EXHIBIT
10.1(b)
CAL-MAINE FOODS, INC.
CAL-MAINE PARTNERSHIP,
LTD.
SERIES A SECURED NOTES DUE SEPTEMBER
1, 2014
PPN: 12803# AC 4
SERIES B SECURED NOTES DUE SEPTEMBER
1, 2014
PPN: 12803# AB 6
SERIES C SECURED NOTES DUE SEPTEMBER
1, 2014
PPN: 12803# AD 2
AMENDED AND RESTATED
SECURED NOTE PURCHASE
AGREEMENT
DATED AS OF SEPTEMBER 30,
2003
AMENDED AND RESTATED SECURED
NOTE PURCHASE AGREEMENT
AMENDED
AND RESTATED SECURED NOTE PURCHASE AGREEMENT
, dated as of September 30, 2003,
between CAL-MAINE FOODS, INC., a Delaware
corporation (together with its successors and assigns, the “
Company ”), and CAL-MAINE
PARTNERSHIP, LTD., a Texas limited partnership (together
with its successors and assigns, the “
Partnership ” and with the Company, the
“ Borrowers ”) and the institutional
investors identified on Annex 1 (whether one or
more, the “ Purchasers ”).
RECITALS
The Borrowers
and the Purchasers are parties to that certain Secured Note
Purchase Agreement dated as of September 28, 1999 (the “
Existing Agreement ”) pursuant to which the
Purchasers purchased Series A Senior Secured Notes of the Borrowers
in the original aggregate principal amount of $9,101,337.11 (the
“ Series A Notes ”) and Series B
Senior Secured Notes of the Borrowers in the original aggregate
principal amount of $16,000,000 (the “ Series B
Notes ”), and collectively with the Series A Notes,
the “ Existing Notes ”).
The Borrowers
desire, upon and subject to the terms and conditions of this
Agreement, to sell to the Purchasers and the Purchasers are willing
to purchase Series C Senior Secured Notes in the aggregate
principal amount of $5,000,000 (the “ Series C
Notes ”, and collectively with the Existing Notes,
the “ Secured Notes ”), and the
holders of the Existing Notes, the Purchasers and the Borrowers
desire to amend and restate the Existing Agreement to extend the
maturity date of, and amend the interest rate applicable to
outstanding principal on, the Series A Notes and to amend certain
covenants of the Borrowers.
AGREEMENT
NOW, THEREFORE,
it is agreed:
1
AUTHORIZATION;
RANKING
A.
Authorization of Issue of
the Series C Notes. The Borrowers will authorize, as joint and
several co-makers, the issue and sale of their Series C Notes in
the aggregate principal amount of $5,000,000, each to be dated the
date of issue, and to be repaid and to bear interest as provided
herein. The Series C Notes shall be in the form of Exhibit
A .
B.
Ranking
. The Secured Notes will constitute
the direct senior obligations of the Borrowers and will rank not
less than pari passu in priority of payment with each other and
with all other outstanding Debt of the Borrowers, present or
future, except to the extent such other Debt is preferred as a
result of being secured (but only to the extent such security is
not prohibited by paragraph 6B and then only to
the extent of such security) or as a matter of law.
C.
Interest on the Secured
Notes. The unpaid
principal amount of the Secured Notes owing to each Holder shall
accrue interest at the rates, time and manner set forth
below.
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(a)
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Each Series A
Note shall bear interest on the unpaid principal amount thereof
from the date issued through the Closing Date at the rate of 7.64%
per annum and thereafter through maturity (whether by prepayment,
acceleration or otherwise) at the rate of 7.06% per
annum .
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(b)
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Each Series B
Note shall bear interest on the unpaid principal amount thereof
from the date issued through maturity (whether by prepayment,
acceleration or otherwise) at the rate of 8.26% per annum
.
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(c)
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Each Series C
Note shall bear interest on the unpaid principal amount thereof
from the date issued through maturity (whether by prepayment,
acceleration or otherwise), at the rate of 6.87% per annum
.
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(ii)
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Post-Maturity Interest.
Any principal payments on the
Secured Notes not paid when due and, to the extent permitted by
applicable law, any interest payment on the Secured Notes or Make
Whole Amount on the Secured Notes not paid when due, in each case
whether at stated maturity, by notice of pre-payment, by
acceleration or otherwise, shall thereafter bear interest payable
upon demand at a rate per annum (the “
Default Rate ”) equal to the lesser
of:
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a)
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the highest
rate allowed by applicable law; or
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b)
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the annual
interest rate then applicable to principal outstanding under such
Secured Note and not then overdue plus 2%.
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(iii)
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Computation of Interest.
Interest on the Secured Notes shall
be computed on the basis of a 360-day year and twelve 30-day
months. In computing interest on the Secured Notes, the date of the
issuance of the Secured Notes shall be included and the date of
payment shall be excluded.
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2
PURCHASE AND SALE OF THE
SECURED NOTES; CLOSING; EFFECT
A.
Purchase and Sale of the
Secured Notes. The
Existing Notes were sold and purchased on September 28, 1999
pursuant to the Existing Agreement. Subject to the terms and
conditions of this Agreement, the Borrowers shall sell to each
Purchaser, and each Purchaser shall purchase from the Borrowers,
Series C Notes in the principal amount specified below such
Purchaser’s name in Annex 1 , at a price
equal to 100% of such principal amount registered in such
Purchaser’s name or that of the Purchaser’s nominee or
nominees as specified in Annex 1 . 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.
B.
Closing.
The purchase and sale of the Series
C Notes shall take place at the offices of Sullivan & Worcester
LLP, One Post Office Square, Boston, Massachusetts 02109, at a
closing (the “ Closing ”) to be held
on September 30, 2003 or on such other Business Day as the
Purchasers and the Borrowers may agree (the “ Closing
Date ”). At the Closing the Borrowers will deliver
to each Purchaser the Series C Notes to be purchased by it, against
payment of the purchase price therefore by transfer of immediately
available funds to the Borrowers in accordance with the wiring
instructions set forth on Annex 2 .
C.
Effect of Amendment and
Restatement . This
Agreement amends and restates the continuing obligations of the
Borrowers under the Existing Agreement. Nothing in this Agreement,
however, is intended to waive any failure by any Borrower to have
complied with all the terms and provisions of the Existing
Agreement and the other Transaction Documents (as such term is
defined in the Existing Agreement) as they were in effect from time
to time prior to the Closing Date or to waive of any Event of
Default (as such term is defined in the Existing Agreement)
existing as of the Closing Date. Further, nothing in this Agreement
is intended to impair the rights of any Holder to be reimbursed for
any costs and expenses or be indemnified by any Borrower pursuant
to the terms of the Existing Agreement and any other Transaction
Document (as such term is defined in the Existing Agreement) as in
effect at the time such rights arose.
