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EXHIBIT 10(a)
ALLETE Second Quarter 2007 Form 10-Q
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ALLETE, INC.
$50,000,000
5.99% Senior Notes Due June 1, 2017
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NOTE PURCHASE AGREEMENT
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Dated June 8, 2007
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TABLE OF CONTENTS
PAGE
SECTION 1. AUTHORIZATION OF
NOTES.............................................1
SECTION 2. SALE AND PURCHASE OF
NOTES.........................................1
SECTION 3.
CLOSING............................................................1
SECTION 4. CONDITIONS TO
CLOSING..............................................2
Section 4.1 Representations and
Warranties..............................2
Section 4.2 Performance; No
Default.....................................2
Section 4.3 Compliance
Certificates.....................................2
Section 4.4 Opinions of
Counsel.........................................2
Section 4.5 Purchase Permitted By Applicable Law,
Etc...................3
Section 4.6 Sale of
Notes...............................................3
Section 4.7 Payment of Special Counsel
Fees.............................3
Section 4.8 Private Placement
Number....................................3
Section 4.9 Changes in Corporate
Structure..............................3
Section 4.10 Funding
Instructions........................................3
Section 4.11 Proceedings and
Documents...................................3
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY......................4
Section 5.1 Organization; Power and
Authority...........................4
Section 5.2 Authorization,
Etc..........................................4
Section 5.3
Disclosure..................................................4
Section 5.4 Organization and Ownership of Shares of
Subsidiaries..............................................4
Section 5.5 Financial Statements; Material
Liabilities..................5
Section 5.6 Compliance with Laws, Other Instruments,
Etc................5
Section 5.7 Governmental Authorizations,
Etc............................6
Section 5.8
Litigation..................................................6
Section 5.9
Taxes.......................................................6
Section 5.10 Title to Property;
Leases...................................6
Section 5.11 Licenses, Permits,
Etc......................................6
Section 5.12 Compliance with
ERISA.......................................6
Section 5.13 Private Offering by the
Company.............................7
Section 5.14 Use of Proceeds; Margin
Regulations.........................8
Section 5.15 Existing Indebtedness; Future
Liens.........................8
Section 5.16 Foreign Assets Control Regulations,
Etc.....................8
Section 5.17 Status under Investment Company Act and ICC
Termination Act...........................................9
Section 5.18 Environmental
Matters.......................................9
SECTION 6. REPRESENTATIONS OF THE
PURCHASERS..................................9
Section 6.1 Purchase for
Investment.....................................9
Section 6.2 Source of
Funds.............................................9
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SECTION 7. INFORMATION AS TO
COMPANY.........................................11
Section 7.1 Financial and Business
Information.........................11
Section 7.2 Officer's
Certificate......................................13
Section 7.3
Visitation.................................................14
SECTION 8. PAYMENT AND PREPAYMENT OF THE
NOTES...............................14
Section 8.1
Maturity...................................................14
Section 8.2 Optional Prepayments with Make-Whole
Amount................14
Section 8.3 Change in
Control..........................................15
Section 8.4 Allocation of Partial
Prepayments..........................16
Section 8.5 Maturity; Surrender,
Etc...................................16
Section 8.6 Purchase of
Notes..........................................16
Section 8.7 Make-Whole
Amount..........................................17
SECTION 9. AFFIRMATIVE
COVENANTS.............................................18
Section 9.1 Compliance with
Law........................................18
Section 9.2
Insurance..................................................18
Section 9.3 Maintenance of
Properties..................................18
Section 9.4 Payment of Taxes and
Claims................................19
Section 9.5 Corporate Existence,
Etc...................................19
Section 9.6 Books and
Records..........................................19
SECTION 10. NEGATIVE
COVENANTS................................................19
Section 10.1 Transactions with
Affiliates...............................19
Section 10.2 Merger, Consolidation,
Etc.................................20
Section 10.3 Terrorism Sanctions
Regulations............................20
Section 10.4
Liens......................................................20
Section 10.5 Maximum Ratio of Funded Debt to Total
Capital..............24
SECTION 11. EVENTS OF
DEFAULT.................................................24
SECTION 12. REMEDIES ON DEFAULT,
ETC..........................................27
Section 12.1
Acceleration...............................................27
Section 12.2 Other
Remedies.............................................27
Section 12.3
Rescission.................................................27
Section 12.4 No Waivers or Election of Remedies, Expenses,
Etc..........28
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF
NOTES.....................28
Section 13.1 Registration of
Notes......................................28
Section 13.2 Transfer and Exchange of
Notes.............................28
Section 13.3 Replacement of
Notes.......................................29
SECTION 14. PAYMENTS ON
NOTES.................................................29
Section 14.1 Place of
Payment...........................................29
Section 14.2 Home Office
Payment........................................29
SECTION 15. EXPENSES,
ETC.....................................................30
Section 15.1 Transaction
Expenses.......................................30
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Section 15.2
Survival...................................................30
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE
AGREEMENT.........................................................30
SECTION 17. AMENDMENT AND
WAIVER..............................................30
Section 17.1
Requirements...............................................30
Section 17.2 Solicitation of Holders of
Notes...........................31
Section 17.3 Binding Effect,
etc........................................31
Section 17.4 Notes Held by Company,
etc.................................32
SECTION 18.
NOTICES...........................................................32
SECTION 19. REPRODUCTION OF
DOCUMENTS.........................................32
SECTION 20. CONFIDENTIAL
INFORMATION..........................................33
SECTION 21. SUBSTITUTION OF
PURCHASER.........................................34
SECTION 22.
