SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________________ to ____________________
Commission file number 0-21318
O'REILLY AUTOMOTIVE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 44-0618012
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
233 South Patterson
Springfield, Missouri 65802
- --------------------------------------------------------------------------------
(Address of principal executive offices, Zip code)
(417) 862-6708
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Common stock, $0.01 par value - 52,199,439 shares outstanding as of June 30,
2001.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
FORM 10-Q
Quarter Ended June 30, 2001
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
-----
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION 7
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 9
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION 9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURE PAGE 10
EXHIBIT INDEX 11
PART I Financial Information
ITEM 1. Financial Statements
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
----------------- ------------------
(Unaudited) (Note)
(In thousands)
Assets
Current assets:
Cash $ 16,801 $ 9,204
Short-term investments 500 500
Accounts receivable, net 41,401 32,673
Amounts receivable from vendors 16,551 29,175
Inventory 397,709 372,069
Refundable income taxes 14 92
Deferred income taxes -- 1,402
Other current assets 3,652 4,089
----------------- ------------------
Total current assets 476,628 449,204
Property and equipment, at cost 354,223 323,021
Accumulated depreciation and
amortization 89,408 76,167
----------------- ------------------
Net property and equipment 264,815 246,854
Notes receivable 2,485 2,836
Other assets 14,075 17,101
----------------- ------------------
Total assets $ 758,003 $ 715,995
================= ==================
Liabilities and shareholders'
equity
Current liabilities:
Note payable to bank $ -- $ 35,000
Income taxes payable 4,994 1,011
Accounts payable 72,056 68,947
Accrued payroll 10,660 9,309
Accrued benefits & withholdings 11,223 9,360
Other current liabilities 13,446 15,184
Current deferred income taxes 2,187 --
Current portion of long-tem
debt 14,908 14,121
----------------- ------------------
Total current liabilities 129,474 152,932
Long-term debt, less current
portion 112,197 90,463
Deferred income taxes 5,876 4,086
Other liabilities 4,686 4,783
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares-90,000,000
Issued and outstanding
shares - 52,199,439 shares
at June 30, 2001, and
51,544,879 at
December 31, 2000 522 515
Additional paid-in capital 242,329 230,600
Retained earnings 262,919 232,616
----------------- ------------------
Total shareholders' equity 505,770 463,731
----------------- ------------------
Total liabilities and
shareholders' equity $ 758,003 $ 715,995
================= ==================
NOTE: The balance sheet at December 31, 2000, has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- -------------------------
2001 2000 2001 2000
------------- ------------- ------------ ------------
(In thousands, except per share data)
Product sales $ 280,676 $ 266,359 $ 519,739 $ 422,117
Cost of goods sold,
including warehouse and
distribution expenses 162,749 129,098 299,275 240,150
------------- ------------ ------------ ------------
Gross profit 117,927 97,261 220,464 181,967
Operating, selling, general
and administrative expenses 87,047 72,468 167,632 137,764
------------- ------------ ------------ ------------
Operating income 30,880 24,793 52,832 44,203
Other expense, net (1,879) (1,634) (4,029) (2,454)
------------- ------------ ------------ ------------
Income before income taxes 29,001 23,159 48,803 41,749
Provision for income taxes 11,015 8,800 18,500 15,829
------------- ------------ ------------ ------------
Net income $ 17,986 $ 14,359 $ 30,303 $ 25,920
============= ============ ============ ============
Net income per common share $ 0.35 $ 0.28 $ 0.59 $ 0.51
============= ============ =========== ============
Net income per common share
- assuming dilution $ 0.34 $ 0.28 $ 0.58 $ 0.50
============= ============ ============ ============
Weighted average common
shares outstanding 51,823 51,111 51,708 50,983
============= ============ ============ ============
Adjusted weighted average
common shares outstanding 52,427 51,548 52,237 51,405
- assuming dilution ============= ============ ============ ============
See notes to condensed consolidated financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
2001 2000
---------------- ----------------
(In thousands)
Net cash provided by
operating activities $ 41,716 $ 15,885
Investing activities:
Purchases of property and
equipment (28,552) (43,057)
Proceeds from sale of property
and equipment 901 545
Payments received on notes
receivable 320 275
Investment in other assets (1,180) (1,468)
---------------- -----------------
Net cash used in investing
activities (28,511) (43,705)
Financing activities:
Borrowings on notes payable
to banks -- 7,130
Payments on notes payable
to banks (35,000) (7,130)
Proceeds from issuance of
long-term debt 191,542 276,528
Payments on long-term debt (169,466) (249,353)
Proceeds from issuance of
common stock 7,305 1,839
Issuance of other liabilities 10 --
---------------- ----------------
Net cash (used in) provided
by financing activities (5,608) 29,014
---------------- ----------------
Net increase in cash 7,597 1,194
Cash at beginning of period 9,204 9,791
---------------- ----------------
Cash at end of period $ 16,801 $ 10,985
================ ================
See notes to condensed consolidated financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2001
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
O'Reilly Automotive, Inc. and Subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six months ended June 30, 2001, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2001. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
2. Acquisition
On August 9, 2001, the Company announced the signing of a definitive agreement
to acquire all of the outstanding stock of Mid-State Automotive Distributors,
Inc ("Mid-State"). Under the terms of the agreement, the Company will purchase
all of the outstanding stock of Mid-State for $19.5 million in cash and assume
approximately $26.7 million in debt. Mid-State operates 85 stores and 4
distribution centers in Indiana, Kentucky, Tennessee, Mississippi, Alabama,
Florida and Georgia and has estimated 2001 revenues of $122 million. The
acquisition expands the presence of O'Reilly to seven new states, adds
distribution capacity and increases O'Reilly's store count by 80-85 new stores.
The transaction is expected to close October 1, 2001. This acquisition will be
accounted for using the purchase method of accounting.
3. Long-Term Debt
On May 16, 2001, the Company completed a $100 million private placement of debt
("Senior Notes") with the signing of a Note Purchase Agreement and the issuance
of two series of senior notes. Series 2001-A was issued for $75 million due May
16, 2006, bearing interest at 7.72% per year. Series 2001-B was issued for $25
million due May 16, 2008, bearing interest at 7.92% per year. The agreement
allows for a total of $200 million of senior notes issuable in series. Proceeds
from the transaction were used to reduce outstanding borrowings under the
Company's Revolving Credit Facility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Unless otherwise indicated, "we," "us," "our" and similar terms, as well as
references to the "Company" or "O'Reilly" refer to O'Reilly Automotive, Inc. and
its subsidiaries.
Results of Operations
Product sales for the second quarter of 2001 increased by $54.3 million, or
24.0%, over product sales for the second quarter of 2000. Product sales for the
first six months of 2001 increased by $97.6 million, or 23.1% over product sales
for the first six months of 2000. These increases were primarily due to the
opening of 30 net, new stores during the second quarter of 2001 and 60 net, new
stores during the first six months of 2001, in addition to a 14.4% and 12.0%
increase in comparable store product sales for the second quarter and first six
months of 2001, respectively. At June 30, 2001, the Company operated 732 stores
compared to 626 stores at June 30, 2000.
Gross profit increased 21.3% from $97.3 million (or 43.0% of product sales) in
the second quarter of 2000 to $117.9 million (or 42.0% of product sales) in the
second quarter of 2001. Gross profit for the first six months increased 21.2%
from $182.0 million (or 43.1% of product sales) in 2000 to $220.5 million (or
42.4% of product sales) in 2001. The increase in gross profit dollars was
primarily a result of the increase in the number of stores open during the
second quarter and first six months of 2001 compared to the same period of 2000,
and increased sales levels at existing stores. The reduction in gross profit as
a percentage of sales was primarily a result of a change in the Company's sales
mix.
Operating, selling, general and administrative expenses ("OSG&A expenses")
increased $14.6 million from $72.5 million (or 32.0% of product sales) in the
second quarter of 2000 to $87.0 million (or 31.0% of product sales) in the
second quarter of 2001. OSG&A expenses increased $29.8 million from $137.8
million (or 32.6% of product sales) in the first six months of 2000 to $167.6
million (or 32.3% of product sales) in the first six months of 2001. The
increase in OSG&A expenses resulted primarily from the addition of team members
and resources in order to support the increased level of the Company's
operations, higher fuel and utility costs, and increased rent expense due to the
sale-leaseback transaction completed in January 2001.
Other expense increased by $245,000 in the second quarter of 2001 compared to
the second quarter of 2000 and increased by $1.6 million for the first six
months of 2001 compared to the first six months of 2000. The overall increase in
other expense in the second quarter and first six months of 2001 is primarily
due to increased interest expense resulting from the higher debt levels incurred
by the Company to support its continuing store growth.
The Company's estimated provision for income taxes increased to $11.0 million
for the second quarter of 2001 from $8.8 million for the second quarter of 2000
as a result of the Company's increased taxable income. The Company's effective
tax rate was at 38.0% and 37.9% of income before income taxes in the second
quarter of 2001 and the first six months of 2001, respectively.
Principally, as a result of the foregoing, net income increased from $14.4
million or 6.3% of product sales in the second quarter of 2000 to $18.0 million
or 6.4% of product sales in the second quarter of 2001. Net income increased
from $25.9 million or 6.1% of product sales in the first six months of 2000 to
$30.3 million or 5.8% of product sales in the first six months of 2001.
Liquidity and Capital Resources
Net cash provided by operating activities increased from $15.9 million for the
first six months in 2000 to $41.7 million for the first six months of 2001. This
increase was principally the result of decreases in amounts receivable from
vendors and refundable income taxes, partially offset by an increase in both
inventory and accounts receivable and a decrease in other current liabilities.
The decrease in amounts receivable from vendors is primarily due to receiving
credit from vendors related to product line changeovers. Refundable income taxes
decreased due to refunds received during the second quarter of 2001. The
increases in inventory and accounts receivable are primarily due to the
Company's continuing store growth. The change in other current liabilities was
primarily attributable due to the timing of payments.
Net cash used in investing activities decreased from $43.7 million in the first
six months of 2000 to $28.5 million in the first six months of 2001, primarily
due to most of the Company's new stores in 2001 being funded through the
synthetic lease facility as compared to 2000 in which new stores were funded by
the Company.
Net cash provided by financing activities was $29.0 million in the first six
months of 2000. Net cash used in financing activities was $5.6 million in the
first six months of 2001. The decrease in cash provided by financing activities
during the first six months of 2001 compared to the first six months of 2000 is
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (CONT.)
Liquidity and Capital Resources (Continued)
primarily due to an overall reduction in the Company's indebtedness and as a
result of the Company leasing a larger percentage of its new stores in 2001.
On May 16, 2001, the Company completed a $100 million private placement of debt
("Senior Notes") with the signing of a Note Purchase Agreement and the issuance
of two series of senior notes. Series 2001-A was issued for $75 million due May
16, 2006, bearing a fixed rate of interest at 7.72% per year. Series 2001-B was
issued for $25 million due May 16, 2008, bearing a fixed rate of interest at
7.92% per year. The agreement allows for a total of $200 million of senior notes
issuable in series. Proceeds from the transaction were used to reduce
outstanding borrowings under the Company's Revolving Credit Facility.
For the first six months of 2001, 60 net, new stores were opened. The Company
plans to open an additional 60 stores during the remainder of 2001. The funds
required for such planned expansions are expected to be provided by operating
activities and the existing and available bank credit facilities.
Management believes that the cash expected to be generated from operating
activities, existing cash, existing bank credit facilities and trade credit will
be sufficient to fund the Company's short and long-term capital and liquidity
needs for the foreseeable future.
Inflation and Seasonality
The Company has been successful, in many cases, in reducing the effects of
merchandise cost increases principally by taking advantage of vendor incentive
programs, economies of scale resulting from increased volume of purchases and
selective forward buying. As a result, the Company does not believe the
operations have been materially affected by inflation.
The Company's business is seasonal to some extent primarily as a result of the
impact of weather conditions on store sales. Store sales and profits have
historically been higher in the second and third quarters (April through
September) of each year than in the first and fourth quarters.
Forward-Looking Statements
Certain statements contained in this quarterly report on Form 10-Q are
forward-looking statements. These statements discuss, among other things,
expected growth, store development and expansion strategy, business strategies,
future revenues and future performance. These forward-looking statements are
subject to risks, uncertainties and assumptions including, but not limited to
competition, product demand, the market for auto parts, the economy in general,
inflation, consumer debt levels, governmental approvals, our ability to hire and
retain qualified employees and the weather. Actual results may materially differ
from anticipated results described in these forward-looking statements. Certain
risks are discussed in Exhibit 99.1 hereto.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk through derivative financial instruments and other
financial instruments is not material.
PART II - OTHER INFORMATION
Item 5. Other Information
On August 9, 2001, the Company announced the signing of a definitive agreement
to acquire all of the outstanding stock of Mid-State Automotive Distributors,
Inc ("Mid-State"). Under the terms of the agreement, the Company will purchase
all of the outstanding stock of Mid-State for $19.5 million in cash and assume
approximately $26.7 million in debt. Mid-State operates 85 stores and 4
distribution centers in Indiana, Kentucky, Tennessee, Mississippi, Alabama,
Florida and Georgia and has estimated 2001 revenues of $122 million. The
acquisition expands the presence of O'Reilly to seven new states, adds
distribution capacity and increases O'Reilly's store count by 80-85 new stores.
The transaction is expected to close October 1, 2001. This acquisition will be
accounted for using the purchase method of accounting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: See Exhibit Index on page 11 hereof.
(b) No reports on Form 8-K were filed by us during the quarter ended June 30,
2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
O'REILLY AUTOMOTIVE, INC.
August 14, 2001 /s/ David E. O'Reilly
- ---------------- -----------------------------------------------------
Date David E. O'Reilly, Co-Chairman of the Board and
Chief Executive Officer
August 14, 2001 /s/ James R. Batten
- ----------------- -----------------------------------------------------
Date James R. Batten, Vice-President of Finance and
Chief Financial Officer
EXHIBIT INDEX
Number Description Page
10.25 Note Purchase Agreement, filed herewith 13
99.1 Certain Risk Factors, filed herewith. 14
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.25 - Note Purchase Agreement
EXECUTION COPY
================================================================================
O'REILLY AUTOMOTIVE, INC.
