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EXHIBIT 10(t)
THORN APPLE VALLEY, INC.
NOTE AGREEMENT
DATED AS OF OCTOBER 1, 1994
$8,000,000 PRINCIPAL AMOUNT
8.42% SENIOR NOTES
DUE OCTOBER 1, 2003
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TABLE OF CONTENTS
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Section 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Commitment; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. PREPAYMENT OF NOTES
2.1 Required Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Optional and Other Prepayments . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Surrender of Notes on Prepayment or
Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Allocation of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . 4
2.8 Interest Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3. REPRESENTATIONS
3.1 Representations of the Company . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Representations of the Purchaser . . . . . . . . . . . . . . . . . . . . . 11
Section 4. CLOSING CONDITIONS
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Legality of Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Accountant's Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Receipt of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(i)
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5.3 Valuation Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Direct or Indirect Actions . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6. AFFIRMATIVE COVENANTS
6.1 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Taxes, Claims for Labor and Materials . . . . . . . . . . . . . . . . . . 23
6.4 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Financial Information and Reports . . . . . . . . . . . . . . . . . . . . 23
6.7 Inspection of Properties and Records . . . . . . . . . . . . . . . . . . . 26
6.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10 Acquisition of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Required Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 NAIC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7. NEGATIVE COVENANTS
7.1 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Fixed Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.7 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.8 Sale and Lease-Back Transaction . . . . . . . . . . . . . . . . . . . . . . 33
7.9 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Annulment of Acceleration of Notes . . . . . . . . . . . . . . . . . . . . 35
8.4 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Conduct No Waiver; Collection Expenses . . . . . . . . . . . . . . . . . . 36
8.6 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.7 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
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Section 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Solicitation of Holders of Notes . . . . . . . . . . . . . . . . . . . . . 37
9.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE
AND REPLACEMENT
10.1 Form of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Note Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 Issuance of New Notes upon Exchange
or Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.4 Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11. MISCELLANEOUS
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Law Governing; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . 40
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.8 Reliance on and Survival of Provisions . . . . . . . . . . . . . . . . . . 40
11.9 Integration and Severability . . . . . . . . . . . . . . . . . . . . . . . 40
Annex I: Subsidiaries
Annex II: Existing Indebtedness
Annex III: Description of Liens
Annex IV: Existing Investments
Annex V: Material Litigation
Annex VI: Materials Provided to Purchaser
Annex VII: Environmental Disclosure
Exhibit A: Form of 8.42% Senior Note, Due October 1, 2003
Exhibit B: Legal Opinions
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THORN APPLE VALLEY, INC.
NOTE AGREEMENT
Dated as of October 1, 1994
To the Purchaser Named
in Schedule I Hereto
Ladies and Gentlemen:
THORN APPLE VALLEY, INC., a Michigan corporation (the "Company"),
agrees with you as follows:
Section 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes. The Company has authorized the issuance
and sale of $8,000,000 aggregate principal amount of its Senior Notes, to be
dated the date of issuance thereof, to bear interest from such date at the rate
of 8.42% per annum prior to maturity, payable semi-annually on the first day of
April and October of each year, commencing April 1, 1995, and at maturity, to
bear interest on overdue principal (including any overdue required or optional
prepayment), premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the greater of (i) the rate of interest
publicly announced from time to time by Harris Trust and Savings Bank (or its
successors or assigns) as its prime rate plus two percent (2%) or (ii) 10.42%
per annum, to be expressed to mature on October 1, 2003 and to be substantially
in the form attached as Exhibit A. The term "Notes" as used herein shall
include each Note delivered pursuant to this Note Agreement (the "Agreement")
and each Note delivered in substitution or exchange therefor and, where
applicable, shall include the singular number as well as the plural. Any
reference to you in this Agreement shall in all instances be deemed to include
any nominee of yours or any separate account on whose behalf you are purchasing
Notes. You are sometimes referred to herein as the "Purchaser."
1.2 Commitment; Closing Date. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to you, and you agree to purchase
from the Company, Notes in the aggregate principal amount set forth opposite
your name in the attached Schedule I at the price set forth in Section I at a
price of 100% of the principal amount thereof.
Delivery of and payment for the Notes shall be made at the offices of
Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower, Chicago,
Illinois 60610, at 9:00 a.m., Chicago Time, on October 21, 1994, or at such
later time or on such later date, as may be mutually agreed upon by the Company
and the Purchaser (the "Closing Date"). The Notes will be delivered to
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you in fully registered form, issued in your name or in the name of your
nominee. Delivery of the Notes to you on the Closing Date shall be against
payment of the purchase price thereof in federal funds or other funds in U.S.
dollars immediately available at the principal office of [First of America
Bank, 400 South Main, Royal Oak, Michigan 48067, A.B.A. No. 0720-0091-5,] for
deposit in the Company's Account No. 301-135497. If on the Closing Date the
Company shall fail to tender the Notes to you, you shall be relieved of all
remaining obligations under this Agreement. Nothing in the preceding sentence
shall relieve the Company of any liability occasioned by such failure to
deliver the Notes.
Section 2. PREPAYMENT OF NOTES
2.1 Required Prepayments. Except as set forth in Section 2.2(b)
below, no prepayments of the Notes are required.
2.2 Optional and Other Prepayments. (a) Upon notice as provided
in Section 2.3, the Company may prepay the Notes, in whole or in part, at any
time, in an amount of not less than $1,000,000 or in integral multiples of
$100,000 in excess thereof (or the remaining principal amount of the Notes) at
a price of (i) 100% of the principal amount to be prepaid, plus interest
accrued thereon to the date of prepayment, if the Reinvestment Yield, on the
applicable Determination Date, equals or exceeds the interest rate payable on
or in respect of the Notes, or (ii) 100% of the principal amount to be prepaid,
plus interest accrued thereon to the date of prepayment, plus a premium, if the
Reinvestment Yield, on such Determination Date, is less than the interest rate
payable on or in respect of the Notes. The premium shall equal (x) the
aggregate present value of the amount of principal being repaid and the present
value of the amount of interest (exclusive of interest accrued to the date of
prepayment) which would have been payable in respect of such principal absent
such prepayment, determined by discounting (semi-annually on the basis of a
360-day year composed of twelve 30-day months) each such amount utilizing an
interest factor equal to the Reinvestment Yield, less (y) the principal amount
to be prepaid.
(b) In the event that the Company shall have knowledge of any
proposed Change of Control, the Company will give written notice (the "Proposed
Change of Control Notice") of such fact to each of the Noteholders. The
Proposed Change of Control Notice shall be delivered promptly upon receipt of
such knowledge by the Company and shall describe the facts and circumstances of
such proposed Change of Control in reasonable detail. In the event that the
Change of Control described in the Proposed Change of Control Notice or any
other Change of Control shall occur, the Company will give written notice (the
"Company Notice") of such fact to the Noteholders. The Company Notice shall be
delivered promptly and in any event no later than five Business Days following
the occurrence of any Change of Control. The Company Notice shall (i) describe
the facts and circumstances of such Change of Control in reasonable detail,
(ii) make reference to this Section 2.2(b) and the right of the Noteholders to
require payment on the terms and conditions provided for in this Section
2.2(b), (iii) offer in writing to prepay the outstanding Notes at a price of
100% of the principal amount to be prepaid, plus interest accrued thereon to
the date of prepayment and (iv) specify a date for such prepayment, which
prepayment date shall be not earlier than 10 days or later than 20 days after
the expiration of the 15-day
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period provided in the immediately succeeding sentence (the "Change of Control
Prepayment Date"). Each Noteholder shall have the right to reject such offer
and not require payment of the Notes held by such Noteholder by written notice
to the Company (the "Noteholder Notice") given within 15 days following receipt
of the Company Notice. Failure by any Noteholder to deliver the notice
described in the preceding sentence shall be deemed to constitute acceptance of
the Company's offer to prepay. The Company shall, on each Change of Control
Prepayment Date, make payment on all Notes held by Noteholders who have
accepted such offer of prepayment at a price of 100% of the principal amount to
be prepaid, plus interest accrued thereon to the date of prepayment.
Without limiting any of the foregoing, notwithstanding any failure on
the part of the Company to give the Company Notice herein required as a result
of the occurrence of a Change of Control, each Noteholder shall have the right
to require the Company to prepay, and the Company will prepay, such
Noteholder's Notes at any time after such Noteholder has actual knowledge of
any Change of Control. Notice of any required repayment pursuant to this
Section 2.2(b) shall be delivered by any Noteholder which was entitled to, but
did not receive, such Company Notice to the Company within sixty days after
such Noteholder has actual knowledge of such Change of Control. On the date
(the "Delayed Prepayment Date") designated in such Noteholder's Notice (which
shall be not earlier than 20 days nor later than 45 days after the date of such
Noteholder's Notice), the Company shall prepay in full all Notes held by such
Noteholder at a price of 100% of the principal amount prepaid, plus interest
accrued thereon to the date of prepayment. If any Noteholder gives any notice
pursuant to this paragraph, the Company shall give a Company Notice within one
Business Day of receipt of such notice and identify the Delayed Prepayment Date
to all other Noteholders and each of such other Noteholders shall then and
thereupon have the rights with respect to the prepayment of its Notes as set
forth in this Section 2.2(b); provided that the date for prepayment of such
other Noteholder's Notes shall be the Delayed Prepayment Date.
(c) Any optional prepayment pursuant to Section 2.2(a) or Section
2.2(b) of less than all of the Notes outstanding shall be applied, to reduce
payment at maturity.
(d) Except as provided in this Section 2.2, the Notes shall not be
prepayable in whole or in part.
2.3 Notice of Prepayments. The Company shall give notice of any
optional prepayment of the Notes pursuant to Section 2.2(a) to each holder of
the Notes not less than 30 days nor more than 60 days before the date fixed for
prepayment, specifying (i) such date, (ii) the principal amount of the holder's
Notes to be prepaid on such date, and an estimate of the premium, if any,
payable with respect thereto, (iii) the Determination Date as of which the
premium, if any, will be calculated and (iv) the accrued interest applicable to
the prepayment. Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice, together with the
premium, if any, and accrued interest thereon shall become due and payable on
the prepayment date.
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The Company also shall give notice to each holder of the Notes by
telecopy, telegram, telex or other same-day written communication (and the
Company shall solicit telephonic confirmation of receipt of such notice), as
soon as practicable but in any event not later than the Business Day prior to
the prepayment date, of the premium, if any, applicable to such prepayment and
the details of the calculations used to determine the amount of such premium.
2.4 Surrender of Notes on Prepayment or Exchange. Subject to
Section 2.5, upon any partial prepayment of a Note pursuant to this Section 2
or partial exchange of a Note pursuant to Section 10.3, such Note may, at the
option of the holder thereof, (i) be surrendered to the Company pursuant to
Section 10.3 in exchange for a new Note equal to the principal amount remaining
unpaid on the surrendered Note, or (ii) be made available to the Company for
notation thereon of the portion of the principal so prepaid or exchanged. In
case the entire principal amount of any Note is prepaid or exchanged, such Note
shall, following such prepayment or exchange, be surrendered to the Company for
cancellation and shall not be reissued, and no Note shall be issued in lieu of
such Note.
2.5 Direct Payment. Notwithstanding any other provision contained
in the Notes or this Agreement, the Company will pay all sums by 11:00 a.m.
Central Time, becoming due on each Note held by you or any subsequent
Institutional Holder by wire transfer of immediately available federal funds to
such account as you or such subsequent Institutional Holder have designated in
Schedule I, or as you or such subsequent Institutional Holder may otherwise
designate by notice to the Company, in each case without presentment and
without notations being made thereon, except that any such Note so paid or
prepaid in full shall, after payment thereof, be surrendered to the Company for
cancellation. Any wire transfer shall identify such payment in the manner set
forth in Schedule I and shall identify the payment as principal, premium, if
any, and/or interest. You and any subsequent Institutional Holder of a Note to
which this Section 2.5 applies agree that, before selling or otherwise
transferring any such Note, you or it will make a notation thereon of the
aggregate amount of all payments of principal theretofore made and of the date
to which interest has been paid.
2.6 Allocation of Payments. Except in the case of a prepayment
pursuant to Section 2.2(b), if less than the entire principal amount of all the
Notes outstanding is to be paid, the Company will prorate the aggregate
principal amount to be paid among the outstanding Notes in proportion to the
unpaid principal.
2.7 Payments Due on Saturdays, Sundays and Holidays. In any case
where the date of any required prepayment of the Notes or any scheduled
interest payment date on the Notes or the date fixed for any other payment of
any Note or exchange of any Note is not a Business Day, then such payment,
prepayment or exchange need not be made on such scheduled date but may be made
on the next succeeding Business Day (with interest accrued to the actual
payment date), with the same force and effect as if made on the due date.
2.8 Interest Adjustment. Anything in this Agreement or the Notes
to the contrary notwithstanding, in no event shall the Noteholders be entitled
to charge or receive interest in excess of twenty-five percent (25%) simple
interest per annum. For purposes of this provision,
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interest shall include any amount, charge, fee, prepayment expense, bonus,
points or consideration that is deemed to be interest for purposes of such
applicable law.
Section 3. REPRESENTATIONS
3.1 Representations of the Company. As an inducement to, and as
part of the consideration for, your purchase of the Notes pursuant to this
Agreement, the Company represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan, has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted
and as presently proposed to be conducted, to enter into and perform the
Agreement and to issue and sell the Notes as contemplated in the Agreement.
