EXHIBIT 4.7
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WOLVERINE WORLD WIDE,
INC.
$75,000,000 6.50%
Senior Notes due December 8, 2008
NOTE PURCHASE
AGREEMENT
Dated December 8,
1998
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TABLE OF
CONTENTS
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1. AUTHORIZATION OF NOTES
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1
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2. SALE AND PURCHASE OF NOTES
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1
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3. CLOSING
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2
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4. CONDITIONS TO CLOSING
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2
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4.1 Representations and Warranties
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2
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4.2 Performance; No Default
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2
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4.3 Compliance Certificates
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3
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4.4 Opinions of Counsel
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3
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4.5 Purchase Permitted by Applicable Law
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3
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4.6 Sale of Other Notes
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4
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4.7 Payment of Special Counsel Fees
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4
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4.8 Private Placement Number
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4
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4.9 Changes in Corporate Structure
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4
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4.10 Proceedings and Documents
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4
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4.11 Offeree Letter
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4
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5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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5
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5.1 Organization; Power and Authority
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5
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5.2 Authorization, etc
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5
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5.3 Disclosure
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5
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5.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates
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6
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5.5 Financial Statements
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7
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5.6 Compliance with Laws, Other Instruments, etc.
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7
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5.7 Governmental Authorizations, etc.
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8
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5.8 Litigation; Observance of Agreements, Statutes and
Orders
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8
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5.9 Taxes
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8
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5.10 Title to Property; Leases
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9
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5.11 Licenses, Permits, etc
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9
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5.12 Compliance with ERISA
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9
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5.13 Private Offering by the Company
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10
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i
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5.14 Use of Proceeds; Margin Regulations
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11
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5.15 Existing Indebtedness; Future Liens
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11
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5.16 Foreign Assets Control Regulations, etc
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12
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5.17 Status under Certain Statutes
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12
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5.18 Environmental Matters
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12
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5.19 Year 2000 Issues
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13
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6. REPRESENTATIONS OF THE PURCHASER
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13
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6.1 Purchase for Investment
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13
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6.2 Source of Funds
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14
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7. INFORMATION AS TO COMPANY
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15
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7.1 Financial and Business Information
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15
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7.2 Officer's Certificate
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18
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7.3 Inspection
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19
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8. PREPAYMENT OF THE NOTES
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19
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8.1 Required Prepayments; Payment at Maturity
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19
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8.2 Optional Prepayments with Make-Whole Amounts
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20
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8.3 Allocation of Partial Prepayments
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20
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8.4 Maturity; Surrender, etc.
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20
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8.5 Purchase of Notes
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21
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8.6 Make-Whole Amount
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21
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8.7 Offer to Prepay Notes in the Event of a Debt Prepayment
Application
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22
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9. AFFIRMATIVE COVENANTS
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23
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9.1 Compliance with Law
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23
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9.2 Insurance
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24
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9.3 Maintenance of Properties
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24
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9.4 Payment of Taxes and Claims
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24
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9.5 Corporate Existence, etc.
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25
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10. NEGATIVE COVENANTS
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25
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10.1 Fixed Charge Coverage
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25
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10.2 Maintenance of Consolidated Net Worth
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25
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10.3 Liens
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25
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ii
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10.4 Incurrence of Funded Debt
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28
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10.5 Priority Debt
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28
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10.6 Merger or Consolidation
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28
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10.7 Sale of Assets
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29
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10.8 Transactions With Affiliates
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30
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10.9 Nature of Business
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30
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11. EVENTS OF DEFAULT
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30
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12. REMEDIES ON DEFAULT, ETC.
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33
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12.1 Acceleration
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33
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12.2 Other Remedies
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34
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12.3 Rescission
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34
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12.4 No Waivers or Election of Remedies, Expenses, etc.
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34
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13. REGISTRATION; EXCHANGE, SUBSTITUTION OF NOTES
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35
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13.1 Registration of Notes
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35
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13.2 Transfer and Exchange of Notes
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35
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13.3 Replacement of Notes
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36
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14. PAYMENTS ON NOTES
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36
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14.1 Place of Payment
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36
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14.2 Home Office Payment
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36
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15. EXPENSES, ETC.
