FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 1-6905
---------------------------
R U D D I C K C O R P O R A T I O N
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0905940
- ---------------------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2000 Two First Union Center
Charlotte, North Carolina 28282
- ---------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 372-5404
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding Shares
Class As of April 26, 1996
- ---------------------------- ---------------------
Common Stock 46,418,558 shares
RUDDICK CORPORATION
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS -
MARCH 31, 1996 AND OCTOBER 1, 1995 2
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME - THREE MONTHS AND SIX MONTHS
ENDED MARCH 31, 1996 AND APRIL 2, 1995 3
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS - SIX MONTHS ENDED
MARCH 31, 1996 AND APRIL 2, 1995 4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6-9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 11
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUDDICK CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31, OCTOBER 1,
ASSETS 1996 1995
------ (Unaudited) (Unaudited)
CURRENT ASSETS: ----------- -----------
Cash and Temporary Cash Investments $ 7,253 $ 18,959
Accounts Receivable, Net 58,620 57,906
Inventories 183,555 177,395
Other 27,628 32,131
Net Assets of Discontinued Operations 397 11,712
---------- ----------
Total Current Assets 277,453 298,103
PROPERTY, NET 365,609 344,368
INVESTMENTS AND OTHER ASSETS 74,702 71,496
---------- ----------
Total $ 717,764 $ 713,967
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes Payable $ 7,643 $ 5,852
Current Portion of Long-Term Debt 9,156 9,192
Accounts Payable 118,128 150,028
Income Taxes Payable 3,286 (253)
Other Accrued Liabilities 53,157 59,567
--------- ----------
Total Current Liabilities 191,370 224,386
--------- ----------
LONG-TERM DEBT 143,582 119,760
DEFERRED LIABILITIES 55,103 53,585
SHAREHOLDERS' EQUITY:
Capital Stock - Common 55,054 54,816
Retained Earnings 274,975 262,921
Cumulative Translation Adjustments (2,320) (1,501)
--------- ----------
Shareholders' Equity 327,709 316,236
--------- ----------
Total $717,764 $713,967
========= ==========
<PAGE> 2
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
THREE MONTHS ENDED
-------------------------
March 31, April 2,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
NET SALES
American & Efird $ 68,719 $ 77,294
Harris Teeter 453,633 416,554
----------- -----------
Total 522,352 493,848
----------- -----------
OPERATING PROFIT
American & Efird 7,434 9,824
Harris Teeter 11,208 10,272
----------- -----------
Total 18,642 20,096
----------- -----------
OTHER COSTS AND DEDUCTIONS
Interest expense, net 2,989 2,724
Other expense 2,598 2,066
----------- -----------
Total 5,587 4,790
----------- -----------
Income from continuing operations 13,055 15,306
before income taxes
Income taxes 3,554 5,303
----------- -----------
Income from continuing operations 9,501 10,003
Income (loss) from discontinued
operations before income taxes - 503
Less applicable income taxes - (204)
----------- -----------
Net income $ 9,501 $ 10,302
=========== ===========
AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING:
Primary 46,532,336 46,561,240
Fully Diluted 46,621,386 46,566,256
NET INCOME PER SHARE-PRIMARY
AND FULLY DILUTED:
Income from continuing operations $.21 $.22
Income (loss) from discontinued operations - $.01
----------- -----------
NET INCOME PER SHARE $.21 $.23
=========== ===========
DIVIDENDS DECLARED PER SHARE - Common $.06 $.04
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
SIX MONTHS ENDED
-------------------------
March 31, April 2,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
NET SALES
American & Efird $ 135,833 $ 147,010
Harris Teeter 916,188 840,429
----------- -----------
Total 1,052,021 987,439
----------- -----------
OPERATING PROFIT
American & Efird 12,386 16,471
Harris Teeter 23,279 20,285
----------- -----------
Total 35,665 36,756
----------- -----------
OTHER COSTS AND DEDUCTIONS
Interest expense, net 6,086 5,361
Other expense 4,976 3,360
----------- -----------
Total 11,062 8,721
----------- -----------
Income from continuing operations 24,603 28,035
before income taxes
Income taxes 7,059 9,734
----------- -----------
Income from continuing operations 17,544 18,301
Income (loss) from discontinued
operations before income taxes 123 457
Less applicable income taxes (47) (190)
----------- -----------
Net income $ 17,620 $ 18,568
=========== ===========
AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING:
Primary 46,560,058 46,632,852
Fully Diluted 46,606,967 46,650,644
NET INCOME PER SHARE-PRIMARY
AND FULLY DILUTED:
Income from continuing operations $.38 $.39
Income (loss) from discontinued operations - $.01
----------- -----------
NET INCOME PER SHARE $.38 $.40
=========== ===========
DIVIDENDS DECLARED PER SHARE - Common $.12 $.07
<PAGE> 3
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
SIX MONTHS ENDED
-------------------------
March 31, April 2,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
CASH FLOW FROM INCOME $ 45,186 $ 38,504
Decrease (Increase) in Current Assets (2,371) (12,030)
Increase (Decrease) in Current
Liabilities (33,197) (4,538)
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 9,618 21,936
----------- -----------
CASH PROVIDED BY (USED IN)
DISCONTINUED ACTIVITIES 11,414 (1,173)
INVESTING ACTIVITIES
Purchase of Assets (52,378) (52,099)
Cash Proceeds from Sale of Assets 1,826 18,457
Company Owned Life Insurance, Net (1,355) (4,423)
Other, Net 80 (275)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (51,827) (38,340)
----------- -----------
FINANCING ACTIVITIES
Proceeds (Repayments) of
Long-Term Borrowings 26,600 20,077
Payment of Principal on Long-Term Debt (2,693) (2,562)
Dividends (5,567) (3,236)
Other, Net 749 (4,156)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 19,089 10,123
----------- -----------
INCREASE (DECREASE) IN BALANCE SHEET
CASH (11,706) (7,454)
BALANCE SHEET CASH AT BEGINNING OF PERIOD 18,959 14,531
----------- -----------
BALANCE SHEET CASH AT END OF PERIOD $ 7,253 $ 7,077
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 5,921 $ 5,824
Income Taxes $ 2,910 $ 9,718
<PAGE> 4
RUDDICK CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
IN THE OPINION OF MANAGEMENT, THE INFORMATION FURNISHED REFLECTS
ALL ADJUSTMENTS (CONSISTING ONLY OF NORMAL RECURRING ACCRUALS)
NECESSARY TO PRESENT FAIRLY THE RESULTS FOR THE INTERIM PERIODS
PRESENTED.
ON JANUARY 23, 1996, THE ASSETS OF JORDAN GRAPHICS, INC. WERE
SOLD TO THE REYNOLDS AND REYNOLDS COMPANY. THE REVENUES OF THE
DISCONTINUED OPERATION FOR THE FISCAL YEAR TO DATE OF SALE WERE
$17.3 MILLION. JORDAN GRAPHICS RETAINED TITLE TO TRADE ACCOUNTS
RECEIVABLE, LAND AND BUILDINGS, WHICH ASSETS HAVE BEEN VALUED AT
THE LOWER OF COST OR NET REALIZABLE VALUE. THE DISPOSITION IS
EXPECTED TO HAVE NO SIGNIFICANT IMPACT ON THE REPORTED
CONSOLIDATED EARNINGS OR THE FINANCIAL CONDITION OF RUDDICK
CORPORATION. THE BUSINESS FORMS SEGMENT IS REPORTED AS
DISCONTINUED OPERATIONS.
<PAGE> 5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The following table shows net sales and operating profit for
each of Ruddick Corporation's operating subsidiaries for the
quarters and six months ended March 31, 1996 and April 2, 1995:
(In Thousands) Quarter Ended Six Months Ended
------------------- ---------------------
March 31, April 2, March 31, April 2,
1996 1995 1996 1995
--------- --------- ---------- ---------
Net Sales
American & Efird $ 68,719 $ 77,294 $ 135,833 $ 147,010
Harris Teeter 453,633 416,554 916,188 840,429
--------- --------- ---------- ---------
Total $522,352 $493,848 $1,052,021 $ 987,439
--------- --------- ---------- ---------
Operating Profit
American & Efird $ 7,434 $ 9,824 $ 12,386 $ 16,471
Harris Teeter 11,208 10,272 23,279 20,285
--------- --------- ---------- ---------
Total $ 18,642 $ 20,096 $ 35,665 $ 36,756
--------- --------- ---------- ---------
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND APRIL 2, 1995
Consolidated sales of $522 million in the second quarter of
fiscal 1996 increased 6% over the $494 million reported for the
comparable period last year. Total operating profit of $18.6
million declined 7% from last year. Net income after taxes of
$9.5 million was down 8% from the $10.3 million reported last
year.
Fully diluted and primary earnings per share were $.21 in
the second quarter of fiscal 1996 and compare to $.23 for the
comparable period last year.
Per share earnings from continuing operations in the second
quarter of fiscal 1996 were $.21 compared to $.22 reported in the
comparable quarter last year. The assets of Jordan Graphics,
Inc. were sold in the second fiscal quarter this year and all
financial statement categories have been restated to reflect the
printing business segment as discontinued operations.
In the second quarter of fiscal 1996, American & Efird sales
of $68.7 million declined 11% from the $77.3 million reported for
the comparable period last year. The sales decrease was driven
by continuing weakness in apparel sales at retail which resulted
in reduced demand for industrial thread in the U.S. and Canada.
In response to the weak demand, A&E's manufacturing plants were
operated on reduced schedules throughout the
<PAGE> 6
quarter, which had a substantial negative impact on operating profit for
the quarter. Operating profit of $7.4 million in the March, 1996
quarter declined 24% from the $9.8 million in the comparable period
of last year. International sales increased compared to the 1995
second quarter, but operating profit showed a slight decline
resulting largely from the weak conditions in Canada.
While A&E sales continue to be depressed, a slight
improvement in retail sales was seen late in the second quarter.
If this sales improvement advances, demand for thread could
improve early in the fourth quarter, and any improved demand
should have a positive impact on operating profit at A&E.
During the second quarter of fiscal 1996, A&E announced that
it has reached an agreement in principle to acquire certain
assets of Threads USA (a subsidiary of Dixie Yarns, Inc.) used in
its sewing thread manufacturing operations. The assets to be
acquired include the plants and equipment at four manufacturing
facilities in Gastonia, NC and the equipment at one manufacturing
facility in Puerto Rico. The acquisition is subject to execution
of a definitive agreement, completion of environmental
assessments and receipt of all required regulatory approvals.
Harris Teeter sales in the second quarter of fiscal 1996 of
$453.6 million increased 9% over the $416.6 million reported for
the comparable period last year. Net sales for stores in
operation during both periods increased 4.5%. Sales increases
were achieved in all major markets and were driven by aggressive
feature plans and advertising. Operating profit of $11.2 million
was up 9% from the $10.3 million reported for the comparable
period last year. The operating profit increase was largely the
result of increased sales volume, a favorable customer acceptance
of recently opened stores and continued control of operating
expenses.
At March 31, 1996, 136 stores were in operation, compared to
139 at April 2 1995. During the second quarter of fiscal 1996,
one new store was opened and three smaller stores were closed.
In addition, two new, larger stores were opened during the
quarter, replacing two older, smaller stores, under a previously
announced marketing strategy and plan for which a restructuring
reserve of $5.3 million, before taxes, was established in fiscal
1993. Charges incurred in this quarter against the reserve were
$129 thousand. A cumulative total of $1.9 million has been
charged for all periods to date. The plan calls for the
replacement of an anticipated 12 smaller, less competitive stores
with larger stores offering increased variety and drawing from a
larger marketing area, with related store closings planned to
occur during fiscal years ending 1994 through 1996. Management
anticipates that, on average, half of the charges associated with
each store closing will be incurred in the year of the closing
and the balance, within four years thereafter. Management
expects that the effect on operating results of any fiscal year
and on liquidity will not be material, and that capital resources
will be adequate to complete such restructuring.
<PAGE> 7
During the quarter, the Company elected to begin paying
directly to its ESOP employee-shareholders the cash dividends on
ESOP shares instead of accumulating such dividends within the
ESOP Trust. Favorable tax treatment of the ESOP dividend pass-
through under the applicable income tax statutes along with
favorable tax attributes of Company-owned life insurance have
significantly reduced the effective income tax rate of the
Company, subject to the potential of adverse future tax
legislation, if any.
FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND APRIL 2, 1995
Consolidated sales for the six months ended March 31, 1996
of $1.05 billion increased 7% over the $987 million reported for
the first six months of fiscal 1995, with Harris Teeter reporting
an increase and A&E reporting a decrease. Operating profit of
$35.7 million was down 3% from the $36.8 million reported for the
comparable period last year, with Harris Teeter reporting an
increase and A&E reporting a decrease. Net income of $17.6
million was down 5% from $18.6 million reported last year. Fully
diluted per share earnings for the first six months this year
were $.38 versus $.40 a year ago, and from continuing operations,
$.38 versus $.39 a year ago.
American & Efird sales of $136 million for the first six
months this year declined 8% from the comparable period last
year. The sales decrease was in industrial thread in the U.S.
and Canada and was the result of continuing weakness in apparel
sales at retail which reduced demand by apparel manufacturers for
industrial thread. In response, A&E's thread manufacturing
plants operated on reduced schedules throughout the six months
which had a substantial negative impact on operating profit, down
25% from the comparable prior year period.
Harris Teeter sales of $916.2 million for the six months
ended March 31, 1996 increased 9% over the same period last year,
primarily the result of increased selling area in new and
remodeled stores, strong holiday sales, promotion of feature
programs and effective advertising. Operating profit was up 15%,
the result of increased sales volume, a favorable product mix of
higher gross profit items, favorable customer acceptance of
recently opened stores, and continued control of operating
expenses.
CAPITAL RESOURCES AND LIQUIDITY
Ruddick has an overall financial goal of earning 15% return
on beginning shareholders' equity. The Company has not met that
objective in a number of years. At the same time, Ruddick seeks
to limit long-term debt so as to constitute no more than 40% of
capital employed, which includes long-term debt and shareholders'
equity. As of March 31, 1996, this percentage was 31.8% compared
to 29.0% at October 1, 1995.
The Company's principal source of liquidity has been
revenues from operations. The Company also has the ability to
borrow up to an aggregate of $100 million under established
<PAGE> 8
revolving lines of credit with three banks. The maximum amount
outstanding under these credit facilities during the quarter
ended March 31, 1996 was $100 million, and $38.7 million was
outstanding at quarter end. The majority of the borrowings under
Ruddick's revolving credit facilities were used for capital
expenditures. Borrowings and repayments under these revolving
credit facilities are of the same nature as short-term credit
lines; however, due to the nature and terms of the agreements
allowing up to five years for repayment, all borrowings under
these facilities are classified as long-term debt.
On March 1, 1996, the Company executed an unsecured $50
million 6.48% Senior Promissory Note, due March 1, 2011 with The
Prudential Insurance Company of America (Prudential). Proceeds
from this note were used to reduce the amount borrowed under the
revolving lines of credit. Also on March 1, 1996, a non-
committed $50 million Private Shelf Facility was executed with
Prudential. Neither the Company nor Prudential is committed or
required to fulfill on the terms of the Private Shelf Facility.
No borrowings under this $50 million Private Shelf Facility had
been undertaken as of March 31, 1996.
Working capital of $86.1 million at March 31, 1996 increased
$12.4 million from October 1, 1995, largely the result of the net
reductions in cash balances and accounts payable. The current
ratio was 1.4 at March 31, 1996 and 1.3 at October 1, 1995.
Covenants in certain of the Company's long-term debt
agreements limit the total indebtedness that the Company may
incur. Management believes that the limit on indebtedness does
not significantly restrict the Company's liquidity and that such
liquidity is adequate to meet foreseeable requirements.
The level of capital expenditures incurred in the second
fiscal quarter may be reasonably indicative of those expected
quarterly for the balance of the year. Management expects that
internally generated funds, supplemented by available borrowing
capacity, will be adequate to finance such expenditures.
During the quarter, the Company announced to its
shareholders the adoption of a Dividend Reinvestment Plan
available to all shareholders of record.