The Borrowers’ obligation to sell the
Series C Notes is subject to the Purchasers having purchased all
the Series C Notes at the Closing. Each Purchaser’s
obligation to purchase and pay for its Series C Notes is subject to
the fulfillment to its satisfaction or its written waiver, on or
before the Closing Date, of the following conditions:
A.
Charter and
Proceedings. On or
before the Closing Date, the Charter and By-laws of the Company and
the constituting documents of the Partnership, the Transaction
Documents and all documents incidental hereto and thereto shall be
reasonably satisfactory in form and substance to the Purchasers,
and the Purchasers shall have received the following items, each of
which shall be in form and substance reasonably satisfactory to the
Purchasers and, unless otherwise noted, dated the Closing Date, and
in sufficient copies (except for the Series C Notes), for each
Purchaser:
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(i)
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Certified
copies of resolutions of the board of directors of the Company (on
its own behalf and as the general partner of the Partnership)
approving this Agreement, the Series C Notes to be issued, and the
other Transaction Documents, and of all documents evidencing other
necessary corporate action and governmental and other third party
approvals and consents, if any, with respect to this Agreement, the
Series C Notes to be issued, and each other Transaction
Document.
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(ii)
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A copy of the
Certificate of Organization of the Company and each amendment
thereto, certified (as of a date reasonably near the Closing Date)
by the Secretary of State of Delaware as being a true and correct
copy thereof and a copy of the Certificate of Limited Partnership
of the Partnership and each amendment thereto, certified (as of a
date reasonably near the Closing Date) by the Secretary of State of
Texas as being a true and correct copy thereof.
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(iii)
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A copy of a
certificate of the Secretary of State of Delaware, dated within 10
Business Days prior to the Closing Date certifying that the Company
is in good standing under the laws of State of Delaware and a copy
of a certificate of the Secretary of State of Texas, dated within
10 Business Days prior to the Closing Date certifying that the
Partnership is in good standing under the laws of State of
Texas.
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(iv)
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A copy of a
certificate of the Secretary of State of each state listed on
Schedule 8A , dated reasonably near the Closing
Date, stating that the Company and the Partnership (to the extent
applicable) are duly qualified and in good standing in such state
and have filed all annual reports required to be filed to the date
of such certificate.
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(v)
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An
Officers’ Certificate attested to by the secretary or an
assistant secretary of the Company, (and the statements made in
such certificate shall be true on and as of the Closing Date)
certifying on behalf of the Company, individually and as general
partner of the Partnership, as to (a) the absence of any amendments
to the Certificate of Organization of the Company or Certificate of
Limited Partnership of the Partnership since the date of the
Secretary of State certificates referred to in clause
(ii) above, (b) a true and correct copy of the By-laws of
the Company and the Agreement of Limited Partnership of the
Partnership, each as in effect on the Closing Date, (c) the absence
of any proceeding for the dissolution or liquidation of the Company
or the Partnership, (d) as to the matters set forth in
paragraph 3D , and (e) the absence of any event
occurring and continuing, or resulting from the Closing, that
constitutes a Default or an Event of Default.
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(vi)
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An
Officers’ Certificate attested to by the secretary or an
assistant secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to sign on
behalf of the Company, in its own capacity and as general partner
of the Partnership this Agreement, the Series C Notes, each other
Transaction Document and the other documents to be delivered
hereunder and thereunder.
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(vii)
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Originals of
this Agreement and the Series C Notes to be issued to each
Purchaser at the Closing executed by an authorized officer of the
Company.
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(viii)
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An
Officers’ Certificate, in form and substance reasonably
satisfactory to the Purchasers, attesting to the Solvency of the
Company, the Partnership and the Consolidated Group immediately
before and immediately after giving effect to consummation of the
transactions contemplated by this Agreement.
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B.
Opinion of Borrowers’
Counsel. The
Purchasers shall have received a favorable opinion, dated the
Closing Date and addressed to them, from Young, Williams, Henderson
& Fuselier, P.A., counsel to the Borrowers and local counsel to
the Purchasers in Tennessee, Ohio and Kentucky, covering the
matters set forth in Exhibit B and such other
matters as any Purchaser or Special Counsel may reasonably request
and otherwise in form and substance reasonably acceptable to the
Purchasers. To the extent that the opinions referred to in this
paragraph 3B are 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. The opinions of
counsel to the Borrowers, local counsel and any such other counsel
shall be in form and substance reasonably satisfactory to the
Purchasers and Special Counsel.
C.
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.
D.
Representations and
Warranties and Compliance. The representations and warranties contained in
paragraph 8 shall be true on and as of the Closing
Date after giving effect to the issue and sale of the Series C
Notes (and application of the proceeds as contemplated by
paragraph 5I ); no Default or Event of Default (as
such terms are defined in the Existing Agreement) under the
Existing Agreement and no Default or Event of Default under this
Agreement shall have occurred or be continuing; and the Borrowers
shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or
complied with by them at or prior to the Closing.
E.
Purchase Permitted by
Applicable Laws. The
offering, issuance, purchase and sale of and payment for, the
Series C Notes on the Closing Date on the terms and conditions of
this Agreement (including the use of the proceeds of such sale)
shall be permitted by the laws and regulations of each jurisdiction
to which a Purchaser is subject, without recourse to provisions
(such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by life insurance Company without
restriction as to the character of the particular investment, shall
not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securities Act or
Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and shall not subject any Purchaser to any tax,
penalty, liability or other condition adverse to it under or
pursuant to any applicable law or governmental regulation, and the
Purchasers shall have received such certificates or other evidence
as to matters of fact as they may reasonably request to enable them
to determine whether such purchase is so permitted.
F.
Private Placement
Numbers. Private
Placement Numbers shall have been assigned to the Notes by Standard
& Poor’s CUSIP Service Bureau.
G.
Sale of all Series C
Notes. The Borrowers
shall have sold to each other Purchaser, and each other Purchaser
shall have purchased, the Series C Notes to be purchased by it as
set forth in Annex 1 .
H.
Consent of Other
Persons. The
Borrowers shall have received all authorizations, consents and
approvals necessary in connection with the transactions
contemplated by this Agreement, including those identified in
Schedule 8L , in form and substance satisfactory
to the Purchasers.
I.
Appointment of Agent for
Service of Process. The Purchasers shall have received written
evidence satisfactory to them that CT Corporation has been
appointed by the Borrowers as their 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.
J.
Payment of Special Counsel
Fees. Without
limiting the provisions of paragraph 11A , the
Borrowers shall have paid the reasonable fees, charges and
disbursements of Special Counsel and Purchasers’ local
counsel (which may include a reasonable reserve for anticipated
fees and expenses) to the extent reflected in a statement of
Special Counsel and such local counsel rendered to the Borrowers at
or before the Closing.