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37
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15.1 Transaction Expenses
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37
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15.2 Survival
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37
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16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE
AGREEMENT
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37
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17. AMENDMENT AND WAIVER
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38
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17.1 Requirements
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38
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17.2 Solicitation of Holders of Notes
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38
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17.3 Binding Effect, etc.
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39
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17.4 Notes held by Company, etc.
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39
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iii
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18. NOTICES
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39
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19. REPRODUCTION OF DOCUMENTS
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40
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20. CONFIDENTIAL INFORMATION
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40
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21. SUBSTITUTION OF PURCHASER
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41
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22. MISCELLANEOUS
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41
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22.1 Successors and Assigns
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41
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22.2 Payments Due on Non-Business Days
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42
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22.3 Severability
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42
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22.4 Construction
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42
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22.5 Counterparts
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42
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22.6 Governing Law
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43
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iv
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SCHEDULE A
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Information Relating to Purchasers
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SCHEDULE B
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Defined Terms
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SCHEDULE 4.9
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Changes in Corporate Structure
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SCHEDULE 5.3
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Disclosure Materials
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SCHEDULE 5.4
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Subsidiaries of the Company and Ownership of
Subsidiary Stock; Company's Affiliates;
Company's
Directors and Senior Officers
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SCHEDULE 5.11
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Disclosures Regarding Patents, etc.
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SCHEDULE 5.14
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Use of Proceeds
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SCHEDULE 5.15
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Existing Indebtedness; Liens
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EXHIBIT 1
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Form of Senior Note
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EXHIBIT 4.4(a)
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Form of Opinion of Special Counsel for the Company
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v
WOLVERINE WORLD WIDE,
INC.
9341 Courtland Drive, NE
Rockford, Michigan 49351
6.50% Senior Notes due
December 8, 2008
December 8, 1998
TO EACH OF THE PURCHASERS
LISTED IN THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Wolverine World Wide, Inc., a Delaware corporation (the
"Company" ), agrees with you as follows:
1. AUTHORIZATION OF
NOTES.
The Company will authorize the issue and sale of
Seventy-Five Million Dollars ($75,000,000) aggregate principal
amount of its 6.50% Senior Notes due December 8, 2008 (the "
Notes ", such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement or
the Other Agreements (as hereinafter defined)). The Notes shall be
substantially in the form set out in Exhibit 1, with such changes
therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
2. SALE AND PURCHASE OF
NOTES.
Subject to the terms and
conditions of this Agreement, the Company will issue and sell to
you and you will purchase from the Company, at the Closing provided
for in Section 3, Notes in the principal amounts specified
opposite your name in Schedule A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering
into this Agreement, the Company is entering into separate Note
Purchase Agreements (the "Other Agreements" ) identical with
this Agreement with each of the other purchasers named in Schedule
A (the "Other Purchasers" ), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal
amount specified opposite its name in Schedule A. Your
obligations hereunder and the obligations of the Other Purchasers
under the Other Agreements are several and not joint obligations
and
you shall have no obligation
under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser
thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you
and the Other Purchasers shall occur at the offices of Kilpatrick
Stockton, LLP, at 1100 Peachtree Street, Suite 2800, Atlanta,
Georgia 30309, at a closing (the "Closing" ) on December 8,
1998 or on such other Business Day thereafter as may be agreed upon
by the Company and you and the Other Purchasers. At the Closing the
Company will deliver to you the Notes to be purchased by you in the
form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as you may request) dated the
date of the Closing and registered in your name (or in the name of
your nominee), against delivery by you to the Company or its order
of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the
account of the Company to account number 04 045 53, Account Name:
"Wolverine World Wide, Inc.", at NBD Bank N.A., Detroit, Michigan,
ABA Routing # 072000326. If at the Closing the Company shall fail
to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure
or such nonfulfillment.
4. CONDITIONS TO
CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following
conditions:
4.1 Representations and
Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the
Closing.
4.2 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
5.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have
entered into any transaction since the date of the Memorandum that
would have been prohibited by this Agreement had it applied since
such date.
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4.3 Compliance
Certificates.
(a) Officer's
Certificate . The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have
been fulfilled.
(b) Secretary's
Certificate . The Company shall have delivered to you a
certificate from a duly authorized Secretary or Assistant Secretary
of the Company certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization,
execution and delivery of the Notes, this Agreement and the Other
Agreements.