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Ruddick Corporation
was held on February 1, 1996 (the "Annual Meeting"). Proxies for
the Annual Meeting were solicited pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended. The
shareholders voted upon the following matters at the Annual
Meeting:
1. ELECTION OF DIRECTORS
The shareholders elected three directors for terms ending in
1999. In addition, the following directors currently are serving
for terms to expire in 1997 or 1998, as indicated: Thomas M.
Belk (1997), James E.S. Hynes (1997), E. C. Wall, Jr. (1997),
John W. Copeland (1998), Alan T. Dickson (1998), Beverly F. Dolan
(1998), and Roddey Dowd, Sr. (1998). There was no solicitation
in opposition to management's nominees as listed in the proxy
statement, and all such nominees were elected. The following
information is furnished with respect to each director elected at
the meeting:
Shares
Director Elected Shares Voted Withholding Broker
at Annual Meeting for Election Authority Non-Votes
----------------- ------------ ----------- ---------
Edwin B. Borden, Jr. 39,111,484 814,439 N/A
R. Stuart Dickson 38,997,510 928,413 N/A
Hugh L. McColl, Jr. 39,071,232 854,692 N/A
2. APPROVAL OF THE 1995 COMPREHENSIVE STOCK OPTION PLAN
The shareholders approved the adoption of the Ruddick
Corporation 1995 Comprehensive Stock Option Plan, and the
following information is provided with respect to the approval
thereof:
Shares Voted Shares Voted Shares Broker
For Against Abstaining Non-Votes
------------ ------------ ---------- ---------
37,283,667 1,960,759 681,497 None
<PAGE> 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
4.1 $50,000,000 6.48% Series A Senior Notes
due March 1, 2011 and $50,000,000
Private Shelf Facility dated March 1,
1996 between Ruddick Corporation and The
Prudential Insurance Company of America.
11 Statement Re: Computation of Per Share
Earnings
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K - None
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
RUDDICK CORPORATION
DATE: May 13, 1996 /s/ R. N. Brigden
-----------------------------------
R. N. BRIGDEN
VICE PRESIDENT - FINANCE
(PRINCIPAL FINANCIAL OFFICER)
<PAGE> 11
EXECUTION COUNTERPART
RUDDICK CORPORATION
NOTE PURCHASE AND
PRIVATE SHELF AGREEMENT
$50,000,000
6.48% SERIES A SENIOR NOTES DUE MARCH 1, 2011
$50,000,000
PRIVATE SHELF FACILITY
AS OF MARCH 1, 1996
<PAGE>
TABLE OF CONTENTS
PARAGRAPH PAGE
1. AUTHORIZATION OF ISSUE OF NOTES. . . . . . . . . . . . . . 1
1A. Authorization of Issue of Series A Notes. . . . . . . 1
1B. Authorization of Issue of Shelf Notes . . . . . . . . 2
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . 2
2A. Purchase and Sale of Series A Notes . . . . . . . . . 2
2B. Purchase and Sale of Shelf Notes. . . . . . . . . . . 3
2B(1) Facility. . . . . . . . . . . . . . . . . . 3
2B(2) Issuance Period . . . . . . . . . . . . . . 3
2B(3) Request for Purchase. . . . . . . . . . . . 4
2B(4) Rate Quotes . . . . . . . . . . . . . . . . 5
2B(5) Acceptance. . . . . . . . . . . . . . . . . 5
2B(6) Market Disruption . . . . . . . . . . . . . 6
2B(7) Facility Closings . . . . . . . . . . . . . 6
2B(8) Fees. . . . . . . . . . . . . . . . . . . . 7
3. CONDITIONS OF CLOSING. . . . . . . . . . . . . . . . . . . 9
3A. Certain Documents . . . . . . . . . . . . . . . . . . 9
3B. Opinion of Purchaser's Special Counsel. . . . . . . .10
3C. Representations and Warranties; No Default. . . . . .10
3D. Purchase Permitted by Applicable Laws . . . . . . . .11
3E. Payment of Fees . . . . . . . . . . . . . . . . . . .11
3F. No Material Adverse Change. . . . . . . . . . . . . .11
4. PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . .11
4A. Required Prepayments of Series A Notes. . . . . . . .11
4B. Required Prepayments of Shelf Notes . . . . . . . . .12
4C. Optional Prepayment With Yield-Maintenance Amount . .12
4D. Notice of Optional Prepayment . . . . . . . . . . . .12
4E. Application of Prepayments. . . . . . . . . . . . . .12
4F. Retirement of Notes . . . . . . . . . . . . . . . . .13
5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . .13
5A. Reporting Requirements. . . . . . . . . . . . . . . .13
5A(1) General Information . . . . . . . . . . . .13
5A(2) Officer's Certificates. . . . . . . . . . .15
5A(3) Annual Accountant's Letter. . . . . . . . .15
5A(4) Special Information . . . . . . . . . . . .16
5B. Inspection of Property. . . . . . . . . . . . . . . .17
5C. Covenant to Secure Notes Equally. . . . . . . . . . .17
5D. Guaranteed Obligations. . . . . . . . . . . . . . . .17
5E. Maintenance of Insurance. . . . . . . . . . . . . . .18
5F. Maintenance of Corporate Existence/
Compliance with Law/Preservation of Property . .18
5G. Compliance with Environmental Laws. . . . . . . . . .18
5H. No Integration. . . . . . . . . . . . . . . . . . . .19
5I. Financial Records . . . . . . . . . . . . . . . . . .19
5J. Good Standing/Qualification Certificates. . . . . . .19
<PAGE>
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .20
6A. Fixed Charge Coverage and Debt Limits . . . . . . . .20
6B. Subsidiary Debt. . . . . . . . . . . . . . . . . . . . . .20
6C. Liens, Debt and Other Restrictions. . . . . . . . . .20
6C(1) Liens . . . . . . . . . . . . . . . . . . .20
6C(2) Merger or Consolidation . . . . . . . . . .22
6C(3) Transactions with Related Party . . . . . .23
6D. Sale of Property. . . . . . . . . . . . . . . . . . .23
6E. Subsidiary Stock and Debt . . . . . . . . . . . . . .24
6F. ERISA . . . . . . . . . . . . . . . . . . . . . . . .25
6G. Environmental Matters . . . . . . . . . . . . . . . .26
6H. Specified Laws. . . . . . . . . . . . . . . . . . . .26
7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .26
7A. Acceleration. . . . . . . . . . . . . . . . . . . . .26
7B. Rescission of Acceleration. . . . . . . . . . . . . .30
7C. Notice of Acceleration or Rescission. . . . . . . . .30
7D. Other Remedies. . . . . . . . . . . . . . . . . . . .31
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. . . . . . . . .31
8A. Organization. . . . . . . . . . . . . . . . . . . . .31
8B. Financial Statements. . . . . . . . . . . . . . . . .31
8C. Actions Pending . . . . . . . . . . . . . . . . . . .32
8D. Outstanding Debt. . . . . . . . . . . . . . . . . . .32
8E. Title to Properties . . . . . . . . . . . . . . . . .33
8F. Taxes . . . . . . . . . . . . . . . . . . . . . . . .33
8G. Conflicting Agreements and Other Matters. . . . . . .33
8H. Offering of Notes . . . . . . . . . . . . . . . . . .34
8I. Use of Proceeds . . . . . . . . . . . . . . . . . . .34
8J. ERISA . . . . . . . . . . . . . . . . . . . . . . . .34
8K. Governmental Consent. . . . . . . . . . . . . . . . .35
8L. Environmental Compliance. . . . . . . . . . . . . . .35
8M. Disclosure. . . . . . . . . . . . . . . . . . . . . .36
8N. Hostile Tender Offers . . . . . . . . . . . . . . . .36
9. REPRESENTATIONS OF THE PURCHASERS. . . . . . . . . . . . .37
9A. Nature of Purchase. . . . . . . . . . . . . . . . . .37
9B. Source of Funds . . . . . . . . . . . . . . . . . . .37
10. DEFINITIONS; ACCOUNTING MATTERS. . . . . . . . . . . . . .38
10A. Yield-Maintenance Terms . . . . . . . . . . . . . . .38
10B. Other Terms . . . . . . . . . . . . . . . . . . . . .40
10C. Accounting Principles, Terms and Determinations . . .51
11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .51
11A. Payments. . . . . . . . . . . . . . . . . . . . . . .51
11B. Expenses. . . . . . . . . . . . . . . . . . . . . . .52
11C. Consent to Amendments . . . . . . . . . . . . . . . .53
11D. Form, Registration, Transfer and Exchange
of Notes; Lost Notes . . . . . . . . . . . . . .54
11E. Persons Deemed Owners; Participations . . . . . . . .54
11F. Survival of Representations and Warranties;
Entire Agreement . . . . . . . . . . . . . . . . .55
11G. Successors and Assigns. . . . . . . . . . . . . . . .55
11H. Independence of Covenants . . . . . . . . . . . . . .55
11I. Notices.. . . . . . . . . . . . . . . . . . . . . . .55
11J. Payments Due on Non-Business Days . . . . . . . . . .56
11K. Severability. . . . . . . . . . . . . . . . . . . . .56
11L. Descriptive Headings. . . . . . . . . . . . . . . . .57
11M. Satisfaction Requirement. . . . . . . . . . . . . . .57
11N. Governing Law; Submission to Jurisdiction . . . . . .57
11O. Severalty of Obligations. . . . . . . . . . . . . . .57
11P. Counterparts. . . . . . . . . . . . . . . . . . . . .57
11Q. Binding Agreement . . . . . . . . . . . . . . . . . .58
Purchaser Schedule
Information Schedule
Exhibit A-1 -- Form of Series A Note
Exhibit A-2 -- Form of Shelf Note
Exhibit B -- Form of Request for Purchase
Exhibit C -- Form of Confirmation of Acceptance
Exhibit D-1 -- Form of Opinion of Company Counsel, Series A
Note Closing
Exhibit D-2 -- Form of Opinion of Company Counsel, Shelf
Note Closing
Schedule 6C(1) -- Outstanding Liens
Schedule 8A -- Subsidiaries
Schedule 8D -- Outstanding Debt
Schedule 8L -- Environmental
RUDDICK CORPORATION
Two First Union Plaza
Suite 2000
Charlotte, North Carolina 28282
As of March 1, 1996
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter defined) which becomes
bound by certain provisions of this Agreement as hereinafter
provided (together with Prudential, the "PURCHASERS")
c/o Prudential Capital Group
Gateway Center One, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07102-5311
Ladies and Gentlemen:
The undersigned, Ruddick Corporation (herein called the
"COMPANY"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF SERIES A NOTES. The Company
will authorize the issue of its senior promissory notes (the
"SERIES A NOTES") in the aggregate principal amount of
$50,000,000, to be dated the date of issue thereof, to mature
March 1, 2011, to bear interest on the unpaid balance thereof
from the date thereof until the principal thereof shall have
become due and payable at the rate of 6.48% per annum and on
overdue principal, Yield-Maintenance Amount and interest at the
rate specified therein, and to be substantially in the form of
Exhibit A-1 attached hereto. The terms "SERIES A NOTE" and
"SERIES A NOTES" as used herein shall include each Series A Note
delivered pursuant to any provision of this Agreement and each
Series A Note delivered in substitution or exchange for any such
Series A Note pursuant to any such provision.
1B. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company
will authorize the issue of its additional senior promissory
notes (the "SHELF NOTES") in the aggregate principal amount of
$50,000,000, to be dated the date of issue thereof, to mature, in
the case of each Shelf Note so issued, no more than 15 years
after the date of original issuance thereof, to have an average
life, in the case of each Shelf Note so issued, of no more than
12 years after the date of original issuance thereof, to bear
interest on the unpaid balance thereof from the date thereof at
the rate per annum, and to have such other particular terms, as
shall be set forth, in the case of each Shelf Note so issued, in
the Confirmation of Acceptance with respect to such Shelf Note
delivered pursuant to paragraph 2B(5), and to be substantially in
the form of Exhibit A-2 attached hereto. The terms "SHELF NOTE"
and "SHELF NOTES" as used herein shall include each Shelf Note
delivered pursuant to any provision of this Agreement and each
Shelf Note delivered in substitution or exchange for any such
Shelf Note pursuant to any such provision. The terms "NOTE" and
"NOTES" as used herein shall include each Series A Note and each
Shelf Note delivered pursuant to any provision of this Agreement
and each Note delivered in substitution or exchange for any such
Note pursuant to any such provision. Notes which have (1) the
same final maturity, (2) the same principal prepayment dates,
(3) the same principal prepayment amounts (as a percentage of the
original principal amount of each Note), (4) the same interest
rate, (5) the same interest payment periods and (6) the same date
of issuance (which, in the case of a Note issued in exchange for
another Note, shall be deemed for these purposes the date on
which such Note's ultimate predecessor Note was issued), are
herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE AND SALE OF SERIES A NOTES. The Company
hereby agrees to sell to Prudential and, subject to the terms and
conditions herein set forth, Prudential agrees to purchase from
the Company $50,000,000 aggregate principal amount of Series A
Notes at 100% of such aggregate principal amount. On March 1,
1996 or any other date prior to March 1, 1996 upon which the
Company and Prudential may agree (herein called the "SERIES A
CLOSING DAY"), the Company will deliver to Prudential at the
offices of King & Spalding, 120 West 45th Street, New York, New
York, one or more Series A Notes registered in its name,
evidencing the aggregate principal amount of Series A Notes to be
purchased by Prudential and in the denomination or denominations
specified in the Purchaser Schedule attached hereto, against
payment of the purchase price thereof by transfer of immediately
available funds for credit to the Company's account
#2070495075681 at First Union National Bank of North Carolina,
Main Branch, Charlotte, North Carolina, ABA Routing Number
053000219, with instructions to First Union to notify M.F. Frye
upon receipt ((704) 372-5404).
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1) FACILITY. Prudential is willing to consider, in
its sole discretion and within limits which may be authorized for
purchase by Prudential and Prudential Affiliates from time to
time, the purchase of Shelf Notes pursuant to this Agreement.
The willingness of Prudential to consider such purchase of Shelf
Notes is herein called the "FACILITY". At any time, the
aggregate principal amount of Shelf Notes stated in paragraph 1B,
minus the aggregate principal amount of Shelf Notes purchased and
sold pursuant to this Agreement prior to such time, minus the
aggregate principal amount of Accepted Notes (as hereinafter
defined) which have not yet been purchased and sold hereunder
prior to such time, plus the aggregate principal amount of Shelf
Notes purchased and sold pursuant to this Agreement and
thereafter retired prior to such time is herein called the
"AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES,
THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT
NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO
QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE
CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL
AFFILIATE.
2B(2) ISSUANCE PERIOD. Shelf Notes may be issued and
sold pursuant to this Agreement until the earlier of:
(i) the second anniversary of the date of this
Agreement (or if such anniversary is not a Business Day, the
Business Day next preceding such anniversary),
(ii) the thirtieth day after Prudential shall have
given to the Company, or the Company shall have given to
Prudential, a notice stating that it elects to terminate the
issuance and sale of Shelf Notes pursuant to this Agreement
(or if such thirtieth day is not a Business Day, the
Business Day next preceding such thirtieth day),
(iii) the last Closing Day after which there is no
Available Facility Amount,
(iv) the termination of the Facility under paragraph 7,
and
(v) the acceleration of any Note under paragraph 7A of
this Agreement.
The period during which Shelf Notes may be issued and sold
pursuant to this Agreement is herein called the "ISSUANCE
PERIOD".
