EXHIBIT 4.1
66
VIRGINIA GAS COMPANY
8.50% SENIOR NOTES DUE DECEMBER 31, 2012
PPN: 927814 A* 4
--------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
--------------------------------------------------------------------------------
Dated as of March 19, 1998
67
TABLE OF CONTENTS
-----------------
PARAGRAPH PAGE
1. AUTHORIZATION; RANKING ................................................................1
1.1 AUTHORIZATION OF ISSUE OF THE NOTES..................................1
1.2 RANKING..............................................................1
2. PURCHASE AND SALE OF THE NOTES.........................................................1
3. CLOSING................................................................................1
4. CONDITIONS OF CLOSING..................................................................2
4.1 REPRESENTATION AND WARRANTIES........................................2
4.2 MATERIAL ADVERSE CHANGE..............................................2
4.3 PERFORMANCE; NO DEFAULT..............................................2
4.4 COMPLIANCE CERTIFICATES..............................................2
4.5 OPINION OF COMPANY COUNSEL...........................................2
4.6 OPINION OF PURCHASERS' SPECIAL COUNSEL...............................2
4.7 PURCHASE PERMITTED BY APPLICABLE LAWS................................3
4.8 SALE OF ALL NOTES....................................................3
4.9 PAYMENT OF SPECIAL COUNSEL FEES......................................3
4.10 PRIVATE PLACEMENT NUMBER.............................................3
4.11 CHANGES IN ORGANIZATIONAL STRUCTURE..................................3
4.12 WHOLLY-OWNED SUBSIDIARIES'GUARANTY...................................3
4.13 PLEDGE OF EQUITY INTERESTS...........................................3
4.14 DOCUMENTS AND PROCEEDINGS............................................3
4.15 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS..........................3
5. REPRESENTATIONS AND WARRANTIES.........................................................3
5.1 ORGANIZATION, ETC....................................................3
5.2 STOCK OWNERSHIP......................................................4
5.3 DISCLOSURE...........................................................4
5.4 FINANCIAL STATEMENTS.................................................5
5.5 CONFLICTING AGREEMENTS AND OTHER MATTERS. ..........................5
5.6 GOVERNMENTAL AUTHORIZATIONS, ETC.....................................5
5.7 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS............5
5.8 TAX RETURNS AND PAYMENTS.............................................5
5.9 TITLE TO PROPERTIES..................................................6
5.10 ERISA................................................................6
5.11 OFFERING OF NOTES....................................................7
5.12 REGULATION G, ETC....................................................7
5.13 EXISTING INDEBTEDNESS; FUTURE LIENS..................................7
5.14 STATUS UNDER CERTAIN FEDERAL STATUTES; FOREIGN ASSET CONTROL.........8
5.15 COMPLIANCE WITH LAWS, ETC............................................8
5.16 ENVIRONMENTAL MATTERS................................................8
5.17 FINANCIAL CONDITION..................................................9
6. REPRESENTATIONS OF THE PURCHASERS......................................................9
i
7. PREPAYMENT, REPAYMENT AND REDEMPTION..................................................10
7.1 SCHEDULED REPAYMENT OF NOTES........................................11
7.2 OPTIONAL PREPAYMENT OF NOTES WITH MAKE-WHOLE AMOUNT.................11
7.3 PAYMENTS PRO RATA; APPLICATION OF PAYMENTS..........................11
7.4 MATURITY; SURRENDER, ETC............................................11
7.5 PURCHASE, REDEMPTION AND RETIREMENT OF NOTES........................11
7.6 MAKE-WHOLE AMOUNT...................................................11
8. AFFIRMATIVE COVENANTS.................................................................13
8.1 FINANCIAL AND OTHER REPORTING BY THE COMPANY........................14
8.2 INFORMATION REQUIRED BY RULE 144A...................................14
8.3 INSPECTION OF PROPERTY..............................................15
8.4 COMPLIANCE WITH LAWS, ETC...........................................15
8.5 INSURANCE...........................................................15
8.6 MAINTENANCE OF PROPERTIES AND LEASES................................15
8.7 CORPORATE EXISTENCE, ETC............................................15
8.8 PAYMENT OF TAXES AND CLAIMS.........................................16
8.9 SCOPE OF BUSINESS...................................................16
8.10 USE OF PROCEEDS.....................................................16
8.11 ENVIRONMENTAL COMPLIANCE............................................16
8.12 MAINTENANCE OF BOOKS AND RECORDS....................................16
8.13 DELIVERY OF GUARANTEE AND PLEDGE....................................17
8.14 VIRGINIA GAS PIPELINE COMPANY.......................................17
9. NEGATIVE COVENANTS....................................................................17
9.1 FINANCIAL COVENANTS.................................................17
9.2 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENT.......................18
9.3 LIENS...............................................................18
9.4 SALE OF STOCK, EQUITY INTEREST......................................20
9.5 MERGER AND SALE OF ASSETS...........................................20
9.6 SUBSIDIARY DIVIDEND AND OTHER RESTRICTIONS..........................21
9.7 TRANSACTIONS WITH AFFILIATES........................................21
9.8 SALES OF RECEIVABLES................................................21
9.9 SUBSIDIARY DEBT.....................................................22
9.10 COMPLIANCE WITH ERISA...............................................22
EVENTS OF DEFAULT........................................................................23
11. REMEDIES ON DEFAULT, ETC..............................................................24
11.1 ACCELERATION........................................................24
11.2 OTHER REMEDIES......................................................25
11.3 RESCISSION OF ACCELERATION..........................................25
11.4 NOTICE OF ACCELERATION OR RESCISSION................................25
11.5 NO WAIVERS OR ELECTION OF REMEDIES..................................25
12. REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES.............................25
12.1 REGISTRATION........................................................25
12.2 TRANSFER AND EXCHANGE...............................................26
12.3 REPLACEMENT.........................................................26
13. PAYMENTS ON NOTES.....................................................................26
ii
13.1 PLACE OF PAYMENT....................................................26
13.2 HOME OFFICE PAYMENT.................................................26
13.3 NO DEDUCTION OR SET-OFF.............................................26
14. EXPENSES..............................................................................27
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........................27
16. AMENDMENT AND WAIVER..................................................................27
16.1 REQUIREMENTS........................................................27
16.2 SOLICITATION OF HOLDERS OF NOTES....................................28
16.3 BINDING EFFECT, ETC.................................................28
17. NOTICES...............................................................................28
18. REPRODUCTION OF DOCUMENTS.............................................................29
19. CONFIDENTIAL INFORMATION..............................................................29
20. SUBSTITUTION OF PURCHASER.............................................................29
21. MISCELLANEOUS.........................................................................30
21.1 SUCCESSORS AND ASSIGNS..............................................30
21.2 PAYMENTS DUE ON NON-BUSINESS DAYS...................................30
21.3 SEVERABILITY........................................................30
21.4 CONSTRUCTION........................................................30
21.5 COUNTERPARTS........................................................30
21.6 DESCRIPTIVE HEADINGS................................................30
21.7 GOVERNING LAW.......................................................30
21.8 CONSENT TO JURISDICTION AND SERVICE AND WAIVER OF TRIAL BY JURY.....30
21.9 TERMINATION.........................................................31
21.10 COMPLIANCE BY SUBSIDIARIES..........................................31
iii
iv
SIGNATURE PAGE.................................................................................32
v
SCHEDULES AND EXHIBITS
EXHIBIT A - Form of Note
EXHIBIT B - Opinion of Counsel to the Company
EXHIBIT C - Form of Subsidiaries' Guaranty
EXHIBIT D - Pledge Agreement
SCHEDULE A - Purchasers
SCHEDULE B - Definitions
SCHEDULE 3 - Wiring Instructions
SCHEDULE 5.1 - Organization; Foreign Qualifications; Etc.
SCHEDULE 5.2 - Ownership of Stock
SCHEDULE 5.3 - Disclosure Matters
SCHEDULE 5.4 - Financial Statements
SCHEDULE 5.7 - Litigation, Etc.
SCHEDULE 5.13 - Existing Debt
SCHEDULE 5.16 - Environmental Matters
SCHEDULE 8.9 - Scope of Business
SCHEDULE 8.10 - Use of Proceeds
SCHEDULE 9.3 - Existing Liens
SCHEDULE 9.7 - Transactions with Affiliates
vi
VIRGINIA GAS COMPANY
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
March 19, 1998
To: The Purchasers Listed
on SCHEDULE A
Gentlemen:
The undersigned, Virginia Gas Company, a Delaware corporation, (together
with any surviving or acquiring entity in any merger or consolidation with the
Company permitted by PARAGRAPH 9.5, the "COMPANY") agrees with you as follows:
1. AUTHORIZATION; RANKING
1.1 AUTHORIZATION OF ISSUE OF THE NOTES. The Company will authorize the
issue and sale of $24,000,000 in aggregate principal amount of its 8.50%
Senior Notes , to be dated the date of issue, to mature on December 31, 2012,
to bear interest on the unpaid principal balance from the date of issue until
the principal shall have become due and payable at the rate of 8.50% per
annum (computed on the basis of a 360-day year of twelve 30 day months),
payable quarterly in arrears, and to bear interest on overdue principal,
overdue Make Whole Amount and, to the extent permitted by law, overdue
interest, at the rate of 10.50% per annum payable on demand, which notes
shall be in the form of EXHIBIT A (together with all notes issued in
substitution, replacement or exchange therefor in accordance with the terms
of this Agreement, the "NOTES"). Certain capitalized terms used in this
Agreement are defined in SCHEDULE B and PARAGRAPH 7.6; references to a
"SCHEDULE" or an "EXHIBIT" are, unless otherwise specified, to a SCHEDULE or
an Exhibit attached to this Agreement.
1.2 RANKING. The Notes shall rank PARI PASSU with each other, will
constitute the direct senior obligations of the Company and will rank not less
than pari passu in priority of payment with all other outstanding Debt of the
Company, present or future, except for Debt which is preferred as a result of
being secured (but only to the extent such security is not prohibited by
PARAGRAPH 9.3 and then only to the extent of such security).
2. PURCHASE AND SALE OF THE NOTES.
Subject to the terms and conditions of this Agreement, the Company shall
sell to each of you (individually a "PURCHASER" and collectively, the
"PURCHASERS"), and each Purchaser shall purchase from the Company, Notes of
principal amount specified below such Purchaser's name in SCHEDULE A, at a price
equal to 100% of such principal amount, registered in such Purchaser's name or
that of the Purchasers' nominee or nominees as specified in SCHEDULE A.
Notwithstanding the foregoing, each Purchaser's obligations under this Agreement
are several and not joint obligations and no Purchaser shall have any obligation
or liability for the performance or non-performance by any other Purchaser of
such other Purchaser's obligations under this Agreement.
3. CLOSING
The purchase and sale of the Notes shall take place at the offices of
Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
at a closing (the "CLOSING") to be held on March 19, 1998 or on such
1
other Business Day as the Purchasers and the Company may agree (the "CLOSING
Date"). At the Closing, the Company will deliver to each Purchaser, the Notes to
be purchased by it, against payment of the purchase price therefor by transfer
of immediately available funds to the Company in accordance with the wiring
instructions set forth on SCHEDULE 3. If at the Closing, the Company fails to
tender any Notes to any Purchaser as provided in this PARAGRAPH 3, or if any of
the conditions specified in PARAGRAPH 4 shall not have been fulfilled to a
Purchaser's satisfaction or waived by such Purchaser, such Purchaser may, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
non-fulfillment.