4.4 Opinions of
Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Warner,
Norcross & Judd LLP, counsel for the Company, in the form
attached hereto as Exhibit 4.4(a) and additional opinions of such
counsel covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such
opinions to you) and (b) from Kilpatrick Stockton LLP, your
special counsel in connection with such transactions, covering the
enforceability of this Agreement and the Notes, the absence of any
requirement to register the Notes under the Securities Act or to
qualify as an indenture under the Trust Indenture Act of 1939, as
amended, and such other matters incident to such transactions as
you may reasonably request.
4.5 Purchase Permitted by
Applicable Law, etc.
On the date of the Closing your purchase of Notes shall
(i) be permitted by the laws and regulations of each
jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment,
(ii) not violate any applicable Law (including, without
limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject you to any Tax,
penalty or liability under or pursuant to any applicable Law, which
Law was not in effect on the date hereof. If requested by you, you
shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6 Sale of Other
Notes.
Contemporaneously with the Closing, the Company shall sell
to the Other Purchasers and the Other Purchasers shall purchase the
Notes to be purchased by them at the Closing as specified in
Schedule A.
-3-
4.7 Payment of Special
Counsel Fees.
Without limiting the provisions of Section 15.1, the
Company shall have paid on or before the Closing the reasonable
fees, charges and disbursements of your special counsel referred to
in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to
the Closing.
4.8 Private Placement
Number.
A Private Placement number issued by Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners)
shall have been obtained for the Notes.
4.9 Changes in Corporate
Structure.
Except as specified in Schedule 4.9, the Company shall not
have changed its jurisdiction of incorporation or been a party to
any merger or consolidation and shall not have succeeded to all or
any substantial part of the liabilities of any other entity, at any
time following the date of the most recent financial statements
referred to in Section 5.5.
4.10 Proceedings and
Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably
request.
4.11 Offeree
Letter.
The Company shall have delivered a letter from First Chicago
Capital Markets, Inc. to you and your special counsel describing in
such detail as you may request the number and character of Persons
to whom the Company or any Person acting on its behalf has offered
any of the Notes or any similar securities of the Company and such
other matters regarding the manner of such offering as you may
request.
5. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 Organization; Power and
Authority.
The Company is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified as a
foreign
-4-
corporation and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and
authority to own or hold under lease the properties it purports to
own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the
Other Agreements and the Notes and to perform the provisions hereof
and thereof.
5.2 Authorization,
etc.
This Agreement and the Other Agreements and the Notes have
been duly authorized by all necessary corporate action on the part
of the Company, and this Agreement constitutes, and upon execution
and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3 Disclosure.
The Company, through its agent, First Chicago Capital
Markets, Inc., has delivered to you and each Other Purchaser a copy
of a Confidential Offering Memorandum, dated October, 1998 (the
"Memorandum" ), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the
Company and its Subsidiaries. Except as disclosed in Schedule 5.3,
this Agreement, the Memorandum, the documents, certificates or
other writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby and the
financial statements identified in Section 5.5, taken as a whole,
do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were
made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents, certificates
or other writings identified therein, or in the financial
statements identified in Section 5.5, since January 3, 1998,
there has been no change in the financial condition, operations,
business, properties or prospects of the Company or any Subsidiary
except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is
no fact known to the Company that could reasonably be expected to
have a Material Adverse Effect that has not been set forth herein
or in the Memorandum or in the other documents, certificates and
other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions
contemplated hereby.
-5-
5.4 Organization and
Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains
(except as noted therein) complete and correct lists (i) of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other
Subsidiary, and specifying those Subsidiaries that are Material
Subsidiaries, (ii) of the Company's Affiliates, other than
Subsidiaries, and (iii) of the Company's directors and senior
officers.
(b) All of the outstanding
shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 5.4 as being owned by the Company and
its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each Subsidiary
identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as
a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to
own or hold under lease and to transact the business it transacts
and proposes to transact.
(d) No Subsidiary is a
party to, or otherwise subject to any legal restriction or any
agreement (other than this Agreement, the agreements listed on
Schedule 5.4, and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of
such Subsidiary.
5.5 Financial
Statements.