MISCELLANEOUS.....................................................34
Section 22.1 Successors and
Assigns.....................................34
Section 22.2 Payments Due on Non-Business
Days..........................34
Section 22.3 Accounting
Terms...........................................34
Section 22.4
Severability...............................................34
Section 22.5 Construction,
etc..........................................35
Section 22.6
Counterparts...............................................35
Section 22.7 Governing
Law..............................................35
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.15 -- Existing Indebtedness
EXHIBIT 1 -- Form of 5.99% Senior Note due June 1, 2017
EXHIBIT 4.4(a) -- Form of Opinion of Deborah A. Amberg, Senior
Vice
President, General Counsel and Secretary of
ALLETE, INC.
EXHIBIT 4.4(b) -- Form of Opinion of Thelen Reid Brown Raysman
&
Steiner LLP
EXHIBIT 4.4(c) -- Form of Opinion of Chapman and Cutler LLP
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ALLETE, INC.
30 West Superior Street
Duluth, Minnesota 55802
5.99% Senior Notes due June 1, 2017
June 8, 2007
TO EACH OF THE PURCHASERS LISTED IN
SCHEDULE A HERETO:
Ladies and Gentlemen:
ALLETE, Inc., a Minnesota corporation (the "COMPANY"), agrees
with each of
the purchasers whose name appears at the end hereof (each, a
"PURCHASER" and,
collectively, the "PURCHASERS") as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $50,000,000
aggregate
principal amount of its 5.99% Senior Notes due June 1, 2017 (the
"NOTES", such
term to include any such notes issued in substitution therefor
pursuant to
Section 13). 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 and other terms used in this Agreement are
defined in
Schedule B; and references to a "SCHEDULE" or an "EXHIBIT" are,
unless otherwise
specified, to a Schedule or an Exhibit attached to this
Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES
Subject to the terms and conditions of this Agreement, the
Company will
issue and sell to each Purchaser and each Purchaser will
purchase from the
Company, at the Closing provided for in Section 3, Notes in the
principal amount
specified opposite such Purchaser's name in Schedule A at the
purchase price of
100% of the principal amount thereof. The Purchasers'
obligations hereunder are
several and not joint obligations and no Purchaser shall have
any liability to
any Person for the performance or non-performance of any
obligation by any other
Purchaser hereunder.
SECTION 3. CLOSING
The sale and purchase of the Notes to be purchased by each
Purchaser shall
occur at the offices of Thelen Reid Brown Raysman & Steiner
LLP, 875 Third
Avenue, New York, New York 10022, at 10:00 a.m., New York time,
at a closing
(the "CLOSING") on June 8, 2007 or on such other Business Day
thereafter as may
be agreed upon by the Company and the Purchasers. At the Closing
the Company
will deliver to each Purchaser the Notes to be purchased by such
Purchaser in
the form of a single Note (or such greater number of Notes in
denominations of
at least $100,000 as such Purchaser may request) dated the date
of the Closing
and registered in such Purchaser's name (or in the name of its
nominee), against
delivery by such Purchaser to the
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Company or its order of immediately available funds in the
amount of the
purchase price therefor by wire transfer for the account of the
Company at Wells
Fargo Bank, San Francisco, CA, ABA 121 000 248 for further
credit to Minnesota
Power Account 002-0000-364, Attn: Richard P. Ausman,
218-723-3908. If at the
Closing the Company shall fail to tender such Notes to any
Purchaser as provided
above in this Section 3, or any of the conditions specified in
Section 4 shall
not have been fulfilled, such Purchaser shall, at its election,
be relieved of
all further obligations under this Agreement, without thereby
waiving any rights
such Purchaser may have by reason of such failure or such
nonfulfillment. If at
the Closing one Purchaser shall fail to purchase the Notes which
it is obligated
to purchase under this Agreement, the Company shall have the
option (i) of
terminating its obligation to sell any and all of the Notes to
all Purchasers
and be relieved of all further obligations under this Agreement,
or (ii) of
terminating its obligation to sell any Notes only to such
defaulting Purchaser
and be relieved of all further obligations under this Agreement
only with
respect to such defaulting Purchaser.
SECTION 4. CONDITIONS TO CLOSING
Each Purchaser's obligation to purchase and pay for the Notes to
be sold to
such Purchaser at the Closing is subject to the fulfillment,
prior to or at the
Closing, of the following conditions:
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. The representations
and
warranties of the Company in this Agreement shall be correct
when made and at
the time of the Closing.
SECTION 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 Section 5.14) no Default or
Event of Default
shall have occurred and be continuing.
SECTION 4.3 COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered
to such Purchaser 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
such Purchaser a certificate of its Secretary or Assistant
Secretary, dated
the date of Closing, certifying as to the resolutions attached
thereto and
other corporate proceedings relating to the authorization,
execution and
delivery of the Notes and this Agreement.
SECTION 4.4 OPINIONS OF COUNSEL. Such Purchaser shall have
received
opinions in form and substance satisfactory to such Purchaser,
dated the date of
the Closing (a) from Deborah A. Amberg, Senior Vice President,
General Counsel
and Secretary of ALLETE, Inc., and Thelen Reid Brown Raysman
& Steiner LLP,
counsel for the Company, covering the matters set forth in
Exhibit 4.4(a) and
4.4(b), respectively, and covering such other matters incident
to the
transactions contemplated hereby as such Purchaser or its
counsel may reasonably
request (and the Company hereby instructs its counsel to deliver
such opinion to
the Purchasers) and (b) from Chapman and Cutler LLP, the
Purchasers' special
counsel in connection with such
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transactions, substantially in the form set forth in Exhibit
4.4(c) and covering
such other matters incident to such transactions as such
Purchaser may
reasonably request.