K.
Other Transaction
Documents. The
Borrowers shall have each (i) executed and delivered (a) an Amended
and Restated Security Agreement in the form of Exhibit
C (the “ Security Agreement
”), an Amended and Restated Mortgage in the form of
Exhibit D-1 on the real property owned by such
Borrower in Ohio and described therein, an Amended and Restated
Mortgage in the form of Exhibit D-2 on the real
property owned by such Borrower in Kentucky and described therein,
and an Amended and Restated Deed of Trust in the form of
Exhibit D-3 on the real property owned by such
Borrower in Tennessee and described therein (collectively, the
“ Mortgages ”), and an Amended and
Restated Assignment of Leases and Rents in the form of
Exhibit E (the “ Assignment of
Leases and Rents ”) to secure the Secured Notes and
the other obligations of the Borrowers under this Agreement and the
other Transaction Documents with a first priority Lien on the
Collateral; (b) the Amended and Restated Collateral Agency
Agreement in the form of Exhibit F (the “
Collateral Agency Agreement ”) and (c) an
amended and restated indemnification agreement in favor of the
Purchasers, with respect to environmental and similar matters
affecting the Land in the form of Exhibit G (the
“ Indemnity ”); and (ii) executed and
filed and/or recorded such financing statements, mortgages or other
instruments, and taken all such other actions and delivered all
such other instruments as are required to perfect and/or maintain
the priority of the security interests granted in the Security
Documents and (iii) delivered or caused to be delivered (a) title
insurance policies in standard ALTA form or such other standard
forms prescribed for use in the relevant state and from a title
company as are reasonably satisfactory to the Purchasers, ensuring
that the Liens granted by the Mortgages on the Land in favor of the
Secured Notes as first priority Liens subject only to such
exceptions as are acceptable to the Purchasers in their sole
discretion and (b) certified copies of Requests for Information
(Form UCC-11) or equivalent reports, listing the financing
statements referred to in clause (ii) of this
paragraph 3K (the “ Financing
Statements ”) and all other effective financing
statements which name either Borrower (under its present name, any
previous names and any trade names) as debtor and which are filed
in the jurisdictions in which the Financing Statements have been
filed or in which a financing statement against such party would be
required to be filed in order to be effective, together with copies
of such other financing statements (none of which shall cover the
Collateral purported to be covered by the Security
Documents).
L.
Environmental and Zoning
Status. The
environmental and zoning status of the Land shall be satisfactory
in all respects to the Purchasers and the Borrowers shall have
provided to the Purchasers such reports, analyses and opinions with
respect thereto as the Purchasers shall reasonably request,
including, without limitation, opinions of counsel, Phase 1
Environmental Audits and ALTA form surveys as of a date which is
satisfactory to the Purchasers.
M.
Appraisals.
Purchasers shall have received
copies of appraisals of the Collateral in form and substance
satisfactorily to the Purchasers and reflecting that the aggregate
principal amount of the Secured Notes to be outstanding immediately
after the Closing is not more than 70% of the aggregate value of
the Land and any improvements and fixtures thereon.
N.
Subsidiary
Guaranties. Each
Subsidiary (other than the Partnership) shall have executed an
Amended and Restated Subsidiary Guaranty in the form of
Exhibit H (collectively, the “
Subsidiary Guaranties ”) guaranteeing the
obligations of the Borrowers hereunder and under the Secured Notes,
accompanied by copies of the organizational documents of such
Subsidiary and corporate resolutions (or equivalent) authorizing
such Guaranty, in each case certified as true and correct by an
appropriate officer of such Subsidiary.
4
PREPAYMENT AND
REPAYMENT
The Secured Notes may be prepaid only under the
circumstances set forth in paragraph 4A and shall
be repaid in accordance with paragraphs 4C, 4D and
4I upon any acceleration of final maturity as provided in
paragraph 7B .
A.
Optional Prepayment of
Secured Notes at Any Time. The Borrowers may prepay the Secured Notes, in
full, or in part in multiples of $1,000,000 on any date.
Prepayments of the principal of any Secured Notes shall be made
together with (a) interest accrued on the principal amount being
prepaid to the Settlement Date and (b) the Make Whole
Amount.
B.
Notice of Optional
Prepayment. The
Borrowers shall give each Holder irrevocable written notice of any
prepayment to be made pursuant to paragraph 4A at
least 30 days and not more than 60 days prior to the Settlement
Date specifying:
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(i)
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the series of
Secured Note being prepaid;
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(ii)
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the Settlement
Date and the Called Principal of the Secured Notes of such series
held by each such Holder;
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(iii)
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that such
prepayment is to be made pursuant to paragraph 4A
; and
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(iv)
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an estimate of
the Make Whole Amount payable on the Called Principal of such
Holder’s Secured Notes (calculated as if the date of such
notice were the date of prepayment), together with the details of
such computation.
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Upon the giving
of such notice, the Called Principal of Secured Notes of the
identified series, together with interest accrued thereon to the
Settlement Date and the Make Whole Amount shall become due and
payable on the Settlement Date. Not later than the close of
business on the second Business Day prior to the Settlement Date,
the Borrowers shall deliver to each Holder an Officers’
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.
C.
Scheduled Repayment of
Secured Notes.
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(i)
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With respect to
the Series A Notes, (a) on October 1, 1999, the Borrowers repaid
$56,656.04 in aggregate principal amount together with all then
accrued interest on the Series A Notes; and (b) on the first day of
each month commencing November 1, 1999 through and including
September 1, 2003, the Borrowers paid installments of principal and
interest each in the amount of $114,601.22. Subject to
paragraph 4E below, (a) on
October 1, 2003 the Borrowers will pay an installment of principal
and interest in the amount of $114,601.22 and (b) on the first day
of each month thereafter, through and including September 1, 2014,
the Borrowers will pay equal installments of principal and interest
in an amount which would, at the rate of interest set pursuant to
paragraph 1C(i)(a) , fully amortize the
outstanding principal of the Series A Notes as of the Closing Date
in 180 monthly installments. In any event, on September 1, 2014 the
Borrowers shall repay in full all unpaid principal and accrued
interest on the Series A Notes.
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(ii)
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With respect to
the Series B Notes, subject to paragraph 4E below,
the Borrowers shall (a) on the first day of each month through and
including December 1, 2003, commencing September 1, 1999, pay
all then accrued interest on the Series B Notes and (b) on the
first day of each month commencing January 1, 2004, through and
including September 1, 2014, pay equal installments of principal
and interest in an amount which would, based on the rate of
interest set forth in paragraph 1C(i)(b) , fully
amortize the then outstanding principal of the Series B Notes as of
December 1, 2003 in 180 monthly installments (which amount, if no
prepayments of the Series B Notes have then been made, would equal
$155,315.55 in the aggregate for all Series B Notes). In any event,
on September 1, 2014 the Borrowers shall repay in full all unpaid
principal and accrued interest on the Series B Notes.