4. CONDITIONS OF CLOSING. Each Purchaser's obligation to purchase and pay for
its Notes is subject to the fulfillment to its satisfaction or its written
waiver, at or before the Closing, of the following conditions:
4.1 REPRESENTATION AND WARRANTIES. The representations and warranties of
the Company in this Agreement, the other Transaction Documents and any
certificates delivered at Closing to the Purchasers in connection therewith
shall be correct when made and at the time of the Closing.
4.2 MATERIAL ADVERSE CHANGE. Since December 31, 1996, except to the extent
specifically described in SCHEDULE 4.2, there has been no material adverse
change in the Company's business, assets, liabilities, financial condition or
results of operations. To the Company's knowledge, there is no event known to
the Company which could reasonably be expected to have a Material Adverse
Effect.
4.3 PERFORMANCE; NO DEFAULT. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement required to
be performed or complied with by it prior to or at the Closing and after
giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by SCHEDULE 8.10) no Default or Event of
Default shall have occurred and be continuing. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the most
recent of the Financial Statements that would have been prohibited by
PARAGRAPHS 9.2 or 9.6 had this Agreement been in effect since such date.
4.4 COMPLIANCE CERTIFICATES.
(a) The Company shall have delivered to the Purchasers an Officer's
Certificate, dated the date of the Closing, certifying that the conditions
specified in PARAGRAPHS 4.1, 4.2, 4.3 and 4.11 have been fulfilled.
(b) The Company and each Subsidiary shall have delivered to the
Purchasers a certificate from its Secretary certifying as to its organizational
documentation and the resolutions and other proceedings relating to the
authorization, execution and delivery of the Transaction Documents to which it
is a party.
4.5 OPINION OF COMPANY COUNSEL. The Purchasers shall have received an
opinion, in form and substance satisfactory to them, dated the Closing Date
and addressed to them, from Bright & Xxxxxx, a Professional Corporation,
counsel to the Company, covering the matters set forth in EXHIBIT B and such
other matters as any Purchaser or Special Counsel may reasonably request.
To the extent that any opinion referred to in this PARAGRAPH 4.5 is rendered in
reliance upon the opinion of any other counsel, the Purchasers shall have
received a copy of the opinion of such other counsel, dated the Closing Date and
addressed to them, or a letter from such other counsel, dated the Closing Date
and addressed to them, authorizing them to rely on such other counsel's opinion.
4.6 OPINION OF PURCHASERS' SPECIAL COUNSEL. The Purchasers shall have received
from Special Counsel an opinion satisfactory to them as to such matters
incident to the transactions contemplated by this Agreement as they may
reasonably request.
2
4.7 PURCHASE PERMITTED BY APPLICABLE LAWS. On the date of the Closing, each
Purchaser's purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which it is subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as
to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Section 5 of the
Securities Act or Regulation G, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
a Purchaser, such Purchaser shall have received an Officer's Certificate
certifying as to such matters of fact as a Purchaser may reasonably specify
to enable it to determine whether such purchase is so permitted.
4.8 SALE OF ALL NOTES. At the Closing, the Company shall have sold to each
Purchaser, and each Purchaser shall have purchased, the Notes to be purchased
by it as set forth in SCHEDULE A.
4.9 PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the provisions of
PARAGRAPH 14, the Company shall have paid, at or before the Closing, the
fees, charges and disbursements of Special Counsel (which may include a
reasonable reserve for anticipated fees and expenses for closing the
transactions contemplated hereby) to the extent reflected in a statement of
Special Counsel rendered to the Company at least one Business Day prior to
the Closing.
4.10 PRIVATE PLACEMENT NUMBER. A Private Placement Number shall have been
assigned to the Notes by Standard & Poor's CUSIP Service Bureau.
4.11 CHANGES IN ORGANIZATIONAL STRUCTURE. The Company shall not have
changed its jurisdiction of organization or been a party to any merger or
consolidation or succeeded to all or any substantial part of the liabilities
of any other Person at any time after the date of the most recent Financial
Statements.
4.12 WHOLLY-OWNED SUBSIDIARIES' GUARANTY. Each Wholly-Owned Subsidiary of
the Company (other than Virginia Gas Pipeline Company) shall have executed and
delivered to the Purchasers the Guaranty in the form of EXHIBIT G (the
"SUBSIDIARIES' GUARANTY") and the Subsidiaries' Guaranty shall be in full force
and effect.
4.13 PLEDGE OF EQUITY INTERESTS. The Company and each Wholly-Owned
Subsidiary shall have pledged any Equity Interests owned by it in any Subsidiary
(other than Wholly-Owned Subsidiary) for the benefit of the Holders pursuant to
a Pledge Agreement in the form of EXHIBIT C (the "PLEDGE AGREEMENT") and the
Pledge Agreement shall be in full force and effect.
4.14 DOCUMENTS AND PROCEEDINGS. All proceedings taken or to be taken in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident thereto shall be satisfactory to the
Purchasers and Special Counsel, and the Purchasers shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
4.15 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. The Purchasers shall have
received written evidence satisfactory to them that CT Corporation has been
appointed, and has accepted such appointment, by the Company as its agent for
service of process in the Commonwealth of Massachusetts and that CT
Corporation has agreed to provide the Purchasers with not less than 30 days'
prior notice of any termination of such appointment.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants that:
5.1 ORGANIZATION, ETC. (i) The Company and each Subsidiary is duly
organized, validly existing and in
3
good standing under the laws of the jurisdiction of its organization and is
qualified and in good standing in each jurisdiction in which it is required to
be qualified to do business (other than those jurisdictions in which the failure
to be so qualified, individually and in aggregate, could not reasonably be
expected to have a Material Adverse Effect) and has all requisite corporate and
other power and authority to own, operate and lease its property and to carry on
its business as now being conducted and which it proposes to conduct. The
Company has all requisite power and authority to execute, deliver and perform
each Transaction Document and to issue and sell the Notes. Each Subsidiary has
all requisite power and authority to execute, deliver and perform each
Transaction Document to which it is a party. SCHEDULE 5.1 correctly identifies
the correct legal name, the jurisdiction of organization, the jurisdictions in
which qualified to do business and the officers and directors of each
Subsidiary.
(ii) Each Transaction Document to which the Company is a party has
been duly authorized by all necessary corporate action on the part of the
Company and has been (or will have been as of the Closing Date) duly
executed and delivered by an authorized officer of the Company and
constitutes (or will constitute upon execution thereof by the Company) the
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(iii) Each Transaction Document to which a Subsidiary is a party has
been duly authorized by all necessary corporate action on the part of each
such Subsidiary, has been (or will have been as of the Closing Date) duly
executed and delivered by an authorized officer of each such Subsidiary and
constitutes (or will constitute upon execution thereof by each such
Subsidiary) the legal, valid and binding obligation of such Subsidiary,
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law).
5.2 STOCK OWNERSHIP. (i) All of the outstanding capital stock,
or other equity interest, of each Subsidiary is validly issued, fully paid and
non-assessable and is now owned and will be owned immediately prior to the
Closing, of record and beneficially, in the amounts and by the Persons as set
forth in SCHEDULE 5.2, free and clear of any Lien of any kind.
(ii) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement and customary
limitations imposed by corporate law statutes) restricting the ability of
such Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or to any other Subsidiary of the
Company.
(iii) Except as set forth in SCHEDULE 5.2, no Subsidiary has any
outstanding rights, options, warrants or other agreements which would
require it to issue any additional shares of its capital stock after the
Closing Date.
5.3 DISCLOSURE. Except as disclosed in SCHEDULE 5.3, the Transaction
Documents, the Financial Statements and the other documents, certificates and
statements furnished to the Purchasers by or on behalf of the Company or any
Subsidiary in connection herewith taken as a whole do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which they are made, not misleading. Except as expressly
described in SCHEDULE 5.3, or in one of the documents, certificates or other
writings identified therein, or in the Financial Statements, since December
31, 1996, there has been no adverse change in the financial condition,
operations, business, properties or prospects of the Company and each
Subsidiary, taken as a whole, except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
4
5.4 FINANCIAL STATEMENTS. The Company has delivered to the Purchasers the
financial statements of the Consolidated Group listed on SCHEDULE 5.4, which
collectively, with their related schedules and notes, are referred to in this
Agreement as the "FINANCIAL STATEMENTS". The Financial Statements fairly
present in all material respects the financial condition of the Consolidated
Group as of the respective dates thereof and the results of its operations
and cash flows for the respective periods specified thereby. The Financial
Statements have been prepared in accordance with GAAP, consistently applied
throughout the periods involved except as set forth in the notes thereto.
5.5 CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor any
Subsidiary is in violation of any term of its charter or by-laws or other
organizational documents, or in violation or breach of any term of any
agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation (including any
Environmental Law) to which it is a party or to which it is subject which
default or violation, individually or in the aggregate, has or is reasonably
expected to have, a Material Adverse Effect. The execution and delivery of
the Transaction Documents and the offering, issuance and sale of the Notes
and fulfillment of and compliance with the terms and provisions of the
Transaction Documents do not and will not conflict with the provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary pursuant to its charter or by-laws or other organizational
documents, any award of any arbitrator or any agreement (including any
agreement with stockholders or other equity holders), instrument, order,
judgment, decree, statute, law, rule or regulation to which it is subject,
except for defaults under, conflicts with, or violations of, any such awards,
agreements, instruments, orders, judgements, decrees, laws, rules or
regulations which are not material in nature and which individually and in
the aggregate do not, and are not reasonably expected to, have a Material
Adverse Effect. Neither the Company nor any Subsidiary is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
Debt, any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, any Debt of the Company to be evidenced by
the Notes.
5.6 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or authorization
of, or registration, filing or declaration with, any Governmental Authority
is required in connection with the execution, delivery or performance by the
Company of this Agreement or the Company's offer, issuance and sale of the
Notes.
5.7 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in SCHEDULE 5.7, there are no actions, suits or
proceedings pending and publicly filed or, to the knowledge of the Company,
otherwise pending or threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.8 TAX RETURNS AND PAYMENTS. The Company and each Subsidiary has filed all
federal, state, local and foreign income tax returns, franchise tax returns,
real and personal property tax returns and other tax returns required by law
to be filed by or on its behalf, or with respect to its properties or assets,
and all Taxes, assessments and other governmental charges imposed upon the
Company and each Subsidiary or the properties, assets, income or franchises
of the Company and each Subsidiary which are due and payable have been paid,
other than those (i) the amount of which is not, individually or in the
aggregate, Material or (ii) presently being contested in good faith by
appropriate proceedings
5
diligently conducted and for which such reserves or other appropriate
provisions, if any, as may be required by GAAP have been made. The charges,
accruals and reserves on the books of the Company and each Subsidiary in respect
of Taxes for all fiscal periods are adequate and the Company knows of no unpaid
assessment on the Company or any Subsidiary for additional Taxes for any period
or any basis for any such assessment that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
5.9 TITLE TO PROPERTIES.
(a) The Company and each Subsidiary has good and sufficient title to
all of its properties and assets reflected in the most recent audited
balance sheet for the Consolidated Group included in the Financial
Statements or purported to have been acquired by the Company or a
Subsidiary after such date (other than properties and assets disposed of
since such date in the ordinary course of business), in each case free of
any Lien not permitted by PARAGRAPH 9.3.
(b) The Company and each Subsidiary enjoys peaceful and undisturbed
possession under all leases which are Material and all such leases are
valid and subsisting and are in full force and effect in all material
respects.
(c) The Company and each Subsidiary owns or has the right to use
(under agreements or licenses which are in full force and effect) all
Intellectual Property necessary for it to conduct its business as currently
conducted, without any known conflict with the rights of others. To the
Company's knowledge, neither the Company nor any Subsidiary is infringing
upon any Intellectual Property owned by any other Person and there is no
violation by any Person of any right of the Company or any Subsidiary with
respect to any Intellectual Property owned or used by the Company or any
Subsidiary which is Material.