SECTION 4.5 PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the
date of
the Closing such Purchaser's purchase of Notes shall (a) be
permitted by the
laws and regulations of each jurisdiction to which such
Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of
the New York
Insurance Law) permitting limited investments by insurance
companies without
restriction as to the character of the particular investment,
(b) not violate
any applicable law or regulation (including, without limitation,
Regulation T, U
or X of the Board of Governors of the Federal Reserve System)
and (c) not
subject such Purchaser to any tax, penalty or liability under or
pursuant to any
applicable law or regulation, which law or regulation was not in
effect on the
date hereof. If requested by such Purchaser, such Purchaser
shall have received
an Officer's Certificate certifying as to such matters of fact
as such Purchaser
may reasonably specify to enable such Purchaser to determine
whether such
purchase is so permitted.
SECTION 4.6 SALE OF NOTES. Contemporaneously with the Closing
the Company
shall sell to each Purchaser and each Purchaser shall purchase
the Notes to be
purchased by it at the Closing as specified in Schedule A.
SECTION 4.7 PAYMENT OF SPECIAL COUNSEL FEES. Without limiting
the
provisions of Section 15.1, the Company shall have paid on or
before the Closing
the fees, charges and disbursements of the Purchasers' special
counsel referred
to in Section 4.4 to the extent reflected in a statement of such
counsel
rendered to the Company at least one Business Day prior to the
Closing.
SECTION 4.8 PRIVATE PLACEMENT NUMBER. A Private Placement Number
issued
by Standard & Poor's CUSIP Service Bureau (in cooperation
with the SVO) shall
have been obtained for the Notes.
SECTION 4.9 CHANGES IN CORPORATE STRUCTURE. The Company shall
not have
changed its jurisdiction of incorporation or organization, as
applicable, or
been a party to any merger or consolidation or 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.
SECTION 4.10 FUNDING INSTRUCTIONS. At least three Business Days
prior to
the date of the Closing, each Purchaser shall have received
written instructions
signed by a Responsible Officer on letterhead of the Company
confirming the
information specified in Section 3 including (i) the name and
address of the
transferee bank, (ii) such transferee bank's ABA number and
(iii) the account
name and number into which the purchase price for the Notes is
to be deposited.
SECTION 4.11 PROCEEDINGS AND DOCUMENTS. All corporate and
other
proceedings in connection with the transactions contemplated by
this Agreement
and all documents and instruments incident to such transactions
shall be
satisfactory to such Purchaser and its special counsel, and such
Purchaser and
its special counsel shall have received all such counterpart
originals or
certified or other copies of such documents as such Purchaser or
such special
counsel may reasonably request.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
SECTION 5.1 ORGANIZATION; POWER AND AUTHORITY. The Company is
a
corporation duly organized, validly existing and in good
standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a
foreign
corporation and is in good standing in each jurisdiction in
which such
qualification is required by law, other than those jurisdictions
as to which the
failure to be so qualified or in good standing could not,
individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. The Company
has the corporate power and authority to own or hold under lease
the properties
it purports to own or hold under lease, to transact the business
it transacts
and proposes to transact, to execute and deliver this Agreement
and the Notes
and to perform the provisions hereof and thereof.
SECTION 5.2 AUTHORIZATION, ETC. This Agreement and the Notes
have been
duly authorized by all necessary corporate action on the part of
the Company,
and this Agreement constitutes, and upon execution and delivery
thereof each
Note will constitute, a legal, valid and binding obligation of
the Company
enforceable against the Company in accordance with its terms,
except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of
creditors' rights generally and (ii) general principles of
equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 5.3 DISCLOSURE. The Company, through its agent, JP
Morgan
Securities Inc., has delivered to each Purchaser a copy of the
Company's Annual
Report on Form 10-K for the year ended December 31, 2006, and a
copy of the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007,
each of which has also been filed with the SEC under the
Exchange Act (the
"DISCLOSURE DOCUMENTS"). The Disclosure Documents fairly
describe, in all
material respects and as of their respective dates, the general
nature of the
business and principal properties of the Company and its
Subsidiaries. The
Disclosure Documents do not contain, as of their respective
dates, 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 Disclosure
Documents, since
December 31, 2006, there has been no change in the financial
condition,
operations, business or properties 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 Disclosure Documents.
SECTION 5.4 ORGANIZATION AND OWNERSHIP OF SHARES OF
SUBSIDIARIES.
(a) Schedule 5.4 contains (except as noted therein) complete
each and correct lists of the Company's active Subsidiaries,
showing, as to
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.
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(b) All of the outstanding shares of capital stock or
similar
by the equity interests of each Subsidiary shown in Schedule 5.4
as being
owned 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 Significant Subsidiary nor Superior Water, Light and
Power Company ("SWL&P") is a party to, or otherwise subject
to any legal,
regulatory, contractual or other restriction (other than this
Agreement,
the agreements listed on Schedule 5.4 and customary limitations
imposed by
corporate law, the Federal Power Act or similar statutes)
restricting the
ability of such Significant Subsidiary or SWL&P 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 Significant Subsidiary or
SWL&P.
SECTION 5.5 FINANCIAL STATEMENTS; MATERIAL LIABILITIES. The
financial
statements included in the Disclosure Documents (including the
schedules and
notes) fairly present in all material respects the consolidated
financial
position of the Company and its Subsidiaries as of the
respective dates
specified in such financial statements and the consolidated
results of their
operations and cash flows for the respective periods so
specified and have been
prepared in accordance with GAAP consistently applied throughout
the periods
involved except as set forth in the notes thereto (subject, in
the case of any
interim financial statements, to normal year-end adjustments).
The Company and
its Subsidiaries do not have any Material liabilities that are
not disclosed on
such financial statements or otherwise disclosed in the
Disclosure Documents.
SECTION 5.6 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution,
delivery and performance by the Company of this Agreement and
the Notes will not
(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 Material
agreement or instrument to which the Company or any Subsidiary
is a party, (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
Significant Subsidiary
or (iii) violate any provision of any statute or other rule or
regulation of any
Governmental Authority applicable to the Company or any
Significant Subsidiary.