$200,000,000
Senior Notes Issuable In Series
$75,000,000
7.72% Series 2001-A Senior Notes due May 15, 2006
$25,000,000
7.92% Series 2001-B Senior Notes due May 15, 2008
================
NOTE PURCHASE AGREEMENT
================
Dated May 1, 2001
================================================================================
Series A PPN: 686091 A* 0
Series B PPN: 686091 A@ 8
TABLE OF CONTENTS
Section Page
1. THE NOTES..............................................................1
1.1. Authorization of the Notes...........................................1
1.2. The Series 2001 Notes................................................2
2. SALE AND PURCHASE OF SERIES 2001 NOTES.................................3
3. CLOSING................................................................3
4. CONDITIONS TO CLOSING..................................................3
4.1. Representations and Warranties.......................................3
4.2. Performance; No Default..............................................4
4.3. Compliance Certificates..............................................4
4.4. Opinions of Counsel..................................................4
4.5. Purchase Permitted By Applicable Law, etc............................4
4.6. Sale of Other Series 2001 Notes......................................5
4.7. Payment of Special Counsel Fees......................................5
4.8. Private Placement Number.............................................5
4.9. Changes in Corporate Structure.......................................5
4.10. Proceedings and Documents............................................5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................5
5.1. Organization; Power and Authority....................................5
5.2. Authorization, etc...................................................6
5.3. Disclosure...........................................................6
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.....7
5.5. Financial Statements.................................................7
5.6. Compliance with Laws, Other Instruments, etc.........................8
5.7. Governmental Authorizations, etc.....................................8
5.8. Litigation; Observance of Agreements, Statutes and Orders............8
5.9. Taxes................................................................8
5.10. Title to Property; Leases............................................9
5.11. Licenses, Permits, etc...............................................9
5.12. Compliance with ERISA...............................................10
5.13. Private Offering by the Company.....................................10
5.14. Use of Proceeds; Margin Regulations.................................11
5.15. Existing Debt; Future Liens.........................................11
5.16. Foreign Assets Control Regulations, etc.............................11
5.17. Status under Certain Statutes.......................................12
i
5.18. Environmental Matters...............................................12
6. REPRESENTATIONS AND COVENANTS OF EACH PURCHASER.......................12
6.1. Purchase for Investment...........................................12
6.2. Source of Funds...................................................13
6.3. Release of Subsidiary Guaranty....................................14
7. INFORMATION AS TO COMPANY.............................................14
7.1. Financial and Business Information................................14
7.2. Officer's Certificate.............................................17
7.3. Inspection........................................................17
8. PREPAYMENT OF THE NOTES...............................................18
8.1. Required Prepayments of Series 2001 Notes.........................18
8.2. Optional Prepayments with Make-Whole Amount.......................18
8.3. Allocation of Partial Prepayments.................................18
8.4. Maturity; Surrender, etc..........................................18
8.5. Purchase of Notes.................................................19
8.6. Make-Whole Amount.................................................19
9. AFFIRMATIVE COVENANTS.................................................20
9.1. Compliance with Law...............................................20
9.2. Insurance.........................................................21
9.3. Maintenance of Properties.........................................21
9.4. Payment of Taxes and Claims.......................................21
9.5. Corporate Existence, etc..........................................21
9.6. Designation of Unrestricted Subsidiaries..........................22
9.7. Additional Subsidiary Guarantors..................................22
10. NEGATIVE COVENANTS....................................................22
10.1. Transactions with Affiliates......................................22
10.2. Merger, Consolidation, etc........................................23
10.3. Disposition of Stock of Restricted Subsidiary.....................23
10.4. Liens.............................................................24
10.5. Sales of Assets...................................................25
10.6. Limitation on Consolidated Debt...................................26
10.7. Minimum Fixed Charge Interest Coverage............................26
10.8. Minimum Consolidated Adjusted Net Worth...........................26
10.9. Pari Passu Position...............................................26
10.10. Nature of Business................................................27
11. EVENTS OF DEFAULT.....................................................27
12. REMEDIES ON DEFAULT, ETC..............................................29
12.1. Acceleration......................................................29
12.2. Other Remedies....................................................30
ii
12.3. Rescission........................................................30
12.4. No Waivers or Election of Remedies, Expenses, etc.................30
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................31
13.1. Registration of Notes.............................................31
13.2. Transfer and Exchange of Notes....................................31
13.3. Replacement of Notes..............................................31
14. PAYMENTS ON NOTES.....................................................32
14.1. Place of Payment..................................................32
14.2. Home Office Payment...............................................32
15. EXPENSES, ETC.........................................................33
15.1. Transaction Expenses..............................................33
15.2. Survival..........................................................33
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........33
17. AMENDMENT AND WAIVER..................................................34
17.1. Requirements......................................................34
17.2. Solicitation of Holders of Notes..................................34
17.3. Binding Effect, etc...............................................34
17.4. Notes held by Company, etc........................................35
18. NOTICES...............................................................35
19. REPRODUCTION OF DOCUMENTS.............................................35
20. CONFIDENTIAL INFORMATION..............................................36
21. SUBSTITUTION OF PURCHASER.............................................37
22. MISCELLANEOUS.........................................................37
22.1. Successors and Assigns............................................37
22.2. Payments Due on Non-Business Days.................................37
22.3. Severability......................................................37
22.4. Construction......................................................38
22.5. Counterparts......................................................38
22.6. Governing Law.....................................................38
22.7. Time is of the Essence............................................38
iii
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 10.4 -- Existing Liens
EXHIBIT 1.1-A -- Form of Subsidiary Guaranty
EXHIBIT 1.1-B -- Form of Supplement
EXHIBIT 1.1-C -- Form of Intercreditor Agreement
EXHIBIT 1.2-A -- Form of Series 2001-A Senior Notes due May 15, 2006
EXHIBIT 1.2-B -- Form of Series 2001-B Senior Notes due May 15, 2008
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
iv
O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
$200,000,000
Senior Notes Issuable In Series
7.72% Series 2001-A Senior Notes due May 15, 2006
7.92% Series 2001-B Senior Notes May 15, 2008
May 1, 2001
TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A (the "Purchasers"):
Ladies and Gentlemen:
O'REILLY AUTOMOTIVE, INC., a Missouri corporation (the "Company"), agrees
with you as follows:
1. THE NOTES.
1.1. Authorization of the Notes.
The Company is contemplating the issue and sale of up to $200,000,000
aggregate principal amount of its Senior Notes issuable in one or more series
(the "Notes", such term to include any such Notes issued in substitution
therefor pursuant to Section 13 of this Agreement). The Notes will be
substantially in the form set out in Exhibit 1 to the hereafter defined
supplement, with such changes therefrom, if any, as may be approved by the
purchasers of such Notes, or Series thereof, 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. The Notes may be issued in one or more
series (each, a "Series" of Notes) and each Series of Notes may be issued in one
or more sub-series (each, a Sub-Series). Subject to Section 6.3 hereof, each
Series of Notes will be guaranteed by the Subsidiary Guarantors pursuant to a
guaranty in substantially the form of Exhibit 1.1-A, with such changes as may be
necessary to describe therein the Series of Notes being guaranteed (the
"Subsidiary Guaranty"). The banks which are party to the Bank Agreement and the
holders of the Notes will enter into an Intercreditor Agreement satisfactory to
the holders of the Notes and substantially in the form attached as Exhibit 1.1-C
hereto governing their respective rights under the Subsidiary Guaranty and the
Bank Guaranty (the "Intercreditor Agreement").
Each Series of Notes, other than the initial Series, shall be issued
pursuant to a supplement to this Agreement (a "Supplement") in substantially the
form of Exhibit 1.1-B, and shall be subject to the following terms and
conditions:
(a) the designation of each Series of Notes shall distinguish the Notes of one
Series from the Notes of all other Series;
(b) the Notes of each Series shall rank pari passu with the Notes of all other
Series and the Company's other outstanding unsecured Debt that has not been
expressly subordinated to any other Debt of the Company (the "Senior Debt");
(c) each Series of Notes shall be dated the date of issue, bear interest at such
rate or rates, mature on such date or dates, be subject to such mandatory
prepayments on the dates and with the make-whole amounts, if any, as are
provided in the Supplement under which such Notes are issued, and shall have
such additional or different conditions precedent to closing and such additional
or different representations and warranties or other terms and provisions as
shall be specified in such Supplement;
(d) any additional covenants, Defaults, Events of Default, rights or other
similar provisions that are added by a Supplement for the benefit of a Series of
Notes to be issued pursuant to such Supplement that are more favorable to the
holders of such Notes than the comparable terms applicable to any previously
issued Series of Notes shall apply automatically to, and be deemed incorporated
by reference in, such previously issued Series of Notes, whether or not such
Supplement so provides; and
(e) except to the extent provided in foregoing clauses (a) through (d) and as
otherwise provided in this Agreement, all of the provisions of this Agreement
shall apply to the Notes of each Series.
The Purchasers of the Series 2001 Notes shall not be required to purchase
subsequent Series of Notes.
1.2. The Series 2001 Notes
The Company has authorized, as the initial Series of Notes hereunder, the
issue and sale of (i) $75,000,000 7.72% Series 2001-A Senior Notes due May 15,
2006 (the "Series 2001-A Notes") and (ii) $25,000,000 7.92% Series 2001-B Senior
Notes due May 15, 2008 (the "Series 2001-B Notes"). Each of the Series 2001-A
Notes and the Series 2001-B Notes are referred to separately herein as a
"Sub-Series" of the Series 2001 Notes and together, the Series 2001-A and Series
2001-B Notes are referred to herein as the "Series 2001 Notes", with such terms
to include any such notes issued in substitution therefor pursuant to Section 13
of this Agreement. The Series 2001 Notes shall be substantially in the forms set
out in Exhibit 1.2-A and Exhibit 1.2-B, as applicable, with such changes
therefrom, if any, as may be approved by you and each of the other purchasers
named in Schedule A 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.
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2. SALE AND PURCHASE OF SERIES 2001 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, Series 2001 Notes of the Sub-Series and in the
principal amount specified opposite your name in Schedule A at the purchase
price of 100% of the principal amount thereof. Your obligation hereunder and the
obligations of the other Purchasers are several and not joint obligations and
you shall have no obligation hereunder and no liability to any Person for the
performance or non-performance by any other Purchaser.
3. CLOSING.
The sale and purchase of the Series 2001 Notes to be purchased by you and
the other Purchasers shall occur at the offices of Gardner, Carton & Douglas,
321 North Clark Street, Chicago, Illinois 60610, at 10:00 a.m., Central Standard
time, at a closing (the "Closing") on May 17, 2001 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 Series 2001 Notes
to be purchased by you in the form of a single Series 2001 Note (or such greater
number of Series 2001 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 093046020, at Commerce Bank, Springfield, Missouri,
ABA#101000019, Account Name: O'Reilly Automotive, Inc. Operating Account;
O'Reilly Contact: Michelle Bright, telephone number: 417-874-7249; Bank
telephone number: 417-837-5275. If at the Closing the Company shall fail to
tender such Series 2001 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 Series 2001 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 and of
the Subsidiary Guarantors in the Subsidiary Guaranty shall be correct when made
and at the time of the Closing.
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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 Series 2001 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 Sections 10.1 through Section 10.10 hereof had such Sections
applied since such date.
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. Each of the Company and the Subsidiary Guarantors,
as applicable, shall have delivered to you a certificate certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Series 2001 Notes and the Agreement
by the Company and the Subsidiary Guaranty by the Subsidiary Guarantors.
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 Greensfelder, Hemker and Gale, PC,
special counsel for the Company and the Subsidiary Guarantors, covering the
matters set forth in Exhibit 4.4(a) and 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 opinion to
you) and (b) from Gardner, Carton & Douglas, your special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(b)
and covering 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 Series 2001 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 or regulation (including, without limitation,
Regulation G, T 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 or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
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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 Series 2001 Notes.
Contemporaneously with the Closing the Company shall sell to the other
Purchasers and the other Purchasers shall purchase the Series 2001 Notes to be
purchased by them at the Closing as specified in Schedule A.
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 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 Series 2001 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 Schedule 5.5.
4.10. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement, the Subsidiary Guaranty 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.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
Each of the Company and the Subsidiary Guarantors 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
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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 of the Company
and the Subsidiary Guarantors 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, and, in the case of
the Company, to execute and deliver this Agreement and the Series 2001 Notes and
to perform the provisions hereof and thereof. Each of the Subsidiary Guarantors
has the corporate power and authority to execute and deliver the Subsidiary
Guaranty and to perform the provisions thereof.
5.2. Authorization, etc.
(a) This Agreement and the Series 2001 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 Series 2001 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).
(b) The Subsidiary Guaranty has been duly authorized by all necessary corporate
action on the part of each Subsidiary Guarantor, and upon execution and delivery
thereof the Subsidiary Guaranty will constitute a legal, valid and binding
obligation of each Subsidiary Guarantor enforceable against each Subsidiary
Guarantor 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, Banc of America Securities LLC, has
delivered to you a copy of a Private Placement Memorandum, dated February 2001
(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 Restricted
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 listed in Schedule 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 listed in Schedule 5.5, since December 31, 2000, there has been no
6
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 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.
5.4. 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, whether such Subsidiary is a
Restricted Subsidiary or Unrestricted Subsidiary 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, (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). Except as disclosed in Schedule 5.4, there
exist no preemptive or other rights to acquire capital stock or similar equity
interests of any such Subsidiary.
(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 each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
7
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule 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).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this Agreement
and the Series 2001 Notes and of the Subsidiary Guaranty by the Guarantors 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 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 statute or other rule or regulation 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 or the
Series 2001 Notes or by the Subsidiary Guarantors of the Subsidiary Guaranty.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, 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 applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all required tax returns that
are required to have been filed in any jurisdiction, and have paid all taxes
8
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.
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 in accordance
with GAAP. The Federal income tax liabilities of the Company and its
Subsidiaries have been audited and determined by the Internal Revenue Service
and paid for all fiscal years up to and including the fiscal year ended December
31, 1987. The Company is currently under audit for its fiscal years ending
December 31, 1997 and December 31, 1998. The Company does not believe there will
be any tax liability resulting from such audit which would have a Material
Adverse Effect.
5.10. Title to Property; Leases.
The Company and its Restricted Subsidiaries have good and sufficient title
to their respective properties which the Company and its Restricted Subsidiaries
own or purport to own 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), 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 Restricted Subsidiaries own or possess all Material
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known Material conflict with the rights of
others;
(b) to the best knowledge of the Company, no product of the Company 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
(c) 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 Restricted 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 Restricted Subsidiaries.
9
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. 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.
(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 not Material or has otherwise
been disclosed in the most recent audited consolidated financial statements of
the Company and its Subsidiaries.
(e) The execution and delivery of this Agreement and the issuance and sale of
the Series 2001 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 in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of your representation in
Section 6.2 as to the sources of the funds used to pay the purchase price of the
Series 2001 Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the Series
2001 Notes or any similar securities for sale to, or solicited any offer to buy
10
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 55 other
Institutional Investors, each of which has been offered the Series 2001 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 Series 2001 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 Series 2001 Notes as
set forth in Schedule 5.14. No part of the proceeds from the sale of the Series
2001 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 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of 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.
5.15. Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete and correct
list of all outstanding Debt of the Company and its Subsidiaries as of May 1,
2001, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the Debt of
the Company or its Subsidiaries. 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 Debt of the Company or such Subsidiary and no event
or condition exists with respect to any Debt 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 Debt 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 Restricted
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 Series 2001 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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5.17. Status under Certain Statutes.
Neither the Company nor any Restricted 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.
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.
6. REPRESENTATIONS AND COVENANTS OF EACH PURCHASER.
6.1. Purchase for Investment.
(a) You represent that you are purchasing the Notes for your own account or for
one or more separate accounts maintained by you 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 your or their property shall at all times be
within your or their control. You understand that the offer and sale of the
Notes have not been registered under the Securities Act and the Notes may be
resold only if registered pursuant to the provisions of the Securities Act or if
12
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.
(b) With respect to purchasers of the Series 2001 Notes, you represent that you
have received a copy of the Memorandum and that you are an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act.