5.10 ERISA.
(a) The Company and each Subsidiary and each ERISA Affiliate has
operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and
could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company, any Subsidiary nor any ERISA Affiliate has incurred
any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred
or exists that could reasonably be expected to result in the incurrence of
any such liability by the Company, any Subsidiary or any ERISA Affiliate,
or in the imposition of any Lien on any of the rights, properties or assets
of the Company, any Subsidiary or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be, individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under any
of the Plans that is subject to Title IV of ERISA (other than Multiemployer
Plans), determined as of the end of such Plan's most recently ended plan
year on the basis of the actuarial assumptions specified for funding
purposes in such Plan's most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term "BENEFIT LIABILITIES" has the meaning
specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in Section 3 of ERISA.
(c) Neither the Company, any Subsidiary nor any ERISA Affiliate has
incurred withdrawal liabilities (and neither the Company, any Subsidiary
Group nor any ERISA Affiliate is subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
6
(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard
to liabilities attributable to continuation coverage mandated by section
490B of the Code) of the Company and each Subsidiary is not Material.
(e) The execution and delivery of the Transaction Documents, the
issuance and sale of the Notes and the consummation of the transactions
contemplated by the Agreement will not involve a transaction which is
subject to the prohibitions of Section 406 of ERISA or in connection with
which a Tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Code. The representation in the preceding sentence is made in reliance upon
and subject to the accuracy of the Purchasers' representations in PARAGRAPH
6(B) as to the source of the funds to be used to pay the purchase price of
the Notes.
5.11 OFFERING OF NOTES. Neither the Company nor anyone acting on its
behalf has, directly or indirectly, offered the Notes or similar
securities for sale to, or solicited any offers to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Purchasers, each of which has been offered the
Notes at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken or will take any action which would
subject the issuance or sale of the Notes to the provisions of Section 5
of the Securities Act or to the registration provisions of any
securities or Blue Sky law of any applicable jurisdiction. As of the
Closing Date, the Notes will not be of the same class as securities of
the Company listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system, within the meaning of Rule 144A.
5.12 REGULATION G, ETC. None of the proceeds of the sale of the Notes
will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any margin
stock within the meaning of Regulation G of the Board of Governors of
the Federal Reserve System (12 CFR Part 207) or for the purpose of
buying or carrying or trading in any securities under such circumstances
as to involve the Company in a violation of Regulation X of such Board
(12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of such Board (12 CFR 220). Margin stock does not
constitute more than 25% of the value of the assets of the Consolidated
Group or of the Company and the Company has no present intention that
margin stock will constitute more than 25% of the value of its or the
Consolidated Group's assets. As used in this PARAGRAPH 5.12, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the
meanings assigned to them in said Regulation G.
5.13 EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) SCHEDULE 5.13 sets forth a complete and correct list of all
outstanding Debt of the Company and each Subsidiary as of the Closing Date
both immediately before and after the application of the proceeds of the
Notes as set forth in PARAGRAPH 8.10 and a list of each instrument or
agreement evidencing or otherwise governing the terms and conditions of
such Debt. The Company has previously delivered to Special Counsel true,
correct and complete copies of each instrument or agreement listed on
SCHEDULE 5.13. Neither the Company nor any Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal
or interest on any such Debt and no event or condition exists with respect
to any such Debt that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.
(b) Neither the Company nor any Subsidiary has agreed or consented to
cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by PARAGRAPH 9.3.
7
5.14 STATUS UNDER CERTAIN FEDERAL STATUTES; FOREIGN ASSET CONTROL. Neither
the Company nor any Subsidiary is subject to regulation under the Investment
Company Act of 1940, as amended or the Public Utility Holding Company Act of
1935, as amended. Neither the sale of the Notes hereunder nor the use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.15 COMPLIANCE WITH LAWS, ETC. The Company and each Subsidiary is in
compliance with the requirements of all applicable laws, rules, regulations
and orders of any Governmental Authority (including, without limitation, the
Occupational Safety and Health Act of 1970, as amended, ERISA and any
Environmental Laws), and has in effect all licenses, certificates, permits,
franchises, filing and other governmental authorizations necessary to the
ownership of its properties or to the conduct of its businesses, in each case
to the extent failure does not, and could not reasonably be expected,
individually and in the aggregate, to have a Material Adverse Effect.
5.16 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 5.16, there are
no claims and neither the Company nor any Subsidiary has received any notice
of any claim, and no proceeding has been instituted raising any claim,
against or involving the Company or any Subsidiary or any of their respective
real properties now or formerly owned, leased, occupied or operated by the
Company or any Subsidiary or other assets, alleging any damage to the
environment or violation of or liability under any Environment Laws. Neither
the Company nor any Subsidiary has received any request for information or
similar inquiry with respect to any property now or formerly owned, leased,
operated or occupied by the Company or any Subsidiary or with respect to any
off-site location to or at which Hazardous Materials used or generated by the
Company or any Subsidiary have been transported or disposed or have come to
be located.
Except as otherwise disclosed in SCHEDULE 5.16:
(i) the Company has no knowledge of any facts which would give
rise to any claim, public or private, of violation of or liability
under Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
owned, leased, occupied or operated by the Company or any Subsidiary
or relating to any other assets of the Company or any Subsidiary or
its use, or any disposal of release of Hazardous Materials used or
generated by the Company or any Subsidiary except, in each case, such
as could not reasonably be expected to result in a Material Adverse
Effect;
(ii) neither the Company nor any Subsidiary has stored or
disposed of any Hazardous Materials on real properties now or formerly
owned, leased, occupied or operated by the Company or any Subsidiary
and has disposed of any Hazardous Materials in a manner which could
reasonably be expected to have a Material Adverse Effect and in any
event, in violation of any Environmental Laws;
(iii) all buildings on all real properties now owned, leased,
occupied or operated by the Company or any Subsidiary are in
compliance with applicable Environmental Laws, except where failure to
comply could not reasonably be expected to result in a Material
Adverse Effect; and
(iv) the Company and each Subsidiary have obtained all permits,
licenses and other authorizations and has made all filings,
registrations and other submittals which are required of it under all
Environmental Laws (except to the extent failure to have any such
permits, licenses or authorizations or to have made any such filings,
registrations or submittals individually and in the aggregate does
not, and is not reasonably expected to, result in a Material Adverse
Effect) and the Company and each Subsidiary is in compliance with all
Environmental Laws and with the terms and conditions of all such
permits, licenses, authorizations, filings, registrations and
submittals and in compliance with all applicable orders, decrees,
judgments and injunctions, issued, entered,
8
promulgated or approved under any Environmental Law (except to the
extent failures to comply, individually and in the aggregate do not,
and are not reasonably expected in the future, to result in a Material
Adverse Effect).
(v) Other than releases which have occurred in de minimis
quantities and in the ordinary course of business which in the
aggregate are not material, no release of Hazardous Materials has
occurred on any property now or formerly owned, leased, operated or
occupied by the Company or any Subsidiary in a manner which could
reasonably be expected to require remediation, cleanup or other
response by the Company or any Subsidiary under any applicable
Environmental Law.
(vi) The Company has provided to the Purchasers true and complete
copies of all environmental assessment reports in the possession of
the Company or any Subsidiary which relate to the Company or any
Subsidiary or to any property owned, leased, operated or occupied by
the Company or any Subsidiary.
(vii) To the knowledge of the Company, no property or facility to
or at which the Company or any Subsidiary has, directly or indirectly,
disposed of, or arranged for the disposal of any Hazardous Materials
is currently on or formally proposed for listing on any federal or
state "Superfund" list or is the subject of any investigation in
connection with or related to the release of Hazardous Materials.
(viii) No underground storage tanks, polychlorinated biphenyls or
friable asbestos are currently located at or have been released at or
from any property now owned, leased, operated or occupied by the
Company or any Subsidiary.
5.17 FINANCIAL CONDITION. After giving effect to the transactions
contemplated hereby, (i) the aggregate present fair saleable value of the
assets of the Company will be greater than the amount that will be required
to pay the probable liabilities of the Company on its debts, including
contingent liabilities, as they become absolute and mature; (ii) the Company
has (and has no reason to believe that it will not have) sufficient capital
for the conduct of its business as presently conducted; and (iii) the Company
does not intend to incur, or believe it has incurred, debts beyond its
ability to pay as they mature.
5.18 SECURITIES FILINGS. All reports and statements required to be filed by
the Company with the SEC since October 4, 1996, at the time filed or, if
amended, as of the date of the last such amendment, conformed in all material
respects to the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations promulgated thereunder
and did not include at the time of filing or, if amended, as of the date of the
last such amendment, such documents any untrue statement of a material fact or
omit to state any material fact required to be stated or necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading and the consolidated financial statements of the Company and the
Consolidated Group included therein comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Since October 4, 1996, the Company has not
failed to make any filing required by the Exchange Act on a timely basis.
6. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser represents that:
(a) It is an `accredited investor" (as defined in Rule 501 of the
Securities Act) and it is purchasing its Notes for its own account or for
one or more separate accounts maintained by it or for the account of one or
more pension or trust funds, in each case for investment and not with a
view to the distribution thereof, PROVIDED that the disposition of such
Purchaser's property shall at all times be within its control. The Company
acknowledges that a Purchaser's sale of all or a portion of its Notes to
one or more Qualified Institutional Buyers in compliance with Rule 144A
would not be a breach of this representation.
9
(b) With respect to each source of funds to be used by it to pay the
purchase price of its Notes (respectively, the "SOURCE"), at least one of
the following statements is accurate as of the Closing Date:
(i) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995) and there is no "employee benefit
plan" (within the meaning of Section 3(3) of ERISA or Section
4975(e)(1) of the Code and treating as a single plan all plans
maintained by the same employer or employee organization) with respect
to which the amount of the general account reserves and liabilities
for all contracts held by or on behalf of such plan exceed ten percent
(10%) of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth
in the NAIC Annual Statement filed with the state of domicile of the
Purchaser.
(ii) The Source is either (i) an insurance company pooled
separate account and the purchase is exempt in accordance with PTE
90-1 (issued January 29, 1990), or (ii) a bank collective investment
fund, within the meaning of PTE 91-38 (issued July 21, 1991) and,
except as such Purchaser has disclosed to the Company in writing
pursuant to this CLAUSE (II), no employee benefit plan or group of
plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(iii) The Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition
of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant
to this CLAUSE (III); or
(iv) The Source is a "governmental plan" as defined in Title I,
Section 3(32) of ERISA;
or
(v) The Source is one or more plans or a separate account or
trust fund comprised of one or more plans each of which has been
identified to the Company in writing pursuant to this CLAUSE (V); or
(vi) The Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this PARAGRAPH 6, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. PREPAYMENT, REPAYMENT AND REDEMPTIONPREPAYMENT, REPAYMENT AND REDEMPTION.
The Notes may be prepaid only under the circumstances set forth in
PARAGRAPH 7.2 and shall be repaid in accordance with PARAGRAPH 7.1 and upon
any acceleration of final maturity as provided in PARAGRAPH 11.1.
10
7.1 SCHEDULED REPAYMENT OF NOTES. The Company shall on each March 31,
June 30, September 30 and October 31 beginning in 2003, repay $585,365.85 of
the aggregate unpaid principal amount of the Notes and on December 31, 2012,
shall repay in full all unpaid principal of the Notes, in each case at 100%
of the principal amount so repaid.
