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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 23, 1997
WEST MARINE, INC.
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(Exact name of registrant as specified in its Securities)
Delaware 0-22515 77-035-5502
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 Westridge Drive, Watsonville, California 95076-4100
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(Address of principal executive office)
Registrant's Telephone number, including area code: (408) 728-2700
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N/A
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(Former name or former address if changed since last Report)
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Item 5: Other Events
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On December 23, 1997, Registrant's wholly owned subsidiary, West Marine
Finance Company, Inc., a California corporation, offered and sold to five
accredited investors pursuant to the provisions of Rule 506 of Regulation D of
the Securities and Exchange Commission, Forty Million Dollars ($40,000,000) of
its unsecured 6.85% Senior Guaranteed Notes due December 23, 2004 ("the Notes).
A specimen of the Note Purchase Agreement used to effect the sale of the
Notes is attached as Exhibit A hereto.
A specimen of the Form of Note issued and sold is attached as Exhibit I to
the Note Purchase Agreement, Exhibit A hereto.
By Guaranty Agreement dated as of December 23, 1997, Registrant
unconditionally guarantees to the holders of the Notes the full and prompt
payment of principal and interest due under the Notes.
By Guaranty Agreement dated as of December 23, 1997, each of Registrant's
remaining subsidiaries, being West Marine Products, Inc., a California
corporation; E&B Marine, Inc., a Delaware corporation; E&B Marine Supply, Inc.,
a New Jersey corporation; E&B Marine Supply, Inc., a Maryland corporation; E&B
Marine Supply (Florida), Inc., a Delaware corporation; James Bliss & Company,
Inc., a Massachusetts corporation; Goldbergs' Marine Distributors, Inc., a
Delaware corporation; Central Marine Supply, Inc., a New Jersey corporation;
Central Marine Supply (Florida), Inc., a Delaware corporation; Sea Ranger
Marine, Inc., a Delaware corporation; Krista Corporation, a Delaware
corporation; West Marine LBC, Inc., a California corporation; West Marine IHC I,
Inc., a California corporation; West Marine IHC II, Inc., a California
corporation; E&B Marine LBC, Inc., a California corporation; E&B Marine IHC I,
Inc., a California corporation; E&B Marine IHC II, Inc., a California
corporation; West Marine FSC, Inc., a Barbados corporation and W. Marine
Management Company, Inc., a California corporation (collectively the "Subsidiary
Guarantors") similarly, guarantee to the holders of the Notes, the full and
prompt payment of principal and interest due under the Notes.
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Item 7: Financial Statements, Proforma Financial Information and Exhibits
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit A - Form of Note Purchase Agreement dated as of
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December 23, 1997, together with specimen form of 6.85% Senior
Guaranteed Note due December 23, 2004.
SIGNATURES
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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 hereunto duly authorized.
WEST MARINE, INC.,
a Delaware corporation
/s/ JOHN C. ZOTT
________________
Date: January 7, 1998 JOHN C. ZOTT
Its Senior Vice President,
Finance & Chief Financial Officer
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West Marine Finance Company, Inc.
$40,000,000
6.85% Senior Guaranteed Notes due December 23, 2004
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Note Purchase Agreement
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Dated as of December 22, 1997
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TABLE OF CONTENTS
(Not a part of the Agreement)
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SECTION HEADING PAGE
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Section 1. Authorization of Notes........................................... 1
Section 2. Sale and Purchase of Notes....................................... 1
Section 2.1. Sales and Purchase of Notes................................... 1
Section 2.2. Parent Guaranty and Subsidiary Guaranty....................... 2
Section 2.3. Release of Subsidiary Guaranty................................ 2
Section 3. Closing.......................................................... 3
Section 4. Conditions to Closing............................................ 3
Section 4.1. Representations and Warranties................................ 3
Section 4.2. Performance; No Default....................................... 3
Section 4.3. Compliance Certificates....................................... 4
Section 4.4. Parent Guaranty; Subsidiary Guaranty; Credit Agreement........ 4
Section 4.5. Opinions of Counsel........................................... 4
Section 4.6. Purchase Permitted By Applicable Law, Etc..................... 5
Section 4.7. Sale of Other Notes........................................... 5
Section 4.8. Payment of Special Counsel Fees............................... 5
Section 4.9. Private Placement Number...................................... 5
Section 4.10. Changes in Corporate Structure................................ 5
Section 4.11. Proceedings and Documents..................................... 6
Section 4.12. Consent of Holders of Other Securities........................ 6
Section 5. Representations and Warranties of the Company.................... 6
Section 5.1. Organization; Power and Authority............................. 6
Section 5.2. Authorization, Etc............................................ 6
Section 5.3. Organization and Ownership of Shares of Subsidiaries.......... 6
Section 5.4. Compliance with Laws, Other Instruments, Etc.................. 6
Section 5.5. Governmental Authorizations, Etc.............................. 7
Section 5.6. Litigation; Observance of Agreements, Statutes and Orders..... 7
Section 5.7. Taxes......................................................... 7
Section 5.8. Title to Property; Leases..................................... 7
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Section 5.9. Licenses, Permits, Etc........................................ 8
Section 5.10. Compliance with ERISA......................................... 8
Section 5.11. Private Offering by the Company............................... 8
Section 5.12. Use of Proceeds; Margin Regulations........................... 8
Section 5.13. Existing Indebtedness; Future Liens........................... 8
Section 6. Representations of the Purchaser................................. 8
Section 6.1. Purchase for Investment....................................... 8
Section 6.2. Source of Funds............................................... 9
Section 7. Prepayment of the Notes.......................................... 10
Section 7.1. Required Prepayments.......................................... 10
Section 7.2. Optional Prepayments with Make-Whole Amount................... 10