(b) Qualification to Do Business. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction where the nature of the business transacted by it
or the character of its properties owned or leased makes such qualification or
licensing necessary, except where the failure to be so licensed or qualified or
in good standing would not materially and adversely affect the condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole.
(c) Subsidiaries. The Company has no Subsidiaries, as defined in
Section 5.1, except those listed in Annex I, which correctly sets forth the
jurisdiction of incorporation and the percentage of the outstanding Voting
Stock of each Subsidiary which is owned, of record or beneficially, by the
Company and/or one or more Subsidiaries. Each Subsidiary has been duly
organized, is validly existing and is in good standing under the laws of its
jurisdiction of incorporation and is duly licensed or qualified and in good
standing as a foreign corporation in each other jurisdiction where the nature
of the business transacted by it or the character of its properties owned or
leased makes such qualification or licensing necessary, except where the
failure to be so licensed or qualified or in good standing would not materially
and adversely affect the condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole. A list of Non-Operating Subsidiaries and a
list of those jurisdictions wherein each Subsidiary is qualified to do business
is set forth in Annex I. Each Subsidiary has full corporate power and
authority to own and operate its properties and to carry on its business as now
conducted and as presently proposed to be conducted. The Company and each
Subsidiary have good and marketable title to all of the shares they purport to
own of the capital stock of each Subsidiary, free and clear in each case of any
lien or encumbrance, and all such shares have been duly issued and are fully
paid and nonassessable. The Non-Operating Subsidiaries have no assets and no
operations of a material nature.
(d) Financial Statements. The consolidated balance sheets of the
Company and its Subsidiaries as of May 27, 1994, May 28, 1993, May 29, 1992 and
May 31, 1991, and the related consolidated statements of income, shareholders'
equity and cash flows for the years ended
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May 27, 1994, May 28, 1993, May 29, 1992 and May 31, 1991, accompanied by the
report and unqualified opinion of Coopers & Lybrand, independent certified
public accountants, copies of which have heretofore been delivered to you were
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein) and present fairly the consolidated financial condition and
consolidated results of operations and cash flows of the Company and its
Subsidiaries for and as of the end of each of such years.
(e) No Contingent Liabilities or Adverse Changes. Neither the
Company nor any of its Subsidiaries had, as of the respective dates of the
financial statements described in the foregoing paragraph (d) of this Section
3.1, any contingent liabilities which are material to the Company and its
Subsidiaries taken as a whole other than as indicated on the financial
statements described in the foregoing paragraph (d) of this Section 3.1, and
since May 27, 1994, there have been no material adverse changes in the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole.
(f) No Pending Litigation or Proceedings. Except as set forth in
Annex V hereto, there are no actions, suits or proceedings pending or
threatened against or affecting the Company or any of its Subsidiaries, at law
or in equity or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined against the Company or any
Subsidiary, might result, either individually or in the aggregate, in any
material adverse change in the business, Properties, profits and prospects,
operations or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or on the Company's ability to perform its
obligations under this Agreement or the Notes.
(g) Compliance with Law. (i) Neither the Company nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction or
decree of any court to which it is a named party; or (y) in default under any
law, rule, regulation, approval, ordinance or order, relating to its or their
respective businesses, the sanctions and penalties resulting from which
defaults described in clauses (x) and (y), if applied individually or in the
aggregate, might have a material adverse effect on the business, Properties,
profits and prospects, operations, assets or condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole, or on the Company's
ability to perform its obligations under this Agreement or the Notes.
(ii) Neither the Company nor any Subsidiary nor any
Affiliate of the Company is an entity defined as a "designated national" within
the meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or
for any other reason, subject to any restriction or prohibition under, or is in
violation in any material respect of, any Federal statute or Presidential
Executive Order, or any rules or regulations of any department, agency or
administrative body promulgated under any such statute or Order, concerning
trade or other relations with any foreign country or any citizen or national
thereof or the ownership or operation of any property.
(h) Pension Reform Act of 1974. The Internal Revenue Service has
issued a determination that each "employee pension benefit plan," as defined in
Section 3 of the
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Employee Retirement Income Security Act of 1974, as amended ("ERISA") (a
"Plan"), established, maintained or contributed to by the Company or any
Subsidiary has been qualified under Section 401(a) and related provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), and that each
related trust or custodial account is exempt from taxation under Section 501(a)
of the Code. All Plans of the Company or any Subsidiary comply in all material
respects with ERISA and other applicable laws. There exist with respect to the
Company or any Subsidiary no "multi-employer plans," as defined in the
Multi-employer Pension Plan Amendments Act of 1980, for which a material
withdrawal or termination liability may be incurred. There exist with respect
to all Plans or trusts established or maintained by the Company or any
Subsidiary: (i) no material accumulated funding deficiency within the meaning
of ERISA; (ii) no termination of any Plan or trust which would result in any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or any
"reportable event," as that term is defined in ERISA, which is likely to
constitute grounds for termination of any Plan or trust by the PBGC; and (iii)
no "prohibited transaction," as that term is defined in ERISA, which is likely
to subject any Plan, trust or party dealing with any such Plan or trust to any
material tax or penalty on prohibited transactions imposed by Section 4975 of
the Code. The present value of vested benefits under Plans of the Company and
its Subsidiaries does not materially exceed the value of Plan assets. The
Company and its Subsidiaries are in full compliance with all filing
requirements of ERISA.
(i) Title to Properties. The Company and each Subsidiary has (i)
good title in fee simple or its equivalent under applicable law to all the real
property owned by it which is material to the business, Properties, profits and
prospects, operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole and (ii) good title to all other Property
owned by it which is material to the business, Properties, profits and
prospects, operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole, in each case free from all Liens except (x)
those securing Indebtedness of the Company or a Subsidiary, which are listed in
the attached Annex II and Annex III and (y) other Liens that would be permitted
pursuant to Section 7.4.
(j) Leases. The Company and each Subsidiary enjoy peaceful and
undisturbed possession under all leases under which the Company or such
Subsidiary is a lessee or is operating which are material to the business,
Properties, profits and prospects, operations or condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole. None of such
leases contains any provision which might materially and adversely affect the
operation or use of the property so leased. All of such leases are valid and
subsisting and neither the Company nor any Subsidiary is in default with
respect to any leases which are material, individually or in the aggregate, to
the business, Properties, profits and prospects, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
on the Company's ability to perform its obligations under this Agreement or the
Notes.
(k) Franchises, Patents, Trademarks and Other Rights. The Company
and each Subsidiary have all franchises, permits, approvals, validations,
licenses and other authority, necessary to carry on their businesses as now
being conducted and as proposed to be conducted, and none are in default under
any of such franchises, permits, approvals, validations, licenses or
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other authority which are, individually or in the aggregate, material to their
businesses, Properties, profits and prospects, operations or condition,
financial or otherwise or on the Company's ability to perform its obligations
under this Agreement or the Notes. The Company and each Subsidiary own or
possess all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing necessary for the present
conduct of their businesses, without any known conflict with the rights of
others which, if determined against the Company or any Subsidiary, might
result, either individually or in the aggregate, in any material adverse change
in their business, Properties, profits and prospects, operations or condition,
financial or otherwise of the Company and its Subsidiaries taken as a whole or
on the Company's ability to perform its obligations under this Agreement or the
Notes.
(l) Status of Notes and Sale of Notes. This Agreement and the
Notes have been duly authorized on the part of the Company and will constitute,
when executed and delivered, the legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, except to the extent that
enforcement of this Agreement and the Notes may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in
equity or at law. The sale of the Notes and compliance by the Company with all
of the provisions of this Agreement and of the Notes (i) are within the
corporate powers of the Company, (ii) have been duly authorized by proper
corporate action and (iii) are legal, will not violate any provisions of any
law or regulation or order of any court, governmental authority or agency and
will not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on any property of the
Company or any Subsidiary under the provisions of, any charter document,
by-law, loan agreement or other material agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their property
may be bound. With respect solely to matters of federal, state and local
securities law, the Company has relied in making its representations in this
paragraph (l) in part upon representations of the Purchaser in this Agreement.
(m) No Defaults; Outstanding Indebtedness. No event has occurred
and no condition exists which, upon the execution of this Agreement or the
issuance of the Notes, would constitute an Event of Default, or with the lapse
of time or the giving of notice or both would become an Event of Default, under
this Agreement. Neither the Company nor any Subsidiary is in default under any
charter document, by-law, loan agreement or other material agreement or
material instrument to which it is a party or by which it or its property may
be bound, nor has the Company or any Subsidiary obtained any waivers with
respect to any such defaults under any loan agreements or other agreements or
instruments. A summary of all of the outstanding Indebtedness, the current
outstanding principal amount of which exceeds $100,000 of the Company and its
Subsidiaries, is attached hereto as Annex II.
(n) Governmental Consent. Neither the nature of the Company or
any of its Subsidiaries, their respective businesses or properties, nor any
relationship between the Company or any of its Subsidiaries and any other
Person, nor any circumstances in connection with the offer, issue, sale or
delivery of the Notes is such as to require a consent, approval or
authorization
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of, or withholding of objection on the part of, or filing, registration or
qualification with, any governmental authority on the part of the Company in
connection with the execution and delivery of this Agreement or the offer,
issue, sale or delivery of the Notes. With respect to solely matters of
federal, state and local securities law, the Company has relied in making its
representations in this paragraph (n) in part upon representations of the
Purchaser in this Agreement.
(o) Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have been filed, and all taxes, assessments,
fees and other governmental charges upon the Company or any Subsidiary, or upon
any of their respective properties, income or franchises, which are due and
payable, have been paid timely or within appropriate extension periods or are
being contested in good faith by appropriate proceedings, except for failures
to file for or pay certain state or local sales taxes and where such failures
would not, individually or in the aggregate, have a material adverse effect on
the Company's business, Properties, or condition, financial or otherwise. The
Company does not know of any proposed additional tax assessment against it or
any Subsidiary for which adequate reserves have not been provided for on its
books. The federal income tax liability of the Company and its Subsidiaries
has been finally determined by the Internal Revenue Service and satisfied for
all taxable years up to and including the taxable year ended May 31, 1991 and
no controversy in respect of additional taxes due since such date is pending or
to the Company's knowledge threatened, except as described on Schedule 3.1P(o)
attached hereto. The provisions for taxes on the books of the Company and each
Subsidiary are, in the opinion of the Company, adequate for all open years and
for the current fiscal period.
(p) Status under Certain Statutes. Neither the Company nor any
Subsidiary is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility" as defined
in the Federal Power Act, as amended, or (iii) required to be registered as an
"investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
(q) Private Offering. Neither National City Investments
Corporation (the only Person authorized or employed by the Company as agent,
broker, dealer or otherwise in connection with the offering of the Notes or any
similar security of the Company) based upon a letter dated October 19, 1994
from National City Investments Corporation to the Company nor the Company has
offered any of the Notes or any similar security of the Company for sale to, or
solicited offers to buy any thereof from, or otherwise approached or negotiated
with respect thereto with, any prospective purchaser, other than the Purchaser,
who is an "accredited investor" within the meaning of Regulation D under the
Securities Act, and who was offered all or a portion of the Notes at private
sale for investment. Neither the Company nor anyone acting on its
authorization will offer the Notes or any part thereof or any similar
securities for issue or sale to, or solicit any offer to acquire any of the
same from, anyone so as to bring the issuance and sale of the Notes within the
provisions of Section 5 of the Securities Act.
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(r) Effect of Other Instruments. Neither the Company nor any
Subsidiary is bound by any agreement, instrument, decree, order or subject to
any charter or other corporate restriction which materially and adversely
affects the business, Properties, profits and prospects, operations, or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the Company's ability to perform its obligations under this
Agreement or the Notes.
(s) Use of Proceeds. The Company presently intends to apply the
proceeds from the sale of the Notes for general working capital purposes. None
of the transactions contemplated in this Agreement to be performed by the
Company (including, without limitation thereof, the use of the proceeds from
the sale of the Notes) will violate or result in a violation of Section 7 of
the Exchange Act, or any regulations issued pursuant thereto, including,
without limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System (12 C.F.R., Chapter II). None of the proceeds from the
sale of the Notes will be used to purchase or carry or refinance any borrowing
the proceeds of which were used to purchase or carry any "margin stock" or
"margin security" in violation of Regulations G, T, U or X.
(t) Condition of Property. All of the facilities of the Company
and each of its Subsidiaries which are material to the business, Properties,
profits and prospects, operations or condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole are in sound operating condition
and repair in all material respects except for such facilities being repaired
in the ordinary course of business or facilities which individually or in the
aggregate are not material to the business, Properties, profits and prospects,
operations, or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or on the Company's ability to perform its
obligations under this Agreement or the Notes.
(u) Books and Records. The Company and each of its Subsidiaries
(i) maintain books, records and accounts in reasonable detail which accurately
and fairly reflect their respective transactions and business affairs, and (ii)
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and to permit preparation of
financial statements in accordance with generally accepted accounting
principles.
(v) Full Disclosure. Neither the financial statements referred to
in paragraph (d) of this Section 3.1, nor this Agreement, nor any other
document listed in Annex VI hereto furnished by the Company to you in
connection with the negotiation of the sale of the Notes, taken together,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading in
light of the circumstances under which they were made. There is no fact known,
or which, with reasonable diligence would be known, by the Company which the
Company has not disclosed to you in writing which has a material adverse effect
on or, so far as the Company can now foresee, will have a material adverse
effect on the business, Property, profits and prospects, operations or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the ability of the Company to perform its obligations under this
Agreement and the Notes.
