JAMES F. EVERT
Assistant General Counsel
ThePRUDENTIAL[Logo]
PRUDENTIAL CAPITAL GROUP
Two Prudential Plaza, Suite 5600
Chicago, IL 60601-6716
312 540-4205 Fax: 312 540-4222
Exhibit 10(s)
February 21, 1996
Randy Pearce
Regis Corporation
7201 Metro Boulevard
Minneapolis, Minnesota 55439
Dear Randy:
Enclosed is your copy of a fully-executed confirmation of
acceptance.
Sincerely,
/s/ James F. Evert
James F. Evert
JFE:sr
Enclosures
REGIS CORPORATION
Reference is made to the Private Shelf Agreement (the "Agreement"),
dated as of July 25, 1995 between Regis Corporation (the "Company"), on the
one hand, and The Prudential Insurance Company of America ("Prudential") and
each Prudential Affiliate which becomes party thereto, on the other hand. All
terms used herein that are defined in the Agreement have the respective
meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below as a
Purchaser of Notes hereby confirms the representations as to such Notes set
forth in paragraph 9 of the Agreement, and agrees to be bound by the
provisions of paragraphs 2E and 2G of the Agreement relating to the purchase
and sale of such Notes and by the provisions of the penultimate sentence of
paragraph 11A of the Agreement.
Pursuant to paragraph 2E of the Agreement, an Acceptance with respect to
the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal
amount $10,000,000
(a) Name of Purchaser: The Prudential Insurance Company of
America
(b) Principal amount: $10,000,000
(c) Final maturity date: July 1, 2005
(d) Principal prepayment dates and amounts: None
(e) Interest rate: 6.94%
(f) Interest payment period: Quarterly
(g) Payment and notice instructions: As set forth on
attached Purchaser Schedule
II. Closing Day: February 21, 1996
Dated: February 16, 1996 REGIS CORPORATION
By: /s/ Paul D. Finkelstein
-----------------------
Title: President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. Scott von Fisch
-----------------------
Vice President
PURCHASER SCHEDULE
SERIES A NOTES
REGIS CORPORATION
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- ------------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $10,000,000 $10,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "6.94% Senior
Notes due July 1, 2005, Security No.
!INV____!," and the due date and application
(as among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (201) 802-5260
Telecopy: (201) 802-8055
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
180 North Stetson Street, Suite 5600
Chicago, Illinois 60601-6716
Attention: Managing Director
Telecopy: (312) 540-4222
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (201) 802-6660
Telecopy: (201) 802-9425
(5) Tax Identification No.: 22-1211670
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REGIS CORPORATION
$50,000,000
PRIVATE SHELF AGREEMENT
Dated as of July 25, 1995
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
TABLE OF CONTENTS
(Not Part of Agreement)
Page
----
1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . 2
3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 6
4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 9
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . 23
9. REPRESENTATIONS OF THE PURCHASERS . . . . . . . . . . . . . . . . . 27
10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
INFORMATION SCHEDULE
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF REQUEST FOR PURCHASE
EXHIBIT C -- FORM OF CONFIRMATION OF ACCEPTANCE
EXHIBIT D -- FORM OF OPINION OF COMPANY'S COUNSEL
SCHEDULE 8A -- LIST OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
SCHEDULE 8G -- LIST OF AGREEMENTS RESTRICTING DEBT
REGIS CORPORATION
7201 Metro Boulevard
Minneapolis, Minnesota 55439
As of July 25, 1995
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential,
the "PURCHASERS")
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Ladies and Gentlemen:
The undersigned, Regis Corporation (herein called the "COMPANY"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the issue
of its senior promissory notes (the "NOTES") in the aggregate principal amount
of $50,000,000, to be dated the date of issue thereof, to mature, in the case
of each Note so issued, no less than five and no more than ten years after the
date of original issuance thereof, to bear interest on the unpaid balance
thereof from the date thereof at the rate per annum, and to have such other
particular terms, as shall be set forth, in the case of each Note so issued,
in the Confirmation of Acceptance with respect to such Note delivered pursuant
to paragraph 2E and to be substantially in the form of EXHIBIT A attached
hereto. The terms "NOTE" and "NOTES" as used herein shall include each Note
delivered pursuant to any provision of this Agreement and each Note delivered
in substitution or exchange for any such Note pursuant to any such provision.
Notes which have (i) the same final maturity, (ii) the same principal
prepayment dates, (iii) the same principal prepayment amounts (as a percentage
of the original principal amount of each Note), (iv) the same interest rate,
(v) the same interest payment periods and (vi) the same date of issuance
(which, in the case of a Note issued in exchange for another Note, shall be
deemed for these purposes the date on which such Note's ultimate predecessor
Note was issued), are herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. FACILITY. Prudential is willing to consider, in its sole discretion
and within limits which may be authorized for purchase by Prudential and
Prudential Affiliates from time to time, the purchase of Notes pursuant to
this Agreement. The willingness of Prudential to consider such purchase of
Notes is herein called the "FACILITY". At any time, the aggregate principal
amount of Notes stated in paragraph 1, MINUS the aggregate principal amount
of Notes purchased and sold pursuant to this Agreement prior to such time,
MINUS the aggregate principal amount of Accepted Notes (as hereinafter
defined) which have not yet been purchased and sold hereunder prior to such
time, MINUS the aggregate principal amount of notes of the Company issued
pursuant to the 1991 Agreement which are outstanding and held by Prudential
and Prudential Affiliates at such time is herein called the "AVAILABLE
FACILITY AMOUNT" at such time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL
TO CONSIDER PURCHASES OF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS
UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE NOTES, OR TO QUOTE RATES,
SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF NOTES, AND THE
FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY
PRUDENTIAL AFFILIATE.
2B. ISSUANCE PERIOD. Notes may be issued and sold pursuant to this
Agreement commencing July 1, 1995, and until the earlier of (i) June 30, 1998
and (ii) the thirtieth day after Prudential shall have given to the Company,
or the Company shall have given to Prudential, a notice stating that it
elects to terminate the issuance and sale of Notes pursuant to this Agreement
(or if such thirtieth day is not a Business Day, the Business Day next
preceding such thirtieth day). The period during which Notes may be issued
and sold pursuant to this Agreement is herein called the "ISSUANCE PERIOD".
2C. REQUEST FOR PURCHASE. The Company may from time to time during the
Issuance Period make requests for purchases of Notes (each such request being
herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase shall be
made to Prudential by telecopier or overnight delivery service, and shall
(i) specify the aggregate principal amount of Notes covered thereby, which
shall not be less than $5,000,000 and not be greater than the Available
Facility Amount at the time such Request for Purchase is made, (ii) specify
the principal amounts, final maturities, and principal prepayment dates and
amounts of the Notes covered thereby, (iii) specify the use of proceeds of
such Notes, (iv) specify the proposed day for the closing of the purchase and
sale of such Notes, which shall be a Business Day during the Issuance Period
not less than 10 days and not more than 25 days after the making of such
Request for Purchase, (v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of such
Notes are to be transferred on the Closing Day for such purchase and sale,
(vi) certify that the representations and warranties contained in paragraph 8
are true on and as of the date of such Request for Purchase and that there
exists on the date of such Request for Purchase no Event of Default or
Default, and
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(vii) be substantially in the form of EXHIBIT B attached hereto. Each Request
for Purchase shall be in writing and shall be deemed made when received by
Prudential.
2D. RATE QUOTES. Not later than five Business Days after the
Company shall have given Prudential a Request for Purchase pursuant to
paragraph 2C, Prudential may, but shall be under no obligation to, provide to
the Company by telephone or telecopier, in each case between 9:30 A.M. and
1:30 P.M. New York City local time (or such later time as Prudential may
elect) interest rate quotes for the several principal amounts, maturities,
principal prepayment schedules, and interest payment periods of Notes
specified in such Request for Purchase. Each quote shall represent the
interest rate per annum payable on the outstanding principal balance of such
Notes at which Prudential or a Prudential Affiliate would be willing to
purchase such Notes at 100% of the principal amount thereof.
2E. ACCEPTANCE. Within 30 minutes after Prudential shall have provided
any interest rate quotes pursuant to paragraph 2D or such shorter period as
Prudential may specify to the Company (such period herein called the
"ACCEPTANCE WINDOW"), the Company may, subject to paragraph 2F, elect to
accept such interest rate quotes as to not less than $5,000,000 aggregate
principal amount of the Notes specified in the related Request for Purchase.
Such election shall be made by an Authorized Officer of the Company notifying
Prudential by telephone or telecopier within the Acceptance Window that the
Company elects to accept such interest rate quotes, specifying the Notes
(each such Note being herein called an "ACCEPTED NOTE") as to which such
acceptance (herein called an "ACCEPTANCE") relates. The day the Company
notifies an Acceptance with respect to any Accepted Notes is herein called
the "ACCEPTANCE DAY" for such Accepted Notes. Any interest rate quotes as to
which Prudential does not receive an Acceptance within the Acceptance Window
shall expire, and no purchase or sale of Notes hereunder shall be made based
on such expired interest rate quotes. Subject to paragraph 2F and the other
terms and conditions hereof, the Company agrees to sell to Prudential or a
Prudential Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the
principal amount of such Notes. As soon as practicable following the
Acceptance Day, the Company, Prudential and each Prudential Affiliate which
is to purchase any such Accepted Notes will execute a confirmation of such
Acceptance substantially in the form of EXHIBIT C attached hereto (herein
called a "CONFIRMATION OF ACCEPTANCE"). If the Company should fail to execute
and return to Prudential within three Business Days following receipt thereof
a Confirmation of Acceptance with respect to any Accepted Notes, Prudential
may at its election at any time prior to its receipt thereof cancel the
closing with respect to such Accepted Notes by so notifying the Company in
writing.
2F. MARKET DISRUPTION. Notwithstanding the provisions of paragraph 2E,
if Prudential shall have provided interest rate quotes pursuant to
paragraph 2D and thereafter prior to the time an Acceptance with respect to
such quotes shall have been notified to Prudential in accordance with
paragraph 2E the domestic market for U.S. Treasury securities or derivatives
shall have closed or there shall have occurred a general suspension, material
limitation, or significant disruption of trading in securities generally on
the New York Stock
3
Exchange or in the domestic market for U.S. Treasury securities or
derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies Prudential of the Acceptance of
any such interest rate quotes, such Acceptance shall be ineffective for all
purposes of this Agreement, and Prudential shall promptly notify the Company
that the provisions of this paragraph 2F are applicable with respect to such
Acceptance.