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 Series 2001 Notes to be purchased by you hereunder:
(a) the Source is an insurance company general account as such term is used in
Prohibited Transaction Class Exemption ("PTE") 95-60 issued by the United States
Department of Labor 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 the NAIC Annual Statements filed with
your state of domicile;
(b) the Source is an insurance company separate account maintained solely in
connection with the fixed contractual obligations of the insurance company under
which the amounts payable, or credited, to any employee benefit plan (or its
related trust) and 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 (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
(d) 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
13
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 (d); or
(e) the Source is a governmental plan; or
(f) 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 (f); or
(g) 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", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
6.3. Release of Subsidiary Guaranty
You and each subsequent holder of a Note agree to release any Subsidiary
Guarantor from the Subsidiary Guaranty at such time as the banks which are party
to the Bank Agreement release such Subsidiary Guarantor from the Bank Guaranty;
provided, however, that you and each subsequent holder will not be required to
release a Subsidiary Guarantor from the Subsidiary Guaranty if (a) such
Subsidiary Guarantor is to become a borrower under the Bank Agreement or (b)
such release is part of a plan of financing that contemplates such Subsidiary
Guarantor incurring a Debt or guaranteeing any other Debt of the Company or (c)
if immediately prior to such release, a Default or Event of Default shall have
occurred which has not been waived or cured, or (d) all compensation directly or
indirectly provided to such banks shall not have also been provided on an equal
and ratable basis to the holders of the Notes. Your obligation to release a
Subsidiary Guarantor from the Subsidiary Guaranty is further conditioned upon
your receipt of a certificate from a Senior Financial Officer of the Company
stating that none of the circumstances described in clauses (a) through (d) of
this Section 6.3 above is true.
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 60 days after the end of each quarterly
fiscal period of the Company (other than the last quarterly fiscal period of
each fiscal year), duplicate copies of,
(i) an unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
14
(ii) unaudited consolidated statements of income, changes in
shareholders' equity 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, except that any unaudited financial statements will not
contain footnotes and will be subject to year-end adjustments, 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);
(b) Annual Statements -- within 105 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 income, changes in shareholders' 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 an opinion thereon of independent certified public accountants 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
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; 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, shall be deemed to satisfy the
requirements of this Section (b);
(c) Unrestricted Subsidiaries - in the event that Unrestricted Subsidiaries
account for more than 10% of the Consolidated Total Assets of the Company and
its Subsidiaries, or more than 10% of the Consolidated Net Income of the Company
and its Subsidiaries, then the financial information delivered pursuant to (a)
and (b) of this Section 7.1 shall be accompanied by unaudited financial
statements for all Unrestricted Subsidiaries of the Company taken as a group,
together with consolidating statements reflecting eliminations or adjustments
15
required to reconcile such group statements to the consolidated financial
statements of the Company and its Subsidiaries;
(d) 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;
(e) Notice of Default or Event of Default -- promptly, and in any event within
five Business Days after a Responsible Officer becoming aware of the existence
of any Default or Event of Default hereunder or a "Default" or "Event of
Default" as such terms are defined in the Intercreditor Agreement 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;
(f) 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 forth the nature thereof and proposed action with regard to reportable
events (as defined in Section 4043(b) of ERISA and the regulations thereunder),
termination proceedings (as defined in Section 4042 of ERISA) and any
liabilities or Liens relating to Plans which may have a Material Adverse Effect;
(g) 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 order, ruling,
statute or other law or regulation that could reasonably be expected to have a
Material Adverse Effect;
(h) Litigation - within 15 days after the Company obtains knowledge thereof,
notice of any litigation or any governmental proceeding in which damages sought
exceed $5,000,000 or which may have a Material Adverse Effect;
(i) Supplements -- in the event that more than one Series of notes is issued
under the Note Agreement, within ten (10) Business Days after execution and
delivery, a copy of any Supplement to the Note Purchase Agreement executed in
connection with such issuance; and
(j) 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
Series 2001 Notes as from time to time may be reasonably requested by any such
holder of Series 2001 Notes.
16
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of
Series 2001 Notes pursuant to Section 7.1(a) or Section (b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance - (i) a list of Unrestricted Subsidiaries, if any, and
(ii) the information (including detailed calculations) required in order to
establish whether the Company was in compliance with the requirements of Section
10.1 through Section 10.10 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);
(b) Consolidated Total Assets - if there exist any Unrestricted Subsidiaries, a
detailed calculation demonstrating the percentage of Consolidated Total Assets
of the Company and its Subsidiaries derived from assets of Unrestricted
Subsidiaries as of the date of the certificate; and
(c) 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 Environmental 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 each holder of a Note:
(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 Restricted Subsidiaries with the Company's
officers, and (with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, to visit the other
offices and properties of the Company and each Restricted 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 Restricted 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
17
Company and its Restricted Subsidiaries), all at such times and as often as may
be requested.
8. PREPAYMENT OF THE NOTES
8.1. Required Prepayments of Series 2001 Notes.
There shall be no required prepayments with respect to the
Series 2001 Notes.
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 of any
Series, including the Series 2001 Notes, in an amount not less than 5% of the
aggregate principal amount of such Series then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus accrued
interest to the date of prepayment, plus 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, 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 of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes of any
Series, the principal amount of the Notes of such Series to be prepaid shall be
allocated among all of the Notes of such Series at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts
thereof 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
18
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 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 the "PX Screen" on the
Bloomberg Financial Market Service (or such other display as may
replace the "PX Screen" on the Bloomberg Financial Market 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 will be
19
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the duration closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is 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.
"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.
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, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, 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.
20
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 Restricted
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 Restricted 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 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 such taxes and
assessments 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 assessment
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 10.2, 10.3 and 10.5, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Restricted Subsidiaries (unless merged into
the Company or a 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
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
21
9.6. Designation of Unrestricted Subsidiaries.
The Company may designate a Restricted Subsidiary as an
Unrestricted Subsidiary and an Unrestricted Subsidiary as a Restricted
Subsidiary, provided that: (a) if such Subsidiary initially is a Restricted
Subsidiary, then such Restricted Subsidiary may be subsequently redesignated as
an Unrestricted Subsidiary and such Unrestricted Subsidiary may be subsequently
designated as a Restricted Subsidiary, but no further changes in designation may
be made; (b) if such Subsidiary initially is an Unrestricted Subsidiary, then
such Unrestricted Subsidiary may be subsequently redesignated as a Restricted
Subsidiary and such Restricted Subsidiary may be subsequently redesignated as an
Unrestricted Subsidiary, but no further changes in designation may be made; and
(c) no such designation of a Restricted Subsidiary as an Unrestricted Subsidiary
shall be permitted unless immediately before and after such designation there
exists no Default or Event of Default.
9.7. Additional Subsidiary Guarantors.
(a) Within (i) ten (10) days after the end of each fiscal quarter of the Company
or, (ii) if applicable, at any time sooner required by the Bank Agreement in
connection with any acquisition that results in the creation of a domestic
Subsidiary, the Company shall cause each domestic Subsidiary created or acquired
during the fiscal quarter then ending or, in the case of acquisition, then being
acquired, to execute and deliver to the holders of the Notes the Subsidiary
Guaranty amended so that such domestic Subsidiary becomes a party thereto and
such other documentation as the Required Holders of each Series may reasonably
request to cause such Subsidiary to evidence and otherwise implement the
Subsidiary Guaranty for the repayment of the obligations contemplated by the
Subsidiary Guaranty and this Agreement.
(b) All documents evidencing the addition of such new domestic Subsidiaries to
the Subsidiary Guaranty shall be delivered to the holders of the Notes
simultaneously with the delivery of documents required to be delivered with
respect to the Bank Guaranty pursuant to the terms of the Bank Agreement.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. Transactions with Affiliates.
The Company will not and will not permit any Restricted
Subsidiary to enter into directly or indirectly any 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 Restricted Subsidiary), except
in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
22
10.2. Merger, Consolidation, etc.
The Company shall not, and shall not permit any Restricted
Subsidiary to, consolidate with or merge with any other corporation or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person provided, however, that:
(a) the Company may consolidate or merge with any other Person if the successor
formed by such consolidation or the survivor of such merger or the Person that
acquires by conveyance, transfer or lease substantially all of the assets of the
Company as an entirety, as the case may be, shall be a solvent corporation
organized and existing under the laws of the United States or any State thereof
(including the District of Columbia), and, if the Company is not such
corporation, (i) such corporation shall have executed and delivered to each
holder of any Series 2001 Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement and
the Series 2001 Notes, (ii) shall have caused to be delivered to each holder of
any Series 2001 Notes an opinion of nationally recognized independent counsel,
or other independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof and
(iii) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing;
(b) Any Restricted Subsidiary may (i) merge into the Company (provided that the
Company is the surviving corporation) or another Restricted Subsidiary or (ii)
sell, transfer or lease all or any part of its assets to the Company or another
Restricted Subsidiary, or (iii) merge or consolidate with, or sell, transfer or
lease all or substantially all of its assets to, any Person in a transaction
that is permitted by Section 10.5 or, as a result of which, such Person becomes
a Restricted Subsidiary; provided in each instance set forth in clauses (i)
through (iii) that, immediately before and after giving effect thereto, there
shall exist no Default or Event of Default.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under this Agreement or the Series 2001
Notes.
10.3. Disposition of Stock of Restricted Subsidiary.
(a) The Company will not permit any Restricted Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purposes of this
section, any warrants, rights or options to purchase or otherwise acquire stock
or other securities exchangeable for or convertible into stock) of such
Restricted Subsidiary to any Person other than the Company or a Wholly-Owned
Restricted Subsidiary, except for the purpose of qualifying directors, or except
in satisfaction of the validly pre-existing preemptive or contractual rights of
minority shareholders in connection with the simultaneous issuance of stock to
the Company or a Restricted Subsidiary whereby the Company or such Restricted
23
Subsidiary maintain their same proportionate interest in such Restricted
Subsidiary or the extent required by applicable law; and
(b) The Company will not sell, transfer or otherwise dispose of any shares of
stock of any Restricted Subsidiary (except to qualify directors), and will not
permit any Restricted Subsidiary to sell, transfer or otherwise dispose of
(except to the Company or a Wholly-Owned Restricted Subsidiary) any share of
stock of any other Restricted Subsidiary, unless such sale or other disposition
can be made pursuant to the requirements of Section 10.2 or of Section 10.5.
10.4. Liens.
The Company and its Restricted Subsidiaries shall not create or incur
any Lien on its property except for the following:
(a) Liens for taxes, assessments or other governmental charges which are
not yet due and payable or that are being contested in good faith;
(b) Liens incidental to the conduct of business or the ownership of properties
and assets (including landlords', carriers', warehousemen's, mechanics,'
materialmen's and other similar Liens) and Liens to secure the performance of
bids, tenders, leases, or trade contracts, or to secure statutory obligations
(including obligations under workers compensation, unemployment insurance and
other social security legislation), surety or appeal bonds or other Liens
incurred in the ordinary course of business and not in connection with borrowed
money;
(c) Liens resulting from judgments, unless such judgments are not, within 60
days, discharged or stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;
(d) Liens securing Debt of a Restricted Subsidiary owed to the Company or
to another Restricted Subsidiary;
(e) Liens in existence at Closing and set forth on Schedule 10.4;
(f) minor survey exceptions and the like which do not Materially detract
from the value of the property subject to such exceptions;
(g) leases, subleases, easements, rights-of-way, zoning restrictions or other
restrictions and other similar charges or encumbrances incidental to the
ownership of property or assets or the ordinary conduct of the Company or any of
its Restricted Subsidiaries' businesses, provided that the aggregate of such
Liens do not Materially detract from the value of property subject to such
Liens;
(h) Liens (i) existing on property at the time of its acquisition or
construction by the Company or a Restricted Subsidiary and not created in
contemplation thereof; (ii) on property created contemporaneously with its
acquisition or within 180 days of the acquisition or completion of construction
or improvement thereof to secure or provide for all or a portion of the purchase
24
price or cost of construction or improvement thereof; or (iii) existing on
property of a Person at the time such Person is consolidated with or merged into
the Company or a Restricted Subsidiary and not created in contemplation thereof;
provided that in the case of clauses (i), (ii) and (iii) such Liens do not
extend to additional property of the Company or any Restricted Subsidiary (other
than property that is an improvement to or is acquired for specific use in
connection with the subject property) and, in the case of clause (ii) only, that
the aggregate principal amount of Debt secured by such Lien shall not exceed the
lesser of (y) the cost of acquisition or construction or (z) fair market value
of such property (as determined in good faith by one or more officers of the
Company to whom authority to enter into the transaction has been delegated by
the board of directors);
(i) any Liens renewing, extending or replacing Liens permitted by sections (d),
(e), (h) and (i), provided that (A) the principal amount of the Debt secured is
not increased or the maturity thereof reduced, (B) such Lien is not extended to
any other property, and (C) immediately after such extension, renewal, or
refunding, no Default or Event of Default would exist; and
(j) Liens securing Debt of the Company and its Restricted Subsidiaries not
otherwise permitted by paragraphs (a) through (i) above, provided that (i)
Priority Debt outstanding does not exceed 15% of Consolidated Adjusted Net Worth
and (ii) such Priority Debt could be incurred without violating Section 10.6 and
Section 10.7.
If, notwithstanding the prohibition contained herein, the Company
shall, or shall permit any of its Restricted Subsidiaries to directly or
indirectly create, incur, assume or permit to exist any Lien, other than those
Liens permitted by the provisions of paragraphs (a) through (j) of this Section
10.4, it will make or cause to be made effective provision whereby the Notes
will be secured equally and ratably with any and all other obligations thereby
secured, such security to be pursuant to agreements reasonably satisfactory to
the holders of more than 50% in principal amount of the Notes at the time
outstanding and, in any such case, the Notes shall have the benefit, to the
fullest extent that, and with such priority as, the holders of the Notes may be
entitled under applicable law, of an equitable Lien on such property. Any
violation of this Section 10.4 will constitute a Default, whether or not
provision is made for an equal and ratable Lien pursuant to this Section 10.4.
10.5. Sales of Assets.
The Company will not, and will not permit any Restricted
Subsidiary to, sell, lease or otherwise dispose of any "substantial part" (as
defined below) of the assets of the Company and its Restricted Subsidiaries;
provided, however, that the Company or any Restricted Subsidiary may sell, lease
or otherwise dispose of assets constituting a substantial part of the assets of
the Company and its Restricted Subsidiaries if such assets are sold in an arms
length transaction and, at such time and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing and an amount equal to
the net proceeds received from such sale, lease or other disposition shall be
used within 180 days of such sale, lease or disposition, in any combination:
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(a) to acquire productive assets used or useful in carrying on the business
of the Company and its Restricted Subsidiaries; or
(b) to prepay Debt (including the Notes) of the Company and/or its Restricted
Subsidiaries which is not subordinated to the Series 2001 Notes; provided,
however, that prepayment of the Notes shall be at the price and subject to the
other requirements set forth in Section 8.2.
As used in this provision, a sale, lease or other disposition of assets shall be
deemed to be a "substantial part" of the assets of the Company and its
Restricted Subsidiaries if the book value of such assets, when added to the book
value of all other assets sold, leased or otherwise disposed of by the Company
and its Restricted Subsidiaries during any period of 365 consecutive days,
exceeds 15% of the book value of Consolidated Total Assets, determined as of the
end of the fiscal quarter immediately preceding such sale, lease or other
disposition; provided that there shall be excluded from any determination of a
"substantial part" any (i) sale or disposition of assets in the ordinary course
of business of the Company and its Restricted Subsidiaries, (ii) Excluded Sale
and Leaseback Transactions, and (iii) any transfer of assets from the Company to
any Restricted Subsidiary or from any Restricted Subsidiary to the Company or
another Restricted Subsidiary in compliance with the requirements of Section
10.2(b).
10.6. Limitation on Consolidated Debt.
At no time shall the Company permit:
(a) the ratio of Consolidated Debt, as of the end of the most recently completed
fiscal quarter, to Adjusted EBITDA for the most recently completed period of
four fiscal quarters, to be greater than 3.0 to 1.0; and
(b) Priority Debt to exceed 15% of Consolidated Adjusted Net Worth.