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(w) Environmental Compliance. Except as disclosed in Annex VII
hereto, the Company and each Subsidiary (i) is in compliance in all material
respects with all applicable environmental, transportation, health and safety
statutes and regulations, including, without limitation, regulations
promulgated under the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section Section 6901 et seq. and the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et. seq.,
and (ii) has not acquired, incurred or assumed, directly or indirectly, any
material contingent liability in connection with the release or storage of any
toxic or hazardous waste or substance into the environment. Except as
discussed on Annex VII hereto, the Company has not incurred any material
liability pursuant to any environmental indemnity agreements to which it is a
party or with respect to which it has entered into a Guaranty. Except as
discussed in Annex VII hereto, the Company and its Subsidiaries have not
acquired, incurred or assumed, directly or indirectly, any material contingent
liability in connection with a release or other discharge of any hazardous,
toxic or waste material, including petroleum, on, in, under or into the
environment surrounding any property owned, used or leased by any of them.
3.2 Representations of the Purchaser. You represent, and in
entering into this Agreement the Company understands, that (i) you are an
Institutional Holder and an "accredited investor" within the meaning of
Regulation D under the Securities Act, (ii) you are acquiring Notes for the
purpose of investment for your own account and not with a view to the
distribution thereof, and (iii) you have no present intention of selling,
negotiating or otherwise disposing of the Notes; provided that the disposition
of your property shall at all times be and remain within your control, subject,
however, to compliance with Federal, state and local securities laws. You
acknowledge that the Notes have not been registered under the Securities Act or
the laws of any state and you understand that the Notes must be held
indefinitely unless they are subsequently registered under the Securities Act
or the laws of any state, if applicable, or an exemption from such registration
is available. You have been advised that the Company does not contemplate
registering, and is not legally required to register, the Notes under the
Securities Act.
To the knowledge of the Purchaser, the acquisition of the Notes by the
Purchaser shall constitute a legal investment as of the Closing Date under the
laws and regulations of the State of Illinois (without any resort to any
"basket" or "leeway" provision which permits the making of an investment
without restriction as to the character of the investment being made) and such
acquisition shall not subject the Purchaser to any penalty or other onerous
condition in or pursuant to any such law or regulation.
You further represent that either: (i) no part of the funds to be used
by you to purchase the Notes will constitute assets allocated to any separate
account maintained by you; or (ii) no part of the funds to be used by you to
purchase the Notes will constitute assets allocated to any separate account
maintained by you such that the application of such funds will constitute a
prohibited transaction under Section 406 of ERISA; or (iii) all or a part of
such funds will constitute assets of one or more separate accounts maintained
by you, and you have disclosed to the Company the names of such employee
benefit plans whose assets in such separate account or accounts exceed 10% of
the total assets or are expected to exceed 10% of the total assets of such
account or accounts as of the date of such purchase and the Company has advised
you in writing that the
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Company is not a party-in-interest nor are the Notes employer securities with
respect to the particular employee benefit plans disclosed to the Company by
you as aforesaid (for the purpose of this clause (iii), all employee benefit
plans maintained by the same employer or employee organization are deemed to be
a single plan). As used herein, the terms "separate account,"
"party-in-interest," "employer securities," and "employee benefit plan" have
the meanings assigned to them in ERISA.
Section 4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the Closing Date and the
Company's obligation to sell the Notes shall be subject to the performance by
the Company and the Purchaser, respectively, of their agreements hereunder,
which are to be performed at or prior to the time of delivery of the Notes, and
to the following conditions to be satisfied on or before the Closing Date:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement or otherwise made in
writing in connection herewith shall be true and correct in all material
respects on or as of the Closing Date and the Company shall have delivered to
you a certificate to such effect, dated the Closing Date and executed by the
President or the chief financial officer of the Company based upon such
officer's respective knowledge, after due inquiry.
4.2 Legal Opinions. You shall have received from Gardner, Carton
& Douglas, who is acting as your special counsel in this transaction, from
Louis Glazier, Executive Vice President Finance and Administration and Chief
Financial Officer of the Company, and from Honigman, Miller, Schwartz and Cohn,
counsel for the Company, their respective opinions, dated as of the Closing
Date, in form and substance satisfactory to you and covering substantially the
matters set forth or provided in the attached Exhibit B.
4.3 Events of Default. No event shall have occurred and be
continuing on the Closing Date which would constitute an Event of Default, as
defined in Section 8.1, or with notice or lapse of time or both would become
such an Event of Default, and the Company shall have delivered to you a
certificate to such effect, dated the Closing Date and executed by the
President or the chief financial officer of the Company and based on such
officer's respective knowledge, after due inquiry.
4.4 Payment of Fees and Expenses. The Company shall have paid all
fees, expenses, costs and charges, including the fees and expenses of your
special counsel, incident to the proceedings in connection with, and
transactions contemplated by, this Agreement and the Notes.
4.5 Legality of Investment. Your acquisition of the Notes shall
constitute a legal investment as the Closing Date under the laws and
regulations of each jurisdiction to which you may be subject (without resort to
any "basket" or "leeway" provision which permits the making of an investment
without restriction as to the character of the particular investment being
made),
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and such acquisition shall not subject you to any penalty or other onerous
condition in or pursuant to any such law or regulation.
4.6 Private Placement Number. A private placement number shall
have been obtained from Standard & Poor's Corporation.
4.7 Accountant's Letter. You shall have received, dated the
Closing Date, a letter from the Company's independent certified public
accountants acknowledging that you may rely on their opinion accompanying the
audited financial statements referred to in Section 3.1(d).
4.8 Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation of such transactions shall be
satisfactory in form and substance to you and your special counsel, and you and
your special counsel shall have received copies (executed or certified as may
be appropriate) of all legal documents or proceedings which you and they may
reasonably request. You shall have provided written wire instructions,
executed by an officer of the Company, directing the Purchasers as to the bank
in which the purchase price of the Notes shall be deposited.
4.9 Receipt of Proceeds. The Company shall have received the
purchase price of the Notes, specified in Section 1.2.
4.10 Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued on such date or if the conditions
specified in Sections 4.1 through 4.8 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in Sections 4.1
through 4.8 have not been fulfilled, you may waive compliance by the Company
with any such condition to such extent as you may in your sole discretion
determine. Nothing in this Section 4.10 shall operate to relieve the Company
of any of its obligations hereunder or to waive any of your rights against the
Company.
Section 5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined. The terms hereinafter set forth when
used in this Agreement shall have the following meanings:
Affiliate - Any Person (other than a Wholly-Owned Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or any Subsidiary or (iii) 5% or more of the Voting Stock (or in the
case of a Person which is not a corporation, 5% of the equity interest) of
which is beneficially owned or held by the Company or a Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and
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policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
Agreement - As defined in Section 1.1.
Beneficial Ownership - As defined in Rule 13d-3 under the Exchange Act.
Business Day - A day other than a Saturday, Sunday or a legal holiday
or any other day on which banking institutions in Chicago, Illinois or Royal
Oak, Michigan are authorized by law to close.
Capitalized Lease - Any lease the obligation for Rentals with respect
to which, in accordance with generally accepted accounting principles, would be
required to be capitalized on a balance sheet of the lessee.
Change of Control - (a) The acquisition, through purchase or otherwise
(including the agreement to act in concert without more), by any Person (other
than Designated Persons) or group of Persons acting in concert (other than
Designated Persons), directly or indirectly, in one or more transactions, of
Beneficial Ownership or control of securities representing more than 50% of the
combined voting power of the Company's Voting Stock; or
(b) The distribution by the Company of cash, securities or other
properties (other than regular periodic cash dividends at a rate which is
substantially consistent with past practice, including with respect to
increases in dividends, and other than Common Stock or rights to acquire Common
Stock) to holders of capital stock (including by means of dividend,
reclassification, recapitalization or otherwise) which, together with all other
such distributions during the 365-day period preceding the date of such
distribution, has an aggregate fair market value in excess of an amount equal
to 30% of the fair market value of the Voting Stock of the Company outstanding
on the date immediately prior to such distribution.
A merger or consolidation pursuant to Section 7.6 with respect to
which the Voting Stock of the surviving corporation is more than 50% owned by a
Person or group of Persons acting in concert (other than Designated Persons)
who did not own such Voting Stock prior to such merger or consolidation shall
constitute a "Change of Control."
Closing Date - As defined in Section 1.2.
Code - As defined in Section 3.1(h).
Consolidated Fixed Charges - For any period, the sum of: (i)
Consolidated Interest Expense for such period and (ii) Rentals of the Company
and its Subsidiaries under all leases other than Capitalized Leases.
Consolidated Funded Debt - For any period, Funded Debt of the Company
and its Subsidiaries.
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Consolidated Income Available for Fixed Charges - For any period, the
sum of (i) Consolidated Net Income for such period, plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
federal, state, or other income taxes made by the Company and its Subsidiaries
during such period and (iii) Consolidated Fixed Charges.
Consolidated Interest Expense - The interest expense (including
capitalized and noncapitalized interest, the interest component of Rentals
under Capitalized Leases and any expense associated with the termination of a
swap arrangement) of the Company and its Subsidiaries on a consolidated basis
for any period.
Consolidated Net Income - For any period, the gross revenues of the
Company and its Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding Minority Interests,
but excluding in any event:
(a) any extraordinary or non-recurring items, any taxes on
excluded gains and any tax deductions or credits on account of any excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in any
manner by the Company or any Subsidiary, realized by such corporation prior to
the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated or
which shall have merged into or with the Company or a Subsidiary prior to the
date of such consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary)
in which the Company or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash or other equivalent distributions;
(g) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to the Company or any other
Subsidiary;
(h) earnings or losses resulting from any reappraisal,
re-evaluation, write-up or write-down of assets;
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(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof on or after the
Closing Date over the amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any securities of the
Company or any Subsidiary; or
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such period.
Consolidated Tangible Net Worth - The consolidated shareholders' equity
(including preferred stock other than preferred stock which would be
characterized as Indebtedness under generally accepted accounting principles
and excluding Minority Interests) of the Company and its Subsidiaries
determined in accordance with generally accepted accounting principles, less
all goodwill, trade names, trademarks, patents, organization expense,
unamortized debt discount and expense and other similar intangibles properly
classified as intangibles in accordance with generally accepted accounting
principles and incurred after December 10, 1993.
Consolidated Total Assets - The consolidated total assets of the
Company and its Subsidiaries determined in accordance with generally accepted
accounting principles.
Consolidated Total Capitalization - The sum of Consolidated Tangible
Net Worth and Consolidated Funded Debt.
Current Debt - All Indebtedness for borrowed money incurred under a
credit line or other facility providing for borrowings, the final maturity of
which Indebtedness is one year or less from the date of determination.
Default - Any event which, with the giving of notice or the passage of
time or both, would constitute an Event of Default.
Designated Persons - A "Designated Person" shall include:
(a) (i) Henry S. Dorfman, Marla Dorfman, Gayle Weiss, Carolyn
Dorfman and Joel Dorfman; (ii) the estates of the Persons set forth in clause
(i); and (iii) an inter vivos or testamentary trusts the beneficiaries of which
are one or more Persons falling within the scope of clauses (i) or (ii) above;
(b) Joel Dorfman, Henry S. Dorfman, Louis Glazier, Arnold S.
Mikelberg, Keith Jahnke and Edward Boan;
(c) a group of Persons fifty percent or more are comprised of
Persons set forth in paragraphs (a) and/or (b) above; or
(d) an Employee Stock Ownership Plan as defined in Section
4975(e)(7) of the Code.
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Determination Date - The (i) Business Day two Business Days before the
date fixed for a prepayment pursuant to a notice required by Section 2.2(a) or
(ii) the date of any acceleration pursuant to Section 8.2.
ERISA - As defined in Section 3.1(h).
Event of Default - As defined in Section 8.1.
Exchange Act - The Securities Exchange Act of 1934, as amended, and as
it may be further amended from time to time.
Funded Debt - All Indebtedness which would, in accordance with
generally accepted accounting principles, constitute long-term Indebtedness,
including, but not limited to, (a) any Indebtedness with a maturity more than
one year after the creation of such Indebtedness, (b) without duplication, any
portion of Indebtedness described in clause (a) included in current
liabilities, (c) any Indebtedness outstanding under a revolving credit or
similar agreement providing for borrowings (and renewals and extensions
thereof) over a period of more than one year notwithstanding that any such
Indebtedness may be payable on demand or within one year after the creation
thereof, (d) any Capitalized Lease obligation, (e) any Guarantee with respect
to Funded Debt of another Person and (f) the amount by which outstanding
Current Debt exceeds $10,000,000 at the last day of the thirty day period
within the previous twelve months in which said Current Debt is at its lowest
level.
Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection or
obligations incurred in the ordinary course of business in connection with
repurchase agreements) of a Person guaranteeing or, in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other Person in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, or (y) to maintain working capital
or other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, (iii) to
lease property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation against loss in respect thereof. For the purposes of all
computations made under this Agreement, a Guaranty in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
Indebtedness - (i) All items of borrowings, including Capitalized
Leases, which in accordance with generally accepted accounting principles would
be included in determining total
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liabilities as shown on the liability side of a balance sheet as of the date at
which Indebtedness is to be determined, (ii) all Guaranties (other than
Guaranties of Indebtedness of the Company or a Wholly-Owned Subsidiary by a
Subsidiary, or of a Wholly-Owned Subsidiary by the Company or a Subsidiary),
letters of credit and endorsements (other than of notes, bills and checks
presented to banks for collection or deposit in the ordinary course of
business), in each case to support Indebtedness of other Persons; and (iii) all
items of borrowings secured by any mortgage, pledge or Lien existing on
property owned subject to such mortgage, pledge, or Lien, whether or not the
borrowings secured thereby shall have been assumed by the Company or any
Subsidiary.