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SECTION 5.7 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or
authorization of, or registration, filing or declaration with,
any Governmental
Authority is required in connection with the execution, delivery
or performance
by the Company of this Agreement or the Notes other than such
which have been
obtained and which shall be in full force and effect at the
Closing.
SECTION 5.8 LITIGATION. Except as described in the Disclosure
Documents,
there are no actions, suits, investigations 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
which, if adversely determined, would individually or in the
aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 5.9 TAXES. The Company and its Subsidiaries have filed
all tax
returns that are required to have been filed in any
jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all
other taxes and
assessments levied upon them or their properties, assets, income
or franchises,
to the extent such taxes and assessments have become due and
payable and before
they have become delinquent, except for any taxes and
assessments (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.
SECTION 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 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). All leases
that individually or in the aggregate are Material are valid and
subsisting and
are in full force and effect in all material respects.
SECTION 5.11 LICENSES, PERMITS, ETC. Except as set forth or
contemplated
in the Disclosure Documents, the Company and its Subsidiaries
own or possess all
licenses, permits, franchises, authorizations, patents,
copyrights, proprietary
software, service marks, trademarks and trade names, or rights
thereto, that
individually or in the aggregate are Material, without known
conflict with the
rights of others.
SECTION 5.12 COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable
laws except
for such instances of noncompliance as have not resulted in and
could not
reasonably be expected to result in a Material Adverse Effect.
Neither the
Company nor any ERISA Affiliate has incurred any liability
pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions
of the Code
relating to employee benefit plans (as defined in section 3 of
ERISA), and
no event, transaction or condition has occurred or exists that
could
reasonably be expected to result in the incurrence of any such
liability by
the Company or any ERISA Affiliate, or in the
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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 or section 4068 of ERISA, 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 $26,500,000 in the case of any single Plan and by more
than
$9,500,000 in the aggregate for all Plans.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent
withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect
of
Multiemployer Plans that individually or in the aggregate are
Material.
(d) The expected postretirement benefit obligation
(determined
as of the last day of the Company's most recently ended fiscal
year in
accordance with Financial Accounting Standards Board Statement
No. 106,
without regard to liabilities attributable to continuation
coverage
mandated by section 4980B of the Code) of the Company and its
Subsidiaries
is approximately $60,000,000. A substantial portion of the
annual
postretirement benefit costs recognized by the Company's
regulated
companies are recovered through rates filed with the Company's
regulatory
jurisdictions, as more fully described in Note 16 to the
Consolidated
Financial Statements in the Company's Annual Report on Form 10-K
for the
year ended December 31, 2006.
(e) The execution and delivery of this Agreement and the
issuance
and sale of the Notes hereunder will not involve any transaction
that is
subject to the prohibitions of section 406 of ERISA or in
connection with
which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the
Code. The representation by the Company to each Purchaser in the
first
sentence of this Section 5.12(e) is made in reliance upon and
subject to
the accuracy of such Purchaser's representation in Section 6.2
and the
completeness of such Purchaser's disclosures pursuant to Section
6.2 as to
the sources of the funds used to pay the purchase price of the
Notes to be
purchased by such Purchaser.
SECTION 5.13 PRIVATE OFFERING BY THE COMPANY. Neither the
Company nor
anyone acting on its behalf has offered the Notes or any similar
securities for
sale to, or solicited any offer to buy any of the same from, or
otherwise
approached or negotiated in respect thereof with, any person
other than the
Purchasers and not more than 16 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 or to the registration
requirements of any
securities or blue sky laws of any applicable jurisdiction.
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<PAGE>
SECTION 5.14 USE OF PROCEEDS; MARGIN REGULATIONS. The Company
will apply
the proceeds of the sale of the Notes to fund corporate growth
opportunities and
for general corporate purposes. 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 20% 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 20% of
the value of such assets. As used in this Section, the terms
"MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned
to them in said
Regulation U.
SECTION 5.15 EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness that
is Material
of the Company and its Significant Subsidiaries as of March 31,
2007, since
which date there has been no Material change in the amounts,
interest
rates, sinking funds, installment payments or maturities of
the
Indebtedness of the Company or its Significant Subsidiaries.
Neither the
Company nor any Significant Subsidiary is in default and no
waiver of
default is currently in effect, in the payment of any principal
or interest
on any such Indebtedness and no event or condition exists with
respect to
such Indebtedness 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 Significant 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 10.5.
(c) Neither the Company nor any Subsidiary is a party to, or
otherwise subject to any provision contained in, any instrument
evidencing
Indebtedness that is Material of the Company or such Subsidiary,
any
agreement relating thereto or any other agreement (including,
but not
limited to, its charter or other organizational document) which
limits the
amount of, or otherwise imposes restrictions on the incurring
of,
Indebtedness of the Company, except as specifically indicated in
Schedule
5.15.
SECTION 5.16 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
(a) 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.
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<PAGE>
(b) Neither the Company nor any Subsidiary (i) is a Person
described or designated in the Specially Designated Nationals
and Blocked
Persons List of the Office of Foreign Assets Control or in
Section 1 of the
Anti-Terrorism Order or (ii) engages in any dealings or
transactions with
any such Person. The Company and its Subsidiaries are in
compliance, in all
material respects, with the USA Patriot Act.
(c) No part of the proceeds from the sale of the Notes
hereunder
will be used, directly or indirectly, for any payments to any
governmental
official or employee, political party, official of a political
party,
candidate for political office, or anyone else acting in an
official
capacity, in order to obtain, retain or direct business or
obtain any
improper advantage, in violation of the United States Foreign
Corrupt
Practices Act of 1977, as amended, assuming in all cases that
such Act
applies to the Company.
SECTION 5.17 STATUS UNDER INVESTMENT COMPANY ACT AND ICC
TERMINATION ACT.