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(iii)
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With respect to
the Series C Notes, subject to paragraph 4E below,
the Borrowers shall (a) on the first day of October, 2003 pay all
then accrued interest on the Series C Notes and (b) on the first
day of each month through and including September 1, 2014,
commencing November 1, 2003, pay equal installments of principal
and interest in an amount which would, at the rate of interest set
pursuant to paragraph 1C(i)(c) , fully amortize
the outstanding principal of the Series C Notes as of the Closing
Date in 180 monthly installments. In any event, on September 1,
2014 the Borrowers shall repay in full all unpaid principal and
accrued interest on the Series C Notes.
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D.
Prepayment of Secured Notes
Upon a Change of Control. The Borrowers shall give written notice (a
“ Change of Control Notice ”) to each
Holder not less than 30 nor more than 60 days prior to the
occurrence of any event which may reasonably be expected to result
in a Change of Control, or if the Borrowers have no knowledge that
such an event is to occur until less than 30 days prior thereto, or
until after the occurrence thereof, then as promptly as
practicable, but in no event more than 5 days after a Borrower
first acquires knowledge that such an event is definitely going to
occur or has occurred. The Change of Control Notice shall identify
the event, the reason why such event may result in or has resulted
in a Change of Control and the Persons involved, and shall include
such financial and other information as is available to the
Borrowers or which may be obtained by the Borrowers with reasonable
effort that would be reasonably necessary for a Holder to make an
informed decision as to whether to elect to require prepayment of
its Secured Notes under this paragraph 4D and
shall set forth the proposed effective date for, or if the Change
of Control has occurred, the actual date, of such Change of
Control. Any Holder, by giving written notice to the Borrowers of
such election (an “ Election Notice ”)
not later than 5 Business Days prior to the effective date of such
Change of Control, if the Change of Control Notice is given at
least 30 days prior to such effective date, and otherwise not later
than 30 days after the Change of Control Notice is given, shall
have the option to require the Borrowers to prepay all of its
Secured Notes at 100% of the principal amount thereof plus interest
accrued thereon to the Settlement Date and the Make Whole Amount.
Once given, any Election Notice may be revoked, by notice, given at
any time up to the last date an Election Notice could have been
given with respect to the Change of Control Notice. If the proposed
terms of a Change of Control change substantially, or if any other
event which may result in a Change of Control may or has occurred,
the Borrowers shall give each Holder a revised Change of Control
Notice and each Holder shall then have another opportunity to elect
to require prepayment of its Secured Notes under this
paragraph 4D by delivering to the Borrowers a new
Election Notice or to revoke, by written notice to the Borrowers,
any prior Election Notice, not later than 30 days following the
date such revised Change of Control Notice is given. The prepayment
of a Holder’s Secured Notes pursuant to this
paragraph 4D shall occur on the later of (a) the
effective date of such Change of Control or (b) 5 Business Days
following the date such Holder’s Election Notice is given.
Notwithstanding the foregoing, no prepayment or early redemption
shall be required pursuant to this paragraph 4D
unless a Change of Control occurs or has occurred.
Not later than
the close of business on the second Business Day prior to the
Settlement Date of a prepayment under this paragraph
4D , the Borrowers shall deliver to the Holder of each
Secured Note to be prepaid an Officers’ Certificate stating
whether a Make Whole Amount is payable in connection with such
prepayment and setting forth in detail the calculations used in
making such determination.
If the
Borrowers fail to give a Change of Control Notice and a Change of
Control occurs, or fail to give a proper Change of Control Notice
as to a Change of Control which has occurred, any Holder may, at
any time after the occurrence of such Change of Control, without
waiver of any right on the part of the Holder to accelerate its
Secured Notes pursuant to paragraph 7B , require
the Borrowers, on demand pursuant to this paragraph
4D , to prepay all of such Holder’s Secured Notes at
100% of the principal amount thereof plus accrued interest to the
Settlement Date and the Make Whole Amount.
E.
Payments Pro Rata;
Application of Payments. Upon any partial prepayment of the Secured Notes
pursuant to paragraph 4A and any scheduled
repayment of the Secured Notes pursuant to paragraph
4C , such payments shall be applied first to accrued
interest on the series of Secured Notes to which such payment
applies and then to repayment of principal of such series. The
accrued interest paid and the principal amount so prepaid or repaid
plus the Make Whole Amount shall be allocated among the Holders in
proportion to respective outstanding principal amounts of the
series of Secured Notes held by them to which such prepayment or
scheduled repayment applies. All partial prepayments of principal
made to the Holders in respect of the Secured Notes shall be
applied to the obligations of the Borrowers to make the scheduled
payments required by paragraph 4C in inverse order
of maturity.
F.
Retirement of Secured
Notes. The Borrowers
shall not, and shall not permit any of their Affiliates to, prepay
or otherwise retire any Secured Notes in whole or in part, prior to
its stated maturity (other than by prepayment pursuant to
paragraph 4A or 4D ,
scheduled repayment pursuant to paragraph 4C
or upon acceleration of final maturity pursuant to
paragraph 7B ), or purchase or otherwise acquire,
directly or indirectly, any Secured Notes held by any Holder unless
the Borrowers 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 Secured Notes of the same series 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 10
Business Days. If the Required Holders accept such offer, the
Borrowers 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 10 Business Days from its receipt of such notice to
accept such offer. No Secured Notes so prepaid or otherwise retired
or purchased or otherwise acquired by either Borrower or any of
their Affiliates shall thereafter be reissued or deemed to be
outstanding for any purpose under this Agreement.
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(i)
|
Manner
of Payment. The
Borrowers shall pay all amounts payable with respect to each
Secured Note (without any presentment of such Secured Note, unless
such payment is the final payment thereon, in which case the
original of the Secured Note shall be delivered to the Borrowers),
and without any notation of such payment being made thereon, by
crediting, by federal funds bank wire transfer, the account of the
Holder thereof in any bank in the United States of America as may
be designated in writing by such Holder, or in such other manner or
to such other address in the United States of America as may be
reasonably designated in writing by such Holder. Absent subsequent
notice from a Purchaser, Annex 1 shall be deemed
to constitute designation by the Purchasers to the Borrowers with
respect to payments to be made to the Purchasers on their Secured
Notes. In the absence of a written designation by a Holder, all
amounts payable with respect to each Secured Note held by such
Holder shall be paid by check mailed and addressed to the
applicable Holder at such Holder’s Home Office. All payments
of principal and interest and fees hereunder and under the Secured
Notes by the Borrowers shall be made without defense, set-off or
counterclaim.
