) and (b) from Xxxxxxx and Xxxxxx, your special counsel in connection with
such transactions, substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may reasonably
request.
Section 4.5. Purchase Permitted by Applicable Law, Etc. On the date of
the Closing your purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (b) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and (c) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
Section 4.6. Sale of Other Notes. Contemporaneously with the Closing,
the Company shall sell to the Other Purchasers, and the Other Purchasers shall
purchase, the Notes to be purchased by them at the Closing as specified in
Schedule A.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.
Section 4.8. Guaranty Agreement. The Guaranty Agreement shall be in
form and substance satisfactory to you and your special counsel, shall have been
duly executed and delivered by the parties thereto and shall be in full force
and effect and you shall have received a true, correct and complete copy
thereof.
Section 4.9. Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
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Borders Group, Inc. Note Purchase Agreement
Section 4.10. Changes in Corporate Structure. The Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
Section 4.11. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Other
Agreements and the Notes and to perform the provisions hereof and thereof.
Section 5.2. Authorization, Etc. This Agreement, the Other Agreements
and the Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 5.3. Disclosure. The Company, through its agent, Banc One
Capital Markets, Inc., has delivered to you and each Other Purchaser a copy of a
Confidential Offering Memorandum, dated June, 2002 (the "Memorandum"), relating
to the transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. This Agreement, the Memorandum and the
financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Since January 27, 2002, there has been
no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
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Borders Group, Inc. Note Purchase Agreement
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Memorandum.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in financial statements and the consolidated results
of their operations and cash flows for the respective periods so specified and
have been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust,
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Borders Group, Inc. Note Purchase Agreement
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which the Company or any Subsidiary is bound or
by which the Company or any Subsidiary or any of their respective properties may
be bound or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8 hereto, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended January 28, 2001.
Section 5.10. Title to Property; Leases. The Company and its
Subsidiaries have good and sufficient title to their respective properties,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
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Borders Group, Inc. Note Purchase Agreement
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.
Section 5.11. Licenses, Permits, Etc. (a) The Company and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others.
(b) To the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise, authorization,
patent, copyright, service xxxx, trademark, trade name or other right owned by
any other Person.
(c) To the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service xxxx, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "current value" and
"present value" have the meanings specified in Section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards
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Borders Group, Inc. Note Purchase Agreement
Board Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the Company and
its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than you, the
Other Purchasers and not more than thirty-four (34) other Institutional
Investors, each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 5% of the value of such assets. As used
in this Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Indebtedness; Future Liens. (a) Schedule 5.15
sets forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of July 15, 2002, since which date there has
been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Indebtedness of the Company or such Subsidiary and no event or condition
exists with respect to any Indebtedness of the Company or any Subsidiary that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or
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Borders Group, Inc. Note Purchase Agreement
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 10.7.
Section 5.16. Status under Certain Statutes. Neither the Company nor any
Subsidiary is an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, or is subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, the
ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.17. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted raising any claim against the Company or
any of its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them or has disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case
in any manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.18. Foreign Assets Control Regulations, Etc. Neither the sale
of the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto. Without limiting the foregoing, neither the Company nor any of
its Subsidiaries (a) is a person whose property or interests in property are
blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transaction With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in
any dealings or transactions, or be otherwise associated, with any such person.
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Borders Group, Inc. Note Purchase Agreement
Section 5.19. Solvency. The fair value of the business and assets of
each of the Company and each Guarantor exceeds the amount that will be required
to pay its respective liabilities (including, without limitation, contingent,
subordinated, unmatured and unliquidated liabilities on existing debts, as such
liabilities may become absolute and matured), in each case after giving effect
to the transactions contemplated by this Agreement, the Other Agreements, the
Guaranty Agreement and the Notes (including, without limitation, the use of the
proceeds of the sale of the Notes). Neither the Company nor the Guarantors,
after giving effect to the transactions contemplated by this Agreement, the
Other Agreements, the Guaranty Agreement and the Notes, will be engaged in any
business or transaction, or about to engage in any business or transaction, for
which such Person has unreasonably small assets or capital (within the meaning
of the Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act
and Section 548 of the Federal Bankruptcy Code), and neither the Company nor the
Guarantors has any intent to
(a) hinder, delay or defraud any entity to which any of them
is, or will become, on or after the date of Closing, indebted, or
(b) incur debts that would be beyond any of their ability to
pay as they mature.
Section 5.20. Pari Passu Obligations.
(a) The Notes. The Notes rank equally and ratably with all unsecured
and unsubordinated obligations of the Company generally, but subject to the
right of any Person having secured or preferred rights, whether such rights
arise by contract, statute, law (or the operation thereof) or otherwise.
(b) The Guaranty Agreement. The Guaranty Agreement ranks equally and
ratably with all unsecured and unsubordinated obligations of each of the
Guarantors generally, but subject to the right of any Person having secured or
preferred rights, whether such rights arise by contract, statute, law (or the
operation thereof) or otherwise.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
your or their property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
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Borders Group, Inc. Note Purchase Agreement
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the
same employer or employee organization, with respect to which the
amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceed ten percent (10%)
of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth
in the NAIC Annual Statement filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Company in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party-in-interest" and "separate account" shall have the
respective meanings as assigned to such terms in Section 3 of ERISA.
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Borders Group, Inc. Note Purchase Agreement
If you or any subsequent transferee of the Notes indicates that you or
such transferee are relying on any representation contained in paragraph (b),
(c) or (e) above, the Company shall deliver on the date of Closing or on the
date of transfer, as applicable, a certificate, which shall state whether that
(i) it is a party in interest or a "disqualified person" (as defined in Section
4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (b) or (e) above, or (ii) with respect to any plan, identified
pursuant to paragraph (c) above, it or any "affiliate" (as defined in Section
V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing pursuant to paragraph (c) above or to
negotiate the terms of said QPAM's management agreement on behalf of any such
identified plan.
SECTION 7. INFORMATION AS TO COMPANY.
Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of:
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end of
each fiscal year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company and
its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
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Borders Group, Inc. Note Purchase Agreement
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by
an opinion thereon of independent certified public
accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in
all material respects, the financial position of the companies
being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances,
provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year (together
with the Company's annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and
Exchange Commission, shall be deemed to satisfy the requirements of
this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five business days after a Responsible Officer
becoming aware of the existence of any Default or Event of Default or
that any Person has given any notice or taken any action with respect
to a claimed default hereunder or that any Person has given any notice
or taken any action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the nature
and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
business days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
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Borders Group, Inc. Note Purchase Agreement
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material
Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Sections 10.2 through 10.4 and 10.6
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the
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Borders Group, Inc. Note Purchase Agreement
existence during such period of any condition or event that constitutes
a Default or an Event of Default or, if any such condition or event
existed or exists (including, without limitation, any such event or
condition resulting from the failure of the Company or any Subsidiary
to comply with any Environmental Law), specifying the nature and period
of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives
of each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Prepayments Generally. The Notes are not subject to
prepayment or redemption at the option of the Company prior to their express
maturity dates except on the terms and conditions and in the amounts and with
the Make-Whole Amount as set forth in this Agreement.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes, in an amount not less than 5.00% of
the aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, together with
interest accrued thereon to the date of such prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
such date, the aggregate principal amount of the Notes to be prepaid on such
date, the principal amount of each Note held by such holder to be
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Borders Group, Inc. Note Purchase Agreement
prepaid (determined in accordance with Section 8.4), and the interest to be paid
on the prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
Section 8.3. Prepayment of Notes Upon Change of Control.
(a) Condition to Company Action. Within five (5) days of a Change of
Control, the Company shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in
subparagraph (b) of this Section 8.3, accompanied by the certificate described
in subparagraph (e) of this Section 8.3.
