EXHIBIT 4.9
EXECUTION COPY
===========================================================================
SPARTAN STORES, INC.
NOTE AGREEMENT
Dated as of January 15, 1993
Re:
$20,000,000 7.27% Senior Notes
Due February 1, 2003
===========================================================================
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT. . . . . . . . . . . . . .1
Section 1.1. Description of Notes . . . . . . . . . . . . . . . . .1
Section 1.2. Commitment; Closing Date . . . . . . . . . . . . . . .1
Section 1.3. Other Agreements . . . . . . . . . . . . . . . . . . .2
SECTION 2. PREPAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . . . .2
Section 2.1. Required Prepayments . . . . . . . . . . . . . . . . .2
Section 2.2. Optional Prepayments . . . . . . . . . . . . . . . . .3
Section 2.3. Notice of Optional Prepayments . . . . . . . . . . . .3
Section 2.4. Allocation of Prepayments. . . . . . . . . . . . . . .3
Section 2.5. Direct Payment . . . . . . . . . . . . . . . . . . . .3
SECTION 3. REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . .4
Section 3.1. Representations of the Company . . . . . . . . . . . .4
Section 3.2. Representations of the Purchaser . . . . . . . . . . .4
SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . .4
Section 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 5. COMPANY COVENANTS. . . . . . . . . . . . . . . . . . . . . . .6
Section 5.1. Maintenance of Certain Financial Conditions;
Limitations on Certain Debt. . . . . . . . . . . . . .8
Section 5.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . .7
Section 5.3. Transactions with Affiliates . . . . . . . . . . . . .9
Section 5.4. Subsidiary Stock and Indebtedness. . . . . . . . . . .9
Section 5.5. Consolidation, Merger, Sale of Assets, etc.. . . . . 10
Section 5.6. Investments, etc.. . . . . . . . . . . . . . . . . . 12
Section 5.7. Restricted Payments. . . . . . . . . . . . . . . . . 13
Section 5.8. Nature of Business . . . . . . . . . . . . . . . . . 14
Section 5.9. Payment of Notes; Maintenance of Books and Office. . 14
Section 5.10. Corporate Existence; Payment of Taxes;
Maintenance of Properties; Insurance; Compliance
with Laws; Maintenance of Patents, etc.. . . . . . . 15
Section 5.11. Repurchase of Notes. . . . . . . . . . . . . . . . . 16
Section 5.12. Financial Statements; Information. . . . . . . . . . 16
Section 5.13. Inspection Rights. . . . . . . . . . . . . . . . . . 00
-x-
XXXXXXX 0. EVENTS OF DEFAULT AND REMEDIES THEREFOR. . . . . . . . . . . 20
Section 6.1. Events of Default. . . . . . . . . . . . . . . . . . 20
Section 6.2. Notice to Holders. . . . . . . . . . . . . . . . . . 21
Section 6.3. Acceleration of Maturities . . . . . . . . . . . . . 22
Section 6.4. Rescission of Acceleration . . . . . . . . . . . . . 22
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . 23
Section 7.1. Consent Required . . . . . . . . . . . . . . . . . . 23
Section 7.2. Solicitation of Noteholders. . . . . . . . . . . . . 23
Section 7.3. Effect of Amendment or Waiver; Scope of Consent. . . 24
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . 24
Section 8.1. Definitions. . . . . . . . . . . . . . . . . . . . . 24
Section 8.2. Accounting Principles. . . . . . . . . . . . . . . . 35
Section 8.3. Directly or Indirectly . . . . . . . . . . . . . . . 35
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1. Note Register. . . . . . . . . . . . . . . . . . . . 35
Section 9.2. Exchange of Notes. . . . . . . . . . . . . . . . . . 35
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . . 36
Section 9.4. Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 36
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. . 36
Section 9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.7. Reproduction of Documents. . . . . . . . . . . . . . 37
Section 9.8. Successors and Assigns . . . . . . . . . . . . . . . 37
Section 9.9. Survival of Covenants and Representations. . . . . . 37
Section 9.10. Severability . . . . . . . . . . . . . . . . . . . . 38
Section 9.11. Governing Law. . . . . . . . . . . . . . . . . . . . 38
Section 9.12. Captions . . . . . . . . . . . . . . . . . . . . . . 38
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-ii-
ATTACHMENTS TO NOTE AGREEMENTS:
Schedule I - Names and Addresses of Purchasers and Amounts of
Commitments
Schedule II - Information Relating to Subsidiaries
Schedule III - Debt of the Company and its Subsidiaries; Liens and
Investments
Exhibit A - Form of 7.27% Senior Note Due February 1, 2003
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the
Company
Exhibit C -
-iii-
SPARTAN STORES, INC.
000 00XX XXXXXX X.X.
XXXXX XXXXXX, XXXXXXXX 00000
NOTE AGREEMENT
Re: $20,000,000 7.27% Senior Notes
Due February 1, 2003
Dated as of
January 15, 1993
To the Purchaser named in
Schedule I hereto which is
a signatory to this Agreement
Gentlemen:
The undersigned, SPARTAN STORES, INC., a Michigan corporation (the
"COMPANY"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
SECTION 1.1. DESCRIPTION OF NOTES. The Company will authorize the
issue and sale of $20,000,000 aggregate principal amount of its 7.27%
Senior Notes (the "NOTES") to be dated the date of issue, to bear interest
from such date at the rate of 7.27% per annum, payable semiannually on the
first day of each February and August in each year (commencing on the first
such day after the date of issue) and at maturity and to bear interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on
any overdue installment of interest at the rate of 9.27% per annum after
the due date thereof, whether by acceleration or otherwise, until paid, to
be expressed to mature on February 1, 2003, and to be substantially in the
form attached hereto as Exhibit A. Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months. If any amount of
principal, premium, if any, or interest on or in respect of the Notes
becomes due and payable on any date which is not a Business Day (as defined
in 8.1), such amount shall be payable on the immediately preceding
Business Day. The Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity date except on the
terms and conditions and in the amounts and with the premium, if any, set
forth in 2 of this Agreement. The term "NOTES" as used herein
shall include each Note delivered pursuant to this Agreement and the
separate agreements with the other purchasers named in Schedule I hereto.
You and the other Purchasers named in Schedule I hereto are hereinafter
sometimes referred to as the "PURCHASERS". The terms which are capitalized
herein shall have the meanings set forth in 8.1 hereof unless the
context shall otherwise require.
SECTION 1.2. COMMITMENT; CLOSING DATE. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name in Schedule I hereto at a price of 100% of the principal
amount thereof on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Warner, Norcross
& Xxxx, 000 Xxx Xxxx Xxxxxxxx, 000 Xxxx Xxxxxx, X.X., Xxxxx Xxxxxx,
Xxxxxxxx 00000-0000, against payment therefore in Federal Reserve or other
funds current and immediately available at the principal office of Michigan
National Bank in the amount of the purchase price at 10:00 a.m., Grand
Rapids, Michigan time, on January 29, 1993 or such later date (not later
than February 1, 1993) as shall mutually be agreed upon by the Company and
Purchasers (the "Closing Date"). The Notes delivered to you on the Closing
Date will be delivered to you in the form of a single registered Note for
the full amount set opposite your name in Schedule I (unless different
denominations are specified by you), registered in your name or in the name
of such nominee as may be specified in Schedule I and in substantially the
form attached hereto as Exhibit A.
SECTION 1.3. OTHER AGREEMENTS. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar
agreements with the other Purchasers under which such other Purchasers
agree to purchase from the Company the principal amount of Notes set
opposite such Purchasers' names in Schedule I, and your obligation and the
obligations of the Company hereunder are subject to the execution and
delivery of the similar agreements by the other Purchasers. This Agreement
and said similar agreements with the other Purchasers are herein
collectively referred to as the "AGREEMENTS". 'Me obligations of each
Purchaser shall be several and not joint and no Purchaser shall be liable
or responsible for the acts of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement.
SECTION 2.1. REQUIRED PREPAYMENTS. In addition to paying the entire
outstanding principal amount and the interest due on the Notes on the
maturity date thereof, the Company agrees that on the first day of February
in each year, commencing February 1, 1994 and ending February 1, 2002, both
inclusive (herein called "FIXED PAYMENT DATES"), IT will prepay and apply
and there shall become due and payable the sum of $2,000,000 on the
principal indebtedness evidenced by the Notes. No premium shall be payable
in connection with any required prepayment made pursuant to this
2.1.
-2-
In the event that the Company shall prepay less than all of the Notes
pursuant to 2.2 hereof, the amounts of the prepayments required by
this 2.1 shall be reduced by an amount which is the same
percentage of such required prepayment as the percentage that the principal
amount of Notes prepaid pursuant to 2.2 is of the aggregate
principal amount of outstanding Notes immediately prior to the prepayment
pursuant to 2.2.
SECTION 2.2. OPTIONAL PREPAYMENTS. In addition to the payments
required by 2.1, upon compliance with the terms of 2.3,
the Company shall have the privilege, at any time and from time to time, of
prepaying the outstanding Notes either in whole or in part (but if in part
in units of $1,000,000 or an integral multiple of $10,000 in excess
thereof), by payment of the principal amount of the Notes to be prepaid or
portion thereof to be prepaid and accrued interest thereon to the date of
such prepayment, together with a premium equal to the Make-Whole Amount
determined as of two Business Days prior to the date of such prepayment
pursuant to this 2.2.
SECTION 2.3. NOTICE OF OPTIONAL PREPAYMENTS. The Company will give
notice of any prepayment of the Notes pursuant to 2.2 to each
holder thereof not less than 30 days nor more than 60 days before the date
fixed for such optional prepayment specifying (a) such date, (b) the
principal amount of the holder's Notes to be prepaid on such date, (c) that
a premium may be payable, (d) the date when such premium will be
calculated, (e) the estimated premium accompanied by a reasonably detailed
computation thereof, and (f) the accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts which
are conditions precedent to any such prepayment. Notice of prepayment
having been so given, the aggregate principal amount of the Notes specified
in such notice, together with the premium, if any, and accrued interest
thereon shall become due and payable on the prepayment date specified in
said notice. Not later than two Business Days prior to the prepayment date
specified in such notice, the Company shall provide each holder of a Note
written notice of the premium, if any, payable in connection with such
prepayment and, whether or not any premium is payable, a reasonably
detailed computation of the Make-Whole Amount.