The Company has delivered to you
and to each Other Purchaser the consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 1994, December 30,
1995, December 28, 1996, and January 3, 1998 and the statements of
income and retained earnings and changes in financial position or
cash flows for the fiscal years ended on said dates, each
accompanied by a report thereon containing an opinion unqualified
as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by Ernst &
Young. All of such statements (including in each case the related
schedules and notes) have been prepared in accordance with GAAP
except as therein noted, are correct and complete and present
fairly the financial position of the Company and its Subsidiaries
as of such dates and the
-6-
consolidated results of their
operations and changes in their financial position or cash flows
for such periods. The Company has delivered to you and to each
Other Purchaser the unaudited consolidated balance sheets of the
Company and its Subsidiaries as of September 12, 1998 and September
6, 1997, and the unaudited statements of operations and cash flows
for the nine-month periods ended on said dates. Such financial
statements have been prepared in accordance with GAAP consistently
applied, are correct and complete and present fairly the financial
position of the Company and its Subsidiaries as of said dates and
the consolidated results of their operations and cash flows for
such periods except as therein noted (subject to normal year-end
adjustments).
5.6 Compliance with Laws,
Other Instruments, etc.
The execution, delivery and performance by the Company of
this Agreement, the Other Agreements, and the Notes will not
(i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument
to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may
be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii)
violate any provision of any Law of any Governmental Authority
applicable to the Company or any Subsidiary.
5.7 Governmental
Authorizations, etc.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required
in connection with the execution, delivery or performance by the
Company of this Agreement, the Other Agreements, or the Notes.
5.8 Litigation; Observance
of Agreements, Statutes and Orders.
(a) There are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b)
Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of
any court, arbitrator or Governmental Authority or is in violation
of any Law (including without limitation Environmental Laws) of
any
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Governmental Authority, which
default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have
paid or reflected appropriate reserves or accruals on its balance
sheets for all taxes (including federal, state, local, sales, use,
VAT, customs, excise, franchise, assets, ad valorem and withholding
taxes), duties, assessments and levies (collectively "Taxes"
), except for any Taxes (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the
Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in
respect of federal, state or other Taxes for all fiscal periods are
adequate. The federal income tax returns of the Company and its
Subsidiaries have been audited by the Internal Revenue Service for
all fiscal years up to and including the fiscal year ended December
30, 1995 and any resulting deficiencies, additional assessments,
fines, penalties, interest or other charges have either been paid
or adequately reserved for in the financial statements identified
in Section 5.5.
5.10 Title to Property;
Leases.
The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the
aggregate are Material, including all such properties reflected as
owned in the most recent audited balance sheet referred to in
Section 5.5 or purported to have been acquired by the Company
or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material
respects.
5.11 Licenses, Permits,
etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its
Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that individually or in the
aggregate are Material;
(b) the ownership or use of the
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and tradenames,
-8-
and other rights
owned or used by the Company and its Subsidiaries do not conflict
with the rights of others, except for such conflicts which could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(c) to the best knowledge of the
Company, no product of the Company or any Subsidiary infringes in
any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(d) to the best knowledge of the
Company, there is no Material violation by any Person of any right
of the Company or any of its Subsidiaries with respect to any
patent, copyright, service mark, trademark, trade name or other
right owned or used by the Company or any of its Subsidiaries.
5.12 Compliance with
ERISA.
(a) The Company and each
ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in
the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of
the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of
the aggregate benefit liabilities under each of the Plans (other
than Multiemployer Plans), determined as of the end of such Plan's
most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities by more than $50,000 in the aggregate for all Plans.
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) The Company and its
ERISA Affiliates have not incurred withdrawal liabilities (and are
not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
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(d) The expected
post-retirement benefit obligation (determined as of the last day
of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(e) The execution and
delivery of this Agreement and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to
section 4975(c)(1)(A)-(F) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is made
in reliance upon and subject to (i) the accuracy of your
representation in Section 6.2 as to the sources of the funds used
to pay the purchase price of the Notes to be purchased by you and
(ii) the assumption, made solely for the purpose of making such
representation, that Department of Labor Interpretive Bulletin 75-2
with respect to prohibited transactions remains valid in the
circumstances of the transactions contemplated herein.
5.13 Private Offering by
the Company.
Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other
than you, the Other Purchasers and not more than 45 other
Institutional Investors, each of which has been offered the Notes
at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
5.14 Use of Proceeds;
Margin Regulations.