2G. NOTE CLOSINGS. Not later than 11:30 A.M. (New York City local time)
on the Closing Day for any Accepted Notes, the Company will deliver to each
Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of the Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, the Accepted Notes to be purchased by such Purchaser
in the form of one or more Notes in authorized denominations as such
Purchaser may request for each Series of Accepted Notes to be purchased on
the Closing Day, dated the Closing Day and registered in such Purchaser's
name (or in the name of its nominee), against payment of the purchase price
thereof by transfer of immediately available funds for credit to the
Company's account specified in the Request for Purchase of such Notes. If the
Company fails to tender to any Purchaser the Accepted Notes to be purchased
by such Purchaser on the scheduled Closing Day for such Accepted Notes as
provided above in this paragraph 2G, or any of the conditions specified in
paragraph 3 shall not have been fulfilled by the time required on such
scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York City
local time, on such scheduled Closing Day notify Prudential (which
notification shall be deemed received by each Purchaser) in writing whether
(i) such closing is to be rescheduled (such rescheduled date to be a Business
Day during the Issuance Period not less than one Business Day and not more
than 10 Business Days after such scheduled Closing Day (the "RESCHEDULED
CLOSING DAY") and certify to Prudential (which certification shall be for the
benefit of each Purchaser) that the Company reasonably believes that it will
be able to comply with the conditions set forth in paragraph 3 on such
Rescheduled Closing Day and that the Company will pay the Delayed Delivery
Fee in accordance with paragraph 2H(iv) or (ii) such closing is to be
canceled. In the event that the Company shall fail to give such notice
referred to in the proceeding sentence, Prudential (on behalf of each
Purchaser) may at its election, at any time after 1:00 P.M., New York City
local time, on such scheduled Closing Day, notify the Company in writing that
such closing is to be canceled. Notwithstanding anything to the contrary
appearing in this Agreement, the Company may elect to reschedule a closing
with respect to any given Accepted Notes on not more than one occasion,
unless Prudential shall have otherwise consented in writing.
2H. FEES.
2H(i). STRUCTURING FEE. In consideration for the time, effort and
expense involved in the preparation, negotiation and execution of this
Agreement, at the time of the execution and delivery of this Agreement the
Company will pay to Prudential in immediately available funds a fee (the
"STRUCTURING FEE") in the amount of $100,000.
4
2H(ii). FACILITY FEE. At the time of the execution and delivery of
this Agreement by the Company and Prudential, the Company will pay to
Prudential in immediately available funds a fee (the "FACILITY FEE") in the
amount of $50,000. If following payment of the Facility Fee a Refund Event
shall occur, Prudential shall refund to the Company the Refundable Portion of
the Facility Fee.
2H(iii). ISSUANCE FEE. The Company will pay to Prudential in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day in an amount equal to 0.15% of the aggregate principal amount of
Notes sold on such Closing Day.
2H(iv). DELAYED DELIVERY FEE. If the closing of the purchase and sale
of any Accepted Note is delayed for any reason beyond the original Closing
Day for such Accepted Note, the Company will pay to Prudential (a) on the
Cancellation Date or actual closing date of such purchase and sale and (b) if
earlier, the next Business Day following 90 days after the Acceptance Day for
such Accepted Note and on each Business Day following 90 days after the prior
payment hereunder, a fee (herein called the "DELAYED DELIVERY FEE")
calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, I.E., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, I.E., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or
closest to, the Rescheduled Closing Day or Rescheduled Closing Days (a new
alternative investment being selected by Prudential each time such closing is
delayed); "DTS" means Days to Settlement, I.E., the number of actual days
elapsed from and including the original Closing Day with respect to such
Accepted Note (in the case of the first such payment with respect to such
Accepted Note) or from and including the date of the next preceding payment
(in the case of any subsequent delayed delivery fee payment with respect to
such Accepted Note) to but excluding the date of such payment; and "PA" means
Principal Amount, I.E., the principal amount of the Accepted Note for which
such calculation is being made. In no case shall the Delayed Delivery Fee be
less than zero. Nothing contained herein shall obligate any Purchaser to
purchase any Accepted Note on any day other than the Closing Day for such
Accepted Note, as the same may be rescheduled from time to time in compliance
with paragraph 2G.
2H(v). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the
purchase and sale of an Accepted Note, or if Prudential notifies the Company
in writing under the circumstances set forth in the last sentence of
paragraph 2E or the penultimate sentence of paragraph 2G that the closing of
the purchase and sale of such Accepted Note is to be canceled, or if the
closing of the purchase and sale of such Accepted Note is not consummated on
or prior to the last day of the Issuance Period (the date of any such
notification, or the last day of the Issuance Period, as the case
5
may be, being herein called the "CANCELLATION DATE"), the Company will pay to
Prudential in immediately available funds an amount (the "CANCELLATION FEE")
calculated as follows:
PI X PA
where "PI" means Price Increase, I.E., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the
bid price (as determined by Prudential) of the Hedge Treasury Note(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2H(iv). The foregoing bid and ask prices
shall be as reported by Telerate Systems, Inc. (or, if such data for any
reason ceases to be available through Telerate Systems, Inc., any publicly
available source of similar market data). Each price shall be based on a U.S.
Treasury security having a par value of $100.00 and shall be rounded to the
second decimal place. In no case shall the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to purchase
and pay for any Notes is subject to the satisfaction, on or before the
Closing Day for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of Directors
of the Company authorizing the execution and delivery of this Agreement
and the issuance of the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant Secretary and
one other officer of the Company certifiying the names and true
signatures of the officers of the Company authorized to sign this
Agreement and the Notes and the other documents to be delivered
hereunder.
(iv) Certified copies of the Certificate of Incorporation and
By-laws of the Company.
(v) A favorable opinion of Phillips & Gross, P.A., special counsel
to the Company (or such other counsel designated by the Company and
acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of EXHIBIT D attached hereto and as to such
other matters as such Purchaser may reasonably request. The Company
hereby directs such counsel to deliver such opinion, agrees that the
issuance and sale of any Notes will constitute a reconfirmation of such
direction, and understands and agrees that each Purchaser receiving such
an opinion will and is hereby authorized to rely on such opinion.
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(vi) A good standing certificate for the Company from the Secretary
of State of Minnesota dated of a recent date and such other evidence of
the status of the Company as such Purchaser may reasonably request.
(vii) Certified copies of Requests for Information or Copies (Form
UCC-11) or equivalent reports listing all effective financing statements
which name the Company or any Restricted Subsidiary (under their present
names and previous names) as debtor and which are filed in the offices
of the Secretaries of State of Minnesota and Colorado together with
copies of such financing statements.
(viii) Additional documents or certificates with respect to legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall
have received from James F. Evert, Assistant General Counsel of Prudential,
or such other counsel who is acting as counsel for it in connection with this
transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 shall be true on and
as of such Closing Day; there shall exist on such Closing Day no Event of
Default or Default; and the Company shall have delivered to such Purchaser
an Officer's Certificate, dated such Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by such Purchaser on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the
Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental
regulation, and such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to Prudential any fees
due it pursuant to or in connection with this Agreement, including any
Issuance Fee due pursuant to paragraph 2H(iii) and any Delayed Delivery Fee
due pursuant to paragraph 2H(iv).
3F. OFFSET SHARING AGREEMENT. The Offset Sharing Agreement shall have
been amended so as to apply to the Notes pursuant to a document in form and
content satisfactory to the Purchaser.
7
3G. SUBORDINATION AGREEMENT. The terms of the Subordinated Debt shall
have been amended so as to subordinate the Subordinated Debt to the Notes
pursuant to a document in form and content satisfactory to the Purchaser.
3H. OTHER LOAN AGREEMENTS. The Company shall have demonstrated its
compliance with the penultimate sentence of paragraph 8G to the satisfaction
of the Purchaser.
4. PREPAYMENTS. The Notes shall be subject to required prepayment as
and to the extent provided in paragraph 4A. The Notes shall also be subject
to prepayment under the circumstances set forth in paragraph 4B. Any
prepayment made by the Company pursuant to any other provision of this
paragraph 4 shall not reduce or otherwise affect its obligation to make any
required prepayment as specified in paragraph 4A.
4A. REQUIRED PREPAYMENTS OF NOTES. Each Series of Notes shall be
subject to required prepayments, if any, set forth in the Notes of such
Series.
4B(1). OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes of
each Series will be subject to prepayment, in whole at any time or from time
to time in part (in integral multiples of $500,000) at the option of the
Company, at 100% of the principal amount so prepaid plus interest thereon to
the prepayment date and the Yield-Maintenance Amount, if any, with respect to
each such Note. Any partial prepayment of a Series of Notes pursuant to this
paragraph 4B(1) shall be applied in satisfaction of required payments of
principal in inverse order of their scheduled due dates.
4B(2). PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT PURSUANT TO OFFSET
SHARING AGREEMENT. If amounts are to be applied to the principal of the
Notes pursuant to the terms of an Offset Sharing Agreement, interest owing
thereon to the prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note shall be due and payable on such date. Any partial
prepayment of the Notes pursuant to this paragraph 4B(2) shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4(C). NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder
of each Note of a Series to be prepaid pursuant to paragraph 4B(1)
irrevocable written notice of such prepayment not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date, the aggregate
principal amount of the Notes of such Series to be prepaid on such date, the
principal amount of the Notes of such Series held by such holder to be
prepaid on that date and that such prepayment is to be made pursuant to
paragraph 4B(1). Notice of prepayment having been given as aforesaid, the
principal amount of the Notes specified in such notice, together with
interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4B(1),
give telephonic notice of the principal amount of the Notes to be prepaid and
the prepayment date to each Significant Holder which
8
shall have designated a recipient for such notices in the Purchaser Schedule
attached to the applicable Confirmation of Acceptance or by notice in writing
to the Company.