Section 7.3. Prepayment of Notes upon Change of Control.................... 11
Section 7.4. Allocation of Partial Prepayments............................. 12
Section 7.5. Maturity; Surrender, Etc...................................... 12
Section 7.6. Purchase of Notes............................................. 13
Section 7.7. Make-Whole Amount............................................. 13
Section 8. Affirmative Covenants of the Company............................. 14
Section 8.1. Compliance with Law........................................... 14
Section 8.2. Insurance..................................................... 14
Section 8.3. Maintenance of Properties..................................... 15
Section 8.4. Payment of Taxes and Claims................................... 15
Section 8.5. Corporate Existence, Etc...................................... 15
Section 8.6. Nature of Business............................................ 15
Section 8.7. Notes to Rank Pari Passu...................................... 15
Section 8.8. Mergers and Consolidations and Sales of Assets................ 16
Section 8.9. Delivery of Certain Closing Documentation Following the
Closing Date.................................................. 16
Section 10. Remedies on Default, Etc......................................... 19
Section 10.1. Acceleration.................................................. 19
Section 10.2. Other Remedies................................................ 20
Section 10.3. Rescission.................................................... 20
Section 10.4. No Waivers or Election of Remedies, Expenses, Etc............. 20
Section 11. Registration; Exchange; Substitution of Notes.................... 20
Section 11.1. Registration of Notes......................................... 20
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Section 11.2. Transfer and Exchange of Notes................................ 21
Section 11.3. Replacement of Notes.......................................... 21
Section 12. Payments on Notes................................................ 22
Section 12.1. Place of Payment.............................................. 22
Section 12.2. Home Office Payment........................................... 22
Section 13. Expenses, Etc.................................................... 22
Section 13.1. Transaction Expenses.......................................... 22
Section 13.2. Survival...................................................... 23
Section 14. Survival of Representations and Warranties; Entire Agreement..... 23
Section 15. Amendment and Waiver............................................. 23
Section 15.1. Requirements.................................................. 23
Section 15.2. Solicitation of Holders of Notes.............................. 24
Section 15.3. Binding Effect, Etc........................................... 24
Section 15.4. Notes Held by Company, Etc.................................... 24
Section 16. Notices.......................................................... 25
Section 17. Reproduction of Documents........................................ 25
Section 18. Substitution of Purchaser........................................ 26
Section 19. Miscellaneous.................................................... 26
Section 19.1. Successors and Assigns........................................ 26
Section 19.2. Payments Due on Non-Business Days............................. 26
Section 19.3. Severability.................................................. 26
Section 19.4. Construction.................................................. 26
Section 19.5. Counterparts.................................................. 26
Section 19.6. Governing Law................................................. 27
Signature.............................................................................. 27
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Section 9. Events of Default................................................ 16
Section 10. Remedies on Default, Etc......................................... 19
Section 10.1. Acceleration.................................................. 19
Section 10.2. Other Remedies................................................ 20
Section 10.3. Rescission.................................................... 20
Section 10.4. No Waivers or Election of Remedies, Expenses, Etc............. 20
Section 11. Registration; Exchange; Substitution of Notes.................... 20
Section 11.1. Registration of Notes......................................... 20
Section 11.2. Transfer and Exchange of Notes................................ 21
Section 11.3. Replacement of Notes.......................................... 21
Section 12. Payments on Notes................................................ 22
Section 12.1. Place of Payment.............................................. 22
Section 12.2. Home Office Payment........................................... 22
Section 13. Expenses, Etc.................................................... 22
Section 13.1. Transaction Expenses.......................................... 22
Section 13.2. Survival...................................................... 23
Section 14. Survival of Representations and Warranties; Entire Agreement..... 23
Section 15. Amendment and Waiver............................................. 23
Section 15.1. Requirements.................................................. 23
Section 15.2. Solicitation of Holders of Notes.............................. 24
Section 15.3. Binding Effect, Etc........................................... 24
Section 15.4. Notes Held by Company, Etc.................................... 24
Section 16. Notices.......................................................... 25
Section 17. Reproduction of Documents........................................ 25
Section 18. Substitution of Purchaser........................................ 26
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Section 19. Miscellaneous.................................................... 26
Section 19.1. Successors and Assigns........................................ 26
Section 19.2. Payments Due on Non-Business Days............................. 26
Section 19.3. Severability.................................................. 26
Section 19.4. Construction.................................................. 26
Section 19.5. Counterparts.................................................. 26
Section 19.6. Governing Law................................................. 27
Signature.............................................................................. 27
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Schedule A --- Information Relating To Purchasers
Schedule B --- Defined Terms
Schedule 4.10 --- Changes in Corporate Structure
Exhibit 1 --- Form of 6.85% Senior Guaranteed Note due December 23, 2004
Exhibit 2 --- Form of Parent Guaranty
Exhibit 3 --- Form of Subsidiary Guaranty
Exhibit 4.4(a) --- Form of Opinion of Special Counsel for the Company and the Parent Guarantor
Exhibit 4.4(b) --- Form of Opinion of Special Counsel for the Purchasers
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WEST MARINE FINANCE COMPANY, INC.