Institutional Holder - Any bank, trust company, insurance company,
pension fund, mutual fund or other similar financial institution which meets
the requirements of a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act, which is or becomes a holder of any Note.
Investments - All investments made, in cash or by delivery of property,
directly or indirectly, in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
Lien - Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to grant 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 file any financing statement under
the Uniform Commercial Code of any jurisdiction in connection with any of the
foregoing.
Majority-Owned Subsidiary - When applied to a Subsidiary, any
Subsidiary 80% or more of the Voting Stock of which is owned by the Company or
a Majority-Owned Subsidiary (other than Voting Stock required to be held as
director's qualifying stock).
Material Work Stoppage - A cessation or interruption of work by a
unified group of employees of the Company or its Subsidiaries arising from or
in connection with a labor dispute which causes Consolidated Income Available
for Fixed Charges during any quarter in which such work interruption occurs to
decline 10% or more from Consolidated Income Available for Fixed Charges for
the same fiscal quarter of the prior fiscal year.
Minority Interests - Capital stock of any Subsidiary not owned by the
Company or any Subsidiary.
Non-Operating Subsidiaries - Crown West, Inc., Gunsberg Corned Beef
Company, Miller's Transport, Inc. and Thorn Apple Valley Foreign Sales
Corporation; provided, however, that the foregoing corporations shall not be
Non-Operating Subsidiaries at any time as any of such corporations conducts
operations or owns assets of a material nature.
Noteholder - Any holder of a Note.
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PBGC - As defined in Section 3.1(h).
Permitted Investments - The following Investments of the Company and
its Subsidiaries:
(a) Existing Investments described in Annex IV hereto;
(b) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the Company or
any Subsidiary, is accorded at least an "A-1" rating by Standard & Poor's
Corporation or a "P-1" rating by Moody's Investors Service, Inc.;
(c) Investments in direct obligations of the United States of
America, or any agency thereof the obligations of which are guaranteed by the
United States of America, maturing in twelve months or less from the date of
acquisition thereof;
(d) Investments in certificates of deposit, repurchase agreements
or bankers acceptances, maturing within one year from the date of origin,
issued by a bank organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits aggregating at least
$100,000,000;
(e) Investments in "money market" preferred stock rated "A" or
better by Standard & Poor's Corporation or by Moody's Investors Services, Inc.;
(f) Tax-exempt floating rate option tender bonds backed by an
irrevocable letter of credit issued by a bank the long-term debt rating of
which is at least "AA" by Standard & Poor's Corporation or "Aa" by Moody's
Investors Service, Inc.;
(g) Investments in Subsidiaries which operate principally in lines
of business similar to lines of business of the Company or its Subsidiaries
existing on the Closing Date;
(h) Investments in capital stock of the Company in an amount not
to exceed $20,000,000; and
(i) Investments in or commitments to purchase foreign currency;
provided that such Investment is made solely to the extent that the Company and
its Subsidiaries are obligated to make payments to other Persons in such
foreign currency.
In valuing any Investments for the purpose of applying the limitations
set forth above, such Investments shall be taken at the original cost thereof,
without allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
For purposes of this definition, at any time when a corporation
becomes a Subsidiary, all investments of such corporation at such time shall be
deemed to have been made by such
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corporation, as a Subsidiary, at such time, provided, however, that the Company
shall have 60 days to dispose of any such investments which are not permitted
above.
Person - Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Plan - As defined in Section 3.1(h).
Property - Any real or personal or tangible or intangible asset.
Reinvestment Yield - The sum of (i) the yield set forth on page "USD"
of the Bloomberg Financial Markets Service at 11:00 a.m. Central Time on the
Determination Date opposite the maturity of the U.S. Treasury Security
corresponding to the Weighted Average Life to Maturity, rounded to the nearest
month, of the principal amount of the Notes to be prepaid, plus (ii) .50 of 1%.
If no maturity exactly corresponding to such rounded Weighted Average Life to
Maturity shall appear therein, yields for the two most closely corresponding
published maturities (one of which occurs prior and the other subsequent to the
Weighted Average Life to Maturity) shall be calculated pursuant to the
foregoing sentence and the Reinvestment Yield shall be interpolated from such
yields on a straight-line basis (rounding in each of such relevant periods, to
the nearest month). In the event that the Bloomberg Financial Markets Service
is no longer available, Noteholders holding at least 66-2/3% of the outstanding
principal amount of the Notes shall select a replacement entity offering a
comparable service.
Rentals - As of the date of any determination thereof, all fixed
payments (including all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property) payable by the
Company or a Subsidiary, as lessee or sublessee under a lease of real or
personal property, but exclusive of any amounts required to be paid by the
Company or a Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes, assessments,
amortization and similar charges.
Sale and Lease-Back Transaction - Any arrangement, directly or
indirectly, with any Person whereby a seller or a transferor shall sell or
otherwise transfer any real or personal property and then or thereafter lease
(whether or not a Capitalized Lease), or repurchase under an extended purchase
contract, the same or similar property from the purchaser or the transferee of
such property.
Securities Act - The Securities Act of 1933, as amended, and as it may
be further amended from time to time.
Subordinated Debt - Any Indebtedness which, by its terms, is expressly
subordinated in right of payment to the Notes.
Subsidiary - Any corporation other than a Non-Operating Subsidiary of
which more than 50% of the outstanding shares of Voting Stock are owned or
controlled by the Company.
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Voting Stock - Capital stock of any class of a corporation having
ordinary voting power to vote for the election of members of the board of
directors of such corporation, or persons performing similar functions.
Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes, at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of the Notes to be prepaid into (b)
the sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity, or other required
payment, including payment at final maturity, foregone by such prepayment in
the case of a prepayment of the Notes by (ii) the number of years (calculated
to the nearest 1/12th) which will elapse between such date and the date such
payment was scheduled to be made.
Wholly-Owned - When applied to a Subsidiary, any Subsidiary 100% of the
Voting Stock of which is owned by the Company and/or its Wholly-Owned
Subsidiaries (other than Voting Stock required to be held as director's
qualifying stock).
Terms which are defined in other Sections of this Agreement shall have
the meanings specified therein.
5.2 Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with
generally accepted accounting principles in force in the United States at the
time of determination, except where such principles are inconsistent with the
requirements of this Agreement.
5.3 Valuation Principles. Except where indicated expressly to the
contrary by the use of terms such as "fair value," "fair market value" or
"market value," each asset, each liability and each capital item of any Person,
and any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof for
all purposes of this Agreement. "Net book value" with respect to any asset,
liability or capital item of any Person shall mean the amount at which the same
is recorded or, in accordance with generally accepted accounting principles,
should have been recorded in the books of account of such Person, as reduced by
any reserves which have been or, in accordance with generally accepted
accounting principles, should have been set aside with respect thereto, but in
every case (whether or not permitted in accordance with generally accepted
accounting principles) without giving effect to any write-up, write-down or
write-off (other than any write-down or write-off the entire amount of which
was charged to Consolidated Net Income or to a reserve which was a charge to
Consolidated Net Income) relating thereto which was made after the date of this
Agreement.
5.4 Direct or Indirect Actions. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
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Section 6. AFFIRMATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on
any Note:
6.1 Corporate Existence. The Company will maintain and preserve,
and will cause each Subsidiary to maintain and preserve, its corporate
existence and right to carry on its business and use, and cause each Subsidiary
to use, its best efforts to maintain, preserve, renew and extend all of its
rights, powers, privileges and franchise necessary to the proper conduct of its
business; provided, however, that the foregoing shall not prevent any
transaction permitted by Sections 7.6 or 7.7.
6.2 Insurance. The Company will insure and keep insured at all
times all of its Properties and all of its Subsidiaries' properties which are
material to the business, Properties, profits and prospects, operations or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole and which are of an insurable nature and of the character usually
insured by companies operating similar properties, against loss or damage by
fire and from other causes customarily insured against by companies engaged in
similar businesses in such amounts as are usually insured against by such
companies. The Company also will maintain for itself and its Subsidiaries at
all times with, in its reasonable business judgment, financially sound and
reputable insurers adequate insurance against loss or damage from such hazards
and risks to the person and property of others as are usually insured against
by companies operating properties similar to the properties of the Company and
its Subsidiaries.
6.3 Taxes, Claims for Labor and Materials. The Company will pay
and discharge when due, and will cause each Subsidiary to pay and discharge
when due, all taxes, assessments and governmental charges or levies imposed
upon it or its property or assets, or upon properties leased by it (but only to
the extent required to do so by the applicable lease), prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon its property or assets, provided that neither the Company
nor any Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim, the payment of which is being contested in good faith and by
proper proceedings that will stay the forfeiture or sale of any property and
with respect to which adequate reserves are maintained.
6.4 Maintenance of Properties. The Company will maintain,
preserve and keep, and will cause each Subsidiary to maintain, preserve and
keep, Properties material to the business, Properties, profits and prospects,
operations or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole (whether owned in fee or a leasehold interest) in
good repair and working order, ordinary wear and tear excepted, and from time
to time will make all necessary repairs, replacements, renewals and additions,
to the extent such repairs, replacements, renewals and additions are, in the
reasonable business judgment of the Company, necessary and appropriate.
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6.5 Maintenance of Records. The Company will keep, and will cause
each Subsidiary to keep, at all times proper books of record and account in
which full, true and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company or
such Subsidiary, in accordance with generally accepted accounting principles
consistently applied throughout the period involved (except for such changes as
are disclosed in such financial statements or in the notes thereto and
concurred in by the independent certified public accountants), and the Company
will, and will cause each Subsidiary to, provide reasonable protection against
loss or damage to such books of record and account.
6.6 Financial Information and Reports. The Company will furnish to
you and to any other Institutional Holder the following:
(a) As soon as available and in any event within 60 days after the
end of each of the first three quarterly accounting periods of each fiscal year
of the Company, an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such period and unaudited consolidated statements
of income, shareholders' equity and cash flows of the Company and its
Subsidiaries for the periods beginning on the first day of such fiscal year and
the first day of such quarterly accounting period and ending on the date of
such balance sheet, setting forth in comparative form the corresponding
consolidated figures for the corresponding periods of the preceding fiscal
year, all in reasonable detail prepared in accordance with generally accepted
accounting principles consistently applied throughout the period involved
(except for changes disclosed in such financial statements or in the notes
thereto and concurred in by the Company's independent certified public
accountants) and certified by the chief financial officer or chief accounting
officer of the Company (i) outlining the basis of presentation, and (ii)
stating that the information presented in such statements presents fairly the
financial condition of the Company and its Subsidiaries and the results of
operations for the periods, subject to customary and other year-end audit
adjustments;
(b) As soon as available and in any event within 90 days after the
last day of each fiscal year, two copies of an audited consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
two copies of the related audited consolidated statements of income,
shareholders' equity and cash flows for such fiscal year, in each case setting
forth in comparative form figures for the preceding fiscal year, all in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved (except for
changes disclosed in such financial statements or in the notes thereto and
concurred in by independent certified public accountants) and accompanied by a
report unqualified as to limitations and scope (and not qualified as to "going
concern" status) as to the consolidated balance sheet and the related
consolidated statements of Coopers & Lybrand or any firm of independent public
accountants of recognized national standing reasonably acceptable to the
Noteholders and selected by the Company to the effect that such financial
statements have been prepared in conformity with generally accepted accounting
principles and present fairly, in all material respects, the financial
condition of the Company and its Subsidiaries and that the examination of such
financial statements by such accounting firm has been made in accordance with
generally accepted auditing standards;
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(c) Together with the financial statements delivered pursuant to
paragraphs (a) and (b) of this Section 6.6, a certificate of the chief
financial officer or chief accounting officer, (i) to the effect that such
officer has re-examined the terms and provisions of this Agreement and that at
the date of such certificate, during the periods covered by such financial
statements and as of the end of such periods, to the knowledge of such officer,
after due inquiry, the Company and each of its Subsidiaries is not, or was not,
in default in the fulfillment of any of the terms, covenants, provisions and
conditions of this Agreement and that no Event of Default or Default is
occurring or has occurred as of the date of such certificate, during such
periods or as of the end of such periods, or if the signer is aware of any such
Default or Event of Default, he shall disclose in such statement the nature
thereof, its period of existence and what action, if any, the Company has taken
or proposes to take with respect thereto, and (ii) stating whether, to the
knowledge of such officer, after due inquiry, the Company is in compliance with
Sections 7.1 through 7.10 and setting forth, in sufficient detail, the
information and computations required to establish whether or not the Company
was in compliance with the requirements of Sections 7.1 through 7.8 during the
periods covered by the financial statements then being furnished and as of the
end of such periods;
(d) Together with the financial reports delivered pursuant to
paragraph (b) of this Section 6.6, a certificate of the independent certified
public accountants (i) stating that in making the examination necessary for
expressing an opinion on such financial statements, nothing came to their
attention that caused them to believe that there is in existence or has
occurred any Event of Default hereunder, or any Default hereunder or, if such
accountants shall have obtained knowledge of any such Event of Default or
Default, describing the nature thereof and the length of time it has existed
and (ii) acknowledging that holders of the Notes may rely on their opinion on
such financial statements;
(e) Within 15 days after the Company obtains knowledge thereof,
notice of any litigation or any governmental proceeding or investigation
pending against the Company or any Subsidiary in each case (i) in which the
damages or penalties sought exceed $2,000,000, after deducting the amount with
respect to which the Company or any Subsidiary is insured and with respect to
which the insurer has assumed responsibility in writing or (ii) which might
otherwise materially adversely affect the business, Property, operations or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or on the Company's ability to perform its obligations under this
Agreement or the Notes;
(f) As soon as available, copies of each financial statement,
notice, report and proxy statement which the Company shall furnish to its
shareholders; copies of each registration statement and periodic report which
the Company may file with the Securities and Exchange Commission, and any other
similar or successor agency of the Federal government administering the
Securities Act, the Exchange Act or the Trust Indenture Act of 1939, as
amended; copies of each report relating to the Company or its securities which
the Company may file with any securities exchange on which any of the Company's
securities may be registered; copies of any orders in any material proceedings
to which the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company or
any of its Subsidiaries; and, except at such times as the Company is a
reporting company under
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Section 13 or 15(d) of the Exchange Act or has complied with the requirements
for the exemption from registration under the Exchange Act set forth in Rule
12g-3-2(b), such financial or other information as any holder of the Notes may
reasonably determine is required to permit such holder to comply with the
requirements of Rule 144A under the Securities Act in connection with the
resale by it of the Notes;
(g) Immediately upon receipt thereof, final copies of any report
as to accounting controls submitted to the Board of Directors of the Company by
independent accountants in connection with any audit of the Company or any
Subsidiary;
(h) As soon as available, a final copy of each other report
submitted to the Board of Directors of the Company or any Subsidiary by
independent accountants retained by the Company or any Subsidiary in connection
with any interim or special audit made by them of the books of the Company or
any Subsidiary; and
(i) Such additional information as you or such other Institutional
Holder of the Notes may reasonably request concerning the Company and its
Subsidiaries.