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|
(ii)
|
Payments Due on Holidays.
If any payment due on, or with
respect to, any Secured Note shall fall due on a day other than a
Business Day, then such payment shall be made on the first Business
Day following the day on which such payment was due; provided that
if all or any portion of such payment shall consist of a payment of
interest, for purposes of calculating such interest, such payment
shall be deemed to have been originally due on such first following
Business Day, such interest shall accrue and be payable to (but not
including) the actual date of payment, and the amount of the next
succeeding interest payment shall be adjusted
accordingly.
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|
(iii)
|
Payments, When Received.
Any payment to be made to the
Holders hereunder or under the Secured Notes shall be deemed to
have been made on the Business Day such payment actually becomes
available at such Holder’s bank prior to the close of
business of such bank, provided that interest for one (1)
day at the non-default interest rate of the Secured Notes shall be
due on the amount of any such payment that actually becomes
available to such Holder at such Holder’s bank after 1:00 pm
(local time of such bank).
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|
(i)
|
Any and all
payments by the Borrowers hereunder or under the Secured Notes
shall be made free and clear of and without deduction for any and
all present or future Taxes and all liabilities with respect
thereto, excluding, (A) in the case of each Holder, net income
taxes that are imposed by the United States and net income taxes
(or franchise taxes imposed in lieu thereof) that are imposed on
such Holder by the state or foreign jurisdiction under the laws of
which such Holder is organized or any political subdivision
thereof, (B) in the case of each Holder, net income taxes (or
franchise taxes imposed in lieu thereof) that are imposed on such
Holder by the state or foreign jurisdiction of such Holder’s
applicable Home Office or any political subdivision thereof and (C)
in the case of any Holder that becomes a party after the Closing
Date, any taxes imposed by the United States solely by reason of
the organization or incorporation of such Holder outside the United
States (all such Taxes and liabilities other than those excluded in
clauses (A), (B) and (C) being
referred to as “ Covered Taxes ”). If
a Borrower shall be required by law to deduct any Covered Taxes
from or in respect of any sum payable hereunder or under any
Secured Note to any Holder, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this paragraph 4H ) such Holder receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) the Borrowers shall make such deductions and (iii) the
Borrowers shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable
law.
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(ii)
|
In addition,
the Borrowers shall pay any present or future stamp, documentary,
excise, property or similar Taxes that arise from or in connection
with or as a result of the issuance of the Secured Notes, any
payment made hereunder or in respect of the Secured Notes or the
execution, delivery or registration of, performing under, or
otherwise with respect to, this Agreement or the Secured Notes, or
any modification, waiver or amendment of this Agreement, the
Secured Notes or any other Transaction Document (“
Other Taxes ”).
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|
(iii)
|
The Borrowers
shall indemnify each Holder for the full amount of Taxes and Other
Taxes, and for the full amount of Covered Taxes imposed by any
jurisdiction on amounts payable under this paragraph
4H , imposed on or paid by such Holder and any liability
(including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto, whether or not such
Covered Taxes were correctly or legally imposed. This
indemnification shall be made within thirty (30) days from the date
such Holder makes written demand on the Borrowers specifying in
reasonable detail the basis therefore.
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(iv)
|
Within thirty
(30) days after the date of any payment of Covered Taxes or Other
Taxes, the Borrowers shall furnish to the subject Holder a copy of
the original receipt, certified as true and correct by a Senior
Officer. If the Borrowers determine that no Covered Taxes or Other
Taxes are payable in respect thereof, the Borrowers shall furnish,
or shall cause such payor to furnish, to the Holders an opinion of
counsel or other reasonably satisfactory evidence stating that such
payment is exempt from Covered Taxes or Other Taxes.
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I.
Make Whole
Amount. The
Borrowers acknowledge that the Make Whole Amount due at any
optional or required prepayment of its Secured Notes (including any
prepayment required pursuant to any provision of this
paragraph 4 or upon acceleration of final
maturity under paragraph 7B ) has been negotiated
with the Purchasers to provide a bargained for rate of return on
the Purchasers’ investment in the Secured Notes and is not a
penalty.
5
AFFIRMATIVE
COVENANTS
A.
Financial and Other
Reporting by the Borrowers. The Borrowers will deliver to each
Holder:
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(i)
|
as soon as
practicable, and in any event not more than 30 days after the end
of each Fiscal Quarter (except the last fiscal quarter of each
Fiscal Year), the unaudited consolidated (and consolidating)
balance sheet of the Consolidated Group as at the end of such
quarterly period and the related unaudited consolidated (and
consolidating) statements of income and retained earnings and of
cash flows of the Consolidated Group for such quarterly 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 (except as disclosed in
such certificate) with any changes in accounting policies discussed
in reasonable detail, subject to changes resulting from year-end
adjustments not material in scope or amount; provided that
delivery within the time period specified above of copies of the
Company’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefore and filed with the SEC
shall be deemed to satisfy the requirements of this
paragraph 5A(i) ;
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(ii)
|
as soon as
practicable, and in any event not more than 90 days, after the end
of each Fiscal Year, 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 income and
retained earnings and of cash flows 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; provided that the delivery within the time
period specified above of the Company’s Annual Report on Form
10-K for such fiscal year (together with the Company’s annual
report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the
requirements therefore and filed with the SEC shall be deemed to
satisfy the requirements of this paragraph 5A(ii)
;
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(iii)
|
together with
each delivery of financial statements of the Consolidated Group
pursuant to paragraphs 5A(i) and
5A(ii) , a certificate of the chief
financial officer of the Company (a) stating that he/she has
reviewed the terms of the Transaction Documents and has made, or
caused to be made under his/her 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, of any Default or Event of Default or,
if any such Default or Event of Default existed or exists,
specifying the nature and period of existence thereof and what
action the Borrowers have taken or are taking or propose to take
with respect thereto; (b) demonstrating (if applicable, with
computations in reasonable detail) compliance by the Borrowers with
the provisions of paragraph 6A ; (c) analyzing the
principal changes in the results of operations of the Consolidated
Group for such Fiscal Year or Fiscal Quarter from the results of
operations of the Consolidated Group for the immediately preceding
Fiscal Year or Fiscal Quarter; and (d) identifying in reasonable
detail the amount and type of Restricted Payments and Restricted
Investments made during the fiscal period covered by such financial
statements.