7.2 OPTIONAL PREPAYMENT OF NOTES WITH MAKE-WHOLE AMOUNT. The Company may
prepay the Notes in full at any time or in part from time to time (provided
that any partial prepayment shall be of at least $1,000,000 in aggregate
principal amount or a larger principal amount which is an integral multiple
of $500,000), at 100% of the principal amount so prepaid, plus interest
accrued thereon to the Settlement Date and the Make-Whole Amount. The Company
shall give each Holder irrevocable written notice of any prepayment to be
made pursuant to this PARAGRAPH 7.2 at least 30 days, and not more than 60
days, prior to the Settlement Date, (i) specifying the Settlement Date and
the Called Principal of the Notes held by each such Holder (determined in
accordance with PARAGRAPH 7.3), (ii) stating that such prepayment is to be
made pursuant to this PARAGRAPH 7.2, (iii) stating the amount of interest to
be paid on the Settlement Date with respect to such Called Principal and (iv)
providing an estimate of the Make-Whole Amount payable on the Called
Principal of such Xxxxxx's Notes (calculated as if the date of such notice
were the date of prepayment) and setting forth the details of such
computation. Not later than the close of business on the second Business Day
prior to the Settlement Date, the Company shall deliver to the Holder of each
Note, an Officer's Certificate setting forth in detail the calculations used
in determining whether a Make-Whole Amount is payable on such prepayment and
the amount of such Make-Whole Amount.
7.3 PAYMENTS PRO RATA; APPLICATION OF PAYMENTS. Upon any partial prepayment
of the Notes pursuant to PARAGRAPH 7.2 the principal amount so prepaid shall
be allocated among the Holders in proportion to the respective outstanding
principal amounts of the Notes held by them.
7.4 MATURITY; SURRENDER, ETC. In the case of each prepayment of Notes
pursuant PARAGRAPH 7.2, the principal amount of each Note to be prepaid shall
mature and become due and payable on the Settlement Date, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount. From and after such date, unless the Company shall fail to
pay such principal amount when so due and payable, together with the interest
and Make-Whole Amount as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid or repaid principal amount of any Note.
7.5 PURCHASE, REDEMPTION AND RETIREMENT OF NOTES. The Company shall not,
and shall not permit any of its Affiliates to, prepay or otherwise retire any
Note in whole or in part, prior to its stated maturity (other than by
prepayment pursuant to PARAGRAPH 7.2 or upon acceleration of final maturity
pursuant to PARAGRAPH 12.1), or purchase or otherwise acquire, directly or
indirectly, any Note unless the Company or such Affiliate shall have offered
to prepay or otherwise retire, purchase, redeem or otherwise acquire, as the
case may be, the same proportion of the aggregate outstanding principal
amount of Notes held by each other Holder at the time outstanding upon the
same terms and conditions. Any such offer shall provide each Holder with
sufficient information to enable it to make an informed decision with respect
to such offer, and shall remain open for at least 5 Business Days. If the
Required Holders accept such offer, the Company shall promptly notify the
remaining Holders of such fact and the expiration date for the acceptance by
Holders of such offer shall be extended by the number of days necessary to
give each such Holder at least 5 Business Days from its receipt of such
notice to accept such offer. No Notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its Affiliates shall
thereafter be reissued or deemed to be outstanding for any purpose under this
Agreement.
7.6 MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT" means, with respect to
any Note, an amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal,
11
PROVIDED that the Make-Whole Amount may in no event be less than zero. For the
purposes of this PARAGRAPH 7 and determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to PARAGRAPH 7.2 or has become or
is declared to be immediately due and payable pursuant to PARAGRAPH 11.1,
as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, fifty basis points over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page USD" on the Bloomberg
Financial Markets (or such other display as may replace Page USD on
Bloomberg Financial Markets) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, PROVIDED that if such Settlement Date is in
connection with a prepayment pursuant to PARAGRAPH 7.2 and is not a date on
which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to PARAGRAPH 7.2.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
PARAGRAPH 7.2 or has become or is declared to be immediately due and
payable pursuant to PARAGRAPH 11.1, as the context requires.
The Company acknowledges that the Make-Whole Amount due at any optional or
required prepayment of Notes (including any prepayment required pursuant to any
provision of PARAGRAPH 11.1) has been negotiated with
12
the Purchasers to provide a bargained for rate of return on the Purchasers'
investment in the Notes and is not a penalty.
8. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any Note is outstanding;
8.1 FINANCIAL AND OTHER REPORTING BY THE COMPANY. The Company will
deliver to each Holder:
(i) as soon as practicable, and in any event not more than 45
days after the end of each fiscal quarter (other than the fourth
quarter), the unaudited consolidated and consolidating balance sheet of
the Consolidated Group as at the end of such quarter and the related
unaudited consolidated and consolidating statements of operations, cash
flows and stockholders' equity of the Consolidated Group for such
period and for the fiscal year to date, setting forth, in each case in
comparative form, figures for the corresponding period(s) in the
preceding fiscal year, all in reasonable detail and in accordance with
GAAP, and certified by the chief accounting officer or chief financial
officer of the Company as fairly presenting the financial condition of
the Consolidated Group as at the dates indicated and the results of its
operations and cash flows, in each case for the periods indicated, in
conformity with GAAP subject to changes resulting from normal year-end
adjustments;
(ii) as soon as practicable, and in any event not more than 90
days, after the end of each fiscal year of the Company, the
consolidated and consolidating balance sheet of the Consolidated Group
as of the end of such year and the related consolidated and
consolidating statements of operations, cash flows and stockholders'
equity of the Consolidated Group for such year, and setting forth in
each case in comparative form, corresponding figures for the preceding
fiscal year, all in reasonable detail and in accordance with GAAP and
accompanied by an opinion thereon of the Approved Auditor, which
opinion shall be without limitation as to the scope of the audit and
shall state that such financial statements present fairly in all
material respects the consolidated financial condition of the
Consolidated Group as at the dates indicated and the results of their
consolidated operations and cash flows for the periods indicated in
conformity with GAAP (except as otherwise specified in such report) and
that the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and provides a reasonable basis for such opinion;
(iii) together with each delivery of financial statements of
the Consolidated Group pursuant to SUBPARAGRAPHS (I) and (II) of this
PARAGRAPH 8.1, a certificate of the chief financial officer of the
Company (a) stating that the signer has reviewed the terms of the
Transaction Documents and has made, or caused to be made under the
signer's supervision, a review in reasonable detail of the transactions
and condition of the Consolidated Group during the fiscal period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such fiscal period, and
that after reasonable investigation the signer has no knowledge of the
existence as at the date of such certificate, of any condition or event
which constitutes a Default or Event of Default or, if any such
condition or event existed or exists, 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 and (b) demonstrating
compliance by the Company with the provisions of PARAGRAPHS 9.1, 9.2
and 9.5(V), (c) if not specified in the accompanying financial
statements, specifying the aggregate amount of interest paid or accrued
by the Consolidated Group and the aggregate amount of depreciation,
depletion and amortization charged on the books of the Consolidated
Group and (d) identifying the names of each Subsidiary of the Company
included in such financial information;
(iv) promptly and in any event within 5 days after (A) any
Senior Officer becomes aware of the existence of any Default or Event
of Default or (B) any Holder gives notice to the Company or takes any
other action with respect to a claimed Default or Event of Default
under this Agreement, or (C) any Person
13
gives any notice to the Company or any Subsidiary or takes any other
action with respect to a claimed default or event or condition of the
type referred to in CLAUSE (III) of PARAGRAPH 10, an Officer's
Certificate specifying the nature and period of existence of any such
condition or event, or specifying the notice given or action taken by
such Holder or Person and the nature of such claimed Default, Event of
Default, event or condition, and what action the Company has taken, is
taking or proposes to take with respect thereto;
(v) promptly, and in any event within 5 days after any Senior
Officer becomes aware of any of the following, a written notice setting
forth the nature thereof and the action, if any, that the Company or
any ERISA Affiliate proposes to take with respect thereto:
(A) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
(B) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any Subsidiary or any ERISA
Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(C) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any Subsidiary or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the
Company or any Subsidiary or any ERISA Affiliate pursuant to
Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, is reasonably
expected to have a Material Adverse Effect;
(vi) (A) promptly upon their becoming available, copies of (i)
all financial statements, proxy statements, notices and reports as the
Company or any Subsidiary shall send or make available to its security
holders generally and (ii) all registration statements (with exhibits),
prospectuses and all regular or periodic reports which it files with
the SEC or any stock exchange and of all press releases and other
statements made available generally by the Company or any Subsidiary to
the public concerning material developments and (B) promptly after
receipt thereof, copies of any reports, statements and notices the
Company or any Subsidiary may receive in accordance with Section 13(d)
or 14(d) of the Exchange Act or the rules and regulations of any stock
exchange; and
(vii) with reasonable promptness, such other information and
data relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any Subsidiary or
relating to the ability of the Company or any Subsidiary to perform
their obligations under the Transaction Documents or relating to the
ability of the Company or any Subsidiary to comply with the terms of
the Transaction Documents as may from time to time be reasonably
requested by any Holder.
8.2 INFORMATION REQUIRED BY RULE 144A. The Company will, upon the
request of any Holder, provide to such Holder, and any Qualified Institutional
Buyer designated by such Holder, such financial and other information as such
Holder may reasonably determine to be necessary in order to permit compliance
with the information requirements of Rule 144A in connection with a resale or
proposed resale of any Note.
8.3 INSPECTION OF PROPERTY. The Company shall permit the
representatives of any Holder that is an Institutional Investor:
14
(i) if no Default or Event of Default then exists, at the expense of
such Holder and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company or any Subsidiary with the officers of the Company and,
with the consent of the Company, which consent will not be unreasonably withheld
or delayed, the independent public accountants of the Company and, with the
consent of the Company, which consent will not be unreasonably withheld or
delayed, to visit the offices of the Company and any Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(ii) if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the
Company and any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and any Subsidiary), all at such times and as often as may be requested.
8.4 COMPLIANCE WITH LAWS, ETC. The Company and each Subsidiary will
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without limitation, the
Occupational Safety and Health Act of 1970, as amended, ERISA and all
Environmental Laws), and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
businesses, in each case to the extent necessary to ensure that any
non-compliance with such laws, ordinances or governmental rules or regulations
or any failure to obtain or maintain in effect such licenses, permits,
franchises and other governmental authorizations does not, and could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
8.5 INSURANCE. The Company and each Subsidiary will maintain, with
financially sound and reputable insurers, rated at least A or A+ by A.M. Best,
insurance with respect to its properties and business of such types and in such
forms and amounts (including deductibles, co-insurance and self-insurance if
adequate reserves are maintained with respect thereto) and against such risks as
are reasonable and prudent in the circumstances and as are customarily insured
against by Persons of established reputation engaged in the same or similar
business and similarly situated.
8.6 MAINTENANCE OF PROPERTIES AND LEASES. The Company and each
Subsidiary will (i) maintain all its properties in good repair and working order
and condition (other than ordinary wear and tear) so that the business carried
on in connection therewith may be properly conducted at all times and from time
to time make or cause to be made all appropriate repairs, renewals,
replacements, additions and improvements thereof as needed, PROVIDED that this
PARAGRAPH 8.6 shall not prevent either the Company or any Subsidiary from
discontinuing the operation or maintenance of any of their properties if such
discontinuance is desirable in the conduct of their business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) comply in all
material respects with the provisions of all leases or licenses under which it
leases or licenses any such properties to the extent necessary to ensure that
any such non-compliance with such leases or licenses could not reasonably be
expected to have a Material Adverse Effect.