The Company will apply the proceeds of the sale of the Notes
as set forth in Schedule 5.14. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly,
for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying
or carrying or trading in any securities under such circumstances
as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 1% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more
than 1% of the value of such assets. As used in this Section, the
terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said
Regulation U.
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5.15 Existing Indebtedness;
Future Liens.
(a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of
all outstanding Indebtedness of the Company and its Subsidiaries as
of September 12, 1998 and, as to each item listed, a general
description of any property securing such Indebtedness. Since the
date as of which the Company has prepared Schedule 5.15, there has
been no Material change in the amounts, interest rates, sinking
funds, installment payments or maturities of the Indebtedness of
the Company or its Subsidiaries or the security therefor. Neither
the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary and
no event or condition exists with respect to any Indebtedness of
the Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of
payment.
(b) Except as disclosed in
Schedule 5.15, neither the Company nor any Subsidiary has
agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien
not permitted by Section 10.3.
5.16 Foreign Assets Control
Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor
its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
5.17 Status under Certain
Statutes.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as
amended.
-11-
5.18 Environmental
Matters.
Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding
has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing,
(a) neither the Company nor any
Subsidiary has knowledge of any facts which would give rise to any
claim, public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or in any
way related to real properties now or formerly owned, leased or
operated by any of them or to other assets or their use, except, in
each case, such as could not reasonably be expected to result in a
Material Adverse Effect;
(b) neither the Company nor any
of its Subsidiaries has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them
and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse
Effect; and
(c) all buildings on all real
properties now owned, leased or operated by the Company or any of
its Subsidiaries are in compliance with applicable Environmental
Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
5.19 Year 2000
Issues.
The Company and its Subsidiaries
have made a reasonable assessment of Year 2000 Issues, have adopted
a program intended to remediate all Year 2000 Issues concerning the
information and other systems and computer applications operated or
used by the Company and its Subsidiaries on a timely basis, and
have fully complied with the requirements of the Securities and
Exchange Commission regarding disclosure of Year 2000 issues. Based
on such assessment and program, the Company does not reasonably
anticipate that Year 2000 Issues concerning the information and
other systems and computer applications operated or used by the
Company and its Subsidiaries will have a Material Adverse Effect.
The Company has delivered to you a copy of its Quarterly Report on
Form 10-Q for the most recently ended fiscal quarter of the Company
filed with the Securities and Exchange Commission. There is no fact
known to the Company that is inconsistent with the continued
accuracy of the information contained in such Form under the
heading "Year 2000 Readiness Disclosure" and such information
continues to represent
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the Company's best estimate of
the estimated impact of Year 2000 Issues on the Company and its
Subsidiaries as provided therein.
6. REPRESENTATIONS OF THE
PURCHASER.
6.1 Purchase for
Investment.
You represent that (i) you are not a "creditor" as defined
in Regulation T of the Board of Governors of the Federal Reserve
System (12 CFR 220), (ii) you are an insurance company having its
principal place of business in a state set forth on the Purchaser
Schedule attached as Schedule A, (iii) you (and any separate
accounts for which you are purchasing a Note or Notes) are an
"accredited investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act, and (iv) that you are
purchasing the Notes for your own account or for one or more
separate accounts maintained by you and not with a view to the
distribution thereof, provided that the disposition of your
or their property shall at all times be within your or their
control. You understand that the Notes have not been registered
under the Securities Act or any other state securities law and may
be resold only if registered pursuant to the provisions of the
Securities Act and applicable state securities laws or if an
exemption from registration is available, except under
circumstances where neither such registration nor such an exemption
is required by law, and that the Company is not required to
register the Notes.
6.2 Source of
Funds.