6.7 Inspection of Properties and Records. The Company will allow,
and will cause each Subsidiary to allow, any representative of you or any other
Institutional Holder, so long as you or such other Institutional Holder holds
any Note, at your expense, to visit and inspect any of its properties, to
examine its books of record and account and to discuss its affairs, finances
and accounts with its officers and its public accountants (and by this
provision the Company authorizes such accountants to discuss with you or such
Institutional Holder the Company's affairs, finances and accounts), all at such
reasonable times and as often as you or such Institutional Holder may
reasonably request. So long as a Default or Event of Default has occurred and
is continuing, the Company agrees to pay the reasonable costs of any
inspections made pursuant to this Section 6.7.
You and each other Noteholder agrees to treat any information obtained
by such Person pursuant to this Agreement which is marked and otherwise treated
as confidential by the Company as confidential; provided, however, that nothing
herein contained shall limit or impair the right or obligation of any holder of
the Notes to disclose such information: (i) to its directors, auditors,
attorneys, employees or agents who would have access to such information in the
normal course of the performance of such Person's duties, (ii) when required by
any law, ordinance or governmental order, regulation, rule, policy,
investigation or any regulatory authority request, (iii) as may be required in
any report, statement or testimony submitted to any municipal, state,
provincial or federal regulatory body having or claiming to have jurisdiction
over such Noteholder or to the National Association of Insurance Commissioners
or similar organizations or their successors, (iv) in connection with the
enforcement of the terms and conditions of this Agreement and the Notes, (v)
which is publicly available or readily ascertainable from public sources, or
which is received by any Noteholder of the Notes from a third Person who or
which is not bound to keep the same confidential, (vi) in connection with any
proceeding, case or matter pending (or on its face purported to be pending)
before any court, tribunal, arbitration board or any governmental agency,
commission, authority, board or similar
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entity, (vii) to the extent necessary in connection with any contemplated
transfer of any of the Notes by a Noteholder or (viii) to any other holder of
the Notes.
6.8 ERISA. (a) The Company agrees that all assumptions and
methods used to determine the actuarial valuation of employee benefits, both
vested and unvested, under any Plan of the Company or any Subsidiary, and each
such Plan, whether now existing or adopted after the date hereof, will comply
with ERISA and other applicable laws unless such non-compliance would not have
a material adverse effect on the business, Properties, profits and prospects,
operations or conditions, financial or otherwise, or on the Company's ability
to perform its obligations under this Agreement or the Notes.
(b) The Company will not at any time permit any Plan established,
maintained or contributed to by it or any Subsidiary or "affiliate" (as defined
in Section 407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as such term
is defined in Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such
term is defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to
result in the imposition of a Lien on the Property of the Company or any
Subsidiary pursuant to Section 4068 of ERISA, if and to the extent such
termination is within the control of the Company;
if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Company or any Subsidiary or ERISA affiliate to a
liability which, in the aggregate, is material in relation to the business,
property, operations, or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole.
(c) Upon the request of you or any other Institutional Holder, the
Company will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service. Copies of annual
reports shall be delivered no later than 30 days after the later of the date
such report has been filed with the Internal Revenue Service or the date the
copy is requested.
(d) Promptly upon the occurrence thereof, the Company will give
you and each other Institutional Holder written notice of (i) a reportable
event with respect to any Plan, to the extent that PBGC has not waived the
30-day notice period with respect thereto; (ii) the institution of any steps by
the Company, any Subsidiary, any ERISA affiliate, the PBGC or any other person
to terminate any Plan; (iii) the institution of any steps by the Company, any
Subsidiary, or any ERISA affiliate to withdraw from any Plan; (iv) a prohibited
transaction in connection with any Plan; (v) any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by the
Internal Revenue Service, the Department of Labor or the PBGC with respect to
any of the foregoing
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which, in any of the events specified above, would result in any material
liability of the Company or any of its Subsidiaries.
6.9 Compliance with Laws. The Company will comply, and will cause
each Subsidiary to comply in all material respects, with all laws, rules,
regulations, judgments and orders material to the business, Properties, profits
and prospects, operations or condition, financial or otherwise, of the Company
and its Subsidiaries taken as a whole; provided, however, that the Company and
its Subsidiaries shall not be required to comply with laws, rules, regulations,
judgments and orders the validity or applicability of which are being contested
in good faith and by appropriate proceedings; provided that the failure to
comply with such laws, rules or regulations would not have a material adverse
effect on the business, Properties, operations, assets or condition, financial
or otherwise, of the Company and its Subsidiaries taken as a whole or on the
Company's ability to perform its obligations under this Agreement or the Notes.
6.10 Acquisition of Notes. Neither the Company nor any Subsidiary
or Affiliate, directly or indirectly, will repurchase or offer to repurchase
any Notes unless the offer is made to repurchase Notes pro rata from all
holders at the same time and at the same terms. The Company will forthwith
cancel any Notes in any manner or at any time acquired by the Company or any
Subsidiary or Affiliate and such Notes shall not be deemed to be outstanding
for any of the purposes of this Agreement or the Notes.
6.11 Required Filings. The Company consents to the filing by the
Purchaser of copies of this Agreement with Standard & Poor's Corporation to
obtain a private placement number and with the National Association of
Insurance Commissioners to obtain a rating therefrom.
6.12 NAIC Filings. The Company shall, on the date it provides its
audited financial statements to the Noteholders pursuant to Section 6.6(b),
simultaneously provide such statements to the National Association of Insurance
Commissioners, Securities Valuation Office, 195 Broadway, New York, New York
10007.
Section 7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on
any Note:
7.1 Net Worth. The Company will not at any time permit its
Consolidated Tangible Net Worth to be less than $65,000,000.
7.2 Funded Debt. The Company will not, and will not permit any
Subsidiary to, create, assign, incur, guarantee or otherwise become liable for,
directly or indirectly, any Funded Debt other than
(a) Funded Debt existing on the date hereof, as set forth in Annex
II hereto;
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(b) the Notes;
(c) Funded Debt owed to the Company by any Majority-Owned
Subsidiary or Funded Debt owed to any Majority-Owned Subsidiary by the Company
or Funded Debt owed by a Majority-Owned Subsidiary to another Majority-Owned
Subsidiary;
(d) Funded Debt (including refinancings, refundings or extensions
of Funded Debt described in Annex II hereto and Current Debt deemed to
constitute Funded Debt pursuant to the definition of Funded Debt in Section
5.1), unless after giving effect thereto and the application of the proceeds
thereof, the amount of total Funded Debt of the Company and its Subsidiaries
then outstanding would not exceed fifty-five percent (55%) of Consolidated
Total Capitalization determined as of the end of the Company's prior fiscal
quarter; and
(e) Funded Debt of Subsidiaries otherwise permitted by this
Section which when added to the amount of Indebtedness secured by Liens
incurred pursuant to paragraph (k) of Section 7.4 would not exceed twenty
percent (20%) of Consolidated Tangible Net Worth.
7.3 Fixed Charge Ratio. The Company will not, as of the end of
any fiscal quarter, permit the ratio of Consolidated Income Available for Fixed
Charges to Consolidated Fixed Charges for the preceding twelve months to be
less than 1.50 to 1.0; provided, however, that if a Material Work Stoppage has
occurred, for a period of four fiscal quarters commencing with the date of
commencement of such Material Work Stoppage, the Company will not, as of any
fiscal quarter, permit the ratio of Consolidated Income Available for Fixed
Charges to Consolidated Fixed Charges for the preceding 18 months to be less
than 1.50 to 1.00.
7.4 Liens. The Company will not, and will not permit any
Subsidiary to, create, assume, or incur, or permit to exist, directly or
indirectly, any Lien on its properties or assets, whether now owned or
hereafter acquired, except:
(a) Liens existing on Property of the Company or any Subsidiary as
of the date of this Agreement that are described in Annex III to this
Agreement;
(b) Liens for taxes, assessments or governmental charges not then
due and delinquent and for which a penalty has not attached or the validity of
which is being contested in good faith and by proper proceedings and with
respect to which adequate reserves are maintained in accordance with generally
accepted accounting principles;
(c) Liens arising in connection with court proceedings, provided
that the execution of such Liens is effectively stayed, such Liens are being
contested in good faith and adequate reserves are maintained with respect
thereto in accordance with generally accepted accounting principles;
(d) Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money, including encumbrances in
the nature of zoning restrictions, easements, rights and restrictions of record
on the use of real Property, landlord's and lessor's
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liens in the ordinary course of business, which do not, individually or in the
aggregate, materially interfere with the conduct of the business of the Company
and its Subsidiaries taken as a whole and do not materially affect the value of
the Property subject to such Liens;
(e) Construction or materialmen's or mechanic's Liens securing
obligations not overdue or, if overdue, are being contested in good faith and
by proper proceedings and with respect to which adequate reserves are
maintained in accordance with generally accepted accounting principles;
(f) Liens in connection with worker's compensation, social
security taxes or similar charges arising in the ordinary course of business
and not incurred in connection with the borrowing of money;
(g) Liens incurred in connection with obtaining or performing
government contracts in the ordinary course of business and not incurred in
connection with the borrowing of money;
(h) Liens resulting from extensions, renewals, refinancings and
refundings of Indebtedness secured by Liens permitted by paragraph (a) above;
provided there is no increase in the outstanding principal amount of
Indebtedness secured thereby and any new Liens attached only to the same
property theretofore subsequent to such earlier Lien;
(i) Liens securing Indebtedness owed by a Subsidiary to the
Company or the Company to any Subsidiary or to another Subsidiary;
(j) (A) any Lien in property or in rights relating thereto to
secure any rights granted with respect to such Property in connection with the
provision of all or a part of the purchase price or cost of the construction of
such Property created contemporaneously with, or within 270 days after, such
acquisition or the completion of such construction, or (B) any Lien in Property
existing on such Property at the time of acquisition thereof, whether or not
the debt secured thereby is assumed by the Company or such Subsidiary, or (C)
any Lien existing in the Property of a corporation or other person at the time
such corporation or other person is acquired (whether by purchase of stock, by
merger, or consolidation or otherwise) by the Company or a Subsidiary, or at
the time of a purchase, lease or other acquisition of the Properties of a
corporation or other person by the Company or a Subsidiary; provided that, any
Liens incurred pursuant to this clause (j) shall not exceed 100% of the fair
market value on the related Property at the time the Lien was originally
created; and
(k) Liens in addition to those permitted by clauses (g) through
(j) above, securing Indebtedness of the Company or any Subsidiary, provided
that at the time of the incurrence of any such Lien the sum of (x) the
aggregate principal amount outstanding of all Indebtedness secured by Liens
permitted by this clause (k), plus (y) the aggregate amount of Funded Debt of
Subsidiaries then outstanding shall not exceed 20% of Consolidated Tangible Net
Worth.
In the event that the Company or any Subsidiary creates, assumes,
incurs or permits to exist any Lien not otherwise permitted by this Section
7.4, the Company will make or cause to be
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made provision whereby the Notes will be secured equally and ratably with all
other obligations secured by such Liens (subject (i) to any holder of Notes
having the right to decline to have its Notes secured by such Liens and (ii) to
the receipt by the Noteholders of an opinion of counsel in form and substance
satisfactory to such Noteholders to the effect that the Notes will be secured
equally and ratably with all other obligations secured by such Liens), and in
any case the Notes shall have the benefit, to the full extent that, and with
such priority as, the holders may be entitled thereto under applicable law, of
an equitable Lien on such Property securing the Notes.