2B(3) REQUEST FOR PURCHASE. The Company may from time
to time during the Issuance Period make requests for purchases of
Shelf Notes (each such request being herein called a "REQUEST FOR
PURCHASE"). Each Request for Purchase shall be made to
Prudential by telecopier or overnight delivery service, and
shall:
(i) specify the aggregate principal amount of Shelf
Notes covered thereby, which shall not be less than
$10,000,000 and not be greater than the Available Facility
Amount at the time such Request for Purchase is made,
(ii) specify the principal amounts, final maturities
(which shall be no more than fifteen years from the date of
issuance), principal prepayment dates and amounts and
interest payment periods (which shall be quarterly in
arrears) of the Shelf Notes covered thereby,
(iii) specify the use of proceeds of such Shelf Notes
(which shall not be used to finance a Hostile Tender Offer),
(iv) specify the proposed day for the closing of the
purchase and sale of such Shelf Notes, which shall be a
Business Day during the Issuance Period not less than 10
days and not more than 20 days after the making of such
Request for Purchase,
(v) specify the number of the account and the name and
address of the depository institution to which the purchase
prices of such Shelf Notes are to be transferred on the
Closing Day for such purchase and sale,
(vi) certify that the representations and warranties
contained in paragraph 8 are true on and as of the date of
such Request for Purchase and that there exists on the date
of such Request for Purchase no Event of Default or Default,
(vii) specify the Designated Spread for such Shelf
Notes, and
(viii) be substantially in the form of Exhibit B
attached hereto.
Each Request for Purchase shall be in writing and shall be deemed
made when received by Prudential.
2B(4) RATE QUOTES. Not later than five Business Days
after the Company shall have given Prudential a Request for
Purchase pursuant to paragraph 2B(3), Prudential may, but shall
be under no obligation to, provide to the Company by telephone or
telecopier, in each case between 9:30 A.M. and 2:00 P.M. New York
City local time (or such later time as Prudential may elect),
interest rate quotes for the several principal amounts,
maturities, principal prepayment schedules, and interest payment
periods of Shelf Notes specified in such Request for Purchase.
Each quote shall represent the interest rate per annum payable on
the outstanding principal balance of such Shelf Notes at which
Prudential or a Prudential Affiliate would be willing to purchase
such Shelf Notes at 100% of the principal amount thereof.
2B(5) ACCEPTANCE. Within 30 minutes after Prudential
shall have provided any interest rate quotes pursuant to
paragraph 2B(4) or such shorter period as Prudential may specify
to the Company (such period herein called the "ACCEPTANCE
WINDOW"), the Company may, subject to paragraph 2B(6), elect to
accept such interest rate quotes as to not less than $10,000,000
aggregate principal amount of the Shelf Notes specified in the
related Request for Purchase. Such election shall be made by an
Authorized Officer of the Company notifying Prudential by
telephone or telecopier within the Acceptance Window (but not
earlier than 9:30 A.M. or later than 2:00 P.M., New York City
local time or such later time as Prudential may elect) that the
Company elects to accept such interest rate quotes, specifying
the Shelf Notes (each such Shelf Note being herein called an
"ACCEPTED NOTE") as to which such acceptance (herein called a
"ACCEPTANCE") relates. The day the Company notifies Prudential
of an Acceptance with respect to any Accepted Notes is herein
called the "ACCEPTANCE DAY" for such Accepted Notes. Any
interest rate quotes as to which Prudential does not receive an
Acceptance within the Acceptance Window shall expire, and no
purchase or sale of Shelf Notes hereunder shall be made based on
such expired interest rate quotes. Subject to paragraph 2B(6)
and the other terms and conditions hereof, the Company agrees to
sell to Prudential or a Prudential Affiliate, and Prudential
agrees to purchase, or to cause the purchase by a Prudential
Affiliate of, the Accepted Notes at 100% of the principal amount
of such Notes. As soon as practicable following the Acceptance
Day, the Company, Prudential and each Prudential Affiliate which
is to purchase any such Accepted Notes will execute a
confirmation of such Acceptance substantially in the form of
Exhibit C attached hereto (herein called a "CONFIRMATION OF
ACCEPTANCE"). If the Company should fail to execute and return
to Prudential within three Business Days following receipt
thereof a Confirmation of Acceptance with respect to any Accepted
Notes, Prudential may at its election at any time prior to its
receipt thereof cancel the closing with respect to such Accepted
Notes by so notifying the Company in writing.
2B(6) MARKET DISRUPTION. Notwithstanding the provisions
of paragraph 2B(5), if Prudential shall have provided interest
rate quotes pursuant to paragraph 2B(4) and thereafter prior to
the time an Acceptance with respect to such quotes shall have
been notified to Prudential in accordance with paragraph 2B(5)
the domestic market for U.S. Treasury securities or derivatives
shall have closed or there shall have occurred a general
suspension, material limitation, or significant disruption of
trading in securities generally on the New York Stock Exchange or
in the domestic market for U.S. Treasury securities or
derivatives, then such interest rate quotes shall expire, and no
purchase or sale of Shelf Notes hereunder shall be made based on
such expired interest rate quotes. If the Company thereafter
notifies Prudential of the Acceptance of any such interest rate
quotes, such Acceptance shall be ineffective for all purposes of
this Agreement, and Prudential shall promptly notify the Company
that the provisions of this paragraph 2B(6) are applicable with
respect to such Acceptance.
2B(7) FACILITY CLOSINGS. Not later than 11:30 A.M. (New
York City local time) on the Closing Day for any Accepted Notes,
the Company will deliver to each Purchaser listed in the
Confirmation of Acceptance relating thereto at the offices of the
Prudential Capital Group, Gateway Center One, 11th Floor, 7-45
Raymond Boulevard West, Newark, New Jersey the Accepted Notes to
be purchased by such Purchaser in the form of one or more Notes
in authorized denominations as such Purchaser may request for
each Series of Accepted Notes to be purchased on the Closing Day,
dated the Closing Day and registered in such Purchaser's name (or
in the name of its nominee), against payment of the purchase
price thereof by transfer of immediately available funds for
credit to the Company's account specified in the Request for
Purchase of such Notes. If the Company fails to tender to any
Purchaser the Accepted Notes to be purchased by such Purchaser on
the scheduled Closing Day for such Accepted Notes as provided
above in this paragraph 2B(7), or any of the conditions specified
in paragraph 3 shall not have been fulfilled by the time required
on such scheduled Closing Day, the Company shall, prior to 1:00
P.M., New York City local time, on such scheduled Closing Day
notify Prudential (which notification shall be deemed received by
each Purchaser) in writing whether (i) such closing is to be
rescheduled (such rescheduled date to be a Business Day during
the Issuance Period not less than one Business Day and not more
than 10 Business Days after such scheduled Closing Day (the
"RESCHEDULED CLOSING DAY") and certify to Prudential (which
certification shall be for the benefit of each Purchaser) that
the Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled
Closing Day and that the Company will pay the Delayed Delivery
Fee in accordance with paragraph 2B(8)(iii) or (ii) such closing
is to be canceled. In the event that the Company shall fail to
give such notice referred to in the preceding sentence,
Prudential (on behalf of each Purchaser) may at its election, at
any time after 1:00 P.M., New York City local time, on such
scheduled Closing Day, notify the Company in writing that such
closing is to be canceled. Notwithstanding anything to the
contrary appearing in this Agreement, the Company may elect to
reschedule a closing with respect to any given Accepted Notes on
not more than one occasion, unless Prudential shall have
otherwise consented in writing.
2B(8) FEES.
2B(8)(i) FACILITY FEE. In consideration for the time,
effort and expense involved in the preparation, negotiation and
execution of this Agreement, at the time of the execution and
delivery of this Agreement by the Company and Prudential, the
Company will pay to Prudential in immediately available funds a
nonrefundable fee (herein called the "FACILITY FEE") in the
amount of $75,000.00 less any fees and expenses paid by the
Company pursuant to clause (ii) of paragraph 11B for the
preparation and execution of this Agreement and the Notes as of
the Series A Closing Day.
2B(8)(ii) ISSUANCE FEE. The Company will pay to
Prudential in immediately available funds a fee (herein called
the "ISSUANCE FEE") on each Closing Day (other than the Series A
Closing Day) in an amount equal to 0.10% of the aggregate
principal amount of Notes sold on such Closing Day.
2B(8)(iii) DELAYED DELIVERY FEE. If the closing of the
purchase and sale of any Accepted Note is delayed for any reason
beyond the original Closing Day for such Accepted Note, the
Company will pay to Prudential (a) on the Cancellation Date or
actual closing date of such purchase and sale and (b) if earlier
than the Cancellation Date or actual closing date, the next
Business Day following 90 days after the Acceptance Day for such
Accepted Note and on each Business Day following 90 days after
the prior payment hereunder, a fee (herein called the "DELAYED
DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond
equivalent yield per annum of such Accepted Note, "MMY" means
Money Market Yield, i.e., the yield per annum on a commercial
paper investment of the highest quality selected by Prudential on
the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same
as, or closest to, the Rescheduled Closing Day or Rescheduled
Closing Days (a new alternative investment being selected by
Prudential each time such closing is delayed); "DTS" means Days
to Settlement, i.e., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted
Note (in the case of the first such payment with respect to such
Accepted Note) or from and including the date of the next
preceding payment (in the case of any subsequent delayed delivery
fee payment with respect to such Accepted Note) to but excluding
the date of such payment; and "PA" means Principal Amount, i.e.,
the principal amount of the Accepted Note for which such
calculation is being made. In no case shall the Delayed Delivery
Fee be less than zero. Nothing contained herein shall obligate
any Purchaser to purchase any Accepted Note on any day other than
the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv) CANCELLATION FEE. If the Company at any time
notifies Prudential in writing that the Company is canceling the
closing of the purchase and sale of any Accepted Note, or if
Prudential notifies the Company in writing under the
circumstances set forth in the last sentence of paragraph 2B(5)
or the penultimate sentence of paragraph 2B(7) that the closing
of the purchase and sale of such Accepted Note is to be canceled,
or if the closing of the purchase and sale of such Accepted Note
is not consummated on or prior to the last day of the Issuance
Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay the Purchasers in
immediately available funds an amount (the "CANCELLATION FEE")
calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in
decimals) obtained by dividing (a) the excess of the ask price
(as determined by Prudential) of the Hedge Treasury Note(s) on
the Cancellation Date over the bid price (as determined by
Prudential) of the Hedge Treasury Notes(s) on the Acceptance Day
for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing
bid and ask prices shall be as reported by Telerate Systems, Inc.
(or, if such data for any reason ceases to be available through
Telerate Systems, Inc., any publicly available source of similar
market data). Each price shall be based on a U.S. Treasury
security having a par value of $100.00 and shall be rounded to
the second decimal place. In no case shall the Cancellation Fee
be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser
to purchase and pay for any Notes is subject to the satisfaction,
on or before the Closing Day for such Notes, of the following
conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have
received the following, each dated the date of the applicable
Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board
of Directors of the Company authorizing the execution and
delivery of this Agreement and the issuance of the Notes,
and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to
this Agreement and the Notes.
(iii) A certificate of the Secretary or an
Assistant Secretary and one other officer of the Company
certifying the names and true signatures of the officers of
the Company authorized to sign this Agreement and the Notes
and the other documents to be delivered hereunder.
(iv) Certified copies of the Articles of Incorporation
and By-laws of the Company.
(v) A favorable opinion of Smith Helms Mulliss &
Moore, L.L.C., special counsel of the Company (or such other
counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-1 (in the case of the
Series A Notes) or D-2 (in the case of any Shelf Notes)
attached hereto and as to such other matters as such
Purchaser may reasonably request. The Company hereby
directs each such counsel to deliver such opinion, agrees
that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees
that each Purchaser receiving such an opinion will and is
hereby authorized to rely on such opinion.
(vi) Except as provided in paragraph 5J, a good
standing certificate for the Company and each Restricted
Subsidiary from the State of its incorporation dated of a
recent date and good standing or other certificates of
qualification to do business as a foreign corporation for
the Company and each of its Restricted Subsidiaries in the
States of South Carolina, Georgia and Virginia and such
other evidence of the status of the Company or any of its
Restricted Subsidiaries as such Purchaser may reasonably
request.
(vii) Additional documents or certificates with
respect to legal matters or corporate or other proceedings
related to the transactions contemplated hereby as may be
reasonably requested by such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such
Purchaser shall have received from King & Spalding or such other
counsel who is acting as special counsel for it in connection
with this transaction, a favorable opinion satisfactory to such
Purchaser as to such matters incident to the matters herein
contemplated as it may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 shall be
true on and as of such Closing Day, except to the extent of
changes caused by the transactions herein contemplated; there
shall exist on such Closing Day no Event of Default or Default;
and the Company shall have delivered to such Purchaser an
Officer's Certificate, dated such Closing Day, to both such
effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The
purchase of and payment for the Notes to be purchased by such
Purchaser on the terms and conditions herein provided (including
the use of the proceeds of such Notes by the Company) shall not
violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve
System) and shall not subject such Purchaser to any tax, penalty,
liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as it may
request to establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to
Prudential any fees due it pursuant to or in connection with this
Agreement, including any Facility Fee due pursuant to paragraph
2B(8)(i), any Issuance Fee due pursuant to paragraph 2B(8)(ii)
and any Delayed Delivery Fee due pursuant to paragraph
2B(8)(iii).
3F. NO MATERIAL ADVERSE CHANGE. Prudential shall have
received a certificate from the chief financial officer of the
Company, dated the applicable Closing Day, saying that no
material adverse change in the financial condition, business,
operations or prospects of the Company or its subsidiaries, taken
as a whole, has occurred since October 1, 1995.
4. PREPAYMENTS. The Series A Notes and any Shelf Notes
shall be subject to required prepayment as and to the extent
provided in paragraphs 4A and 4B, respectively. The Series A
Notes and any Shelf Notes shall also be subject to prepayment
under the circumstances set forth in paragraph 4C. Any
prepayment made by the Company pursuant to any other provision of
this paragraph 4 shall not reduce or otherwise affect its
obligation to make any required prepayment as specified in
paragraph 4A or 4B.
4A. REQUIRED PREPAYMENTS OF SERIES A NOTES. Until the
Series A Notes shall be paid in full, the Company shall apply to
the prepayment of the Series A Notes, without Yield-Maintenance
Amount, the sum of $7,142,857.14 commencing on March 1, 2005 and
each March 1 thereafter to and including March 1, 2010, and such
principal amounts of the Series A Notes, together with interest
thereon to the payment dates, shall become due on such payment
dates. The remaining unpaid principal amount of the Series A
Notes, together with interest accrued thereon, shall become due
on March 1, 2011, the maturity date of the Series A Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series
of Shelf Notes shall be subject to required prepayments, if any,
set forth in the Notes of such Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.
The Notes of each Series shall be subject to prepayment, in whole
at any time or from time to time in part (in integral multiples
of $100,000 and in a minimum amount of $1,000,000), at the option
of the Company, at 100% of the principal amount so prepaid plus
interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial
prepayment of a Series of the Notes pursuant to this paragraph 4C
shall be applied in satisfaction of required payments of
principal in inverse order of their scheduled due dates.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall
give the holder of each Note of a Series to be prepaid pursuant
to paragraph 4C irrevocable written notice of such prepayment not
less than 10 Business Days prior to the prepayment date,
specifying such prepayment date, the aggregate principal amount
of the Notes of such Series to be prepaid on such date, the
principal amount of the Notes of such Series held by such holder
to be prepaid on that date and that such prepayment is to be made
pursuant to paragraph 4C. Notice of prepayment having been given
as aforesaid, the principal amount of the Notes specified in such
notice, together with interest thereon to the prepayment date and
together with the Yield-Maintenance Amount, if any, herein
provided, shall become due and payable on such prepayment date.
The Company shall, on or before the day on which it gives written
notice of any prepayment pursuant to paragraph 4C, give
telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient for such notices in the
Purchaser Schedule attached hereto or the applicable Confirmation
of Acceptance or by notice in writing to the Company.
4E. APPLICATION OF PREPAYMENTS. In the case of each
prepayment of less than the entire unpaid principal amount of all
outstanding Notes of any Series pursuant to paragraphs 4A, 4B or
4C, the amount to be prepaid shall be applied pro rata to all
outstanding Notes of such Series (including, for the purpose of
this paragraph 4E only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates other than by prepayment pursuant to
paragraph 4A, 4B or 4C) according to the respective unpaid
principal amounts thereof.
4F. RETIREMENT OF NOTES. The Company shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay
or otherwise retire in whole or in part prior to their stated
final maturity (other than by prepayment pursuant to paragraphs
4A, 4B or 4C or upon acceleration of such final maturity pursuant
to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes of any Series held by any holder unless the
Company or such Subsidiary or Affiliate shall have offered to
prepay or otherwise retire or purchase or otherwise acquire, as
the case may be, the same proportion of the aggregate principal
amount of Notes of such Series held by each other holder of Notes
of such Series at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in
paragraph 4E.