8.7 CORPORATE EXISTENCE, ETC. Except as otherwise specifically
permitted by this Agreement, the Company and each Subsidiary will at all times
preserve and keep in full force and effect their separate legal existence and
all its Material rights and franchises, and qualify and maintain their
qualification to do business and good standing in any jurisdiction, except in
each case where the failure to do so, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
15
8.8 PAYMENT OF TAXES AND CLAIMS.
(a) The Company and each Subsidiary will file all tax returns required
to be filed in any jurisdiction and pay all Taxes shown to be due and payable on
such returns and all other Taxes imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income, sales and
services, or profits when the same become due and payable, but in any event
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which have or might become a Lien upon any
of its properties or assets, PROVIDED, that no such Tax or claim need be paid if
(a) it is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor,
and (b) the failure to pay such Tax or claim could not reasonably be expected,
if such contest were adversely determined, individually or in the aggregate, to
have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary will consent to or permit
the filing of or be a party to any consolidated income tax return on its behalf
with any Person (other than a consolidated return that includes solely the
Consolidated Group).
8.9 SCOPE OF BUSINESS. Neither the Company nor any Subsidiary will
engage to a substantial extent in any business other than the business described
in the SCHEDULE 8.9 and businesses reasonably related thereto or in furtherance
thereof.
8.10 USE OF PROCEEDS. The Company will use the proceeds of the sale of
the Notes only as designated on SCHEDULE 8.10 and not for any purpose which
would violate any applicable law or governmental regulation or which is
otherwise prohibited under PARAGRAPH 5.12.
8.11 ENVIRONMENTAL COMPLIANCE. The Company and each Subsidiary will (i)
obtain and maintain all permits, licenses, and other authorizations that are
required of it under all Environmental Laws other than those which the failure
to obtain or maintain, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, and (ii) comply with all terms and
conditions of all such permits, licenses, and authorizations and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in all Environmental Laws or in
any regulation, ordinance or code applicable to it and any, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder applicable to it, except to the extent of any noncompliance
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect and (iii) operate all property owned or leased or
otherwise used by it such that no claim or obligation, including a clean-up
obligation, which, individually or in the aggregate, with all such other
obligations could reasonably be expected to have a Material Adverse Effect shall
arise under any Environmental Law.
8.12 MAINTENANCE OF BOOKS AND RECORDS. The Company and each Subsidiary
will: (i) keep proper records and books of account with respect to its business
activities in which proper entries are made in the ordinary course of all
dealings or transactions of or in relation to its business and affairs; (ii) set
up on its books adequate reserves with respect to all Taxes, assessments,
charges, levies and claims; and (iii) set up on its books reserves against
doubtful accounts receivable, advances and all other proper reserves (including
reserves for depreciation, obsolescence or amortization of its property). All
determinations pursuant to this PARAGRAPH 8.12 shall be made in accordance with,
or as required by, GAAP in order to fairly reflect all of the financial
transactions of the Company and each Subsidiary. Notwithstanding the foregoing,
the Company and each Subsidiary may make adjustments and changes in the manner
in which its books and records are kept, PROVIDED, that:
(A) all such adjustments and changes shall be required or
permitted by GAAP, but need not conform with the prior accounting
practice of the Company or such Subsidiary or its predecessor;
16
(B) each Holder shall be given written notice of all such
changes or adjustments together with the financial statements required
by CLAUSE (I) of PARAGRAPH 8.1 for the quarter in which such change
occurred, and together with the financial statements required by CLAUSE
(II) of PARAGRAPH 8.1, a year-end listing and description of all such
changes and adjustments and the effect thereof certified by the chief
accounting or chief financial officer of the Company; and
(C) the financial covenants and ratios set forth in PARAGRAPH
9.1 shall continue to be calculated without regard to such adjustments
or changes unless and until the Required Holders have consented
thereto.
8.13 DELIVERY OF GUARANTY AND PLEDGE. Promptly upon, and in any event
within 10 Business Days of, the Company acquiring any Wholly-Owned Subsidiary,
such Wholly-Owned Subsidiary shall become a party to the Subsidiaries' Guaranty;
PROVIDED, if the Company acquires a Subsidiary which is not a Wholly-Owned
Subsidiary, the Company may, in lieu of such Subsidiary becoming a party to the
Subsidiaries' Guaranty, pledge, or caused to be pledged, any Equity Interest it
or any of its other Subsidiaries has in such Subsidiary for the benefit of the
Holders pursuant to the terms of the Pledge Agreement. Promptly, upon and in any
event within 10 Business Days of any Subsidiary becoming a Wholly-Owned
Subsidiary, it shall also become a party to the Subsidiaries' Guaranty. In
either case, the Company shall provide to the Holders evidence satisfactory to
the Required Holders (which, upon the request of the Required Holders, shall
include an opinion of counsel) that the Subsidiaries' Guaranty and/or the Pledge
Agreement remains in full force and effect and is enforceable against such
Subsidiary in accordance with its terms. Upon delivery of such evidence in the
case of a Wholly-Owned Subsidiary becoming a party to the Subsidiaries'
Guaranty, each Holder shall promptly deliver to the Collateral Agent under the
Pledge Agreement, its written consent to the release from the Pledge Agreement
of the Equity Interest of such Subsidiary.
8.14 VIRGINIA GAS PIPELINE COMPANY. Promptly following the Closing
Date, the Company will use its best efforts to promptly obtain such regulatory
consent(s) as are required to permit Virginia Gas Pipeline Company to become a
party to the Subsidiaries' Guaranty and upon obtaining such consent(s) will
cause Virginia Gas Pipeline Company to become a party thereto.
9. NEGATIVE COVENANTS. The Company covenants that for so long as any Note
is outstanding:
9.1 FINANCIAL COVENANTS.
9.1.1 CONSOLIDATED TANGIBLE NET WORTH. Consolidated Tangible Net Worth
shall not, as of the last day of any fiscal quarter ending on or after the
Closing Date, be less than $24,000,000 plus, if such amount is greater than
zero, an amount equal to 25% of Consolidated Net Income for the period after
December 31, 1997, taken as a single accounting period.
9.1.2 LIMITATION ON CONSOLIDATED TOTAL LIABILITIES. As of the last day
of any fiscal quarter ending on or after the Closing Date, the ratio of (a)
Consolidated Total Liabilities to (b) Consolidated Tangible Net Worth shall not
be greater than the ratio set forth below for such fiscal quarter:
Any fiscal quarter ended on or
before December 31, 1998 1.20 to 1.00
Any fiscal quarter ended after
December 31, 1998 and on or
before December 31, 1999 1.10 to 1.00
Any fiscal quarter ended after
December 31, 1999 1.00 to 1.00
17
9.1.3 DEBT SERVICE COVERAGE. As of the last day of any fiscal quarter
ending on or after the Closing Date, the ratio of (a) Consolidated EBITDA to (b)
Consolidated Pro-Forma Debt Service shall not be less than the ratio set forth
below for such fiscal quarter:
Any fiscal quarter ended on or
before December 31, 1998 1.00 to 1.00
Any fiscal quarter ended after
December 31, 1998 and on or
before December 31, 1999 1.50 to 1.00
Any fiscal quarter ended after
December 31, 1999 and on or
before December 31, 2001 1.75 to 1.00
Any fiscal quarter ended after
December 31, 2001 2.00 to 1.00
9.2 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. Neither the Company
nor any Wholly-Owned Subsidiary shall make, declare or incur any liability to
make any Restricted Payments or any Restricted Investment after the Closing Date
other than any Restricted Payment or Restricted Investment if immediately after
giving effect thereto, the aggregate amount of all Restricted Payments made or
declared by the Company and each Subsidiary since the Closing Date plus the
aggregate value of all Restricted Investments at such time (including those made
pursuant to this sentence) does not exceed the sum of (a) 25% of Consolidated
Net Income for each full fiscal year ended after December 31, 1997 (or if
Consolidated Net Income for any such year is a loss, then 100% of Consolidated
Net Income for such year, expressed as a negative number) plus (b) the Net
Proceeds of Eligible Capital Stock received by the Company after December 31,
1997; provided, in either case, (i) no Event of Default or Default exists
immediately before or immediately after making or declaring such Restricted
Payment or Restricted Investment or would otherwise be reasonably expected to
result therefrom and (ii) immediately after giving effect thereto the Company
could incur an additional $1.00 of Debt and not violate the financial covenants
set forth in PARAGRAPH 9.1.
Neither the Company nor any Wholly-Owned Subsidiary shall make, declare
or incur any liability to make any Restricted Investment after the Closing Date
unless (i) no Event of Default or Default exists immediately before or
immediately after making, declaring or incurring liability to make such
Restricted Investment or could reasonably be expected to result therefrom, (ii)
immediately after giving effect thereto the Company could incur an additional
$1.00 of Debt and not violate the financial covenants set forth in PARAGRAPH 9.1
and (iii) if the Restricted Investment is in an Affiliate, the Restricted
Investment is represented by a promissory note the repayment of which is secured
by a perfected, first priority Lien on assets of the Affiliate with a fair
market value at least equal to the principal amount of the promissory note. For
the purpose of this PARAGRAPH 9.2, the value of a Restricted Investment which
constitutes a liability (contingent or otherwise) shall be the maximum amount of
such liability.
9.3 LIENS. Neither the Company nor any Subsidiary shall create, assume
or suffer to exist any Lien on its properties or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom or proceeds of
dispositions thereof, or transfer any property for the purpose of subjecting the
same to the payment of obligations in priority to the payment of its general
creditors without equally and ratably securing the Notes, except for:
(i) Liens, and other charges incidental to the
conduct of its business, or the ownership of its property
(including charges for Taxes or otherwise arising by operation
of law, mechanics', carriers', workers', repairmen's,
warehousers' or other similar Liens), which are not incurred
in
18
connection with the borrowing of money or the securing of
Debt, PROVIDED that, in each case, the obligation secured is
not overdue or is being contested in good faith by appropriate
actions or procedures promptly instituted and diligently
conducted and such reserves as shall be required by GAAP shall
have been made therefor, but only so long as no foreclosure,
distraint, sale or similar proceedings have been commenced
with respect thereto (unless the same shall have been fully
bonded or otherwise effectively stayed);
(ii) Liens arising as a result of any judicial
proceedings with respect to which it shall then, in good faith
and by appropriate actions and procedures promptly instituted
and diligently conducted, be prosecuting appeal or other
proceedings for review and Liens arising from judgments or
decrees not constituting a Default or Event of Default unless,
in either case, such Xxxx remains undischarged, unstayed
pending appeal, unbonded or undismissed for a period of 60
consecutive days and PROVIDED, in either case, such reserves
as shall be required by GAAP shall have been made therefor and
such Liens in the aggregate do not have a Material Adverse
Effect;
(iii) deposits or pledges to secure worker's
compensation, unemployment insurance, old age benefits or
other social security obligations or retirement benefits;
(iv) Liens arising out of deposits in connection
with, or given to secure the performance of leases, bids,
tenders, trade contracts not for the payment of money, or to
secure statutory obligations or surety or appeal bonds,
performance bonds or other pledges or deposits for purposes of
like nature in the ordinary course of business but only so
long as no foreclosure, distraint, sale or similar proceedings
have been commenced with respect thereto (unless the same
shall have been fully bonded or otherwise effectively stayed);
(v) minor survey exceptions or encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or zoning
or other restrictions as to the use of real properties, which
are necessary for the conduct of its activities or which
customarily exist on properties of Persons engaged in similar
activities and similarly situated and which do not in the
aggregate have a Material Adverse Effect or materially impair
the use of such real properties in the operation of its
business;
(vi) Liens on any properties or assets of a
Subsidiary in favor of the Company or a Wholly-Owned
Subsidiary and Liens, if any, securing the Notes;
(vii) Liens existing as of the Closing and described
on SCHEDULE 9.3;
(viii) Liens securing Debt of the Company or any
Wholly-Owned Subsidiary to finance the acquisition of assets
provided that (a) any such Lien is confined solely to the
asset so acquired, (b) the principal amount of the Debt
secured by such Xxxx does not exceed the cost of such asset,
(c) any such Lien shall be created within 60 days of the date
such asset was acquired and (d) the aggregate principal amount
of the Debt secured by Liens permitted by this CLAUSE (VIII)
does not exceed $500,000 (which amount shall be reduced by the
principal amount of any Debt secured by Liens of the type
permitted by this CLAUSE (VIII) and described in SCHEDULE
9.3);
(ix) Liens on the assets of any Person (other than
the Company or an existing Subsidiary) existing at the time
such assets are acquired by it whether by merger,
consolidation, purchase of assets or otherwise so long as such
(A) Liens are not created, incurred or assumed in
contemplation of such assets being acquired by it; (B) no
Default or Event of Default exists immediately before or
immediately after the incurrence of such Liens or could
reasonably be anticipated to result therefrom; (C) after
giving effect to such acquisition and the Debt secured by such
Lien, the financial tests set forth in PARAGRAPH 9.1,
calculated on the basis of the most
19
recently available financial information, would be satisfied,
and (D) such Liens do not extend to any other assets of the
Company or any Subsidiary; and
(x) any Lien resulting from renewing, extending or
refinancing any Liens permitted by CLAUSES (VII), (VIII), (IX)
or (X) above, provided that (a) such Lien does not extend to
any property of the Company or any Subsidiary other than a
Subsidiary which is an existing obligor on the Debt secured by
the Lien being renewed, refinanced or extended and (b)
immediately after such extension, renewal or refunding, no
Default or Event of Default would exist or could reasonably be
expected to result therefrom.