7.5 Restricted Payments. The Company will not, except as
hereinafter provided:
(a) declare or pay any dividends, either in cash or Property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company); or
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock; or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) make any Investment other than a Permitted Investment; or
(e) make any payment, either directly or indirectly or through any
Subsidiary, of principal of any Subordinated Debt other than at the expressed
maturity date thereof and scheduled mandatory prepayments or redemptions
thereof in accordance with the terms in effect on the date of creation of such
Subordinated Debt;
(all such declarations, payments, purchases, redemptions, retirements,
distributions and Investments being herein collectively called "Restricted
Payments") if, after giving effect thereto (i) the Company could not incur an
additional $1.00 of Funded Debt pursuant to Section 7.2, (ii) a Default or
Event of Default would exist or (iii) the aggregate amount of all Restricted
Payments made during the period from and after May 31, 1993, to and including
the date of the Restricted Payment in question would exceed the sum of:
(x) $15,000,000, plus
(y) 60% (or minus 100% in the case of a deficit) of
Consolidated Net Income for such period (computed on a cumulative basis for
each fiscal quarter commencing after May 31, 1993 to and including the date of
making a Restricted Payment), plus
(z) the net cash proceeds from the sale or issuance,
after the date of this Agreement, of the Company's capital stock.
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The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after its date of declaration.
Any dividend which complies with the provisions of this Section 7.5 on the date
of its declaration shall be deemed to comply on its date of payment, provided
that any intervening event giving rise to non-compliance is not the result of a
Restricted Payment.
7.6 Merger or Consolidation. The Company will not, and will not
permit any Subsidiary to, merge or consolidate with any other Person, except
that:
(a) The Company may consolidate with or merge into any Person or
permit any other Person to merge into it, provided that immediately after
giving effect thereto,
(i) The Company is the successor corporation or, if
the Company is not the successor corporation, the successor
corporation is a corporation organized under the laws of a
state of the United States of America or the District of
Columbia and shall expressly assume in writing the Company's
obligations under the Notes and this Agreement, and the
surviving corporation shall furnish the holders of the Notes
an opinion of counsel in form and substance satisfactory to
such holders to the effect that the instrument of assumption
has been duly authorized, executed and delivered and
constitutes the legal, valid and binding contract and
agreement of the surviving corporation enforceable in
accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles;
(ii) There shall exist no Event of Default or
Default; and
(iii) The Company or such successor corporation could
incur at least $1.00 of additional Funded Debt pursuant to
Section 7.2;
(b) Any Subsidiary may (i) merge into the Company or another
Majority-Owned Subsidiary or (ii) sell, transfer or lease all or any part of
its assets to the Company or to another Majority-Owned Subsidiary or (iii)
merge into any Person which, as a result of such merger, concurrently becomes a
Majority-Owned Subsidiary, provided in each such instance that there shall
exist no Event of Default or Default.
7.7 Sale of Assets. The Company will not, and will not permit any
Subsidiary to, sell, lease, transfer or otherwise dispose of any assets,
including the disposition of the stock of any Subsidiary and including any Sale
and Lease-Back Transaction (collectively, a "Disposition"), in one or a series
of transactions, other than in the ordinary course of business, to any Person,
other than the Company or a Majority-Owned Subsidiary if immediately preceding
such Disposition and after giving effect to such Disposition, (a) during any
twelve consecutive month period of the Company the aggregate book value of all
such assets sold, leased, transferred or otherwise disposed of during such
period, would exceed 10% of the Consolidated Total Assets of the Company and
its Subsidiaries determined in accordance with generally accepted accounting
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principles as of the end of the Company's immediately preceding fiscal year and
(b) since the date of this Agreement, the aggregate book value of all such
assets sold, leased, transferred or otherwise disposed of would exceed 25% of
the Consolidated Total Assets of the Company and its Subsidiaries determined in
accordance with generally accepted accounting principles as of the end of the
Company's immediately preceding fiscal year; provided, however, that the
Company may, and may permit any Subsidiary to, sell, lease, transfer or
otherwise dispose of assets in excess of the percentages specified in
subparagraphs (a) and (b) above if the cash proceeds therefrom are (x) utilized
within one year after such Disposition to purchase or are committed to the
purchase of Property of a similar nature and of at least equivalent value or
(y) used to prepay Funded Debt (except Subordinated Debt), including the Notes,
on a pro rata basis, subject to the prepayment requirements and at the price
set forth in Section 2.2(a).
7.8 Sale and Lease-Back Transaction. The Company will not, and
will not permit any Subsidiary to, effect any Sale and Lease-Back Transaction
unless such Sale and Lease-Back Transaction complies with the requirements of
Sections 7.2, 7.6 and 7.7.
7.9 Change in Business. Neither the Company nor any Subsidiary
will engage in any business as a result of which more than thirty percent (30%)
of Consolidated Net Income will derive from businesses substantially different
from that currently conducted by them.
7.10 Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into any transaction (including the
furnishing of goods or services) with an Affiliate except in the ordinary
course of business and on terms and conditions no less favorable to the Company
or such Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events. An "Event of Default" shall exist if any
one or more of the following occurs:
(a) Default in the payment of interest on the Notes when due and
such default shall continue for a period of five days;
(b) Default in the payment of the principal of any of the Notes or
the premium thereon, if any, at maturity, upon acceleration of maturity or at
any date fixed for prepayment;
(c) Default shall occur (i) in the payment of the principal of,
premium, or interest on any other Indebtedness of the Company or its
Subsidiaries, aggregating in excess of $2,000,000 in principal amount as and
when due and payable (whether by lapse of time, declaration, call for
redemption or otherwise), (ii) under any mortgage, agreement or other
instrument of the Company or any Subsidiary securing such Indebtedness or under
or pursuant to which such Indebtedness aggregating in excess of $2,000,000 is
issued, (iii) under any leases other than Capitalized Leases of the Company or
any Subsidiary, with aggregate Rentals in excess of
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$2,000,000 or (iv) with respect to any combination of the foregoing involving
Indebtedness and/or Rentals aggregating in excess of $2,000,000 regardless of
whether such defaults would be Events of Default hereunder; provided a notice
of such default shall have been provided to the Company by the applicable
lender, lessor or Purchaser, and any such defaults shall continue, unless
waived, beyond the period of grace, if any, allowed with respect thereto;
(d) Default in the observance or performance of Sections 7.1
through 7.10 and Section 8.7 of this Agreement;
(e) Default in the observance or performance of any other
condition or provision of this Agreement which is not remedied within 30 days
after written notice of such default is provided to the Company by any
Noteholder;
(f) Any representation or warranty made by the Company in this
Agreement, or made by the Company in any written statement or certificate
furnished by the Company in connection with the issuance and sale of the Notes
or furnished by the Company pursuant to this Agreement, proves incorrect in any
material respect as of the date of the issuance or making thereof; provided,
that if the Company shall have given written notice to the Noteholders that any
such representation or warranty was untrue in any material respect and the
Noteholders have not declared an Event of Default within 60 days of such
notice, then the Noteholders shall be deemed to have waived any Event of
Default with respect to this paragraph (f);
(g) Any fines, penalties, judgments, writs or warrants of
attachment or any similar processes individually or in the aggregate in excess
of $2,000,000 shall be entered or filed against the Company or any Subsidiary
or against any Property or assets of either and remain unpaid, unvacated,
unbonded or unstayed (through appeal or otherwise) for a period of 30 days
after the Company or any Subsidiary receives notice thereof;
(h) The Company or any Subsidiary shall incur a "Distress
Termination" (as defined in Title IV of ERISA) of any Plan or any trust created
thereunder which results in material liability to the PBGC, the PBGC shall
institute proceedings to terminate any Plan or any trust created thereunder, or
a trustee shall be appointed by a United States District Court pursuant to
Section 4042(b) of ERISA to administer any Plan or any trust created
thereunder; or
(i) The Company or any Subsidiary shall
(i) generally not pay its debts as they become
due or admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the
Federal Bankruptcy Code, or any similar applicable bankruptcy
or insolvency law, as now or in the future amended (herein
collectively called "Bankruptcy Laws"), or an answer or other
pleading admitting or failing to deny the material allegations
of such a petition or seeking, consenting to or acquiescing in
relief provided for under the Bankruptcy Laws;
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(iii) make an assignment of all or a substantial
part of its Property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the
appointment of a receiver, liquidator, custodian or trustee of
it or for all or a substantial part of its Property;
(v) be finally adjudicated a bankrupt or
insolvent;
(vi) be subject to the entry of a court order,
which shall not be vacated, set aside or stayed within 60 days
from the date of entry, appointing a receiver, liquidator,
custodian or trustee of it or for all or a substantial part of
its Property, or entering of an order for relief pursuant to
an involuntary case, or effecting an arrangement in,
bankruptcy or for a reorganization pursuant to the Bankruptcy
Laws or for any other judicial modification or alteration of
the rights of creditors; or
(vii) be subject to the assumption of custody or
sequestration by a court of competent jurisdiction of all or a
substantial part of its Property, which custody or
sequestration shall not be suspended or terminated within 60
days from its inception.
8.2 Remedies on Default. When any Event of Default described in
paragraphs (a) through (h) of Section 8.1 has happened and is continuing, the
holder or holders of at least 25% in principal amount of the Notes then
outstanding may by notice to the Company declare the entire principal, together
with the premium set forth below, and all interest accrued on all Notes to be,
and such Notes shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
expressly waived. Notwithstanding the foregoing, when (i) any Event of Default
described in paragraphs (a) or (b) of Section 8.1 has happened and is
continuing, any holder may by notice to the Company declare the entire
principal, together with the premium set forth below, and all interest accrued
on the Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or
other notice of any kind, all of which are expressly waived and (ii) where any
Event of Default described in paragraph (i) of Section 8.1 has happened, then
all outstanding Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes or any of them
becoming due and payable as aforesaid, the Company will forthwith pay to the
holders of such Notes the entire principal of and interest accrued on such
Notes, plus, to the extent permitted by law, a premium in the event that the
Reinvestment Yield shall, on the Determination Date, be less than the interest
rate payable on or in respect of the Notes. Such premium shall equal (x) the
aggregate present value of the principal so accelerated and the aggregate
present value of the interest which would have been payable in respect of such
principal absent such accelerated payment, determined by discounting
(semi-annually on the basis of a 360-day year composed of twelve 30-day months)
each such amount utilizing an interest factor equal to the Reinvestment Yield,
less (y) the principal amount so accelerated.
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8.3 Annulment of Acceleration of Notes. The provisions of Section
8.2 are subject to the condition that if the principal of and accrued interest
on the Notes have been declared immediately due and payable by reason of the
occurrence of any Event of Default described in paragraphs (a) through (h),
inclusive, of Section 8.1, the holder or holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, provided that (i) at the time such declaration is annulled and
rescinded no judgment or decree has been entered for the payment of any monies
due pursuant to the Notes or this Agreement, (ii) all arrears of interest upon
all the Notes and all other sums payable under the Notes and under this
Agreement (except any principal, interest or premium on the Notes which has
become due and payable solely by reason of such declaration under Section 8.2)
shall have been duly paid and (iii) each and every Event of Default shall have
been cured or waived; and provided further, that no such rescission and
annulment shall extend to or affect any subsequent Default or Event of Default
or impair any right consequent thereto. For purposes of determining whether
the requisite principal amount of Notes have made or concurred in such
annulment and recission, Notes held in the name of or owned beneficially by,
the Company or any Subsidiary or any Affiliate thereof, shall not be deemed
outstanding.
8.4 Other Remedies. If any Event of Default shall be continuing,
any holder of Notes may enforce its rights by suit in equity, by action at law,
or by any other appropriate proceedings, whether for the specific performance
(to the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in
this Agreement, and may enforce the payment of any Note held by such holder and
any of its other legal or equitable rights.
8.5 Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any holder of Notes, nor any delay or failure on the part of any
holder of Notes to exercise any of its rights, shall operate as a waiver of
such rights or otherwise prejudice such holder's rights, powers and remedies.
If the Company fails to pay, when due, the principal of, premium, if any, or
the interest on, any Note, or fails to comply with any other provision of this
Agreement, the Company will pay to each holder, to the extent permitted by law,
on demand, such further amounts as shall be sufficient to cover the cost and
expenses, including but not limited to reasonable attorneys' fees, incurred by
such holders of the Notes in collecting any sums due on the Notes or in
otherwise enforcing any of their rights.
8.6 Remedies Cumulative. No right or remedy conferred upon or
reserved to any holder of Notes under this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given under this
Agreement or now or hereafter existing under any applicable law. Every right
and remedy given by this Agreement or by applicable law to any holder of Notes
may be exercised from time to time and as often as may be deemed expedient by
such holder, as the case may be.
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8.7 Notice of Default. With respect to Events of Default or
Defaults hereunder or claimed defaults with respect to any Indebtedness other
than the Notes, the Company will give the following notices: the Company
promptly will furnish to each holder of a Note notice in writing by overnight
courier of the occurrence of an Event of Default or a Default or receipt of a
notice of a claimed default with respect to Indebtedness the principal amount
of which exceeds $100,000 other than the Notes or any other action taken by a
lender with respect to any claimed default with respect to such Indebtedness.
Such notice shall specify the nature of such Event of Default or Default or
claimed default, the period of existence thereof and what action the Company
has taken or is taking or proposes to take with respect thereto.