(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.3 shall be an offer to prepay, in accordance
with and subject to this Section 8.3, all, but not less than all, the Notes held
by each holder (in this case only, "holder" in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on the date specified in such offer (the "Proposed Prepayment
Date") that is not less than 30 days and not more than 60 days after the date of
such offer (if the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the first Business Day which is at
least 45 days after the date of such offer).
(c) Acceptance; Rejection. A holder of Notes may accept the offer to
prepay made pursuant to this Section 8.3 by causing a notice of such acceptance
to be delivered to the Company at least 10 days prior to the Proposed Prepayment
Date. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3 shall be deemed to constitute a rejection of such
offer by such holder.
(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment. The prepayment
shall be made on the Proposed Prepayment Date.
(e) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 8.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.3; (iii) the principal amount of each Note offered to be prepaid; (iv)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date; (v) that the conditions of this Section 8.3 have
been fulfilled; and (vi) in reasonable detail, the nature and date or proposed
date of the Change of Control.
Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the
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Borders Group, Inc. Note Purchase Agreement
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof.
Section 8.5. Maturity; Surrender, Etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6. Purchase of Notes. The Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, .50% over the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page PX1" on the
Bloomberg Financial Markets Services Screen (or such other display as
may replace Page PX1 on the Bloomberg Financial Markets Services
Screen) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such
time
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Borders Group, Inc. Note Purchase Agreement
or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day
for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (a) converting U.S. Treasury
xxxx quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the duration closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause each
of its Subsidiaries to, comply with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in
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Borders Group, Inc. Note Purchase Agreement
effect such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.2. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 9.3. Maintenance of Properties. The Company will, and will
cause each of its Subsidiaries to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need pay
any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.8 and 10.9, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
Section 9.6. Additional Subsidiaries. The Company hereby covenants and
agrees that, if any Domestic Subsidiary which is not a Guarantor (i) guarantees
the Company's obligations under the Bank Credit Agreement, (ii) becomes an
obligor under the Credit Agreement or (iii) directly or indirectly guarantees
any Indebtedness or other obligations of the Company, it will cause such
Domestic Subsidiary to enter into a joinder agreement substantially in the form
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Borders Group, Inc. Note Purchase Agreement
of the joinder agreement set forth as Annex 1 to the Guaranty Agreement and
acceptable in form and substance to the Required Holders for the benefit of the
holders of the Notes, together with a completed closing certificate
substantially in the form of Annex 2 to the Guaranty Agreement and a favorable
legal opinion of counsel as to the due authorization, execution, delivery,
legality, validity and enforceability thereof, and that such guaranty agreement
does not violate or conflict with any law or governing document relating to the
Company or such Domestic Subsidiary. Notwithstanding the foregoing, in the event
that any Guarantor is no longer obligated to any Lender pursuant to the Credit
Agreement or any guarantee thereof or any other Indebtedness directly or
indirectly as an obligor, guarantor or otherwise and (x) no Default or Event of
Default exists or would exist immediately after such release, and (y) the
release of such Guarantor would not result in a Material Adverse Effect, the
holders of the Notes hereby agree to release such Guarantor from its obligations
under the Guaranty Agreement pursuant to terms and conditions reasonably
satisfactory to the Required Holders.
Section 9.7. Pari Passu Ranking. The Company's obligations under the
Notes and this Agreement will at all times rank at least pari passu, without
preference or priority, with all unsecured and unsubordinated Debt of the
Company generally, but subject to the right of any Person having secured or
preferred rights, whether such rights arise by contract, statute, law (or the
operation thereof) or otherwise.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Transactions with Affiliates. The Company will not and
will not permit any Subsidiary to enter into directly or indirectly any
transaction (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
Section 10.2. Consolidated Net Worth. The Company will not, at any
time, permit Consolidated Net Worth to be less than the sum of (a) $725,000,000,
plus (b) an aggregate amount equal to 20% of Consolidated Net Income (but, in
each case, only if a positive number) for each completed fiscal quarter
beginning with the fiscal quarter ending July 31, 2002.
Section 10.3. Consolidated Total Debt Coverage. The Company will not,
and will not permit any Subsidiary to, directly or indirectly, create, incur,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness unless on the date the Company or such Subsidiary becomes
liable with respect to any such Indebtedness and immediately after giving effect
thereto and the concurrent retirement of any other Indebtedness,
(a) no Default or Event of Default exists, and
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Borders Group, Inc. Note Purchase Agreement
(b) the ratio of Consolidated Total Debt to Consolidated
Operating Cash Flow does not exceed 2.50 to 1.00, in each case for the
immediately preceding four quarter period, taken as a single accounting
period ending on the date of calculation.
For the purposes of this Section 10.3, any Person becoming a Subsidiary after
the date hereof shall be deemed, at the time it becomes a Subsidiary, to have
incurred all of its then outstanding Indebtedness, and any Person extending,
renewing or refunding any Indebtedness shall be deemed to have incurred such
Indebtedness at the time of such extension, renewal or refunding.
Section 10.4. Fixed Charge Coverage. The Company will not permit, as at
the end of each fiscal quarter, the ratio of Consolidated Income Available for
Fixed Charges to Consolidated Fixed Charges to be less than 1.50 to 1.00 for the
immediately preceding four quarter period, taken as a single accounting period
ending on the date of calculation.
Section 10.5. Permitted Investments. The Company will not, and will not
permit any Subsidiary to, make, authorize or have any Investment other than
Permitted Investments.
Section 10.6. Priority Debt. The Company will not, at any time, permit
Priority Debt to exceed 15% of Consolidated Net Worth determined as of the end
of the most recently ended fiscal quarter.
Section 10.7. Liens. The Company will not, and will not permit any
Subsidiary to, create, assume, incur or suffer to be created, assumed or
incurred or to exist any Lien in respect of any Property, whether now owned or
hereafter acquired, except:
(a) Liens for taxes or assessments or other governmental
charges or levies, provided that payment thereof is not required by
Section 9.1 or 9.4;
(b) Liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by
appropriate proceedings, provided that payment thereof is not required
by Section 9.1 or 9.4;
(c) other Liens incidental to the normal conduct of the
business of the Company and its Subsidiaries or the ownership of their
property which are not incurred in connection with the incurrence of
Indebtedness and which do not, in the aggregate, materially impair the
use of such property in the operation of the business of the Company
and its Subsidiaries taken as a whole or the value of such property for
the purposes of such business;
(d) minor survey exceptions or minor encumbrances which are
necessary for the conduct of the activities of the Company and its
Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities, which do not materially impair their use
in operations of the business of the Company and its Subsidiaries;
(e) Liens existing on the date of this Agreement as described
on Schedule 5.15;
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Borders Group, Inc. Note Purchase Agreement
(f) the extension, renewal or replacement of any Lien
permitted by the foregoing paragraph (e) in respect of the same
property subject thereto or the extension, renewal of such replacement
liens (without increase of principal amount of the Indebtedness
secured);
(g) (i) any Lien in property or in rights relating thereto to
secure any rights granted with respect to such property in connection
with the provision of all or a part of the purchase price or cost of
the construction of such property created contemporaneously with, or
within 180 days after, such acquisition or the completion of such
construction, or
(ii) any Lien in property existing in such property at the
time of acquisition thereof, whether or not the Indebtedness secured
thereby is assumed by the Company or such Subsidiary, or
(iii) any Lien existing in the property of a corporation at
the time such corporation is merged into or consolidated with the
Company or a Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation or firm as an entirety
or substantially as an entirety to the Company or a Subsidiary,
provided, however, that all of such Liens described in this Section
10.7(g) shall not exceed, in the aggregate, 100% of the fair market
value on the related property;
(h) Liens securing obligations of a Subsidiary to the Company
or a Wholly-Owned Subsidiary;
(i) Liens on assets of Foreign Subsidiaries securing
Indebtedness permitted pursuant to paragraph (c) of the definition of
Priority Debt;
(j) Liens in respect of the interests of lessors under Capital
Leases and Synthetic Leases permitted under this Agreement securing
obligations of the Company or its Subsidiaries to the lessor under such
Capital Leases or Synthetic Leases;
(k) if and so long as no Default or Event of Default exists
hereunder, including, without limitation under Section 10.6, Liens
securing Indebtedness of the Company or any Subsidiary in addition to
those described in clauses (a) through (j) above;
(l) Liens on the properties covered by the Existing Synthetic
Lease Facility and related assets granted to the real estate
administrative agent under the Existing Synthetic Lease Facility
securing obligations of the Company or its Subsidiaries to the lenders
under the Existing Synthetic Lease Facility; and
(m) Liens constituting rights of setoff described in Section
16.1 of the Credit Agreement.