You represent that at least one of the following statements
is an accurate representation as to each source of funds (a
"Source" ) to be used by you to pay the purchase price of
the Notes to be purchased by you hereunder:
(a) the Source is an "insurance
company general account" within the meaning of Prohibited
Transaction Exemption ( "PTE" ) 95-60 (issued July 12, 1995)
and there is no employee benefit plan (treating as a single plan
all plans maintained by the same employer or employee organization)
with respect to which the amount of the general account reserves
and liabilities for all contracts held by or on behalf of such plan
exceeds 10% of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus,
as set forth in your most recent annual statement in the form
required by the National Association of Insurance Commissioners as
filed with your state of domicile; or
(b) the Source is either (i) an
insurance company pooled separate account, within the meaning of
PTE 90-1 (issued January 29, 1990), or (ii) a bank collective
investment fund, within the meaning of the PTE 91-38 (issued July
12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
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(c) the Source constitutes assets
of an "investment fund" (within the meaning of Part V of the QPAM
Exemption) managed by a "qualified professional asset manager" or
"QPAM" (within the meaning of Part V of the QPAM Exemption), no
employee benefit plan's assets that are included in such investment
fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization
and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a Person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company, and (i) the identity of such QPAM and
(ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company
in writing pursuant to this paragraph (c); or
(d) the Source is a governmental
plan; or
(e) the Source is one or more
employee benefit plans, or a separate account or trust fund
comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this
paragraph (e); or
(f) the Source does not include
assets of any employee benefit plan, other than a plan exempt from
the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit
plan" , "governmental plan" , and "separate
account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
7. INFORMATION AS TO
COMPANY.
7.1 Financial and Business
Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements
-- within 45 days after the end of each quarterly fiscal period in
each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of,
(i)
a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
-14-
(ii)
consolidated statements of operations and cash flows of the
Company and its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in
comparative form the figures for the corresponding periods in the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements
generally, and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and
cash flows, subject to changes resulting from year-end
adjustments;
provided that delivery within
the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this
Section 7.1(a) so long as such requirements of the Securities and
Exchange Commission continue to require that Form 10-Q include the
financial statements described in subparagraphs (i) and (ii)
above;
(b) Annual Statements --
within 90 days after the end of each fiscal year of the Company,
duplicate copies of,
(i) a consolidated balance sheet
of the Company and its Subsidiaries, as at the end of such year,
and
(ii) consolidated statements of
operations, changes in stockholders' equity and cash flows of the
Company and its Subsidiaries, for such year,
setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and
accompanied by:
(A) an opinion thereon of
Ernst & Young LLP, or another firm of independent certified
public accountants of comparable national standing, which opinion
shall state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances; and
-15-
(B) a certificate of such
accountants stating that they have reviewed this Agreement and
stating further whether, in making their audit, they have become
aware of any condition or event that then constitutes a Default or
an Event of Default, and, if they are aware that any such condition
or event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants shall
not be liable, directly or indirectly, for any failure to obtain
knowledge of any Default or Event of Default unless such
accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or
did not make such an audit);
provided that the delivery
within the time period specified above of the Company's Annual
Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant
to Rule 14a-3 under the Exchange Act) prepared in accordance with
the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate
described in clause (B) above, shall be deemed to satisfy the
requirements of this Section 7.1(b) so long as such requirements of
the Securities and Exchange Commission continue to require that
Form 10-K include the financial statements described in
subparagraphs (i) and (ii) above;
(c) SEC and Other Reports
-- promptly upon their becoming available, one copy of ( i )
each financial statement, report, notice or proxy statement sent by
the Company or any Subsidiary to public securities holders
generally, and ( ii ) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities
and Exchange Commission and of all press releases and other
statements made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event
of Default -- promptly, and in any event within five days after
a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice
or taken any action with respect to a claimed default hereunder or
that any Person has given any notice or taken any action with
respect to a claimed default of the type referred to in Section
11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes
to take with respect thereto;
(e) ERISA Matters --
promptly, and in any event within ten days after a Responsible
Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect
thereto:
-16-
(i) with respect to any Plan, any
reportable event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date
hereof; or
(ii) the taking by the PBGC of
steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan if such
termination is reasonably likely to result in liability of the
Company or any Subsidiary to PBGC or any Plan in excess of
$200,000; or
(iii) any event, transaction or
condition that could result in the incurrence of any liability by
the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating
to employee benefit plans, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect; or
(iv) if at any time 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 $50,000;
(f) Notices From Governmental
Authority -- promptly, and in any event within 30 days of
receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority
relating to any Law that could reasonably be expected to have a
Material Adverse Effect;
(g) Rule 144A Information
-- with reasonable promptness, any information necessary to permit
any such holder to comply with Rule 144A under the Securities Act,
or any successor rule; and
(h) Requested Information
-- with reasonable promptness, such other data and information
relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations
hereunder and under the Notes as from time to time may be
reasonably requested by any holder of Notes that is an
Institutional Investor.