5. AFFIRMATIVE COVENANTS.
5A. REPORTING REQUIREMENTS.
5A(1) GENERAL INFORMATION. The Company covenants that
it will deliver to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within
45 days after the end of each quarterly period (other than
the fourth quarterly period) in each fiscal year,
(1) unaudited Consolidated statements of income
and retained earnings and statements of cash flows for
the period from the beginning of the current fiscal
year to the end of such quarterly period, and
(2) an unaudited Consolidated balance sheet as at
the end of such quarterly period,
setting forth in each case in comparative form figures for
the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the
Required Holder(s) and certified by an authorized financial
officer of the Company as fairly presenting, in all material
respects, the financial condition of the Company and its
Consolidated Subsidiaries as of the end of such period and
the results of their operations for the period then ended in
accordance with generally accepted accounting principles,
subject to changes resulting from normal year-end
adjustments and the inclusion of abbreviated footnotes;
provided, however, that delivery pursuant to clause (iii)
below of copies of the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with the Securities
and Exchange Commission shall be deemed to satisfy the
requirements of this clause (i);
(ii) as soon as practicable and in any event within 90
days after the end of each fiscal year,
(1) audited Consolidated statements of income and
retained earnings and statements of cash flows for such
year, and
(2) an audited Consolidated balance sheet as at
the end of such year,
setting forth in each case in comparative form corresponding
Consolidated figures from the preceding annual audit, all in
reasonable detail and satisfactory in scope to the Required
Holder(s) and reported on by independent public accountants
of recognized standing selected by the Company whose report
shall be without limitation as to the scope of the audit and
reasonably satisfactory in substance to the Required
Holder(s); provided, however, that delivery pursuant to
clause (iii) below of copies of the Annual Report on Form
10-K of the Company for such year filed with the Securities
and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and
reports as it shall send to its public stockholders and
copies of all registration statements (without exhibits) and
all reports (other than any registration statement filed on
Form S-8) which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each
other material report (including, without limitation,
management letters) submitted to the Company or any
Subsidiary by independent accountants in connection with any
annual, interim or special audit made by them of the books
of the Company or any Subsidiary;
(v) promptly upon receipt thereof, a copy of each
report, survey, study, evaluation, assessment or other
document prepared by any consultant, engineer, Environmental
Authority or other Person relating to compliance by the
Company or any Subsidiary with any Environmental
Requirements, if the cost of remediation, repair or
compliance may be reasonably expected to exceed $5,000,000
in any one case or in the aggregate;
(vi) with reasonable promptness, upon the request of
the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder,
such financial and other information as such holder may
reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A
under the Securities Act in connection with the resale of
Notes, except at such times as the Company is subject to the
reporting requirements of section 13 or 15(d) of the
Exchange Act. For the purpose of this clause (vi), the term
"qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act; and
(vii) with reasonable promptness, such other data
relating to the business, operations, properties or
financial condition of the Company or any of its
Subsidiaries as a Significant Holder may reasonably request;
5A(2) OFFICER'S CERTIFICATES. Together with each
delivery of financial statements required by clauses 5A(i) and
(ii) above, the Company will deliver to each Significant Holder
an Officer's Certificate demonstrating (with computations in
reasonable detail) compliance with the provisions of
paragraphs 6A, 6B and 6C(1) and stating that there exists no
Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence
thereof and what action the Company has taken, is taking or
proposes to take with respect thereto;
5A(3) ANNUAL ACCOUNTANT'S LETTER. Together with each
delivery of financial statements required by clause 5A(ii) above,
the Company will deliver to each Significant Holder a certificate
of the independent public accountants giving the report on such
financial statements stating that, in making the audit necessary
for their report, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any
Event of Default or Default, specifying the nature and period of
existence thereof. The accountants, however, shall not be liable
to anyone as a result of this provision by reason of their
failure to obtain knowledge of any Event of Default or Default
which would not be disclosed in the course of an audit conducted
in accordance with generally accepted auditing standards;
5A(4) SPECIAL INFORMATION. The Company also covenants
that within 5 Business Days after any Responsible Officer obtains
knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial
condition, business or operations of the Company and its
Subsidiaries, taken as a whole;
(c) legal proceedings filed against the Company and/or
any Subsidiary, which reasonably could be expected to have a
material adverse effect on the financial condition, business
or operations of the Company and its Subsidiaries, taken as
a whole, or which in any manner draws into question the
validity of or reasonably could be expected to impair the
ability of the Company to perform its obligations under this
Agreement or the Notes;
(d) a default under any agreement or note evidencing
Debt for which the Company or any Subsidiary is liable,
which individually or in the aggregate with all other
agreements and notes in default for which the Company or any
Subsidiary is liable, exceed $1,000,000;
(e) the occurrence of any other event that reasonably
could be expected to impair the ability of the Company to
meet its obligations hereunder;
(f) any (i) Environmental Liabilities, (ii) pending,
threatened or anticipated Environmental Proceedings,
(iii) Environmental Notices, (iv) Environmental Judgments
and Orders, or (v) Environmental Releases at, on, in, under
or in any way affecting the Properties which reasonably
could be expected to have a material adverse effect on the
business, operations or financial condition of the Company
and its Subsidiaries, taken as a whole; or
(g) with respect to any Plan that is subject to the
funding requirements of Section 302 of ERISA or Section 412
of the Code, the Company (i) has given or is required to
give notice to the Pension Benefit Guaranty Corporation that
a material reportable event has occurred with respect to
such Plan, (ii) has delivered notice to the Pension Benefit
Guaranty Corporation of any intent to withdraw from or
terminate any such Plan, or (iii) has failed to make timely
a contribution to any such Plan;
the Company will deliver to each Significant Holder an Officer's
Certificate specifying the nature and period of existence thereof
and what action the Company or the Subsidiary has taken, is
taking or proposes to take with respect thereto.
5B. INSPECTION OF PROPERTY. The Company covenants
that, at such reasonable times and as often as a Significant
Holder may reasonably request, it will permit any Person
designated by a Significant Holder in writing, at such
Significant Holder's expense unless a Default has occurred and is
continuing in which case at the Company's expense, to:
(i) visit and inspect any of the properties of the
Company and any Subsidiary;
(ii) examine the corporate books and financial records
of the Company and its Subsidiaries and make copies thereof
or extracts therefrom; and
(iii) discuss the affairs, finances and accounts of
any of such corporations with the principal officers of the
Company or any Subsidiary and their independent public
accountants.
5C. COVENANT TO SECURE NOTES EQUALLY. The Company
covenants that if it or any Subsidiary shall create or assume any
Lien upon any of its property or assets, whether now owned or
hereafter acquired, other than Liens permitted by paragraph 6C(1)
(unless prior written consent shall have been obtained under
paragraph 11C), it will make or cause to be made effective
provision whereby the Notes will be secured by such Lien equally
and ratably with any and all other Debt thereby secured so long
as any such other Debt shall be so secured.
5D. GUARANTEED OBLIGATIONS. Except for Liens
permitted by paragraph 6C(1), the Company covenants that if any
Person (other than the Company) Guarantees or provides collateral
in any manner for any Debt of the Company or any Subsidiary
(other than any such Guarantees in an amount not to exceed
$10,000,000, individually or in the aggregate), it will
simultaneously cause such Person to Guarantee or provide
collateral for the Notes equally and ratably with all Debt
Guaranteed or secured by such Person for so long as such Debt is
Guaranteed and pursuant to documentation in form and substance
reasonably satisfactory to such holder.
5E. MAINTENANCE OF INSURANCE. The Company covenants
that it and each Subsidiary will maintain, with responsible
insurers, insurance with respect to its properties and business
against such casualties and contingencies (including, but not
limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in
the case of similarly situated corporations engaged in the same
or similar businesses.
5F. MAINTENANCE OF CORPORATE EXISTENCE/COMPLIANCE WITH
LAW/PRESERVATION OF PROPERTY. The Company covenants that, except
as permitted under paragraph 6C(2) and 6D, it and each Subsidiary
will do or cause to be done all things necessary to, at all
times:
(i) preserve, renew and keep in full force and effect
the corporate existence of the Company and its Subsidiaries
(other than those Subsidiaries not material to the financial
condition, business or operations of the Company and its
Subsidiaries taken as a whole);
(ii) comply with all laws and regulations (including,
without limitation, laws and regulations relating to equal
employment opportunity and employee safety) applicable to it
and any Subsidiary except where the failure to comply could
not reasonably be expected to have a material adverse effect
on the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole;
(iii) maintain, preserve and protect all material
licenses, certificates, permits, franchises and intellectual
property of the Company and its Subsidiaries; and
(iv) preserve all the remainder of its property used or
useful in the conduct of its business and keep the same in
good repair, working order and condition excluding normal
wear and tear.
5G. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company
covenants that it and each Subsidiary will, comply in a timely
fashion with, or operate pursuant to valid waivers of the
provisions of, all applicable Environmental Requirements,
including, without limitation, the emission of wastewater
effluent, solid and hazardous waste and air emissions together
with any other applicable Environmental Requirements for
conducting, on a timely basis, periodic tests and monitoring for
contamination of ground water, surface water, air and land and
for biological toxicity of the aforesaid, and all applicable
regulations of the Environmental Protection Agency or other
relevant federal, state or local governmental authority, except
where the failure to comply could not reasonably be expected to
have a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries, taken as
a whole. The Company agrees to indemnify and hold you, your
officers, agents and employees (each an "INDEMNIFIED PERSON")
harmless from any loss, liability, claim or expense that you may
incur or suffer as a result of a breach by the Company or any
Subsidiary, as the case may be, of this covenant other than as a
result of the gross negligence or wilful misconduct of such
Indemnified Person. The Company shall not be deemed to have
breached or violated this paragraph 5G if the Company or any
Subsidiary is challenging in good faith by appropriate
proceedings diligently pursued the application or enforcement of
such Environmental Requirements for which adequate reserves have
been established in accordance with generally accepted accounting
principles.
5H. NO INTEGRATION. The Company covenants that it has
taken and will take all necessary action so that the issuance of
the Notes does not and will not require registration under the
Securities Act. The Company covenants that no future offer and
sale of debt securities of the Company of any class will be made
if there is a reasonable possibility that such offer and sale
would, under the doctrine of "integration", subject the issuance
of the Notes to you to the registration requirements of the
Securities Act.
5I. FINANCIAL RECORDS. The Company covenants that it
and each Subsidiary will, keep proper books of record and account
in which full and correct entries (subject to normal year end
adjustments and, as to interim statements, the absence of
footnotes) will be made of the business and affairs of the
Company or such Subsidiary under generally accepted accounting
principles consistently applied (except for changes disclosed in
the financial statements furnished to you pursuant to paragraph
5A and concurred in by the independent public accountants
referred to in paragraph 5A).
5J. GOOD STANDING/QUALIFICATION CERTIFICATES. On or
prior to May 1, 1996, the Company shall deliver to you with
respect to Harris-Teeter, Inc., a good standing certificate from
its State of incorporation and good standing or other
certificates of qualification to do business as a foreign
corporation in the States of Virginia, Georgia and South
Carolina, in each case dated a date within five days of delivery
thereof.
6. NEGATIVE COVENANTS. Unless the Required Holders
otherwise agree in writing, the Company shall not, and shall not
permit any Subsidiary, to take any of the following actions or
permit the occurrence or existence of any of the following events
or conditions:
6A. FIXED CHARGE COVERAGE AND DEBT LIMITS. The
Company covenants that it will not permit at any time:
(i) Consolidated Fixed Charges to exceed 125% of the
sum of (a) Consolidated Net Income plus (a) Consolidated
Fixed Charges plus (a) income taxes due and payable or paid
for the most recently ended four fiscal quarter period; or
(ii) Consolidated Funded Debt to exceed 60% of
Consolidated Total Capitalization; or
6B. SUBSIDIARY DEBT. The Company will not permit any
Restricted Subsidiary to create, incur, assume or suffer to exist
any Debt, except:
(i) Debt of any such Restricted Subsidiary to the
Company or another Restricted Subsidiary; and
(ii) other Debt of any such Restricted Subsidiary,
provided that the sum (without duplication) of the aggregate
unpaid amount of all outstanding Debt of such Restricted
Subsidiaries permitted by this clause (ii) does not at any
time exceed 15% of Consolidated Tangible Net Worth.
6C. LIENS, DEBT AND OTHER RESTRICTIONS. The Company
covenants that it will not and will not permit any Restricted
Subsidiary to:
6C(1) LIENS. Create, assume or suffer to exist any
Lien upon any of its property or assets, whether now owned or
hereafter acquired (whether or not provision is made for the
equal and ratable securing of the Notes pursuant to paragraph
5C), except:
(i) Liens existing on the Series A Closing Day and
specified on Schedule 6C(1);
(ii) Liens for taxes (including ad valorem and property
taxes) and assessments or governmental charges or levies not
yet due or which are being actively contested in good faith
by appropriate proceedings;
(iii) other Liens incidental to the conduct of its
business or the maintenance, operation, construction or
ownership of its property and assets (including pledges or
deposits in connection with workers' compensation and social
security taxes, assessments and charges, and landlords,
mechanics and materialmen Liens and survey exceptions or
encumbrances, easements or reservations, rights-of-way, or
zoning restrictions) provided that (iv) such Liens were not
incurred in connection with the borrowing of money, or the
obtaining of advances or credit or the payment of the
deferred purchase price of property and (v) the existence of
such Lien does not materially detract from the value of such
property or assets to the Company or any Subsidiary or
unreasonably interfere with the ordinary conduct of
business;
(iv) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business
to secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, performance bonds, purchase,
construction or sales contracts and other similar
obligations, in each case not incurred or made in connection
with any Debt;
(v) any Lien created to secure all or any part of the
purchase price incurred or assumed to pay all or any part of
the purchase price of property acquired by the Company or a
Restricted Subsidiary after the date of this Agreement,
provided that:
(A) any such Lien shall be confined solely to the
item or items of property so acquired and, if required
by the terms of the instrument originally creating such
Lien, other property which is an improvement to or for
specific use with such acquired property; and
(B) the principal amount of the Debt secured by
any such Lien shall at no time exceed 100% of the
lesser of (1) the cost to the Company or such
Restricted Subsidiary of the property acquired and
(2) the Fair Market Value of such property (as
determined in good faith by the Company's Board) at the
time of such acquisition;
(vi) Liens securing Capitalized Lease Obligations,
provided such Liens are limited to the property subject to
such leases;
(vii) any right of set off or banker's lien
(whether by common law, statute, contract or otherwise) in
connection with ordinary course of business deposit
arrangements maintained by the Company or its Subsidiaries
with its banks or other financial institutions so long as
any such bank or other financial institution (A) shall not
at any time make loans or otherwise extend credit to the
Company or any Subsidiary, (B) does not maintain accounts
(for the deposit of cash or otherwise) for the benefit of
the Company or any Subsidiary, or (C) shall have waived in
writing for the benefit of each holder of a Note such right
of setoff or banker's lien; or
(viii) any Lien renewing, extending, or refunding
any outstanding obligations secured by a Lien described in
clause (i), provided the principal amount secured is not
increased and such Lien is not extended to any other
property of the Company or its Restricted Subsidiaries;
(ix) Liens securing judgments rendered against the
Company or any of its Restricted Subsidiaries or arising in
connection with any court proceedings, provided (i) such
Liens are being contested in good faith by appropriate
proceedings and (ii) no action has been taken by any Person
to execute or otherwise collect on such Lien;
(x) Liens securing Debt, held by the Company in any
Restricted Subsidiary or Debt held by any Restricted
Subsidiary in any other Restricted Subsidiary; and
(xi) additional Liens securing Debt, provided that
after giving effect to such Liens, such Debt shall not
exceed 15% of Consolidated Tangible Net Worth at any time.