500 WESTRIDGE DRIVE
WATSONVILLE, CALIFORNIA 95076-4100
6.85% Senior Guaranteed Notes due December 23, 2004
Dated as of December 22, 1997
TO THE PURCHASER LISTED IN THE ATTACHED
SCHEDULE A WHO IS A SIGNATORY HERETO:
Ladies and Gentlemen:
WEST MARINE FINANCE COMPANY, INC. a California corporation (the
"Company"), hereby agrees with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $40,000,000 aggregate
principal amount of its 6.85% Senior Guaranteed Notes due December 23, 2004 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to SECTION 11 of this Agreement or the Other Agreements (as hereinafter
defined)). The Notes shall be substantially in the form set out in EXHIBIT 1
with such changes therefrom, if any, as may be approved by you and the Company
in accordance with SECTION 15.1. Certain capitalized terms used in this
Agreement are defined in SCHEDULE B; references to a "SCHEDULE" or an "EXHIBIT"
are, unless otherwise specified, to a SCHEDULE or an EXHIBIT attached to this
Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES; SECURITY.
Section 2.1. Sales and Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Company will issue and sell to you and you
will purchase from the Company, at the Closing provided for in SECTION 3, Notes
in the principal amount specified opposite your name in SCHEDULE A at the
purchase price of 100% of the principal amount thereof. Contemporaneously with
entering into this Agreement, the Company is entering into separate Note
Purchase Agreements (the "Other Agreements") identical with this Agreement with
each of the other purchasers named in SCHEDULE A (the "Other Purchasers"),
providing for the sale at such Closing to each of the Other Purchasers of Notes
in the principal amount specified opposite
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its name in SCHEDULE A. Your obligation hereunder, and the obligations of the
Other Purchasers under the Other Agreements, are several and not joint
obligations, and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or nonperformance by any Other
Purchaser thereunder.
Section 2.2. Parent Guaranty and Subsidiary Guaranty. Without
limiting SECTION 4.8 of the Parent Guaranty, the payment by the Company of all
amounts due with respect to the Notes and the performance by the Company of its
obligations under this Agreement and the Other Agreements will be absolutely and
unconditionally guaranteed by the Parent Guarantor pursuant to the Parent
Guaranty Agreement substantially in the form of EXHIBIT 2 attached hereto and
made a part hereof (as the same may be amended, modified, extended or renewed
(the "Parent Guaranty") and the payment by the Company of all amounts due with
respect to the Notes and the performance by the Company of its obligations under
this Agreement and the Other Agreements will be absolutely and unconditionally
guaranteed by the existing Subsidiaries of the Parent Guarantor which are listed
as guarantors on Schedule 2.4 to the Parent Guaranty (together with any other
Subsidiary which may from time to time become a party to the Subsidiary
Guaranty, collectively the "Subsidiary Guarantors") pursuant to a Guaranty
Agreement substantially in the form of EXHIBIT 3 attached hereto and made a part
hereof (as the same may be amended, modified, extended or renewed, the
"Subsidiary Guaranty").
If at any time the Parent Guarantor creates or acquires any Subsidiary
after the date of the Closing, then and in such event the Parent Guarantor shall
cause such Subsidiary to enter into the Subsidiary Guaranty. Any such
additional Guaranty or security shall be given to the holders of the Notes
pursuant to SECTION 4.8 of the Parent Guaranty.
Section 2.3. Release of Subsidiary Guaranty. (a) The holders of
the Notes acknowledge and agree that such holders will discharge and release the
Subsidiary Guaranty pursuant to the request of the Parent Guarantor, provided
that the Bank Lenders simultaneously discharge in the same manner and to the
same extent the Guaranties of Subsidiaries delivered pursuant to the Bank Credit
Agreement, and provided further that in the event any Guaranty is thereafter
required to be delivered by any Subsidiary pursuant to the Bank Credit
Agreement, then the Parent Guarantor shall cause such Subsidiary then and
thereupon to comply with the requirements of SECTION 4.8 of the Parent Guaranty.
Without limiting the foregoing, the Parent Guarantor may request the release of
a Subsidiary from the Subsidiary Guaranty if such Subsidiary is merged or
consolidated with or into another Subsidiary of the Parent Guarantor, provided
that the surviving Subsidiary shall confirm in writing its obligations under and
pursuant to the Subsidiary Guaranty and the Bank Lenders shall have
simultaneously released such Subsidiary from the terms of any Guaranty delivered
pursuant to the Bank Credit Agreement.
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(b) Neither the Parent Guarantor nor any of its Subsidiaries (including,
without limitation, the Company) or any Affiliate will, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of Indebtedness as
consideration for or as an inducement to their release of the Subsidiary
Guaranty, unless such remuneration is concurrently offered and paid on the same
terms, to the holders of all Notes then outstanding.
(c) Nothing contained in this Agreement, including without limitation
this SECTION 2.3, shall be deemed or construed in any manner whatsoever to
obligate the holders of the Notes to release and discharge the Parent Guaranty,
which shall be and remain an absolute and unconditional guaranty as therein
contemplated until payment in full of the Notes and satisfaction of the
obligations of the Parent Guarantor and the Company hereunder and thereunder, as
the case may be.
SECTION 3. Closing.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois, at 10:00 a.m. Chicago time, at a closing (the
"Closing") on December 23, 1997 or on such other Business Day thereafter on or
prior to December 30, 1997 as may be agreed upon by the Company and you and the
Other Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $1,000,000 as you may request) dated the date of
the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
14870-03268 at Bank of America (ABA#E121-000-358), 101 Park Center Plaza, Dept.