4D. APPLICATION OF PREPAYMENTS. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Notes or all
outstanding Notes of any Series, as the case may be, pursuant to paragraphs
4A, 4b(1) or 4B(2), the amount to be prepaid shall be applied pro rata to all
outstanding Notes or all outstanding Notes of such Series, as the case may be
(including, for the purpose of this paragraph 4D only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph
4A or 4B), according to the respective unpaid principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole
or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraphs 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes of any Series held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes of such Series held by each other holder
of Notes of such Series at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates
shall not be deemed to be outstanding for any purpose under this Agreement,
EXCEPT as provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS. During the Issuance period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company covenants
that it will deliver to Prudential and each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, a consolidated balance sheet of the
Company and its Subsidiaries and of the Company and its Restricted
Subsidiaries as at the end of such quarterly period and the related
consolidated statements of income and cash flows of the Company and its
Subsidiaries and of the Company and its Restricted Subsidiaries for
such period setting forth, in each case in comparative form, figures
for the corresponding period in the preceding fiscal year, all in
reasonable detail and certified by the chief financial officer or chief
accounting officer of the Company as fairly presenting the consolidated
financial position of the Company and its Subsidiaries and of the
Company and its Restricted Subsidiaries as at the dates indicated and
the consolidated results of their respective operations and cash flows,
in each case for the periods indicated, in conformity with generally
accepted accounting principles applied on a basis consistent with prior
9
periods (except as disclosed in such certificate), subject to changes
resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a consolidated and consolidating
balance sheet of the Company and its Subsidiaries as at the end of such
year and the related consolidated and consolidating statements of
income and cash flows of the Company and its Subsidiaries for such
year, all in reasonable detail and satisfactory in scope to the
Required Holder(s), and (a) in the case of such consolidated financial
statements, setting forth in each case in comparative form
corresponding consolidated figures for the preceding fiscal year, and
accompanied by a report thereon of independent public accountants of
recognized national standing selected by the Company, which report
shall state that, subject only to standard qualifications and
limitations generally contained in an unqualified audit report, such
consolidated financial statements present fairly the consolidated
financial position of the Company and its Subsidiaries as at the dates
indicated and the consolidated results of their operations and cash
flows for the periods indicated in conformity with generally accepted
accounting principles applied on a basis consistent with prior years
(except as otherwise specified in such report) and that the audit by
such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards, and (b) in the case of such consolidating financial
statements, (w) setting forth on supplemental schedules, in one
column, the total amounts for the Company and its Restricted
Subsidiaries, and, in a second column, the total amounts for the
Company's other Subsidiaries, and showing all eliminations and
adjustments made in aggregating the amounts of such columns to arrive
at the Company's consolidated financial statements, (x) setting
forth in comparative form the corresponding consolidated figures for
the Company and its Restricted Subsidiaries for the preceding fiscal
year, (y) certified by the chief financial officer or chief
accounting officer of the Company as fairly presenting the respective
financial positions of the separate entities reported on as at the
dates indicated and the results of their respective operations and cash
flows for the period indicated, in conformity with generally accepted
accounting principles applied on a basis consistent with prior periods
(except as otherwise specified in such certificate), and (z)
accompanied by a report thereon of the independent public accountants
reporting on the consolidated financial statements of the Company and
its Subsidiaries for such fiscal year, which report shall state that,
subject to the qualifications and limitations contained in their report
on the consolidated financial statements of the Company and its
Subsidiaries, and to the further qualification that the principles of
consolidation followed in the preparation of such consolidated figures
for the Company and its Restricted Subsidiaries conform to the
provisions of this Agreement rather than to generally accepted
accounting principles, such consolidated figures for the Company and
its Restricted Subsidiaries present fairly the consolidated financial
position of the Company and its Restricted Subsidiaries as at the dates
indicated and the consolidated results of their operations and cash
flows for the periods indicated in conformity with generally accepted
accounting principles applied on a basis consistent with prior periods
(except as otherwise specified in such report);
10
(iii) as soon as practicable and in any event within (a) 45
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year and (b) 120 days after the end of
each fiscal year, balance sheets (which in the case of the fiscal year
end shall be audited) of each Unrestricted Subsidiary as at the end of
such period and the related statements of income and cash flows of
each such Unrestricted Subsidiary for such period (which in the case of
annual statements shall be audited);
(iv) together with each delivery of financial statements
pursuant to clauses (i) and (ii) of this paragraph 5A, an Officer's
Certificate (a) stating that the signer has reviewed the terms of this
Agreement and the Notes and has made, or caused to be made under his or
her supervision, a review in reasonable detail of the transactions and
condition of the Company and its Restricted Subsidiaries during the
fiscal period covered by such financial statements and that such review
has not disclosed the existence during or at the end of such fiscal
period, and that the signer does not have knowledge of the existence as
at the date of the Officer's Certificate, of any condition or event
which constitutes a Default or Event of Default or, if any such
condition or event existed or exists, specifying the nature and period
of existence thereof and what action the Company has taken or is taking
or proposes to take with respect thereto, and (b) demonstrating (with
computations in reasonable detail) compliance by the Company with the
provisions of paragraphs 6A, 6B, 6C(1), 6C(2), 6C(3), 6C(4), 6C(6) and
6C(8) of this Agreement (herein called the "COMPUTATION PARAGRAPHS");
(v) together with each delivery of financial statements of
the Company and its Subsidiaries pursuant to clause (ii) of this
paragraph 5A, a certificate by the Company's independent public
accountants stating (a) that their audit examination has included a
review of the terms of this Agreement and of the Notes as they relate
to accounting matters and that such review is sufficient to enable them
to make the statement referred to in subclause (c) of this clause (v),
(b) whether in the course of their audit examination there has been
disclosed the existence during the fiscal year covered by such
financial statements (and whether they have knowledge of the existence
as of the date of such accountants' certificate) of any condition or
event which constitutes a Default or Event of Default and if during
their audit examination there has been disclosed (or if they have
knowledge of) such a condition or event, specifying the nature and
period of existence thereof (it being understood, however, that such
accountants shall not be liable to any Person by reason of their
failure to obtain knowledge of any Default or Event of Default which
would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards), and (c) that
based on their annual audit examination, including a review of the
Computation Paragraphs, nothing came to their attention which causes
them to believe that the information relating to the Computation
Paragraphs contained in the Officer's Certificate delivered therewith
pursuant to clause (iv) of this paragraph 5A is not correct or that the
matters set forth in such Officer's Certificate are not stated in
accordance with the terms of this Agreement;
11
(vi) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available generally by the Company and its Restricted Subsidiaries
to its security holders (other than the Company in the case of
Restricted Subsidiaries), of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Company
or any of its Restricted Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or with NASDAQ, and of all
press releases and other written statements made available generally by
the Company or any of its Restricted Subsidiaries to the public
concerning material developments in the business of the Company and its
Restricted Subsidiaries;
(vii) promptly upon receipt thereof by the Company, copies
of all reports submitted to the Company by independent public
accountants in connection with each annual, interim or special audit of
the books of the Company or any of its Restricted Subsidiaries made by
such accountants;
(viii) promptly upon any Responsible Officer obtaining
knowledge (a) that a condition or event exists that constitutes a
Default or Event of Default, (b) that the holder of any Note has given
any notice or taken any other action with respect to a claimed Default
or Event of Default under this Agreement, (c) of any condition or event
which could reasonably be expected to have a material adverse effect on
the business, condition (financial or other), assets, properties,
operations or prospects of the Company or the Company and its
Restricted Subsidiaries taken as a whole (other than matters of a
general economic or political nature which do not affect the Company or
its Restricted Subsidiaries uniquely), (d) that any Person has given any
notice to the Company or any Restricted Subsidiary or taken any other
action with respect to a claimed default or event or condition of the type
referred to in clause (iii) of paragraph 7A, (e) of the institution of any
litigation involving claims against the Company or any Restricted
Subsidiary in excess of the coverage provided under the Company's or such
Restricted Subsidiary's insurance policies (treating any portion of such
coverage which is subject to self-insurance or deductibles as a part of
such excess) if the amount of the excess of such claims individually
exceeds $500,000, or, when aggregated with the excess over insurance
coverage of all other outstanding claims, exceeds $1,000,000, (f) of
the initiation by the Securities and Exchange Commission of any
proceeding against the Company or any Restricted Subsidiary or of any
investigation of the Company or any Restricted Subsidiary or (g) of the
initiation by any other governmental agency of any proceeding against
the Company or any Restricted Subsidiary or of any investigation of the
Company or any Restricted Subsidiary involving allegations (or which
could reasonably be expected to result in allegations) of material
illegal activities or misconduct on the part of the Company or any
Restricted Subsidiary, an Officer's Certificate specifying the nature
and period of existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person and the
nature of such claimed Default, Event of Default, event or condition,
or specifying the nature of such litigation, proceeding or
12
investigation, and what action the Company has taken, is taking or
proposes to take with respect thereto; and
(ix) with reasonable promptness, such other information and
data with respect to the Company or any of its Subsidiaries as from
time to time may be reasonably requested by such Significant Holder.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and
any qualified institutional buyer designated by such holder, such financial
and other information as such holder may reasonably determine to be necessary
in order to permit compliance with the information requirements of Rule 144A
under the Securities Act in connection with the resale of Notes, except at
such times as the Company is subject to and in compliance with the reporting
requirements of section 13 or 15(d) of the Exchange Act. For the purpose of
this paragraph 5B, the term "QUALIFIED INSTITUTIONAL BUYER" shall have the
meaning specified in Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such
Significant Holder's expense (unless a Default or Event of Default shall have
occurred and be continuing, in which case at the Company's expense), to visit
and inspect any of the properties of the Company and its Restricted
Subsidiaries, to examine the corporate books and financial records of the
Company and its Restricted Subsidiaries and made copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants, all at such reasonable times and as often as such
Significant Holder may reasonably request.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if
it or any Restricted Subsidiary shall create or assume any Lien upon any of
its property or assets, whether now owned or hereafter acquired, other than
Liens permitted by the provisions of paragraph 6C(1) (unless prior written
consent to the creation or assumption thereof shall have been obtained
pursuant to paragraph 11C), it will make or cause to be made effective
provision whereby the Notes will be secured by such Lien equally and ratably
with any and all other obligations thereby secured so long as any such other
obligations shall be so secured.
5E. KEEPING OF BOOKS AND BANK ACCOUNTS. The Company covenants that it
will, and will cause each of its Restricted Subsidiaries to (i) keep separate
and proper books of record and account in which full and correct entries
shall be made of all transactions, including any transactions between the
Company or any Restricted Subsidiary and any Affiliate, all in accordance
with generally accepted accounting principles, and (ii) maintain bank
accounts which are separate and segregated from the bank accounts of any
Unrestricted Subsidiary or Affiliate.
5F. INCORPORATION OF OTHER DEBT COVENANTS. The Company covenants that
if it is or shall become subject to any operational or financial covenant in
any document evidencing
13
or pertaining to Debt of the Company which is more favorable to a lender or
other beneficiary than those set forth in paragraph 6 hereof, then (i) this
Agreement shall be deemed to be automatically amended to include such more
favorable covenant, (ii) the Company shall promptly give each holder of Notes
notice thereof and (iii) if requested by Prudential or the Required Holder(s)
of the Notes, the Company shall promptly execute and deliver a written
amendment to this Agreement specifically incorporating such covenant herein.
Once any such covenant has been included in this Agreement (whether or not
pursuant to a written amendment), it may only be modified or eliminated by an
amendment hereto entered into as contemplated by paragraph 11C hereof.
5G. CORPORATE EXISTENCE. The Company covenants that it will at all
times preserve and keep in full force and effect its corporate existence, and
rights and franchises material to its business, and those of each of its
Restricted Subsidiaries, except as otherwise specifically permitted by
paragraphs 6C(4) and 6C(5), and will qualify, and cause each of its
Restricted Subsidiaries to qualify, to do business in any jurisdiction where
the failure to do so would have a material adverse effect on the business,
condition (financial and other), assets, properties, prospects or operations
of the Company or the Company and its Restricted Subsidiaries taken as a
whole, PROVIDED that the corporate existence of any Restricted Subsidiary may
be terminated if, in the good faith judgment of the Board of Directors of the
Company, such termination is in the best interests of the Company.
5H. PAYMENT OF TAXES AND CLAIMS. The Company covenant that it will,
and will cause each of its Subsidiaries to, pay all income taxes before the
same shall become delinquent, except where such income taxes are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, if adequate reserves therefor have been established on
the books of the Company or its Subsidiaries in accordance with generally
accepted accounting principles. The Company covenants that it will, and will
cause each of its Subsidiaries to, pay all other taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any
penalty accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have
become due and payable and which by law have or may become a Lien upon any of
its properties or assets, PROVIDED that no such tax, assessment, charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such accrual
or other appropriate provision, if any, as shall be required by generally
accepted accounting principles shall have been made therefor.
5I. COMPLIANCE WITH LAWS, ETC. The Company covenants that it will, and
will cause each of its Restricted Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, the noncompliance with which would materially
adversely affect the business, condition (financial or other), assets,
properties, operations or prospects of the Company or the Company and its
Restricted Subsidiaries taken as a whole.
14
5J. MAINTENANCE OF PROPERTIES; INSURANCE. The Company covenants that
it will, and will cause each of its Restricted Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition all
properties used or useful in the business of the Company and its Restricted
Subsidiaries and from time to time make or cause to be made all appropriate
repairs, renewals and replacements thereof. The Company will maintain or
cause to be maintained, with financially sound and reputable insurers, (i)
insurance with respect to its properties and business and the properties and
business of its Restricted Subsidiaries against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged
in the same or similar business and similarly situated, of such types and in
such amounts as are customarily carried under similar circumstances by such
other corporations, and (ii) life insurance, with the Company as the owner
and named beneficiary, on the life of Myron Kunin in the amount (net of any
premium loans thereon and interest due in connection therewith) of not less
than $2,700,000, and on the life of Paul Finkelstein in the amount (net of
any premium loans thereon and interest due in connection therewith) of not
less than $2,400,000, each of which life insurance policies shall be free of
premium loans (except as specifically provided herein) and other Liens on or
offsets against proceeds payable to the Company.