Section 10.8. Merger, Consolidation, etc. The Company will not, and
will not permit any Subsidiary to, consolidate with or merge with any other
corporation or convey, transfer or lease
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Borders Group, Inc. Note Purchase Agreement
substantially all of its assets in a single transaction or series of
transactions to any Person (except that any Subsidiary may merge with or into,
or convey, transfer or lease substantially all of its assets to, the Company or
any Wholly-Owned Subsidiary if (1) in any such merger or consolidation involving
the Company, the Company is the survivor and (2) immediately after giving effect
to any such merger, consolidation or conveyance, transfer or lease, no Default
or Event of Default would exist) unless:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company or such Subsidiary
as an entirety, as the case may be, shall be a solvent corporation and,
in the case of the Company or any Guarantor, organized and existing
under the laws of the United States or any State thereof (including the
District of Columbia) or, in the case of any Guarantor which is not
organized in the United States, under the laws of such Guarantor's
jurisdiction of organization, and, in the case of any such transaction
involving the Company or a Guarantor, if the Company or such Guarantor
is not such corporation, (i) such corporation shall have executed and
delivered to each holder of any Notes its assumption of the due and
punctual performance and observance of each covenant and condition of
this Agreement, the other Agreements and the Notes or the Guaranty
Agreement, in the case of a successor to any Guarantor and (ii) shall
have caused to be delivered to each holder of any Notes an opinion of
nationally recognized independent counsel, or other independent counsel
reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof;
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing and
the Company could incur at least $1.00 of additional Indebtedness
pursuant to Sections 10.3 and 10.4, treating such transaction, for
determining compliance with Sections 10.3 and 10.4, as having been
consummated as of the last day of the immediately preceding fiscal
quarter.
No such conveyance, transfer or lease of substantially all of the assets of the
Company or such Subsidiary shall have the effect of releasing the Company or
such Subsidiary or any successor corporation that shall theretofore have become
such in the manner prescribed in this Section 10.8 from its liability under this
Agreement, the Other Agreements or the Notes to which it is a party.
Section 10.9. Sale of Assets. Except as permitted under Section 10.8,
the Company will not, and will not permit any Subsidiary to, make any Asset
Disposition unless:
(a) in the good faith opinion of the Company or Subsidiary
making the Asset Disposition, the Asset Disposition is in exchange for
consideration having a fair market value at least equal to that of the
property exchanged;
(b) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
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Borders Group, Inc. Note Purchase Agreement
(c) immediately after giving effect to such Asset Disposition,
the Company could incur at least $1.00 of additional Indebtedness
pursuant to Section 10.3 and Section 10.4 assuming such Asset
Disposition occurred as of the end of the immediately preceding fiscal
quarter; and
(d) the sum of (i) the Disposition Value of the property
subject to such Asset Disposition, plus (ii) the aggregate Disposition
Value for all other property that was the subject of an Asset
Disposition during the period of 365 days immediately preceding such
Asset Disposition would not exceed 15% of Consolidated Total Assets
determined as of the end of the most recently ended calendar month
preceding such Asset Disposition.
To the extent that the Net Sales Amount consisting of cash for any Transfer to a
Person other than the Company or a Subsidiary is applied to a Debt Prepayment
Application or applied or committed to be applied to a Property Reinvestment
Application within one year after such Transfer, then such Transfer (or, if less
than all such Net Sales Amount is applied as contemplated hereinabove, the pro
rata percentage thereof which corresponds to the Net Sales Amount so applied),
only for the purpose of determining compliance with subsection (d) of this
Section 10.9 as of any date, shall be deemed not to be an Asset Disposition.
Section 10.10. Nature of Business. The Company will not, and will not
permit any Subsidiary to, engage to any substantial extent in any business other
than the businesses in which the Company and its Subsidiaries are engaged on the
date of this Agreement as described in the Memorandum and businesses reasonably
related thereto or in furtherance thereof.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 10.2 through 10.9; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written
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Borders Group, Inc. Note Purchase Agreement
notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or any Guarantor or by any officer of the Company
or any Guarantor in this Agreement or the Guaranty Agreement or in any
writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect
on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $25,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$25,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been
declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), the Company or any Subsidiary
has become obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of payment in
an aggregate outstanding principal amount of at least $25,000,000; or
(g) the Company or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any of its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company
or any of its Subsidiaries and such petition shall not be dismissed
within 60 days; or
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Borders Group, Inc. Note Purchase Agreement
(i) default shall occur in the observance or performance of
any provision of the Guaranty Agreement and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (i) of Section 11); or
(j) the Guaranty Agreement shall cease to be in full force and
effect for any reason whatsoever, including, without limitation, a
determination by any governmental body or court that such Guaranty
Agreement is invalid, void or unenforceable or any party thereto shall
contest or deny in writing the validity or enforceability of any of its
obligations under any such Guaranty Agreement; or
(k) a final judgment or judgments for the payment of money
aggregating in excess of $25,000,000 are rendered against one or more
of the Company and its Subsidiaries (net of insurance proceeds
whereunder a solvent insurer with an investment grade long term bond
rating has acknowledged in writing its obligation to satisfy such
judgment) and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under Section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $25,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect.
As used in Section 11(l), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
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Borders Group, Inc. Note Purchase Agreement
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect to
the Company described in paragraph (g) or (h) of Section 11 (other than an Event
of Default described in clause (i) of paragraph (g) or described in clause (vi)
of paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may at any time, at its option, by
notice or notices to the Company, declare all the Notes held by it to be
immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (i) all accrued and unpaid
interest thereon and (ii) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 51% in principal amount of the Notes then outstanding,
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and
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Borders Group, Inc. Note Purchase Agreement
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Subject to Section 13.4,
upon surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000. Any transferee of a Note, or purchaser of a participation
therein, shall, by its acceptance of such Note
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Borders Group, Inc. Note Purchase Agreement
be deemed to make the same representations to the Company regarding the Note or
participation as you and the Other Purchasers have made pursuant to Section 6.2,
provided that such entity may (in reliance upon information provided by the
Company, which shall not be unreasonably withheld) make a representation to the
effect that the purchase by such entity of any Note will not constitute a
non-exempt prohibited transaction under section 406(a) of ERISA.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
Section 13.4. Legend. Upon issuance of the Notes and until such time,
if any, as the same is no longer required under applicable securities laws, the
Notes shall bear the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE REGISTRATION UNDER SAID ACT
IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT OR IF SAID ACT DOES NOT APPLY.
Any holder of a Note may, upon surrender of its Notes to the Company together
with an opinion of counsel (which counsel may be internal counsel to such
holder) to the effect that the foregoing legend is no longer required under
applicable securities laws, obtain a like Note in exchange for its Note without
such legend.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal office of Bank
One, N.A. in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
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Borders Group, Inc. Note Purchase Agreement
Section 14.2. Home Office Payment. So long as you or your nominee shall
be the holder of any Note, and notwithstanding anything contained in Section
14.1 or in such Note to the contrary, the Company will pay all sums becoming due
on such Note for principal, Make-Whole Amount, if any, and interest by the
method and at the address specified for such purpose below your name in Schedule
A, or by such other method or at such other address as you shall have from time
to time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and each Other Purchaser or
holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes. The Company will pay, and will save you and each other
holder of a Note harmless from, all claims in respect of any fees, costs or
expenses, if any, of brokers and finders (other than those retained by you).