SECTION 2.4. ALLOCATION OF PREPAYMENTS. All partial prepayments
shall be applied on all outstanding Notes ratably in accordance with the
unpaid principal amounts thereof.
SECTION 2.5. DIRECT PAYMENT. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by
any Purchaser or its nominee or owned by any other Institutional Holder of
5% or more in aggregate outstanding principal amount of the Notes or which
has acquired 100% of the outstanding Notes originally issued to an Initial
Holder which has given written notice to the Company requesting that the
-3-
provisions of this 2.5 shall apply, the Company will promptly and
punctually pay when due the principal thereof and premium, if any, and
interest thereon, without any presentment thereof directly to such
Purchaser or such subsequent Institutional Holder at the address of such
Purchaser set forth in Schedule I or at such other address as such
Purchaser or such subsequent Institutional Holder may from time to time
designate in writing to the Company or, if a bank account is designated for
such Purchaser on Schedule I hereto or in any written notice to the Company
from such Purchaser or any such subsequent Institutional Holder, the
Company will make such payments in immediately available funds to such bank
account, marked for attention as indicated, or in such other manner or to
such other account of such Purchaser or such holder in any bank in the
United States as such Purchaser or any such subsequent Institutional Holder
may from time to time direct in writing. With respect to Notes to which
this 2.5 applies, the Company shall be entitled to presume
conclusively that the original or such subsequent Institutional Holder as
shall have requested the provisions hereof to apply to its Notes remains
the holder of such Notes until (1) the Company shall have received notice
of the transfer of such Notes, and the name and address of the transferee,
or (2) such Notes shall have been presented to the Company as evidence of
the transfer.
SECTION 3. REPRESENTATIONS.
SECTION 3.1. REPRESENTATIONS OF THE COMPANY. The Company represents
and warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and
are incorporated herein by reference with the same force and effect as
though herein set forth in full.
SECTION 3.2. REPRESENTATIONS OF THE PURCHASER. (a) You represent,
and in entering into this Agreement the Company understands, that you are
acquiring the Notes for the purpose of investment and not with a view to
the distribution thereof, and that you have no present intention of
selling, negotiating or otherwise disposing of the Notes; PROVIDED that the
disposition of your property shall at all times be and remain within your
control. Without limiting the foregoing, you agree that you will only
reoffer or resell the Notes received by you under this Agreement in
accordance with any available exemption from the requirements of Section 5
of the Securities Act of 1933, as amended, and in any event, in accordance
with any applicable state securities laws.
(b) You further represent that you are acquiring the Notes for your
own account and with your general corporate assets and not with the assets
of any separate account in which any employee benefit plan has any
interest. As used in this 3.2(B), the terms "SEPARATE ACCOUNT"
and "EMPLOYEE BENEFIT PLAN" shall have the respective meanings assigned to
them in ERISA.
-4-
SECTION 4. CLOSING CONDITIONS.
SECTION 4.1. Your obligation to purchase the Notes on the Closing
Date shall be subject to the performance by the Company of its agreements
hereunder which by the terms hereof are to be performed at or prior to the
time of delivery of the Notes and to the following further conditions
precedent:
(a) CLOSING CERTIFICATE. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received a
certificate dated the Closing Date, signed by the President or a Vice
President of the Company substantially in the form attached hereto as
Exhibit B, the truth and accuracy of which shall be a condition to
your obligation to purchase the Notes.
(b) LEGAL OPINIONS. Concurrently with the delivery of Notes to
you on the Closing Date, you shall have received from Xxxxxxx and
Xxxxxx, who are acting as your special counsel in this transaction,
and from Warner, Norcross & Xxxx, counsel for the Company, their
respective opinions dated the Closing Date, in form and substance
satisfactory to you, and covering the matters set forth in Exhibits C
and D, respectively, hereto.
(c) COMPANY'S EXISTENCE AND AUTHORITY. On or prior to the
Closing Date, you shall have received, in form and substance
reasonably satisfactory to you and your special counsel, such
documents and evidence with respect to the Company as you may
reasonably request in order to establish the existence and good
standing of the Company and the authorization of the transactions
contemplated by this Agreement.
(d) CONSENT OF HOLDERS OF OTHER SECURITIES. Any consents or
approvals required to be obtained from any holder or holders of any
outstanding Security of the Company and any amendments of agreements
pursuant to which any Security may have been issued which shall be
necessary to permit the consummation of the transactions contemplated
hereby on the Closing Date shall have been obtained and all such
consents or approvals shall be reasonably satisfactory in form and
substance to you and your special counsel.
(e) RELATED TRANSACTIONS. Concurrently with the issuance and
delivery of the Notes to you on the Closing Date, the Company shall
have consummated the issuance and delivery of Notes scheduled to be
issued and delivered to the other Purchasers on such Closing Date.
(f) PRIVATE PLACEMENT NUMBER. On or prior to the Closing Date,
special counsel to the Purchasers of the Notes shall have duly made
the appropriate filings with Standard & Poor's CUSIP Service Bureau,
-5-
as agent for the National Association of Insurance Commissioners, in
order to obtain a private placement number for the Notes.
(g) FUNDING INSTRUCTIONS. At least three Business Days prior to
the Closing Date, you shall have received written instructions
executed by a Responsible Officer of the Company directing the manner
of the payment of funds and setting forth (1) the name of the
transferee bank, (2) such transferee bank's ABA number, (3) the
account name and number into which the purchase price for the Notes is
to be deposited, and (4) the name and telephone number of the account
representative responsible for verifying receipt of such funds.
(h) LEGALITY OF INVESTMENT. The Notes to be purchased by you
shall be a legal investment for you under the laws of each
jurisdiction to which you may be subject (without resort to any so-
called "BASKET PROVISIONS" to such laws).
(i) SATISFACTORY PROCEEDINGS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and
all documents necessary to the consummation thereof, shall be
reasonably satisfactory in form and substance to you and your special
counsel, and you shall have received a copy (executed or certified as
may be appropriate) of all legal documents or proceedings taken in
connection with the consummation of said transactions.
(j) WAIVER of CONDITIONS. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or
if the conditions specified in this Section 4 have not been fulfilled,
you may thereupon elect to be relieved of all further obligations
under this Agreement. Without limiting the foregoing, if the
conditions specified in this 4 have not been fulfilled, you
may waive compliance by the Company with any such condition to such
extent as you may in your sole discretion determine. Nothing in this
4.1(J) shall operate to relieve the Company of any of its
obligations hereunder or to waive any of your rights against the
Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
SECTION 5.1. MAINTENANCE OF CERTAIN FINANCIAL CONDITIONS;
LIMITATIONS ON CERTAIN DEBT. (a) The Company will not on any date permit:
(1) Stockholders' Equity to be less than $80,000,000;
(2) the ratio of Consolidated Funded Debt to Stockholders'
Equity to be greater than 1.25 to 1.00;
-6-
(3) the ratio of Consolidated Current Assets to Consolidated
Current Liabilities to be less than 1.25 to 1.00; or
(4) the ratio of Net Income Available for Fixed Charges to Fixed
Charges for the immediately preceding four consecutive fiscal quarter
period to be less than 1.50 to 1.0 for such four fiscal quarter
period.
(b) The Company will not permit any Subsidiary to create, incur,
assume or otherwise become or be, directly or indirectly, liable in respect
of any Debt (other than Debt of a Subsidiary to the Company or to another
Subsidiary), unless on the date on which such Subsidiary proposes to incur
such Debt and after giving effect to such incurrence and to the
substantially concurrent incurrence by the Company and all other
Subsidiaries of any Debt and to the substantially concurrent retirement by
the Company and any Subsidiary of any Debt, and to the application of the
proceeds of all such Debt, the sum of:
(1) the aggregate principal amount of outstanding Debt of all
Subsidiaries (other than (i) Debt of a Subsidiary to the Company or
another Subsidiary and (ii) Debt of Spartan Insurance Co., Ltd., a
Bermuda corporation ("SPARTAN INSURANCE"), secured by Liens permitted
by and granted in compliance with 5.2J)) PLUS (without
duplication);
(2) the aggregate principal amount of all outstanding Debt of
the Company and its Subsidiaries secured by Liens permitted by
paragraphs (g), (h), (i) and (k) of 5.2 (such sum, as
determined on any date, being hereinafter referred to as the "PRIORITY
DEBT AMOUNT");
shall not exceed 15% of Consolidated Tangible Assets as of the end of the
fiscal quarter of the Company which shall have ended most recently prior to
such date of incurrence.