5K. AFFILIATE TRANSACTIONS, KEEPING OF BOOKS, BANK ACCOUNTS. The
Company covenants that it will (i) keep and cause each of its Restricted
Subsidiaries to keep separate and proper books of record and account, in
which full and correct entries shall be made of all transactions including
any transactions between the Company or any Restricted Subsidiary and any
Affiliate, all in accordance with generally accepted accounting principles,
and (ii) maintain and cause each of its Subsidiaries to maintain bank
accounts which are separate and segregated from the bank accounts of any
Affiliate.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note or other amount due hereunder is outstanding and
unpaid, the Company covenants as follows:
6A. INTEREST COVERAGE RATIO. The Company will not permit the Interest
Coverage Ratio to be less than 2.0 to 1.0 at the end of any fiscal quarter.
6B. CONSOLIDATED NET WORTH. The Company will not permit: (i)
Consolidated Net Worth at any time to be less than $60,000,000 plus, to the
extent positive, 50% of Consolidated Net Income for the period (taken as one
accounting period) commencing July 1, 1995, and ending on the last day of the
fiscal quarter most recently ended as of any date of determination; or (ii)
Tangible Net Worth at the end of any fiscal quarter to be less than
$10,000,000.
6C. LIEN, DEBT AND OTHER RESTRICTIONS. The Company will not and will
not permit any Restricted Subsidiary to:
15
6C(1). LIENS. Create, assume or suffer to exist any Lien upon any of
its properties or assets, whether now owned or hereafter acquired (whether or
not provision is made for the equal and ratable securing of the Notes in
accordance with the provisions of paragraph 5D), EXCEPT:
(i) Liens for taxes, assessments or governmental charges not yet
due or which are being actively contested in good faith by appropriate
proceedings,
(ii) Liens incidental to the conduct of its business or the
ownership of its property and assets which do not secure Debt and which do
not in the aggregate materially detract from the value of its property or
assets or materially impair the use thereof in the operation of its
business,
(iii) Liens on property or assets of a Restricted Subsidiary to
secure obligations of such Restricted Subsidiary to the Company or a
Wholly-Owned Restricted Subsidiary,
(iv) Liens which are the subject of an Offset Sharing Agreement,
and
(v) other Liens securing Debt permitted by paragraph 6C(2),
PROVIDED that Priority Debt shall at no time exceed 15% of Consolidated
Net Worth;
6C(2). DEBT. Create, incur, assume or suffer to exist any Debt, EXCEPT:
(i) Funded Debt evidenced by the Notes,
(ii) Funded Debt which is outstanding under the 1991 Agreement,
(iii) Current Debt the aggregate principal amount of which at no
time exceeds $20,000,000, PROVIDED that any holder of such Current Debt is
party to an Offset Sharing Agreement, and
(iv) other Funded Debt,
provided that at no time shall (a) the ratio of Total Debt to the sum of
Total Debt and Consolidated Net Worth exceed .50 to 1.00 or (b) Priority Debt
exceed 15% of Consolidated Net Worth;
6C(3). INVESTMENTS. Make or permit to remain outstanding any loan or
advance to, or extend credit to, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any Person (all of the foregoing being referred to herein as
"Investments"), EXCEPT that the Company or any Restricted Subsidiary may:
16
(i) make or permit to remain outstanding Investments to or in
any Restricted Subsidiary or any corporation which immediately following
such Investment will be a Restricted Subsidiary;
(ii) own, purchase or acquire marketable direct obligations
issued or unconditionally guaranteed by the United States of America or
any agency thereof and maturing within one year from the date of
acquisition thereof,
(iii) make demand deposits in banks in the ordinary course of
business, and make deposits or own certificates of deposit of United
States dollars maturing within one year from the date of acquisition
thereof issued by commercial banks chartered under the laws of the United
States of America or any state thereof or the District of Columbia, each
having as at any date of determination combined capital, surplus and
undivided profits of not less than $100,000,000 (determined in accordance
with generally accepted accounting principles),
(iv) own, purchase or acquire commercial paper maturing no more
than 270 days from the date of acquisition thereof and rated A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc.,
(v) make and own Investments in mutual funds which invest at
least 95% of their assets in instruments described in clauses (ii), (iii)
and (iv) of this paragraph 6C(3),
(vi) endorse negotiable instruments for collection in the
ordinary course of business,
(vii) make or permit to remain outstanding Investments to or in
any Unrestricted Subsidiary, PROVIDED that (a) the aggregate amount (at
original cost) of all Investments in Unrestricted Subsidiaries (excluding
up to a $4,000,000 equity contribution to a single United Kingdom based
corporation if made after June 23, 1995 and prior to October 1, 1995)
shall at no time exceed 10% of Consolidated Net Worth and (b) any
Investment made in an Unrestricted Subsidiary subsequent to June 30,
1995, shall only be deemed an Investment for purposes of this paragraph
6C(3) to the extent it involves a cash or other asset contribution or
advance (net of any return thereof), and
(viii) make or permit to remain outstanding other Investments
(exclusive of Investments in Unrestricted Subsidiaries), PROVIDED that
the aggregate amount thereof shall at no time exceed 5% of Consolidate
Net Worth.
6C(4). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise
dispose of, or part with control of, any shares of stock or Debt of any
Restricted Subsidiary, except to the Company or a Wholly-Owned Restricted
Subsidiary, and except that all shares of stock and Debt of any Restricted
Subsidiary at the time owned by or owed to the Company and all
17
Restricted Subsidiaries may be sold as an entirety for a cash consideration
which represents the fair value (as determined in good faith by the Board of
Directors of the Company) at the time of sale of the shares of stock and Debt
so sold; PROVIDED that (i) such sale or other disposition, if treated as a
Transfer of assets of such Restricted Subsidiary, would be permitted by
paragraph 6C(6) and (ii) at the time of such sale, such Restricted Subsidiary
shall not own, directly or indirectly, any shares of stock or Debt of any
other Restricted Subsidiary (unless all of the shares of stock and Debt of
such other Restricted Subsidiary owned, directly or indirectly, by the Company
and all Restricted Subsidiaries are simultaneously being sold as permitted by
this paragraph 6C(4));
6C(5). MERGER AND CONSOLIDATION. Merge or consolidate with or into any
other Person, EXCEPT that:
(i) any Restricted Subsidiary may merge or consolidate with
or into the Company, PROVIDED that the Company is the continuing or
surviving corporation,
(ii) any Restricted Subsidiary may merge or consolidate with
or into another Restricted Subsidiary, PROVIDED that a Wholly-Owned
Restricted Subsidiary shall be the continuing or surviving corporation,
and
(iii) the Company may merge or consolidate with any other
corporation, PROVIDED that (a) either (x) the Company shall be the
continuing or surviving corporation, or (y) the successor or acquiring
corporation shall be a corporation organized under the laws of any state
of the United States of America and shall expressly assume in writing all
of the obligations of the Company under this Agreement and on the Notes,
including all covenants herein and therein contained, and such successor
or acquiring corporation shall succeed to and be substituted for the
Company with the same effect as if it had been named herein as a party
hereto and (b) immediately after giving effect to such transaction, no
Default or Event of Default would exist hereunder (including a Default or
Event of Default under clause (iii) of paragraph 6C(2));
6C(6). TRANSFERS OF ASSETS. Transfer any of its assets EXCEPT that:
(i) any Restricted Subsidiary may Transfer assets to the
Company or a Wholly-Owned Restricted Subsidiary,
(ii) the Company or any Restricted Subsidiary may sell inventory
in the ordinary course of business, and
(iii) the Company or any Restricted Subsidiary may otherwise
Transfer assets, PROVIDED that after giving effect thereto (a) the
Aggregate Percentage of Earnings Capacity Transferred pursuant to this
clause (iii) shall not exceed 10% and (b) the Aggregate Percentage of
Total Assets Transferred pursuant to this clause (iii) shall not exceed
10%;
18
6C(7). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or discount
or otherwise sell for less than the face value thereof, any of its notes or
accounts receivable;
6C(8). TRANSACTIONS WITH AFFILIATES. Directly or indirectly, engage in
any transaction (including, without limitation, the purchase, sale or exchange
of assets or the rendering of any service) with any Affiliate, unless (i) such
transaction is in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and
upon fair and reasonable terms that are comparable to those which might be
obtained in an arm's-length transaction between unaffiliated parties, and (ii)
in the case of any such transaction in which the aggregate value of the assets
or services involved, or of the payments made, exceeds $1,000,000, such
transaction is authorized by a majority of the independent members of the
Board of Directors of the Company;
6C(9). RESTRICTED SUBSIDIARY DIVIDEND RESTRICTIONS. Enter into, or
otherwise be subject to, any contract or agreement (including its certificate
or articles of incorporation), which limits the amount of, or otherwise
imposes restrictions on the payment of, dividends by any Restricted
Subsidiary; or
6C(10). TAX CONSOLIDATION. Consent to or permit the filing of or be a
party to any consolidated income tax return with any Person, other than a
consolidated income tax return with any Person, other than a consolidated tax
return of the Company and its Subsidiaries.