1478, San Jose, California 95113. If at the Closing the Company shall fail to
tender such Notes to you as provided above in this SECTION 3, or any of the
conditions specified in SECTION 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
SECTION 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
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Section 4.1. Representations and Warranties. (a) The representations
and warranties of the Company in this Agreement shall be correct when made and
at the time of the Closing.
(b) The representations and warranties of the Parent Guarantor in the
Parent Guaranty shall be correct when made and at the time of the Closing.
(c) The representations and warranties of the Subsidiary Guarantors in
the Subsidiary Guaranty shall be correct when made and at the time of the
Closing.
Section 4.2. Performance; No Default. (a) The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by SECTION 5.12), no
Default or Event of Default shall have occurred and be continuing. The Company
shall not have entered into any transaction since the date of the Memorandum
that would have been prohibited by SECTION 8 had such SECTION applied since such
date.
(b) The Parent Guarantor shall have performed and complied with all
agreements and conditions contained in the Parent Guaranty required to be
performed and complied with by it prior to or at the Closing, and after giving
effect to the issuance and sale of the Notes (and the application of the
proceeds thereof as contemplated by SECTION 5.12), no Default or Event of
Default shall have occurred and be continuing. Neither the Parent Guarantor nor
any Subsidiary shall have entered into any transactions since the date of the
Memorandum that would have been prohibited by Sections 4 and 5 of the Parent
Guaranty had such Sections applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. (i) The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in SECTIONS 4.1(a), 4.2(a) and 4.10(a) have been fulfilled.
(ii) The Parent Guarantor shall have delivered to you an Officer's
Certificate, dated the date of the Closing, certifying that the conditions
specified in SECTIONS 4.1(b), 4.2(b) and 4.10(b) have been fulfilled.
(iii) Each Subsidiary Guarantor shall have delivered to you a
certificate of an authorized officer, dated the date of the Closing, certifying
that the conditions specified in SECTION 4.1(c) have been fulfilled with respect
to such Subsidiary Guarantor.
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(b) Secretary's Certificate. (i) The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
(ii) The Parent Guarantor shall have delivered to you a certificate
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the Parent
Guaranty.
(iii) Each Subsidiary Guarantor shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Subsidiary Guaranty.
Section 4.4. Parent Guaranty; Subsidiary Guaranty; Credit Agreement. The
Parent Guaranty, Subsidiary Guaranty and the Bank Credit Agreement shall have
been duly executed and delivered by the parties thereto, shall be in full force
and effect, shall be in form and substance satisfactory to you and you shall
have received true, correct and complete copies of each thereof.
Section 4.5. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Robertson, Lewis & Deckard, counsel for the Parent Guarantor and its
Subsidiaries (including, without limitation, the Company), covering the matters
set forth in EXHIBIT 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Parent Guarantor and the Company each hereby instructs its counsel to
deliver such opinion to you) and (b) from Chapman and Cutler, your special
counsel in connection with such transactions, substantially in the form set
forth in EXHIBIT 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
Section 4.6. Purchase Permitted By Applicable Law, Etc. On the date of
the Closing your purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (b) not violate any applicable law or
regulation (including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (c) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
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Section 4.7. Sale of Other Notes. Contemporaneously with the
Closing, the Company shall sell to the Other Purchasers, and the Other
Purchasers shall purchase, the Notes to be purchased by them at the Closing as
specified in SCHEDULE A.
Section 4.8. Payment of Special Counsel Fees. Without limiting the
provisions of SECTION 13.1, the Company or the Parent Guarantor shall have paid
on or before the Closing the fees, charges and disbursements of your special
counsel referred to in SECTION 4.5 to the extent reflected in a statement of
such counsel rendered to the Company or the Parent Guarantor at least three
Business Days prior to the Closing.
Section 4.9. Private Placement Number. A Private Placement number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
Section 4.10. Changes in Corporate Structure. (a) Except as
specified in SCHEDULE 4.10, the Company shall not have changed its jurisdiction
of incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any other
entity, at any time following the date of the most recent financial statements
referred to in Schedule 2.5 to the Parent Guaranty.
(b) Except as specified in SCHEDULE 4.10, the Parent Guarantor shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 2.5 of the Parent Guaranty.
Section 4.11. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
Section 4.12. Consent of Holders of Other Securities. Any consents
or approvals required to be obtained from any holder or holders of any
outstanding Security of the Parent Guarantor and any amendments or agreements
pursuant to which any Securities may have been issued which shall be necessary
to permit the consummation of the transactions contemplated hereby on the date
of the Closing shall have been obtained and all such consents or amendments
shall be satisfactory in form and substance to you and your special counsel.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Other Agreements and the Notes and to perform the provisions hereof and
thereof.
Section 5.2. Authorization, Etc. This Agreement, the Other
Agreements and the Notes have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium 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).
Section 5.3. Organization and Ownership of Shares of Subsidiaries.
The Company has no Subsidiaries.
Section 5.4. Compliance with Laws, Other Instruments, Etc. (a) The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company is bound or by which the Company or any of its
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company.
(b) The Notes and all other obligations under this Agreement of the
Company are direct and unsecured obligations of the Company ranking pari passu
as against the assets of the Company with all other existing unsecured
Indebtedness of the Company (actual or contingent)
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which is not expressed to be subordinated or junior in rank to any other
unsecured Indebtedness of the Company.