SECTION 5.2. LIENS. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any asset of any character of the
Company or any Subsidiary (whether held on the date hereof or hereafter
acquired) or any interest therein or any income or profits therefrom,
except:
(a) Liens for taxes, assessments or governmental charges or
levies either not yet due or the payment of which is not at the time
required by 5.10(B);
(b) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons incurred in the ordinary course
-7-
of business for sums either not yet due or the payment of which is not
at the time required by 5.10(B);
(c) Liens (other than any Lien created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
letters of credit, tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-
money bonds and other similar obligations (exclusive in any case of
obligations incurred in connection with the borrowing of money or the
obtaining of advances or credit);
(d) any attachment, judgment or other similar Lien arising in
connection with court proceedings, PROVIDED that (1) the execution or
other enforcement of such Lien is effectively stayed and the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings diligently conducted and effective to delay or
prevent the forfeiture or sale of any property of the Company or any
Subsidiary or any material interference with the use thereof by the
Company or any Subsidiary, and (2) such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor (or, if no such reserve or other provision is required, the
Company shall have set aside on its books reserves deemed by it to be
adequate therefor);
(e) easements, licenses, rights-of-way and other rights and
privileges in the nature of easements and similar Liens incidental to
the ownership of property and not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which
do not, individually or in the aggregate, materially interfere with
the ordinary conduct of the business of the Company or any Subsidiary
or materially detract from the value of the properties subject to any
such Liens;
(f) Liens on property of any Subsidiary securing Debt or other
obligations of such Subsidiary owing to the Company or to a Wholly-
owned Subsidiary;
(g) Liens specified on Schedule III attached hereto existing on
January 2, 1993 and securing the Debt specified on such Schedule III,
PROVIDED, HOWEVER, that no such Lien shall be extended to any other
property or asset of the Company or any Subsidiary;
(h) any Lien (including a Capital Lease) created solely to
secure the deferred purchase price of property consisting of fixed
assets acquired by the Company or any Subsidiary after the date
hereof, or created to secure Debt, incurred solely for the purpose of
-8-
financing the acquisition of such property (if such Debt is incurred
at the time of or within 90 days after such acquisition), or existing
on property acquired at the time of acquisition thereof, or, in the
case of any Person which hereafter becomes a Subsidiary, any Lien in
respect of its property existing at the time such Person becomes a
Subsidiary, PROVIDED, HOWEVER, that
(1) no such Lien shall at any time extend to or cover any
property of the Company or any Subsidiary other than the acquired
property on which it was originally imposed and improvements
thereto and proceeds thereof; and
(2) the principal amount of all Debt secured by all such
Liens on any such property shall at no time exceed an amount
equal to the lesser of (i) the cost to the Company or such
Subsidiary (including the principal amount of any pre-existing
Debt secured by such Liens, whether or not the Company or such
Subsidiary has any personal liability with respect thereto) of
such property and (ii) the fair market value of such property at
the time of acquisition thereof (or, in the case of a Lien in
respect of property existing at the time of a Person becoming a
Subsidiary after the date hereof, the fair market value of such
property at such time);
(i) Liens not otherwise permitted by the foregoing paragraphs
(a) through (h) of this 5.2 securing Funded Debt (or any
Current Debt which would, except for the parenthetical exclusion in
the definition of Funded Debt set forth in 8.1, be Funded
Debt) of the Company or any Subsidiary; PROVIDED that all such Debt
shall have been incurred within the limitations provided in
5.1(B);
(j) Liens granted by Spartan Insurance from time to time on
property owned by it to secure any reimbursement obligation of Spartan
Insurance in respect of letters of credit issued by commercial banks
for the account of Spartan Insurance; and
(k) Liens extending, renewing or replacing any Lien permitted by
clause (g), (h) or (i) of this 5.2, PROVIDED that, the
principal amount of the Debt secured by such Lien is not increased and
such Lien is not extended to other property.
It shall be a further condition to the creation or incurrence of any
Lien permitted by paragraph (h), (i) or (k) of this 5.2 that, on
the date on which the Company or any Subsidiary proposes to create or incur
such Lien and immediately after giving effect to such action, to the
substantially concurrent incurrence of any Debt and to the substantially
concurrent retirement of any other Debt, the Priority Debt Amount shall not
-9-
exceed 15% of Consolidated Tangible Assets as at the end of the fiscal
quarter of the Company which shall have ended most recently prior to such
date. For all purposes of this 5.2, any Person becoming a
Subsidiary after the date of this Agreement shall be deemed to have
incurred all of its then existing Liens at the time it becomes a
Subsidiary, and any extension, renewal or refinancing of any Lien by the
Company or any Subsidiary shall be deemed to be an incurrence of such Lien
at the time of such extension, renewal or refinancing, and any Lien
existing on any property or assets at the time it is acquired by the
Company or any Subsidiary shall be deemed to have been created at the time
of such acquisition.
SECTION 5.3. TRANSACTIONS WITH AFFILIATES. Except for transactions
between the Company and a Subsidiary or between Subsidiaries, the Company
will not, and will not permit any Subsidiary to, directly or indirectly,
engage in any transaction with any Affiliate of the Company, other than
transactions entered into in the ordinary course of business upon terms
that are fair and reasonable and not less favorable to the Company or such
Subsidiary, as the case may be (as determined in good faith by the
Company), than those which might be obtained at the time on an arm's-length
basis from any Person which is not such an Affiliate.
SECTION 5.4. SUBSIDIARY STOCK AND INDEBTEDNESS. The Company will
not:
(a) directly or indirectly, sell, assign, pledge or otherwise
dispose of any Debt of, or claim against, or any shares of stock or
similar interests or other Securities (or warrants, rights or options
to acquire stock or similar interests) of any Subsidiary, except to a
Wholly-owned Subsidiary or except as to directors' qualifying shares
if required by applicable law; or
(b) permit any Subsidiary to, directly or indirectly, sell,
assign, pledge or otherwise dispose of any Debt of, or claim against,
or any shares of stock or similar interests or other Securities (or
warrants, rights or options to acquire stock or similar interests) of
any other Subsidiary, except to the Company or a Wholly-owned
Subsidiary or except as to directors' qualifying shares if required by
applicable law;
(c) permit any Subsidiary to, directly or indirectly, issue or
sell any shares of its stock or similar interests or other Securities
(or warrants, rights or options to acquire any stock or similar
interests) of such Subsidiary except to the Company or a Wholly-owned
Subsidiary or except as to directors' qualifying shares or to satisfy
preemptive rights if required by applicable law; or
-10-
(d) permit any Subsidiary to have outstanding any shares of
preferred stock, except shares of preferred stock owned by the Company
or a Wholly-owned Subsidiary;
PROVIDED, HOWEVER, that all Debt and shares of stock and similar interests
of any Subsidiary owned by the Company and its other Subsidiaries may be
sold as an entirety to any Person for a consideration determined in good
faith by the Company to be fair, or any part of the shares of common stock
and similar interests (but not preferred stock) of any Subsidiary owned by
the Company and its other Subsidiaries may be sold to any Person for a
consideration determined in good faith by the Company to be fair, if in
each such case (1) such sale would then be permitted pursuant to
5.5(E) and (2) at the time of and immediately after the
consummation of such transaction and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing and a
Subsidiary shall at such time be permitted to incur $1.00 of additional
Debt (to a Person other than the Company or a Subsidiary) pursuant to
5.1(B).
SECTION 5.5. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The
Company will not, and will not permit any Subsidiary to, voluntarily
liquidate or dissolve, or consolidate or merge with any other Person, or
permit any other Person to consolidate or merge with it, or sell, lease,
transfer or otherwise dispose of any of its assets to any other Person
(other than in the ordinary course of business), except that:
(a) any Subsidiary may consolidate into or merge with (1) the
Company or any Subsidiary (if the Company or such Subsidiary shall be
the continuing or surviving corporation) or (2) any other corporation
(if such Subsidiary shall be the continuing or surviving corporation);
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of its assets in their entirety to the Company or any
Subsidiary, and may thereafter liquidate and dissolve;
(c) the Company may merge with any other corporation provided
that the Company shall be the continuing or surviving corporation;
(d) the Company may consolidate with or merge into, or sell,
lease, or otherwise dispose of its assets as an entirety or
substantially as an entirety to, any solvent corporation which shall
be duly organized and validly existing in good standing under the laws
of the United States of America or a state thereof, which shall be
engaged in a line of business which is substantially the same or
similar to the business in which the Company and its Subsidiaries are
primarily engaged on the date of this Agreement and which shall
expressly assume, pursuant to a written agreement satisfactory in
form, scope and substance to the holders of the Notes, the due and
-11-
punctual payment of the principal of, premium, if any, and interest on
the Notes according to their tenor, and the due and punctual
performance and observance of the obligations of the Company under the
Agreements and the Notes, an executed counterpart of which assumption
agreement shall have been furnished to each holder of a Note together
with a favorable opinion of counsel satisfactory to each such holder
covering such matters relating to such assumption and such assumption
agreement as such holder may reasonably request; and
(e) the Company or any Subsidiary, in addition to making any
sale, lease or other disposition permitted by the foregoing provisions
of this 5.5, may sell or otherwise dispose of any of its
assets for a consideration at least equal to the fair value of such
assets (as determined in good faith by the Company) at the time of
such sale or other disposition, PROVIDED, HOWEVER, that, (1) if such
sale, lease or other disposition shall relate to the assets of a
Subsidiary, the requirements of 5.4 with respect to the
disposition of the stock of such Subsidiary shall be complied with,
and (2) the assets so sold, leased or otherwise disposed of on any
date, when taken together with all other assets theretofore sold,
leased or otherwise disposed of by the Company and its Subsidiaries in
accordance with this subsection (e) (including all dispositions of
Debt and stock and similar interests of Subsidiaries pursuant to
5.4), during the period of twelve months ending on (and
including) the date of such disposition, shall not have an aggregate
book value which shall exceed 10% of the book value of the
consolidated assets of the Company and its Subsidiaries as at the end
of the quarterly fiscal period of the Company which shall have ended
most recently prior to such date.
It shall be a further condition to any consolidation, merger, sale,
lease or other disposition under subsection (a), (c), (d) or (e) of this
5.5, that, on the date of such consolidation, merger, sale, lease
or other disposition and immediately after giving effect to such action, no
Default or Event of Default shall have occurred and be continuing and a
Subsidiary shall at such time be permitted to incur $1.00 of additional
Debt (to a Person other than the Company or a Subsidiary) pursuant to
5.1(B). Nothing contained in this 5.5 shall permit the
disposition of assets consisting of Debt, stock or similar interests in any
Subsidiary unless such disposition is also in compliance with 5.4.