6D. TRANSACTIONS BY RESTRICTED SUBSIDIARIES. The Company covenants that
it will not permit any Restricted Subsidiary (either directly, or indirectly
by the issuance of rights or options for, or securities convertible into, such
shares) to issue, sell or otherwise dispose of (i) any shares of any class of
its stock (other than Common Stock) except to the Company or another
Restricted Subsidiary or (ii) any shares of its Common Stock except (a) to the
Company or another Restricted Subsidiary and (b) concurrently with
dispositions under (a) above, to any minority shareholders of such Restricted
Subsidiary to the extent necessary to maintain such minority shareholders'
percentage ownership of outstanding shares of Common Stock of such Restricted
Subsidiary.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of, or
Yield-Maintenance Amount payable with respect to, any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on any
Note for more than 5 days after the date due; or
19
(iii) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed
(or any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any obligation
issued or assumed as full or partial payment for property whether or
not secured by a purchase money mortgage or any obligation under
notes payable or drafts accepted representing extensions of credit)
beyond any period of grace provided with respect thereto, or the
Company or any Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under which
any such obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing) and the
effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due (or to be
repurchased by the Company or any Subsidiary) prior to any stated
maturity, PROVIDED that the aggregate amount of all obligations as to
which such a payment default shall occur and be continuing or such a
failure or other event causing or permitting acceleration (or resale
to the Company or any Subsidiary) shall occur and be continuing
exceeds $500,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any covenant
or agreement contained in paragraph 6 or incorporated by reference
into this Agreement pursuant to paragraph 5F; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
(vii) the Company or any Restricted Subsidiary makes an
assignment for the benefit of creditors or is generally not paying
its debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Restricted Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "BANKRUPTCY LAW"), of any
jurisdiction; or
(ix) the Company or any Restricted Subsidiary petitions
or applies to any tribunal for, or consents to, the appointment of,
or taking possession by, a trustee, receiver, custodian, liquidator
or similar official of the Company or any Restricted Subsidiary, or of
any substantial part of the assets of the Company or any Restricted
Subsidiary, or commences a voluntary case under the Bankruptcy Law of
the United
20
States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Restricted Subsidiary)
relating to the Company or any Restricted Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any Restricted
Subsidiary and the Company or such Restricted Subsidiary by any act
indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 30
days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Restricted Subsidiary
decreeing a split-up of the Company or such Restricted Subsidiary
which requires the divestiture of assets representing a substantial
part, or the divestiture of the stock of a Restricted Subsidiary
whose assets represent a substantial part, of the consolidated assets
of the Company and its Restricted Subsidiaries (determined in
accordance with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of a Restricted
Subsidiary, which shall have contributed a substantial part of
Consolidated Net Income for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed
and in effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount
in excess of $500,000 is rendered against the Company or any
Subsidiary and, within 60 days after entry thereof, any such judgment
is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment
is not discharged; or
(xiv) (a) 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, (b) 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 Affiliate that a Plan may become a
subject of such proceedings, (c) the aggregate "amount of unfunded
benefit liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV of
ERISA, shall exceed $500,000, (d) the Company 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
21
provisions of the Code relating to employee benefit plans, (e) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
or (f) the Company or any Restricted 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 Restricted Subsidiary thereunder; and any such event or events
described in clauses (a) through (f) above, either individually or
together with any other such event or events, could reasonably be
expected to have a material adverse effect on the business or condition
(financial or otherwise) of the Company and the Restricted
Subsidiaries, taken as a whole;
then (a) if such event is an Event of Default specified in clause (i) or (ii)
of this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held
by such holder shall thereupon be and become, immediately due and payable at
par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause (viii), (ix) or
(x) of this paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and (c) with respect to any event constituting an
Event of Default, the Required Holder(s) of the Notes of any Series may at
its or their option during the continuance of such Event of Default, by
notice in writing to the Company, declare all of the Notes of such Series to
be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with respect to each Note
of such Series, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in writing to the Company, rescind and annul such declaration
and its consequences if (i) the Company shall have paid all overdue interest
on the Notes of such Series, the principal of and Yield-Maintenance Amount,
if any, payable with respect to any Notes of such Series which have become
due otherwise than by reason of such declaration, and interest on such
overdue interest and overdue principal and Yield-Maintenance Amount at the
rate specified in the Notes of such Series, (ii) the Company shall not have
paid any amounts which have become due solely by reason of such declaration,
(iii) all Events of Defaults and Defaults, other than non-payment of amounts
which have become due solely by reason of such declaration, shall have been
cured or waived pursuant to paragraph 11C, and (iv) no judgment or decree
shall have been entered for the payment of any amounts due pursuant to the
Notes of such Series or this Agreement. No such rescission or annulment shall
extend to or affect any subsequent Event of Default or Default or impair any
right arising therefrom.
22
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each
Note of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance
of any covenant or other agreement contained in this Agreement or in aid of
the exercise of any power granted in this Agreement. No remedy conferred in
this Agreement upon the holder of any Note is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be
in addition to every other remedy conferred herein or now or hereafter
existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Minnesota, each
Subsidiary is duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated, and the Company has and each
Restricted Subsidiary has the corporate power to own its respective property
and to carry on its respective business as now being conducted. This
Agreement and the Notes have been duly authorized by all necessary corporate
action on the part of the Company and, when executed and delivered by the
Company, will constitute legal, valid and binding obligations of the Company.
SCHEDULE 8A attached hereto lists all Restricted Subsidiaries and all
Unrestricted Subsidiaries. All of the outstanding stock (and all outstanding
warrants, options and similar rights to acquire stock) of each Restricted
Subsidiary is owned by the Company or a Restricted Subsidiary, except as
otherwise disclosed in SCHEDULE 8A.
8B. FINANCIAL STATEMENTS. The Company has furnished each Purchaser of
any Accepted Notes with the following financial statements, identified by a
principal financial officer of the Company: (i) consolidating and
consolidated balance sheets of the Company and its Subsidiaries as at June 30
in each of the three fiscal years of the Company most recently completed
prior to the date as of which this representation is made or repeated to such
Purchaser (other than fiscal years completed within 90 days prior to such
date for which audited financial statements have not been released) and
consolidating and consolidated statements of income, cash flows and a
consolidated statement of shareholders' equity of the Company and its
Subsidiaries for each such year, all reported on by Coopers & Lybrand L.L.P.
and (ii) a consolidated balance sheet of the Company and its Subsidiaries and
of the Company and its Restricted Subsidiaries as at the end of the quarterly
period (if any) most recently completed prior to such date and after the end
of such fiscal year (other than quarterly periods completed within 45 days
prior to such date for which financial statements
23
have not been released) and the comparable quarterly period in the preceding
fiscal year and consolidated statements of income and cash flows of the
Company and Subsidiaries and of the Company and its Restricted Subsidiaries
for the periods from the beginning of the fiscal years in which such
quarterly periods are included to the end of such quarterly periods, prepared
by the Company. Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and year-end
adjustments), have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods involved
and show all liabilities, direct and contingent, of the Company and its
Subsidiaries or the Company and its Restricted Subsidiaries (as the case may
be) required to be shown in accordance with such principles. The balance
sheets fairly present the condition of the Company and its Subsidiaries or
the Company and its Restricted Subsidiaries (as the case may be) as at the
dates thereof, and the statements of income, stockholders' equity and cash
flows fairly present the results of the operations of the Company and its
Subsidiaries or the Company and its Restricted Subsidiaries (as the case may
be) and their cash flows for the periods indicated. There has been no
material adverse change in the business, property or assets, condition
(financial or otherwise), operations or prospects of the Company and its
Subsidiaries or the Company and its Restricted Subsidiaries, in each case
taken as a whole, since the end of the most recent fiscal year for which such
audited financial statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its Restricted Subsidiaries, or any properties or
rights of the Company or any of its Restricted Subsidiaries, by or before any
court, arbitrator or administrative or governmental body which might result
in any material adverse change in the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Restricted
Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Restricted
Subsidiaries has outstanding any Debt except as permitted by paragraph 6C(2).
There exists no default under the provisions of any instrument evidencing
such Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its Restricted
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title to all of
its other respective properties and assets, including the properties and
assets reflected in the most recent audited balance sheet referred to in
paragraph 8B (other than properties and assets disposed of in the ordinary
course of business), subject to no Lien of any kind except Liens permitted by
paragraph 6C(1). All leases necessary in any material respect for the conduct
of the respective businesses of the Company and its Restricted Subsidiaries
are valid and subsisting and are in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which are required to be filed,
and each has paid all taxes
24
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Restricted Subsidiaries is a party to any contract or agreement or
subject to any charter or other corporate restriction which materially and
adversely affects its business, property or assets, condition (financial or
otherwise) or operations. Neither the execution nor delivery of this
Agreement or the Notes, nor the offering, issuance and sale of the Notes, nor
fulfillment of nor compliance with the terms and provisions hereof and of the
Notes will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of,
or result in the creation of any Lien upon any of the properties or assets of
the Company or any of its Restricted Subsidiaries pursuant to, the charter or
by-laws of the Company or any of its Restricted Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Restricted Subsidiaries is subject. Neither the
Company nor any of its Restricted Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Debt of the
Company or such Restricted Subsidiary, any agreement relating thereto or any
other contract or agreement (including its charter) which limits the amount
of, or otherwise imposes restrictions on the incurring of, Debt of the
Company of the type to be evidenced by the Notes except as set forth in the
agreements listed in SCHEDULE 8G attached hereto. The Company is not party to
any agreement evidencing or pertaining to Debt of the Company which includes
any operational or financial covenant which is more favorable to a lender or
other beneficiary than those set forth in paragraph 6 hereof. For purposes of
the preceding sentence, no effect shall be given to paragraph 5F hereof.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security
of the Company for sale to, or solicited any offers to buy the Notes or any
similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than institutional investors, and
neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. None of the proceeds of the sale of any Notes
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin stock" as
defined in Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System (herein called "MARGIN STOCK") or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally
incurred to purchase or carry any stock that is then currently a margin stock
or for any other purpose which might constitute the purchase of such Notes a
"purpose credit" within the meaning of such Regulation G, unless the Company
shall have delivered to the Purchaser
25
which is purchasing such Notes, on the Closing Day for such Notes, an opinion
of counsel satisfactory to such Purchaser stating that the purchase of such
Notes does not constitute a violation of such Regulation G. Neither the
Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now
or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company
or any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate
which is or would be materially adverse to the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Restricted Subsidiaries taken as whole. Neither the Company, any Subsidiary
nor any ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the business,
property or assets, condition (financial or otherwise) or operations of the
Company and its Restricted Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes will be
exempt from or will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of
ERISA or a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence is made in
reliance upon and subject to the accuracy of the representation of each
Purchaser in paragraph 9B as to the source of funds to be used by it to
purchase any Notes.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Restricted Subsidiary, nor any of their respective businesses or properties,
nor any relationship between the Company or any Restricted Subsidiary and any
other Person , nor any circumstance in connection with the offering,
issuance, sale or delivery of the Notes is such as to require any
authorization, consent, approval, exemption or any action by or notice to or
filing with any court or administrative or governmental body (other than
routine filings after the Closing Day for any Notes with the Securities and
Exchange Commission and/or state Blue Sky authorities) in connection with the
execution and delivery of this Agreement, the offering, issuance, sale or
delivery of the Notes or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
8L. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all
of their respective properties and facilities have complied at all times and
in all respects with all foreign, federal, state, local and regional
statutes, laws, ordinances and judicial or administrative orders, judgments,
rulings and regulations relating to protection of the environment EXCEPT, in
any such case, where failure to comply would not result in a material
26
adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Restricted Subsidiaries taken as a whole.
8M. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property or assets, condition
(financial or otherwise) or operations of the Company or any of its
Restricted Subsidiaries and which has not been set forth in this Agreement.
8N. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
8O. RULE 144A. The Notes are not of the same class as securities of the
Company, if any, listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
8P. FOREIGN ENEMIES AND REGULATIONS. Neither the issue and sale of the
Notes by the Company, its use of the proceeds thereof nor any of the
transactions contemplated by this Agreement will violate (i) any regulations
promulgated or administered by the Office of Foreign Assets Control, United
States Department of the Treasury, including, without limitation, the Foreign
Assets Control Regulations, the Transaction Control Regulations, the Cuban
Assets Control Regulations, the Foreign Funds Control Regulations, the
Iranian Assets Control Regulations, the Nicaraguan Trade Control Regulations,
the South African Transaction Regulations, the Iranian Transactions
Regulations, the Iraqi Sanctions Regulations, the Soviet Gold Coin
Regulations, the Panamanian Transaction Regulations or the Libyan Sanctions
Regulations of the United States Treasury Department, 31 C.F.R., Subtitle B,
Chapter V, as amended, (ii) the Trading with the Enemy Act, as amended,
(iii) Executive Orders 8389, 9095, 9193, 12543 (Libya), 12544 (Libya),
12722 (Iraq) or 12724 (Iraq), 12775 (Haiti) or 12779 (Haiti), as amended, of
the President of the United States, (iv) the Comprehensive Anti-Apartheid Act
of 1986 or (v) any rule, regulation or executive order issued or promulgated
pursuant to the laws or regulations described in the foregoing clauses
(i) through (iv).
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that
the disposition of such Purchaser's property shall at all times be and remain
within its control.