Neither the Company nor any Subsidiary is subject to regulation
under the
Investment Company Act of 1940, as amended or the ICC
Termination Act of 1995,
as amended.
Section 5.18 ENVIRONMENTAL MATTERS. Except as disclosed in the
Disclosure
Documents, the Company and its Subsidiaries (i) are in
compliance with all
Environmental Laws, (ii) have received all permits, licenses or
other approvals
required of them under applicable Environmental Laws to conduct
their respective
businesses, and (iii) are in compliance with all terms and
conditions of any
such permit, license or approval; except, in each case, such as
could not
reasonably be expected to result in a Material Adverse
Effect.
SECTION 6. REPRESENTATIONS OF THE PURCHASERS.
SECTION 6.1 PURCHASE FOR INVESTMENT. Each Purchaser severally
represents
that it is purchasing the Notes for its own account or for one
or more separate
accounts maintained by such Purchaser or for the account of one
or more pension
or trust funds and not with a view to the distribution thereof,
provided that
the disposition of such Purchaser's or their property shall at
all times be
within such Purchaser's or their control. Each Purchaser
understands that the
Notes have not been registered under the Securities Act and may
be resold only
if registered pursuant to the provisions of the Securities Act
or if an
exemption from registration is available, except under
circumstances where
neither such registration nor such an exemption is required by
law, and that the
Company is not required to register the Notes.
SECTION 6.2 SOURCE OF FUNDS. Each Purchaser severally represents
that at
least one of the following statements is an accurate
representation as to each
source of funds (a "Source") to be used by such Purchaser to pay
the purchase
price of the Notes to be purchased by such Purchaser
hereunder:
(a) the Source is an "insurance company general account" (as
the
term is defined in The United States Department of Labor's
Prohibited
Transaction Exemption ("PTE") 95-60) in respect of which the
reserves and
liabilities (as defined by the annual statement for life
insurance
companies approved by the National Association of Insurance
Commissioners
(the "NAIC ANNUAL STATEMENT")) for the general account
contract(s) held by
or on behalf of any employee benefit plan together with the
amount of
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<PAGE>
the reserves and liabilities for the general account contract(s)
held by or
on behalf of any other employee benefit plans maintained by the
same
employer (or affiliate thereof as defined in PTE 95-60) or by
the same
employee organization in the general account do not exceed 10%
of the total
reserves and liabilities of the general account (exclusive of
separate
account liabilities) plus surplus as set forth in the NAIC
Annual Statement
filed with such Purchaser's state of domicile; or
(b) the Source is a separate account that is maintained
solely
in connection with such Purchaser's fixed contractual
obligations under
which the amounts payable, or credited, to any employee benefit
plan (or
its related trust) that has any interest in such separate
account (or to
any participant or beneficiary of such plan (including any
annuitant)) are
not affected in any manner by the investment performance of the
separate
account; or
(c) the Source is either (i) an insurance company pooled
separate
account, within the meaning of PTE 90-1 or (ii) a bank
collective
investment fund, within the meaning of the PTE 91-38 and, except
as
disclosed by such Purchaser to the Company in writing pursuant
to this
clause (c), 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
(d) the Source constitutes assets of an "investment fund"
(within
the meaning of Part V of PTE 84-14 (the "QPAM EXEMPTION"))
managed by a
"qualified professional asset manager" or "QPAM" (within the
meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets
that are
included in such investment fund, when combined with the assets
of all
other employee benefit plans established or maintained by the
same employer
or by an affiliate (within the meaning of Section V(c)(1) of the
QPAM
Exemption) of such employer or by the same employee organization
and
managed by such QPAM, exceed 20% of the total client assets
managed by such
QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are
satisfied, neither the QPAM nor a person controlling or
controlled by the
QPAM (applying the definition of "control" in Section V(e) of
the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the
identity
of such QPAM and (ii) the names of all employee benefit plans
whose assets
are included in such investment fund have been disclosed to the
Company in
writing pursuant to this clause (d); or
(e) the Source constitutes assets of a "plan(s)" (within the
meaning of Section IV of PTE 96-23 (the "INHAM EXEMPTION"))
managed by an
"in-house asset manager" or "INHAM" (within the meaning of Part
IV of the
INHAM Exemption), the conditions of Part I(a), (g) and (h) of
the INHAM
Exemption are satisfied, neither the INHAM nor a person
controlling or
controlled by the INHAM (applying the definition of "control" in
Section
IV(d) of the INHAM Exemption) owns a 5% or more interest in the
Company and
(i) the identity of such INHAM and (ii) the name(s) of the
employee benefit
plan(s) whose assets constitute the Source have been disclosed
to the
Company in writing pursuant to this clause (e); or
(f) the Source is a governmental plan; or
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<PAGE>
(g) 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 clause (g); or
(h) 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.