SECTION 5.6. INVESTMENTS, ETC. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, through a Subsidiary or
otherwise, make or own any Investment, except:
(a) the Company and its Subsidiaries may make and own
Investments in (1) marketable direct obligations issued by the United
States of America or by any agency thereof which in the case of the
-12-
latter are supported by the full faith and credit of the United States
of America, in each case having a maturity not in excess of one year
from the date of acquisition thereof; (2) commercial paper maturing
not later than one year from the date of creation thereof and rated in
the highest rating classification by any rating service recognized
nationally in the United States; (3) certificates of deposit maturing
within one year from the date of acquisition thereof issued by
commercial banks or trust companies and rated in one of the two
highest rating classifications by any rating service recognized
nationally in the United States; (4) mutual funds substantially all of
the assets of which consist of cash and Securities of the types
specified in clause (1) through (3) above; and (5) readily marketable
Eurodollar obligations having a maturity not in excess of one year
from the date of acquisition thereof issued by commercial banks or
trust companies and rated in the highest rating classification by any
rating service recognized nationally in the United States;
(b) the Company and its Subsidiaries may make and own (1)
Investments in any Subsidiary or any Person which is or simultaneously
therewith becomes a Subsidiary (PROVIDED that, no Investments shall be
permitted to be made by the Company or any Subsidiary pursuant to this
clause (b)(1) in Spartan Insurance or any Insurance Subsidiary
referred to in clause (2) of this 5.6(B)), and (2)
Investments consisting of common stock of Spartan Insurance or common
stock of any other Subsidiary organized to conduct or engaged in the
business of insurance underwriting (any such Subsidiary, an "INSURANCE
SUBSIDIARY"); PROVIDED that the amount of all such Investments by the
Company and its Subsidiaries permitted by this clause (2) in Spartan
Insurance and in Insurance Subsidiaries shall not, in the aggregate
for all such Investments exceed $5,000,000;
(c) Spartan Insurance may make and own any Investments required
or permitted to be owned by it under the insurance laws and
regulations of its jurisdiction of incorporation;
(d) the Company and its Subsidiaries may make and own (1)
Investments in Country Fresh, Inc. and Oven Fresh, Inc., each a
Michigan corporation, and in any other similar entity (each a
"SUPPLIER ENTITY") which is owned in whole or in part by the Company,
a Subsidiary or another Person (a "MEMBER RETAILER") which is both an
owner of common stock of the Company and a retail customer of the
Company, if a significant portion of the business of such Supplier
Entity is supplying grocery merchandise to the Company or to Member
Retailers, and (2) Investments in Member Retailers consisting of loans
or other Investments similar in character to comparable loans and
Investments made in Member Retailers prior to the date hereof for the
purpose of new store development or store expansion or remodeling by
such Member Retailers;
-13-
(e) Investments as of January 2, 1993 and specified on Schedule
III attached hereto; and
(f) the Company may make and own Investments not otherwise
permitted by this 5.6, PROVIDED, HOWEVER, that on the date of
and after giving effect to any such other Investment, (1) no Default
or Event of Default shall have occurred and be continuing, (2) a
Subsidiary would at such time be permitted to incur $1.00 of
additional Debt (to a Person other than the Company or a Subsidiary)
pursuant to Section 5.1(b), and (3) the aggregate amount of all such
other Investments permitted by this paragraph (f) shall not exceed an
amount equal to 10% of Consolidated Tangible Assets as at the end of
the fiscal quarter of the Company which shall have ended most recently
prior to such date.
For all purposes of this 5.6, Investments owned by any Person
at the time it becomes a Subsidiary shall be deemed to be made at such
time.
SECTION 5.7. RESTRICTED PAYMENTS. (a) The Company will not directly
or indirectly, through a Subsidiary or otherwise, declare, order, pay, make
or set apart any sum or property for any Restricted Payment, unless, at the
time of such proposed action and immediately after giving effect thereto
and to any other substantially concurrent action:
(1) no condition or event shall exist which constitutes a
Default or Event of Default;
(2) a Subsidiary would at such time be permitted to incur $1.00
of additional Debt (to a Person other the Company or a Subsidiary)
pursuant to Section 5.1(b); and
(3) the aggregate amount of all sums and property included in
all Restricted Payments directly or indirectly declared, ordered,
paid, made or set apart by the Company during the period (taken as one
accounting period), from and including March 29, 1992 to and including
the date of such proposed action (the "COMPUTATION PERIOD") shall not
exceed the sum of (i) $7,500,000 PLUS (ii) Consolidated Net Income for
the Computation Period (or if such Consolidated Net Income is a
negative figure, then minus 100% of such figure) PLUS (iii) an amount
equal to 50% of the value, as shown on the books of the Company on the
date of distribution, of the common stock of the Company distributed
in payment of Volume Incentive Rebates during the Computation Period.
For the purposes of this 5.7(A), the amount involved in any
Restricted Payment directly or indirectly declared, ordered, paid or made
or set apart in property shall be the greater of (A) the fair market value
of such property (as determined in good faith by a resolution of the Board
-14-
of Directors) and (B) the net book value thereof on the books of the
Company (determined in accordance with GAAP), in each case as determined on
the date such Restricted Payment is declared, ordered, paid or made or set
apart.
(b) The Company will not declare any dividend (other than
dividends payable solely in shares of its own common stock) on any
shares of any class of its stock which is payable more than 60 days
after the date of declaration thereof.
(c) Except pursuant to mandatory provisions of applicable law
restricting the payment of dividends, the Company will not and will
not permit any Subsidiary to enter into or otherwise become subject to
any charter provision, contract or agreement which limits the amount,
or otherwise imposes restrictions on the payment, of dividends by any
Subsidiary.
SECTION 5.8. NATURE OF BUSINESS. The Company will not, and will not
permit any Subsidiary to, engage in any line of business in which it is not
currently engaged if as a result thereof the business of the Company and
its Subsidiaries taken as a whole would be substantially different from
what it was at the date of this Agreement.
SECTION 5.9. PAYMENT OF NOTES; MAINTENANCE OF BOOKS AND OFFICE. (a)
The Company will duly and punctually pay the principal of, premium, if any,
and interest on the Notes in accordance with the terms of the Notes and the
Agreements. The Company will maintain its principal office at a location
in the United States of America where notices, presentations and demands in
respect of this Agreement and the Notes may be made upon it and will
notify, in writing, each holder of a Note of any change of location of such
office; and such office shall be maintained at 000 00xx Xxxxxx X.X., Xxxxx
Xxxxxx, Xxxxxxxx 00000 until such time as the Company shall so notify the
holders of the Notes of any such change.
(b) The Company will, and will cause each of its Subsidiaries
to, maintain a system of accounting established and administered in
accordance with GAAP, keep proper books of record and account in which
full, true and correct entries are made of its business transactions,
and set aside appropriate reserves, all in accordance with GAAP.
SECTION 5.10. CORPORATE EXISTENCE; PAYMENT OF TAXES; MAINTENANCE OF
PROPERTIES; INSURANCE; COMPLIANCE WITH LAWS; MAINTENANCE OF PATENTS, ETC.
The Company will, and will cause each of its Subsidiaries to:
(a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence (except as
otherwise permitted by 5.5) and its licenses, rights (charter
and statutory) and franchises, except that, subject to compliance
-15-
with 5.4 and 5.5, the licenses, rights and franchises of
the Company or any Subsidiary may be abandoned, modified, or
terminated if in the good faith judgment of the Company such
abandonment, modification or termination is in the best interest of
the Company;
(b) pay and discharge or cause to be paid and discharged when
due (1) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of its
property (real, personal or mixed), or upon any part thereof, and (2)
all lawful claims of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons for labor, materials, supplies
and Rentals which, if unpaid, might by law become a Lien upon any of
its property; PROVIDED, HOWEVER, that the failure of the Company or
any Subsidiary to pay any such tax, assessment, charge, levy or claim
shall not constitute a Default hereunder (i) if and for so long as the
amount, applicability or validity thereof shall concurrently be
contested in good faith by appropriate and timely actions or
proceedings diligently pursued and effective to delay or prevent the
forfeiture or sale of any property of the Company or such Subsidiary
or any material interference with the use thereof by the Company or
such Subsidiary, and (ii) if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor (or, if no such reserve or other provision is required, the
Company shall have set aside on its books reserves deemed by it to be
adequate therefor);
(c) maintain and keep, or cause to be maintained and kept, in
good repair and working order (ordinary wear and tear excepted) all
material properties used or useful in the business of the Company and
its Subsidiaries, and from time to time make or cause to be made all
needful and proper repairs, renewals, replacements and improvements
thereof so that the business carried on in connection therewith may
continue to be conducted consistent with industry standards;
(d) keep adequately insured, by financially sound and reputable
insurers, all of its property of a character usually insured against
by prudent corporations engaged in the same or a similar business and
similarly situated against loss or damage of the kinds and in amounts
customarily insured against by such corporations and with deductibles
or co-insurance no greater than is customary, and carry, with such
insurers in customary amounts and with deductibles or coinsurance no
greater than is customary, such other insurance, including public
liability insurance and liability insurance against claims for any
violation of applicable law, as is usually carried by prudent
corporations of established reputation engaged in the same or a
similar business and similarly situated;
-16-
(e) comply in all material respects with all applicable lawful
statutes, including, without limitation ERISA, regulations and orders
of, and all applicable lawful restrictions imposed by, any court,
arbitrator or Governmental Body, in respect of the conduct of its
business and the ownership of its properties (including, without
limitation, applicable statutes, regulations and orders relating to
equal employment opportunities and all Environmental Legal
Requirements), except (1) such as are being contested in good faith by
appropriate and timely actions or proceedings diligently conducted and
effective to delay or prevent the forfeiture or sale of any property
of the Company or a Subsidiary, and for which such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made (or, if no such reserve or other provision is required, for
which the Company shall have set aside on its books reserves deemed by
it to be adequate therefor) or (2) such as non-compliance with which
would not reasonably be expected to have a Material Adverse Effect;
and
(f) maintain the validity of all patents, trademarks, service
marks, trade names, copyrights and the -like necessary in any material
respect for the conduct of its business as now conducted and as
proposed to be conducted.
SECTION 5.11. REPURCHASE OF NOTES. Neither the Company nor any of
its Affiliates, directly or indirectly, may repurchase or make any offer to
repurchase any Notes unless the offer has been made to repurchase Notes,
pro rata, from all holders of the Notes at the same time and upon the same
terms. In case the Company repurchases any Notes, such Notes shall
thereafter be canceled and no Notes shall be issued in substitution
therefor. Without limiting the foregoing, upon the purchase or other
acquisition of any Notes by the Company or any of its Affiliates, such
Notes shall no longer be outstanding for purposes of any section of this
Agreement relating to the taking by the holders of the Notes of any actions
with respect thereto, including, without limitation, 6.3, 6.4
and 7.1.