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|
(iv)
|
together with
each delivery of financial statements pursuant to paragraph
5A(ii) , a certificate by the Approved Auditor stating (a)
that their audit examination has included a review of the terms of
the Transaction Documents as they relate to accounting matters and
that such review is sufficient to enable them to make the statement
referred to in clause (c) below, (b) whether, in
the course of their audit examination, there has been disclosed the
existence during the Fiscal Year covered by such financial
statements (and whether they have knowledge of the existence as of
the date of such accountants’ certificate) of any condition
or event which constitutes a Default or Event of Default under
paragraph 7A and if during their audit examination
there has been disclosed (or if they have knowledge of) such a
condition or event, specifying the nature and period of existence
thereof (it being understood, however, that such accountants shall
not be liable to any Person by reason of their failure to obtain
knowledge of any Default or Event of Default which would not be
obtained in the course of an audit conducted in accordance with
generally accepted auditing standards), and (c) that based on their
annual examination nothing came to their attention which causes
them to believe that the information contained in the certificate
of the chief financial officer of the Company delivered therewith
pursuant to paragraph 5A(iii) is not correct or
that the matters set forth in such certificate are not stated in
accordance with the terms of this Agreement;
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(v)
|
promptly after
receipt thereof by a Borrower, copies of all management letters, if
any, submitted to such Borrower by independent public accountants
in connection with each annual, interim or special audit of the
books of the Consolidated Group;
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|
(vi)
|
promptly after
any Senior Officer obtains actual knowledge (a) of any Default or
Event of Default, (b) that any Holder has given notice to a
Borrower or taken any other action with respect to a claimed
Default or Event of Default under this Agreement, or (c) that any
Person has given any notice to a Borrower or any Subsidiary or
taken any other action with respect to a claimed default or event
or condition of the type referred to in paragraph
7A(ii) , an Officers’ Certificate specifying the
nature and period of existence of any such Default or Event of
Default, 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 Borrowers have
taken, are taking or propose to take with respect
thereto;
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|
(vii)
|
promptly, and
in any event within 5 days after any Senior Officer obtains
knowledge of any of the following, a written notice setting forth
the nature thereof and the action, if any, that the Borrowers or
any ERISA Affiliate proposes to take with respect
thereto:
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|
(viii)
|
with respect to
any Plan, any “reportable event” (as defined in section
4043(b) of ERISA) for which notice thereof has not been waived
pursuant to regulations of the DOL or “prohibited
transaction” (as such term is defined in section 406 of ERISA
or section 4975 of the IRC) in connection with any Plan or any
trust created thereunder; or
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|
(ix)
|
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, and any distress termination notice delivered to the PBGC
under section 4041 of ERISA in respect of any Plan, and any
determination of the PBGC in respect thereof;
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(x)
|
the placement
of any Multiemployer Plan in reorganization status under Title IV
of ERISA, any Multiemployer Plan becoming “insolvent”
(as such term is defined in section 4245 of ERISA) under Title IV
of ERISA, or the whole or partial withdrawal of a Borrower or any
ERISA Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith; or
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|
(xi)
|
any event,
transaction or condition that could reasonably be expected to
result in the incurrence of any liability by a Borrower or any
ERISA Affiliate, or the imposition of any Lien on any of the
rights, properties or assets of a Borrower 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, if such
liability or Lien, taken together with any other such liabilities
or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;
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|
(xii)
|
promptly after
transmission thereof, copies of all financial statements, proxy
statements, notices and reports as the Company shall send or make
available to its stockholders or debtholders and copies of all
registration statements (with exhibits), prospectuses and all
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 to the public concerning material
developments and (b) promptly after receipt thereof, copies of any
reports, statements and notices the Company may receive in
accordance with Section 13(d) or 14(d) of the Exchange Act or the
rules and regulations of any stock exchange;
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(xiii)
|
promptly after
transmission thereof, copies of all such financial statements,
notices, certificates and reports as a Borrower shall send to any
other lender or group of lenders in connection with, and after the
occurrence of, any event or condition which results in, or which,
with notice or the passage of time, could result in, the occurrence
of any event or condition of the type referred to in
paragraph 7A(ii) with respect to the Debt owed to
such lender or group of lenders or;
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|
(xiv)
|
promptly after
the commencement of any action or proceeding relating to a Borrower
or any Subsidiary in any court or before any Governmental Authority
or arbitration board or tribunal as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect, a notice specifying the nature and period of existence
thereof and what action the Borrowers have taken, are taking or
propose to take with respect thereto; and
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|
(xv)
|
with reasonable
promptness, such other information and data with respect to the
Borrowers or the Consolidated Group or relating to the ability of
the Borrowers or any Subsidiary to perform their obligations under
the Transaction Documents as may from time to time be reasonably
requested by any Holder.
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B.
Information Required by Rule
144A. The Borrowers
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 Secured Note.
C.
Inspection of
Property. Each
Borrower will permit the representatives of any Holder to visit and
inspect any of its properties or any of its Subsidiaries, 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, employees and independent public accountants
(and by this provision each Borrower authorizes said accountants to
discuss the finances and affairs of such Borrower and its
Subsidiaries) all at such reasonable times and as often as may be
reasonably requested in advance. At all times during which there
exists a Default or Event of Default, any reasonable out-of-pocket
expenses incurred by the Holders in connection with this
paragraph 5C shall be paid in accordance with
paragraph 11A .
D.
Existence,
Etc. Except as
otherwise specifically permitted by this Agreement, each Borrower
will, and will cause each Subsidiary to, at all times preserve and
keep in full force and effect its existence as a corporation, and
rights and franchises material to its business, and qualify and
maintain its qualification to do business and good standing in any
jurisdiction where the failure to do so individually or in the
aggregate would have a Material Adverse Effect.
E.
Payment of Taxes and
Claims.
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(i)
|
Each Borrower
will, and will cause each Subsidiary to, 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 the Consolidated Group’s properties or assets or
in respect of any of the Consolidated Group’s 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
actively contested in good faith by appropriate proceedings and if
reasonable reserves or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefore, and (b)
the failure to pay such Tax or claim is not expected, if such
contest were adversely determined, to have a Material Adverse
Effect.
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|
(ii)
|
Neither
Borrower will consent to or permit the filing of or be a party to
any consolidated income tax return on its behalf or on behalf of
any of its Subsidiaries with any Person (other than a consolidated
return that includes solely the Borrowers and their
Subsidiaries).
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F.
Compliance with Laws,
Etc. Each Borrower
will, and will cause each Subsidiary to, comply with all applicable
laws, rules, regulations and orders of any Governmental Authority
to which it is subject, and 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 reasonably ensure that non-compliance with such laws, ordinances
or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, permits, franchises and other
governmental authorizations in the aggregate do not, and could not
reasonably be expected to, have a Material Adverse
Effect.
G.
Maintenance of Properties
and Leases. Each
Borrower will, and will cause each Subsidiary to, maintain, in good
repair and working order and condition (other than ordinary wear
and tear and obsolescence excepted) all properties used in the
Consolidated Group’s business (except to the extent the
failure to so maintain, repair and keep in good working order does
not, and is not expected to, have a Material Adverse Effect), and
from time to time make or cause to be made all appropriate repairs,
renewals, replacements, additions and improvements thereof as
needed and comply in all material respects with the provisions of
all leases or licenses under which it leases or licenses any such
properties.