10.7. Minimum Fixed Charge Interest Coverage.
As calculated on a rolling four quarter basis on the last day
of each fiscal quarter of the Company, the Company shall not permit the ratio of
(i) Consolidated Income Available for Fixed Charges to (ii) Fixed Charges to be
less than 2.25 to 1.0.
10.8. Minimum Consolidated Adjusted Net Worth.
The Company shall not permit Consolidated Adjusted Net Worth
as of any date to be less than the sum of $375,000,000 plus 50% of Consolidated
Net Income (0% in the case of any deficit) for each fiscal year (or portion
thereof) occurring after December 31, 2000.
10.9. Pari Passu Position.
The Company agrees that it will not grant or provide, and at
no time will it allow to exist, be created or granted, any Guaranties by
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Subsidiaries for the benefit of any other holders of Debt for borrowed money of
the Company or its Subsidiaries, unless in the case of the giving of any
Guaranties by Subsidiaries, the holders of the Notes shall simultaneously be
provided with such Guaranties.
10.10. Nature of Business
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business, if, as a result, the general nature of the business in
which the Company and its Restricted Subsidiaries, taken as a whole, would then
be engaged in would be substantially changed from the general nature of the
business in which the Company and its Restricted Subsidiaries, taken as a whole,
are engaged on the date of this Agreement.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any term
contained in Sections 10.1 through 10.10 or any other negative covenant
contained in any Supplement; or
(d) the Company defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and (c) of
this Section 11) or in any Supplement and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual knowledge
of such default and (ii) the Company receiving written notice of such default
from any holder of a Note (any such written notice to be identified as a "notice
of default" and to refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of (i) the
Company or by any officer of the Company in this Agreement or in any Supplement
or (ii) any Subsidiary Guarantor or by any officer of a Subsidiary Guarantor in
the Subsidiary Guaranty or in any writing furnished in connection with the
transactions contemplated hereby or by the Subsidiary Guaranty proves to have
been false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $5,000,000 beyond any period of grace provided with
27
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $5,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared (or one or more Persons are entitled to declare such Debt
to be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Debt to convert such Debt into equity interests), (x) the
Company or any Subsidiary has become obligated to purchase or repay Debt before
its regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $5,000,000, or (y) one or
more Persons have the right to require the Company or any Subsidiary so to
purchase or repay such Debt; or
(g) the Company or any Significant Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Subsidiaries, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in excess
of $5,000,000 are rendered against one or more of the Company and its
Significant Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any ERISA
28
Affiliate that a Plan may become a subject of any such proceedings, (iii) 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 $5,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect. As used in this paragraph (j) herein, the terms
"employee benefit plan" and "employee welfare benefit plan" shall have the
respective meanings assigned to such terms in Section 3 of ERISA; or
(k) (i) default by any Subsidiary Guarantor with respect to any term, covenant
or agreement contained in the Subsidiary Guaranty or (ii) the Subsidiary
Guaranty shall cease to be in full force and effect for any reason (except as
provided in Section 6.3) or any Subsidiary Guarantor shall contest or deny in
writing the validity or enforceability of any of its obligations under the
Subsidiary Guaranty.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in paragraph
(g) or (h) of Section 11 (other than an Event of Default described in clause (i)
of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the
fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all
the Notes then outstanding shall automatically become immediately due and
payable.
(b) If any other Event of Default has occurred and is continuing, the Required
Holders of any Series of Notes at the time outstanding may at any time at their
option, by notice or notices to the Company, declare all the Notes of such
Series then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, any holder or holders of Notes of any Series at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare the Notes held by it
or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
29
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
12.3. Rescission.
At any time after any Series of Notes has been declared due
and payable pursuant to clause (b) of Section 12.1, the Required Holders of such
Series of Notes, by written notice to the Company, may rescind and annul any
such declaration and its consequences if (a) the Company has paid all overdue
interest on such Series of Notes, all principal of and Make-Whole Amount, if
any, on any such Series of Notes that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue principal
and Make-Whole Amount, if any, and (to the extent permitted by applicable law)
any overdue interest in respect of such Series of Notes, at the Default Rate,
(b) all Events of Default and Defaults, other than non-payment of amounts that
have become due solely by reason of such declaration, have been cured or have
been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to such Series of
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
30
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, of the
same Series or Sub-Series and in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall, in the case of a
Series 2001 Note, be substantially in the form of Exhibit 1.2-A or 1.2-B (as
appropriate), and in the case of any other Note, be substantially in the form of
Exhibit 1.2-A or 1.2-B hereto or Exhibit 1 to the Supplement, as applicable.
Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
31
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
in Springfield, Missouri at the principal office of Commerce Bank in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
32
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including reasonable
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) incurred by the holders of Notes in connection with such transactions
and in connection with any amendments, waivers or consents under or in respect
of this Agreement, the Notes, the Subsidiary Guaranty or the Intercreditor
Agreement (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement, the Notes, the Subsidiary Guaranty or the Intercreditor
Agreement or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the Notes, the
Subsidiary Guaranty or the Intercreditor Agreement or any documents relating
thereto, or by reason of being a holder of any Note, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby, by the
Notes, the Subsidiary Guaranty or the Intercreditor Agreement or any documents
relating thereto. The Company will pay, and will save you and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders (other than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement, the Notes and the Subsidiary
Guaranty, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement, the Series 2001 Notes and
the Subsidiary Guaranty, the purchase or transfer by any holder of any Series
2001 Note or portion thereof or interest therein and the payment of any Series
2001 Note, and may be relied upon by any subsequent holder of a Series 2001
Note, regardless of any investigation made at any time by or on behalf of you or
any other holder of a Series 2001 Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Series 2001 Notes embody the entire agreement and understanding between
you and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
33
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement, the Notes and the Subsidiary Guaranty may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders of each Series of Notes, except
that (a) no amendment or waiver of any of the provisions of Section 1.2, 2, 3, 4
(solely with respect to the Series of Notes to which Section 4 relates), 5, 6 or
21 hereof, or any defined term (as it is used therein), will be effective as to
any holder of a Note unless consented to by such holder in writing, and (b) no
such amendment or waiver may, without the written consent of the holders of each
Note at the time outstanding affected thereby, (i) change the amount or time of
any prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount on
the Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof of the Notes, of the Subsidiary Guaranty and of the Intercreditor
Agreement. The Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of this Section
17 to each holder of outstanding Notes promptly following the date on which it
is executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or
as an inducement to the entering into by any holder of Notes or any waiver or
amendment of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
34
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement, the Notes and the Subsidiary Guaranty, or have
directed the taking of any action provided herein or in the Notes to be taken
upon the direction of the holders of a specified percentage of the aggregate
principal amount of Notes then outstanding, Notes directly or indirectly owned
by the Company or any of its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be
in writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at such
other address as you or it shall have specified to the Company in
writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of the Chief Financial
Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
35
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential
Information" means information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes, this Agreement and the
Subsidiary Guaranty. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits of this
Section 20 as though it were a party to this Agreement. On reasonable request by
36
the Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
37
22.4. Construction.
Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of Illinois excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
22.7. Time is of the Essence
Time is of the essence with respect to each and every covenant
and agreement of the Company under this Agreement and the Notes.
* * * * *
If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
O'REILLY AUTOMOTIVE, INC.
By: /s/ James R. Batten
Name: James R. Batten
Title: Vice President of Finance/CFO
38
The foregoing is hereby
agreed to as of the
date thereof.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Jeffrey J. Lueken
Name: Jeffrey J. Lueken
Title: Its Authorized Representative
---------------------------------------------
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
For its Group Annuity Separate Account
By: /s/ Jeffrey J. Lueken
Name: Jeffrey J. Lueken
Title: Its Authorized Representative
---------------------------------------------
MONY LIFE INSURANCE COMPANY
By: /s/ Leonard P. Mazlish
Name: Leonard P. Mazlish
Title: Investment Vice President
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc.
(authorized agent)
By: /s/ Stephen H. Wilson
Name: Stephen H. Wilson
Title: Managing Director
NEW YORK LIFE INSURANCE COMPANY
By: /s/ A. Post Howland
Name: A. Post Howland
Title: Investment Vice President
39
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By: /s/ A. Post Howland
Name: A. Post Howland
Title: Vice President
JEFFERSON PILOT LIFEAMERICA
INSURANCE COMPANY
By: /s/ Robert E. Whalen, II
Name: Robert E. Whalen, II
Title: Vice President
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By: /s/ Robert E. Whalen, II
Name: Robert E. Whalen, II
Title: Vice President
THE CANADA LIFE ASSURANCE COMPANY
By: /s/ C. Paul English
Name: C. Paul English
Title: Associate Treasurer
AMERITAS LIFE INSURANCE CORP.
By: Ameritas Investment Advisors, Inc.,
as Agent
By: /s/ Patrick J. Henry
Name: Patrick J. Henry
Title: Vice President - Fixed Income Securities
40
ACACIA NATIONAL LIFE INSURANCE
COMPANY
By: Ameritas Investment Advisors Inc.,
as Agent
By: /s/ Patrick J. Henry
Name: Patrick J. Henry
Title: Vice President - Fixed Income Securities
ACACIA LIFE INSURANCE COMPANY
By: Ameritas Investment Advisors Inc.,
as Agent
By: /s/ Patrick J. Henry
Name: Patrick J. Henry
Title: Vice President - Fixed Income Securities
SECURITY FINANCIAL LIFE INSURANCE
COMPANY
By: /s/ Kevin W. Hammond
Name: Kevin W. Hammond
Title: Vice President - Chief Investment Officer
41
SCHEDULE A-1
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY Series 2001-A Notes
$11,000,000
Series 2001-B Notes
$17,000,000
(1) All payments on or in respect of the Notes shall be made by wire
transfer of immediately available funds, setting forth the name of the
issuer of the Notes, the full title (including the coupon rate, final
maturity date and series) of the Notes, a reference to the applicable
PPN and the due date and application (as among principal, premium and
interest) of the payment being made, to:
Bankers Trust Company
16 Wall Street
Insurance Unit--4th Floor
New York, NY 10005
ABA# 021-001-033
For the account of:
The Northwestern Mutual Life Insurance Company
Account No. 00-000-027
(2) All notices with respect to confirmation of payments on account of the
Notes shall be delivered or mailed to:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Investment Operations
Fax: 414-665-5714
(3) All other communications shall be delivered or mailed to:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
Fax: 414-665-7124
Notes are to be registered in the name of "The Northwestern Mutual Life
Insurance Company".
TAX ID NUMBER: 39-0509570
2
SCHEDULE A-2
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
for its Group Annuity Separate Account Series 2001-A Notes
$1,000,000
Series 2001-B Notes
$1,000,000
(1) All payments on or in respect of the Notes shall be made by wire
transfer of immediately available funds, setting forth the name of the
issuer of the Notes, the full title (including the coupon rate, final
maturity date and series) of the Notes, a reference to the applicable
PPN and the due date and application (as among principal, premium and
interest) of the payment being made, to:
Bankers Trust Company
16 Wall Street
Insurance Unit--4th Floor
New York, NY 10005
ABA# 021-001-033
For the account of:
The Northwestern Mutual Life Insurance Company
for its Group Annuity Separate Account
Account No. 50-233-339
3
(2) All notices with respect to confirmation of payments on account of the
Notes shall be delivered or mailed to:
The Northwestern Mutual Life Insurance Company
For its Group Annuity Separate Account
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Investment Operations
Fax: 414-665-5714
(3) All other communications shall be delivered or mailed to:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
Fax: 414-665-7124
Notes are to be registered in the name of "The Northwestern Mutual Life
Insurance Company for its Group Annuity Separate Account".
TAX ID NUMBER: 39-0509570
4
SCHEDULE A-3
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
MONY LIFE INSURANCE COMPANY Series 2001-A Notes
$11,000,000
Series 2001-B Notes
$6,000,000
(1) Note Issuance. The Series 2001-A Note being purchased by MONY Life
-------------
Insurance Company will be evidenced by one Series 2001-A Note issued in
the name of J. ROMEO & CO. The Series 2001-B Note being purchased by
MONY Life Insurance Company will be evidenced by one Series 2001-B Note
issued in the name of J. ROMEO & CO. The Notes should be delivered to
the Law Department of MONY Life Insurance Company by overnight courier.
(2) Payments. All payments in respect of the Notes issued in the name of
--------
J. ROMEO & CO. to be made by bank wire or intra-bank transfer of
Federal or other funds (identifying the issue upon which payment is
being made and the application of the payment as between interest,
principal and premium) to:
Chase Manhattan Bank, ABA #021000021, for credit to Private
Income
Processing Account No. 544-755102.
(3) Notes and Communications.
------------------------
(a) All Notices and Confirmations Relating to Payments:
If by Registered Mail, Certified Mail or Federal Express:
The Chase Manhattan Bank
4 New York Plaza, 13th Floor
New York, NY 10004
Attn.: Income Processing--J. Piperato, 13th Floor
5
If by Regular Mail:
The Chase Manhattan Bank
Dept. 3492
P.O. Box 50000
Newark, NJ 07101-8006
With a Second Copy to:
Telecopy Confirms and Notices:
(212) 708-2152
Attention: Securities Custody Division
M.D. 6-39A
Mailing Confirms and Notices:
MONY Life Insurance Company
1740 Broadway
New York, NY 10019
Attention: Securities Custody Division
M.D. 6-39A
(b) All other communications:
MONY Life Insurance Company
1740 Broadway
New York, NY 10019
Attention: Capital Management Unit
Telecopy No.: (212) 708-2491
MONY Life Insurance Company
TAX ID NUMBER: 13-1632487
6
SCHEDULE A-4
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
CONNECTICUT GENERAL LIFE INSURANCE Series 2001-A Notes
COMPANY $3,000,000
$5,000,000
$3,000,000
$1,000,000
$1,000,000
$3,000,000
(1) All payments by federal funds wire transfer of immediately available
funds to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
Accompanying Information:
OBI=[name of company; description of security; interest rate,
maturity date; PPN; due date and application (as among
principal, premium and interest of the payment being made);
contact name and phone.]
(2) All notices related to payments to:
CIG & CO.
c/o CIGNA Investments, Inc.
Attention: Securities Processing -S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
7
CIG & CO.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S-307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: 860-726-7203
with a copy to:
Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, NY 10081
Attention: CIGNA Private Placements
Fax: (212) 552-3107/1005
(3) All other communications to:
CIG & CO.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division- S-307
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: (860) 726-7203
(4) All securities shall be registered in the name of CIG & CO.
TAX ID NUMBER: 13-3574027
8
SCHEDULE A-5
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
NEW YORK LIFE INSURANCE COMPANY Series 2001-A Notes
$5,000,000
(1) All payments by wire or intrabank transfer of immediately available
funds to:
Chase Manhattan Bank
New York, New York 10019
ABA No.: 021-000-021
Credit: New York Life Insurance Company
General Account No. 008-9-00687
with sufficient information (including issuer, PPN number, interest
rate, maturity and whether payment is of principal, premium, or
interest) to identify the source and application of such funds.
With advice of such payments to:
New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4296
(2) All other communications:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
9
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122/ (212) 576-6752
with a copy of any notices regarding defaults or Events of Default
under the operative documents to:
Attention: Office of General Counsel
----------
Investment Section, Room 1107
Fax #: (212) 576-8340
TAX ID NUMBER: 13-5582869
10
SCHEDULE A-6
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
NEW YORK LIFE INSURANCE Series 2001-A Notes
AND ANNUITY CORPORATION $10,000,000
(1) All payments by wire or intrabank transfer of immediately available
funds to:
Chase Manhattan Bank
New York, New York
ABA No. 021-000-021
Credit: New York Life Insurance and Annuity Corporation
General Account No. 323-8-47382
with sufficient information (including issuer, PPN, interest rate,
maturity and whether payment is of principal, premium, or interest) to
identify the source and application of such funds.