SECTION 5.12. FINANCIAL STATEMENTS; INFORMATION. The Company will
furnish (in duplicate) to you, so long as you or your nominee shall be
obligated to purchase or shall hold any of the Notes and to each other
Institutional Holder of 5% or more of the aggregate outstanding principal
amount of the Notes or which has acquired 100% of the outstanding Notes
originally issued to an Initial Holder:
(a) as soon as practicable and in any event within 60 days after
the end of each of the first three quarterly fiscal periods in each
fiscal year of the Company, consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such
quarterly period and the related consolidated and consolidating
-17-
statements of earnings, stockholders' equity and cash flows of the
Company and its Subsidiaries for such period and (in the case of the
second and third such quarterly periods) for the portion of the fiscal
year ended with the last day of such quarterly period, setting forth,
in the case of such consolidated statements, in comparative form the
figures for the corresponding periods of the previous fiscal year, all
in reasonable detail and certified as complete and correct in all
material respects (subject to changes resulting from year-end audit
adjustments) by the principal financial officer of the Company;
(b) as soon as practicable and in any event within 90 days after
the end of each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of
the end of such year and the related consolidated and consolidating
statements of earnings, stockholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the
respective figures for the previous fiscal year, all in reasonable
detail and (1) in the case of such consolidated financial statements,
accompanied by a report thereon of Deloitte & Touche or other
independent certified public accountants of recognized national
standing selected by the Company, which report (i) shall not be made
in reliance upon the opinion of any other accountant; (ii) shall be
made without qualifications or modifications within the meaning of
Statement on Auditing Standards No. 58 (except for such qualifications
and modifications resulting from changes in accounting principles and
methods agreed to by such accountants); (iii) shall state that the
financial statements are the responsibility of the Company's
management and the independent auditor's responsibility is to express
an opinion on the financial statements based on the audits; (iv) shall
state that the audits are conducted in accordance with generally
accepted auditing standards, which require the planning and
performance of the audit to obtain reasonable assurance as to whether
the financial statements are free of material misstatement, including
the examination, on a test basis, of evidence supporting the amounts
and disclosures in the financial statements and the assessment of the
accounting principles used and of significant estimates by management,
as well as an evaluation of the overall financial statement
presentation; and (v) shall state that such financial statements
present fairly, in all material respects, the financial position of
the companies being reported upon as of the dates indicated and the
results of their operations and their cash flows for the periods
indicated in conformity with GAAP, and (2) in the case of such
consolidating financial statements, certified as complete and correct
in all material respects by the principal financial officer of the
Company;
(c) concurrently with each delivery of financial statements
pursuant to clause (a) or (b) of this 5.12, an Officers'
Certificate:
-18-
(1) stating that the signatories thereto have reviewed the
terms of the Agreements and of the Notes and have made, or caused
to have been made under their supervision, a review in reasonable
detail of the transactions and conditions of the Company and its
Subsidiaries during the accounting period covered by such
financial statements, and that such review has not disclosed the
existence during or at the end of such accounting period, and
that such signatories do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or
event which constitutes a Default or an Event of Default, or, if
any such condition or event existed or exists, the nature and
period of existence thereof and what action the Company has taken
or is taking or proposes to take with respect thereto,
(2) setting forth, as of the date of such balance sheet for
such period, (i) the respective amounts of Stockholders' Equity,
Consolidated Net Income, Consolidated Current Assets,
Consolidated Current Liabilities, Consolidated Tangible Assets,
Consolidated Funded Debt, Net Income Available for Fixed Charges
and Fixed Charges, (ii) the aggregate amount of Volume Incentive
Rebates for which the Company or any Subsidiary shall have become
obligated during such period and the respective portions thereof
which shall have been paid in common stock and cash, and (iii)
the aggregate principal amount of outstanding Funded Debt and
Current Debt of all Subsidiaries and outstanding Debt secured by
Liens permitted by 5.2, and
(3) setting forth facts or computations in reasonable
detail demonstrating compliance with the restrictions contained
in 5.1, 5.2, 5.5(E), 5.6(B), 5.6(F) and 5.7;
(d) together with each delivery of annual financial statements
pursuant to clause (b) of this 5.12, a written statement by
the independent public accountants referred to in said clause (b):
(1) stating that (i) they have read the Officers'
Certificate delivered in connection with the annual financial
statements pursuant to clause (c) of this 5.12 for such
fiscal year, and (ii) based upon their annual audit examination
of the consolidated financial statements delivered pursuant to
clause (b) of this 5.12 nothing has come to their
attention which causes them to believe that the matters set forth
in such Officers' Certificate pursuant to clauses (2) and (3) of
such clause (c) have not been properly stated in accordance with
the terms of the Agreements, and
(2) stating that, although their audit was not directed
toward obtaining knowledge of noncompliance, nothing came to
-19-
their attention in connection with their audit which caused them
to believe that the Company was not in compliance with the
provisions of 5.1 through 5.10 of this Agreement,
insofar as such provisions relate to accounting matters;
(e) promptly upon receipt thereof (and in any event within five
Business Days thereafter), copies of all reports submitted to the
Company or any Subsidiaries by independent public accountants in
connection with any annual, interim or special audit of the Company or
any Subsidiaries made by such accountants;
(f) promptly upon their becoming available (and in any event
within five Business Days thereafter), copies of (1) all financial
statements, reports, notices, proxy statements and other information
sent or made available generally by the Company to any class of its
Security holders (other than promotional and other materials furnished
to holders of common stock of the Company solely by reason of their
status as customers of the Company or a Subsidiary), and (2) all
regular and periodic reports (including reports on Form 8-K) and any
registration statements and prospectuses filed by the Company or any
of its Subsidiaries with any securities exchange or with the
Commission;
(g) promptly upon any Responsible Officer obtaining knowledge of
any condition or event which constitutes a Default or an Event of
Default, or becoming aware that the holder of any Note has given any
notice or taken any other action with respect to a claimed Default or
Event of Default or that any Person has given any notice to the
Company or any Subsidiary or taken any other action with respect to a
claimed default under or in respect of any Debt or lease referred to
in 6.1(F) or (G) or with respect to the occurrence or
existence of any event or condition of the type referred to in
6.1(J), (K) or (1), an Officers' Certificate specifying the
nature and period of existence thereof and what action the Company has
taken or is taking or proposes to take with respect thereto;
(h) promptly upon any Responsible Officer becoming aware of the
occurrence of any (1) Reportable Event or (2) non-exempt "PROHIBITED
TRANSACTION," as such term is defined in Section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written
notice specifying the nature thereof, what action the Company has
taken, is taking and proposes to take with respect thereto, and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto; and
(i) promptly upon request therefor (and in any event within five
Business Days thereafter), such other information as to the business,
properties, operations or condition (financial or otherwise) of the
-20-
Company or any of its Subsidiaries as may from time to time be
reasonably requested by any holder of the Notes.
SECTION 5.13. INSPECTION RIGHTS. So long as you or your nominee
holds any Note, or any other Institutional Holder holds 5% in aggregate
outstanding principal amount of the Notes or has acquired 100% of the
outstanding Notes originally issued to an Initial Holder, your or such
other Institutional Holder's representative or representatives may visit
and inspect any of the properties of the Company and its Subsidiaries,
including their respective books of account, records, reports and other
papers, make copies and extracts therefrom, and discuss their affairs,
finances and accounts with their respective officers and independent public
accountants (and the Company hereby authorizes and directs each such
officer and independent public accountant to engage in such discussion),
all at such reasonable times during normal business hours upon reasonable
prior notice to the President or a Vice President of the Company and as
often as may be reasonably requested. Any visitation shall be at the sole
expense of you or such Institutional Holder unless a Default or Event of
Default shall have occurred and be continuing or if the holder of any Note
or of any other evidence of Indebtedness of the Company or any Subsidiary
gives any written notice or takes any other action with respect to claimed
default (unless, with respect to a claimed default, the Company is
contesting the existence thereof in good faith by appropriate actions or
proceedings), in which case the Company will be obligated to pay for the
reasonable expenses of any such visitation or inspection.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
SECTION 6.1. EVENTS OF DEFAULT. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note
when the same shall have become due and such default shall continue
for more than five Business Days; or
(b) Default shall occur in the making of any required prepayment
on any of the Notes as provided in 2.1; or
(c) Default shall occur in the making of any other payment of
the principal of any Note or the premium thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment; or
(d) Default shall occur in the observance or performance of any
covenant or agreement contained in 5.L through 5.8,
inclusive, or 5.12(G) hereof; or
(e) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
-21-
after the earlier of (1) the day on which a Responsible Officer of the
Company first obtains knowledge of such Default and (2) the day on
which written notice thereof is given to the Company by the holder of
any Note; or
(f) Default shall be made in the payment of the principal of or
interest on any Debt of the Company or any Subsidiary for borrowed
money aggregating in excess of $250,000, as and when the same shall
become due and payable by the lapse of time, by declaration, by call
for redemption or otherwise, and such default shall continue beyond
the period of grace, if any, allowed with respect thereto; or
(g) Default or the happening of any event under any indenture,
agreement, or other instrument under which any Debt of the Company or
any Subsidiary for borrowed money aggregating in excess of $250,000
may be issued and such default, event or condition shall continue for
a period of time sufficient to permit the acceleration of the maturity
of any Debt of the Company or any Subsidiary outstanding thereunder;
or
(h) Any representation or warranty made by the Company herein,
or made by the Company in any statement or certificate furnished by or
on behalf of the Company in connection with the consummation of the
issuance and delivery of the Notes or furnished by the Company
pursuant hereto, is untrue in any material respect as of the date of
the issuance or making thereof; or
(i) Final judgment or judgments for the payment of money
aggregating in excess of $250,000 is or are outstanding against the
Company or any Subsidiary or against any property or assets of either
and any one of such judgments in excess of $250,000 has, or an
aggregate of such judgments for more than $250,000 have, remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period of 30 days from the date of its entry; or
(j) A custodian, liquidator, trustee or receiver is appointed
for the Company or any Subsidiary or for the major part of the
property of either and is not discharged within 60 days after such
appointment; or
(k) The Company or any Subsidiary becomes insolvent or bankrupt,
is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any
Subsidiary applies for or consents to the appointment of a custodian,
liquidator, trustee or receiver for the Company or such Subsidiary or
for the major part of the property of either; or
(1) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
-22-
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Subsidiary and, if instituted against the
Company or any Subsidiary, are consented to or are not dismissed
within 60 days after such institution.
SECTION 6.2. NOTICE TO HOLDERS. When any Event of Default described
in the foregoing 6.1 has occurred, or if the holder of any Note or
of any other evidence of Debt of the Company gives any notice or takes any
other action with respect to a claimed default, the Company agrees to give
notice within three Business Days of such event to all holders of the Notes
then outstanding, such notice to be in writing and sent by registered or
certified mail or by telegram.