9.4 SALE OF STOCK, EQUITY INTEREST. No Subsidiary of the Company shall
issue, sell or otherwise dispose of, or part with control of, any of its own
Equity Interest (other than directors' qualifying shares) either directly or
indirectly by the issuance of rights, options for securities convertible into or
exchangeable for its Equity Interest unless (i) the proceeds of such issuance,
transfer or sale are used to make a Qualifying Reinvestment within the meaning
of CLAUSE (V) of PARAGRAPH 9.5 and (ii) after such sale, transfer or other
disposition, such Subsidiary remains a Subsidiary.
9.5 MERGER AND SALE OF ASSETS. Neither the Company nor any Subsidiary
shall merge or consolidate with any other Person or sell, lease or transfer or
otherwise dispose of its respective assets to any Person or Persons, except
that:
(i) any Subsidiary may merge or consolidate with or
sell, lease, transfer or otherwise dispose of all or any of
its assets to the Company or a Wholly-Owned Subsidiary
(PROVIDED, that the Company or such Wholly-Owned Subsidiary
shall be the continuing or surviving corporation in the case
of a merger or consolidation and, in any case, the acquiring
or surviving entity is a corporation organized under the laws
of, and having its principal place of business in, a state of
the United States of America or the District of Columbia) and
upon any such sale, transfer or other disposition, such
Subsidiary may liquidate and dissolve;
(ii) the Company may merge or consolidate with any
other Person; PROVIDED, that (A) the Company shall be the
continuing or surviving Person, or (B) the successor or
acquiring Person (1) shall be a solvent Person organized under
the laws of any state of the United States of America or the
District of Columbia; (2) shall expressly assume in writing
all of the obligations and covenants of the Company under the
Transaction Documents; and (3) shall provide the Holders the
written opinion of counsel satisfactory in form and substance
to the Holders confirming that the assumption of such
obligations by such Person is duly authorized and constitutes
the legal, valid and binding obligation of such Person,
enforceable (subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
regardless of whether enforcement is sought in a proceeding in
equity or at law) against such Person in accordance with its
terms, PROVIDED, that in either case, immediately after and
giving effect thereto, on a pro forma basis, based on the most
recently available financial information, the financial tests
set forth in PARAGRAPH 9.1 would be satisfied, and PROVIDED
FURTHER, that in either case, immediately after and giving
effect thereto, on a pro forma basis, the Company is able to
incur at least $1.00 of Debt;
(iii) the Company and each Subsidiary may sell or
lease, as lessor, inventory in the ordinary course of its
business;
(iv) the Company and each Subsidiary may dispose of
equipment or other assets which have become obsolete or
otherwise no longer useful or required for the conduct of
their business, provided such dispositions do not,
individually or in the aggregate, constitute a liquidation of
all or substantially all of the Company's or any Subsidiary's
assets; and
20
(v) in addition to the matters set forth above, the
Company and any Subsidiary may sell, transfer or otherwise
dispose of some or all of its respective properties or assets
in a transaction not otherwise permitted pursuant to this
PARAGRAPH 9.5 for fair and adequate consideration (a
"DISPOSITION"), and if such Disposition is a Disposition of
all or substantially all of the assets of a Subsidiary, such
Subsidiary may thereafter liquidate and dissolve; PROVIDED,
that immediately after and giving effect to any such
Disposition, the greater of (a) the aggregate book value of
each property and asset so sold (each an "ASSET SOLD" and
collectively, the "ASSETS SOLD"), as reflected on the most
recent consolidated balance sheet of the Consolidated Group
furnished to the Holders pursuant to PARAGRAPH 8.1 prior to
the date of Disposition of such Asset Sold, or (b) the
aggregate net proceeds (with any non-cash proceeds being
valued at its fair market value) of the Assets Sold (1) during
the immediately preceding twelve months, less the aggregate
amount of Qualifying Reinvestments, did not exceed more than
10% of Consolidated Total Assets as reflected on the most
recent consolidated balance sheet of the Consolidated Group
delivered to the Holders pursuant to PARAGRAPH 8.1 or (2)
since the Closing Date, less the aggregate amount of
Qualifying Reinvestments, did not exceed more than 25% of
Consolidated Total Assets as reflected on the most recent
consolidated balance sheet of the Consolidated Group delivered
to the Holders pursuant to PARAGRAPH 8.1;
PROVIDED, that, in each case other than the sale or lease of inventory pursuant
to SUBPARAGRAPH (III) above, no Default or Event of Default exists immediately
before or immediately after giving effect to such sale, transfer or disposition
of properties or assets or such merger or consolidation nor would any Default or
Event of Default reasonably be expected to result therefrom and in the case of a
sale, transfer or other disposition of outstanding Equity Interest of a
Subsidiary pursuant to SUBPARAGRAPH (V) above, such sale, transfer or other
disposition otherwise satisfies the requirements of PARAGRAPH 9.4.
For purposes of SUBPARAGRAPH (V) of this PARAGRAPH 6C(3), a "QUALIFYING
REINVESTMENT" is the use of the proceeds, or of funds expended in anticipation
of the proceeds, of Assets Sold not more than twelve months after the date of a
Disposition, to (a) purchase (x) assets usable in any business permitted to be
conducted by PARAGRAPH 8.9, or (y) either (1) all of the outstanding capital
stock or other equity interests of a Person which, immediately after such
purchase, is a Wholly-Owned Subsidiary of the Company and is engaged in a
business permitted to be conducted by PARAGRAPH 8.9, or (2) all or substantially
all of the assets and business of a Person which is engaged in any business
permitted to be conducted by PARAGRAPH 8.9; PROVIDED, that if the Assets Sold
are subject to a Lien securing the Notes at the time of sale or other
disposition, the assets, equipment, real property, improvements, capital stock
or other equity interests purchased with the proceeds of such Assets Sold shall
not constitute Qualifying Reinvestments unless promptly made subject to a Lien
securing the Notes with the same priority and otherwise substantially the same
terms and conditions as the Liens on the Assets Sold or (b) to make an optional
prepayment of the Notes pursuant to PARAGRAPH 7.2 or to prepay any other Debt
ranking at least pari passu with the Notes.
9.6 SUBSIDIARY DIVIDEND AND OTHER RESTRICTIONS. Except for this
Agreement, enter into, or be otherwise subject to, any contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the payment of, dividends by, or distributions on any securities
of, any Subsidiary of the Company.
9.7 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 9.7,
directly or indirectly, engage in any transaction or group of transactions
(including, without limitation, the purchase, sale or exchange of assets or the
payment of salary, bonuses and other compensation for services rendered) with
any Affiliate, except in the ordinary course of business pursuant to the
reasonable requirements of its business and upon commercially reasonable terms
which are no less favorable to it than those which might be obtained at arms'
length with a Person not an Affiliate.
9.8 SALES OF RECEIVABLES. The Company will not, and will not permit any
of its Subsidiaries to, discount, pledge, sell (with or without recourse), or
otherwise sell for less than face value thereof any of its accounts
21
or notes receivable, EXCEPT for sales of receivables (i) without recourse which
are seriously past due and which have been substantially written off as
uncollectible or collectible only after extended delays, or (ii) made in
connection with the sale of a business but only with respect to the receivables
directly generated by the business so sold.
9.9 SUBSIDIARY DEBT. Except for Debt owing to the Company or a
Wholly-Owned Subsidiary (to the extent incurred in compliance with PARAGRAPH
9.2) and except for the Debt in existence on the Closing Date as set forth on
SCHEDULE 5.13, the Company will not permit any Subsidiary to create, incur,
assume or otherwise become or remain directly or indirectly liable with respect
to any Debt.
9.10 COMPLIANCE WITH XXXXX. The Company, its Subsidiaries and any ERISA
Affiliate shall not:
(i) engage in any transaction in connection with
which the Company or any Subsidiary or any ERISA Affiliate
could be subject to either a civil penalty assessed pursuant
to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code, terminate or withdraw from any Plan (other than a
Multiemployer Plan) in a manner, or take any other action with
respect to any such Plan (including, without limitation, a
substantial cessation of business operations or an amendment
of a Plan within the meaning of Section 4041(e) of ERISA,
which could result in any liability to the PBGC, to a Plan, to
a Plan participant, to the Department of Labor or to a trustee
appointed under Section 4042(b) or (c) of ERISA), incur any
liability to the PBGC or a Plan on account of a withdrawal
from or a termination of a Plan under Section 4063 or 4064 of
ERISA, fail to make full payment when due of all amounts
which, under the provisions of any Plan or applicable law, it
is required to pay as contributions thereto, or permit to
exist any accumulated funding deficiency, whether or not
waived, with respect to any Plan (other than a Multiemployer
Plan) other than such penalties, taxes, liabilities, failures
or deficiencies which individually and in the aggregate do
not, and are not reasonably expected to have in the future, a
Material Adverse Effect;
(ii) at any time permit the termination of any
defined benefit pension plan intended to be qualified under
Section 401(a) and Section 501(a) of the Code unless such plan
is funded so that the value of all benefit liabilities upon
the termination date does not exceed the then current value of
all assets in such plan by an amount the payment of which
would have a Material Adverse Effect; or
(iii) at any time permit the aggregate complete or
partial withdrawal liability under Title IV of ERISA with
respect to Multiemployer Plans incurred by the Company or any
Subsidiary and their ERISA Affiliates, or the aggregate
liability under Title IV of ERISA incurred by the Company or
any Subsidiary and their ERISA Affiliates, to exceed an amount
the payment of which would have a Material Adverse Effect.