27
9B. SOURCE OF FUNDS. No part of the funds used by such Purchaser to pay
the purchase price of the Notes purchased by such Purchaser hereunder
constitutes assets allocated to any separate account maintained by such
Purchaser in which any employee benefit plan, other than employee benefit
plans identified on a list which has been furnished by such Purchaser to the
Company, participates to the extent of 10% or more. For the purpose of this
paragraph 9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall
have the respective meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in
paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, 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 (as
converted to reflect the periodic basis on which interest on such Note is
payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace page 678 on the Telerate 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 if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported,
for the latest day for which such yields shall have been so reported as of
the Business Day next 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 shall be
determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and
(b) interpolating linearly between yields reported for various maturities.
28
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, 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) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which 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" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or 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.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal
of such Note over the sum of (i) such Called Principal plus (ii) interest
accrued thereon as of (including interest due on) the Settlement Date with
respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2E.
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2E.
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2E.
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2E.
"AFFILIATE" shall mean (i) any Responsible Officer or member of the Board
of Directors of the Company, (ii) any holder of at least 10% of the total
combined voting power of all classes of Voting Stock (or the equivalent) of
the Company or of any corporation or other entity which directly or
indirectly controls the Company, (iii) the spouse, any sibling (by blood or
adoption) or any descendant (be blood or adoption) of any individual referred
to in clause (i) or (ii) above, or any spouse of any such sibling or descendant
or any descendant of any such sibling, (iv) any trust in which any Person
referred to in clause (i), (ii) or (iii) above has a substantial beneficial
interest, (v) any corporation or other entity (a) of which the Company or any
Person referred to in clause (i), (ii), (iii) or (iv) above holds at least 10%
of the total combined economic interest of all classes of Common Stock (or
the equivalent) or at least 10% of the total combined voting power of all
classes of Voting Stock (or the equivalent) or (b) directly or indirectly
controlled by any Person referred to in clause (i), (ii),
29
(iii) or (iv) above, and (vi) any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
PROVIDED that a Restricted Subsidiary shall not be an Affiliate. A Person
shall be deemed to control a corporation or other entity if such Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such corporation or other entity, whether
through the ownership of voting securities, by contract or otherwise.
"AGGREGATE PERCENTAGE OF EARNINGS CAPACITY TRANSFERRED" shall mean, with
respect to any eight consecutive fiscal quarter period, the sum of the
Percentages of Earnings Capacity Transferred for each asset of the Company
and its Restricted Subsidiaries that is Transferred during such period.
"AGGREGATE PERCENTAGE OF TOTAL ASSETS TRANSFERRED" shall mean, with
respect to any eight consecutive fiscal quarter period, the sum of the
Percentages of Total Assets Transferred for each asset of the Company and its
Restricted Subsidiaries that is Transferred during such period.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its chief
executive officer, its chief financial officer, any vice president of the
Company designated as an "Authorized Officer" of the Company in the
Information Schedule attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief
executive officer or chief financial officer and delivered to Prudential, and
(ii) in the case of Prudential, any officer of Prudential designated as its
"Authorized Officer" in the Information Schedule or any officer of Prudential
designated as its "Authorized Officer" for the purpose of this Agreement in a
certificate executed by one of its Authorized Officers. Any action taken
under this Agreement on behalf of the Company by any individual who on or
after the date of this Agreement shall have been an Authorized Officer of the
Company and whom Prudential in good faith believes to be an Authorized
Officer of the Company at the time of such action shall be binding on the
Company even though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this Agreement on behalf
of Prudential by any individual who on or after the date of this Agreement
shall have been an Authorized Officer of Prudential and whom the Company in
good faith believes to be an Authorized Officer of Prudential at the time of
such action shall be binding on Prudential even though such individual shall
have ceased to be an Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in paragraph
2A.
"AVERAGE CONSOLIDATED NET INCOME" shall mean, as of any time of
determination thereof, the average Consolidated Net Income of the Company and
Restricted Subsidiaries for the three complete fiscal years of the Company
then most recently ended.
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
30
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a Sunday,
(ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2C hereof only, a
day on which The Prudential Insurance Company of America is not open for
business.
"CANCELLATION DATE" shall have the meaning specified in paragraph 2H(v).
"CANCELLATION FEE" shall have the meaning specified in paragraph 2H(v).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Restricted Subsidiary, taken
at the amount thereof accounted for as indebtedness (net of interest
expenses) in accordance with such principles.
"CLOSING DAY" shall mean, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note
in the Request for Purchase of such Accepted Note, PROVIDED that (i) if the
Company and the Purchaser which is obligated to purchase such Accepted Note
agree on an earlier Business Day for such closing, the "CLOSING DAY" for such
Accepted Note shall be such earlier Business Day, and (ii) if the closing of
the purchase and sale of such Accepted Note is rescheduled pursuant to
paragraph 2G, the Closing Day for such Accepted Note, for all purposes of
this Agreement except references to "original Closing Day" in paragraph
2H(iv), shall mean the Rescheduled Closing Day with respect to such Accepted
Note.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" shall mean, as applied to any corporation, shares of such
corporation which shall not be entitled to preference or priority over any
other shares of such corporation in respect of either the payment of
dividends or the distribution of assets upon liquidation.
"COMPUTATION PARAGRAPHS" shall have the meaning specified in paragraph
5A(iv).
"CONFIRMATION OF ACCEPTANCE" shall have meaning specified in paragraph 2E.
"CONSOLIDATED INTEREST EXPENSE" shall mean, as to any period,
consolidated interest expense of the Company and Restricted Subsidiaries for
such period, calculated to (i) include imputed interest on Capitalized Lease
Obligations and (ii) exclude amortization of debt discount to the extent not
actually paid in cash.
"CONSOLIDATED NET INCOME" shall mean, as to any period, the net income of
the Company and Restricted Subsidiaries on a consolidated basis; provided
that for periods ended on or prior to June 30, 1994, there shall be excluded
from the determination of such net income any non-recurring charges related
to MEI Diversified, Inc.
31
"CONSOLIDATED NET WORTH" shall mean, as of any time of determination
thereof, (i) the shareholders' equity (or deficit) of the Company and its
Restricted Subsidiaries, as the same would be shown on a consolidated balance
sheet of the Company and its Restricted Subsidiaries, PLUS (ii) to the extent
that (a) the convertible debenture of the Company issued to T. Rowe Price
Strategic Partners II, L.P. remains outstanding and (b) the public market
price of the Company's Common Stock is in excess of the conversion price set
forth in such convertible debenture, the conversion price of such convertible
debenture, MINUS (iii) the aggregate amount of Investments in Unrestricted
Subsidiaries which are deemed not to be Investments for purposes of paragraph
6C(3) as a result of clause (vii)(b) thereof.
"CURRENT DEBT" shall mean, with respect to any Person, all Indebtedness
of such Person for borrowed money which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or within one year
from the date of the creation thereof, PROVIDED that Indebtedness outstanding
under a revolving credit or similar agreement which obligates the lender or
lenders to extend credit over a period of more than one year shall constitute
Current Debt and not Funded Debt.
"DEBT" shall mean Current Debt and Funded Debt.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2H(iv).
"EBIT" shall mean, as to any period, Consolidated Net Income for such
period PLUS (i) Consolidated Interest Expense for such period, PLUS or MINUS
(as appropriate) (ii) any provision for income taxes for such period.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening
of any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FACILITY" shall have the meaning specified in paragraph 2A.
"FACILITY FEE" shall have the meaning specified in paragraph 2H(ii).
32
"FUNDED DEBT" shall mean with respect to any Person, all Indebtedness of
such Person which by it terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than
one year from, or is directly or indirectly renewable or extendible at the
option of the debtor to a date more than one year from, the date of the
creation thereof, PROVIDED that Indebtedness outstanding under a revolving
credit or similar agreement which obligates the lender or lenders to extend
credit over a period of more than one year shall constitute Current Debt and
not Funded Debt.
"GENERAL INTANGIBLES" shall mean all choses in action, causes of action
and all other intangible property of the Company and its Restricted
Subsidiaries of every kind and nature now owned or hereafter acquired,
including, without limitation, corporate and other business records, deposit
accounts, inventions, designs, patents, patent and trademark registrations
and applications, trademarks, trade names, trade secrets, goodwill,
copyrights registrations, licenses, franchises, deferred tax benefits, tax
refund claims, prepaid expenses, computer programs not included in Capital,
Property and Equipment on the annual audited consolidated financial
statements of the Company and its Restricted Subsidiaries, covenants not to
compete, customer lists and mailing lists, contract rights, indemnification
rights, and any letters of credit, guarantee claims, security interests or
other security held by or granted to the Company or its Restricted
Subsidiaries.
"GUARANTEE" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect
of which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of
the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation or service, regardless of the
non-delivery or non-furnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss
in respect thereof. The amount of any Guarantee shall be equal to the
outstanding principal amount of the obligation guaranteed or such lesser
amount to which the maximum exposure of the guarantor shall have been
specifically limited.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
33
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital
stock of any corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial ownership of, or
rights to acquire, any such shares or equity interests, if such shares,
equity interests, securities or rights are of a class which is publicly
traded on any securities exchange or in any over-the-counter market, other
than purchases of such shares, equity interests, securities or rights
representing less than 5% of the equity interests or beneficial ownership of
such corporation or other entity for portfolio investment purposes, and such
offer or purchases has not been duly approved by the board of directors of
such corporation or the equivalent governing body of such other entity prior
to the date on which the Company makes the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, (i) all items (excluding items of (a) contingency reserves, (b)
reserves for deferred income taxes, (c) deferred compensation to the extent
that such deferred compensation items are fully funded by life insurance
policies, (d) deferred rent, (e) post-retirement benefit liabilities
determined in accordance with Financial Accounting Standards Board Statement
No. 106 and (f) current liabilities for trade payables, tax and payroll
obligations) which in accordance with generally accepted accounting
principles would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as of the date on which
Indebtedness is to be determined, (ii) all indebtedness secured by any Lien
on any property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been assumed, and
(iii) all indebtedness and other obligations of others with respect to which
such Person has become liable by way of Guarantee.
"INTEREST COVERAGE RATIO" shall mean, as to any period, the ratio of (i)
EBIT for such period to (ii) Consolidated Interest Expense for such period.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement
to give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose,
or having the effect, of protecting a creditor against loss or securing the
payment or performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA.
34
"1991 AGREEMENT" shall mean the note agreement dated as of June 21, 1991
pursuant to which the Company issued its 11.52% promissory notes due June 30,
1998 in the original principal amount of $55,000,000.
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"OFFSET SHARING AGREEMENT" shall mean the offset sharing agreement dated
as of June 21, 1994, among Prudential, LaSalle National Bank, Bank Hapoalin
and the other lenders named as parties thereto (as such agreement has been
and may be amended from time to time) as well as any similar agreement which
hereafter may be entered into by Prudential, other holders of the Notes and
other lenders to the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"PERCENTAGE(S) OF EARNINGS CAPACITY TRANSFERRED" shall mean, with
respect to each asset Transferred pursuant to clause (iii) of paragraph
6C(6), the ratio (expressed as a percentage) of (i) Consolidated Net Income
produced by, or attributable to, such asset during the four fiscal quarter
period most recently ended prior to the effective date of such Transfer to
(ii) Average Consolidated Net Income.
"PERCENTAGE(S) OF TOTAL ASSETS TRANSFERRED" shall mean, with respect to
each asset Transferred pursuant to clause (iii) of paragraph 6C(6), the ratio
(expressed as a percentage) of (i) the greater of such asset's fair market
value or net book value on the date of Transfer to (ii) the book value of the
consolidated assets of the Company and Restricted Subsidiaries as of the last
day of the fiscal quarter immediately preceding the day of Transfer.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company
or any ERISA Affiliate.