SECTION 6.3. ACCELERATION OF MATURITIES. When any Event of Default
described in paragraph (a), (b) or (c) of 6.1 has happened and is
continuing, any holder of any Note as to which such Event of Default has
occurred may, by notice in writing sent in the manner provided in Section
9.6 hereof to the Company, declare the entire principal and interest
accrued on such Note to be, and such Note shall thereupon become forthwith
due and payable, without any presentment, demand, protest or other notice
of any kind, all of which is hereby expressly waived. When any Event of
Default described in paragraphs (a) through (i), inclusive, of said
6.1 has happened and is continuing, the holder or holders of 35%
or more of the principal amount of Notes at the time outstanding may, by
notice in writing sent in the manner provided in 9.6 hereof to the
Company, declare the entire principal and all interest accrued on all Notes
to be, and all Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived. When any Event of Default described
in paragraph (j), (k) or (1) of 6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire unpaid principal
balance of the Notes then outstanding, together with all accrued and unpaid
interest thereon and, to the extent not prohibited by applicable law, an
amount as liquidated damages for the loss of the bargain evidenced hereby
(and not as a penalty) equal to the Make-Whole Amount, determined as of the
day on which the Notes shall so become due and payable. No course of
dealing on the part of any holder of the Notes nor any delay or failure on
the part of any holder of the Notes to exercise any right shall operate as
a waiver of such right or otherwise prejudice such holder's rights, powers
and remedies. The Company further agrees, to the extent permitted by law,
to pay to the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Notes upon any default hereunder
or thereon, including reasonable compensation to such holder's or holders'
attorneys for all services rendered in connection therewith.
-23-
SECTION 6.4. RESCISSION OF ACCELERATION. The provisions of
6.3 are subject to the condition that if the principal of and
accrued interest on all or any outstanding Notes have been declared
immediately due and payable by reason of the occurrence of any Event of
Default described in paragraphs (a) through (i), inclusive, of
6.1, the holders of 66-2/3% in aggregate principal amount of the
Notes then outstanding may, by written instrument delivered to the Company,
rescind and annul such declaration and the consequences thereof, PROVIDED
that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other
sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and
payable solely by reason of such declaration under 6.3)
shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to 7.1;
and PROVIDED FURTHER, that no such rescission and annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
SECTION 7.1. CONSENT REQUIRED. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be
amended or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the
Company shall have obtained the consent in writing of the holders of at
least 66-2/3% in aggregate principal amount of outstanding Notes; PROVIDED
that without the written consent of the holders of all of the Notes then
outstanding, no such waiver, modification, alteration or amendment shall be
effective (a) which will change the time of payment (including any
prepayment required by 2.1) of the principal of or the interest on
any Note or reduce the principal amount thereof or change the rate of
interest thereon, or (b) which will change any of the provisions with
respect to optional prepayments, or (c) which will change the percentage of
holders of the Notes required to consent to any such amendment, alteration
or modification or any of the provisions of 6 or this 7.
SECTION 7.2. SOLICITATION OF NOTEHOLDERS. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless
each holder of the Notes (irrespective of the amount of Notes then owned by
-24-
it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company
with sufficient information to enable it to make an informed decision with
respect thereto. Executed or true and correct copies of any waiver
effected pursuant to the provisions of this 7.2 shall be delivered
by the Company to each holder of outstanding Notes forthwith following the
date on which the same shall have been executed and delivered by the holder
or holders of the requisite percentage of outstanding Notes. 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, to
any holder of the Notes as consideration for or as an inducement to the
entering into by any holder of the Notes of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to the holders of all of the
Notes then outstanding.
SECTION 7.3. EFFECT OF AMENDMENT OR WAIVER; SCOPE OF CONSENT. (a)
Any amendment or waiver approved in accordance with 7.1 shall
apply equally to all of the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company, whether or
not such Note shall have been marked to indicate such amendment or waiver.
No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
(b) Any consent to an amendment or waiver given pursuant to
7.1 by a holder of a Note which has (1) transferred or agreed to
transfer all or a portion of its Notes to the Company or any of its
Affiliates and (2) provided such consent as a condition to such transfer,
shall be valid and binding only upon such holder. Any amendment or waiver
which becomes effective only with such consent (and the consents of all
other holders of the Notes which were acquired under the same or similar
conditions) shall be valid and binding only upon such holder or holders.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
SECTION 8.1. DEFINITIONS. Unless the context otherwise requires,
the terms hereinafter set forth when used in this Agreement and in any
schedule or exhibit attached hereto shall have the following meanings, and
the following definitions shall be equally applicable to both the singular
and plural forms of any of the herein defined:
"AFFILIATE" with respect to any designated Person, shall mean any
other Person (a) directly or indirectly controlling or controlled by or
under direct or indirect common control with such designated Person, (b)
which beneficially owns or holds 5% or more of the shares of any class of
Voting Stock of such designated Person or (c) 5% or more of any class of
the Voting Stock of which is beneficially owned or held by such designated
Person. For purposes of this definition, "CONTROL" (including, with
-25-
correlative meanings, the terms "CONTROLLED BY" AND "UNDER COMMON CONTROL
WITH"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Stock or by contract or otherwise.
"AGREEMENTS" is defined in 1.2.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company
or a duly authorized committee of directors lawfully exercising the
relevant powers of such Board.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which commercial banks are authorized by law to be closed in
Michigan.
"CAPITAL LEASE" as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with GAAP, be required to be classified and accounted
for as a capital lease of such Person, other than, in the case of the
Company or a Subsidiary, any such lease under which the Company or a
Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATION" with respect to any Capital Lease, shall
mean the amount of the obligation of the lessee thereunder, determined in
accordance with GAAP, in respect of such Capital Lease.
"CLOSING DATE" is defined in 1.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission and any
other similar or successor agency of the Federal government administering
the Securities Act.
"COMPANY" is defined in the introductory paragraph hereof.
"COMPUTATION PERIOD" is defined in 5.7(A).
"CONSOLIDATED CURRENT ASSETS" as at any date of determination, shall
mean the amount at which the current assets of the Company and its
Subsidiaries would be shown on a consolidated balance sheet of the Company
and its Subsidiaries prepared in accordance with GAAP as at such date.
"CONSOLIDATED CURRENT LIABILITIES" as at any date of determination,
shall mean the amount at which the current liabilities of the Company and
its Subsidiaries would be shown on a consolidated balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP as at such
date.
-26-
"CONSOLIDATED FUNDED DEBT" as at any date of determination, shall mean
the aggregate principal amount of all Funded Debt of the Company and its
Subsidiaries outstanding on such date, determined in accordance with GAAP
on a consolidated basis, after eliminating all intercompany items.
"CONSOLIDATED NET INCOME" for any period, shall mean the net earnings
(or net deficit) of the Company and its Subsidiaries for such period (taken
as a cumulative whole) after deducting, without duplication, all operating
expenses, interest expenses, rentals, provisions for all taxes and reserves
(including reserves for deferred income taxes), an Volume Incentive Rebates
(whether or not paid out), and all other proper deductions, all determined
in accordance with GAAP on a consolidated basis after eliminating all
intercompany items and deducting portions of income properly attributable
to outside minority interests, if any, in any Subsidiary; PROVIDED,
HOWEVER, that there shall be excluded:
(a) the proceeds of any life insurance policy;
(b) any gain arising from (1) the sale or other disposition not
in the ordinary course of business of any assets (other than current
assets) to the extent that the aggregate amount of the gain exceeds
the aggregate amount of losses from the sale, abandonment or other
disposition of assets (other than current assets), (2) any writeup of
assets, (3) the acquisition of any Securities evidencing, or the
extinguishment under GAAP of, Debt of the Company or any Subsidiary or
(4) the termination of an employee benefit plan;
(c) any amount representing the interest of the Company or any
Subsidiary in the undistributed earnings of any Person other than a
Subsidiary;
(d) any income or deficit, prior to the date of acquisition, of
any Person acquired in any manner by the Company or a Subsidiary;
(e) in the case of a successor to the Company or any Subsidiary
by consolidation or merger or a transferee of its assets, any earnings
of the successor or transferee corporation prior to the consolidation,
merger or transfer of assets;
(f) any restoration to income of any contingency reserve, except
to the extent provision for such reserve was made out of income
accrued during such period;
(g) any net income of a Subsidiary which for any reason is
unavailable for the payment of dividends to the Company or another
Subsidiary; and
(h) any items properly classified as extraordinary in accordance
with GAAP.
-27-
"CONSOLIDATED TANGIBLE ASSETS" as at any date of determination, shall
mean the aggregate book value as of such date of the assets of the Company
and its Subsidiaries, real, personal and mixed (but exclusive of treasury
stock and franchises, licenses, permits, patents, patent applications,
copyrights, trademarks, trade names, goodwill, experimental or
organizational expense, unamortized debt discount and expense, deferred
charges and other like intangibles), determined on a consolidated basis in
accordance with GAAP, LESS the aggregate book value of all assets of the
following character included therein: (a) all reserves for depreciation,
depletion, obsolescence and/or amortization of properties (other than
properties excluded as hereinabove provided) and all other reserves (other
than general contingency reserves not allocated to any particular purpose
and reserves representing mere appropriations of surplus) set aside in
connection with the business conducted by the Company and its Subsidiaries,
(b) any write-up in the book value of any asset resulting from the
revaluation thereof subsequent to the date of the most recent audited
financial statements referred to in paragraph 4 of Exhibit B, or any write-
up in excess of the cost of any asset acquired subsequent to such date, and
(c) assets subject to Liens granted by Spartan Insurance on property owned
by it to secure any reimbursement obligation in respect of letters of
credit issued by commercial banks for the account of Spartan Insurance.
"CURRENT DEBT" of any Person as of the date of determination thereof,
shall mean all Debt of such Person other than any such Debt which
constitutes Funded Debt as of such date.