Section 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification. Any term, covenant,
agreement or condition of this Agreement may, with the consent of the Company,
be amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the Company
shall have obtained the consent in writing of the holder or holders of at least
66-2/3% in aggregate principal amount of outstanding Notes; provided, however,
that, without the written consent of the holder or holders of all of the Notes
then outstanding, no such waiver, modification, alteration or amendment shall
be effective which will (i) change the time of payment (including any required
prepayment) of the principal of or the interest on any Note, (ii) reduce the
principal amount thereof or the premium, if any, or change the rate of interest
thereon, (iii) change any provision of any instrument affecting the preferences
between holders of the Notes or between holders of the Notes and other
creditors of the Company, or (iv) change any of the provisions of Section 6.10,
Section 8.1, Section 8.2, Section 8.3 or this Section 9.
For the purpose of determining whether holders of the requisite
principal amount of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Agreement, Notes held in the
name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate
thereof, shall not be deemed outstanding.
9.2 Solicitation of Holders of Notes. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
record holder of the Notes (irrespective of the amount of Notes then owned by
it) shall concurrently be informed thereof by the Company and shall be afforded
the opportunity of considering the same and shall be supplied by the Company
with sufficient information to enable it to make an informed decision with
respect thereto. Executed or true and correct copies of any waiver or consent
effected pursuant to the provisions of this Section 9 shall be delivered by the
Company to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or holders
of the requisite percentage of outstanding Notes. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder of
the Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of
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the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to each holder of the then
outstanding Notes.
9.3 Binding Effect. Any such amendment or waiver shall apply
equally to all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company whether or not such Note
shall have been marked to indicate such amendment or waiver. No such amendment
or waiver shall extend to or affect any obligation not expressly amended or
waived or impair any right related thereto.
Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE
AND REPLACEMENT
10.1 Form of Notes. The Notes initially delivered under this
Agreement will be in the form of one fully registered Note in the form attached
as Exhibit A. The Notes are issuable only in fully registered form and in
denominations of at least $1,000,000 (or the remaining outstanding balance
thereof, if less than $1,000,000).
10.2 Note Register. The Company shall cause to be kept at its
principal office a register (the "Note Register") for the registration and
transfer of the Notes. The names and addresses of the holders of Notes, the
transfer thereof and the names and addresses of the transferees of the Notes
shall be registered in the Note Register. The Company may deem and treat the
person in whose name a Note is so registered as the holder and owner thereof
for all purposes and shall not be affected by any notice to the contrary, until
due presentment of such Note for registration of transfer as provided in this
Section 10.
10.3 Issuance of New Notes upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the office of
the Company designated for notices in accordance with Section 11.2, the Company
shall execute and deliver, at its expense, one or more new Notes of any
authorized denominations pursuant to Section 10.1 requested by the holder of
the surrendered Note, each dated the date to which interest has been paid on
the Note so surrendered (or, if no interest has been paid, the date of such
surrendered Note), but in the same aggregate unpaid principal amount as such
surrendered Note, and registered in the name of such person or persons as shall
be designated in writing by such holder. Every Note surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or by its
attorney duly authorized in writing. The Company may condition its issuance of
any new Note in connection with a transfer by any Person on compliance by the
transferee of the representations required under Section 3.2 and a written
certification to said effect signed by the transferee, by Institutional Holders
on compliance with Section 2.5 and on the payment to the Company of a sum
sufficient to cover any stamp tax or other governmental charge imposed in
respect of such transfer.
10.4 Replacement of Notes. Upon receipt of evidence satisfactory
to the Company of the loss, theft, mutilation or destruction of any Note, and
in the case of any such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably
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satisfactory to the Company or in the event of such mutilation upon surrender
and cancellation of the Note, the Company, without charge to the holder
thereof, will make and deliver a new Note, of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note. If any such lost, stolen or destroyed
Note is owned by you or any other Institutional Holder, then the affidavit of
an authorized officer of such owner setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof, and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note, other than a written agreement of such owner (in form reasonably
satisfactory to the Company) to indemnify the Company.
Section 11. MISCELLANEOUS
11.1 Expenses. Whether or not the purchase of Notes herein
contemplated shall be consummated, the Company agrees to pay directly all
reasonable expenses in connection with the preparation, execution and delivery
of this Agreement and the transactions contemplated by this Agreement,
including, but not limited to, out-of-pocket expenses, filing fees of Standard
& Poor's Corporation in connection with obtaining a private placement number,
charges and disbursements of special counsel, photocopying and printing costs
and charges for shipping the Notes, adequately insured, to you at your home
office or at such other address as you may designate, and all similar expenses
(including the reasonable fees and expenses of counsel) relating to any
amendments, waivers or consents in connection with this Agreement or the Notes,
including, but not limited to, any such amendments, waivers or consents
resulting from any work-out, renegotiation or restructuring relating to the
performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save you harmless against
any and all liability with respect to (a) placement agent fees and (b) stamp
and other documentary taxes, if any, which may be payable, or which may be
determined to be payable in connection with the execution and delivery of this
Agreement or the Notes (but not in connection with a transfer of any Notes),
whether or not any Notes are then outstanding. The obligations of the Company
under this Section 11.1 shall survive the retirement of the Notes.
11.2 Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and delivered
or sent by registered or certified mail, return receipt requested, or by
overnight courier (i) if to you, to the address set forth below your name in
Annex I, or to such other address as you may in writing designate, (ii) if to
any other holder of the Notes, to such address as the holder may designate in
writing to the Company, and (iii) if to the Company, to Thorn Apple Valley,
Inc., 18700 West Ten Mile Road, Southfield, Michigan 48075, Attention: Louis
Glazier, or to such other address as the Company may in writing designate.
11.3 Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed, (ii) documents received by you
at the closing of the purchase of the Notes (except the Notes themselves), and
(iii) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic,
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microfilm, micro-card, miniature photographic or other similar process, and you
may destroy any original document so reproduced. The Company agrees and
stipulates that any such reproduction which is legible shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence; provided that nothing herein contained
shall preclude the Company from objecting to the admission of any reproduction
on the basis that such reproduction is not accurate, has been altered or is
otherwise incomplete.
11.4 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
11.5 Law Governing; Consent to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois. No provision of this Agreement may be waived, changed or modified,
or the discharge thereof acknowledged, orally, except by an agreement in
writing signed by the party against whom the enforcement of any waiver, change,
modification or discharge is sought. THE COMPANY IRREVOCABLY AGREES THAT,
SUBJECT TO THE NOTEHOLDER'S SOLE AND ABSOLUTE CONSENT TO A CONTRARY
JURISDICTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING
OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR THE NOTES SHALL BE LITIGATED
ONLY IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, COUNTY OF COOK, STATE
OF ILLINOIS. THE COMPANY HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY, COUNTY AND STATE.
THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE
OF ANY LITIGATION BROUGHT AGAINST THE COMPANY BY THE NOTEHOLDERS IN ACCORDANCE
WITH THIS PARAGRAPH.
11.6 Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
11.7 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart or reproduction thereof permitted by Section
11.3.
11.8 Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant to this Agreement, whether or not in connection
with a closing, (i) shall be deemed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on
your behalf and (ii) shall survive the delivery of this Agreement and the
Notes.
-39-
44
11.9 Integration and Severability. This Agreement embodies the
entire agreement and understanding between you and the Company, and supersedes
all prior agreements and understandings relating to the subject matter hereof.
In case any one or more of the provisions contained in this Agreement or in any
Note, or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement and in any Note, and any other application thereof,
shall not in any way be affected or impaired thereby.
-40-
45
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
THORN APPLE VALLEY, INC.
By: /s/ LOUIS GLAZIER
------------------------------
LOUIS GLAZIER
Title:
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ LOUIS G. LOWER, III
------------------------------
LOUIS G. LOWER, III
By: /s/ BARRY S. PAUL
------------------------------
Authorized Signatories BARRY S. PAUL
By: /s/ PATRICIA W. WILSON
------------------------------
PATRICIA W. WILSON
-41-
46
SCHEDULE I
Principal Amount of Notes to Be Purchased
Name and Address of Purchaser Principal Amount of Notes
- ----------------------------- -------------------------
Allstate Life Insurance Company $8,000,000
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Attn: Investment Operations
Private Placements
Telephone: (708) 402-8709
Telecopy: (708) 402-7331
All notices of scheduled payments and written confirmations of such wire
transfer should be sent to the address above. All payments by Fedwire
transfer of immediately available funds, identifying the name of the
Issuer (and the Credit, if any), the Private Placement Number preceded by
"DPP" and the payment as principal, interest or premium, in the
format as follows:
[BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Thorn Apple Valley, Inc.
OBI = DPP (PPN: 885184 A* 2)
Payment Due Date (MM/DD/YY) -
P__________ (Enter "P" and amount of
principal being remitted, for example,
P5000000.00) -
I__________ (Enter "I" and amount of
interest being remitted, for example,
I225000.00)
-42-
47
Securities to be delivered to:
Harris Trust and Savings Bank
111 West Monroe Street
Master Trust Department, 5E
Chicago, Illinois 60690
Attention: Lisa Cox
For Allstate Life Insurance Company/
Safekeeping Account No. 23-91317
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Allstate Life Insurance Company
Private Placements Department
3100 Sanders Road, STE J2A
Northbrook, IL 60062-7154
Tax ID #36-2554642
-43-
48
SCHEDULE 3.1(o)
TAXES
The Company has appealed an IRS assessment with respect to its fiscal years
1989, 1990 and 1991. In those years, the Company deducted a total of $283,333
paid with respect to a covenant not to compete executed by Allen Charlupski (a
former officer, director and shareholder of the Company), and the Company
deducted a total of $437,500 paid with respect to covenants not to compete
executed by Max and Ivan Miller (former officers, directors and shareholders of
Tri-Miller Packing, Inc.). The Charlupski noncompete agreement requires total
payments of $700,000; the Miller noncompete agreements require total payments
of $1,500,000. The Company has reserved $700,000 at present with respect to
these disputes.
49
ANNEX I
THORN APPLE VALLEY, INC.
SUBSIDIARY CORPORATIONS AND ENTITIES
THORN APPLE VALLEY, INC.,
a Michigan corporation
- -------------------------------------
Incorporation Date: July 23, 1971
Qualified in: State:
California
Illinois
Kansas
Massachusetts
Missouri
New Jersey
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
Utah
CAVANAUGH LAKEVIEW FARMS, LTD.,
a Michigan corporation
- -------------------------------------------------
Incorporation Date: July 2, 1981
Authorized Capital Stock: 500,000 Shares, Common Stock
$1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 225,000 shares
50
COAST REFRIGERATED TRUCKING CO., INC.
a North Carolina corporation
- -------------------------------------------------------
Incorporation Date: June 21, 1971
Authorized Capital Stock: 1,000 Shares, Common Stock
$100.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
CROWN WEST, INC.,
a Michigan corporation
- ------------------------
Incorporation Date: January 16, 1978
Authorized Capital Stock: 50,000 Shares, Common Stock
$1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 1,000 Shares
FREDERICK HOLDINGS, INC.,
a Michigan corporation
- ----------------------------------
Incorporation Date: August 3, 1993
Authorized Capital Stock: 60,000 Shares, Common Stock
No Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 1,000 Shares
GUNSBERG CORNED BEEF COMPANY,
a Michigan corporation
- -----------------------------------------------
Incorporation Date: March 1, 1989
Authorized Capital Stock: 50,000 Shares, Common Stock
$1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 100 Shares
- 2 -
51
MILLER'S TRANSPORT, INC.,
a Utah corporation
- ------------------------------------
Incorporation Date: February 3, 1965
Authorized Capital Stock: Common Stock (Voting) 20,000 Shares,
$1.00 Par Value
Preferred Stock, 10,000 Shares,
$1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 20,000 Shares
NATIONAL FOOD EXPRESS, INC.,
a Michigan corporation
- ---------------------------------------
Incorporation Date: October 25, 1983
Authorized Capital Stock: 1,000 Shares, Common Stock
$1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
TAV BRANDS, INC.,
a Nevada corporation
- ------------------------
Incorporation Date: April 5, 1991
Authorized Capital Stock: 25,000 Shares, Common Stock
$0.01 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 100 Shares
- 3 -
52
THORN APPLE VALLEY FOREIGN SALES
CORPORATION, a U.S. Virgin Islands corporation
- ----------------------------------------------
Incorporation Date: December 19, 1984
Authorized Capital Stock: 1,000 Shares, Common Stock,
No Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
TILLMAN HOLDINGS, INC.
a Michigan corporation
- ------------------------------
Incorporation Date: June 24, 1994
Authorized Capital Stock: 60,000 Shares, Common Stock
No Par Value
Shareholder(s):
TRI-MILLER PACKING, CO.,
a Utah corporation
- ---------------------------------
Incorporation Date: November 15, 1960
Authorized Capital Stock; Common Stock (Voting)
2 Shares, $1.00 Par Value
Preferred Stock
500,000 Shares, $1.00 Par Value
Shareholder(s): Thorn Apple Valley, Inc., a Michigan corporation
- 2 Shares Common Stock
- 4 -
53
TRI-MILLER TRANSPORTATION COMPANY, INC.,
a Utah corporation
- ----------------------------------------------------------------
Incorporation Date: December 4, 1985
Authorized Capital Stock: 50,000 Shares, Common Stock
$1.00 Par Value
Shareholder(s): Miller's Transport, Inc., a Utah corporation
- 35,451 Shares
Tri-Miller Packing Co., a Utah corporation
- 14,549 Shares
- 5 -
54
10/13/94
THORN APPLE VALLEY, INC.