H.
Insurance.
Each Borrower will, and will cause
each Subsidiary to, maintain, with financially sound and reputable
insurers, 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 is 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 and shall, in any event, maintain
the insurance required by the Security Documents.
I.
Use of
Proceeds. Each
Borrower will use the proceeds it receives from the sale of the
Secured Notes only as set forth on Schedule 5I and
for working capital, and not for any purpose which would violate
any applicable law or governmental regulation or which is otherwise
prohibited under paragraph 8J .
J.
Environmental Compliance and
Indemnification. Each Borrower will, and will cause each
Subsidiary to, (a) 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 do not, and could not
reasonably be expected to have, a Material Adverse Effect, and (b)
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 any, plan,
order, decree, judgment, injunction, notice, or demand letter
issued, entered, promulgated, or approved thereunder directly
applicable to it, except to the extent of noncompliance which, in
the aggregate, does not, and could not reasonably be expected to,
have a Material Adverse Effect, and (c) operate all property owned
or leased by it such that no claims or obligations, including
clean-up obligations, which in the aggregate, have, or could
reasonably be expected to have, a Material Adverse Effect, shall
arise under any Environmental Law, and if any claim is made against
it or any such obligation shall arise under any Environmental Law,
it shall at its own cost and expense, timely satisfy such claim or
obligation, provided no such claim or obligation need be satisfied
for so long as (1) it is being actively contested in good faith by
appropriate proceedings, (2) such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been
made therefore and (3) no Lien shall attach to any such property as
a result of the failure to satisfy such claim or
obligation.
K.
Maintenance of Books and
Records. Each
Borrower will, and will cause each Subsidiary to: (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
5K shall be made in accordance with, or as required by,
GAAP in order to fairly reflect all of the Consolidated
Group’s financial transactions. Notwithstanding the
foregoing, the Borrowers and their Subsidiaries may make
adjustments and changes in the manner in which their books and
records are kept, provided , that:
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(i)
|
all such
adjustments and changes shall be required or permitted by GAAP, but
need not conform with the prior accounting practice of such
Borrower or such Subsidiary or its predecessor;
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(ii)
|
each Holder
shall be given written notice of all such changes or adjustments
together with the financial statements required by
subparagraph 5A(i) for the Fiscal Quarter in which
such change occurred, and together with the financial statements
required by subparagraph 5A(ii) , a year-end
listing and description of all such changes and adjustments and the
effect thereof by the chief financial officer of the
Company;
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(iii)
|
the financial
covenants and ratios set forth in paragraph 6A
shall continue to be calculated without regard to such adjustments
or changes unless and until the Required Holders have consented
thereto; and
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(iv)
|
the Company may
not change its Fiscal Year unless and until the Required Holders
have consented thereto.
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L.
Subsidiary
Guaranties. Each
Borrower will cause each Subsidiary hereafter existing to guaranty
the obligations of the Borrowers hereunder and under the Secured
Notes by executing and delivering to each Holder contemporaneously
with the organization or acquisition of such Subsidiary, a
Subsidiary Guaranty accompanied by copies of the organizational
documents of such Subsidiary and corporate resolutions (or
equivalent) authorizing such transaction, in each case certified as
true and correct by an appropriate officer of such Subsidiary and
such opinions of counsel with respect thereto as the Required
Holders reasonably request.
M.
Payment of Trade
Payables. Each
Borrower will, and will cause each Subsidiary to, pay all Trade
Payables in accordance with industry practice, but not later than
90 days after their due dates; provided no such Trade
Payable need be paid so long as (a) it is being actively contested
in good faith by appropriate proceedings and if reasonable reserves
or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefore, and (b) the failure to pay
such Trade Payable does not have a Material Adverse Effect or
result in a Lien on any of the Collateral.
N.
Additional Agreements;
Post-Closing Items. Each Borrower will, and will cause each
Subsidiary to, do all such acts, and will execute and deliver to
the Holders all such security agreements, pledges, mortgages,
financing statements, certificates, and other instruments and will
obtain all such governmental authorizations and other consents and
approvals and will do or cause to be done all such other things as
is required to confirm, perfect, or secure the priority of, the
interest of the Holders in the Collateral or as the Holders may
reasonably request from time to time in order to give full force
and effect to the Security Documents and to secure the
Holders’ rights thereunder. The Borrowers also agree to
provide the Holders, at the time of acquisition, with a mortgage on
any real property acquired by the Borrowers or any of their
Subsidiaries after the Closing Date, substantially on the same
terms and conditions as the Mortgages as in effect on the Closing
Date, subject only to Liens permitted pursuant to paragraph
6B(i)(a) . The Borrowers agree to provide the Purchasers
on or before October 31, 2003 with an opinion of Texas counsel, in
form and substance reasonably satisfactory to them, confirming the
due authorization, execution and delivery of the Transaction
Documents by the Partnership.
6
NEGATIVE
COVENANTS
A.
Financial
Covenants. For as
long as any of the Secured Notes are outstanding, the Borrowers
will not:
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(i)
|
Limitation on Total Funded Debt.
Permit, as of the last day of any
Fiscal Quarter, the ratio of Consolidated Funded Debt to
Consolidated Capitalization to be greater than:
|
|
|
(a)
|
From the
Closing until and including February 27, 2004, 0.70 to
1.00;
|
|
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(b)
|
After February
27, 2004 until and including November 29, 2004, 0.65 to 1.00;
and
|
|
|
(c)
|
After November
29, 2004, 0.60 to 1.00.
|
|
(ii)
|
Current
Ratio. Permit, as of
the last day of any Fiscal Quarter, the ratio of Consolidated
Current Assets to Consolidated Current Liabilities (excluding
deferred taxes) to be less than 1.25 to 1.00.
|
|
(iii)
|
Consolidated Tangible Net Worth.
Permit, as of the last day of any
Fiscal Quarter, Consolidated Tangible Net Worth to be less than (a)
from the Closing until and including February 27, 2004,
$53,000,000, (b) after February 27, 2004, until and including May
29, 2004, $60,000,000 and (c) after May 29, 2004, the sum of
$60,000,000 plus, if a positive number, 45% of Consolidated Net
Income for Fiscal Year 2005 and each Fiscal Year thereafter and
100% of any Equity Sale Proceeds.
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(iv)
|
Consolidated Cash Flow Coverage
Ratio. Permit, as of
the last day of any Fiscal Quarter, the ratio of (a) Consolidated
Operating Cash Flow, to (b) Consolidated Fixed Charges, to be less
than 1.25 to 1.00.