SECTION 7. INFORMATION AS TO COMPANY
SECTION 7.1 FINANCIAL AND BUSINESS INFORMATION. As long as any
of the
Notes are outstanding, the Company shall deliver to each holder
of Notes that
is an Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days (or such shorter
period as is 15 days greater than the period applicable to the
filing of
the Company's Quarterly Report on Form 10-Q (the "FORM 10-Q")
with the SEC
regardless of whether the Company is subject to the filing
requirements
thereof) 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,
including its Subsidiaries, as at the end of such quarter,
and
(ii) consolidated statements of income and cash
flows of theCompany, including 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
Form 10-Q prepared in compliance with the requirements therefor
and filed
with the SEC shall be deemed to satisfy the requirements of this
Section
7.1(a), PROVIDED, FURTHER, that the Company shall be deemed to
have made
such delivery of such Form 10-Q if it shall have timely made
such Form 10-Q
available on "EDGAR" and on its home page on the worldwide web
(at the date
of this Agreement located at: http//www.allete.com) (such
availability
being referred to as "ELECTRONIC DELIVERY");
(b) ANNUAL STATEMENTS -- within 120 days (or such shorter
period
as is 15 days greater than the period applicable to the filing
of the
Company's Annual Report on Form 10-K (the "FORM 10-K") with the
SEC
regardless of whether the Company is
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<PAGE>
subject to the filing requirements thereof) after the end of
each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company,
including itsSubsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company, including
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 an opinion thereon of independent registered
public
accounting firm of recognized national standing, which opinion
shall state
that such financial statements present fairly, in all material
respects,
the financial position of the companies being reported upon and
their
results of operations and cash flows and have been prepared in
conformity
with GAAP, and that the examination of such accounting firm in
connection
with such financial statements has been made in accordance with
generally
accepted auditing standards, and that such audit provides a
reasonable
basis for such opinion in the circumstances, PROVIDED that the
delivery
within the time period specified above of the Company's 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
SEC, shall be
deemed to satisfy the requirements of this Section 7.1(b),
PROVIDED,
FURTHER, that the Company shall be deemed to have made such
delivery of
such Form 10-K if it shall have timely made Electronic Delivery
thereof;
(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 its 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 final prospectus and all amendments
thereto filed by
the Company or any Subsidiary with the SEC, PROVIDED that the
Company shall
be deemed to have made such delivery of such documents if it
shall have
timely made Electronic Delivery thereof;
(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,
provided, however, that the Company shall not be required to
comply with
the provisions of this Section 7.1(d) for so long as the Company
is subject
to the public reporting requirements of the Exchange Act;
(e) ERISA MATTERS -- promptly, and in any event within five
days
after a Responsible Officer becoming aware of any of the
following, a
written notice setting
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<PAGE>
forth the nature thereof and the action, if any, that the
Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(c) 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 Multi-employer Plan that
such
action has been taken by the PBGC with respect to such
Multi-employer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any
ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty
or
excise tax provisions of the Code relating to employee
benefit
plans, or in the imposition of any Lien on any of the
rights,
properties or assets of the Company or any ERISA Affiliate
pursuant
to Title I or IV of ERISA or such penalty or excise tax
provisions,
if such liability or Lien, taken together with any other
such
liabilities or Liens then existing, could reasonably be expected
to
have a Material Adverse Effect;
(f) 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 (including, but without limitation, actual copies
of the
Company's Form 10-Q and Form 10-K) or relating to the ability of
the
Company to perform its obligations hereunder and under the Notes
as from
time to time may be reasonably requested by any such holder of
Notes.
SECTION 7.2 OFFICER'S CERTIFICATE. Each set of financial
statements
delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b)
shall be accompanied by a certificate of a Senior Financial
Officer setting
forth (which, in the case of Electronic Delivery of any such
financial
statements, shall be by separate concurrent delivery of such
certificate to each
holder of Notes):
(a) COVENANT COMPLIANCE -- the information (including
detailed
calculations) required in order to establish whether the Company
was in
compliance with the requirements of Section 10.5, during the
quarterly or
annual period covered by the statements then being furnished;
and
(b) EVENT OF DEFAULT -- a statement that such Senior
Financial
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
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<PAGE>
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, specifying the nature and
period of
existence thereof and what action the Company shall have taken
or proposes
to take with respect thereto.
SECTION 7.3 VISITATION. 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,
the Company shall permit the representatives of each holder of
Notes that
is an Institutional Investor, 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) to
visit the other offices and properties of the Company and each
Subsidiary,
all at such reasonable times and as often as may be reasonably
requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists,
at
the expense of the Company to visit and inspect any of the
offices or
properties of the Company or any Subsidiary, to examine all
their
respective books of account, records, reports and other papers,
to make
copies and extracts therefrom, and to discuss their respective
affairs,
finances and accounts with their respective officers and
independent public
accountants (and by this provision the Company authorizes said
accountants
to discuss the affairs, finances and accounts of the Company and
its
Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PAYMENT AND PREPAYMENT OF THE NOTES.
SECTION 8.1 MATURITY. As provided therein, the entire unpaid
principal
balance of the Notes shall be due and payable on the stated
maturity date
thereof.
SECTION 8.2 OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The
Company may,
at its option, upon notice as provided below, prepay at any time
all, or from
time to time any part of, the Notes, in an amount not less than
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,
together with
interest accrued thereon to the date of such prepayment, and the
Make-Whole
Amount determined for the prepayment date with respect to such
principal amount.
The Company will give each holder of Notes written notice of
each optional
prepayment under this Section 8.2 not less than 30 days and not
more than 60
days prior to the date fixed for such prepayment. Each such
notice shall specify
such date (which shall be a Business Day), 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
8.4), and the
interest to be paid on the prepayment date with respect to such
principal amount
being prepaid, and shall be accompanied by a certificate of a
Senior Financial
Officer as to the estimated Make-Whole Amount due in connection
with such
prepayment (calculated as if the date of such notice were the
date of the
prepayment), setting forth the details of such computation. Two
Business Days
prior to such prepayment, the Company shall deliver to each
holder of Notes a
certificate of
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<PAGE>
a Senior Financial Officer specifying the calculation of such
Make-Whole
Amount as of the specified prepayment date.
SECTION 8.3 CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL AND CHANGE IN CONTROL EVENT.
The Company will, within five Business Days after any
Responsible Officer
has knowledge of the occurrence of any Change in Control, give
written
notice of such Change in Control to each holder of Notes. If
within 90 days
after such Change in Control, the Company does not, for any
reason, have an
Investment Grade Rating, a "Change in Control Event" shall be
deemed to
have occurred. If a Change in Control Event has occurred, the
Company shall
give immediate written notice thereof to the holders, and such
notice shall
contain and constitute an offer to prepay Notes as described
in
subparagraph (b) of this Section 8.3 and shall be accompanied by
the
certificate described in subparagraph (e) of this Section
8.3.