With advice of such payments to:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madion Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4296
11
(2) All other communications:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122/ (212) 576-6752
with a copy of any notices regarding defaults or Events of Default
under the operative documents to:
Attention: Office of General Counsel
---------
Investment Section, Room 1107
Fax #: (212) 576-8340
TAX ID NUMBER: 13-3044743
12
SCHEDULE A-7
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
JEFFERSON PILOT LIFEAMERICA Series 2001-A Notes
INSURANCE COMPANY $4,000,000
(1) All payments by federal funds wire transfer of immediately available
funds to:
Jefferson Pilot LifeAmerica Insurance Company
c/o The Bank of New York
ABA 021000018 BNF: IOC566
Custody Account 280256
Attention: P&I Department
Such wire transfer shall identify the issue to which the payment
relates and shall identify the amount of principal interest and premium.
(2) Address for Bank Correspondence (copy to Purchaser at address below):
Jefferson Pilot LifeAmerica Insurance Company
c/o The Bank of New York
Attention: P&I Department
Post Office Box 19266
Newark, New Jersey 07195
Purchaser's Address (for all notices):
Jefferson Pilot LifeAmerica Insurance Company
Post Office Box 20407
Greensboro, North Carolina 27420
Attention: Securities Administration
Fax: (336) 691-3717
13
For Hand Delivery:
100 North Greene Street
Greensboro, North Carolina 27401
Attention: Securities Administration
(3) Delivery of Notes: A copy of the Note(s) should be sent to
Jefferson Pilot LifeAmerica at the above
address.
Deliver Notes to:
Bank of New York
One Wall Street
3rd Floor Window A
For Jefferson Pilot LifeAmerica Account #280256
New York, New York 10286
TAX ID NUMBER: 22-0832760
14
SCHEDULE A-8
INFORMATION RELATING TO PURCHASERS
Principal Amount and Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
JEFFERSON-PILOT LIFE INSURANCE COMPANY Series 2001-A Notes
$8,000,000
(1) All payments by federal funds wire transfer of immediately available
funds to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
ABA 021000018 BNF: IOC566
Custody Account 186100
Attention: P&I Department
Such wire transfer shall identify the issue to which the payment
relates and shall identify the amount of principal interest and premium.
(2) Address for Bank Correspondence (copy to Purchaser at address below):
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
Attention: P&I Department
Post Office Box 19266
Newark, New Jersey 07195
Purchaser's Address (for all notices):
Jefferson-Pilot Life Insurance Company
Post Office Box 20407
Greensboro, North Carolina 27420
Attention: Securities Administration
Fax: (336) 691-3717
15
For Hand Delivery:
100 North Greene Street
Greensboro, North Carolina 27401
Attention: Securities Administration
(3) Delivery of Notes: A copy of the Note(s) should be sent to
Jefferson-Pilot Life at the above address.
Deliver Notes to:
Bank of New York
One Wall Street
3rd Floor Window A
For Jefferson-Pilot Life Account #186100
New York, New York 10286
TAX ID NUMBER: 56-0359860
16
SCHEDULE A-9
INFORMATION RELATING TO PURCHASERS
Principal Amount of Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
THE CANADA LIFE ASSURANCE COMPANY Series 2001-A Notes
$5,000,000
(1) Domestic Physical Delivery
By Messenger:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
New York, NY 10004-2477
Reference: The Canada Life Assurance Company
Trust Account Number G52708
By Courier:
Chase Manhattan Bank
4 New York Plaza--1st Floor
Ground Floor Window
New York, NY 10004-2477
Attention: Mike Jones--Outsourcing Dept. (212) 623-1023
---------
Reference: The Canada Life Assurance Company
Trust Account Number G52708
Depository Trust Company:
Chase Manhattan Bank
Agent ID No. 26368
Agent DTC No. 902
Institution ID No. 58499
For: The Canada Life Assurance Company
Trust Account Number: G52708
Cash Wire Instructions:
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000200
Trust Account No. G52708
17
Reference: CUSIP, Name of Issuer & description, and Principal
and Interest payment.
Payment Instructions (by mail):
J. Romeo & Co.
c/o Chase Manhattan Bank
P.O. Box 35308
Newark, New Jersey 07101-8006
Attn: Funds Clearance/ AC # G 52708
Reference: CUSIP, Name of Issuer and description, and
Principal and Interest payment.
For Call or Maturity Payment:
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000192
Trust Account G52708
Reference: CUSIP, Name of Issuer & description, and call or
maturity date
(2) Please send notices of payment and written confirmations of wire
transfers to:
Chase Manhattan Bank
North American Insurance
3 Chase Metro tech Center--6th Floor
Brooklyn, NY 11245
Attn.: Doll Balbadar
Copy to: The Canada Life Assurance Company
330 University Ave. SP-12
Securities Accounting
Toronto, ON M5G 1R8
Canada
(3) Register notes in the name of J. Romeo & Co.
TAX ID NUMBER: 38-0397420
18
SCHEDULE A-10
INFORMATION RELATING TO PURCHASERS
Principal Amount of Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
AMERITAS LIFE INSURANCE CORP. Series 2001-A Notes
5900 "O" Street $2,000,000
Lincoln, NE 68510-2234
(1) All payments by wire transfer of immediately available funds to:
U.S. Bank
ABA# 104-000-029
Ameritas Life Insurance Corp.
Acct#: 1-494-0070-0188
Re: Description of Note; Principal & Interest Breakdown
with sufficient information to identify the source and application of
such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Fax Number: (402) 467-6970
Attn.: James Mikus
(3) All other communications:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Attn.: James Mikus
TAX ID NUMBER: 47-0098400
19
SCHEDULE A-11
INFORMATION RELATING TO PURCHASERS
Principal Amount of Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
ACACIA NATIONAL LIFE Series 2001-A Notes
INSURANCE COMPANY $1,000,000
5900 `O' Street
Lincoln, NE 68510-2234
(1) All payments by wire transfer of immediately available funds to:
Bankers Trust New York
ABA #021-001-033
Reference: Acacia National Life Insurance Company #093596;
CUSIP; Name of Issue with sufficient information to identify
the source and application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
Acacia National Life Insurance Company
Ameritas Investment Advisors Inc.
390 North Cotner Blvd.
Lincoln, NE 68505
Fax #: (402) 467-6970
(3) All other communications:
Acacia National Life Insurance Company
Ameritas Investment Advisors Inc.
390 North Cotner Blvd.
Lincoln, NE 68505
20
(4) Delivery of certificates by registered mail:
Bankers Trust Company
Corp. Receive Window 44
16 Wall Street, 4th Floor, M.S. 4045
New York, NY 10005
Ref: Acacia National Life Insurance Company #093596
(5) To be registered in the nominee of SALKELD & CO.
TAX ID NUMBER: 52-1009067
21
SCHEDULE A-12
INFORMATION RELATING TO PURCHASERS
Principal Amount of Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
ACACIA LIFE INSURANCE COMPANY Series 2001-A Notes
5900 "O" Street $1,000,000
Lincoln, NE 68510-2234
(1) All payments by wire transfer of immediately available funds to:
Bankers Trust New York
ABA #021-001-033
Reference: Acacia Life Insurance Company #093595; CUSIP; Name
of Issue with sufficient information to identify
the source and application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
Acacia Life Insurance Company
Ameritas Investment Advisors Inc.
390 North Cotner Blvd.
Lincoln, NE 68505
Fax#: (402) 467-6970
(3) All other communications:
Acacia Life Insurance Company
Ameritas Investment Advisors Inc.
390 North Cotner Blvd.
Lincoln, NE 68505
22
(4) Delivery of certificates by registered mail:
Bankers Trust Company
Corp. Receive Window 44
16 Wall Street, 4th Floor, M.S. 4045
New York, NY 10005
Acacia Life Insurance Company #093595
(5) To be registered in the nominee of SALKELD & CO.
TAX ID NUMBER: 53-0022880
23
SCHEDULE A-13
INFORMATION RELATING TO PURCHASERS
Principal Amount of Sub-Series of
Name and Address of Purchaser Series 2001 Notes to be Purchased
- ----------------------------- ---------------------------------
SECURITY FINANCIAL LIFE INSURANCE Series 2001-B Notes
COMPANY $1,000,000
(1) All payments on in respect of the Notes shall be made by wire transfer of
immediately available funds at the opening of business on the due date to:
Wells Fargo Bank, Nebraska, N.A.
1248 "O" Street
Lincoln, NE 68508
ABA No. 104-000-058
Account of: Security Financial Life
Account No.: 79-40-797-624
Each such wire transfer shall set forth the name of the issuer, the
full title of the Notes (including the rate and final redemption to
maturity date) and application of such funds among principal, premium
and interest, if applicable.
(2) All notices of payment and written confirmations of such wire transfers
should be sent to:
Security Financial Life Insurance Co.
4000 Pine Lake Road
P.O. Box 82248
Lincoln, NE 68516
Attention: Investment Division
Fax: (402) 434-9599
Phone: (402) 434-9500
24
(3) All other communications should be sent to:
Security Financial Life Insurance Co.
4000 Pine Lake Road
P.O. Box 82248
Lincoln, NE 68501-2248
TAX ID NUMBER: 47-0293990
25
SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"Adjusted EBITDA" means for any period, the total of the
following calculated without duplication on a consolidated basis for such
period: (i) EBITDA, plus (ii) on a pro forma basis, the pro forma EBITDA of each
Person or, as applicable, the EBITDA attributable to the assets acquired from
such Person by the Company or any Restricted Subsidiary in the subject period,
for any portion of such subject period occurring prior to the date of the
acquisition by the Company or any Restricted Subsidiary of such Person or
related assets and provided, further, that any calculation pursuant to subclause
(ii) above of pro form EBITDA for any subject period which gives effect to asset
acquisitions during the subject period on a pro forma basis as provided above
shall in any event be determined by the Company in accordance with sound
financial practice and on the basis, to the extent available, of appropriate
financial statements and tax returns for the applicable period, and shall be set
forth in a certificate of the principal financial officer of the Company
accompanied by calculations in reasonable detail showing the manner of
determination thereof, which certificate shall be furnished to each holder of a
Note not later than the certificate required to be furnished by the Company in
respect of the fiscal period in which such date of determination occurs pursuant
to Section 7.2(a).
"Affiliate" means, at any time, and with respect to any
Person, (a) any Person (other than a Restricted Subsidiary) that at such time
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and (b) any
Person beneficially owning or holding, directly or indirectly, 10% or more of
any class of voting or equity interests of the Company or any Subsidiary or any
corporation of which the Company and its Subsidiaries beneficially own or hold,
in the aggregate, directly or indirectly, 10% or more of any class of voting or
equity interests. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"Bank Agreement" means the Credit Agreement dated as of
January 27, 1998 among O'Reilly Automotive, Inc., Nationsbank, N.A., Nationsbanc
Montgomery Securities, LLC and the Lenders named therein, as such Credit
Agreement has been and may be amended, restated or otherwise modified.
"Bank Guaranty" means the Guaranty dated January 27, 1998 from
the Subsidiaries of the Company party thereto in favor of the banks party to the
Bank Agreement, as such agreement may be amended, restated or otherwise
modified, and any successors thereto or assignees thereof.
"Business Day" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York, New York; Chicago,
Illinois and Springfield, Missouri are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person
and a Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on the balance sheet of such Person.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"Company" means O'Reilly Automotive, Inc., a Missouri
corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Adjusted Net Worth" means, as of the date of any
determination thereof, Consolidated Net Worth less the total amount of
Restricted Investments in excess of 10% of shareholders' equity on such date of
determination.
"Consolidated Debt" means as of any date of determination, the
total of all Debt of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means for
any period the sum of (i) EBITDA and (ii) Rentals for such period.
"Consolidated Net Income" shall mean net income, before any
extraordinary items, of the Company and its Restricted Subsidiaries for such
period on a consolidated basis, as calculated in accordance with GAAP.
"Consolidated Net Worth" means at any time the total amount of
shareholders' equity of the Company and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
2
"Consolidated Total Assets" means, as of the date of any
determination thereof, the total amount of all assets of the Company and its
Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP.
"Debt" means, without duplication, the sum of (a) liabilities
for borrowed money, (b) liabilities and redemption obligations in respect of
mandatorily redeemable preferred stock, (c) liabilities (excluding accounts
payable and other accrued liabilities arising in the ordinary course of
business) for the deferred purchase price of property and conditional sale or
title retention agreements, (d) Capital Lease Obligations, (e) liabilities for
borrowed money secured by any Lien with respect to any property owned by such
Person (whether or not it was assumed or otherwise became liable for such
liabilities) and (f) Guaranties of any Person with respect to liabilities of a
type described in clauses (a) through (e) hereof.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"Default Rate" means, with respect to any Sub-Series of the
Series 2001 Notes, that rate of interest that is the greater of (i) 2% per annum
above the rate of interest stated in clause (a) of the first paragraph of such
Sub-Series of Series 2001 Notes or (ii) 2% over the rate of interest publicly
announced by Bank of America in Chicago, Illinois as its "base" or "prime" rate.
"EBITDA" shall mean Consolidated Net Income, plus, to the
extent deducted in calculating Consolidated Net Income, income tax expense,
Interest Expense, depreciation and amortization.
"Environmental Laws" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Excluded Sale and Leaseback Transaction" means a transaction
or series of transactions pursuant to which the Company or any Restricted
Subsidiary shall sell or transfer to any Person (other than the Company or a
Restricted Subsidiary) any property acquired after the date of this Agreement,
3
and, as part of the same transaction or series of transactions, the Company or
any Restricted Subsidiary shall, within 180 days following such sale or
transfer, rent or lease as lessee (other than pursuant to a Capital Lease), or
similarly acquire the right to possession or use of, such property or one or
more properties which it intends to use for the same purpose or purposes as such
property.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fixed Charges" means, with respect to any period, the sum of
(i) Interest Expense and (ii) Rentals for such period.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining
to, any such government.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
4
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
The amount of any Guaranty of any guaranteeing Person shall be deemed to be the
lesser of (i) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty is made, or (ii) the
maximum principal amount for which such guaranteeing Person may be liable
pursuant to the terms of the instrument embodying such Guaranty, unless such
primary obligation and the maximum amount for which such guaranteeing Person may
be liable are not stated or determinable, in which case the amount of such
Guaranty shall be such guaranteeing Person's maximum reasonably anticipated
liability in respect thereof as determined by the Board of Directors of the
Company.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"holder" means, with respect to any Series 2001 Note, the
Person in whose name such Series 2001 Note is registered in the register
maintained by the Company pursuant to Section 13.1.
"Institutional Investor" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than $2,000,000 of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension plan,
any investment company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form.
"Intercreditor Agreement" is defined in Section 1.1.
"Interest Expense" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between the Company and its Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Restricted Subsidiaries
in accordance with GAAP): (a) all interest in respect of Debt of the Company and
its Restricted Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such period,
and (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Income for such period.
5
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement or the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.2.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"Priority Debt" means (without duplication), as of any date,
the sum of (a) unsecured Debt of Restricted Subsidiaries other than (i) Debt
owed to the Company or any other Restricted Subsidiary and (ii) Debt outstanding
at the time such Person became a Restricted Subsidiary and (b) Debt of the
6
Company and its Restricted Subsidiaries secured by a Lien other than any such
Lien permitted by clauses (a) through (i) of Section 10.4.
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"Purchaser(s)" is defined in the salutation to this Agreement.