STANDBY LETTERS OF CREDIT SUMMARY
ANNEX II
MICHIGAN NATIONAL BANK
- ----------------------
#15995
EXPIRES: 4/1
OUTSTANDING: $250,000
BENEFICIARY: BUREAU OF WORKER'S COMP
BENEFICIARY: BUREAU OF WORKER'S COMP
#15871
EXPIRES: 12/1
OUTSTANDING: $500,000
BENEFICIARY: ST. PAUL FIRE & MARINE INSURANCE
OLD KENT BANK
- -------------
THREE (3) IN THE AMOUNT OF $250,000 EACH, TOTAL OF... $750,000
ONE (1) IN THE AMOUNT OF... $100,000
KEY BANK OF UTAH
- ----------------
#021-407-KBU
EXPIRES: 6/8
OUTSTANDING: $700,000
BENEFICIARY: INDUSTRIAL ACCIDENTS $403,500
INDUSTRIAL COMMISSION OF UTAH -------------
$1,103,500
-------------
STANDBY LETTERS OF CREDIT - VARIOUS INSURANCE AGREEMENTS $2,703,500
OLD KENT BANK
- -------------
#8934
EXPIRES: 12/16/98
OUTSTANDING: $5,590,410.96
TRUSTEE: PNC BANK, OHIO, NATIONAL ASSOCIATION
SERVING AS SECURITY TO A $5,500.000 MICHIGAN STRATEGIC
FUND ADJUSTABLE RATE DEMAND LIMITED OBLIGATION REVENUE
BOND. (INDEBTEDNESS INCLUDED ON IRB SCHEDULE)
-------------
TOTAL STANDBY LETTERS OF CREDIT $8,293,910.96
=============
55
THORN APPLE VALLEY, INC.
SUMMARY OF INDEBTEDNESS
ANNEX II
BALANCE
OUTSTANDING
@ 9/16/94
-----------
LINES OF CREDIT:
Combined 11,840,000
----------
NOTES PAYABLE:
Utah Subsidiary: (Lundahl) 4,800
Corporate: (Boston Financial Institutional Tax
Credits IV), assigned to Great West Life and
Annuity Insurance Co. 1,994,025
Corporate: Allstate Unsecured Notes 15,000,000
----------
Sub-total 16,998,825
----------
INDUSTRIAL REVENUE BONDS:
Utah Subsidiary: (Zions) 1,268,333
Corporate: (Branch Banking) 3,500,000
Corporate: (Michigan Strategic Fund - Adjustable Rate
Demand Limited Obligation Revenue Bond, Series 1993) 5,500,000
----------
Sub-total 10,268,333
----------
CAPITAL LEASES:
Corporate 1,218,728
Frederick division 620,702
Utah Subsidiary 165,120
----------
Sub-total 2,004,550
----------
TOTAL OUTSTANDING INDEBTEDNESS 41,111,708
==========
56
THORN APPLE VALLEY, INC.
SUMMARY OF EXISTING LIENS AT 9/16/94
ANNEX III
DEBT AMOUNT OF
LOCATION REFERENCE DESCRIPTION OF COLLATERAL: O/S DEBT
- ----------------- ------------- ------------------------------------------------------ -------------
NOTES PAYABLE:
Utah Subsidiary Lundahl Land $4,800
Corporate Great West Life and Thorn Apple Valley Inc.'s interest in the Boston $1,994,025
Annuity Insurance Co. Financial Institutional Tax Credit IV limited
(tax credit IV investment) partnership.
INDUSTRIAL REVENUE BONDS:
Utah Subsidiary Zions Part of manufacturing facility. $1,268,333
Corporate Branch Banking Carolina manufacturing facility. $3,500,000
CAPITAL LEASES:
Corporate, Frederick division and Various machinery and equipment located at the
Utah Subsidiary company's various divisions and Utah subsidiary. $2,004,550
57
THORN APPLE VALLEY, INC.
SUMMARY OF EXISTING INVESTMENTS
ANNEX IV
INVESTMENT BALANCE
FINANCIAL INSTITUTION TYPE @ 9/16/94
- -------------------------- ----------------------------------------------- ---------------
SHORT-TERM INVESTMENTS
The Bank of Bloomfield Hills CD $700,000
The Bank of Bloomfield Hills CD $31,064
United Carolina Bank CD $500,000
Providence TempCash $25,000
Providence TempFund $25,000
----------
Sub-Total $1,281,064
----------
LONG-TERM INVESTMENTS
Boston Financial Institutional Tax Credits III, Limited Partnership $2,160,000
Boston Financial Institutional Tax Credits IV, Limited Partnership $2,145,000
----------
Sub-Total $4,305,000
----------
TOTAL INVESTMENTS $5,586,064
==========
58
ANNEX V
MATERIAL LITIGATION
1. Martin E. Levin v. Thorn Apple Valley, Inc., Case No. 89-380591-CK, Oakland
County Circuit Court. Plaintiff has brought various breach of contract
claims against Thorn Apple Valley, Inc. and claims approximately $5
million in damages. Plaintiff has requested that the parties settle the
claims but Thorn Apple Valley, Inc. believes the claims to be meritless and
presently intends to litigate this matter.
2. Tri-Miller Packing Co., Tri-Miller Transportation Company, Inc. and
Miller's Transport, Inc., have been identified as potentially responsible
parties ("PRPs") at the Ekoteck Superfund Site located in Salt Lake City,
Utah. Based on information provided to Thorn Apple Valley, Inc.,
Tri-Miller Packing, Co., Tri-Miller Transportation Company, Inc. and
Miller's Transport, Inc., allegedly contributed only a de minimus amount to
the site, if any, and are expected to have an opporunity to settle the
claim against all of them for a total payment of approximately $100,000.
59
ANNEX VI
MATERIALS PROVIDED TO PURCHASER
None.
60
ANNEX VII
ENVIRONMENTAL DISCLOSURE
Tri-Miller Packing Co., Tri-Miller Transportation Company, Inc. and
Miller's Transport Inc., have been identified as potentially responsible
parties ("PRPs") at the Ekoteck Superfund Site located in Salt Lake City, Utah.
Based on information provided to Thorn Apple Valley, Inc., Tri-Miller Packing,
Co., Tri-Miller Transportation Company, Inc. and Miller's Transport, Inc.,
allegedly contributed only a de minimus amount to the site, if any, and are
expected to have an opporunity to settle the claim against all of them for a
total payment of approximately $100,000.
61
EXHIBIT A
THORN APPLE VALLEY, INC.
8.42% SENIOR NOTE
Due October 1, 2003
THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND
ACCORDINGLY ANY PROSPECTIVE PURCHASER SHOULD FIRST VERIFY THE UNPAID PRINCIPAL
AMOUNT WITH THE COMPANY.
Registered Note No. R-__ October , 1994
$_______________
THORN APPLE VALLEY, INC., a Michigan corporation (the "Company"), for
value received, hereby promises to pay to ________________________ or
registered assigns, on the first day of October, 2003, the principal amount of
______________ Dollars ($__________) and to pay interest (computed on the basis
of a 360-day year of twelve 30-day months) on the principal amount from time to
time remaining unpaid hereon at the rate of eight and forty-two hundredths
percent (8.42%) per annum from the date hereof until maturity, payable on the
first day of April and October in each year, commencing April 1, 1995, and at
maturity, and to pay interest on overdue principal, premium and (to the extent
legally enforceable) on any overdue installment of interest at the greater of
(a) the rate of interest publicly announced from time to time by Harris Trust
and Savings Bank (or its successors or assigns) as its prime rate plus two
percent (2%) or (b) ten and forty-two hundredths percent (10.42%) per annum
after maturity or the due date thereof, whether by acceleration or otherwise,
until paid. Payments of the principal of, the premium, if any, and interest on
this Note shall be made in lawful money of the United States of America in the
manner and at the place provided in Section 2.5 of the Note Agreement
hereinafter defined.
This Note is issued under and pursuant to the terms and provisions of
a Note Agreement, dated as of October 1, 1994, entered into by the Company with
the Purchaser named in Schedule I thereto (the "Note Agreement"), and this Note
and any holder hereof are entitled to all of the benefits and are bound by the
terms provided for by such Note Agreement or referred to therein. The
provisions of the Note Agreement are incorporated in this Note to the same
extent as if set forth at length herein.
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62
This Note has not been registered under the Securities Act as provided
in the Note Agreement, any transfer is subject to compliance with the terms of
the Note Agreement and 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 its attorney duly authorized in
writing, a new Note for a like unpaid principal amount will be issued to, and
registered in the name of, the transferee upon the payment of the taxes or
other governmental charges, if any, that may be imposed in connection
therewith. 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.
This Note may be declared due prior to its expressed maturity date.
Voluntary and other prepayments may be made hereon in the events, on the terms
and in the manner as provided in the Note Agreement.
Should the indebtedness represented by this Note or any part thereof
be collected in any proceeding provided for in the Note Agreement or be placed
in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, premium, if any, and interest due and payable
hereon, to the extent legally enforceable, all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
This Note and the Note Agreement are governed by and construed in
accordance with the laws of the State of Illinois.
THORN APPLE VALLEY, INC.
By: ______________________
Its: _____________________
-52-
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EXHIBIT B
LEGAL OPINIONS
A. The opinion of Gardner, Carton & Douglas, special counsel for
the Purchaser, shall be to the effect that:
1. The Company is a corporation organized and validly existing in
good standing under the laws of the State of Michigan, with all requisite
corporate power and authority referred to in the Agreement, to enter into and
perform the Agreement and to issue and sell the Notes.
2. The Agreement has been duly authorized by proper corporate
action on the part of the Company, has been duly executed and delivered by an
authorized officer of the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable in accordance with its terms, except to
the extent that enforcement of the Agreement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
3. The Notes have been duly authorized by proper corporate action
on the part of the Company, have been duly executed and delivered by an
authorized officer of the Company and constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their terms, except
to the extent that enforcement of the Notes may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of the
Notes under the Securities Act of 1933, as amended, nor the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
5. The issuance and sale of the Notes and compliance with the
terms and provisions of the Notes and the Agreement will not conflict with or
result in any breach of any of the provisions of the Certificate of
Incorporation or By-Laws of the Company.
The opinion of Gardner, Carton & Douglas also shall state that the opinion of
Honigman, Miller, Schwartz and Cohn, counsel for the Company, delivered to you
pursuant to the Agreement, is satisfactory in form and scope to Gardner, Carton
& Douglas, and, in their opinion, the Purchaser and it are justified in relying
thereon and shall cover such other matters relating to the sale of the Notes as
the Purchaser may reasonably request.
-53-
64
B. The opinion of Honigman, Miller, Schwartz and Cohn, counsel
for the Company, shall cover all matters specified in clauses 1 through 6 set
forth above and also shall be to the effect that:
1. The Company has full corporate power and authority to conduct
the activities in which it is now engaged and own its property.
2. Each Subsidiary of the Company is a corporation duly organized
and validly existing in good standing under the laws of its jurisdiction of
incorporation, and each has all requisite corporate power and authority to
carry on its business as now conducted and own its property.
3. Each of the Company and its Subsidiaries is duly qualified or
licensed and in good standing as a foreign corporation authorized to do
business in each jurisdiction where the nature of the business transacted by it
or the character of its properties owned or leased makes such qualification or
licensing necessary except where failure to so qualify would not, individually
or in the aggregate, have a material adverse affect on its business,
properties, or condition, financial or otherwise.
4. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful
execution and delivery by the Company of the Agreement or the lawful offering,
issuance and sale of the Notes, and no designation, filing, declaration,
registration and/or qualification with any governmental authority is required
by the Company in connection with such offer, issuance and sale.
5. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Agreement will not conflict with, or
result in any breach or violation of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on the property of the
Company or any Subsidiary pursuant to, (i) the provisions of the Certificate of
Incorporation or other charter document of the Company or any Subsidiary or
By-laws of the Company or any Subsidiary or any loan agreement under which the
Company or any Subsidiary is bound, or other agreement or instrument to which
the Company or any Subsidiary is a party or by which any of them or their
property is bound or (ii) any law (including usury laws) or regulation, order,
writ, injunction or decree of any court or governmental authority applicable to
the Company.
6. There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against, or
affecting the Company or its Subsidiaries, at law or in equity or before or by
any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which are likely
to result, either individually or in the aggregate, in any material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole.
-54-
65
7. All of the issued and outstanding shares of capital stock of
each Subsidiary have been duly and validly issued, are fully paid and
nonassessable and, to the knowledge of such counsel, are owned by the Company
free and clear of any Lien.
8. The issuance of the Notes and the use of the proceeds of the
sale of the Notes do not violate or conflict with Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System (12 C.F.R., Chapter II).
9. Neither the Company nor any Subsidiary is: (i) a "public
utility company" or a "holding company," or an "affiliate" or a "subsidiary
company" of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, or (ii) a "public utility" as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof or an "affiliated person" of any such "affiliated person," as such
terms are defined in the Investment Company Act of 1940, as amended.
The opinion of Honigman, Miller, Schwartz and Cohn shall cover such other
matters relating to the sale of the Notes as the Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company and with respect to matters governed by
the laws of any jurisdiction other than the United States of America and the
State of Illinois, such counsel may rely upon the opinions of counsel deemed
(and stated in their opinion to be deemed) by them to be competent and
reliable. The opinion of Honigman, Miller, Schwartz and Cohn shall provide
that such opinion may be relied upon by the Purchaser and its counsel and (i)
in connection with enforcement of obligations of the Company under the Notes
and the Note Agreement, (ii) in response to a subpoena or other legal process,
(iii) as otherwise required by applicable law or regulation or (iv) in
connection with the sale or transfer of any of the Notes to a subsequent
purchaser or transferee.
-55-