6C(2) MERGER OR CONSOLIDATION. Merge, consolidate or
exchange shares with any other Person, except that:
(i) any Restricted Subsidiary may merge or consolidate
with the Company or any other Restricted Subsidiary;
(ii) the Company may merge or consolidate with any
other corporation (including a Subsidiary) provided (B) the
acquiring corporation shall be a solvent corporation
existing under the laws of the United States or any State
thereof (including the District of Columbia), and such
corporation (1) shall have executed and delivered to each
holder of any Note its assumption of the due and punctual
performance and observance of each covenant and condition of
this Agreement and the Notes and (2) shall have caused to be
delivered to each holder of any Note (a) an opinion of
nationally independent counsel, or other independent counsel
reasonably satisfactory to the Required Holders, to the
effect that all agreements and instruments effecting such
assumption and reaffirmation are enforceable in accordance
with their terms and comply with the terms hereof, which
opinion shall be reasonably satisfactory to the holders of
the Notes in all respects and (a) such other agreements and
instruments which the holders of the Notes may reasonably
request, and (B) immediately after giving effect to such
transaction, no Default or Event of Default shall occur or
exist; or
6C(3) TRANSACTIONS WITH RELATED PARTY. Effect any
transaction with any Affiliate or Subsidiary by which any asset
or services of the Company or a Restricted Subsidiary of the
Company is transferred to such Affiliate or Subsidiary, or from
such Affiliate or Subsidiary or enter into any other transaction
with an Affiliate or Subsidiary, on terms more favorable than
would be reasonably expected to be given in a similar transaction
with an unrelated entity.
6D. SALE OF PROPERTY. The Company will not, and will
not permit any Restricted Subsidiary to, Dispose of any property
or assets, except:
(i) The Company or any Restricted Subsidiary may sell
inventory in the ordinary course of business for Fair Market
Value;
(ii) any Restricted Subsidiary may Dispose of its
assets to the Company or a Restricted Subsidiary;
(iii) the Company or any Restricted Subsidiary may
Dispose of its assets (whether or not leased back) so long
as, immediately after giving effect to such proposed
Disposition:
(A) the consideration for such assets represents
the Fair Market Value of such assets (as determined in
good faith by the Company's Board) at the time of such
Disposition; and
(B) the net book value of all assets so Disposed
of by the Company and its Restricted Subsidiaries
during the prior 12 months, does not constitute a
Substantial Part of the Consolidated assets; and
(C) no Default or Event of Default shall exist;
provided, however, if after any Disposition, the Company
shall, within 12 months of the date of such Disposition,
apply the proceeds (net of reasonable expenses) from such
Disposition to (1) acquire operating assets and equipment to
be used in the business of the Company and its Restricted
Subsidiaries or (2) repay Funded Debt, such portion so
applied shall not be included in the calculation of
Substantial Part.
For purposes of this paragraph 6D:
(i) "DISPOSE" means the sale, lease, transfer or other
disposition of property or assets (including without
limitation any stock of a Subsidiary) of the Company or any
of its Restricted Subsidiaries, and "DISPOSITION" and
"DISPOSED OF" has a corresponding meaning to Dispose;
(ii) CALCULATION OF NET BOOK VALUE. The net book value
of any assets shall be determined as of the respective date
of Disposition of those assets; and
(iii) SALES OF LESS THAN ALL THE STOCK OF A
SUBSIDIARY. In the case of the sale or issuance of the
stock of a Subsidiary, the amount of Consolidated Assets
contributed by the stock Disposed of shall be assumed to be
the percentage of outstanding stock sold or to be sold.
6E. SUBSIDIARY STOCK AND DEBT. The Company will not:
(i) directly or indirectly sell, assign, pledge or
otherwise dispose of any Debt of or any shares of stock of
(or warrants, rights or options to acquire stock of) any
Subsidiary except to a Restricted Subsidiary except as
permitted pursuant to paragraph 6D;
(ii) permit any Subsidiary directly or indirectly to
sell, assign, pledge or otherwise dispose of any Debt of the
Company or any other Subsidiary, or any shares of stock of
(or warrants, rights or options to acquire stock of) any
other Subsidiary, except to the Company or a Restricted
Subsidiary and except pursuant to paragraph 6D;
(iii) permit any Subsidiary to have outstanding any
shares of Preferred Stock other than Preferred Stock owned
by the Company or a Restricted Subsidiary;
(iv) permit any Subsidiary directly or indirectly to
issue or sell any shares of its stock (or warrants, rights
or options to acquire its stock) except to the Company or a
Restricted Subsidiary and except as permitted pursuant to
paragraph 6C(2) and 6D; or
(v) permit any Subsidiary to enter into or otherwise
be bound by or subject to any contract or agreement
(including, without limitation, any provision of its
certificate or articles of incorporation or bylaws) that
restricts its ability to pay dividends or other
distributions on account of its stock; or
(vi) permit any Subsidiary to create, incur, assume or
maintain any Debt except as permitted by paragraph 6B.
6F. ERISA. The Company covenants that it will not nor
permit any Subsidiary to:
(i) terminate or withdraw from any Plan resulting in
the incurrence of any material liability to the Pension
Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any
prohibited transaction (as defined in Section 4975 of the
Code) involving any Plan (other than a Multiemployer Plan)
which would subject the Company or any Subsidiary to any
material tax, penalty or other liability;
(iii) incur or suffer to exist any material
accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived,
involving any Plan (other than a Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition
which presents a risk of incurring a material liability to
the Pension Benefit Guaranty Corporation.
6G. ENVIRONMENTAL MATTERS. The Company covenants that
it will not, and will not permit any Third Party to, use,
produce, manufacture, process, generate, store, dispose of,
manage at, or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials used,
produced, released or managed in the ordinary course of business
in compliance with all applicable Environmental Requirements
except where the failure to do so could not reasonably be
expected to have a material adverse effect on the business,
operations or financial condition of the Company and its
Subsidiaries taken as a whole and except for Hazardous Materials
released in amounts which do not require remediation pursuant to
applicable Environmental Requirements or if remediation is
required, such remediation could not reasonably be expected to
have a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries taken as
a whole.
6H. SPECIFIED LAWS. Neither the Company nor any agent
acting on its behalf will take any action which could reasonably
be expected to cause this Agreement or the Notes to violate
Regulation G, Regulation T or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the
Exchange Act, in any case as in effect now or as the same may
hereafter be in effect.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of, or Yield- Maintenance Amount payable with
respect to, any Note when the same shall become due, either
by the terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any
interest on any Note for more than 10 days after the date
due; or
(iii) the Company or any Subsidiary defaults
(whether as primary obligor or as guarantor or other surety)
in any payment of principal of or interest on any other
obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other
title retention agreement, any obligation issued or assumed
as full or partial payment for property whether or not
secured by a purchase money mortgage or any obligation under
notes payable or drafts accepted representing extensions of
credit) beyond any period of grace provided with respect
thereto, or the Company or any Subsidiary fails to perform
or observe any other agreement, term or condition contained
in any agreement under which any such obligation is created
(or if any other event thereunder or under any such
agreement shall occur and be continuing) and the effect of
such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf
of such holder or holders) to cause, such obligation to
become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a
payment default shall occur and be continuing or such a
failure or other event causing or permitting acceleration
(or resale to the Company or any Subsidiary) shall occur and
be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any
writing furnished in connection with or pursuant to this
Agreement shall be false in any material respect on the date
as of which made; or
(v) the Company fails to perform or observe any
agreement contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such
failure shall not be remedied within 30 days after any
Responsible Officer obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an
assignment for the benefit of creditors or is generally not
paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of
the Company or any Subsidiary is entered under any
bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereafter in effect (herein
called the "BANKRUPTCY LAW"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case
under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Subsidiary) relating to the
Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any
Subsidiary and the Company or such Subsidiary by any act
indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in
any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of
the Company and such order, judgment or decree remains
unstayed and in effect for more than 60 days: or
(xii) any order, judgment or decree is entered in
any proceedings against the Company or any Subsidiary
decreeing a split-up of the Company or such Subsidiary which
requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a Substantial Part, of the
consolidated assets of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets, or
stock of a Subsidiary, which shall have contributed a
Substantial Part of the consolidated net income of the
Company and its Subsidiaries (determined in accordance with
generally accepted accounting principles) for any of the
three fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for more
than 60 days; or
(xiii) one or more final judgments in an aggregate
amount in excess of $5,000,000 is rendered against the
Company or any Subsidiary and, within 60 days after entry
thereof, any such judgment is not discharged or execution
thereof stayed pending appeal, or within 60 days after the
expiration of any such stay, such judgment is not
discharged; or
(xiv) the Company or any ERISA Affiliate, in its
capacity as an employer under a Multiemployer Plan, makes a
complete or partial withdrawal from such Multiemployer Plan
resulting in the incurrence by such withdrawing employer of
a withdrawal liability in an amount exceeding $5,000,000;
then:
(a) if such event is an Event of Default specified in
clause (i) or (ii) of this paragraph 7A, any holder (other
than the Company or any of its Subsidiaries) of any Note may
at its option during the continuance of such Event of
Default, by notice in writing to the Company, terminate the
Facility and/or declare all of the Notes held by such holder
to be, and all of the Notes held by such holder shall
thereupon be and become, immediately due and payable at par
together with interest accrued thereon, without presentment,
demand, protest or notice of any kind, all of which are
hereby waived by the Company,
(b) if such event is an Event of Default specified in
clause (viii), (ix) or (x) of this paragraph 7A with respect
to the Company, the Facility shall automatically terminate
and all of the Notes at the time outstanding shall
automatically become immediately due and payable together
with interest accrued thereon and together with the Yield-
Maintenance Amount, if any, with respect to each Note,
without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company, and
(c) with respect to any event constituting an Event of
Default, the Required Holder(s) of the Notes of any Series
may at its or their option during the continuance of such
Event of Default, by notice in writing to the Company,
terminate the Facility and declare all of the Notes of such
Series to be, and all of the Notes of such Series shall
thereupon be and become, immediately due and payable
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note
of such Series, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the
Company.
7B. RESCISSION OF ACCELERATION. At any time after any
or all of the Notes of any Series shall have been declared
immediately due and payable pursuant to paragraph 7A, the
Required Holder(s) of the Notes of such Series may, by notice in
writing to the Company, rescind and annul such declaration and
its consequences if:
(i) the Company shall have paid all overdue interest
on the Notes of such Series, the principal of and Yield-
Maintenance Amount, if any, payable with respect to any
Notes of such Series which have become due otherwise than by
reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount
at the rate specified in the Notes of such Series,
(ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration,
(iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by
reason of such declaration, shall have been cured or waived
pursuant to paragraph 11C, and
(iv) no judgment or decree shall have been entered for
the payment of any amounts due pursuant to the Notes of such
Series or this Agreement.
No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right
arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever
any Note shall be declared immediately due and payable pursuant
to paragraph 7A or any such declaration shall be rescinded and
annulled pursuant to paragraph 7B, the Company shall forthwith
give written notice thereof to the holder of each Note of each
Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or
Default shall occur and be continuing, the holder of any Note may
proceed to protect and enforce its rights under this Agreement
and such Note by exercising such remedies as are available to
such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific
performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this
Agreement. No remedy conferred in this Agreement upon the holder
of any Note is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or
hereafter existing at law or in equity or by statute or
otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows (all references to
"Subsidiary" and "Subsidiaries" in this paragraph 8 shall be
deemed omitted if the Company has no Subsidiaries at the time the
representations herein are made or repeated):
8A. ORGANIZATION. The Company is a corporation duly
organized and existing in good standing under the laws of the
State of North Carolina, and each Subsidiary is duly organized
and existing in good standing under the laws of the jurisdiction
in which it is incorporated. Schedule 8A hereto is an accurate
and complete list of all Subsidiaries as of the Series A Closing
Day, including the jurisdiction of incorporation and ownership of
all such Subsidiaries. The Company and each Subsidiary has the
corporate power to own its respective properties and to carry on
its respective businesses as now being conducted and is duly
qualified and authorized to do business in each other
jurisdiction in which the character of its respective properties
or the nature of its respective businesses require such
qualification or authorization except where the failure to be so
qualified or authorized could not reasonably be expected to have
a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries, taken as
a whole.
8B. FINANCIAL STATEMENTS. The Company has furnished
you with the following financial statements, identified by a
principal financial officer of the Company:
(i) a Consolidated balance sheet as at the last day of
the fiscal year in each of the years 1991 to 1995,
inclusive, a Consolidated statement of income and retained
earnings and statements of cash flows for each such year,
all reported on by Arthur Anderson LLP; and
(ii) a Consolidated balance sheet as at December 31,
1995 and Consolidated statements of income and retained
earnings and statements of cash flows for the three-month
period ended on such date, prepared by the Company.
Those financial statements (including any related schedules
and/or notes) fairly present in all material respects (subject,
as to interim statements, to the absence of footnotes or to
changes resulting from normal year-end adjustments) the financial
condition of the Company and have been prepared in accordance
with generally accepted accounting principles consistently
applied throughout the periods involved and show all liabilities,
direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles. The
balance sheets and related footnotes fairly present, in all
material respects, the Consolidated financial condition of the
Company and its Subsidiaries as at the dates thereof, and the
statements of income and retained earnings and statements of cash
flow and related footnotes fairly present, in all material
respects, the Consolidated results of the operations of the
Company and its Subsidiaries, the changes in the Company's
stockholders' equity and their Consolidated cash flows for the
periods indicated. There has been no material adverse change in
the business, condition (financial or otherwise) or operations of
the Company and its Subsidiaries taken as a whole since
October 1, 1995.
8C. ACTIONS PENDING. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its
Subsidiaries, or any properties or rights of the Company or any
of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which might result in any
material adverse change in the business, property or assets,
condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of
its Restricted Subsidiaries has outstanding any Debt except as
permitted by paragraph 6A(ii) or 6B. There exists no default
under the provisions of any instrument evidencing such Debt or of
any agreement relating thereto. Schedule 8D hereto (as such
Schedule 8D may have been modified from time to time by written
supplements thereto delivered by the Company to Prudential) is an
accurate and complete list of Debt of the Company and its
Subsidiaries on the applicable Closing Day.
8E. TITLE TO PROPERTIES. The Company has and each of
its Subsidiaries has good and indefeasible title to its
respective real properties (other than properties which it
leases) and good title to all of its other respective properties
and assets, including the properties and assets reflected in the
most recent audited balance sheet referred to in paragraph 8B
(other than properties and assets disposed of in the ordinary
course of business and other than assets of its subsidiary, JGBF,
Inc. (f/k/a Jordan Graphics, Inc.) disposed of by sale on
January 23, 1996), subject to no Lien of any kind except Liens
permitted by paragraph 6C(1). All leases necessary in any
material respect for the conduct of the respective businesses of
the Company and its Subsidiaries are valid and subsisting and are
in full force and effect.
8F. TAXES. The Company has and each of its
Subsidiaries has filed all federal, state and other income tax
returns which, to the best knowledge of the officers of the
Company and its Subsidiaries, are required to be filed, and each
has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have
become due, except such taxes as are being contested in good
faith by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted accounting
principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither
the Company nor any of its Subsidiaries is a party to any
contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects its
business, property or assets, condition (financial or otherwise)
or operations. Neither the execution nor delivery of this
Agreement or the Notes, nor the offering, issuance and sale of
the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will conflict with, or result
in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to, the
charter or by-laws of the Company or any of its Subsidiaries, any
award of any arbitrator or any agreement (including any agreement
with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its
Subsidiaries is subject. Neither the Company nor any of its
Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Debt of the Company or
such Subsidiary, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the
amount of, or otherwise imposes restrictions on the incurring of,
Debt of the Company of the type to be evidenced by the Notes
except as set forth in the agreements listed in Schedule 8G
hereto.
8H. OFFERING OF NOTES. Neither the Company nor any
agent acting on its behalf has, directly or indirectly, offered
the Notes or any similar security of the Company for sale to, or
solicited any offers to buy the Notes or any similar security of
the Company from, or otherwise approached or negotiated with
respect thereto with, any Person other than institutional
investors, and neither the Company nor any agent acting on its
behalf has taken or will take any action which would subject the
issuance or sale of the Notes to the provisions of Section 5 of
the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction. The Company hereby
represents and warrants to you that, within the preceding twelve
months, neither the Company nor any other Person acting on behalf
of the Company has offered or sold to any Person (other than
accredited investors) any Notes, or any securities of the same or
a similar class as the Notes, or any other substantially similar
securities of the Company.