-17-
7.2 Officer's
Certificate.
Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting
forth:
(a) Covenant Compliance --
the information (including detailed calculations) required in order
to establish whether the Company was in compliance with the
requirements of Sections 10.1 through 10.7 hereof, inclusive,
during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and
(b) Event of Default -- a
statement that such officer has reviewed the relevant terms hereof
and has made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the
existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure
of the Company or any Subsidiary to comply with any Law),
specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with
respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder
of Notes that is an Institutional Investor:
(a) No Default -- if no
Default or Event of Default then exists, at the expense of such
holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries
with the Company's officers, and (with the consent of the Company,
which consent will not be unreasonably withheld, and after giving
the Company the opportunity to accompany the holder on such
visitation) its independent public accountants, and (with the
consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as
may be reasonably requested in writing; and
(b) Default -- if a
Default or Event of Default then exists, at the expense of the
Company to visit and inspect any of the offices or properties of
the
-18-
Company or any
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as
may be requested.
8. PREPAYMENT OF THE
NOTES.
8.1 Required Prepayments;
Payment at Maturity.
On December 8, 2002 and on each December thereafter to and
including December, 2007, the Company will prepay $10,714,285, and
on December 8, 2008 the Company will make a final payment of
$10,714,290 of principal amount (or such amount as shall then be
the remaining outstanding principal amount) of the Notes at par and
without payment of the Make-Whole Amount or any premium,
provided that upon any partial prepayment of the Notes
pursuant to Section 8.2 or Section 8.7 the principal amount of
each required prepayment and the payment at final maturity of the
Notes becoming due under this Section 8.1 on and after the
date of such prepayment shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment.
8.2 Optional Prepayments
with Make-Whole Amount.
The Company may, at its option, upon notice as provided
below, prepay at any time all, or from time to time any part of,
the Notes in an amount not less than 10% of the aggregate principal
amount of the Notes then outstanding in the case of a partial
prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect
to such principal amount. Any such optional payment shall be on a
Business Day. The Company will give each holder of Notes written
notice of each optional prepayment under this Section 8.2 not less
than 30 days and not more than 60 days prior to the date fixed for
such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a
Senior Financial Officer as to the estimated Make-Whole Amount due
in connection with such prepayment (calculated as if the date of
such notice were the date of the prepayment), setting forth the
details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a
certificate via facsimile transmission of a Senior Financial
Officer specifying the calculation of such Make-Whole Amount as of
the specified prepayment date. The Notes shall not be subject to
prepayment at the option of the Company except pursuant to this
Section 8.2.
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8.3 Allocation of Partial
Prepayments.
Except as otherwise provided in Section 8.7, in the case of
each partial prepayment of the Notes, the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts of all such Notes not
theretofore called for prepayment.
8.4 Maturity; Surrender,
etc.
In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall
mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and
after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or
prepaid in full shall be surrendered to the Company and cancelled
and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
8.5 Purchase of
Notes.
The Company will not, and will not permit any Affiliate to,
purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this
Agreement and the Notes. The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement
and no Notes may be issued in substitution or exchange for any such
Notes.
8.6 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, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due
and payable pursuant to Section 12.1, as the context
requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments
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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, the rate per annum equal to 0.50%
plus the yield to maturity implied by (i) the yields
reported (offer side), 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 Bloomberg Financial
Markets Service for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (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 in
(i) and (ii) above 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 maturity closest to
and greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the maturity closest to and less
than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal
into (ii) the sum of the products obtained by multiplying (a) the
principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years
(calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal
and interest thereon that would be due after the Settlement Date
with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.
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"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to Section 8.2 has become or is
declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
8.7 Offer to Prepay Notes
in the Event of a Debt Prepayment Application.