Section 15.2. Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding
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Borders Group, Inc. Note Purchase Agreement
sentence, this Agreement and the Notes embody the entire agreement and
understanding between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof or of
the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding whether or not such holder consented to such waiver or amendment.
Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this
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Borders Group, Inc. Note Purchase Agreement
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.
Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Xxxxxx X. Xxxxxxx,
Senior Vice President and Chief Financial Officer, or at such other
address as the Company shall have specified to the holder of each Note
in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any
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Borders Group, Inc. Note Purchase Agreement
other holder of Notes from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to demonstrate
the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, trustees, officers, employees (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors and outside agents, attorneys and affiliates who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio, or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee or any
other holder that shall have previously delivered such a confirmation), such
holder will confirm in writing that it is bound by the provisions of this
Section 20.
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Borders Group, Inc. Note Purchase Agreement
SECTION 21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
Section 22.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by fewer than all, but together signed by
all, of the parties hereto.
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Borders Group, Inc. Note Purchase Agreement
Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Michigan excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
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Borders Group, Inc. Note Purchase Agreement
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
BORDERS GROUP, INC.
By______________________________________
Name:
Title:
-36-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By _____________________________________
Name:
Title:
-37-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
TIAA-CREF LIFE INSURANCE COMPANY
By: Teachers Insurance and Annuity
Association of America, as
Investment Manager
By______________________________________
Name:
Title:
-38-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By _____________________________________
Name:
Title:
-39-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
JEFFERSON PILOT LIFEAMERICA INSURANCE
COMPANY
By _____________________________________
Name:
Title:
-40-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
THE TRAVELERS INSURANCE COMPANY
By _____________________________________
Name:
Title:
-41-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
THE TRAVELERS LIFE AND ANNUITY COMPANY
By _____________________________________
Name:
Title:
-42-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
PRIMERICA LIFE INSURANCE COMPANY
By _____________________________________
Name:
Title:
-43-
Borders Group, Inc. Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
ALLSTATE LIFE INSURANCE COMPANY
By _____________________________________
Name:
By _____________________________________
Name:
Authorized Signatories
-44-
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
TEACHERS INSURANCE AND ANNUITY $10,000,000
ASSOCIATION OF AMERICA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Payments
All payments on or in respect of the Notes shall be made in immediately
available funds at the opening of business on the due date by electronic funds
transfer through the Automated Clearing House System to:
Chase Manhattan Bank
ABA #000-000-000
New York, New York
For deposit to the account of:
TIAA Personal Annuity Private Placements
Account Number 000-0-000000
For further credit to the TIAA Account Number: G07320
Reference: PPN# 099709 A* 8/ Borders Group, Inc./Mat. Date/Coupon
Rate/P&I Breakdown
Notices
Contemporaneous with the above electronic funds transfer, advice setting forth
(1) the full name, private placement number and interest rate of the Notes; (2)
allocation of payment between principal, interest, premium and any special
payment; and (3) name and address of Bank (or Trustee) from which wire transfer
was sent, shall be delivered, mailed or faxed to:
Teachers Insurance and Annuity Association of America
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Securities Accounting Division
Telephone: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE A
(to Note Purchase Agreement)
All other notices and communications shall be delivered or mailed to:
Teachers Insurance and Annuity Association of America
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxxx - Securities Division
Telephone: (000) 000-0000
Fax: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
Notes should be delivered to your attorney contact at Teachers.
A-2
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
TIAA-CREF LIFE INSURANCE COMPANY $13,000,000
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Payments
All payments on or in respect of the Notes shall be made in immediately
available funds at the opening of business on the due date by electronic funds
transfer through the Automated Clearing House System to:
Chase Manhattan Bank
ABA #000-000-000
New York, New York
For deposit to the account of:
T-C Life PA Select Private Placements
Account Number 000-0-000000
For further credit to TIAA Account Number: G08045
Reference: PPN# 099709 A* 8/ Borders Group, Inc./Mat. Date/Coupon
Rate/P&I Breakdown
Notices
Contemporaneous with the above electronic funds transfer, advice setting forth
(1) the full name, private placement number and interest rate of the Notes, (2)
allocation of payment between principal, interest, premium and any special
payment; and (3) name and address of Bank (or Trustee) from which wire transfer
was sent, shall be delivered or faxed to:
Teachers Insurance and Annuity Association of America
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Securities Accounting Division
Telephone: (000) 000-0000
Fax: (000) 000-0000
A-3
All other communications shall be delivered or mailed to:
Teachers Insurance and Annuity Association of America
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxxx - Securities Division
Telephone: (000) 000-0000
Fax: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-4
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
JEFFERSON-PILOT LIFE INSURANCE COMPANY $8,000,000
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Securities Administration
Telefacsimile: (000) 000-0000
Overnight Mail Address:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Borders Group, Inc., 6.31% Senior Guaranteed Notes due 2006, PPN 099709 A* 8,
principal, premium or interest") to:
Jefferson-Pilot Life Insurance Company
x/x Xxx Xxxx xx Xxx Xxxx
XXX #021 000 018 BNF: IOC566
Custody Account 186100
Attention: P&I Department
Notices
All notices and communications, including notices with respect to payments on or
in respect of the Notes and written confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
Securities should be delivered to:
Bank of New York
One Wall Street
3rd Floor, Window A
For Jefferson-Pilot Life Account 186100
Xxx Xxxx, Xxx Xxxx 00000
with copy of transmittal letter and Note to contact person at Jefferson-Pilot.
A-5
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
JEFFERSON PILOT LIFEAMERICA INSURANCE $3,000,000
COMPANY
P. O. Xxx 00000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Securities Administration
Telefacsimile: (000) 000-0000
Overnight Mail Address:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Securities Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Borders Group, Inc., 6.31% Senior Guaranteed Notes due 2006, PPN 099709 A* 8,
principal, premium or interest") to:
Jefferson Pilot LifeAmerica Insurance Company
x/x Xxx Xxxx xx Xxx Xxxx
XXX #021 000 018 BNF: IOC566
Custody Account 186145
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:
Jefferson Pilot LifeAmerica Insurance Company
x/x Xxx Xxxx xx Xxx Xxxx
P. O. Xxx 00000
Xxxxxx, Xxx Xxxxxx 00000
Attention: P&I Department
with duplicate notice to Jefferson Pilot LifeAmerica Insurance Company at the
address first provided above.
All notices and communications other than those in respect to payments to be
addressed as first provided above.
A-6
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
Securities should be delivered to:
Bank of New York
One Wall Street
3rd Floor, Window A
For Jefferson Pilot LifeAmerica Account 280256
Xxx Xxxx, Xxx Xxxx 00000
with copy of transmittal letter and Note to contact person at Jefferson Pilot.