8I. USE OF PROCEEDS. The proceeds of the Series A
Notes will be used to repay certain existing long term revolving
and short term Debt of the Company. None of the proceeds of the
sale of any Notes of the Company in whole or in part will be
used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin
stock" as defined in Regulation G (12 C.F.R. Part 207) of the
Board of Governors of the Federal Reserve System (herein called
"MARGIN STOCK") or for the purpose of maintaining, reducing or
retiring any Debt which was originally incurred to purchase or
carry any stock that is then currently a margin stock or for any
other purpose which might constitute the purchase of such Notes a
"purpose credit" within the meaning of such Regulation G, unless
the Company shall have delivered to the Purchaser which is
purchasing such Notes, on the Closing Day for such Notes, an
opinion of counsel satisfactory to such Purchaser stating that
the purchase of such Notes does not constitute a violation of
such Regulation G. Neither the Company nor any agent acting on
its behalf has taken or will take any action which might cause
this Agreement or the Notes to violate Regulation G, Regulation T
or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in
effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan (other
than a Multiemployer Plan). No liability to the Pension Benefit
Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company, any Subsidiary
or any ERISA Affiliate which is or would be materially adverse to
the business, property or assets, condition (financial or
otherwise) or operations of the Company and its Subsidiaries
taken as a whole. Neither the Company, any Subsidiary nor any
ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the
business, property or assets, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a
whole. The execution and delivery of this Agreement and the
issuance and sale of the Notes will be exempt from or will not
involve any transaction which is subject to the prohibitions of
section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section
502(i) of ERISA or a tax could be imposed pursuant to section
4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the
accuracy of the representation of each Purchaser in paragraph 9B
as to the source of funds to be used by it to purchase any Notes.
8K GOVERNMENTAL CONSENT. Neither the nature of the
Company or of any Subsidiary, nor any of their respective
businesses or properties, nor any relationship between the
Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or
delivery of the Notes is such as to require any authorization,
consent, approval, exemption or any action by or notice to or
filing with any court or administrative or governmental body
(other than routine filings after the Closing Day for any Notes
with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of
this Agreement, the offering, issuance, sale or delivery of the
Notes or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
8L. ENVIRONMENTAL COMPLIANCE.
(i) The Company and its Subsidiaries and all of their
respective Properties have complied at all times and in all
respects with all Environmental Requirements where failure to
comply could reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
(ii) Neither the Company nor any Subsidiary is subject to
any Environmental Liability or Environmental Requirement which
could reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise) or operations of
the Company and its Subsidiaries, taken as a whole.
(iii) Except as otherwise disclosed in Schedule 8L,
neither the Company nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state
statute similar to CERCLA. None of the Properties has been
identified on any current or proposed National Priorities List
under 40 C.F.R. 300 or any list arising from a state statute
similar to CERCLA. None of the Properties has been identified on
any CERCLIS list.
(iv) No Hazardous Materials have been or are being used,
produced, manufactured, processed, generated, stored, disposed
of, released, managed at or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the
Properties or, to the actual knowledge of the Company, at or from
any adjacent site or facility, except for Hazardous Materials
used, produced, manufactured, processed, generated, stored,
disposed of, released and managed in the ordinary course of
business in compliance with all applicable Environmental
Requirements and except for Hazardous Materials present in
amounts which have not required and do not require remediation,
pursuant to applicable law or regulation, or if remediation is
required, such remediation could not reasonably be expected to
have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its
Subsidiaries, taken as a whole.
(v) The Company and each Subsidiary have procured all
permits necessary under Environmental Requirements for the
conduct of their respective businesses or is otherwise in
compliance with all applicable Environmental Requirements, except
to the extent the failure to do so could not reasonably be
expected to have a material adverse effect on the business,
condition (financial or otherwise) or operations of the Company
and its Subsidiaries, taken as a whole.
8M. DISCLOSURE. Neither this Agreement nor any other
document, certificate or statement furnished to any Purchaser by
or on behalf of the Company in connection herewith contains any
untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Company can now
foresee) materially adversely affect the business, property or
assets, condition (financial or otherwise) or operations of the
Company or any of its Subsidiaries and which has not been set
forth in this Agreement.
8N. HOSTILE TENDER OFFERS. None of the proceeds of
the sale of any Notes have been or will be used to finance a
Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not
acquiring the Notes purchased by it hereunder with a view to or
for sale in connection with any distribution thereof within the
meaning of the Securities Act, provided that the disposition of
such Purchaser's property shall at all times be and remain within
its control.
9B. SOURCE OF FUNDS. You represent that at least one
of the following statements is an accurate representation as to
each source of funds (a "SOURCE") to be used by you to pay the
purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source does
not include assets allocated to any separate account
maintained by you in which any employee benefit plan (or its
related trust) has any interest, other than a separate
account that is maintained solely in connection with your
fixed contractual obligations under which the amounts
payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the
separate account; or
(b) the Source is either (i) an insurance company
pooled separate account, within the meaning of Prohibited
Transaction Exemption ("PTE") 90-1 (issued January 29,
1990), or (i) a bank collective investment fund, within the
meaning of the PTE 91-38 (issued July 12, 1991) and, except
as you have disclosed to the Company in writing pursuant to
this paragraph (b), no employee benefit plan or group of
plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective
investment fund; or
(c) the Source constitutes asset of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or
"QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM,
the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of "control"
in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the company and (i) the identity of such QPAM
and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been
disclosed to the Company in writing pursuant to clause (c);
or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans,
or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to
the Company in writing pursuant to this clause (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of
ERISA.
As used in this paragraph 9B, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT"
shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of
this Agreement, the terms defined in paragraphs 10A and 10B (or
within the text of any other paragraph) shall have the respective
meanings specified therein and all accounting matters shall be
subject to determination as provided in paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
paragraph 4C or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"DESIGNATED SPREAD" shall mean 0% in the case of each Note
of any Series unless the Confirmation of Acceptance with respect
to the Notes of such Series specifies a different Designated
Spread in which case it shall mean, with respect to each Note of
such Series, the Designated Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which
interest on such Note is payable, if payable other than on a
semi-annual basis) equal to the Reinvestment Yield with respect
to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, the Designated Spread over the yield to
maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the
display designated as "Page 678"on the Telerate Service (or such
other display as may replace page 678 on the Telerate Service)
for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as
of such Settlement Date, or (ii) if such yields shall not be
reported as of such time or the yields reported as of such time
shall not be ascertainable, the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields shall
have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and
(b) interpolating linearly between yields reported for various
maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (a) the sum of the products obtained by
multiplying (b) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (a) the number of
years (calculated to the nearest one-twelfth year) which will
elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to
the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to paragraph 4A or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i)
such Called Principal plus (i) interest accrued thereon as of
(including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in
paragraph 2B(5).
"ACCEPTANCE WINDOW" shall have the meaning specified in
paragraph 2B(5).
"ACCEPTED NOTE" shall have the meaning specified in
paragraph 2B(5).
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Subsidiary. A Person shall
be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract
or otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the
Company, its chief executive officer, its chief financial
officer, its principal accounting officer, any vice president of
the Company designated as an "Authorized Officer" of the Company
in the Information Schedule attached hereto or any vice president
of the Company designated as an "Authorized Officer" of the
Company for the purpose of this Agreement in an Officer's
Certificate executed by the Company's chief executive officer or
chief financial officer and delivered to Prudential, and (i) in
the case of Prudential, any officer of Prudential designated as
its "Authorized Officer" in the Information Schedule or any
officer of Prudential designated as its "Authorized Officer" for
the purpose of this Agreement in a certificate executed by one of
its Authorized Officers. Any action taken under this Agreement
on behalf of the Company by any individual who on or after the
date of this Agreement shall have been an Authorized Officer of
the Company and whom Prudential in good faith believes to be an
Authorized Officer of the Company at the time of such action
shall be binding on the Company even though such individual shall
have ceased to be an Authorized Officer of the Company, and any
action taken under this Agreement on behalf of Prudential by any
individual who on or after the date of this Agreement shall have
been an Authorized Officer of Prudential and whom the Company in
good faith believes to be an Authorized Officer of Prudential at
the time of such action shall be binding on Prudential even
though such individual shall have ceased to be an Authorized
Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified
in paragraph 2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday
or a Sunday, (i) a day on which commercial banks in New York City
are required or authorized to be closed, (i) for purposes of
paragraph 2B(3) hereof only, a day on which The Prudential
Insurance Company of America is not open for business and (i) for
purposes of paragraphs 4A and 4B only, a day on which the Federal
Reserve Bank is closed.
"CANCELLATION DATE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles,
is or will be required to be capitalized on the books of the
Company or any Subsidiary, taken at the amount thereof accounted
for as indebtedness (net of interest expenses) in accordance with
such principles.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act.
"CERCLIS" shall mean the Comprehensive Environmental
Response, Compensation and Liability Inventory System established
pursuant to CERCLA.
"CLOSING DAY" shall mean, with respect to the Series A
Notes, the Series A Closing Day and, with respect to any Accepted
Note, the Business Day specified for the closing of the purchase
and sale of such Accepted Note in the Request for Purchase of
such Accepted Note, provided that (i) if the Company and the
Purchaser which is obligated to purchase such Accepted Note agree
on an earlier Business Day for such closing, the "CLOSING DAY"
for such Accepted Note shall be such earlier Business Day, and
(i) if the closing of the purchase and sale of such Accepted Note
is rescheduled pursuant to paragraph 2B(7), the Closing Day for
such Accepted Note, for all purposes of this Agreement except
references to "original Closing Day" in paragraph 2B(8)(iii),
shall mean the Rescheduled Closing Day with respect to such
Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations
promulgated thereunder from time to time.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning
specified in paragraph 2B(5).
"CONSOLIDATED" shall mean, with respect to any item of
financial information, the item of financial information for the
Company and its Restricted Subsidiaries consolidated in
accordance with generally accepted accounting principles.
"CONSOLIDATED FIXED CHARGES" shall mean, for the Company and
its Subsidiaries on a Consolidated basis, the sum (without
duplication) of:
(i) all Rentals (excluding all principal components of
Rentals under Capitalized Lease Obligations) paid during the
most recently completed four fiscal quarters (the "PRIOR
PERIOD"); and
(ii) all Consolidated Interest Charges for the Prior
Period.
"CONSOLIDATED INTEREST CHARGES" shall mean, for the Company
and its Subsidiaries on a Consolidated basis for the four fiscal
quarters most recently ended, all interest expense (as determined
in accordance with generally accepted accounting principles) on
all Debt (including Capitalized Lease Obligations) net of
interest income.
"CONSOLIDATED NET WORTH" shall mean, at any time, for the
Company and its Subsidiaries on a Consolidated basis
shareholders' equity at such time determined in accordance with
generally accepted accounting principles.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean Consolidated
Net Worth minus Intangibles.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean, at any
time, the sum of (i) Consolidated Funded Debt at such time plus
(ii) Consolidated Net Worth at such time.
"CURRENT DEBT" shall mean, with respect to any Person, all
Debt of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or
within one year from the date of the creation thereof and is not
directly or indirectly renewable or extendible at the option of
the debtor to a date one year or more from the date of the
creation thereof, provided that (i) Debt outstanding under a
revolving credit or similar agreement which obligates the lender
or lenders to extend credit over a period of more than one year
shall constitute Funded Debt and not Current Debt, even though
such Debt by its terms matures on demand or within one year from
the date of the creation thereof and (i) Current Maturities of
Funded Debt shall constitute Funded Debt and not Current Debt.
"CURRENT MATURITIES OF FUNDED DEBT" shall mean the portion
of Funded Debt outstanding which by its terms is due on demand or
within one year and is not directly or indirectly renewable,
extendible or refundable at the option of the obligor to a date
one year or more from such time.
"DEBT" with respect to any Person, shall mean, at any time,
without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including,
without limitation, all liabilities created or arising under
any conditional sale or other title retention agreement with
respect to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable
for such liabilities); and
(e) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a)
through (d) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (e) to the
extent such Person remains legally liable in respect thereof
through defeasance of such Debt notwithstanding that any such
obligation is deemed to be extinguished under generally accepted
accounting principles.
"DELAYED DELIVERY FEE" shall have the meaning specified in
paragraph 2B(8)(iii).
"ENVIRONMENTAL AUTHORITY" shall mean any foreign, federal,
state, local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"ENVIRONMENTAL JUDGMENTS AND ORDERS" shall mean all
judgments, decrees or orders arising from or in any way
associated with any Environmental Requirements, whether or not
entered upon consent or written agreements with an Environmental
Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated
in a judgment, degree or order.
"ENVIRONMENTAL LIABILITIES" shall mean any liabilities,
whether accrued or contingent, arising from or relating in any
way to any Environmental Requirements.
"ENVIRONMENTAL NOTICES" shall mean any written communication
from any Environmental Authority stating possible or alleged
noncompliance with or possible or alleged liability under any
Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental
Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any
purported violation of any Environmental Requirements.
Environmental Notices also shall mean (i) any written
communication from any other Person threatening litigation or
administrative proceedings against or involving the Company
relating to alleged violation of any Environmental Requirements
and (ii) any complaint, petition or similar documents filed by
any other Person commencing litigation or administrative
proceedings against or involving the Company relating to alleged
violation of any Environmental Requirements.
"ENVIRONMENTAL PROCEEDINGS" shall mean any judicial or
administrative proceedings arising from or in any way associated
with any Environmental Requirement.
"ENVIRONMENTAL RELEASES" shall mean releases (as defined in
CERCLA or under any applicable state or local environmental law
or regulation) of Hazardous Materials. Environmental Releases
does not include releases for which no remediation or reporting
is required by applicable Environmental Requirements and which do
not present a danger to health, safety or the environment.
"ENVIRONMENTAL REQUIREMENTS" shall mean any applicable
local, state or federal law, rule, regulation, permit, order,
decision, determination or requirement relating in any way to
Hazardous Materials or to health, safety or the environment.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a
member of the same controlled group of corporations as the
Company within the meaning of section 414(b) of the Code, or any
trade or business which is under common control with the Company
within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further
condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"FACILITY" shall have the meaning specified in paragraph
2B(1).
"FACILITY FEE" shall have the meaning specified in paragraph
2B(8)(i).
Fair Market Value means, at any time, the sale value of
property that would be realized in an arm's-length sale at such
time between an informed and willing buyer, and an informed and
willing seller, under no compulsion to buy or sell, respectively.
"FUNDED DEBT" shall mean with respect to any Person, all
Debt of such Person which by it terms or by the terms of any
instrument or agreement relating thereto matures, or which is
otherwise payable or unpaid, more than one year from, or is
directly or indirectly renewable or extendible at the option of
the debtor to a date more than one year (including an option of
the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period
of more than one year) from, the date of the creation thereof,
provided that Funded Debt shall include, as at any time of
determination, Current Maturities of Funded Debt.
"GUARANTY" or "GUARANTEE" shall mean, with respect to any
Person, any obligation (except the endorsement in the ordinary
course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement,
contingent or otherwise, by such Person:
(i) to purchase such indebtedness or obligation or any
property constituting security therefor;
(ii) to advance or supply funds for the purchase or
payment of such indebtedness or obligation, or to maintain any
working capital or other balance sheet condition or any income
statement condition of any Person or otherwise to advance or make
available funds for the purchase or payment of such indebtedness
or obligation;
(iii) to lease properties or to purchase properties
or services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(iv) otherwise to assure the owner of such indebtedness
or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIALS" shall mean (a) hazardous waste as
defined in the Resource Conservation and Recovery Act of 1976, or
in any applicable federal, state or local law or regulation, (b)
hazardous substances, as defined in CERCLA, or in any applicable
state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, (d) toxic substances, as defined
in the Toxic Substances Control Act of 1976, or in any applicable
federal, state or local law or regulation or (e) insecticides,
fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable federal, state or local law or regulation, as each
such Act, statute or regulation may be amended from time to time.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any
Accepted Note, the United States Treasury Note or Notes whose
duration (as determined by Prudential) most closely matches the
duration of such Accepted Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use
of proceeds of any Note, any offer to purchase, or any purchase
of, shares of capital stock of any corporation or equity
interests in any other entity, or securities convertible into or
representing the beneficial ownership of, or rights to acquire,
any such shares or equity interests, if such shares, equity
interests, securities or rights are of a class which is publicly
traded on any securities exchange or in any over-the-counter
market, other than purchases of such shares, equity interests,
securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other
entity for portfolio investment purposes, and such offer or
purchase has not been duly approved by the board of directors of
such corporation or the equivalent governing body of such other
entity prior to the date on which the Company makes the Request
for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
"INTANGIBLES" shall mean goodwill, patents, trademarks,
trade names, organization expense, licenses, franchises,
exploration permits and import and export permits and other like
intangibles, determined in accordance with generally accepted
accounting principles.