For the purposes of CLAUSE (III) of this PARAGRAPH 9.10, the amount of the
withdrawal liability of the Company, its Subsidiaries and their ERISA Affiliates
at any date shall be the aggregate present value of the amounts claimed to have
been incurred less any portion thereof as to which the Company reasonably
believes, after appropriate consideration of possible adjustments arising under
subtitle E of Title IV of ERISA, that neither the Company, any Subsidiary nor
any ERISA Affiliate will have any liability, PROVIDED, that the Company shall
promptly obtain written advice from independent actuarial consultants supporting
such determination. The Company will (x) once in each calendar year, beginning
in 1997, request and obtain a current statement of withdrawal liability from
each Multiemployer Plan to which the Company, its Subsidiaries or any ERISA
Affiliate is or has been obligated to contribute and (y) to the extent such
liabilities, individually or in the aggregate, are Material, transmit a copy of
such statement to each Holder, within 15 days after the Company receives the
same. As used in this PARAGRAPH 9.10, the term "ACCUMULATED FUNDING DEFICIENCY"
has the meaning specified in section 302 of ERISA and section 412 of the Code,
the terms "PRESENT VALUE" and "CURRENT VALUE" have the meanings specified in
section 3 of ERISA, the term "BENEFIT LIABILITIES" has the meaning specified in
section 4001(a)(16) of ERISA and the term "AMOUNT OF UNFUNDED LIABILITIES" has
the meaning specified in section 4001(18) of ERISA.
22
10. EVENTS OF DEFAULT.
If any of the following events shall occur or conditions shall exist
for any reason whatsoever, and whether such occurrence or condition shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise, such occurrence or condition shall constitute an "EVENT OF DEFAULT":
(i) the Company defaults in the payment of any principal of
any Note or Make-Whole Amount when the same shall become due and
payable, whether by the terms thereof or otherwise as provided by the
terms of this Agreement; or
(ii) the Company defaults in the payment of interest on any
Note, whether by the terms thereof or otherwise as provided by this
Agreement or in the Payment of any Expense or any other amount due
under any Note or this Agreement and such Default shall continue for 3
Business Days after the same shall become due and payable; or
(iii) any representation or warranty made in writing by the
Company or any Subsidiary in any Transaction Document or in any writing
furnished at Closing in connection with any Transaction Document proves
to have been false or incorrect in any Material respect on the date as
of which made; or
(iv) with respect to any Debt, other than the Debt represented
by the Notes, the Company or any Subsidiary (A) defaults (whether as
primary obligor or guarantor or surety) in any payment of principal of,
premium, if any, make-whole amount or interest on any such Debt, the
outstanding principal amount of which exceeds $500,000 in the
aggregate, beyond any period of grace provided with respect thereto, or
(B) fails to perform or observe any other agreement, term or condition
contained in any agreement under which such Debt is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such default or other event is to cause,
or to permit the holder or holders of such Debt (or a trustee on behalf
of such holder or holders) to declare such Debt to become due or to be
required to be redeemed or repurchased prior to any stated maturity or
regularly scheduled dates of payment;
(iv) the Company or any Subsidiary fails to perform or observe
any covenant contained in PARAGRAPH 8.7, 8.10, 9.1, 9.2, or 9.3.
(v) the Company or any Subsidiary fails to perform or observe
any other agreement, term or condition of any of the Transaction
Documents applicable to it and such failure shall not be remedied
within 30 days; or
(vi) the Company voluntarily or involuntarily suspends or
discontinues operation or liquidates all or substantially all of its assets; or
(vii) the Company or any Subsidiary (A) is generally not
paying, or admits in writing that it is not able to pay, its debts as
such debts become due; or (B) files, or consents by answer or otherwise
to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction;
or (C) makes an assignment for the benefit of its creditors; or (D)
consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property; (E) is adjudicated insolvent or to be
liquidated or (F) takes corporate action for the purpose of any of the
foregoing; or
(viii) a Governmental Authority enters an order appointing,
without the consent of the Company or any such Subsidiary, a custodian,
receiver, trustee or other officer with similar powers with respect to
it or with respect to any substantial part of the its property, or
constituting an order for relief or approving a
23
petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Subsidiary without the
consent of the Company or such Subsidiary and such order remains
unstayed and in effect for 60 days; or
(ix) a final judgment or judgments for the payment of money
aggregating in excess of $500,000 is rendered against the Company or
any Subsidiary and within 60 days thereof such judgment or judgments
are not bonded or discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such stay, such
judgment or judgments are not discharged; or
(x) if (A) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any year or part thereof or a waiver
of such standards or extension of any amortization period is sought or
granted under section 412 of the Code, (B) a notice of intent to
terminate (other than a notice of a "standard termination" as defined
in Section 4041(b) of ERISA) any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified the Company or
any Subsidiary or any ERISA Affiliate that a Plan may become a subject
of any such proceedings, (C) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $500,000, (D) the Company, any Subsidiary or any ERISA Affiliate
shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (E) the
Company, any Subsidiary or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (F) the Comapny or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the
Company or any Subsidiary thereunder; and any such event or events
described in CLAUSES (A) through (F) above, either individually or
together with any other such event or events, could reasonably be
expected to result in a Material Adverse Effect. As used in this CLAUSE
(X), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT
PLAN" shall have the respective meanings assigned to such terms in
Section 3 of ERISA; or
(xi) there shall have occurred a Change of Control.
11. REMEDIES ON DEFAULT, ETC.
11.1 ACCELERATION.
(a) If an Event of Default with respect to the Company
described in CLAUSES (VII) or (VIII) of PARAGRAPH 10 has occurred, all Notes
then outstanding shall automatically become immediately due and payable at 100%
of the principal amount thereof together with all interest accrued thereon and
the Make-Whole Amount, without presentment, demand, protest or notice of any
kind, all of which are expressly waived by the Company.
(b) If any other Event of Default has occurred, the Required
Holders may at their option declare each Note to be, and each Note shall
thereupon be immediately due and payable at 100% of the principal amount thereof
together with all interest accrued thereon and the Make-Whole Amount, without
presentment, demand, protest or notice of any kind, all of which are expressly
waived by the Company.
(c) if an Event of Default specified in CLAUSE (I) or (II) of
PARAGRAPH 10 has occurred, any Holder, whether or not the Required Holders have
declared each Note to be due and payable pursuant to the immediately preceding
SUBPARAGRAPH (B), may declare each Note held by such Holder to be immediately
due and payable at 100% of the principal amount thereof together with interest
accrued thereon and Make-Whole Amount, without presentment, demand, protest or
notice of any kind, all of which are expressly waived by the Company.
24
11.2 OTHER REMEDIES.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under PARAGRAPH 11.1, any Holder may
proceed to protect and enforce the rights of such Holder by an action at law,
suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
11.3 RESCISSION OF ACCELERATION. At any time after any Note shall have
been declared immediately due and payable pursuant to SUBPARAGRAPH (B) or (C) of
PARAGRAPH 11.1, the Required Holders may, by written notice to the Company,
rescind and annul any such declaration with respect to the Notes if (i) the
Company shall have paid all interest, principal and Make-Whole Amount payable
with respect to any Note which have become due otherwise than by reason of such
declaration, including any interest on any such overdue interest, principal and
the Make-Whole Amount, at the Default Rate, (ii) the Company shall not have paid
any amounts which have become due solely by reason of such declaration, (iii)
all Events of Default and Defaults, other than non-payment of amounts which have
become due solely by reason of such declaration, shall have been cured or waived
pursuant to PARAGRAPH 16, and (iv) no judgment or decree shall have been entered
for the payment of any amounts due pursuant to the Transaction Documents solely
by reason of such declaration. No such rescission or annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right arising
therefrom.
11.4 NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to SUBPARAGRAPH (B) or (C) of
PARAGRAPH 11.1, or any such declaration under PARAGRAPH 11.1 shall be rescinded
and annulled pursuant to PARAGRAPH 11.3, the Company shall forthwith give
written notice thereof to each other Holder at the time outstanding, PROVIDED,
the failure to give such notice shall not affect the validity of any such
declaration, rescission or annulment.
11.5 NO WAIVERS OR ELECTION OF REMEDIES. No course of dealing or
failure or delay by any Holder in exercising any right, power or remedy under a
Transaction Document or any other document executed in connection therewith
shall operate as a waiver thereof or otherwise prejudice such Holder's rights,
powers or remedies, nor shall any single or partial exercise of any such right
or remedy preclude any other right or remedy hereunder or thereunder. No right,
power or remedy conferred by this Agreement or by any Note or upon any Holder
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under PARAGRAPH 14,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this PARAGRAPH 11, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
12. REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES.
12.1 REGISTRATION. The Notes are to be issued and are transferable in
whole or in part as registered Notes without coupons in denominations of at
least $500,000, except as may be necessary to reflect any remaining principal
amount less than $500,000 and may be exchanged for one or more Notes of any
authorized denomination and like class and like aggregate outstanding principal
amount. The Company shall keep at the principal executive office of the Company
a register in which the Company shall record the registrations of the Notes and
the names and addresses of the Holders from time to time and all transfers
thereof. The Company shall provide any Holder, promptly upon request, a complete
and correct copy of the names and addresses of the then Holders. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and Holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary.
25
12.2 TRANSFER AND EXCHANGE. Upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
Holder of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, within 5 Business Days, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
Holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of EXHIBIT A. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $500,000, PROVIDED that
if necessary to enable the registration of transfer by a Holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representations set forth in
PARAGRAPH 6.
12.3 REPLACEMENT. Upon receipt of written notice from a Holder of the
loss, theft, destruction or mutilation of a Note and, in the case of any such
loss, theft or destruction, upon receipt of an indemnification agreement of such
Holder (and, in the case of a Holder which is not a Institutional Investor, with
such security as may be reasonably requested by the Company) satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Note, the Company will make and deliver, within 5 Business Days, a new
Note, at its expense, of like class and tenor, in lieu of the lost, stolen,
destroyed or mutilated Note, and each new Note will bear interest from the date
to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or if no interest has been paid thereon, the date of such lost,
stolen, destroyed or mutilated Note.
13. PAYMENTS ON NOTES.
13.1 PLACE OF PAYMENT. Subject to PARAGRAPH 13.2, payment of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made in Abingdon, Virginia at the principal office of the Company such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
13.2 HOME OFFICE PAYMENT. The Company agrees that, so long as a
Purchaser shall hold any Notes, all payments in respect of such Notes, required
by the terms thereof or otherwise by this Agreement, will be made in compliance
with the applicable terms thereof or hereof and by wire transfer to such
Purchaser of immediately available funds for credit to the account or accounts
as specified in SCHEDULE A for such Purchaser, or such other account or accounts
in the United States as a Purchaser may designate in writing, notwithstanding
any contrary provision in this Agreement or the Notes, with respect to the place
of payment. Each Purchaser agrees that, before disposing of any Note, it will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made and of the date to which interest has been paid. The
Company agrees to afford the benefits of this PARAGRAPH 13.2 to any Holder which
shall have made the same agreement in writing as the Purchasers have made in
this PARAGRAPH 13.2.
13.3 NO DEDUCTION OR SET-OFF. The obligation of the Company to pay
principal, interest, Make-Whole Amounts and any other amounts under the
Transaction Documents owed by the Company shall be absolute and unconditional
and shall not be affected by any circumstances, including without
26
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against a Purchaser or any Holder for any reason
whatsoever.