"QPAM Exemption" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"Rentals" means, with respect to any period, the sum of the
minimum amount of rental and other obligations required to be paid during such
period by the Company or any Restricted Subsidiary as lessee under all operating
leases (other than Capital Leases), excluding any amount required to be paid by
the lessee (whether or not therein designated as rental or additional rental)
(a) which are on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, or (b) which are based on profits,
revenues or sales realized by the lessee from the leased property or otherwise
based on the performance of the lessee.
"Required Holders" means, with respect to any Series, the
holders of more than fifty percent (50%) in principal amount of the Notes of
such Series (taken collectively) at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"Responsible Officer" means the Chief Executive Officer, the
Chief Operating Officer and any "executive officer" as defined in Rule 3b-7
under the Exchange Act.
"Restricted Investments" shall mean all investments except any
of the following: (i) property to be used in the ordinary course of business;
(ii) assets arising from the sale of goods and services in the ordinary course
of business; (iii) investments in one or more Restricted Subsidiaries or any
Person that becomes a Restricted Subsidiary; (iv) investments existing at the
date of closing; (v) investments in obligations, maturing within one year,
issued by or guaranteed by the United States of America, or an agency thereof,
or Canada, or any province thereof; (vi) investments in tax-exempt obligations,
maturing within one year, which are rated in one of the top two rating
classifications by at least one national rating agency; (vii) investments in
certificates of deposit or banker's acceptances maturing within one year issued
by Bank of America or other commercial banks which are rated in one of the top
two rating classifications by at least one national rating agency; (viii)
investments in commercial paper, maturing within 270 days, rated in one of the
top two rating classifications by at least one national rating agency; (ix)
investments in repurchase agreements, (x) treasury stock, or (xi) investments in
money market instrument programs which are classified as current assets in
accordance with GAAP.
"Restricted Subsidiary" means any Subsidiary which: (i) at
least a majority of the voting securities are owned by the Company and/or one or
more Wholly-Owned Restricted Subsidiaries and (ii) the Company has not
7
designated as an Unrestricted Subsidiary by notice in writing given to the
holders of the Series 2001 Notes.
"SEC" means the Securities and Exchange Commission of the
United States.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Series 2001 Notes" is defined in Section 1.2.
"Senior Debt" is defined in Section 1.1.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Significant Subsidiary" means at any time any Restricted
Subsidiary that would at such time constitute a "significant subsidiary" (as
such term is defined in Regulation S-X of the Securities and Exchange Commission
as in effect on the date of the Closing) of the Company.
"Sub-Series" is defined in Section 1.1.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Guarantors" means each of First Call Auto Supply,
L.P., First Call Management Company, Green County Realty Co., Hi-Lo Automotive,
Inc., Hi-Lo Auto Supply, L.P., Hi-Lo Investment Company, Hi-Lo Management
Company, Ozark Automotive Distributors, Inc. and O'Reilly II Aviation, Inc. and
any Subsidiary which becomes a Subsidiary Guarantor pursuant to Section 9.7
hereof.
"Subsidiary Guaranty" is defined in Section 1.1.
"Unrestricted Subsidiary" means any Subsidiary so designated
by the Company.
8
"Wholly-Owned Restricted Subsidiary" means, at any time, any
Restricted Subsidiary one hundred percent (100%) of all of the equity interests
(except directors' qualifying shares) and voting interests of which are owned by
any one or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
9
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
None.
SCHEDULE 5.3
DISCLOSURE MATERIALS
None.
2
SCHEDULE 5.4
SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK
(a) Subsidiaries; Affiliates; Directors/Officers
(i) Subsidiaries
Direct Corporate Subsidiaries of Borrower
Percentage
of Shares
State of Owned
Name Organization Restricted by Company
- ---- ------------ ---------- ----------
Ozark Automotive Distributors, Inc. Missouri Yes 100%
Greene County Realty Co. Missouri Yes 100%
O'Reilly II Aviation, Inc. Missouri Yes 100%
Hi-Lo Automotive, Inc. Delaware Yes 100%
Indirect Corporate Subsidiaries of Borrower
Percentage
of Shares
Owned by
State of Hi-Lo Automotive,
Name Organization Restricted Inc.
- ---- ------------ ---------- -----------------
Hi-Lo Management Company Delaware Yes 100%
Hi-Lo Investment Company Delaware Yes 100%
First Call Management Company Delaware Yes 100%
Indirect Limited Partnership Subsidiaries of Borrower
Name of Partnership
State of General or Interest Owner and
Name Organization Restricted Limited Interest Percentage Ownership
- ---- ------------ ---------- ---------------- --------------------
Hi-Lo Auto Supply, L.P. Texas Yes General Hi-Lo Management Company (1%)
Limited Hi-Lo Investment Company (99%)
First Call Auto Supply, L.P. Texas Yes General First Call Management Company (1%)
Limited Hi-Lo Auto Supply, L.P. (99%)
3
(ii) Company's Affiliates other than Subsidiaries
None.
(iii) Company's directors and senior officers
O'REILLY AUTOMOTIVE, INC.
Directors:
David E. O'Reilly
Lawrence P. O'Reilly
Charles H. O'Reilly, Jr.
Charles H. O'Reilly, Sr.
Rosalie O'Reilly Wooten
Jay D. Burchfield
Joe C. Greene
Paul Lederer
Officers:
Charles H. O'Reilly, Sr. - Chairman Emeritus
Charles H. O'Reilly, Jr. - Vice Chairman of the Board
David O'Reilly - C.E.O. & Chairman of the Board
Larry O'Reilly - C.O.O. & Chairman of the Board
Tricia Headley - Secretary
James R. Batten - Treasurer
Rosalie O'Reilly Wooten - Member of the Board of Directors & Exec. V.P.
Joe C. Greene - Member of Board of Directors
Jay D. Burchfield - Member of Board of Directors
Paul Lederer - Member of Board of Directors
Ted Wise - Co-President
Greg Henslee - Co-President
OZARK AUTOMOTIVE DISTRIBUTORS, INC.
Directors:
David E. O'Reilly
Lawrence P. O'Reilly
Charles H. O'Reilly, Sr.
Tricia Headley
Officers:
Charles H. O'Reilly, Sr. - Chairman of the Board
David E. O'Reilly - President
Larry O'Reilly - Vice-President
4
Charles H. O'Reilly, Jr. - Vice-President
Tricia Headley - Secretary
David O'Reilly - Assistant Secretary
James R. Batten - Chief Financial Officer
O'REILLY II AVIATION, INC.
Directors:
David E. O'Reilly
Lawrence P. O'Reilly
Tricia Headley
Officers:
David E. O'Reilly - President
Lawrence P. O'Reilly - Vice President, Secretary
James R. Batten - Chief Financial Officer
Tricia Headley - Assistant Secretary
HI-LO AUTOMOTIVE, INC.
Directors:
David E. O'Reilly
Lawrence P. O'Reilly
Charles H. O'Reilly, Jr.
Charles H. O'Reilly, Sr.
Rosalie O'Reilly Wooten
Jay D. Burchfield
Joe C. Greene
Officers:
David E. O'Reilly - Executive Vice President
James R. Batten - Executive Vice President, Assistant Secretary
Tricia Headley - Assistant Secretary
GREENE COUNTY REALTY CO.
Directors:
David E. O'Reilly
5
Charles H. O'Reilly, Jr.
Charles H. O'Reilly, Sr.
Tricia Headley
Officers:
Charles H. O'Reilly, Sr. - President
David O'Reilly - Vice-President
Charles H. O'Reilly, Jr. - Secretary/ Treasurer
Tricia Headley - Assistant Secretary
James R. Batten - Chief Financial Officer
HI-LO INVESTMENT COMPANY
Directors:
- ---------
Mark A. Ferruci*
Adianne M. Horne*
Kim E. Luthans*
Officers:
David E. O'Reilly - Executive Vice President
James R. Batten - Executive Vice President, Assistant Secretary
Tricia Headley - Assistant Secretary
* Employees of The Corporation Trust Company acting pursuant to letter agreement
dated December 12, 1991
HI-LO MANAGEMENT COMPANY
Directors:
David E. O'Reilly
Officers:
David E. O'Reilly - Executive Vice President
James R. Batten - Executive Vice President, Assistant Secretary
Tricia Headley - Assistant Secretary
FIRST CALL MANAGEMENT COMPANY
Directors:
David E. O'Reilly
Officers:
David E. O'Reilly - Executive Vice President
6
James R. Batten - Executive Vice President, Assistant Secretary
Tricia Headley - Assistant Secretary
HI-LO AUTO SUPPLY, L.P.
Managing General Partner:
Hi-Lo Management Company
FIRST CALL AUTO SUPPLY, L.P.
Managing General Partner:
First Call Management Company
(b) Liens; Preemption Rights
None.
(d) Restrictions on Subsidiary Dividends/Distributions
None.
7
SCHEDULE 5.5
FINANCIAL STATEMENTS
The financial statements provided to each Purchaser by Borrower and its
Subsidiaries are as follows:
1. March 31, 2001 10Q
2. December 31, 2000 10K
3. 2000 Annual Report to Shareholders
4. Proxy Statement dated April 6, 2001
5. Press Releases:
a. April 24, 2001, O'Reilly Automotive Reports Comparable Sales
of 9.3% and Record First Quarter Sales and Earnings
b. February 27, 2001, O'Reilly Automotive Reports Annual and
Fourth Quarter Earnings
c. February 27, 2001, O'Reilly Automotive Names Paul Lederer to
Board of Directors
8
SCHEDULE 5.8
CERTAIN LITIGATION
Charles Beresky vs. Hi-Lo Auto Supply, L.P., Cause No. B-157,070, in the
District Court of Jefferson County, 60th District Court. The complaint was filed
against Hi/LO in May 1997. The plaintiff sought to certify a class action on
behalf of persons or entities in the States of Texas, Louisiana and California
that have purchased a battery from Hi/LO since May 1990. The complaint alleges
that Hi/LO offered and sold "old," "used" and "out of warranty" batteries as if
the batteries were new, resulting in claims for violations of deceptive trade
practices, breach of contract, negligence, fraud, negligent misrepresentation
and breach of warranty. The plaintiff is seeking, on behalf of the class, an
unspecified amount of compensatory and punitive damages, as well as attorneys'
fees and pre- and post-judgment interest. On July 27, 1998, the Trial Court
certified this class. We appealed the decision to certify the class in the Court
of Appeals for the Ninth District of Texas. On February 25, 1999, the Court of
Appeals issued an opinion affirming the Trial Court's decision to certify the
class. At that time, we appealed the opinion by seeking a mandamus from the
Supreme Court of Texas. On April 6, 1999, the Supreme Court of Texas asked the
plaintiff to file a response, which was filed on April 14, 1999. On May 3, 1999,
we filed a reply to that response. On June 6, 2000, the Supreme Court of Texas
denied the appeal for a mandamus. On January 15, 2001, we reached a favorable
verbal settlement with the plaintiff's counsel. The settlement documents are
currently being prepared and will be subject to the approval of the Trial Court.
We believe that this lawsuit will not have a material adverse effect on our
consolidated financial position, results of operations or cash flows.
Coalition for a Level Playing Field, LLC, et. al. vs. Auto Zone Inc., et.al.,
Cause No. CV0000953 (DRH) in the United States District Court for the Eastern
District of New York. This matter involves numerous independent auto parts
stores (jobbers) who have not been certified as a class action, but have
independently filed suit, claiming price discrimination by the vendors from
which they purchased products. In addition to the Company, Wal-Mart, Autozone,
Discount Auto Parts, Advance Auto Parts and CSK Auto Parts are named defendants.
We believe this matter to be without merit and are vigorously defending against
these claims. We have a motion pending to have the proceedings dismissed with
respect to the Company. We believe that this lawsuit will not have a material
adverse effect on our consolidated financial position, results of operations or
cash flows.
In addition, we and our subsidiaries are involved in various other
legal proceedings incidental to the conduct of our business. Although we cannot
ascertain the amount of liability that we may incur from any of these matters,
we do not currently believe that, in the aggregate, they will have a material
adverse effect on our consolidated financial position, results of operations or
cash flows.
9
SCHEDULE 5.11
LICENSES; PERMITS; ETC.
(a) None.
(b) None.
(c) None.
10
SCHEDULE 5.14
USE OF PROCEEDS
The proceeds from the Notes may be used for general corporate purposes of the
Company and its Subsidiaries, including to repay existing debt of the Company
and its Subsidiaries.
11
SCHEDULE 5.15
EXISTING DEBT
(a) Existing Debt
See attached spreadsheet.
(b) Future Liens
None.
12
SCHEDULE 10.4
EXISTING LIENS
See attachment.
13
EXHIBIT 1.1-A
FORM OF SUBSIDIARY GUARANTY
THIS GUARANTY (this "Guaranty") dated May 1, 2001 is made by First Call
Auto Supply, L.P., a Texas limited partnership, First Call Management Company, a
Delaware corporation, Greene County Realty Co., a Missouri corporation, Hi-Lo
Automotive, Inc., a Delaware corporation, Hi-Lo Auto Supply, L.P., a Texas
limited partnership, Hi-Lo Investment Company, a Delaware corporation, Hi-Lo
Management Company, a Delaware corporation, Ozark Automotive Distributors, Inc.,
a Missouri corporation, and O'Reilly II Aviation, Inc., a Missouri corporation
(collectively, the "Guarantors"), in favor of the holders from time to time of
the Series 2001-A Notes and the Series 2001-B Notes hereinafter referred to,
including each purchaser named in the Note Purchase Agreement [or supplement
thereto] hereinafter referred to, and their respective successors and assigns
(collectively, the "Holders" and each individually, a "Holder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, O'Reilly Automotive, Inc., a Missouri corporation (the
"Company"), and the initial Holders have entered into a Note Purchase Agreement
dated as of May 1, 2001 (the Note Purchase Agreement as amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms
and in effect, the "Note Purchase Agreement");
WHEREAS, the Note Purchase Agreement contemplates the issuance by the
Company of up to $200,000,000 aggregate principal amount of Notes (as defined in
the Note Purchase Agreement) in Series of which $100,000,000 (the 7.72% Series
2001-A Notes due May 15, 2006 (the "Series 2001-A Notes") and the 7.92% Series
2001-B Notes due May 15, 2008 (the "Series 2001-B Notes")) have heretofore been
issued to the Holders;
WHEREAS, the Company owns all of the issued and outstanding capital
stock of the Guarantors and, by virtue of such ownership and otherwise, the
Guarantor will derive substantial benefits from the purchase by the Holders of
the Company's Series 2001-A and Series 2001-B Notes;
WHEREAS, it is a condition precedent to the obligation of the Holders
to purchase the Series 2001-A and Series 2001-B Notes that the Guarantor shall
have executed and delivered this Guaranty to the Holders and it is and will be a
condition to the sale of subsequent Series of the Notes that a substantially
identical Guaranty run in favor of the holders of such subsequent Series of
Notes; and
WHEREAS, the Guarantor desires to execute and deliver this Guaranty to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the premises and other benefits to
the Guarantor, and of the purchase of the Company's Series 2001-A and Series
2001-B Notes by the Holders, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Guarantor makes this
Guaranty as follows:
Section 1. Definitions. Any capitalized terms not otherwise herein
-----------
defined shall have the meanings attributed to them in the Note Purchase
Agreement.