"PRIORITY DEBT" shall mean, as of any time of determination thereof, (i)
Debt of any Restricted Subsidiary, other than Debt owed to the Company or a
Wholly-Owned Restricted Subsidiary and (ii) Debt of the Company secured by
any Lien.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
35
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean with respect to any Accepted Notes, Prudential
and/or the Prudential Affiliates(s), which are purchasing such Accepted Notes.
"REFUND EVENT" shall mean (i) a termination of the Facility resulting
from Prudential's provision of notice of termination as contemplated by
clause (ii) of paragraph 2B or (ii) a termination of the Facility resulting
from the Company's provision of a notice of termination as contemplated by
clause (ii) of paragraph 2B, if such notice is provided by the Company within
five Business Days following Prudential's failure to provide an interest rate
quote (as contemplated by paragraph 2D), unless (a) the applicable Request
for Purchase failed to conform in all respects with the requirements of
paragraph 2C, (b) a Default or Event of Default existed at the time the
applicable Request for Purchase was received or would have existed upon the
issuance of the Notes described in the applicable Request for Purchase, (c) a
market disrupting event described in paragraph 2F existed at any time during
the five Business Day period following receipt of the applicable Request for
Purchase, or (d) upon the issuance of the Notes described in the applicable
Request for Purchase the Company's credit quality, as determined by
Prudential, would have been below investment grade.
"REFUNDABLE PORTION" shall mean, with respect to the Facility Fee, that
portion thereof determined by multiplying the amount of such fee by a
fraction, the denominator of which shall be 1,095 and the numerator of which
shall be the difference between 1,095 and the number of days elapsed between
the date of the Agreement and the date of the Refund Event.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph 2C.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least 51% of
the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2G.
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary organized under the
laws of any state of the United States of America, Puerto Rico, Canada, or
any province of Canada, which conducts substantially all of its business
in the United States of America, Puerto Rico or Canada, and a least 80% of
the total combined voting power of all classes of Voting Stock
36
of which shall, at the time as of which any determination is being made, be
owned by the Company either directly or through Restricted Subsidiaries,
PROVIDED that no such Subsidiary shall be a Restricted Subsidiary unless (i)
it is listed as a Restricted Subsidiary in Schedule 8A attached hereto or
(ii)(a) the Board of Directors of the Company hereafter designates such
Subsidiary a Restricted Subsidiary, (b) notice of such designation is given
by the Company to the holders of the Notes with the next succeeding delivery
of financial statements pursuant to paragraph 5A, and (c) on the date of and
immediately after giving effect to such designation, no Event of Default
shall have occurred and be continuing.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph 1.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as Prudential or
any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 5% of the aggregate
principal amount of the Notes of any Series from time to time outstanding.
"SUBORDINATED DEBT" shall mean (i) that certain 7.25% promissory note of
the Company due December 31, 1998 and (ii) that certain 7.25% convertible
debenture of the Company due December 31, 1998, in each case originally
issued to T. Rowe Price Strategic Partners II, L.P.
"SUBSIDIARY" shall mean any corporation, association or other business
entity which is required to be consolidated in the financial statements of
the Company.
"TANGIBLE NET WORTH" shall mean, as of any time of determination
thereof, the net worth of the Company and its Restricted Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles, plus the amount of the cash surrender value of life
insurance policies maintained by the Company on the lives of executive
officers plus the amount of Debt permitted by this Agreement which is
subordinate in right of payment to the Notes minus the sum of (i) the amount
of any General Intangibles, (ii) amounts due from Affiliates and (iii) the
amount of investments in Unrestricted Subsidiaries.
"TOTAL DEBT" shall mean, as of any time of determination thereof, the
aggregate amount of (i) all Funded Debt of the Company and Restricted
Subsidiaries, PLUS (ii) the average outstanding daily balance of all Current
Debt of the Company and Restricted Subsidiaries during the twelve calendar
month period most recently ended as of any time of determination, MINUS
(iii) Debt of Restricted Subsidiaries owed to the Company or a Wholly-Owned
Subsidiary, MINUS (iv) to the extent that (a) the convertible debenture of the
Company originally issued December 31, 1992, to T. Rowe Price Strategic
Partners II, L.P. remains outstanding and (b) the public market price of the
Company's Common Stock is in excess of the conversion price set forth in such
convertible debenture, the conversion price of such convertible debenture.
37
"TRANSFER" shall mean, with respect to any item, the sale, exchange,
conveyance, lease, transfer or other disposition of such item.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary other than a
Restricted Subsidiary. No Subsidiary which is or becomes a Restricted
Subsidiary shall at any time thereafter become or be an Unrestricted
Subsidiary. Notwithstanding the foregoing, solely for the purposes of clause
(iii) of paragraph 5A, Regis Mexico, S.A. shall not be deemed an Unrestricted
Subsidiary unless and until either it contributes greater than 5% of the
consolidated revenues of the Company and Subsidiaries for any fiscal year of
the Company or its assets constitute greater than 5% of the consolidated
assets of the Company and Subsidiaries as at the end of any fiscal year of
the Company.
"VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" shall mean a Restricted Subsidiary
all the outstanding shares (other than directors' qualifying shares, if
required by law) of every class of stock of which are at the time owned by
the Company or by one or more Wholly-Owned Restricted Subsidiaries.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "generally accepted accounting principles" shall be deemed
to refer to generally accepted accounting principles in effect in the United
States at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations
with respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with
the most recent audited financial statements delivered pursuant to clause
(ii) of paragraph 5A or, if no such statements have been so delivered, the
most recent audited financial statements referred to in clause (i) of
paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on, and
any Yield-Maintenance Amount payable with respect to, such Note, which comply
with the terms of this Agreement, by wire transfer of immediately available
funds for credit (not later than 12:00 noon, New York City local time, on the
date due) to the account or accounts of such Purchaser specified
38
in the Purchaser Schedule specified in the Confirmation of Acceptance with
respect to such Note or such other account or accounts in the United States
as such Purchaser may from time to time designate in writing, notwithstanding
any contrary provision herein or in any Note with respect to the place of
payment. Each Purchaser agrees that, before disposing of any Note, it will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest thereon
has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as
the Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of,
all out-of-pocket expenses arising in connection with such transactions,
including (i) all document production and duplication charges and the fees
and expenses of any special counsel engaged by the Purchasers or any
Transferee in connection with this Agreement, the transactions contemplated
hereby and any subsequent proposed modification of, or proposed consent
under, this Agreement, whether or not such proposed modification shall be
effected or proposed consent granted, and (ii) the costs and expenses,
including attorneys' fees, incurred by any Purchaser or any Transferee in
enforcing (or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The
obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any Purchaser
or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act, of the Required
Holder(s) of the Notes of each Series except that, (i) with the written
consent of the holders of all Notes of a particular Series, and if an Event
of Default shall have occurred and be continuing, of the holders of all Notes
of all Series, at the time outstanding (and not without such written
consents), the Notes of such Series may be amended or the provisions thereof
waived to change the maturity thereof, to change or affect the principal
thereof, or to change or affect the rate or time of payment of interest on or
any Yield-Maintenance Amount payable with respect to the Notes of such
Series, (ii) without the written consent of the holder or holders of all
Notes at the time outstanding, no amendment to or waiver of the provisions of
this Agreement shall change or affect the provisions of paragraph 7A or this
paragraph 11C insofar as such provisions relate to proportions of the
principal amount of the Notes of any Series, or the rights of any individual
holder of Notes, required with respect to any declaration of Notes to be due
and payable or with respect to any consent, amendment, waiver or declaration,
(iii) with the written consent of Prudential (and not without the written
consent of Prudential) the provisions of paragraph 2 may be amended or waived
(except insofar as any such amendment or waiver would affect any rights or
obligations with respect to the purchase and sale of Notes which shall have
become Accepted
39
Notes prior to such amendment or waiver), and (iv) with the written consent
of all of the Purchasers which shall have become obligated to purchase
Accepted Notes of any Series (and not without the written consent of all such
Purchasers), any of the provisions of paragraph 2 and 3 may be amended or
waived insofar as such amendment or waiver would affect only rights or
obligations with respect to the purchase and sale of the Accepted Notes of
such Series or the terms and provisions of such Accepted Notes. Each holder
of any Note at the time or thereafter outstanding shall be bound by any
consent authorized by this paragraph 11C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter may
bear a notation referring to any such consent. 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 and in the Notes, the term "THIS
AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES. The
Notes are issuable as registered notes without coupons in denominations of at
least $1,000,000, except as may be necessary to reflect any principal amount
not evenly divisible by $1,000,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration of
Notes and of transfers of Notes. Upon surrender for registration of transfer
of any Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a
like aggregate principal amount, registered in the name of such transferee
or transferees. At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor and of any authorized denominations,
of a like aggregate principal amount, upon surrender of the Note to be
exchanged at the principal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to
receive. Each installment of principal payable on each installment date upon
each new Note issued upon any such transfer or exchange shall be in the same
proportion to the unpaid principal amount of such new Note as the installment
of principal payable on such date on the Note surrendered for registration of
transfer or exchange bore to the unpaid principal amount of such Note. No
reference need to be made in any such new Note to any installment or
installments of principal previously due and paid upon the Note surrendered
for registration of transfer or exchange. Every Note surrendered for
registration of transfer or exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by the holder
of such Note or such holder's attorney duly authorized in writing. Any Note
or Notes issued in exchange for any Note or upon transfer thereof shall carry
rights to unpaid interest and interest to accrue which were carried by the
Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written
notice from the holder of any Note of the loss, theft, destruction or
mutilation of such Note and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured indemnity agreement, or
in the case of any such mutilation upon surrender and cancellation of such
Note, the Company will make and deliver a new Note, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Note.
40
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name
any Note is registered as the owner and holder of such Note for the purpose
of receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue, and the Company shall
not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participations
in all or any part of such Note to any Person on such terms and conditions as
may be determined by such holder in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of
any Note or portion thereof or interest therein and the payment of any Note,
and may be relied upon by any Transferee, regardless of any investigation
made at any time by or on behalf of any Purchaser or any Transferee. Subject
to the preceding sentence, this Agreement and the Notes embody the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited
by any one of such covenants, the fact that it would be permitted by an
exception to, or otherwise be in compliance within the limitations of,
another covenant shall not (i) avoid the occurrence of an Event of Default or
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by a holder or the holders of the Notes to prohibit
(through equitable action or otherwise) the taking of any action by the
Company or a Restricted Subsidiary which would result in an Event of Default
or Default.
11I. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first
class mail or nationwide overnight delivery service (with charges prepaid)
and (i) if to any Purchaser, addressed as specified for such communications
in the Purchaser Schedule attached to the applicable Confirmation of
Acceptance or at such other address as any such Purchaser shall have
specified to the Company in writing, (ii) if to any other holder of any Note,
addressed to it at such address as it shall have specified in writing to the
Company or, if any such holder shall not have so specified an address, then
addressed to such holder in care of the last holder of such Note which shall
have so specified an address to the Company and (iii) if to the Company,
addressed to it at 7201 Metro Boulevard, Minneapolis, Minnesota 55439,
Attention: Chief Financial Officer, PROVIDED, HOWEVER, that any such
communication to the
41
Company may also, at the option of the Person sending such communication, be
delivered by any other means either to the Company at its address specified
above or to any Authorized Officer of the Company. Any communication pursuant
to paragraph 2 shall be made by the method specified for such communication
in paragraph 2, and shall be effective to create any rights or obligations
under this Agreement only if, in the case of a telephone communication, an
Authorized Officer of the party conveying the information and of the party
receiving the information are parties to the telephone call, and in the case
of a telecopier communication, the communication is signed by an Authorized
Officer of the party conveying the information, addressed to the attention of
an Authorized Officer of the party receiving the information, and in fact
received at the telecopier terminal the number of which is listed for the
party receiving the communication in the Information Schedule or at such
other telecopier terminal as the party receiving the information shall have
specified in writing to the party sending such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day. If the date for any payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the period of
such extension shall be included in the computation of the interest payable
on such Business Day.