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(v)
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Consolidated Capital Expenditure to Depreciation
Ratio. Permit, as of
the last day of any Fiscal Quarter, a ratio of (a) the aggregate
Consolidated Capital Expenditures for the four Fiscal Quarters then
ended to (b) the aggregate Consolidated Depreciation for such four
Fiscal Quarters, to be exceed 1.00 to 1.00.
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B.
Liens and Other
Restrictions.
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(i)
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Liens. The Borrowers will not, and will not permit any
Subsidiary to 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 except for:
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(a) Liens on property not constituting the
Collateral securing Debt otherwise permitted under
paragraph 6H ;
(b) Liens existing as of the date of this Agreement
and described on Schedule 6B(i) ;
(c) Liens, and other charges incidental to the
conduct of their business, or the ownership of their 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 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 therefore and such Liens and charges in the
aggregate do not have a Material Adverse Effect;
(d) Liens arising as a result of any judicial
proceedings with respect to which the Borrowers shall then in good
faith be actively prosecuting appeal or other appropriate
proceedings for review and Liens arising from judgments or decrees
not constituting a Default or Event of Default unless, in either
case, such Lien 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 therefore and such Liens in
the aggregate do not have a Material Adverse Effect;
(e) deposits or pledges to secure worker’s
compensation, unemployment insurance, old age benefits or other
social security obligations or retirement benefits;
(f) Liens arising out of deposits in connection
with, or given to secure the performance of, bids, tenders, trade
contracts not for the payment of money, or leases, 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;
(g) 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
interfere with the use of such real properties in the operation of
the business of the Consolidated Group in the ordinary course;
and
(h) Liens on the Collateral created pursuant to the
Security Documents.
C.
Sales of Equity Interests by
Subsidiaries .
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(i)
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The Borrowers
will not permit any Subsidiary to, issue, sell or otherwise dispose
of, or part with control of, any of such Subsidiary’s own
Equity Interests (other than directors’ qualifying shares)
either directly or indirectly by the issuance of rights, options
for securities convertible into or exchangeable for Equity
Interests other than, in the case of a Subsidiary, to a Borrower or
a Wholly-Owned Subsidiary of the Company.
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(ii)
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The Borrowers
will not, and will not permit any Subsidiary to, sell, transfer or
otherwise dispose of any outstanding Equity Interests of another
Subsidiary other than to a Borrower or a Wholly-Owned Subsidiary of
the Company.
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D.
Merger and Sale of
Assets. The
Borrowers will not, and will not permit any Subsidiary to 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:
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(i)
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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 of the Company provided , that (a)
the Company or such Wholly-Owned Subsidiary shall be the continuing
or surviving corporation and (b) any acquiring or surviving
Wholly-Owned Subsidiary is a corporation or another legal entity
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
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(ii)
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the Borrowers
and their Subsidiaries may sell inventory and surplus or obsolete
equipment (other than Collateral) in the ordinary course of
business.
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E.
Subsidiary Dividend and
Other Restrictions. Other than this Agreement and the Transaction
Documents, the Borrowers will not, and will not permit any
Subsidiary to, 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 to a
Borrower.
F.
Transactions with Related
Parties. The
Borrowers will not, and will not permit any Subsidiary to, 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 Related Party, 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 arm’s
length with a Person not a Related Party.
G.
Dividends; Restricted
Payments and Restricted Investment.
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(i)
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Neither the
Borrowers nor any Subsidiary shall make, declare or incur any
liability to make any Dividends after the Closing Date unless (a)
no Event of Default or Default exists immediately before or
immediately after making or declaring such Dividend or could
otherwise be reasonably expected to result therefrom; (b) on a pro
forma basis the Borrowers would be in compliance with their
financial covenants set forth in paragraph 6A ;
and (c) the aggregate amount of Dividends made in any Fiscal Year
does not exceed $1,300,000.
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(ii)
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Neither the
Borrowers nor any Subsidiary shall make, declare or incur any
liability to make any Restricted Payments or any Restricted
Investment after the Closing Date unless (a) no Event of Default or
Default exists immediately before or immediately after making or
declaring such Restricted Payment or Restricted Investment or could
otherwise be reasonably expected to result therefrom; (b) on a pro
forma basis the Borrowers would be in compliance with their
financial covenants set forth in paragraph 6A ;
and (c) either (1) the aggregate amount of Restricted Payments and
Restricted Investments (excluding the ADM Loan and Restricted
Payments described in subclause (2) of this clause (c)) made in any
Fiscal Year does not exceed $500,000 (or $1,000,000 if immediately
after the making of any Restricted Payment or Restricted Investment
in such Fiscal Year the ratio of Consolidated Funded Debt to
Consolidated Capitalization is less than 0.60 to 1.00); or (2) such
payments (x) are Restricted Payments made during the period August
1, 2004 through November 30, 2005 solely to redeem up to 2,000,000
shares of the Company’s Common Stock in open market purchases
from Persons who are not Affiliates and (y) do not exceed
$20,000,000 in the aggregate.
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(iii)
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The Company may
spend up to $16,500,000 to complete the Going Private Transaction
provided the Company otherwise complies with subclauses (a) and (b)
of clause (iii) in connection therewith.
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For the purpose
of this paragraph 6G , the value of a Restricted
Investment which constitutes a liability (contingent or otherwise)
shall be the maximum amount of such liability and any Restricted
Payment or Restricted Investment made in property other than cash
shall be valued at the fair market value thereof at the time of
making such Restricted Payment or Restricted Investment as
determined in good faith by the Company’s Board of
Directors.
H.
Debt; Guaranties of
Debt.
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(i)
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The Borrowers
will not, and will not permit any Subsidiary to, create, incur or
assume any Debt after the Closing Date or issue any Equity Interest
convertible or exchangeable into Debt of a Borrower or any
Subsidiary unless (a) no Default or Event of Default has then
occurred which is then continuing, (b) no Default or Event of
Default would reasonably be anticipated to result therefrom, and
(c) on a pro forma basis, after giving effect to the incurrence of
such Debt, the Borrowers would be in compliance with their
financial covenants set forth in paragraph 6A
.
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(ii)
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The Partnership
will not, and the Borrowers will not permit any other Subsidiary
to, issue any Preferred Stock.
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I.
Compliance with
ERISA. The Borrowers
will not, and will not permit any ERISA Affiliate to:
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(i)
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engage in any
transaction in connection with which the Borrowers 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
reasonably be expected to 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, incur
any liability for post-retirement benefits under any and all
welfare benefit plans (as defined in section 3(1) 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;
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(ii)
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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
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(iii)
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at any time
permit the aggregate complete or partial withdrawal liability under
Title IV of ERISA with respect to Multiemployer Plans incurred by
the Consolidated Group and any ERISA Affiliate, or the aggregate
liability under Title IV of ERISA incurred by the Consolidated
Group
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