A-7
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE TRAVELERS INSURANCE COMPANY $5,000,000
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, 0xx Xxxxx
Telefacsimile: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Borders Group, Inc., 6.31% Senior Guaranteed Notes due 2006, PPN 099709 A* 8,
principal, premium or interest") to:
The Travelers Insurance Company -- Consolidated Private
Placement Account No. 000-0-000000
JPMorgan Chase Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #000000000
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Cashier, 5th Floor
Telefacsimile: (000) 000-0000
Name of Nominee in which Notes are to be issued: TRAL & CO
Taxpayer I.D. Number: 00-0000000 (a Connecticut corporation)
A-8
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE TRAVELERS LIFE AND ANNUITY COMPANY $3,000,000
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, 0xx Xxxxx
Telefacsimile: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Borders Group, Inc., 6.31% Senior Guaranteed Notes due 2006, PPN 099709 A* 8,
principal, premium or interest") to:
The Travelers Insurance Company
Consolidated Private Placement Account No. 000-0-000000
JPMorgan Chase Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #000000000
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Life and Annuity Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Cashier, 5th Floor
Telefacsimile: (000) 000-0000
Name of Nominee in which Notes are to be issued: TRAL & CO
Taxpayer I.D. Number: 00-0000000
A-9
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
PRIMERICA LIFE INSURANCE COMPANY $1,000,000
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, 0xx Xxxxx
Telefacsimile: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Borders Group, Inc., 6.31% Senior Guaranteed Notes due 2006, PPN 099709 A* 8,
principal, premium or interest") to:
Primerica Life Insurance Company Account No. 000-0-000000
JPMorgan Chase Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #000000000
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
Primerica Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Cashier, 5th Floor
Telefacsimile: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-10
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
ALLSTATE LIFE INSURANCE COMPANY $5,000,000
0000 Xxxxxxx Xxxx, XXX X0X $2,000,000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Private Placements Department
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds, identifying the name of the Issuer, the Private
Placement Number preceded by "DPP" and the payment as principal, interest or
premium, in the exact format as follows:
BBK = Xxxxxx Trust and Savings Bank
ABA #000000000
BNF = Allstate Life Insurance Company
Collection Account #000-000-0
ORG = Borders Group, Inc.
OBI = DPP - (Enter Private Placement Number, if available)
Payment Due Date (MM/DD/YY) - P ______ (Enter "P" and the
amount of principal being remitted, for example,
P5000000.00) - I ______ (Enter "I" and the amount of
interest being remitted, for example, I225000.00)
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
0000 Xxxxxxx Xxxx, XXX X0X
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000 Private Placements
(000) 000-0000 Bank Loans
Telecopy: (000) 000-0000
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
A-11
Taxpayer I.D. Number: 00-0000000
Securities should be delivered to:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx 0X
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
For Allstate Life Insurance Company/Safekeeping Account No. 846627
A-12
DEFINED TERMS
GENERAL PROVISIONS
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or indirectly by
such Person.
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (a) acquires any ongoing business or all or
substantially all of the assets of any Person or division thereof, whether
through purchase of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) a majority of the securities of a corporation, which securities
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage and voting power) of the outstanding partnership
interests of a partnership or membership interests of a limited liability
company.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Subsidiary to the Company or a
Subsidiary;
SCHEDULE B
(to Note Purchase Agreement)
(ii) Transfer from the Company to a Subsidiary;
(iii) any Transfer that constitutes an Excluded Sale
and Leaseback Transaction; and
(iv) Transfers of Investments permitted under clause
(l) of the definition of Permitted Investments;
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event
of Default exists provided, however, in the case of any transfer to a
Subsidiary which is not a Wholly-Owned Subsidiary, only that portion of
the value of the asset Transferred which is proportionately equal to
the Company's ownership percentage (direct or indirect) of such
non-Wholly-Owned Subsidiary shall be excepted for purposes of this
definition; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or any Subsidiary or that
is obsolete.
"Business Day" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Chicago, Illinois are required or authorized to
be closed.
"Capital Assets" means fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and good will); provided that Capital Assets
shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
GAAP.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Change of Control" means any of the following events or circumstances:
(i) individuals who, at the beginning of any period of 12
consecutive calendar months, constitute the Company's board of
directors (together with any new director whose election by the
Company's board of directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason (other than death or
disability) to constitute a majority of the Company's board of
directors then in office; or
B-2
(ii) if any person (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act as in effect on the date of the
Closing) or related persons constituting a group (as such term is used
in Rule 13d-5 under the Exchange Act), become the "beneficial owners"
(as such term is used in Rule 13d-3 under the Exchange Act as in effect
on the date of the Closing), directly or indirectly, of 35% or more of
the total voting power of all classes then outstanding of the Company's
voting stock.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Borders Group, Inc., a Michigan corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Fixed Charges" means, with respect to any period, the sum
of (i) Interest Expense for such period plus (ii) Lease Rentals for such period,
determined on a consolidated basis for the Company and its Subsidiaries,
provided that, in the event any Person (or the assets thereof) is acquired by
the Company or any Subsidiary (whether by merger, consolidation, asset or stock
acquisition or otherwise) at any time during the period of calculation, such
acquisition shall be deemed to have been made on the first day of such
calculation period.
"Consolidated Income Available for Fixed Charges" means, with respect
to any period, Consolidated Net Income for such period plus (to the extent
deducted to calculate Consolidated Net Income):
(a) all provisions for income taxes;
(b) total depreciation and amortization expense; and
(c) Consolidated Fixed Charges for such period,
provided that, in the event any Person (or the assets thereof) is acquired by
the Company or any Subsidiary (whether by merger, consolidation, asset or stock
acquisition or otherwise) at any time during the period of calculation, such
acquisition shall be deemed to have been made on the first day of such
calculation period. Notwithstanding the foregoing, there shall be excluded in
calculating Consolidated Net Income for purposes of this definition any losses
attributable to the use of a fair value methodology for recognition and
measurement of impairment of goodwill not identified with impaired assets in
accordance with Accounting Principles Board Opinion No. 142.
"Consolidated Net Income" means the net income (or loss) of the Company
and its Subsidiaries for such period (taken as a cumulative whole), as
determined in accordance with GAAP, excluding (to the extent deducted to
calculate Consolidated Net Income):
B-3
(i) extraordinary gain and losses; and
(ii) any equity interest of the Company on the unremitted
earnings of any Person that is not a Subsidiary.
"Consolidated Net Worth" means the value of stockholders' equity of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Consolidated Operating Cash Flow" means Consolidated Net Income for
the previous four quarters plus (to the extent deducted to calculate
Consolidated Net Income):
(i) provisions for federal, state and local income taxes;
(ii) Interest Expense; and
(iii) depreciation and amortization, all in accordance with
GAAP,
provided that, in the event any Person (or the assets thereof) is acquired by
the Company or any Subsidiary (whether by merger, consolidation, asset or stock
acquisition or otherwise) at any time during the period of calculation, such
acquisition shall be deemed to have been made on the first day of such
calculation period. Notwithstanding the foregoing, there shall be excluded in
calculating Consolidated Net Income for purposes of this definition any losses
attributable to the use of a fair value methodology for recognition and
measurement of impairment of goodwill not identified with impaired assets in
accordance with Accounting Principles Board Opinion No. 142.
"Consolidated Total Assets" means the total assets of the Company and
its Subsidiaries, determined on a consolidated basis in accordance with GAP.
"Consolidated Total Debt" means, without duplication, all Indebtedness
of the Company and its Subsidiaries, including current maturities of such
obligations, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Liabilities" means all liabilities of the Company
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
and classified as such on the consolidated balance sheet of the Company and its
Subsidiaries.
"Credit Agreement" means that certain Credit Agreement, as may be
amended, modified, supplemented, refinanced or replaced from time to time, dated
as of June 21, 2002, among the Company, the Subsidiaries party thereto, the
lenders listed on Schedule 1 thereto, PNC Bank National Association, as
Administrative Agent, Fleet National Bank, as Syndication Agent, Wachovia Bank,
National Association, as Co-Syndication Agent, Bank One, NA (Main Office
Chicago), as Documentation Agent with Fleet Securities, Inc. and Wachovia
Securities having acted as Co-Arrangers.