(c) All obligations under the Subsidiary Guaranties are direct and
unsecured obligations of the Subsidiary Guarantors ranking pari passu as
against the assets of the Subsidiary Guarantors with all other present and
future unsecured Indebtedness (actual or contingent) of the Subsidiary
Guarantors which is not expressed to be subordinated or junior in rank to any
other unsecured Indebtedness of the Subsidiary Guarantors.
Section 5.5. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.
Section 5.6. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
property of the Company in any court or before any arbitrator of any kind or
before or by any Governmental Authority.
(b) The Company is not in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
nor is it in violation of any applicable law, ordinance, rule or regulation
(including without limitation Environmental Laws) of any Governmental Authority.
Section 5.7. Taxes. The Company has filed all tax returns that are
required to have been filed in any jurisdiction, and has paid all taxes shown to
be due and payable on such returns and, to its knowledge, all other taxes and
assessments levied upon it or its properties, assets, income or franchises, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent.
Section 5.8. Title to Property; Leases. The Company has good and
sufficient title to its properties that individually or in the aggregate are
Material.
Section 5.9. Licenses, Permits, Etc. The Company owns or possesses
all licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others.
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Section 5.10. Compliance with ERISA. The execution and delivery of
this Agreement and the issuance and sale of the Notes hereunder will not involve
any transaction that is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to
Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
first sentence of this SECTION 5.10 is made in reliance upon and subject to the
accuracy of your representation in SECTION 6.2 as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by you.
Section 5.11. Private Offering by the Company. Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar securities
for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than you, the
Other Purchasers and not more than 75 other Institutional Investors, each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act.
Section 5.12. Use of Proceeds; Margin Regulations. The Company
will on the date of Closing remit the proceeds of the sale of the Notes to the
Parent Guarantor which will apply such proceeds to the refinancing of existing
bank Indebtedness and to general corporate purposes.
Section 5.13. Existing Indebtedness; Future Liens. (a) SCHEDULE 5.13
sets forth a complete and correct list of all outstanding Indebtedness of the
Company as of the date of the Closing. The Company is not in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company and no event or condition exists
with respect to any Indebtedness of the Company that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.
(b) The Company has not agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not permitted
by Section 5.6 of the Parent Guaranty.
Section 6. REPRESENTATIONS OF THE PURCHASER.
Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof; provided that the disposition of
your or their property shall at all times be within your or their
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control. You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes.
Section 6.2. Source of Funds. 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) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-
60 (issued July 12, 1995) and there is no employee benefit plan, treating
as a single plan, all plans maintained by the same employer or employee
organization, with respect to which the amount of the general account
reserves and liabilities for all contracts held by or on behalf of such
plan, exceed ten percent (10%) of the total reserves and liabilities of
such general account (exclusive of separate account liabilities) plus
surplus, as set forth in the NAIC Annual Statement filed with your state of
domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part l(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
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assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (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
paragraph (e); or
(f) the Source is an insurance company separate account maintained
solely in connection with the fixed contractual obligations of the
insurance company under which the amounts payable, or credited, to an
employee benefit plan (or its related trust) and to any participant or
beneficiary of such plan (including any annuitant) are not affected in any
manner by the investment performance of the separate account;
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
If you or any subsequent transferee of the Notes indicates that you or such
transferee are relying on any representation contained in paragraph (b), (c) or
(e) above, the Company shall deliver on the date of Closing and on the date of
any applicable transfer a certificate, which shall either state that (i) it is
neither a party in interest nor a "disqualified person" (as defined in
Section 4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (b) or (e) above, or (ii) with respect to any plan, identified
pursuant to paragraph (c) above, neither it nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing pursuant to paragraph (c) above or to
negotiate the terms of said QPAM's management agreement on behalf of any such
identified plan. As used in this SECTION 6.2, the terms "employee benefit
plan", "governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of ERISA.
Section 7. PREPAYMENT OF THE NOTES.
Section 7.1. Required Prepayments. On December 23, 2000 and on each
December 23 thereafter to and including December 23, 2003 the Company will
prepay $8,000,000 principal amount (or such lesser principal amount as shall
then be outstanding) of the Notes at par and without payment of the Make-Whole
Amount or any premium; provided that upon any partial prepayment of the Notes
pursuant to SECTION 7.2 or purchase of the Notes permitted by SECTION 7.6 the
principal amount of each required prepayment of the Notes
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becoming due under this SECTION 7.1 on and after the date of such prepayment or
purchase shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such prepayment or
purchase.