Section 2. Guaranty. The Guarantor unconditionally and irrevocably
guarantees to the Holders the due, prompt and complete payment by the Company of
the principal of, Make-Whole Amount, if any, and interest on, and each other
amount due under, the Series 2001-A and Series 2001-B Notes and the Note
Purchase Agreement, when and as the same shall become due and payable (whether
at stated maturity or by required or optional prepayment or by declaration or
otherwise) in accordance with the terms of the Series 2001-A and Series 2001-B
Notes and the Note Purchase Agreement (the Series 2001-A and Series 2001-B Notes
and the Note Purchase Agreement being sometimes hereinafter collectively
referred to as the "Note Documents" and the amounts payable by the Company under
the Note Documents, and all other monetary obligations of the Company
thereunder, being sometimes collectively hereinafter referred to as the
"Obligations"); provided that the amounts guaranteed hereby shall be limited,
with respect to each Guarantor, to an aggregate amount equal to the largest
amount that would not render such Guarantor's obligations hereunder subject to
avoidance under Section 544 or Section 548 of the United States Bankruptcy Code
or under any applicable state law relating to fraudulent transfers or
conveyances. This Guaranty is a guaranty of payment and not just of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Company or upon any other event, contingency or circumstance
whatsoever. If for any reason whatsoever the Company shall fail or be unable
duly, punctually and fully to pay such amounts as and when the same shall become
due and payable, the Guarantor, without demand, presentment, protest or notice
of any kind, will forthwith pay or cause to be paid such amounts to the Holders
under the terms of such Note Documents, in lawful money of the United States, at
the place specified in the Note Purchase Agreement, or perform or comply with
the same or cause the same to be performed or complied with, together with
interest (to the extent provided for under such Note Documents) on any amount
due and owing from the Company. The Guarantor, promptly after demand, will pay
to the Holders the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable
fees and expenses of counsel.
Section 3. Guarantor's Obligations Unconditional. The obligations of
the Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of the Guarantor, shall not be subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
or defense based upon any claim the Guarantor or any other person may have
against the Company or any other person, and to the full extent permitted by
applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor or the Company shall have any
knowledge or notice thereof), including:
2
(a) any termination, amendment or modification of or deletion
from or addition or supplement to or other change in any of the Note
Documents or any other instrument or agreement applicable to any of the
parties to any of the Note Documents;
(b) any furnishing or acceptance of any security, or any
release of any security, for the Obligations, or the failure of any
security or the failure of any person to perfect any interest in any
collateral;
(c) any failure, omission or delay on the part of the Company
to conform or comply with any term of any of the Note Documents or any
other instrument or agreement referred to in paragraph (a) above,
including, without limitation, failure to give notice to the Guarantor
of the occurrence of a "Default" or an "Event of Default" under any
Note Document;
(d) any waiver of the payment, performance or observance of
any of the obligations, conditions, covenants or agreements contained
in any Note Document, or any other waiver, consent, extension,
indulgence, compromise, settlement, release or other action or inaction
under or in respect of any of the Note Documents or any other
instrument or agreement referred to in paragraph (a) above or any
obligation or liability of the Company, or any exercise or non-exercise
of any right, remedy, power or privilege under or in respect of any
such instrument or agreement or any such obligation or liability;
(e) any failure, omission or delay on the part of any of the
Holders to enforce, assert or exercise any right, power or remedy
conferred on such Holder in this Guaranty, or any such failure,
omission or delay on the part of such Holder in connection with any
Note Document, or any other action on the part of such Holder;
(f) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit
of creditors, composition, receivership, conservatorship,
custodianship, liquidation, marshaling of assets and liabilities or
similar proceedings with respect to the Company, the Guarantor or any
other person or any of their respective properties or creditors, or any
action taken by any trustee or receiver or by any court in any such
proceeding;
(g) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of
any of the Note Documents or any other agreement or instrument referred
to in paragraph (a) above or any term hereof;
(h) any merger or consolidation of the Company or the
Guarantor into or with any other corporation, or any sale, lease or
transfer of any of the assets of the Company or the Guarantor to any
other person;
3
(i) any change in the ownership of any shares of capital
stock of the Company or any change in the corporate relationship
between the Company and the Guarantor, or any termination of such
relationship;
(j) any release or discharge, by operation of law, of the
Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Guaranty, other than payment in
full of the Obligations; or
(k) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen, and any other circumstance which might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a Guarantor or surety or which might otherwise limit
recourse against the Guarantor, other than payment in full of the
Obligations.
Notwithstanding any other provision contained in this Guaranty, the Guarantor's
liability with respect to the principal amount of the Series 2001-A and Series
2001-B Notes shall be no greater than the liability of the Company with respect
thereto.
Section 4. Full Recourse Obligations. The obligations of the
-------------------------
Guarantor set forth herein constitute the full recourse obligations of the
Guarantor enforceable against it to the full extent of all its assets and
properties.
Section 5. Waiver. The Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 3, (b) notice to the Guarantor of the incurrence of any of the
Obligations, notice to the Guarantor or the Company of any breach or default by
the Company with respect to any of the Obligations or any other notice that may
be required, by statute, rule of law or otherwise, to preserve any rights of the
Holders against the Guarantor, (c) presentment to or demand of payment from the
Company or the Guarantor with respect to any amount due under any Note Document
or protest for nonpayment or dishonor, (d) any right to the enforcement,
assertion or exercise by any of the Holders of any right, power, privilege or
remedy conferred in the Note Purchase Agreement or any other Note Document or
otherwise, (e) any requirement of diligence on the part of any of the Holders,
(f) any requirement to exhaust any remedies or to mitigate the damages resulting
from any default under any Note Document, (g) any notice of any sale, transfer
or other disposition by any of the Holders of any right, title to or interest in
the Note Purchase Agreement or in any other Note Document and (h) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit recourse against the Guarantor.
Section 6. Subrogation, Contribution, Reimbursement or Indemnity. Until
one year and one day after all Obligations have been indefeasibly paid in full,
the Guarantor agrees not to take any action pursuant to any rights which may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the United States Bankruptcy Code, as
amended, including Section 509 thereof, under common law or otherwise) of any of
the Holders against the Company or against any collateral security or guaranty
4
or right of offset held by the Holders for the payment of the Obligations. Until
91 days after all Obligations have been indefeasibly paid in full, the Guarantor
agrees not to take any action pursuant to any contractual, common law, statutory
or other rights of reimbursement, contribution, exoneration or indemnity (or any
similar right) from or against the Company which may have arisen in connection
with this Guaranty. So long as the Obligations remain, if any amount shall be
paid by or on behalf of the Company to the Guarantor on account of any of the
rights waived in this paragraph, such amount shall be held by the Guarantor in
trust, segregated from other funds of the Guarantor, and shall, forthwith upon
receipt by the Guarantor, be turned over to the Holders (duly endorsed by such
Guarantor to the Holders, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Holders may determine. The
provisions of this paragraph shall survive the term of this Guaranty and the
payment in full of the Obligations.
Section 7. Effect of Bankruptcy Proceedings, etc. This Guaranty shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time payment, in whole or in part, of any of the sums due to any of the
Holders pursuant to the terms of the Note Purchase Agreement or any other Note
Document is rescinded or must otherwise be restored or returned by such Holder
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Company or any other person, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to the Company or other person or any substantial part of its property, or
otherwise, all as though such payment had not been made. If an event permitting
the acceleration of the maturity of the principal amount of the Series 2001-A
and Series 2001-B Notes shall at any time have occurred and be continuing, and
such acceleration shall at such time be prevented by reason of the pendency
against the Company or any other person of a case or proceeding under a
bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, the maturity of the principal amount of
the Series 2001-A and Series 2001-B Notes and all other Obligations shall be
deemed to have been accelerated with the same effect as if any Holder had
accelerated the same in accordance with the terms of the Note Purchase Agreement
or other applicable Note Document, and the Guarantor shall forthwith pay such
principal amount, Make-Whole Amount, if any, and interest thereon and any other
amounts guaranteed hereunder without further notice or demand.
Section 8. Term of Agreement. This Guaranty and all guaranties,
covenants and agreements of the Guarantor contained herein shall continue in
full force and effect and shall not be discharged until such time as (a) all of
the Obligations shall be paid and performed in full and all of the agreements of
the Guarantor hereunder shall be duly paid and performed in full or (b) this
Guaranty is released pursuant to the terms of Section 6.3 of the Note Purchase
Agreement.
Section 9. Representations and Warranties. The Guarantor represents
------------------------------
and warrants to each Holder that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the States set forth in
the first paragraph of this Guaranty and has the corporate power and
authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently
engaged;
5
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guaranty, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(d) the execution, delivery and performance of this Guaranty
will not violate any provision of any requirement of law or material
contractual obligation of the Guarantor and will not result in or
require the creation or imposition of any Lien on any of the
properties, revenues or assets of the Guarantor pursuant to the
provisions of any material contractual obligation of such Guarantor or
any requirement of law;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority is
required in connection with the execution, delivery, performance,
validity or enforceability of this Guaranty;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
any of its properties or revenues (i) with respect to this Guaranty or
any of the transactions contemplated hereby or (ii) which could
reasonably be expected to have a material adverse effect upon the
business, operations or financial condition of the Guarantor and its
subsidiaries taken as a whole;
(g) the execution, delivery and performance of this Guaranty
will not violate any provision of any order, judgment, writ, award or
decree of any court, arbitrator or Governmental Authority, domestic or
foreign, or of the charter or by-laws of the Guarantor or of any
securities issued by the Guarantor; and
(h) after giving effect to the transactions contemplated
herein, (i) the present fair salable value of the assets of the
Guarantor is in excess of the amount that will be required to pay its
probable liability on its existing debts as said debts become absolute
and matured, (ii) the Guarantor has received reasonably equivalent
value for executing and delivering this Guaranty, (iii) the property
remaining in the hands of the Guarantor is not an unreasonably small
capital, and (iv) the Guarantor is able to pay its debts as they mature
Section 10. Notices. All notices under the terms and provisions hereof
shall be in writing, and shall be delivered or sent by telex or telecopy or
6
mailed by first-class mail, postage prepaid, addressed (a) if to the Company or
any Holder at the address set forth in the Note Purchase Agreement or (b) if to
the Guarantor, to the Guarantor, c/o the Company at the address set forth in the
Note Purchase Agreement or at such other address as the Guarantor shall from
time to time designate in writing to the Holders. Any notice so addressed shall
be deemed to be given when actually received.
Section 11. Survival. All warranties, representations and covenants
made by the Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf hereunder shall be considered to have been relied upon by
the Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any of the Holders. All statements in
any such certificate or other instrument shall constitute warranties and
representations by the Guarantor hereunder.
Section 12. Miscellaneous. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provision hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the Guarantor hereby waives any provision of law that renders
any provisions hereof prohibited or unenforceable in any respect. The terms of
this Guaranty shall be binding upon, and inure to the benefit of, the Guarantor
and the Holders and their respective successors and assigns. No term or
provision of this Guaranty may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Guarantor and the
Holders. The section and paragraph headings in this Guaranty are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof, and all references herein to numbered sections, unless
otherwise indicated, are to sections in this Guaranty. This Guaranty shall in
all respects be governed by, and construed in accordance with, the laws of the
State of Illinois, including all matters of construction, validity and
performance.
7
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed as of the day and year first above written.
[Guarantor]
By:
------------------------------------------------
Title:
------------------------------------------------
By:
------------------------------------------------
Title:
8
EXHIBIT 1.1-B
FORM OF SUPPLEMENT
SUPPLEMENT TO NOTE PURCHASE AGREEMENT
THIS SUPPLEMENT is entered into as of [___________], (this "Supplement")
between O'Reilly Automotive, Inc., a Missouri corporation (the "Company"), First
Call Auto Supply, L.P., First Call Management Company, Greene County Realty Co.,
Hi-Lo Automotive, Inc., Hi-Lo Auto Supply, L.P., Hi-Lo Investment Company, Hi-Lo
Management Company, Ozark Automotive Distributors, Inc. and O'Reilly II
Aviation, Inc. (the "Guarantors") and the Purchasers listed in the attached
Schedule A (the "Purchasers").
R E C I T A L S
A. The Company has entered into a Note Purchase Agreement dated as of
May 1, 2001 with the purchasers listed in Schedule A thereto [and one or more
supplements or amendments thereto] (as heretofore amended and supplemented, the
"Note Purchase Agreement") and certain Subsidiaries have entered into a
Subsidiary Guaranty dated as of May 1, 2001 (the "Subsidiary Guaranty"); and
B. The Company desires to issue and sell, and the Purchasers desire to
purchase, an additional Series of Notes (as defined in the Note Purchase
Agreement) pursuant to the Note Purchase Agreement and in accordance with the
terms set forth below;
NOW, THEREFORE, the Company and the Purchasers agree as follows:
1. Authorization of the New Series of Notes. The Company has authorized
the issue and sale of $______________ aggregate principal amount of Notes to be
designated as its [__]% Senior Notes, Series _____________, due _____________
(the "Series ____ Notes", such term to include any such Notes issued in
substitution therefor pursuant to Section 13 of the Note Purchase Agreement).
The Series _________ Notes shall be substantially in the form set out in Exhibit
1 hereto, with such changes therefrom, if any, as may be approved by you and the
Company.
2. Sale and Purchase of Series ____ Notes. Subject to the terms and
conditions of this Supplement and the Note Purchase Agreement, the Company will
issue and sell to each of the Purchasers, and the Purchasers will purchase from
the Company, at the Closing provided for in Section 3 below, Series ____ Notes
in the principal amount specified opposite their respective names in Schedule A
at the purchase price of 100% of the principal amount thereof. The obligations
of the Purchasers hereunder are several and not joint obligations and no
Purchaser shall have any liability to any Person for the performance or
non-performance by any other Purchaser hereunder.
3. Closing. The sale and purchase of the Series _____ Notes to be
purchased by the Purchasers shall occur at the offices of
_______________________ at 9:00 a.m., ________ time, at a closing (the
"Closing") on ____________ or on such other Business Day thereafter on or prior
to _____________ as may be agreed upon by the Company and the Purchasers. At the
Closing the Company will deliver to each Purchaser the Series ____ Notes to be
purchased by it in the form of a single Note (or such greater number of Series
____ Notes in denominations of at least $500,000 as such Purchaser may request)
dated the date of the Closing and registered in its name (or in the name of its
nominee), against delivery by such Purchaser 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 [__________] at [_________________] Bank, [Insert Bank address,
ABA number for wire transfers, and any other relevant wire transfer
information]. If at the Closing the Company shall fail to tender such Series [ ]
Notes to a Purchaser as provided above in this Section 3, or any of the
conditions specified in Section 4 of the Note Purchase Agreement, as modified or
expanded by Section 4 hereof, shall not have been fulfilled to such Purchaser's
satisfaction, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights it may have
by reason of such failure or such nonfulfillment.
4. Conditions to Closing. Each Purchaser's obligation to purchase and
pay for the Series [____] Notes to be sold to it at the Closing is subject to
the fulfillment to its satisfaction, prior to or at the Closing, of the
conditions set forth in Section 4 of the Note Purchase Agreement, as hereafter
modified, and to the following additional conditions:
[Set forth any modifications and additional conditions.]
5. Representations and Warranties of the Company. The Company
represents and warrants to the Purchasers that each of the representations and
warranties contained in Section 5 of the Note Purchase Agreement is true and
correct as of the date hereof (i) except that all references to "Purchaser" and
"you" therein shall be deemed to refer to the Purchasers hereunder, all
references to "this Agreement" shall be deemed to refer to the Note Purchase
Agreement as supplemented by this Supplement, all references to "Notes" therein
shall be deemed to include the Series____ Notes, and (ii) except for changes to
such representations and warranties or the Schedules referred to therein, which
changes are set forth in the attached Schedule 5. Each Subsidiary Guarantor
represents and warrants to the Purchasers that each of the representations and
warranties contained in Section ___ of the Subsidiary Guaranty is true and
correct as of the date hereof.