B-4
"Debt Prepayment Application" means, with respect to any Transfer of
property, the application by the Company or any Subsidiary of cash in an amount
equal to the Net Sales Amount (or portion thereof) with respect to such Transfer
to pay Senior Debt of the Company or any Subsidiary, (other than Senior Debt in
respect of any revolving credit or similar credit facility providing the Company
or any Subsidiary with the right to obtain loans or other extensions of credit
from time to time, except to the extent that in connection with such payment of
Senior Debt the availability of credit under such credit facility is permanently
reduced by an amount not less than the amount of such proceeds applied to the
payment of such Senior Debt), provided that in the course of making such
application the Company or such Subsidiary shall offer to prepay each
outstanding Note in a principal amount which, when added to the Make-Whole
Amount applicable thereto, equals the Ratable Portion for such Note (which offer
shall be in writing and shall offer to prepay the Ratable Portion of the Notes
on a date which is not less than 30 days after the date of the notice of offer).
If any holder of a Note fails to accept in writing such offer of prepayment
within 15 day of receipt of the notice of offer, then, for purposes of the
preceding sentence only, the Company or such Subsidiary nevertheless will be
deemed to have paid Senior Debt in an amount equal to the Ratable Portion for
such Note. "Ratable Portion" for any Note means an amount equal to the product
of (x) the Net Sales Amount being so applied to the payment of Senior Debt
multiplied by (y) a fraction the numerator of which is the outstanding principal
amount of such Note and the denominator of which is the aggregate principal
amount of Senior Debt of the Company and its Subsidiaries.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is the greater of (i)
2.00% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2.00% over the rate of interest publicly
announced by Bank One, N.A. in Chicago, Illinois as its "base" or "prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute stock of
a Subsidiary, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes stock of a
Subsidiary, an amount equal to that percentage of book value of the
assets of the Subsidiary that issued such stock as is equal to the
percentage that the book value of such stock represents of the book
value of all of the outstanding capital stock of such Subsidiary
(assuming, in making such calculations, that all securities convertible
into such capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by the Company.
"Domestic Subsidiary" means any Subsidiary of the Company organized
under the laws of the United States of America, any state or territory thereof
or the District of Columbia.
B-5
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Sale and Leaseback Transaction" shall mean any sale or
transfer of property acquired by the Company or any Subsidiary after the date of
Closing to any Person within 270 days following the acquisition or construction
of such property by the Company or any Subsidiary if the Company or a Subsidiary
shall concurrently with such sale or transfer, lease such property, as lessee.
"Existing Synthetic Lease Facility" means the Synthetic Lease facility
of the Company and certain of its Subsidiaries evidenced by the relevant
agreements dated as of November 22, 1995, as amended and restated on October 17,
1997 and further amended and restated as of June 21, 2002, among Wilmington
Trust Company, as borrower, the lenders thereto, PNC Bank, N.A., as
Administrative Agent, The First National Bank of Chicago, as Syndication Agent
and Bankers Trust Company, as Real Estate Administrative Agent.
"Foreign Subsidiaries" shall mean any Subsidiary of the Company
organized under the laws of any jurisdiction other than the United States of
America, any State or territory thereof, or the District of Columbia.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
B-6
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guarantors" means Borders, Inc., a Colorado corporation, Xxxxxx Book
Company, Inc., a Colorado corporation, Planet Music, Inc., a North Carolina
corporation, Borders Properties, Inc., a Delaware corporation, Waldenbooks
Properties, Inc., a Delaware corporation, Borders Online, LLC, a Delaware
limited liability company, Borders Outlet, Inc., a Colorado corporation, Borders
Fulfillment, Inc., a Delaware corporation, The Library, Ltd., a Missouri
corporation, BGP (UK) Limited, a company with limited liability organized under
the laws of England and Borders Online, Inc., a Colorado corporation and any
other Person who, pursuant to Section 9.6, executes a joinder agreement and
becomes a party to the Guaranty Agreement.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Guaranty Agreement" means that certain Guaranty Agreement dated as of
July 30, 2002, by the Guarantors for the benefit of the holders of the Notes
from time to time.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be
B-7
required or the generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without limitation,
asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) every obligation of such Person under any Synthetic Lease
which shall be valued at the stipulated loss value, termination value
or similar amount thereof;
(f) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money) to the extent drawn; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 10% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
B-8
"Interest Expense" means, for any period, the interest expense of the
Company and its Subsidiaries, (including imputed interest in respect of Capital
Leases and Synthetic Leases), in respect of all Consolidated Total Debt, and all
debt discount and expense amortized or required to be amortized in the
determination of Consolidated Net Income for such period.
"Investment" means any investment, made in cash or by delivery of
property, by either of the Company or any of its Subsidiaries (i) in any Person,
whether by acquisition of stock (other than stock of the Company), debt or other
obligation or security, or by loan, Guaranty, advance, capital contribution or
otherwise, or (ii) in any property.
"Joint Venture" means, any corporation, partnership, limited liability
company, joint venture or other entity in which the Company and its Subsidiaries
own not more than 50% of the capital stock, partnership interests, membership
interests or other ownership interests and which does not meet the definition of
"Subsidiary" herein.
"Lease Rentals" means, with respect to any period, the sum of the
rentals and other obligations required to be paid during such period by the
Company or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee on the count of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, provided, that, if at the date of
determination, any such rental or other obligations are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (i) shall be assumed to be equal to the amount of such
obligations for the period of 12 consecutive calendar months immediately
preceding the date of determination or (ii) if the related lease was not in
effect during such preceding 12-month period, shall be the amount estimated by a
Senior Financial Officer of the Company on a reasonable basis and in good faith.
"Lender" means the lenders under the Credit Agreement.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease or
Synthetic Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Make-Whole Amount" is defined in Section 8.7.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
B-9
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Sales Amount" means, with respect to any Transfer of any property
by the Company or any Subsidiary, an amount equal to the difference of:
(a) the aggregate amount of consideration (valued at the fair
market value thereof by the Company or such Subsidiary in good faith)
received by the Company or such Subsidiary in respect of such Transfer
minus
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by the Company or such Subsidiary in
connection with such Transfer.
"New Synthetic Lease Facility" means the Synthetic Lease facility
agented by SunTrust Bank to be entered into by the Company and certain of its
Subsidiaries on June 21, 2002 pursuant to the Loan Agreement dated as of June
21, 2002 among Atlantic Financial Group, Ltd., the lenders party thereto, and
SunTrust Bank as agent for such lenders with a total facility amount not to
exceed $75,000,000.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"Optional Currency" means each of the following types of currency:
Euros, Australian Dollars ("AUD"), British Pounds Sterling ("GBP"), Canadian
Dollars ("CAD"), Japanese Yen ("JPY"), New Zealand Dollars ("NZD"), or
Singaporean Dollars ("SGD").
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Investments" means and includes:
(a) Investments in property to be used in the ordinary course
of business of the Company and its Subsidiaries;
(b) Investments in current assets arising from the sale of
goods and services in the ordinary course of business of the Company
and its Subsidiaries;
B-10
(c) Investments existing as of the date of Closing and
described on Schedule 10.5;
(d) Investment in or advances to one or more Subsidiaries or
any Person that concurrently with such investment becomes a Subsidiary;
(e) Investments in certificates of deposit or banker's
acceptances issued by any domestic office of any commercial bank
organized under the laws of the United states of America or any state
thereof which has a combined capital and surplus and undivided profits
of not less than $1,000,000,000, provided that such obligations mature
within 365 days from the date of acquisition thereof;
(f) commercial paper with a minimum rating of "A1" or "P1" by
either Standard & Poor's Corporation or Xxxxx'x Investors Service,
respectively, and maturing not more than 270 days from the date
acquired;
(g) direct or guaranteed obligations of the United States or
United States agency obligations with a maturity of one year or less;
(h) Investments in repurchase agreements;
(i) tax exempt state or municipal general obligation bonds
rated "AA" or better by Standard & Poor's Corporation, "Aa2" or better
by Xxxxx'x Investors Services or an equivalent rating by any other
credit rating agency of recognized national standing, provided that
such obligations mature within 365 days from the date of acquisition
thereof;
(j) money market mutual funds denominated in an Optional
Currency in countries in which the Company or any of its Subsidiaries
operates a business provided that (i) each such fund in which the
Company or any of its Subsidiaries makes an Investment has assets of
not less than $50,000,000 and (ii) the proportional Investment in each
such fund by the Company or such Subsidiary does not exceed five
percent (5%) of the aggregate amount of all Investments in such fund;
(k) Investments consisting of loans and advances to employees
(i) for moving, entertainment, travel and other similar expenses in the
ordinary course of business and (ii) for any other purpose, with such
Investments under this clause (ii) not to exceed $10,000,000 in the
aggregate principal amount at any time outstanding;
(l) Investments in Joint Ventures, provided that the aggregate
amount of all such investments subject to this clause (l) does not at
any time exceed 15% of Consolidated Net Worth; and
(m) other Investments not to exceed, in the aggregate, 5% of
Consolidated Net Worth.