(a) Notice of Debt Prepayment
Application. In the event of a Debt Prepayment Application
pursuant to Section 10.7, the Company shall offer to prepay, in
accordance with and subject to the definition of Debt Prepayment
Application, the Ratable Portion of each Note held by each holder
on the Business Day specified in such offer, which date shall occur
prior to the expiration of the 365 day period specified in Section
10.7 and no later than the first Debt Prepayment Application with
respect to any other Senior Funded Debt of the Company or any of
its Subsidiaries (the "Proposed DPA Prepayment Date" ). The
Proposed DPA Prepayment Date shall be not less than 30 days and not
more than 60 days after the date of such offer (if the Proposed DPA
Prepayment Date shall not be specified in such offer, the Proposed
DPA Prepayment Date shall be the 60th day after the date of such
offer, or if such date is not a Business Day, then on the last
Business Day prior to such date). Each offer under this Section
8.7(a) shall be accompanied by the certificate described in
subparagraph (d) of this Section 8.7.
(b) Acceptance. A holder
of Notes may accept an offer to prepay made pursuant to Section
8.7(a) by causing a notice of such acceptance to be delivered to
the Company at least five Business Days prior to the Proposed DPA
Prepayment Date. A failure by any holder of Notes to respond to an
offer to prepay made pursuant to this Section 8.7 shall be deemed
to constitute a rejection of such offer by such holder.
(c) Prepayment. Prepayment
of the Notes to be prepaid pursuant to this Section 8.7 shall be at
100% of the principal amount of such Notes, or such lesser
principal amount as shall equal the Ratable Portion of the Notes
being repaid, together with interest on such Notes accrued to the
date of prepayment. The prepayment shall be made on the Proposed
DPA Prepayment Date.
(d) Officer's Certificate.
Each offer to prepay the Notes pursuant to Section 8.7(a) shall be
accompanied by a certificate of a Senior Financial Officer of the
Company, dated the date of such offer and specifying: (i) the
Proposed DPA Prepayment Date; (ii) that such offer is made pursuant
to Section 8.7(a); (iii) the aggregate principal amount of all
Notes, and the principal amount of each Note, offered to be prepaid
(determined in accordance with the definition of Ratable Portion);
(iv) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed DPA Prepayment Date; and (v) in
reasonable
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detail, the
respective natures, dates and Net Proceeds Amounts of the Asset
Dispositions giving rise to such offer of prepayment.
9. AFFIRMATIVE
COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1 Compliance with
Law.
The Company will and will cause each of its Subsidiaries to
comply with all Laws to which each of them is subject, including,
without limitation, Environmental Laws and ERISA, and will obtain
and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to
ensure that non-compliance with such Laws or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
9.2 Insurance.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and
in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly
situated.
9.3 Maintenance of
Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times,
provided that this Section shall not prevent the Company or
any Subsidiary from discontinuing the operation and the maintenance
of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.4 Payment of Taxes and
Claims.
The Company will and will cause
each of its Subsidiaries to file all tax returns required to be
filed in any jurisdiction and to pay and discharge all Taxes
shown
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to be due and payable on such
returns and all other Taxes imposed on them or any of their
properties, assets, income or franchises, to the extent such Taxes
have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of the Company or
any Subsidiary, provided that neither the Company nor any
Subsidiary need pay any such Tax or claims if (i) the amount,
applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all
such taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
9.5 Corporate Existence,
etc..
The Company will at all times preserve and keep in full
force and effect its corporate existence. Subject to Sections 10.6,
10.7 and 10.8, the Company will at all times preserve and keep in
full force and effect the legal existence of each of its
Subsidiaries (unless merged into the Company or a Wholly-Owned
Subsidiary) and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and
effect such legal existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse
Effect.
10. NEGATIVE
COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1 Fixed Charge
Coverage.
The Company will not, at any time, permit the Fixed Charges
Coverage Ratio to be less than 1.5 to 1.0.
10.2 Maintenance of
Consolidated Net Worth.
The Company shall not, at any time, permit Consolidated Net
Worth to be less than the sum of (a) $220,000,000, minus (b) Net
Repurchase Expenditures, if any, at such time, plus (c) 40% of its
aggregate Consolidated Net Earnings (but only if a positive number)
for the period beginning on September 13, 1998 and ending at the
end of the fiscal quarter most recently completed at such time.
10.3 Liens.
The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly
create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any
property (including, without
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limitation, any document or
instrument in respect of goods or accounts receivable) of the
Company or any Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom (whether or not
provision is made for the equal and ratable securing of the Notes
in accordance with the last paragraph of this Sec