14. EXPENSES.
Whether or not the transactions provided for hereby shall be
consummated, the Company will pay on demand and save each Purchaser and each
Holder harmless against liability for the payment of, all out-of-pocket expenses
arising in connection with such transactions and in connection with any
subsequent modification of, or waiver or consent under or in respect of, the
Transaction Documents, whether or not such transactions are consummated or
modification shall be effected or consent or waiver granted ("EXPENSES"),
including (i) the reasonable fees and expenses of Special Counsel and its agents
and of any other special or local counsel or other special advisers engaged and
reasonably required by the Purchasers in connection with the transactions
contemplated by this Agreement; provided the Company shall not be liable for the
fees and expenses of more than one Special Counsel in any single matter, (ii)
the costs of obtaining the private placement number from Standard & Poor's
Ratings Group for the Notes, (iii) the costs and expenses, including reasonable
attorneys' fees and the fees of any other special or financial advisers,
incurred in enforcing and defending and, during the continuance of a Default or
after the occurrence of an Event of Default, monitoring or evaluating any rights
under the Transaction Documents (including, without limitation, any costs,
expenses or fees incurred in connection with perfecting or maintaining
perfection of any Lien hereafter existing in favor of the Purchasers or any
Holder as security for the obligations of the Company under the Transaction
Documents or maintaining or protecting the collateral which is the subject of
such Lien) or in responding to any subpoena or other legal process or informal
investigation issued in connection with the Transaction Documents or the
transactions provided for hereby or thereby or by reason of a Purchaser or any
Holder having acquired any of its Notes, and (iv) costs and expenses, including
financial advisors fees, incurred in connection with any bankruptcy or
insolvency of the Company or any Subsidiary or in connection with any workout or
restructuring of any of the transactions contemplated by the Transaction
Documents. The Company will pay and will save each Purchaser and each Holder
from all claims in respect of any fees, costs or expenses, if any, of any
brokers and finders not retained by such Purchaser or Holder. The obligations of
the Company under this PARAGRAPH 14 shall survive the transfer of any of its
Notes or any interest therein by a Purchaser or any Holder and the payment of
any Notes.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained in any Transaction
Document or made in any other writing by or on behalf of the Company in
connection herewith shall survive the execution and delivery of such Transaction
Document or other writing, the transfer by a Purchaser of any Notes or portion
thereof or interest therein and the payment of any Notes and may be relied upon
by any Holder as having been true when made, regardless of any investigation
made at any time by or on behalf of the Purchasers or any Holder. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company or any Subsidiary pursuant to any Transaction Document shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, the Transaction Documents embody the entire
agreement and understanding between the Purchasers and the Company and supersede
all prior agreements and understandings relating to the subject matter hereof
and thereof.
16. AMENDMENT AND WAIVER.
16.1 REQUIREMENTS. This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (i) no amendment or waiver of any
of the provisions of PARAGRAPHS 1, 2, 3, 4, 5, 6 or 20 hereof, or any defined
term (as it is used therein), will be effective as to any Holder unless
consented to by such Holder in writing and (ii) no such amendment or waiver may,
without the written consent of each Holder affected thereby, (A) subject to the
provisions of PARAGRAPH 11 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of
27
computation of interest or of the Make-Whole Amount on, the Notes, (B) change
the percentage of the principal amount of the Notes the Holders of which are
required to consent to any such amendment or waiver or (C) amend any of
PARAGRAPHS 7, 10(I) AND (II), 11, 16 or 19.
16.2 SOLICITATION OF HOLDERS OF NOTES.
16.2.1 SOLICITATION. The Company will provide each Holder (irrespective
of the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such
Holder to make an informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions hereof or of
the Notes. The Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of this
PARAGRAPH 16 to each Holder promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the Required Holders.
16.2.2 PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any Holder of any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each Holder even if such Holder did not consent to such
waiver or amendment.
16.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this PARAGRAPH
16 applies equally to all Holders and is binding upon them and upon each future
Holder and upon the Company without regard to whether such Note has been marked
to indicate such amendment or waiver. No such amendment or waiver will extend to
or affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Company and any Holder nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any such Holder.
17. NOTICES.
All notices and communications provided for hereunder shall be
in writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or its nominee, to it at the
address specified for it for such communications in SCHEDULE
A, or at such other address as such Purchaser shall have
specified to the Company in writing,
(ii) if to any other Holder, to such Holder at such
address or fax number as is specified for such Holder in the
Note register referenced in PARAGRAPH 12, or
(iii) if to the Company, to the Company at its
address set forth at the beginning hereof to the attention of
Xxxxxxx X. Xxxxxxx, Chairman of the Board and President, or at
such other address as the Company shall have specified to each
Holder in writing.
Notices given in accordance with this PARAGRAPH 17 will be deemed given upon the
earlier of actual receipt or the second Business Day after dispatch.
28
18. REPRODUCTION OF DOCUMENTS.
Any Transaction Document and any documents relating thereto,
including, without limitation, (i) consents, waivers and modifications that may
hereafter be executed, (ii) documents received by the Purchasers at the Closing
(except the Notes), and (iii) financial statements, certificates and other
information previously or hereafter furnished to the Purchasers, may be
reproduced by any Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and the Purchasers
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
PARAGRAPH 18 shall not prohibit the Company or any Holder from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
19. CONFIDENTIAL INFORMATION.
For the purposes of this PARAGRAPH 19, "CONFIDENTIAL INFORMATION" means
information delivered to a Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement, that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by the
Purchaser as being confidential information of the Company or any of its
Subsidiaries, PROVIDED that such term does not include information that (i) was
publicly known or otherwise known to the Purchaser prior to the time of such
disclosure, (ii) subsequently becomes publicly known through no act or omission
by the Purchaser, (iii) otherwise becomes known to the Purchaser other than
through disclosure by the Company or any Subsidiary or (iv) constitutes
financial statements delivered to the Purchaser under PARAGRAPH 8.1 that are
otherwise publicly available. Each Purchaser will maintain the confidentiality
of such Confidential Information in accordance with the procedures adopted by it
in good faith to protect confidential information of third parties delivered to
it. Notwithstanding the foregoing, a Purchaser may deliver copies of any
Confidential Information to such Purchaser's and its Subsidiaries' directors,
officers, employees, and to its agents and professional consultants who in the
ordinary course of performance of their duties to or for the benefit of such
Purchaser have a need to have access to such information, any other Purchaser,
any Person to whom such Purchaser offers to sell any of its Notes or any part
thereof or to whom such Purchaser sells or offers to sell a participation in all
or any part of its Notes (provided such Person has entered into a
confidentiality agreement with respect to such information substantially on the
terms of the first two sentences of this PARAGRAPH 19), any federal or state
regulatory authority having jurisdiction over such Purchaser, any Person from
which a Purchaser offers to purchase any security of the Company or any
Subsidiary (provided such Person has entered into a confidentiality agreement
with respect to such information substantially on the terms of the first two
sentences of this PARAGRAPH 19), the NAIC or any regulatory agency which
generally requires access to information about a Purchaser's investment
portfolio or any similar organization, or any nationally recognized rating
agency that requires access to information about a Purchaser's investment
portfolio or any other Person to which such delivery or disclosure may be
necessary or appropriate (a) in compliance with any law, rule, regulation or
order applicable to such Purchaser, (b) in response to any subpoena or other
legal process, (c) in connection with any litigation to which such Purchaser is
a party relating to the transactions contemplated by this Agreement, or (d) if
an Event of Default has occurred and is continuing, to the extent that such
Purchaser determines disclosure is necessary or appropriate in the enforcement
of or for the protection of its rights and remedies under the Transaction
Documents. Each Holder, by its acceptance thereof, will be deemed to have agreed
to be bound by and to be entitled to the benefits of this PARAGRAPH 19 as though
it were a party to this Agreement.
20. SUBSTITUTION OF PURCHASERSUBSTITUTION OF PURCHASER.
Each Purchaser has the right to substitute any one of its Affiliates as
the purchaser of the Notes that it has agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by such Purchaser and its
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in PARAGRAPH 6. In the event
that such Affiliate is so substituted as a Purchaser hereunder and such
Affiliate thereafter transfers to the
29
original Purchaser all of the Notes then held by such Affiliate, upon receipt by
the Company of notice of such transfer, such Purchaser shall have all the rights
of a Purchaser.
21. MISCELLANEOUS.
21.1 SUCCESSORS AND ASSIGNS. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent Holder) whether so expressed or not;
PROVIDED, that except as expressly permitted by this Agreement, the Company may
not delegate the performance of any of its obligations hereunder.
21.2 PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.
21.3 SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
21.4 CONSTRUCTION. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
21.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
21.6 DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
21.7 GOVERNING LAW. THIS AGREEMENT IS TO BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT GIVING EFFECT TO ANY LAWS OR RULES
RELATING TO CONFLICTS OF LAWS THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS).
21.8 CONSENT TO JURISDICTION AND SERVICE AND WAIVER OF TRIAL BY JURY.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS AND OF ANY FEDERAL COURT LOCATED IN SAID
JURISDICTION IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST IT BY
ANY HOLDER ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS AND
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY
WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH ACTION OR PROCEEDING, IN
30
EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A)
IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, (B) IT IS
IMMUNE FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH
RESPECT TO IT OR ITS PROPERTY, (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, OR (D) SUCH TRANSACTION DOCUMENT MAY NOT BE
ENFORCED IN OR BY ANY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND
IRREVOCABLY WAIVES TRIAL BY JURY AND PERSONAL IN HAND SERVICE OF ANY SUMMONS,
COMPLAINT, DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY
AGREES THAT THE SERVICE MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO IT AT ITS ADDRESS SET FORTH IN OR FURNISHED
PURSUANT TO THE PROVISIONS OF THIS AGREEMENT, OR BY ANY OTHER MANNER PROVIDED BY
LAW. ANYTHING HEREINBEFORE TO THE CONTRARY NOTWITHSTANDING, ANY HOLDER MAY SUE
THE COMPANY IN ANY OTHER APPROPRIATE JURISDICTION AND ANY PARTY MAY SUE ANY
OTHER PARTY ON A JUDGMENT RENDERED BY ANY COURT PURSUANT TO THE PROVISIONS OF
THE FIRST SENTENCE OF THIS PARAGRAPH 21.8 IN THE COURTS OF ANY COUNTRY, STATE OF
THE UNITED STATES OR PLACE WHERE SUCH OTHER PARTY OR ANY OF ITS PROPERTY OR
ASSETS MAY BE FOUND OR IN ANY OTHER APPROPRIATE JURISDICTION.
21.9 TERMINATION. This Agreement and the rights of the Holders and the
obligations of the Company hereunder shall not terminate until each of the
Notes, including all principal, interest, including interest on overdue interest
and Make-Whole Amount has been indefeasibly paid in full and all Expenses and
all other amounts owed to any Purchaser or any Holder pursuant to the terms of
any Transaction Document have been indefeasibly paid in full.
21.10 COMPLIANCE BY SUBSIDIARIES. The Company, as the holder of the
Equity Interests of its Wholly-Owned Subsidiaries, shall cause such meetings to
be held, votes to be cast, resolutions to be passed, by-laws to be made and
confirmed, documents to be executed and all other things and acts to be done to
ensure that, at all times, the provisions of this Agreement relating to its
Subsidiaries are complied with. The Company, as the holder of the Equity
Interests of its Subsidiaries (other than its Wholly-Owned Subsidiaries) shall,
to the extent it may do so, cause such meetings to be held, and shall vote its
Equity Investors in favor of such resolutions to be passed, by-laws to be made
and confirmed, documents to be executed and all other things and acts to be done
to cause the provisions of this Agreement relating to such Subsidiaries to be
complied with.
[SIGNATURES FOLLOW ON PAGE 35]
31
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement, executed under
seal between you and the Company.
Very truly yours,
VIRGINIA GAS COMPANY
By:
By:____________________________
Name:
Title:
The foregoing Agreement is hereby accepted as of the date first above written.
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By:______________________________________
Name:
Title:
XXXX XXXXXXX VARIABLE LIFE
INSURANCE COMPANY
By:______________________________________
Name:
Title:
MELLON BANK, N.A., SOLELY IN ITS CAPACITY AS TRUSTEE FOR THE LONG-TERM
INVESTMENT TRUST, (as directed by Xxxx Xxxxxxx Mutual Life Insurance Company),
and not in its individual capacity
By:______________________________________
Name:
Title:
32