6. Representations of the Purchasers. Each Purchaser confirms to
---------------------------------
the Company and the Guarantors that the representations set forth in Section 6
of the Note Purchase Agreement are true and correct as to such Purchaser.
7. Mandatory Prepayment of the Series ____ Notes. [The Series ____
Notes are not subject to mandatory prepayment by the Company.] [On ________ and
on each ________ thereafter to and including __________ the Company will prepay
$________ principal amount (or such lesser principal amount as shall then be
2
outstanding) of the Series ____ Notes at par and without payment of the
Make-Whole Amount or any premium.]
8. Applicability of Note Purchase Agreement. Except as otherwise
expressly provided herein (and expressly permitted by the Note Purchase
Agreement), all of the provisions of the Note Purchase Agreement are
incorporated by reference herein and shall apply to the Series ____ Notes as if
expressly set forth in this Supplement.
3
IN WITNESS WHEREOF, the Company, the Guarantors and the Purchasers have
caused this Supplement to be executed and delivered as of the date set forth
above.
O'REILLY AUTOMOTIVE, INC.
By: __________________________________
Name:
Title:
FIRST CALL AUTO SUPPLY, L.P.
By: First Call Management Company
General Partner
By: __________________________________
Name:
Title:
FIRST CALL MANAGEMENT COMPANY
By: __________________________________
Name:
Title:
GREENE COUNTY REALTY CO.
By: __________________________________
Name:
Title:
HI-LO AUTOMOTIVE, INC.
By: __________________________________
Name:
Title:
4
HI-LO AUTO SUPPLY, L.P.
By: Hi-Lo Management Company
General Partner
By: __________________________________
Name:
Title:
HI-LO INVESTMENT COMPANY
By: __________________________________
Name:
Title:
HI-LO MANAGEMENT COMPANY
By: __________________________________
Name:
Title:
OZARK AUTOMOTIVE DISTRIBUTORS, INC.
By: __________________________________
Name:
Title:
O'REILLY II AVIATION, INC.
By: __________________________________
Name:
Title:
5
[ADD PURCHASER SIGNATURE BLOCKS]
6
Schedule A
to Supplement
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- ----------------------------- ---------------------
[NAME OF PURCHASER] $
(1) All payments by wire transfer
of immediately available funds to:
with sufficient information to identify
the source and application of such funds.
(2) All notices of payments and written
confirmations of such wire transfers:
(3) All other communications:
7
Schedule 5
to Supplement
EXCEPTIONS TO REPRESENTATIONS
AND WARRANTIES
8
Exhibit 1 to
Supplement
[FORM OF NOTE]
O'REILLY AUTOMOTIVE, INC.
[____]% SENIOR NOTE DUE [__________, ____]
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, O'Reilly Automotive, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of [________], hereby promises to pay to [________], or
registered assigns, the principal sum of [________] DOLLARS on [________], with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of [____]% per annum from the date
hereof, payable [semiannually], on the [___] day of [__________] and [_________]
in each year, commencing with the [_________] or [_________] next succeeding the
date hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable [semiannually] as aforesaid (or, at the option of
the registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) [_____]% or (ii) [____]% over the rate of interest
publicly announced by [name of reference bank] from time to time in [city,
state] as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at [_____] or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreements referred to below.
This Note is one of a Series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Purchase Agreement, dated as of May 1,
2001 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
9
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
_______ excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
O'REILLY AUTOMOTIVE, INC.
By______________________________________
Title:
10
EXHIBIT 1.2-A
[FORM OF SERIES 2001-A SENIOR NOTE]
O'REILLY AUTOMOTIVE, INC.
7.72% SERIES 2001-A SENIOR NOTE DUE MAY 15, 2006
No. [_____] [Date]
$[_______] PPN: 686091 A* 0
FOR VALUE RECEIVED, the undersigned, O'Reilly Automotive, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Missouri, hereby promises to pay to [________], or
registered assigns, the principal sum of [________] DOLLARS on May 15, 2006,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 7.72% per annum from the date
hereof, payable semiannually, on the fifteenth day of May and November in each
year, commencing with the May or November next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreement referred to below),
payable semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the greater
of (i) 9.72% or (ii) 2% over the rate of interest publicly announced by Bank of
America from time to time in Chicago, Illinois as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America or at such place as shall have been designated in the Note
Purchase Agreement referred to below.
This Note is one of a Series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Purchase Agreement, dated as of May 1,
2001 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note and the Company's obligation under the Note Purchase
Agreement are guaranteed pursuant to that Subsidiary Guaranty dated as of May 1,
2001 among the holders of the Notes, Ozark Automotive Distributors, Inc., Greene
County Realty, Co., O'Reilly II Aviation, Inc., Hi-Lo Automotive, Inc., Hi-Lo
Management Company, Hi-Lo Investment Company, First Call Management Company,
Hi-Lo Auto Supply, L.P. and First Call Auto Supply, L.P. The Noteholder's rights
hereunder are subject to the terms of the Intercreditor Agreement, dated as of
May 1, 2001.
This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
O'REILLY AUTOMOTIVE, INC.
By:
------------------------------------------------
Name:
------------------------------------------------
Title:
------------------------------------------------
2
EXHIBIT 1.2-B
[FORM OF SERIES 2001-B SENIOR NOTE]
O'REILLY AUTOMOTIVE, INC.
7.92% SERIES 2001-B SENIOR NOTE DUE MAY 15, 2008
No.[_____] [Date]
$[_______] PPN: 686091 A@ 8
FOR VALUE RECEIVED, the undersigned, O'Reilly Automotive, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Missouri, hereby promises to pay to [________], or
registered assigns, the principal sum of [________] DOLLARS on May 15, 2008,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 7.92% per annum from the date
hereof, payable semiannually, on the fifteenth day of May and November in each
year, commencing with the May or November next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreement referred to below),
payable semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the greater
of (i) 9.92% or (ii) 2% over the rate of interest publicly announced by Bank of
America from time to time in Chicago, Illinois as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at such place as shall have been designated in the Note
Purchase Agreement referred to below.
This Note is one of a Series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Purchase Agreement, dated as of May 1,
2001 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note and the Company's obligation under the Note Purchase
Agreement are guaranteed pursuant to that Subsidiary Guaranty dated as of May 1,
2001 among the holders of the Notes, Ozark Automotive Distributors, Inc., Greene
County Realty, Co., O'Reilly II Aviation, Inc., Hi-Lo Automotive, Inc., Hi-Lo
Management Company, Hi-Lo Investment Company, First Call Management Company,
Hi-Lo Auto Supply, L.P. and First Call Auto Supply, L.P. The Noteholder's rights
hereunder are subject to the terms of the Intercreditor Agreement, dated as of
May 1, 2001.
This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
O'REILLY AUTOMOTIVE, INC.
By:
------------------------------------------------
Name:
------------------------------------------------
Title:
------------------------------------------------
2
EXHIBIT 4.4(a)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
Matters To Be Covered In
Opinion of Special Counsel To the Company
The opinion of Greensfelder, Hemker and Gale, PC, counsel to the
Company and the Subsidiary Guarantors, shall be to the effect that:
1. Each of the Company and each Subsidiary listed in Schedule 5.4 of
the Note Purchase Agreement, is a corporation duly incorporated, validly
existing in good standing under the laws of its jurisdiction of incorporation,
and each has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted, and, in the case of the
Company, to enter into, execute, deliver and perform the Note Purchase Agreement
and to issue and sell the Series 2001 Notes, and, in the case of the Subsidiary
Guarantors, to execute, deliver and perform the Subsidiary Guaranty.
2. The Note Purchase Agreement and the Series 2001 Notes have been duly
authorized by proper corporate action on the part of the Company, have been duly
executed and delivered by an authorized officer of the Company, and constitute
the legal, valid and binding agreements of the Company, enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.
3. The Subsidiary Guaranty has been duly authorized by proper corporate
action on the part of each Subsidiary Guarantor, has been duly executed and
delivered by an authorized officer of each Subsidiary Guarantor, and constitutes
the legal, valid and binding obligation of each Subsidiary Guarantor, each
enforceable in accordance with its terms, except to the extent the enforcement
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
4. The offering, sale and delivery of the Series 2001 Notes and
delivery of the 2001 Subsidiary Guaranty do not require the registration of the
Series 2001 Notes or the Subsidiary Guaranty under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust Indenture Act
of 1939, as amended.
5. No authorization, approval or consent of, and no designation,
filing, declaration, registration and/or qualification with, any Governmental
Authority is necessary or required in connection with the execution, delivery
and performance by the Company of the Note Purchase Agreement or the offering,
issuance and sale by the Company of the Series 2001 Notes, and no authorization,
approval or consent of, and no designation, filing, declaration, registration
and/or qualification with, any Governmental Authority is necessary or required
in connection with the execution, delivery and performance of the Subsidiary
Guaranty by the Subsidiary Guarantors.
6. The issuance and sale of the Series 2001 Notes by the Company and
compliance with the terms and provisions of the Series 2001 Notes and the Note
Purchase Agreement will not conflict with, or result in any breach or violation
of any of the provisions of, or constitute a default under, or result in the
creation or imposition of any Lien on the property of the Company or any
Subsidiary pursuant to, the provisions of (i) the Certificate of Incorporation
or By-laws of the Company or any Subsidiary, (ii) any loan agreement, credit
agreement, note, mortgage or similar agreement in respect of borrowed money
known to such counsel after due inquiry to which the Company or any Subsidiary
is a party or by which any of them or their property is bound, (iii) any other
Material agreement or instrument known to such counsel after due inquiry to
which the Company or any Subsidiary is a party or by which any of them or their
property is bound, (iv) any law (including usury laws) or regulation applicable
to the Company, or (v) to the knowledge of such counsel, any order, writ,
injunction or decree of any court or Governmental Authority applicable to the
Company.
7. Execution, delivery and performance of the Subsidiary Guaranty by
each Subsidiary Guarantor and compliance with the terms and provisions thereof
will not conflict with, or result in any breach or violation of any of the
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien on the property of the Company, the Subsidiary Guarantor
or any Subsidiary pursuant to, the provisions of (i) the Certificate of
Incorporation or By-laws of such Subsidiary Guarantor or Subsidiary, (ii) any
loan agreement known to such counsel to which such Subsidiary Guarantor or
Subsidiary is a party or by which it or its property is bound, (iii) any other
Material agreement or instrument known to such counsel to which such Subsidiary
Guarantor or Subsidiary is a party or by which it or its property is bound, (iv)
any law or regulation applicable to such Subsidiary Guarantor, or (v) to the
knowledge of such counsel, any order, writ, injunction or decree of any court or
Governmental Authority applicable to such Subsidiary Guarantor.
8. There are no actions, suits or proceedings pending, or, to such
counsel's knowledge, threatened against or affecting the Company or any
Subsidiary, at law or in equity or before or by any Governmental Authority,
which are likely to result, individually or in the aggregate, in a Material
Adverse Effect.
9. Neither the Company nor any Subsidiary is (i) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended,
(ii) a "public utility" as defined in the Federal Power Act, as amended, or
2
(iii) an "investment company" or an "affiliated person" thereof, as such terms
are defined in the Investment Company Act of 1940, as amended.
10. The issuance of the Series 2001 Notes and the intended use of the
proceeds of the sale of the Series 2001 Notes do not violate or conflict with
Regulation U, T or X of the Board of Governors of the Federal Reserve System.
The opinion of Greensfelder, Hemker and Gale, PC shall cover such other matters
relating to the sale of the Series 2001 Notes as the Purchasers may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company and the Subsidiary Guarantors and with
respect to matters governed by the laws of any jurisdiction other than the
United States of America and the laws of the States of Missouri and Delaware,
such counsel may rely upon the opinions of counsel deemed (and stated in his
opinion to be deemed) by him to be competent and reliable.
3
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The opinion of Gardner, Carton & Douglas, special counsel to the
Purchasers, shall be to the effect that:
1. Each of the Company and each Subsidiary Guarantor is a corporation
organized and validly existing in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and authority,
in the case of the Company, to enter into the Note Purchase Agreement and to
issue and sell the Series 2001 Notes, and, in the case of the Subsidiary
Guarantors, to enter into and to execute and deliver the Subsidiary Guaranty.
2. The Note Purchase Agreement and the Series 2001 Notes have been duly
authorized by proper corporate action on the part of the Company, have been duly
executed and delivered by an authorized officer of the Company, and constitute
the legal, valid and binding agreements of the Company, enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.
3. The Subsidiary Guaranty has been duly authorized by proper corporate
action on the part of the Subsidiary Guarantors, has been duly executed and
delivered by an authorized officer of each such Guarantor, and constitutes the
legal, valid and binding obligation of each such Guarantor, enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.
4. Based upon the representations set forth in the Note Purchase
Agreement, the offering, sale and delivery of the Series 2001 Notes and the
issuance and delivery of the Subsidiary Guaranty do not require the registration
of the Series 2001 Notes or the Subsidiary Guaranty under the Securities Act of
1933, as amended, nor the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
5. The issuance and sale of the Series 2001 Notes and execution,
delivery and performance with the terms and provisions of the Series 2001 Notes
and the Note Purchase Agreement will not conflict with or result in any breach
of any of the provisions of the Certificate of Incorporation or by-laws of the
Company.
1
6. The execution, delivery and performance of the
Subsidiary Guaranty will not violate any provisions of the Certificate of
Incorporation or by-laws of the Subsidiary Guarantors.
CH01/12141001.7
2
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 99.1 - Certain Risk Factors
The following factors could affect our actual results, including revenues,
expenses and net income, and could cause them to differ from any forward-looking
statements made by or on behalf of us.
Competition
We compete with a large number of retail and wholesale automotive aftermarket
product suppliers. The distribution of automotive aftermarket products is a
highly competitive industry, particularly in the more densely populated market
areas served by us. Competitors include national and regional automotive parts
chains, independently owned parts stores (some of which are associated with
national auto parts distributors or associations), automobile dealerships, mass
or general merchandise, discount and convenience chains that carry automotive
products, independent warehouse distributors and parts stores and national
warehouse distributors and associations. Some of our competitors are larger and
have greater financial resources than us.
No Assurance of Future Growth
We believe that our ability to open additional stores at an accelerated rate
will be a significant factor in achieving our growth objectives for the future.
Our ability to accomplish this growth is dependent, in part, on matters beyond
our control, such as weather conditions, zoning and other issues related to new
store site development, the availability of qualified management personnel and
general business and economic conditions. No assurance can be given that our
current growth rate can be maintained.
Dependence Upon Key and Other Personnel
The success of our company has been largely dependent on the efforts of certain
key personnel, including David E. O'Reilly, Lawrence P. O'Reilly, Charles H.
O'Reilly, Jr., Rosalie O'Reilly Wooten, Ted F. Wise, and Greg Henslee. The loss
of the services of one or more of these individuals could have a material
adverse effect on the business and results of operations. Additionally, in order
to successfully implement and manage our growth strategy, we will be dependent
upon our ability to continue to attract and retain qualified personnel. There
can be no assurance that we will be able to continue to attract such personnel.
Concentration of Ownership by Management
Our executive officers and directors as a group beneficially own a substantial
percentage of the outstanding shares of our common stock. These officers and
directors have the ability to exercise effective voting control of the company,
including the election of all of our directors, and to effectively determine the
vote on any matter being voted on by our shareholders, including any merger,
sale of assets or other change in control of the company.
14