(b) OFFER TO PREPAY NOTES. The offer to prepay the Notes
contemplated by subparagraph (a) of this Section 8.3 shall be an
offer to
prepay, in accordance with and subject to this Section 8.3, all,
but not
less than all, of the Notes held by each holder (in this case
only,
"HOLDER" in respect of any Note registered in the name of a
nominee for a
disclosed beneficial owner shall mean such beneficial owner) on
a date
specified in such offer (the "Proposed Prepayment Date"). Such
date shall
be not less than 30 days and not more than 60 days after the
date of such
offer.
(c) ACCEPTANCE. A holder of Notes may accept the offer to
prepay
made pursuant to this Section 8.3 by causing a notice of such
acceptance to
be delivered to the Company not later than 15 days prior to the
Proposed
Prepayment Date. A failure by a holder of Notes to respond to
the offer to
prepay made pursuant to this Section 8.3 shall be deemed to
constitute a
rejection of such offer by such holder.
(d) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant
to
this Section 8.3 shall be at 100% of the principal amount of
such Notes,
together with interest on such Notes accrued to the date of
prepayment and
without any Make-Whole Amount. The Prepayment shall be made on
the Proposed
Prepayment Date.
(e) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 8.3 shall be accompanied by a
certificate,
executed by a Senior Financial Officer of the Company and dated
the date of
such offer, specifying: (i) the Proposed Prepayment Date; (ii)
that such
offer is made pursuant to this Section 8.3; (iii) the interest
that would
be due on each Note offered to be prepaid, accrued to the
Proposed
Prepayment Date; (iv) that the conditions of this Section 8.3
have been
fulfilled; (v) in reasonable detail, the nature of the Change in
Control;
and (vi) any written response from the relevant rating
agency.
(f) CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall be deemed to have occurred if any
person
(as such term is used in Section 13(d) and Section 14(d)(2) of
the Exchange Act
as in effect on the date of
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<PAGE>
the Closing) or related persons constituting a group (as such
term is used in
Rule 13d-5 under the Exchange Act) become the "beneficial
owners" (as such term
is used in Rule 13d-3 under the Exchange Act as in effect on the
date of the
Closing), directly or indirectly, of more than 50% of the total
voting power of
all classes then outstanding of the voting stock of the
Company.
"INVESTMENT GRADE RATING" in respect of any Person means, at
the
time of determination, at least two of the following ratings of
its senior,
unsecured long-term indebtedness for borrowed money: (i) by
Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, or any
successor
thereof, "BBB-" or better, (ii) by Moody's Investors Service,
Inc., or any
successor thereof, "Baa3" or better, or (iii) by any other
nationally recognized
statistical rating agency, an equivalent or better rating.
(g) ASSUMPTIONS. All calculations contemplated in this
Section
8.3 involving the capital stock or other equity interest of any
Person
shall be made with the assumption that all convertible
securities of such
Person then outstanding and all convertible securities issuable
upon the
exercise of any warrants, options an other rights outstanding at
such time
were converted at such time and that all options, warrants and
similar
rights to acquire shares of capital stock or other equity
interest of such
Person were exercised at such time.
SECTION 8.4 ALLOCATION OF PARTIAL PREPAYMENTS. In the case of
each
partial prepayment of the Notes pursuant to Section 8.2, 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 thereof not theretofore called for prepayment.
All prepayments
pursuant to Section 8.3 shall be applied as therein
provided.
SECTION 8.5 MATURITY; SURRENDER, ETC. In the case of each
prepayment of
Notes pursuant to this Section 8, the principal amount of each
Note to be
prepaid shall mature and become due and payable on the date
fixed for such
prepayment (which shall be a Business Day), together with
interest on such
principal amount accrued to such date and the applicable
Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to
pay such
principal amount when so due and payable, together with the
interest and
Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the
Company and cancelled and shall not be reissued, and no Note
shall be issued in
lieu of any prepaid principal amount of any Note.
SECTION 8.6 PURCHASE OF NOTES. The Company will not and will not
permit
any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or
indirectly, any of the outstanding Notes except (a) upon the
payment or
prepayment of the Notes in accordance with the terms of this
Agreement and the
Notes or (b) pursuant to an offer to purchase made by the
Company or an
Affiliate pro rata to the holders of all Notes 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 holders
of more than 25% of the principal amount of the Notes then
outstanding accept
such offer, the Company shall promptly notify the remaining
holders of such fact
and the expiration date for the acceptance by holders of Notes
of such offer
shall be extended by the number of days necessary to give each
such remaining
holder at least 10
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Business Days from its receipt of such notice to accept such
offer. The Company
will promptly cancel all Notes acquired by it or any Affiliate
pursuant to any
payment, prepayment or purchase of Notes pursuant to any
provision of this
Agreement and no Notes may be issued in substitution or exchange
for any such
Notes.
SECTION 8.7 MAKE-WHOLE AMOUNT.
"MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the
excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with
respect to the Called Principal of such Note over the amount of
such Called
Principal, PROVIDED that the Make-Whole Amount may in no event
be less than
zero. For the purposes of determining the Make-Whole Amount, the
following terms
have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such
Note that is to be prepaid pursuant to Section 8.2 or has become
or is declared
to be immediately due and payable pursuant to Section 12.1, as
the context
requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note,
the amount obtained by discounting all Remaining Scheduled
Payments with respect
to such Called Principal from their respective scheduled due
dates to the
Settlement Date with respect to such Called Principal, in
accordance with
accepted financial practice and at a discount factor (applied on
the same
periodic basis as that on which interest on the Notes is
payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal
of any
Note, .50% over the yield to maturity implied by (i) the yields
reported as of
10:00 a.m. (New York City time) on the second Business Day
preceding the
Settlement Date with respect to such Called Principal, on the
display designated
as "Page PX1" (or such other display as may replace Page PX1) on
Bloomberg
Financial Markets for the most recently issued actively traded
on the run 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 (including by way of interpolation), 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 (or any comparable successor publication) for U.S. Treasury
securities
having a constant maturity equal to the Remaining Average Life
of such Called
Principal as of such Settlement Date.