"ISSUANCE PERIOD" shall have the meaning specified in
paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for
the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an
obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA.
"NOTES" shall have the meaning specified in paragraph 1B.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in
the name of the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have
been made, by the Company or any ERISA Affiliate.
"PROPERTIES" shall mean all real property owned, leased or
otherwise used or occupied by the Company or any Subsidiary,
wherever located.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other
entity all of the Voting Stock (or equivalent voting securities
or interests) of which is owned by Prudential either directly or
through Prudential Affiliates.
"PURCHASERS" shall mean Prudential with respect to the
Series A Notes and, with respect to any Accepted Notes,
Prudential and/or the Prudential Affiliate(s), which are
purchasing such Accepted Notes.
"QPAM EXEMPTION" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"RENEWAL FEE" shall have the meaning specified in paragraph
2B(8)(v).
"RENTALS" shall mean for any period of determination all
fixed rents or charges (including as such all payments during any
such period of determination which the lessee is obligated to
make on termination of the lease or surrender of the property)
payable by the Company or a Subsidiary (as lessee, sublessee,
license, franchisee or the like) for such period under a lease,
license, or other agreement for the use or possession of real or
personal property, tangible or intangible, as determined in
accordance with generally accepted accounting principles.
"REQUEST FOR PURCHASE" shall have the meaning specified in
paragraph 2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 66-/% of the aggregate principal amount of the Notes or of
a Series of Notes, as the context may require, from time to time
outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified
in paragraph 2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive
officer, chief operating officer, chief financial officer or
chief accounting officer of the Company, general counsel of the
Company or any other officer of the Company involved principally
in its financial administration or its controllership function.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary that is
not an Unrestricted Subsidiary.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES" shall have the meaning specified in paragraph 1B.
"SERIES A CLOSING DAY" shall have the meaning specified in
paragraph 2A.
"SERIES A NOTE(S)" shall have the meaning specified in
paragraph 1A.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as
Prudential or any Prudential Affiliate shall hold (or be
committed under this Agreement to purchase) any Note, or (ii) any
other holder of at least 5% of the aggregate principal amount of
the Notes of any Series from time to time outstanding.
"SUBSIDIARY" shall mean, as to any Person, any Person, in
which such Person, or one or more of its Subsidiaries, or such
Person and one or more of its Subsidiaries, owns sufficient
equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority
of the directors (or Persons performing similar functions) of
such entity, and any partnership or joint venture if more than a
50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one
or more of its Subsidiaries (unless such partnership can and does
ordinarily take major business actions without the prior approval
of such Person or one or more of its Subsidiaries).
"SUBSTANTIAL PART" shall mean, with respect to any transfer,
assets which (i) together with all other assets disposed of in
the same fiscal year constitute 10% or more of Consolidated
assets determined as of the end of the most recently ended fiscal
quarter or (ii) together with all other assets disposed of since
the Series A Closing Day constitute more than 25% of Consolidated
assets determined as of the most recently ended fiscal quarter;
provided, however, that a transaction involving the sale of the
stock or substantially all the assets of Harris-Teeter, Inc.
and/or American & Efird, Inc., each Subsidiaries of the Company,
shall not be included in the calculation of "SUBSTANTIAL PART" if
(x) in the opinion Required Holders, after giving effect to any
such transaction, the acquiror and the Company have the same
credit quality as the Company immediately prior to such
transaction, (y) the acquiror expressly assumes in writing,
pursuant to such documents as the holders of the Notes may
reasonably request, a proportionate principal amount of the
outstanding notes (based on the relative credit quality, size,
and other factors as the Required Holders shall consider
relevant) and (z) immediately before and after giving effect to
such transaction, no Default or Event of Default would exist.
"THIRD PARTY" shall mean all lessees, sublessees, licensees
and other users of the Properties, excluding those users of the
Properties in the ordinary course of the Company's business
(consistent with its practices on the Series A Closing Day) and
on a temporary basis.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this
Agreement.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary which is
incorporated outside the United States or substantially all of
the business of which is carried on outside the United States.
"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock of such corporation whose holders are
entitled under ordinary circumstances to vote for the election of
directors of such corporation (irrespective of whether at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS.
All references in this Agreement to "generally accepted
accounting principles" shall be deemed to refer to generally
accepted accounting principles in effect in the United States at
the time of application thereof. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted,
all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and
certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis
consistent with the most recent audited financial statements
delivered pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited
financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal
of, interest on, and any Yield-Maintenance Amount payable with
respect to, such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City local time, on
the date due) to (i) the account or accounts of such Purchaser
specified in the Purchaser Schedule attached hereto in the case
of any Series A Note, (ii) the account or accounts of such
Purchaser specified in the Confirmation of Acceptance with
respect to such Note in the case of any Shelf Note or (iii) such
other account or accounts in the United States as such Purchaser
may from time to time designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing
of any Note, it will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made
thereon and of the date to which interest thereon has been paid.
The Company agrees to afford the benefits of this paragraph 11A
to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay,
and save Prudential, each Purchaser and any Transferee harmless
against liability for the payment of, all out-of-pocket expenses
arising in connection with such transactions, including:
(i) all taxes (together in each case with interest and
penalties, if any), other than state or federal income taxes
or franchise taxes, including without limitation, all stamp,
intangibles, recording and other taxes, which may be payable
with respect to the execution and delivery of this Agreement
or the execution, delivery or acquisition of any Note,
(ii) all document production and duplication charges
and the fees and expenses of any special counsel engaged by
the Purchasers or any Transferee in connection with this
Agreement, the transactions contemplated hereby and any
subsequent proposed modification of, or proposed consent
under, this Agreement, whether or not such proposed
modification shall be effected or proposed consent granted,
and
(iii) the reasonable costs and expenses, including
reasonable attorneys' fees, actually incurred by you or such
Transferee in connection with the restructuring, refinancing
or "work out" of this Agreement or the Notes or the
transactions contemplated hereby or thereby or in enforcing
(or determining whether or how to enforce) any rights under
this Agreement or the Notes or in responding to any subpoena
or other legal process or informal investigative demand
issued in connection with this Agreement or the Notes or the
transactions contemplated hereby or by reason of your or any
Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy
case.
The obligations of the Company under this paragraph 11B shall
survive the transfer of any Note or portion thereof or interest
therein by any Purchaser or any Transferee and the payment of any
Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be
amended, and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it,
if the Company shall obtain the written consent to such
amendment, action or omission to act, of the Required Holder(s)
of the Notes of each Series except that, (i) with the written
consent of the holders of all Notes of a particular Series, and
if an Event of Default shall have occurred and be continuing, of
the holders of all Notes of all Series, at the time outstanding
(and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the
maturity thereof, to change or affect the principal thereof, or
to change or affect the rate or time of payment of interest on or
any Yield-Maintenance Amount payable with respect to the Notes of
such Series, (ii) without the written consent of the holder or
holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect
the provisions of this paragraph 11C insofar as such provisions
relate to proportions of the principal amount of the Notes of any
Series, or the rights of any individual holder of Notes, required
with respect to any declaration of Notes to be due and payable or
with respect to any consent, amendment, waiver or declaration,
(iii) with the written consent of Prudential (and not without the
written consent of Prudential) the provisions of paragraph 2B may
be amended or waived (except insofar as any such amendment or
waiver would affect any rights or obligations with respect to the
purchase and sale of Notes which shall have become Accepted Notes
prior to such amendment or waiver), and (1) with the written
consent of all of the Purchasers which shall have become
obligated to purchase Accepted Notes of any Series (and not
without the written consent of all such Purchasers), any of the
provisions of paragraphs 2B and 3 may be amended or waived
insofar as such amendment or waiver would affect only rights or
obligations with respect to the purchase and sale of the Accepted
Notes of such Series or the terms and provisions of such Accepted
Notes. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to
indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing
between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used
herein and in the Notes, the term "THIS AGREEMENT" and references
thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF
NOTES; LOST NOTES. The Notes are issuable as registered notes
without coupons in denominations of at least $1,000,000, except
as may be necessary to reflect any principal amount not evenly
divisible by $1,000,000. The Company shall keep at its principal
office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender
for registration of transfer of any Note at the principal office
of the Company, the Company shall, at its expense, execute and
deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any
Note, such Note may be exchanged for other Notes of like tenor
and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at
the principal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the
exchange is entitled to receive. Each installment of principal
payable on each installment date upon each new Note issued upon
any such transfer or exchange shall be in the same proportion to
the unpaid principal amount of such new Note as the installment
of principal payable on such date on the Note surrendered for
registration of transfer or exchange bore to the unpaid principal
amount of such Note. No reference need be made in any such new
Note to any installment or installments of principal previously
due and paid upon the Note surrendered for registration of
transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by
a written instrument of transfer duly executed, by the holder of
such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon
transfer thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of
written notice from the holder of any Note of the loss, theft,
destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to
due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered as the
owner and holder of such Note for the purpose of receiving
payment of principal of and interest on, and any Yield-
Maintenance Amount payable with respect to, such Note and for all
other purposes whatsoever, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the
contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any
part of such Note to any Person on such terms and conditions as
may be determined by such holder in its sole and absolute
discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein
or made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this
Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of
any investigation made at any time by or on behalf of any
Purchaser or any Transferee. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so
expressed or not.
11H. INDEPENDENCE OF COVENANTS. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is prohibited by any one of such
covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of,
another covenant shall not avoid the occurrence of a Default or
Event of Default if such action is taken or such condition
exists.
11I. NOTICES. All written communications provided for
hereunder (other than communications provided for under paragraph
2) shall be sent by first class mail or nationwide overnight
delivery service (with charges prepaid) and (i) if to any
Purchaser, addressed as specified for such communications in the
Purchaser Schedule attached hereto (in the case of the Series A
Notes) or the Purchaser Schedule attached to the applicable
Confirmation of Acceptance (in the case of any Shelf Notes) or at
such other address as any such Purchaser shall have specified to
the Company in writing, (ii) if to any other holder of any Note,
addressed to it at such address as it shall have specified in
writing to the Company or, if any such holder shall not have so
specified an address, then addressed to such holder in care of
the last holder of such Note which shall have so specified an
address to the Company and (iii) if to the Company, addressed to
it at Two First Union Plaza, Suite 2000, Charlotte, North
Carolina 28282 Attention: Chief Financial Officer,
telephone (704) 372-5404, telecopy (704) 372-6409, provided,
however, that any such communication to the Company may also, at
the option of the Person sending such communication, be delivered
by any other means either to the Company at its address specified
above or to any Authorized Officer of the Company. Any
communication pursuant to paragraph 2 shall be made by the method
specified for such communication in paragraph 2, and shall be
effective to create any rights or obligations under this
Agreement only if, in the case of a telephone communication, an
Authorized Officer of the party conveying the information and of
the party receiving the information are parties to the telephone
call, and in the case of a telecopier communication, the
communication is signed by an Authorized Officer of the party
conveying the information, addressed to the attention of an
Authorized Officer of the party receiving the information, and in
fact received at the telecopier terminal the number of which is
listed for the party receiving the communication in the
Information Schedule or at such other telecopier terminal as the
party receiving the information shall have specified in writing
to the party sending such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in
this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or interest on, or Yield-Maintenance
Amount payable with respect to, any Note that is due on a date
other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the
next succeeding Business Day by reason of the preceding sentence,
the period of such extension shall be included in the computation
of the interest payable on such Business Day.
11K. SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of
the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement,
certificate or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to
any Purchaser, to any holder of Notes or to the Required
Holder(s), the determination of such satisfaction shall be made
by such Purchaser, such holder or the Required Holder(s), as the
case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11N. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement shall be construed and enforced in accordance with, and
the rights of the Parties shall be governed by, the Internal Law
of the State of New York. THE COMPANY HEREBY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE
ELECTION OF THE REQUIRED HOLDER(S) AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE NOTES SHALL BE LITIGATED IN SUCH COURTS, AND THE
COMPANY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN
ANY SUCH COURTS.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to
the Purchasers are to be several sales, and the obligations of
Prudential and the Purchasers under this Agreement are several
obligations. No failure by Prudential or any Purchaser to
perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations
hereunder, and neither Prudential nor any Purchaser shall be
responsible for the obligations of, or any action taken or
omitted by, any other such Person hereunder.
11P. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
11Q. BINDING AGREEMENT. When this Agreement is
executed and delivered by the Company and Prudential, it shall
become a binding agreement between the Company and Prudential.
This Agreement shall also inure to the benefit of each Purchaser
which shall have executed and delivered a Confirmation of
Acceptance, and each such Purchaser shall be bound by this
Agreement to the extent provided in such Confirmation of
Acceptance.
Very truly yours,
RUDDICK CORPORATION
By: /s/ R. N. BRIGDEN
Name: R. N. Brigden
Title: Vice President
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:/s/ ROBERT R. DERRICK
Senior Vice President
EXHIBIT A
[FORM OF SERIES A NOTE]
RUDDICK CORPORATION
6.48% SENIOR SERIES A NOTE DUE 2011
No. _____ [Date]
$50,000,000
FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION
(herein called the "COMPANY"), a corporation organized and
existing under the laws of the State of North Carolina, hereby
promises to pay to _______________________________, or registered
assigns, the principal sum or FIFTY MILLION DOLLARS on March 1,
2011, with interest (computed on the basis of a 360-day
year--30-day month) (a) on the unpaid balance thereof at the rate
of 6.48% per annum from the date hereof, payable quarterly on the
first day of March, June, September and December in each year,
commencing with the June next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b)
on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of Yield Maintenance Amount and
any overdue payment of interest, payable quarterly as aforesaid
(or, at the option of the registered holder hereof, on demand),
at a rate per annum from time to time equal to the greater of (i)
8.48% or (ii) 2% over the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York from time to time in
New York City as its Prime Rate.
Payments of principal, Yield Maintenance Amount, if any, and
interest are to be made at the main office of Morgan Guaranty
Trust Company of New York in New York City or at such other place
as the holder hereof shall designate to the Company in writing,
in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called
the "NOTES") issued pursuant to a Note Purchase and Private Shelf
Agreement, dated as of March 1, 1996 (herein called the
"AGREEMENT"), between the Company, on the one hand, and The
Prudential Insurance Company of America and each Prudential
Affiliate which becomes party thereto, on the other hand, and is
entitled to the benefits thereof. As provided in the Agreement,
this Note is subject to prepayment, in whole or from time to time
in part, with the Yield Maintenance Amount specified in the
Agreement.
The Company agrees to make prepayments of principal of this
Note on the dates and in the amounts specified in the Agreement.
This Note is a registered Note and, as provided in the
Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for
the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
In case an Event of Default shall occur and be continuing,
the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the
Agreement.
The Company and any and all endorsers, guarantors and
sureties severally waive grace, demand, presentment for payment,
notice of dishonor or default, notice of intent to accelerate,
notice of acceleration (to the extent set forth in the
Agreement), protest and diligence in collecting.
Should any debt represented by this Note be collected at law
or in equity, or in bankruptcy or other proceedings, or should
this Note be placed in the hands of attorneys for collection, the
Company agrees to pay, in addition to the principal, Yield-
Maintenance Amount, if any, and interest due and payable hereon,
all costs of collecting or attempting to collect this Note,
including reasonable attorneys' fees and expenses (including
those incurred in connection with any appeal).