B-11
For purposes of applying the limitations set forth in Section 10.5, Permitted
Investments shall be valued at the original cost thereof less any amount repaid
or recovered in cash on account of capital or principal.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Priority Debt" means the sum, without duplication, of (i) Indebtedness
of the Company or any Subsidiary secured by Liens not otherwise permitted by
clauses (a) through (j) of Section 10.7; and (ii) all other Indebtedness of all
Subsidiaries that are not Guarantors other than:
(a) Indebtedness of any Subsidiary outstanding on the date of
Closing and any extension, renewal or refunding thereof, provided that
the principal amount thereof is not increased;
(b) Indebtedness of any Subsidiary owed to the Company or a
Wholly-Owned Subsidiary; and
(c) Indebtedness of any Foreign Subsidiary not otherwise
described in clauses (a) or (b) above in an amount not to exceed the
sum of (i) $30,000,000 plus (ii) the amount permitted under the
"UK/Australian Sublimit" (as defined in the Credit Agreement).
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"Property Reinvestment Application" means, with respect to any Asset
Disposition of property, the application of the Net Sales Amount (or a portion
thereof) with respect to such Asset Disposition to the acquisition by the
Company or any Subsidiary of operating assets of the Company or such Subsidiary
to be used in the business of such person.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
B-12
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Senior Debt" means and includes (i) any Indebtedness of the Company
owing to any Person which is not a Subsidiary or Affiliate and which is not
expressed to be junior or subordinate to any other indebtedness of the Company
and (ii) Debt of any Subsidiary due and owing to any Person other than the
Company, another Subsidiary or an Affiliate.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
controlled, in the case of either (a) or (b) above, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Synthetic Lease" means any lease of goods or other property, whether
real or personal, which is treated as an operating lease under GAAP and as a
loan or financing for U.S. income tax purposes.
"Transfer" means with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including any disposition of any capital stock of any Subsidiary or the assets
of any Subsidiary, whether by merger, consolidation or otherwise.
"Voting Stock" means capital stock of any class or classes of a
corporation having power under ordinary circumstances to vote for the election
of members of the board of directors of such corporation, or persons performing
similar functions (irrespective of whether or not at the time stock of any of
the class or classes shall have or might have special voting power or rights by
reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
B-13
SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK
SUBSIDIARIES OF BORDERS GROUP, INC.
SUBSIDIARY STATE OF INCORPORATION OWNERSHIP
BB Holdings, Inc. Michigan 100%
Borders, Inc. Colorado 100%
Borders Fulfillment, Inc. Delaware 100%
Borders Management, LLC Delaware 100%
Borders Online, LLC Delaware 100%
Borders Online, Inc. Colorado 100%
Borders Outlet, Inc. Colorado 100%
Borders Properties, Inc. Delaware 100%
WB Holdings, Inc. Michigan 100%
Xxxxxx Book Company, Inc. Colorado 100%
Waldenbooks Properties, Inc. Delaware 100%
Borders (UK) Limited
formerly Books etc. Limited U.K. 100%
Borders New Zealand Limited New Zealand 100%
Borders PTE. Limited Singapore 100%
Borders Australia PTY Limited Australia 100%
BGI (UK) Limited U.K. 100%
BGP (UK) Limited U.K. 100%
Borders Canada, Ltd. Canada 100%
Evermatch Limited U.K. 100%
Books Etc Properties Limited U.K. 100%
Meridian Books Limited U.K. 100%
Borders Superstores (UK) Limited U.K. 100%
Charing Cross Properties Limited U.K. 100%
SCHEDULE 5.4
(to Note Purchase Agreement)
FINANCIAL STATEMENTS
Financial statements for the Company's fiscal years ending January 26,
1997 through January 27, 2002 and interim financial statements for 13 week
periods ending April 29, 2001 and April 28, 2002.
SCHEDULE 5.5
(to Note Purchase Agreement)
LITIGATION
In August 1998, The Intimate Bookshop, Inc. (Intimate) and its owner,
Xxxxxxx Xxxxxx, filed a lawsuit in the United States District Court for the
Southern District of New York against the Company, Xxxxxx & Xxxxx, Inc., and
others alleging violation of the Xxxxxxxx-Xxxxxx Act and other federal laws, New
York statutes governing trade practices and common law. In response to
Defendants' Motion to Dismiss the Complaint, plaintiff Xxxxxx withdrew his
claims and plaintiff Intimate voluntarily dismissed all but its Xxxxxxxx-Xxxxxx
claims. Intimate has filed a Second Amended Complaint limited to allegations of
violations of the Xxxxxxxx-Xxxxxx Act. The Second Amended Complaint alleges that
Intimate has suffered $11.3 million or more in damages and requests treble
damages, injunctive and declaratory relief, interest, costs, attorneys' fees and
other unspecified relief. The Company intends to vigorously defend the action.
Two former employees, individually and on behalf of a purported class
consisting of all current and former employees who worked as assistant managers
in Borders stores in the state of California at any time between April 10, 1996,
and the present, have filed an action against the Company in the Superior Court
of California for the County of San Francisco. The action alleges that the
individual plaintiffs and the purported class members worked hours for which
they were entitled to receive, but did not receive, overtime compensation under
California law, and that they were classified as exempt store management
employees but were forced to work more than 50% of their time in non-exempt
tasks. The Amended Complaint, which names two additional plaintiffs, alleges
violations of the California Labor Code and the California Business and
Professions Code. The relief sought includes compensatory and punitive damages,
penalties, preliminary and permanent injunctions requiring Borders to pay
overtime compensation as required under California and Federal law, prejudgment
interest, costs and attorneys' fees and such other relief as the court deems
proper. The hearing on the motion to certify the action as a class action has
been rescheduled for June 14, 2002. The Company intends to vigorously defend the
action, including contesting the certification of the action as a class action.
In addition to the matters described above, the Company is from time to
time involved in or affected by other litigation incidental to the conduct of
its businesses. The Company does not believe that any such other litigation will
have a material adverse effect on its liquidity, financial position or results
of operations.
SCHEDULE 5.8
(to Note Purchase Agreement)
USE OF PROCEEDS
The proceeds from the sale of the Notes will be used to refinance
existing indebtedness of the Company and its Subsidiaries and for general
corporate purposes.
SCHEDULE 5.14
(to Note Purchase Agreement)
EXISTING INDEBTEDNESS
PART I. CREDIT AGREEMENT AND SYNTHETIC LEASE FACILITIES
1. Indebtedness of the Company, the Guarantors, Borders (UK) Limited
and Borders Australia Pty Limited in an aggregate principal amount of
$375,000,000 under the Credit Agreement.
2. Indebtedness of the Company and certain of its Subsidiaries in
respect of the Existing Synthetic Lease Facility and the New Synthetic Lease
Facility in the aggregate principal amount of approximately $100,000,000.