11K. SEVERABILITY. Any provision of this Agreement 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 provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to
the Required Holder(s), the determination of such satisfaction shall be made
by such Purchaser, such holder or the Required Holder(s), as the case may be,
in the sole and exclusive judgment (exercised in good faith) of the Person or
Persons making such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF ILLINOIS.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are
to be several sales, and the obligations of Prudential and the Purchasers
under this Agreement are
42
several obligations. No failure by Prudential or any Purchaser to perform its
obligations under this Agreement shall relieve any other Purchaser or the
Company of any of its obligations hereunder, and neither Prudential nor any
Purchaser shall be responsible for the obligations of, or any action taken or
omitted by, any other such Person hereunder.
11P. 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.
11Q. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between
the Company and Prudential. This Agreement shall also inure to the benefit of
each Purchaser which shall have executed and delivered a Confirmation of
Acceptance, and each such Purchaser shall be bound by this Agreement to the
extent provided in such Confirmation of Acceptance.
Very truly yours,
REGIS CORPORATION
By: /s/ Paul D. Finkelstein
-------------------------
Name: PAUL D. FINKELSTEIN
Title: PRESIDENT
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. Scott von Fischer JE
------------------------------
Vice President
43
INFORMATION SCHEDULE
AUTHORIZED OFFICERS FOR PRUDENTIAL
Allen A. Weaver P. Scott von Fischer
Managing Director Senior Vice President
Prudential Capital Group Prudential Capital Group
Two Prudential Plaza Two Prudential Plaza
Suite 5600 Suite 5600
Chicago, Illinois 60601 Chicago, Illinois 60601
Telephone: (312) 540-4211 Telephone: (312) 540-4225
Facsimile: (312) 540-4222 Facsimile: (312) 540-4222
Mark A. Hoffmeister Leonard H. Lillard IV
Senior Vice President Vice President
Prudential Capital Group Prudential Capital Group
Two Prudential Plaza Two Prudential Plaza
Suite 5600 Suite 5600
Chicago, Illinois 60601 Chicago, Illinois 60601
Telephone: (312) 540-4215 Telephone: (312) 540-4216
Facsimile: (312) 540-4222 Facsimile: (312) 540-4222
Jeffrey L. Dickson
Vice President
Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Telephone: (312) 540-4214
Facsimile: (312) 540-4222
AUTHORIZED OFFICERS FOR THE COMPANY
Paul Finkelstein Randy Pearce
Chief Operating Officer & President Vice President, Finance
Regis Corporation Regis Corporation
7201 Metro Boulevard 7201 Metro Boulevard
Minneapolis, Minnesota 55439 Minneapolis, Minnesota 55439
Telephone: (612) 947-7911 Telephone: (612) 947-7603
Facsimile: (612) 947-7900 Facsimile: (612) 947-7600
Frank Evangelist
Senior Vice President, Finance
Regis Corporation
7201 Metro Boulevard
Minneapolis, Minnesota 55439
Telephone: (612) 947-7699
Facsimile: (612) 947-7600
EXHIBIT A
[FORM OF NOTE]
REGIS CORPORATION
SENIOR SERIES ___ NOTE
No. ____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, Regis Corporation (herein called the
"Company"), a corporation organized and existing under the laws of the State
of Minnesota, hereby promises to pay to ___________________, or registered
assigns, the principal sum of ___________________ DOLLARS [on the Final Maturity
Date specified above][, payable on the Principal Prepayment Dates and in the
amounts specified above, and on the Final Maturity Date specified above in an
amount equal to the unpaid balance of the principal hereof,] with interest
(computed on the basis of a 360-day year--30-day month) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above, payable on
each Interest Payment Date specified above and on the Final Maturity Date
specified above, commencing with the Interest Payment Date next succeeding
the date hereof, until the principal hereof shall have become due and
payable, and (b) on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of Yield-Maintenance Amount and any overdue
payment of interest, payable on each Interest Payment Date 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) 2% over the Interest Rate
specified above or (ii) 2% over the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York from time to time in New York City
as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate
to the Company in writing, in lawful money of the United States of America.
A-1
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Private Shelf Agreement, dated as of July 25, 1995
(herein called the "Agreement"), between the Company, on the one hand, and
The Prudential Insurance Company of America and each Prudential Affiliate (as
defined in the Agreement) which becomes party thereto, on the other hand, and
is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the 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 the then outstanding 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 shall not be affected by
any notice to the contrary.
In case an Event of Default shall occur and be continuing, the principal
of this Note may be declared or otherwise become due and payable in the
manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of Illinois and shall
be construed and enforced in accordance with the internal law of such State.
REGIS CORPORATION
By:
---------------------------
Title:
------------------------
A-2
EXHIBIT B
[FORM OF REQUEST FOR PURCHASE]
REGIS CORPORATION
Reference is made to the Private Shelf Agreement (the "Agreement"),
dated as of July 25, 1995 between Regis Corporation (the "Company"), on the
one hand, and The Prudential Insurance Company of America ("Prudential") and
each Prudential Affiliate which becomes party thereto, on the other hand.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings specified in the Agreement.
Pursuant to Paragraph 2C of the Agreement, the Company hereby makes
the following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "Notes") .................... $____________
2. Individual specifications of the Notes:
Principal
Final Prepayment Interest
Principal Maturity Dates and Payment
Amount(1) Date(2) Amounts Period
- - --------- -------- ---------- --------
Quarterly
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the Notes:
- - ---------------
(1) Minimum principal amount of $5,000,000.
(2) No less than five and no more than ten years from the date of
original issuance.
B-1
5. The purchase price of the Notes is to be transferred to:
Name, Address
and ABA Routing Number of
Number of Bank Account
--------------- ---------
6. The Company certifies (a) that the representations and warranties
contained in paragraph 8 of the Agreement are true on and as of
the date of this Request for Purchase except to the extent of
changes caused by the transactions contemplated in the Agreement
and (b) that there exists on the date of this Request for Purchase
no Event of Default or Default.
Dated: REGIS CORPORATION
By:
----------------------
Authorized Officer
B-2
EXHIBIT C
[FORM OF CONFIRMATION OF ACCEPTANCE]
REGIS CORPORATION
Reference is made to the Private Shelf Agreement (the "Agreement"),
dated as of July 25, 1995 between Regis Corporation (the "Company"), on the
one hand, and The Prudential Insurance Company of America ("Prudential") and
each Prudential Affiliate which becomes party thereto, on the other hand. All
terms used herein that are defined in the Agreement have the respective
meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below as a
Purchaser of Notes hereby confirms the representations as to such Notes set
forth in paragraph 9 of the Agreement, and agrees to be bound by the
provisions of paragraphs 2E and 2G of the Agreement relating to the purchase
and sale of such Notes and by the provisions of the penultimate sentence of
paragraph 11A of the Agreement.
Pursuant to paragraph 2E of the Agreement, an Acceptance with respect
to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal amount $_______________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth on attached
Purchaser Schedule
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth on attached
Purchaser Schedule
[(C), (D)...... same information as above.]
C-1
II. Closing Day:
Dated: REGIS CORPORATION
By:
-------------------------
Title: ----------------------
[THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA]
By:
-------------------------
Vice President
[PRUDENTIAL AFFILIATE]
By:
-------------------------
Vice President
C-2
EXHIBIT D
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Date of Closing]
[Name(s) and address(es) of
purchaser(s)]
Ladies and Gentlemen:
We have acted as counsel for Regis Corporation (the "Company") in
connection with the Private Shelf Agreement, dated as of July 25, 1995 (the
"Agreement") between the Company, on the one hand, and The Prudential
Insurance Company of America and each Prudential Affiliate which becomes a
party thereto, on the other hand, pursuant to which the Company has issued to
you today Senior Series ____ Notes of the Company in the aggregate principal
amount of $_______ (the "Notes"). Capitalized terms used and not otherwise
defined herein shall have the meanings provided in the Agreement. This letter
is being delivered to you in satisfaction of the condition set forth in
paragraph 3A(v) of the Agreement and with the understanding that you are
purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the Company and copies certified to
our satisfaction of corporate documents and records of the Company and of
other papers, and have made such other investigations, as we have deemed
relevant and necessary as a basis for our opinion hereinafter set forth. We
have relied upon such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters contained
therein which were not independently established. With respect to the opinion
expressed in paragraph 3 below, we have also relied upon the representation
made by [each of] you in paragraph 9A of the Agreement.
Based on the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Minnesota. Each Subsidiary is a
corporation duly organized and validly existing in good standing under the
laws of its jurisdiction of incorporation. The Company and its Restricted
Subsidiaries have the corporate power to carry on its their respective
businesses as now being conducted.
D-1
2. The Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance, sale
and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the credit represented by
the Notes do not result in any violation of regulation G, T or X of the Board
of Governors of the Federal Reserve System.
5. The execution and delivery of the Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of and compliance
with the respective provisions of the Agreement and the Notes do not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any of its Restricted Subsidiaries pursuant to, or require any authorization,
consent, approval, exemption, or other action by or notice to or filing with
any court, administrative or governmental body or other Person (other than
routine filings after the date hereof with the Securities and Exchange
Commission and/or state Blue Sky authorities) pursuant to, the charter or
by-laws of the Company or any of its Restricted Subsidiaries, any applicable
law (including any securities or Blue Sky law), statute, rule or regulation
or (insofar as is known to us after having made due inquiry with respect
thereto) any agreement (including, without limitation, any agreement listed
in Schedule 8G to the Agreement), instrument, order, judgment or decree to
which the Company or any of its Restricted Subsidiaries is a party or
otherwise subject.
Very truly yours,
D-2
SCHEDULE 8A
REGIS CORPORATION
SCHEDULE OF SUBSIDIARIES
- - -------------------------------------------------------------------------------
Regis Hairstylists, Ltd. Restricted 100%
Trade Secret, Inc. Restricted 100%
Wilson Salons, Inc. Restricted 100%
Regis Europe, Ltd. Unrestricted 99%*
Regis Mexico, S.A. Unrestricted 100%
Regis South Africa (Proprietary) Limited Unrestricted 100%
Regis Hairstylists (Proprietary) Limited Unrestricted 100%
- - -------------------
* Borrower owns 9,998 shares of the 10,000 shares which are outstanding. The
two shares not controlled by Borrower are owned by two employees of Regis
Europe, LTD.
SCHEDULE 8G
LISTING OF AGREEMENTS WHICH RESTRICT
THE ABILITY OF REGIS TO INCUR DEBT
1. 11.52% Senior Note Agreement, dated June 21, 1991 (as amended)
2. Bank Credit Agreement, dated June 21, 1994 (as amended)
3. Note and Convertible Debenture Purchase Agreement with T. Rowe Price
Strategic Partners Fund II, L.P., dated December 31, 1992 (as amended)