Section 7.2. Optional Prepayments with Make-Whole Amount. The
Company may, at its option, upon notice as provided below, prepay at any time,
or from time to time any part of, the Notes, in an amount not less than 10% of
the aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, together with
interest accrued thereon to the date of such prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this SECTION 7.2 not less than 30 days and not more than
90 days prior to the date fixed for such prepayment. Each such notice shall
specify such date, the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with SECTION 7.4), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
Section 7.3. Prepayment of Notes upon Change of Control. (a) In the
event that a Responsible Officer of the Company or the Parent Guarantor has
knowledge of the occurrence of any Change of Control, the Company will give
written notice (the "Company Notice") of such fact in the manner provided in
SECTION 16 hereof to the holders of the Notes. The Company Notice shall be
delivered promptly upon receipt of such knowledge by the Company and in any
event no later than five Business Days following knowledge of such Responsible
Officer thereof. The Company Notice shall (i) describe the facts and
circumstances of such Change of Control in reasonable detail, (ii) make
reference to this SECTION 7.3 and the right of the holders of the Notes to
require prepayment of the Notes on the terms and conditions provided for in this
SECTION 7.3, (iii) offer in writing to prepay the outstanding Notes, together
with accrued interest to the date of prepayment, but without Make-Whole Amount,
and (iv) specify a date for such prepayment (the "Change of Control Prepayment
Date"), which Change of Control Prepayment Date shall be not more than 60 days
nor less than 45 days following the date of such Company Notice. Each holder of
the then outstanding Notes (in this case only, "holder" in respect of any Note
registered in the name of nominee for a disclosed beneficial owner shall mean
such beneficial owner) shall have the right to accept such offer and require
prepayment of the Notes held by such holder in full by written notice to the
Company (a "Noteholder Notice") given, subject always to
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the next following sentence of this SECTION 7.3, not later than 25 days after
receipt of the Company Notice. Without limiting the foregoing, the Company
shall, not more than 15 days nor less than 10 days following the date of such
Company Notice, send a second written notice (a "Secondary Company Notice") with
respect to the occurrence of such Change of Control, to which Secondary Company
Notice shall be attached a true, correct and complete copy of the Company
Notice, and confirm in such Secondary Company Notice that each such holder of
the Notes must accept or decline such offer of prepayment of the Notes within
the limitations provided in the Company Notice attached to such Secondary
Company Notice. The Company shall on the Change of Control Prepayment Date
prepay in full all of the Notes held by holders which have so accepted such
offer of prepayment. It is understood and agreed by the Company and each holder
of the Notes by its acceptance thereof that any such holder may decline any such
offer of prepayment and that the failure of any such offer to accept or decline
any such offer for prepayment shall be deemed to be the election of any such
holder to decline such prepayment. The prepayment price of the Notes payable
upon the occurrence of any Change of Control shall be an amount equal to 100% of
the outstanding principal amount of the Notes so to be prepaid and accrued
interest thereon to the date of such prepayment but without Make-Whole Amount.
(b)(i) Without limiting the foregoing, notwithstanding any failure on the
part of the Company to give the Company Notice herein required as a result of
the occurrence of a Change of Control, each holder of the Notes shall have the
right by delivery of written notice to the Company to require the Company to
prepay, and the Company will prepay, such holder's Notes in full, together with
accrued interest thereon to the date of prepayment, but without the Make-Whole
Amount. Notice of any required prepayment pursuant to this SECTION 7.3(b)(i)
shall be delivered by any holder of the Notes which was entitled to, but did not
receive, such Company Notice to the Company after such holder has actual
knowledge of such Change of Control. On the date (the "Change of Control
Delayed Prepayment Date") designated in such holder's notice (which shall be not
more than 30 days nor less than 10Edays following the date of such holder's
notice), the Company shall prepay in full all of the Notes held by such holder,
together with accrued interest thereon to the date of prepayment, but without
the Make-Whole Amount. If the holder of any Note gives any notice pursuant to
this SECTION 7.3(b)(i), the Company shall give a Company Notice within three
Business Days of receipt of such notice and identify the Change of Control
Delayed Prepayment Date to all other holders of the Notes and each of such other
holders shall then and thereupon have the right to accept the Company's offer to
prepay the Notes held by such holder in full and require prepayment of such
Notes by delivery of a Noteholder Notice within 20 days following receipt of
such Company Notice; provided only that any date for prepayment of such holder's
Notes shall be the Change of Control Delayed Prepayment Date. On the Change of
Control Delayed Prepayment Date, the Company shall prepay in full the Notes of
each holder thereof which has accepted such offer of prepayment at a prepayment
price equal
to 100% of the outstanding principal amount of the Notes so to be
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prepaid and accrued interest thereon to the date of such prepayment, but without
the Make-Whole Amount.
(ii) Compliance with the provisions of this SECTION 7.3(b) shall not be
deemed to constitute a waiver of, or consent to, any Default or Event of Default
caused by any violation of the provisions of SECTION 7.3(a).
Section 7.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to SECTION 7.2, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment. All partial
prepayments made pursuant to SECTION 7.3 shall be applied only to the Notes of
the holders who have elected to participate in such prepayment.
Section 7.5. Maturity; Surrender, Etc. In the case of each
prepayment of Notes pursuant to this SECTION 7, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid or
prepaid in full shall be surrendered to the Company and cancelled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.
Section 7.6. Purchase of Notes. The Company will promptly cancel all
Notes acquired by the Parent Guarantor or any of its Subsidiaries (including,
without limitation, the Company) or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.
Section 7.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal; provided that
the Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to SECTION 7.2 or has become or is
declared to be immediately due and payable pursuant to SECTION 10.1, as the
context requires.
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"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, .50% over the yield to maturity implied by (a) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page USDO of the Bloomberg Financial Markets
Services Screen (or, if not available, any other national recognized
trading screen reporting on-line intraday trading in the U.S. Treasury
securities) 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 (b) if such yields are not reported as of such time or
the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary, by
(i) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (ii) interpolating linearly
between (1) the actively traded U.S. Treasury security with the duration
closest to and greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the duration closest to and less than
the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (a) such Called Principal into (b) the sum of the products
obtained by multiplying (i) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (ii) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date; provided that if such
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Settlement Date is not a date on which interest payments are due to be made
under the terms of the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement
Date pursuant to SECTION 7.2 or 10.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
SECTION 7.2 or has become or is declared to be immediately due and payable
pursuant to SECTION 10.1, as the context requires.