PART II. CAPITAL LEASES
AMOUNT
COMPANY DESCRIPTION OUTSTANDING
Borders Group Inc. Capital Lease of IBM computer equipment 1,862,000
Borders Group Inc. Capital Lease of IBM computer equipment 2,064,000
Borders Group Inc. Capital Lease of Checkpoint Equipment 13,000
Borders Group Inc. Capital Lease of IBM computer equipment 766,000
Borders Group Inc. Capital Lease of IBM computer equipment 628,000
Borders, Inc. Capital leases 2,881,747
SCHEDULE 5.15
(to Note Purchase Agreement)
PART III. FOREIGN SUBSIDIARY INDEBTEDNESS NOT COVERED UNDER CREDIT AGREEMENT
AMOUNT
COMPANY DESCRIPTION OUTSTANDING
Borders Australia Overdraft facility and related credit AUD$3,500,000
Pty Ltd facilities with ANZ Australia
Borders New Overdraft facility and related credit NZ$2,000,000
Zealand Limited facilities with ANZ New Zealand
Borders (UK) Fortis Bank SA overdraft facility Eng. Pound
Limited Sterling 5,000,000
Borders New Bank guarantees in favor of New NZ$90,000
Zealand Ltd Zealand Customs Service
Borders Australia Bank guarantees in favor of:
Pty Ltd Haymarkets Tivoli Theaters Pty AUD$475,000
Ltd
AMP Life Ltd. AUD$405,000
Borders Pte. Ltd. Bank Guarantee in favor of Standard Singapore
Charter Bank $100,000
Borders Pte. Ltd. Bank Guarantees in favor Singapore
of Board of Film Censors Singapore $20,000
S-5.15-2
EXISTING INVESTMENTS
1. Investments in Harvest Book Company, LLC.
2. Investments in Paperchase Products, Ltd.
3. Investments constituting cash and cash equivalents.
SCHEDULE 10.5
(to Note Purchase Agreement)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE
REGISTRATION UNDER SAID ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT OR IF SAID ACT DOES NOT APPLY.
[FORM OF NOTE]
BORDERS GROUP, INC.
6.31% Senior Guaranteed Note due July 30, 2006
No. [ ] [Date]
---------
$[ ] PPN[ ]
------------ ------------
FOR VALUE RECEIVED, the undersigned, BORDERS GROUP, INC. (herein called
the "Company"), a corporation organized and existing under the laws of the State
of Michigan hereby promises to pay to [ ], or registered assigns,
-----------------
the principal sum of [ ] DOLLARS on July 30, 2006, with interest
----------------
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 6.31% per annum from the date hereof,
payable semiannually, on the thirtieth day of each January and July in each
year, commencing with the January 30 or July 30 next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 8.31% or (ii) 2.00% over the rate of interest
publicly announced by Bank One, N.A. from time to time in Chicago, Illinois as
its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Bank One, N.A., Chicago, Illinois or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Guaranteed Notes (herein called
the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of
July 30, 2002 (as from time to time amended, the "Note Purchase Agreements"),
between the Company and the respective Purchasers named therein and is entitled
to the benefits thereof. The payment and performance hereof is unconditionally
guaranteed pursuant to the Guaranty Agreement dated as of July 30, 2002 of the
Guarantors named therein, and is entitled to the benefits thereof. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreements, provided that such holder may (in
EXHIBIT 1
(to Note Purchase Agreement)
reliance upon information provided by the Company, which shall not be
unreasonably withheld) make a representation to the effect that the purchase by
such holder of any Note will not constitute a non-exempt prohibited transaction
under section 406(a) of ERISA.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with, and the
rights and parties shall be governed by, the law of the State of Michigan,
excluding choice-of-law principles of the law of such State which would require
application of the laws of a jurisdiction other than such State.
BORDERS GROUP, INC.
By
----------------------------
Name:
Title:
E-1-2
DESCRIPTION OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY AND THE GUARANTORS
The closing opinion of Xxxxxxxxx Xxxxxx PLLC, Special Counsel for the
Company and the Guarantors, which is called for by Section 4.4(a) of the Note
Purchase Agreements, shall be dated the date of the Closing and addressed to the
Purchasers, shall be satisfactory in scope and form to the Purchasers and shall
be to the effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Michigan,
has the corporate power and the corporate authority to execute and
perform the Note Purchase Agreements and to issue the Notes and has the
full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or qualified
and is in good standing as a foreign corporation in each jurisdiction
in which the character of the properties owned or leased by it or the
nature of the business transacted by it makes such licensing or
qualification necessary.
2. Each Guarantor is a corporation, duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the corporate power and the corporate authority to
execute and perform the Guaranty Agreement to which it is a party and
has the full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or qualified
and is in good standing as a foreign corporation in each jurisdiction
in which the failure to so qualify could have a Material Adverse
Effect.
3. Each Note Purchase Agreement has been duly authorized by
all necessary corporate action on the part of the Company, has been
duly executed and delivered by the Company and constitutes the legal,
valid and binding contract of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. The Guaranty Agreement has been duly authorized by all
necessary corporate action on the part of each Guarantor, has been duly
executed and delivered by each Guarantor, and constitutes the legal,
valid and binding contract of each Guarantor, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
6. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery of the Guaranty Agreement, the Note Purchase
Agreements or the Notes.
7. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Note Purchase Agreements
and the execution, delivery and performance by each Guarantor of the
Guaranty Agreement do not conflict with or result in any breach of any
of the provisions of or constitute a default under or result in the
creation or imposition of any Lien upon any of the property of the
Company or any Guarantor pursuant to the provisions of the charter
documents or By-laws of the Company or any Guarantor or any agreement
or other instrument known to such counsel to which the Company or any
Guarantor is a party or by which the Company or any Guarantor may be
bound.
8. There are no proceedings pending, or to the knowledge of
such counsel, threatened against or directly affecting the Company or
any Guarantor in any court or before any governmental authority or
arbitration board or tribunal which involve the possibility of
materially and adversely affecting any Guarantor's ability to perform
its obligations under its Guaranty Agreement or the Company's ability
to perform its obligations under the Note Purchase Agreements or the
Notes.
9. The application of the proceeds of the issue and sale of
the Notes will not violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued
pursuant thereto, including, without limitation, Regulations U, T and X
of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II assuming the accuracy of the factual representations set
forth in Section 5 of the Note Purchase Agreements.
10. Neither the Company nor any Guarantor is an "investment
company" or a company "controlled" by an "investment company" under the
Investment Company Act of 1940, as amended.
11. The issuance, sale and delivery of the Notes and the
Guaranty Agreement under the circumstances contemplated by the Note
Purchase Agreements do not, under existing law, require the
registration of the Notes or the Guaranty Agreement under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Xxxxxxxxx Xxxxxx PLLC shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.
E-4.4(a)-2
DESCRIPTION OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, called for by Section 4.4(b) of the Note Purchase Agreements, shall
be dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in form and substance to the Purchasers and shall be to the effect
that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Michigan and has the corporate
power and the corporate authority to execute and deliver the Note
Purchase Agreements and to issue the Notes.
2. Each Note Purchase Agreement constitutes the legal, valid
and binding contract of the Company enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. The Notes constitute the legal, valid and binding
obligations the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar
laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements do not,
under existing law, require the registration of the Notes under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Xxxxxxx and Xxxxxx shall also state that the opinion of
Xxxxxxxxx Xxxxxx PLLC is satisfactory in scope and form to Xxxxxxx and Xxxxxx
and that, in their opinion, the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and
Xxxxxx may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Michigan and the By-laws of the Company. The
opinion of Xxxxxxx and Xxxxxx is limited to the laws of the State of Illinois
and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based,
Xxxxxxx and Xxxxxx may rely on appropriate certificates of public officials and
officers of the Company and upon representations of the Company and the
Purchasers delivered in connection with the issuance and sale of the Notes.
EXHIBIT 4.4(b)
(to Note Purchase Agreement)