In the case of each determination under clause (i) or clause
(ii), as the
case may be, of the preceding paragraph, such implied yield will
be determined,
if necessary, by (a) converting U.S. Treasury bill quotations to
bond equivalent
yields in accordance with accepted financial practice and (b)
interpolating
linearly between (1) the applicable U.S. Treasury security with
the maturity
closest to and greater than such Remaining Average Life and (2)
the applicable
U.S. Treasury security with the maturity closest to and less
than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the
number of decimal
places as appears in the interest rate of the applicable
Note.
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<PAGE>
"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 Section 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of
any Note,
the date on which such Called Principal is to be prepaid
pursuant to Section 8.2
or has become or is declared to be immediately due and payable
pursuant to
Section 12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 9.1 COMPLIANCE WITH LAW. Without limiting Section 10.3,
the
Company will, and will cause each of its Subsidiaries to, comply
with all laws,
ordinances or governmental rules or regulations to which each of
them is
subject, including, without limitation, ERISA, the USA Patriot
Act and
Environmental Laws, and will obtain and maintain in effect all
licenses,
certificates, permits, franchises and other governmental
authorizations
necessary to the ownership of their respective properties or to
the conduct of
their respective businesses, in each case to the extent
necessary to ensure that
non-compliance with such laws, ordinances or governmental rules
or regulations
or failures to obtain or maintain in effect such licenses,
certificates,
permits, franchises and other governmental authorizations could
not,
individually or in the aggregate, reasonably be expected to have
a Material
Adverse Effect.
SECTION 9.2 INSURANCE. The Company will, and will cause each of
its
Subsidiaries to, maintain, with financially sound and reputable
insurers,
insurance with respect to their respective properties and
businesses against
such casualties and contingencies, of such types, on such terms
and in such
amounts (including deductibles, co-insurance and self-insurance,
if adequate
reserves are maintained with respect thereto) as is customary in
the case of
entities of established reputations engaged in the same or a
similar business
and similarly situated, except in each case to the extent that
any
non-compliance with the terms of this Section 9.2 could not
reasonably be
expected to have a Material Adverse Effect.
SECTION 9.3 MAINTENANCE OF PROPERTIES. The Company will, and
will cause
each of its Subsidiaries to, maintain and keep, or cause to be
maintained and
kept, their respective
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<PAGE>
properties in good repair, working order and condition (other
than ordinary wear
and tear), so that the business carried on in connection
therewith may be
properly conducted at all times, PROVIDED that this Section
shall not prevent
the Company or any Subsidiary from discontinuing the operation
and the
maintenance of any of its properties if such discontinuance is
desirable in the
conduct of its business and the Company has concluded that such
discontinuance
could not, individually or in the aggregate, reasonably be
expected to have a
Material Adverse Effect.
SECTION 9.4 PAYMENT OF TAXES AND CLAIMS. The Company will, and
will cause
each of its Subsidiaries to, file all tax returns required to be
filed in any
jurisdiction and to pay and discharge all taxes shown to be due
and payable on
such returns and all other taxes, assessments, governmental
charges, or levies
imposed on them or any of their properties, assets, income or
franchises, to the
extent the same 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,
assessment, charge, levy or claim 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 non-filing of all
such returns and/or
nonpayment of all such taxes, assessments, charges, levies and
claims (as the
case may be) in the aggregate could not reasonably be expected
to have a
Material Adverse Effect.
SECTION 9.5 CORPORATE EXISTENCE, ETC. Subject to Section 10.2,
the Company
will at all times preserve and keep in full force and effect its
corporate
existence. Subject to Section 10.2, the Company will at all
times preserve and
keep in full force and effect the corporate existence of each of
its
Subsidiaries (unless merged into the Company or a Wholly-Owned
Subsidiary) and
all Material rights and franchises of the Company and its
Subsidiaries unless,
in the good faith judgment of the Company, the termination of or
failure to
preserve and keep in full force and effect such corporate
existence, right or
franchise could not, individually or in the aggregate, have a
Material Adverse
Effect.
SECTION 9.6 BOOKS AND RECORDS. The Company will, and will cause
each of
its Subsidiaries to, maintain proper books of record and account
in conformity
with GAAP and all applicable requirements of any Governmental
Authority having
legal or regulatory jurisdiction over the Company or such
Subsidiary, as the
case may be.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 10.1 TRANSACTIONS WITH AFFILIATES. The Company will not
and will
not permit any Significant Subsidiary to enter into directly or
indirectly any
Material transaction or Material group of related transactions
(including
without limitation the purchase, lease, sale or exchange of
properties of any
kind or the rendering of any service) with any Affiliate (other
than the Company
or another Subsidiary), except in the ordinary course and
pursuant to the
reasonable requirements of the Company's or such Significant
Subsidiary's
business and upon fair and
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<PAGE>
reasonable terms no less favorable to the Company or such
Significant Subsidiary
than would be obtainable in a comparable arm's-length
transaction with a Person
not an Affiliate.
SECTION 10.2 MERGER, CONSOLIDATION, ETC. The Company will not
consolidate
with or merge with any other Person or convey, transfer or lease
all or
substantially all of its assets in a single transaction or
series of
transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor
of
such merger or the Person that acquires by conveyance, transfer
or lease
all or substantially all of the assets of the Company as an
entirety, as
the case may be, shall be a solvent corporation or limited
liability
company organized and existing under the laws of the United
States or
Canada or any jurisdiction thereof (including the District of
Columbia),
and, if the Company is not such corporation or limited
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