Section 8. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company covenants that so long as any of the Notes are outstanding:
Section 8.1. Compliance with Law. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 8.2. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 8.3. Maintenance of Properties. The Company will, and will
cause each of its Subsidiaries to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times; provided that
this SECTION 8.3 shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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Section 8.4. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claim for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary; provided that neither the Company nor any Subsidiary need pay
any such tax or assessment or claims if (a) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (b) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
Section 8.5. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
SECTION 8.8, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries (unless merged into
the Company or a Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
Section 8.6. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be substantially changed from the general
nature of the business engaged in by the Company on the date of this Agreement.
Section 8.7. Notes to Rank Pari Passu. The Notes and all other
obligations under this Agreement of the Company are and at all times shall
remain direct and unsecured obligations of the Company ranking pari passu as
against the assets of the Company with all other Notes from time to time issued
and outstanding hereunder without any preference among themselves and pari passu
with all other present and future unsecured Indebtedness (actual or contingent)
of the Company which is not expressed to be subordinate or junior in rank to any
other unsecured Indebtedness of the Company.
Section 8.8. Mergers and Consolidations and Sales of Assets. The
Company will not consolidate with or be a party to a merger with any other
Person, or sell, lease or otherwise dispose of all or substantially all of its
assets; provided that the Company may consolidate or merge with or into any
other corporation if (a)the corporation which results from such
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consolidation or merger (the "surviving corporation") is organized under the
laws of any state of the United States or the District of Columbia, (b) the due
and punctual payment of the principal of and premium, if any, and interest on
all of the Notes, according to their tenor, and the due and punctual performance
and observation of all of the covenants in the Notes and this Agreement to be
performed or observed by the Company are expressly assumed in writing by the
surviving corporation and the surviving corporation shall furnish to the holders
of the Notes an opinion of counsel satisfactory to such holders to the effect
that the instrument of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding contract and agreement of
the surviving corporation enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles, (c) the Parent
Guarantor confirms in writing its obligations under the Parent Guaranty, (d)
each Subsidiary Guarantor confirms in writing its obligations under and pursuant
to the Subsidiary Guaranty, and (e) at the time of such consolidation or merger
and immediately after giving effect thereto, no Default or Event of Default
would exist.
Section 8.9. Delivery of Certain Closing Documentation Following the
Closing Date. Not later than 60 days following the Closing Date, the Company
shall have caused to be delivered to the holders of the Notes and Chapman and
Cutler, all such corporate good standing certificates and other legal proceeding
materials not delivered on the Closing Date, the non-delivery of which good
standing certificates and other legal proceeding materials would not, in any
event, have a Material effect.
Section 9. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with
any term contained in SECTION 8.8 or the Parent Guarantor defaults in the
performance of or compliance with any term contained in SECTION 4.8 or in
SECTIONS 5.1 through 5.9 of the Parent Guaranty; or
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(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a), (b) and (c) of this SECTION 9) or the Parent Guarantor defaults in the
performance of or compliance with any term contained in the Parent Guaranty
(other than those referred to in paragraph (c) of this SECTION 9) and in
any such case such default is not remedied within 30 days after the earlier
of (i) a Responsible Officer of the Parent Guarantor obtaining actual
knowledge of such default and (ii) the Parent Guarantor receiving written
notice of such default from any holder of a Note (any such written notice
to be identified as a "notice of default" and to refer specifically to this
paragraph (d) of SECTION 9); or
(e) any representation or warranty made in writing by or on behalf
of the Company or the Parent Guarantor or by any officer of the Company or
the Parent Guarantor in this Agreement or in the Parent Guaranty or in any
writing furnished in connection with the transactions contemplated hereby
or thereby proves to have been false or incorrect in any material respect
on the date as of which made; or
(f) (i) the Parent Guarantor or any Subsidiary (including, without
limitation, the Company) is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole
amount or interest on any Indebtedness that is outstanding in an aggregate
principal amount of at least $10,000,000 beyond any period of grace
provided with respect thereto, or (ii) the Parent Guarantor or any
Subsidiary (including, without limitation, the Company) is in default in
the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default
or condition such Indebtedness has become, or has been declared (or one or
more Persons are entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly scheduled dates
of payment; or
(g) The Parent Guaranty shall cease to be in full force and effect
for any reason whatsoever, including, without limitation, a determination
by any Governmental Authority that such Parent Guaranty is invalid, void or
unenforceable or the Parent Guarantor shall contest or deny in writing the
enforceability of any of its obligations under the Parent Guaranty; or
(h) The Subsidiary Guaranty shall cease to be in full force and
effect for any reason whatsoever with respect to one or more of the
Subsidiary Guarantors, including, without limitation, a determination by
any Governmental Authority that any Subsidiary Guaranty is invalid, void or
unenforceable with respect to one or more of the Subsidiary Guarantors or
the Subsidiary Guarantor shall contest or deny in writing the validity or
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<PAGE>
enforceability of any of its obligations under the Subsidiary Guaranty, but
excluding the Subsidiary Guaranty ceasing to be in full force and effect in
accordance with and pursuant to the express provisions of SECTION 2.3; or
(i) the Parent Guarantor or any Subsidiary (including, without
limitation, the Company) (i) is generally not paying, or admits in writing
its inability to pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a petition for relief
or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction,
(iii) makes an assignment for the benefit of its creditors, (iv) consents
to the appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or
(vi) takes corporate action for the purpose of any of the foregoing; or
(j) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Parent Guarantor or any
of its Subsidiaries (including, without limitation, the Company), a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Parent Guarantor
or any of its Subsidiaries (including, without limitation, the Company), or
any such petition shall be filed against the Parent Guarantor or any of its
Subsidiaries (including, without limitation, the Company) and such petition
shall not be dismissed within 60 days; or
(k) a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against one or more of
the Parent Guarantor and its Subsidiaries (including, without limitation,
the Company) and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay and have a Material
Adverse Effect; or
(l) if (i)any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
Section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall
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<PAGE>
have notified the Parent Guarantor or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii) the aggregate "amount of
unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $5,000,000, (iv) the Parent Guarantor or any ERISA Affiliate
shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans, (v) the Parent Guarantor or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Parent Guarantor or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a
manner that would increase the liability of the Parent Guarantor or any
Subsidiary thereunder; and any such event or events described in clauses
(i) through (vi) above, either individually or together with any other such
event or events, could reasonably be expected to have a Material Adverse
Effect.