"DEBT" as applied to any Person shall mean (a) all debt of such Person
for borrowed money (and any notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money), (b) any obligation of such Person for all or any part of the
purchase price of property or other assets or for the cost of property or
other assets constructed or of improvements, (c) any obligation secured by
any Lien on or payable out of the proceeds of production from property
owned by such Person even though such Person has not assumed or become
liable for the payment of such obligation, (d) any Capital Lease Obligation
of such Person, (e) any Guaranty by such Person of or with respect to Debt
of another Person, and (f) subject to the following sentence, all
liabilities of such Person for unfunded vested pension and non-pension
benefits. Debt of the Company and its Subsidiaries shall not by reason of
the foregoing clause (f) include obligations of the Company or any
Subsidiary in respect of (1) unfunded vested pension benefits related to
the withdrawal (within the meaning of Title IV of ERISA) by the Company or
any Subsidiary from a Multiemployer Plan or (2) the reorganization (within
the meaning of Section 4241 of ERISA), insolvency (within the meaning of
Section 4245 of ERISA), or termination (within the meaning of Title IV of
ERISA) of any Multiemployer Plan, which obligations are not required in
accordance with GAAP to be shown as a liability on a consolidated balance
sheet of the Company and its Subsidiaries and are not in any event
-28-
attributable to a failure by the Company or such Subsidiary to make
required contributions when due, until, in the case of any obligations
described in the immediately foregoing clause (1), such time as the Company
or a Subsidiary has withdrawn from a Multiemployer Plan or, in the case of
any obligations described in the foregoing clause (2), until such time as
the Company or a Subsidiary, has received notice from the sponsor of such
Multiemployer Plan that such Multiemployer Plan is in reorganization, is
insolvent or has been terminated, as the case may be. In determining the
Debt and assets of any Person, no effect shall be given to deposits, trust
arrangements or similar defeasance arrangements which, in accordance with
GAAP, extinguish Debt for which such Person remains legally liable.
"DEFAULT" shall mean any condition or event which, with notice or
lapse of time or both, would become an Event of Default.
"ENVIRONMENTAL LEGAL REQUIREMENT" shall mean any Federal, state or
local statute, law, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, any such applicable law,
statute or ordinance relating to releases, discharges or emissions to air,
water, land or groundwater, to the withdrawal or use of groundwater, to the
use and handling of polychlorinated byphenyls or asbestos, to the disposal,
treatment, storage or management of solid or hazardous wastes or Hazardous
Substances or crude oil, or fraction thereof, or to exposure to toxic or
hazardous materials, to the handling, transportation, discharge or release
of gaseous or liquid Hazardous Substances and any regulation, order, notice
or demand issued pursuant to such law, statute or ordinance, in each case
applicable to the property of the Company and its Subsidiaries or the
operation, construction or modification of any thereof, including without
limitation the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act of 1976 and the
Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials
Transportation Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking Water Control
Act, the Clean Air Act of 1966, as amended, the Toxic Substances Control
Act of 1976, the Occupational Safety and Health Act of 1977, as amended,
the Emergency Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution Act of 1990
and any similar or implementing state law, and any state statute and any
further amendments to these laws providing for financial responsibility for
cleanup or other actions with respect to the release or threatened release
of Hazardous Substances or crude oil, or any fraction thereof and all
rules, regulations, guidance documents and publication promulgated
thereunder.
-29-
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations
or a controlled group or trades or businesses, as described in Section
414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA.
"EVENT OF DEFAULT" is defined in 6.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same may be in effect at the time.
"FIXED CHARGES" for any period shall mean on a consolidated basis the
sum of (a) all Rentals (other than Capital Lease Obligations) payable
during such period by the Company and its Subsidiaries, and (b) Interest
Expense on all Indebtedness (including the interest component of Capital
Lease Obligations) of the Company and its Subsidiaries payable during such
period.
"FIXED PAYMENT DATES" is defined in 2.1.
"FUNDED DEBT" of any Person as of the date of determination thereof,
shall mean all Debt of such Person, whether secured or unsecured, having a
final maturity (or which, pursuant to the terms of a revolving credit
agreement or otherwise, is renewable or extendible at the option of such
Person for a period ending) more than one year after the date of the
creation thereof (excluding any portion thereof which is on such date
included in current liabilities of such Person).
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States from time to time.
"GOVERNMENTAL BODY" shall mean any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"GUARANTY" as applied to any Person, shall mean any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by
such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any Security therefor,
-30-
or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or any balance
sheet or other financial condition of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders
of such obligation will be protected against loss in respect thereof. The
amount of any Guaranty shall be equal to the amount of the obligation
guaranteed.
"HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional
or Federal authority having jurisdiction over the property of the Company
and its Subsidiaries or its use, including but not limited to any material,
substance or waste which is: (a) defined as a hazardous substance under
Section 311 of the Federal Water Pollution Control Act (33 U.S.C
1317) as amended; (b) regulated as a hazardous waste under Section
1004 or Section 3001 of the Federal Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act (42 U.S.C. 6901 et
seq.) as amended; (c) defined as a hazardous substance under Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act,
(42 U.S.C. 9601 et seq.) as amended, or (d) defined or regulated
as a hazardous substance or hazardous waste under any rules or regulations
promulgated under any of the foregoing statutes.
"INITIAL HOLDER" shall mean any one of Principal Mutual Life Insurance
Company, Nippon Life Insurance Company of America, United of Omaha Life
Insurance Company, United World Life Insurance Company and Companion Life
Insurance Company.
"INSTITUTIONAL HOLDER" shall mean any of the following Persons
existing under the laws of the United States of America or any state
thereof of Canada or any province thereof: (a) any bank, savings
institution, trust company or national banking association, acting for its
own account or in a fiduciary capacity, (b) any charitable foundation, (c)
any insurance company or fraternal benefit society, (d) any pension,
retirement or profit sharing trust or fund for which any bank, trust
company, national banking association or investment adviser registered
under the Investment Advisers Act of 1940, as amended, is acting as trustee
or agent, having surplus and undivided profits of at least $50,000,000, (e)
any investment company, as defined in the Investment Company Xxx 0000, as
amended, or (f) any government, public employees' pension or retirement
system or other government agency supervising the investment of public
funds.
-31-
"INSURANCE SUBSIDIARY" is defined in 5.6(B).
"INTEREST EXPENSE" for any period shall mean all interest and all
amortization of debt discount and expense on any particular indebtedness
(including, without limitation, payment-in-kind, zero coupon and any other
like Security) for which such calculations are being made. Computations of
Interest Expense on a PRO FORMA basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.
"INVESTMENT" as applied to any Person, shall mean any direct or
indirect purchase or other acquisition by such Person of stock or other
Securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, or any Guaranty by
such Person with respect to the Debt of any other Person, including all
Debt and accounts receivable from such other Person which are not current
assets or did not arise from transactions with such other Person in the
ordinary course of business. In computing the amount involved in any
Investment, (a) undistributed earnings of, and interest accrued in respect
of Debt owing by, such other Person accrued after the date of such
Investment shall not be included, (b) there shall not be deducted from the
amounts invested in such other Person any amounts received as earnings (in
the form of dividends, interest or otherwise) on such Investment or as
loans from such other Person and (c) unrealized increases or decreases in
value, or write-ups, write-downs or write-offs of Investments in such other
Person shall be disregarded.
"LIEN" as to any Person, shall mean any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, 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 with respect to, any property or asset of such
Person, or the signing or filing of a financing statement which names such
Person as debtor, or the signing of any security agreement authorizing any
other party as the secured party thereunder to file any financing statement
which names such Person as debtor.
"MATERIAL ADVERSE EFFECT" as applied, to any Person, shall mean a
material adverse effect on such Person's business, properties, operations
or condition (financial or otherwise); PROVIDED that such term, when used
without reference to any particular Person, shall mean such effect on the
Company and its Subsidiaries, taken as a whole.
"MAKE-WHOLE AMOUNT" shall mean in connection with any prepayment of
the Notes the excess, if any, of (a) the aggregate present value as of the
date of such prepayment of each dollar of principal being prepaid (taking
into account the application of such prepayment required by 2.1)
and the amount of interest (exclusive of interest accrued to the date of
-32-
prepayment) that would have been payable in respect of such dollar if such
prepayment had not been made, determined by discounting such amounts at the
Reinvestment Rate from the respective dates on which they would have been
payable, over (b) 100% of the principal amount of the outstanding Notes
being prepaid plus interest accrued to the date of prepayment. If the
Reinvestment Rate is equal to or higher than 7.27%, the Make-Whole Amount
shall be zero. For purposes of any determination of the Make-Whole Amount:
"REINVESTMENT RATE" shall mean .50%, plus the arithmetic mean of the
yields for the two columns under the heading "WEEK ENDING" published in the
Statistical Release under the caption "TREASURY CONSTANT MATURITIES" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal being prepaid (taking into
account the application of such prepayment required by 2.1). If no
maturity exactly corresponds to such Weighted Average Life to Maturity,
yields for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole
Amount shall be used.
"STATISTICAL RELEASE" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded
U.S. Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of
the outstanding Notes.
"WEIGHTED AVERAGE LIFE TO MATURITY" of the principal amount of the
Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "REMAINING DOLLAR-YEARS" of such principal shall mean the amount
obtained by (1) multiplying (i) the remainder of (A) the amount of
principal that would have become due on each scheduled payment date if such
prepayment had not been made, LESS (B) the amount of principal on the Notes
scheduled to become due on such date after giving effect to such prepayment
and the application thereof in accordance with the provisions of
2.1, by (ii) the number of years (calculated to the nearest one-
twelfth) which will elapse between the date of determination and such
scheduled payment date, and (2) totaling the products obtained in (1).
-33-
"MEMBER RETAILER" is defined in 5.6(D).
"MULTIEMPLOYER PLAN" shall have the same meaning as in ERISA.
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the
sum of (a) Consolidated Net Income during such period, PLUS (to the extent
deducted in determining Consolidated Net Income), (b) (i) all provisions
and reserves for any Federal, state (including taxes payable on the
consolidated "BUSINESS INCOME" of the Company and its Subsidiaries as such
term is defined in the Michigan Single Business Tax MCLA 208.1 ET.
SEQ.) or other income taxes made by the Company and its Subsidiaries during
such period, (ii) Fixed Charges of the Company and its Subsidiaries during
such period and (iii) the Non-Cash Portion of Volume Incentive Rebates.