Capitalized terms used and not otherwise defined herein
shall have the meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New
York and shall be construed and enforced in accordance with the
internal law of such State. AS PROVIDED IN PARAGRAPH 11N OF
THE AGREEMENT, THE COMPANY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING
RELATING TO THIS NOTE.
RUDDICK CORPORATION
By:__________________________
Title:
[FORM OF SHELF NOTE]
RUDDICK CORPORATION
SENIOR SERIES ___ NOTE
No. __________
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION
(herein called the "COMPANY"), a corporation organized and
existing under the laws of the State of __________, hereby
promises to pay to ________________________, or registered
assigns, the principal sum $___________________ DOLLARS [on the
Final Maturity Date specified above] [, payable on the Principal
Prepayment Dates and in the amounts specified above, and on the
Final Maturity Date specified above in an amount equal to the
unpaid balance of the principal hereof,] with interest (computed
on the basis of a 360-day year--30-day month) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above,
payable on each Interest Payment Date specified above and on the
Final Maturity Date specified above, commencing with the Interest
Payment Date next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal, any
overdue payment of Yield Maintenance Amount and any overdue
payment of interest, payable on each Interest Payment Date as
aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the
greater of (i) 2% over the Interest Rate specified above or (ii)
2% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its Prime Rate.
Payments of principal, Yield Maintenance Amount, if any, and
interest are to be made at the main office of Morgan Guaranty
Trust Company of New York in New York City or at such other place
as the holder hereof shall designate to the Company in writing,
in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called
the "NOTES") issued pursuant to a Note Purchase and Private Shelf
Agreement, dated as of ___________, 1996 (herein called the
"AGREEMENT"), between the Company, on the one hand, and The
Prudential Insurance Company of America and each Prudential
Affiliate (as defined in the Agreement) which becomes party
thereto, on the other hand, and is entitled to the benefits
thereof.
[This Note is subject to optional prepayment, in whole or
from time to time in part, on the terms specified in the
Agreement.]
This Note is a registered Note and, as provided in the
Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for
the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
In case an Event of Default shall occur and be continuing,
the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in
the Agreement.
The Company and any and all endorsers, guarantors and
sureties severally waive grace, demand, presentment for payment,
notice of dishonor or default, notice of intent to accelerate,
notice of acceleration (to the extent set forth in the
Agreement), protest and diligence in collecting.
Should any debt represented by this Note be collected at law
or in equity, or in bankruptcy or other proceedings, or should
this Note be placed in the hands of attorneys for collection, the
Company agrees to pay, in addition to the principal, Yield-
Maintenance Amount, if any, and interest due and payable hereon,
all costs of collecting or attempting to collect this Note,
including reasonable attorneys' fees and expenses (including
those incurred in connection with any appeal).
Capitalized terms used and not otherwise defined herein
shall have the meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New
York and shall be construed and enforced in accordance with the
internal law of such State. AS PROVIDED IN PARAGRAPH 11N OF THE
AGREEMENT, THE COMPANY SUBMITS TO THE JURISDICTION OF THE SUPREME
COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS
NOTE.
RUDDICK CORPORATION
By:__________________________
Title:
<PAGE>
EXHIBIT B
[FORM OF REQUEST FOR PURCHASE]
RUDDICK CORPORATION
Reference is made to the Note Purchase and Private Shelf
Agreement (the "AGREEMENT"), dated as of ____________, 1996
between Ruddick Corporation (the "COMPANY"), on the one hand, and
The Prudential Insurance Company of America ("PRUDENTIAL") and
each Prudential Affiliate which becomes party thereto, on the
other hand. Capitalized terms used and not otherwise defined
herein shall have the respective meanings specified in the
Agreement.
Pursuant to Paragraph 2B(3) of the Agreement, the Company
hereby makes the following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "NOTES") . . . . . . . . . . . . . .$___________
2. Individual specifications of the Notes:
Principal Final Principal Interest
Amount1 Maturity Payment Dates Payment
Date and Amounts Period
1 Minimum principal amount of $10,000,000.
2 Specify quarterly or semi-annually.
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and
sale of the Notes:
5. The purchase price of the Notes is to be transferred
to:
Name, Address
and ABA Routing Number of
Number of Bank Account
___________________ ______________
6. The Company certifies (a) that the representations and
warranties contained in paragraph 8 of the Agreement
are true on and as of the date of this Request for
Purchase except to the extent of changes caused by the
transactions contemplated in the Agreement and (b) that
there exists on the date of this Request for Purchase
no Event of Default or Default.
7. The Issuance Fee to be paid pursuant to the Agreement
will be paid by the Company on the closing date.
[8. In connection with any rate quotes it may provide,
Prudential should assume a Designated Spread of
_____%.]
Dated: RUDDICK CORPORATION
By: ____________________
Authorized Officer
EXHIBIT C
[FORM OF CONFIRMATION OF ACCEPTANCE]
RUDDICK CORPORATION
Reference is made to the Note Purchase and Private Shelf
Agreement (the "AGREEMENT"), dated as of __________, 1996 between
RUDDICK CORPORATION (the "COMPANY"), on the one hand, and The
Prudential Insurance Company of America ("PRUDENTIAL") and each
Prudential Affiliate which becomes party thereto, on the other
hand. All terms used herein that are defined in the Agreement
have the respective meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below
as a Purchaser of Notes hereby confirms the representations as to
such Notes set forth in paragraph 9 of the Agreement, and agrees
to be bound by the provisions of paragraphs 2B(5) and 2B(7) of
the Agreement relating to the purchase and sale of such Notes and
by the provisions of the penultimate sentence of paragraph 11A of
the Agreement.
Pursuant to paragraph 2B(5) of the Agreement, an Acceptance
with respect to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal
amount $__________________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth
on attached Purchaser Schedule
[(h) Designated Spread: ___%]
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth
on attached Purchaser Schedule
[(h) Designated Spread: ___%]
[(C), (D)..... same information as above.]
II. Closing Day:
Dated: RUDDICK CORPORATION
By: _____________________________
Title: __________________________
[THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA]
_______________________________
Vice President
[PRUDENTIAL AFFILIATE]
By: ___________________________
Vice President
EXHIBIT D-1
[See Attached]
<PAGE>
SMITH HELMS MULLISS & MOORE, L.L.P.
Attorneys at Law
Post Office Box 31247
Charlotte, North Carolina 28231
Telephone (704) 343-2000
March 1, 1996
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center One, 11th Floor
7-45 Raymond Boulevard
Newark, New Jersey 07102-5311
Ladies and Gentlemen:
We have acted as counsel for Ruddick Corporation (the
"Company") in connection with the Note Purchase and Private Shelf
Agreement dated as of March 1, 1996 (the "Agreement") between the
Company, on the one hand, and The Prudential Insurance Company of
America and each Prudential Affiliate which becomes a party
thereto, on the other hand, pursuant to which the Company has
issued to you today its Senior Series A Notes in the aggregate
principal amount of $50,000,000 (the "Notes"). Capitalized terms
used and not otherwise defined herein shall have the meanings
provided in the Agreement. This letter is being delivered to you
in satisfaction of the condition set forth in paragraph 3A(v) of
the Agreement and with the understanding that you are purchasing
the Notes in reliance on the opinions expressed herein.
In this connection, we have examined and relied upon such
matters of law, documents and certificates of public officials,
the Company, and others as we have deemed necessary for the
purposes of this opinion. In all such examinations, we have
assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as conformed or photostatic copies,
and the authenticity of the originals of all such letter
documents. We have also assumed that the agreements and
instruments referred to herein have been duly authorized,
executed and delivered by each party thereto other than the
Company as the case may be. With respect to the opinion
expressed in paragraph 3 below, we have also relied upon the
representation made by you in paragraph 9A of the Agreement.
Based on the foregoing, it is our opinion that:
1. Each of the Company, American & Efird, Inc. and Harris
Teeter, Inc. is a corporation duly organized and validly existing
in good standing under the laws of the State of North Carolina,
and each has the corporate power to carry on its business as now
being conducted. To the best of our knowledge, the Company is
not required to be qualified as a foreign corporation in any
other jurisdiction.
2. The Agreement and the Notes have been duly authorized
by all requisite corporate action and duly executed and delivered
by authorized officers of the Company, and, assuming North
Carolina law were applied, are valid obligations of the Company,
legally binding upon and enforceable against the Company in
accordance with their respective terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances
contemplated by the Agreement to register the Notes under the
Securities Act or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of
regulation G, T or X of the Board of Governors of the Federal
Reserve System.
5. The execution and delivery of the Agreement and the
Notes, the offering, issuance and sale of the Notes and
fulfillment of and compliance with the respective provisions of
the Agreement and the Notes do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of the Restricted Subsidiaries pursuant to, or
require any authorization, consent, approval, exemption, or other
action by or notice to or filing with any court, administrative
or governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission
and/or state Blue Sky authorities) pursuant to, the Articles of
Incorporation or bylaws of the Company, any applicable law
(including any securities or Blue Sky law), statute, rule or
regulation or (insofar as is known to us after having made due
inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Schedule 8G to the
Agreement), instrument, order, judgment or decree to which the
Company is a party or otherwise subject.
6. A North Carolina Court should, under conflicts of law
principles observed by North Carolina courts, if properly
presented with the issue, give effect to the choice of laws
provisions in the Agreement and the Note and apply the laws of
New York to the Agreement and the Note insofar as the choice of
law provisions relate to the substantive laws of New York and are
applicable with respect to the validity, interpretation and
effect of the Agreement, except to the extent that (i) any terms
of the Agreement and the Note or any provisions of New York law
applicable to the Agreement or the Note violate a public policy
of the State of North Carolina; (ii) procedural (as opposed to
substantive) laws are involved; or (iii) any action brought with
respect to the Agreement or the Note alleges a claim based on, or
most closely analogous to, tort rather than contract.
We are members of the Bar of the State of North Carolina
only. We are not expressing any opinion as to any matter
relating to any jurisdiction other than the laws of the State of
North Carolina and the United States of America and we assume no
responsibility as to the applicability of the laws of any other
jurisdiction as to the subject transaction or the effect of such
laws thereon.
Our opinions contained herein are rendered only as of the
date hereof and we undertake no obligation to update our opinions
after the date hereof.
Our opinions contained herein are rendered solely for your
information in connection with the Agreement and may not be
relied upon in any manner by any other person, entity or agency,
or by you for any other purpose except for King & Spalding in
connection with the delivery of its opinion pursuant to paragraph
3B of the Agreement and any Transferee. Without our prior
written consent our opinions herein shall not be quoted or
otherwise included, summarized or referred to in any publication
or document, in whole or in part, for any purposes whatsoever, or
furnished to any other person, entity or agency, except as may be
required by you by applicable law or regulation or request of
regulatory agencies to which you are subject.
Very truly yours,
SMITH HELMS MULLISS & MOORE, L.L.P.
EXHIBIT D-2
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of _______________________]
[Date of Closing]
[Name(s) and address(es) of
Purchaser(s)]
Ladies and Gentlemen:
We have acted as counsel for Ruddick Corporation (the
"COMPANY") in connection [As ___________________ of Ruddick
Corporation (the "COMPANY"), I am familiar] with the Note
Purchase and Private Shelf Agreement, dated as of ___________,
1996 (the "AGREEMENT") between the Company, on the one hand, and
The Prudential Insurance Company of America and each Prudential
Affiliate which becomes a party thereto, on the other hand,
pursuant to which the Company has issued to you today Senior
Series ___ Notes of the Company in the aggregate principal amount
of $_____________ (the "NOTES"). Capitalized terms used and not
otherwise defined herein shall have the meanings provided in the
Agreement. This letter is being delivered to you in satisfaction
of the condition set forth in paragraph 3A(v) of the Agreement
and with the understanding that you are purchasing the Notes in
reliance on the opinions expressed herein.
In this connection, [we] [I] have examined such certificates
of public officials, certificates of officers of the Company and
copies certified to [our] [my] satisfaction of corporate
documents and records of the Company and of other papers, and
have made such other investigations, as [we] [I] have deemed
relevant and necessary as a basis for [our] [my] opinion
hereinafter set forth. [We] [I] have relied upon such
certificates of public officials and of officers of the Company
with respect to the accuracy of material factual matters
contained therein which were not independently established. With
respect to the opinion expressed in paragraph 3 below, [we] [I]
have also relied upon the representation made by [each of] you in
paragraph 9A of the Agreement.
Based on the foregoing, it is [our] [my] opinion that:
1. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of
__________________. [Each Subsidiary is a corporation duly
organized and validly existing in good standing under the laws of
its jurisdiction of incorporation.] The Company [and its
Subsidiaries] has [have] the corporate power to carry on its
[their respective] business[es] as now being conducted. [The
Company has no Subsidiaries.]
2. The Agreement and the Notes have been duly authorized
by all requisite corporate action and duly executed and delivered
by authorized officers of the Company, and are valid obligations
of the Company, legally binding upon and enforceable against the
Company in accordance with their respective terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances
contemplated by the Agreement to register the Notes under the
Securities Act or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of
regulation G, T or X of the Board of Governors of the Federal
Reserve System.
5. The execution and delivery of the Agreement and the
Notes, the offering, issuance and sale of the Notes and
fulfillment of and compliance with the respective provisions of
the Agreement and the Notes do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company [or any of its Subsidiaries] pursuant to, or require any
authorization, consent, approval, exemption, or other action by
or notice to or filing with any court, administrative or
governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission
and/or state Blue Sky authorities) pursuant to, the charter or
by-laws of the Company [or any of its Subsidiaries], any
applicable law (including any securities or Blue Sky law),
statute, rule or regulation or (insofar as is known to [us] [me]
after having made due inquiry with respect thereto) any agreement
(including, without limitation, any agreement listed in Schedule
8G to the Agreement), instrument, order, judgment or decree to
which the Company [or any of its Subsidiaries] is a party or
otherwise subject.
Very truly yours,
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS ENDED
-------------------------
March 31, April 2,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
PRIMARY:
1. Net Income $17,620,000 $18,568,000
=========== ===========
2. Weighted Average Common Shares 46,395,573 46,268,714
Outstanding
3. Incremental Shares Under Stock
Options Computed Under the
Treasury Stock Method Using the
Average Market Price of Issuer's
Stock During the Periods 164,485 364,138
----------- -----------
4. Weighted Average Common Shares and
Common Equivalent Shares Outstanding 46,560,058 46,632,852
=========== ===========
5. Net Income Per Share (Item 1
divided by Item 4) $.38 $.40
=========== ===========
FULLY DILUTED:
1. Net Income $17,620,000 $18,568,000
=========== ===========
2. Weighted Average Common Shares
Outstanding 46,395,573 46,268,714
3. Incremental Shares Under Stock
Options Computed Under the
Treasury Stock Method Using the
Higher of the Average or Ending
Market Price of Issuer's Stock
at the End of the Periods 211,394 381,930
----------- -----------
4. Weighted Average Common Shares and
Common Equivalent Shares Outstanding 46,606,967 46,650,644
=========== ===========
5. Net Income Per Share (Item 1
divided by Item 4) $.38 $.40
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
RUDDICK CORPORATION
Financial Data Schedule for the Three Months ended 3/31/96
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 7,253,000
<SECURITIES> 0
<RECEIVABLES> 59,915,000
<ALLOWANCES> 1,295,000
<INVENTORY> 183,555,000
<CURRENT-ASSETS> 277,453,000
<PP&E> 628,541,000
<DEPRECIATION> 263,428,000
<TOTAL-ASSETS> 717,764,000
<CURRENT-LIABILITIES> 191,370,000
<BONDS> 143,582,000
<COMMON> 55,054,000
0
0
<OTHER-SE> 272,655,000
<TOTAL-LIABILITY-AND-EQUITY> 717,764,000
<SALES> 522,352,000
<TOTAL-REVENUES> 522,352,000
<CGS> 379,840,000
<TOTAL-COSTS> 503,710,000
<OTHER-EXPENSES> 2,598,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,989,000
<INCOME-PRETAX> 13,055,000
<INCOME-TAX> 3,554,000
<INCOME-CONTINUING> 9,501,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,501,000
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