"NON-CASH PORTION OF VOLUME INCENTIVE REBATES" shall mean "REBATES TO
BE PAID IN COMMON STOCK" as shown in the consolidated statement of cash
flows in the consolidated financial statements of the Company and its
Subsidiaries.
"NOTES" is defined in 1.1.
"OFFICERS' CERTIFICATE" shall mean a certificate executed on behalf of
the Company by the Chairman of the Board of Directors (if an officer) or
its President or its Senior Vice President and Chief Financial Officer.
"ORDER" shall mean any order, writ, injunction, decree, judgment,
award, determination, direction or demand.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to all or any of its functions under ERISA.
"PERSON" shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"PLAN" shall mean a "PENSION PLAN," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to
which the Company or any ERISA Affiliate contributed or is a member or
otherwise may have any liability.
"PRIORITY DEBT AMOUNT" is defined in 5.1(B).
"PURCHASERS" is defined in 1.1.
"RENTALS" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee
is obligated to make to the lessor on termination of the lease or surrender
of the property) payable by the Company or a Subsidiary, as lessee or
-34-
sublessee under a lease of real or personal property (LESS, in the case of
any determination of Fixed Charges, any Rentals received by the Company or
such Subsidiary as sublessor under any sublease of the same such real or
personal property), but shall be exclusive of any amounts required to be
paid by the Company or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "PERCENTAGE LEASES" shall
be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues and if
any such percentage lease does not so provide for minimum rents, then fixed
rents under any such percentage lease shall be computed on the basis of the
amount of the last payment of rent next preceding any date of determination
thereof.
"REPORTABLE EVENT" shall have the same meaning as in ERISA.
"RESPONSIBLE OFFICER" shall mean any officer of the Company qualified
to sign an Officers' Certificate (in accordance with the definition of that
term) or any other officer of the Company, regardless of title, who shall
at any time hereafter either (a) perform substantially the same duties as
are performed on the date hereof by any such officer so qualified or (b) be
charged with responsibility for monitoring or administering the Company's
compliance with this Agreement.
"RESTRICTED PAYMENT" shall mean any payment or the incurrence of any
liability to make any payment, in cash, property or other assets (other
than shares of any class of capital stock (but not preferred stock) of the
Company) upon or in respect of any share of any class of capital stock of
the Company, including, without limiting the generality of the foregoing,
payments as dividends and payments (other than out of the net proceeds
actually received by the Company in cash from the sale of common shares of
the Company except for any such shares issued in payment of a Volume
Incentive Rebate) for the purpose of purchasing, retiring or redeeming any
such shares of stock (or any warrants or options evidencing a right to
purchase any such shares of stock) or making any other distribution in
respect of any such shares of stock (or any warrants or options evidencing
a right to purchase any such shares of stock).
"SECURITIES ACT" shall mean the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SECURITY" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
"SPARTAN INSURANCE" is defined in 5.1(B)(1).
"STOCKHOLDERS' EQUITY", as at any date of determination of the amount
thereof, shall mean the sum of the capital stock (but excluding treasury
-35-
stock and capital stock subscribed and unissued), additional paid-in
capital, and retained earnings accounts of the Company and its Subsidiaries
appearing on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP as of such date of
determination, after eliminating all amounts properly attributable to
outside minority interests, if any, in the stock and surplus of
Subsidiaries.
"SUBSIDIARY" shall mean any corporation more than 50% of the Voting
Stock of which is at the time owned by the Company or by one or more
Wholly-owned Subsidiaries or by the Company and one or more Wholly-owned
Subsidiaries.
"SUPPLIER ENTITY" is defined in 5.6(D).
"VOLUME INCENTIVE REBATE" shall mean any amount credited, paid or
accrued as payable by the Company or a Subsidiary to pay (whether paid or
payable by credit to accounts payable, in cash, common stock or other
property of the Company) to any retail customer which shall be a holder of
common stock of the Company, in consideration of the purchase by such
customer from the Company or such Subsidiary of a specified volume or
volumes (by dollar amount, number of cases or otherwise) of merchandise, or
of specified average weekly purchases by weight, volume or purchase price,
or of specified order sizes (whether by purchase price, volume or
otherwise), as a rebate on the purchase price of such merchandise, either
as a predetermined percentage of the price charged to such customer for
such merchandise or measured by weight of shipment or otherwise.
"VOTING STOCK" shall mean capital stock of a corporation the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate directors (or persons performing similar
functions).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary, all of the equity
Securities (except directors' qualifying shares) of which are owned by the
Company or another Wholly-owned Subsidiary.
SECTION 8.2. ACCOUNTING PRINCIPLES. 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 requirements of this Agreement.
SECTION 8.3. DIRECTLY OR INDIRECTLY. 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.
-36-
SECTION 9. MISCELLANEOUS.
SECTION 9.1. NOTE REGISTER. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the
Notes, and the Company will register or transfer or cause to be registered
or transferred, as hereinafter provided any Note issued pursuant to this
Agreement.
At any time, and from time to time, the holder of any Note which has
been duly registered as hereinabove provided may transfer such Note upon
surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the holder
of such Note or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any Note shall be made to or upon the written order of such
holder.
SECTION 9.2. EXCHANGE OF NOTES. At any time and from time to time,
upon not less than ten days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant
to 9.1, this 9.2 or 9.3, and, upon surrender of
such Note at its office, the Company will deliver in exchange therefor,
without expense to the holder, except as set forth below, Notes for the
same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered, in the denomination of (a) $500,000 or any amount in
excess thereof as such holder shall specify, or (b) in the case of any Note
with an unpaid principal amount which is less than $500,000 in such other
denomination (but not less than $100,000) as such holder shall specify,
dated as of the date to which interest has been paid on the Note so
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or
Persons, or registered assigns, as may be designated by such holder, and
otherwise of the same form and tenor as the Notes so surrendered for
exchange. The Company may require the payment of a sum sufficient to cover
any stamp tax or governmental charge imposed upon such exchange or
transfer.
SECTION 9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction
of any Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of the Note, the Company will make and
deliver without expense to the holder thereof, a new Note, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note. If the
-37-
Purchaser or any subsequent Institutional Holder is the owner of any such
lost, stolen or destroyed Note, then the affidavit of an authorized officer
of such owner, setting forth the fact of loss, theft or destruction and of
its ownership of the Note at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further indemnity
shall be required as a condition to the execution and delivery of a new
Note other than the written agreement of such owner to indemnify the
Company.
SECTION 9.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees
to pay directly all of your out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges
and disbursements of Xxxxxxx and Xxxxxx, your special counsel, duplicating
and printing costs and charges for shipping the Notes, adequately insured
to you at your home office or at such other place as you may designate.
The Company also agrees to pay directly reasonable attorney's fees incurred
by any holder of the Notes in evaluating any controversy and enforcing such
holder's rights and remedies under this Agreement and all expenses relating
to any amendment, waiver or consent pursuant to the provisions hereof
(whether or not the same are actually executed and delivered), including,
without limitation, any amendment, waiver or consent resulting from any
work-out, renegotiation, restructuring or similar proceedings relating to
the performance by the Company of its obligations under this Agreement and
the Notes. The Company also agrees that it will pay and save you harmless
against any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be payable in
connection with the execution and delivery of this Agreement or the Notes,
whether or not any Notes are then outstanding. The Company agrees to
protect and indemnify you against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement except for
any and all brokerage fees and commissions incurred by any Person employed
by you in connection with the consummation of this transaction. Without
limiting the foregoing, the Company agrees to pay the cost of obtaining a
private placement number for the Notes and authorizes the submission of
such information as may be required by Standard & Poor's for the purpose of
obtaining such number.
SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No
delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof, nor shall any single
or partial exercise of the same preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies of the holder of any Note are cumulative to and are not exclusive
of any rights or remedies any such holder would otherwise have, and no
waiver or consent, given or extended pursuant to 7 hereof, shall
-38-
extend to or affect any obligation or right not expressly waived or
consented to.
SECTION 9.6. NOTICES. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by prepaid
overnight air courier, or by facsimile communication addressed to you at
your address appearing on Schedule I to this Agreement or such other
address as you or the subsequent holder of any Note initially issued to you
may designate to the Company in writing, and if to the Company, delivered
or mailed by prepaid overnight air courier or by facsimile communication,
in each case to the Company at 000 00xx Xxxxxx X.X., Xxxxx Xxxxxx, Xxxxxxxx
00000, facsimile (000) 000-0000, facsimile confirmation (000) 000-0000,
Attention: Senior Vice President, or to such other address as the Company
may in writing designate to you or to a subsequent holder of the Note
initially issued to you; PROVIDED, HOWEVER, that a notice to you by
overnight air courier shall only be effective if delivered to you at a
street address designated for such purpose in Schedule I; a notice to you
by facsimile communication shall only be effective if made by confirmed
transmission to you at a telephone number designated for such purpose in
Schedule 1, or, in either case, as you or a subsequent holder of any Note
initially issued to you may designate to the Company in writing; and a
notice to the Company by facsimile communication shall only be effective if
made by confirmed transmission to the Company at the telephone numbers set
forth above or at any other telephone numbers the Company may designate to
you in writing.
SECTION 9.7. REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by you at the closing of your purchase of the Notes (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that any such
legible 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 that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 9.8. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to
your benefit and to the benefit of your successors and assigns, including
each successive holder or holders of any Notes.
SECTION 9.9. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All
covenants, representations and warranties made by the Company and you
-39-
herein and in any certificates delivered pursuant hereto, whether or not in
connection with the Closing Date, shall survive the closing and the
delivery of this Agreement and the Notes.
SECTION 9.10. SEVERABILITY. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity
of any remaining portion, which remaining portion shall remain in force and
effect as if this Agreement had been executed with the invalid portion
thereof eliminated and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this
Agreement without including therein any such part, parts, or portion which
may, for any reason, hereafter be declared invalid or unenforceable.
SECTION 9.11. GOVERNING LAW. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with
Michigan law.
SECTION 9.12. CAPTIONS. The descriptive headings of the various
sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
-40-
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement
SPARTAN STORES, INC.
By _____________________________________
Its Senior Vice President and
Chief Financial Officer
-41-
Accepted and agreed to
as of _______________, 1993.
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By _____________________________________
Its__________________________________
-42-