As used in SECTION 9(l), the terms "employee benefit plan" and "employee welfare
benefit plan" shall have the respective meanings assigned to such terms in
Section3 of ERISA.
Section 10. Remedies on Default, Etc.
Section 10.1. Acceleration. (a)If an Event of Default with respect to
the Parent Guarantor or the Company described in paragraph (i) or (j) of SECTION
9 (other than an Event of Default described in clause (i) of paragraph (i) or
described in clause (vi) of paragraph (i) by virtue of the fact that such clause
encompasses clause (i) of paragraph (i)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of at least 51% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company and the Parent Guarantor, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
SECTION 9 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company and the Parent Guarantor,
declare all the Notes held by it or them to be immediately due and payable.
Upon any Note's becoming due and payable under this SECTION 10.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (i) all accrued and unpaid interest
thereon and (ii) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without
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presentment, demand, protest or further notice, all of which are hereby waived.
The Company and the Parent Guarantor acknowledge, and the parties hereto agree,
that each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Company or the Parent Guarantor (except as herein
specifically provided for), and that the provision for payment of a Make-Whole
Amount by the Company in the event that the Notes are prepaid or are accelerated
as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
Section 10.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under SECTION 10.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 10.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of SECTION 10.1, the
holders of not less than 66-2/3% in principal amount of the Notes then
outstanding, by written notice to the Company and the Parent Guarantor, may
rescind and annul any such declaration and its consequences if (a) the Company
has paid all overdue interest on the Notes, all principal of and Make-Whole
Amount, if any, on any Notes that are due and payable and are unpaid other than
by reason of such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to SECTION 15, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this SECTION 10.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
Section 10.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under SECTION 13,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this SECTION 10, including, without
limitation, reasonable attorney's fees, expenses and disbursements.
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Section 11. Registration; Exchange; Substitution of Note's.
Section 11.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 11.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or its attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and within 5 Business Days of
receipt of such Note or instrument of transfer, as the case may be, deliver, at
the CompanyOs expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of EXHIBIT 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$1,000,000; provided that if necessary to enable the registration of transfer by
a holder of its entire holding of Notes, one Note may be in a denomination of
less than $1,000,000. Any transferee, by its acceptance of a Note registered in
its name (or the name of its nominee), shall be deemed to have made the
representation set forth in SECTION 6.2.
Section 11.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is,
or is a nominee for, an original Purchaser or another holder of a Note with
a minimum net worth of at least
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<PAGE>
$50,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and within 5 Business Day of
receipt of such evidence deliver, in lieu thereof, a new Note, dated and bearing
interest from the date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.
Section 12. Payments on Notes.
Section 12.1. Place of Payment. Subject to SECTION 12.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Watsonville, California at the principal office of
the Company. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
Section 12.2. Home Office Payment. So long as you or your nominee
shall be the registered holder of any Note, and notwithstanding anything
contained in SECTION 12.1 or in such Note to the contrary, the Company will pay
all sums becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below your
name in SCHEDULE A, or by such other method or at such other address as you
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to SECTION
12.1. Prior to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to SECTION 11.2. The Company will afford the benefits of this SECTION
12.2 to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this SECTION 12.2.
Section 13. Expenses, Etc.
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<PAGE>
Section 13.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company agrees to pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Notes, the Parent Guaranty or the Subsidiary Guaranty (whether or
not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement, the Notes, the Parent Guaranty or the Subsidiary Guaranty or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the Notes, the Parent Guaranty
or the Subsidiary Guaranty, or by reason of being a holder of any Note, and
(b) the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Parent Guarantor or any
Subsidiary (including, without limitation, the Company) or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes or by the Parent Guaranty or by any Subsidiary Guaranty. The Company and
the Parent Guarantor jointly and severally agree to pay, and will save you and
each other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses, if any, of brokers and finders (other than those retained by
you).
Section 13.2. Survival. The obligations of the Company under this
SECTION 13 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement, the Notes, the Parent
Guaranty or the Subsidiary Guaranty, and the termination of this Agreement.
Section 14. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company or the Parent Guarantor pursuant to
this Agreement shall be deemed representations and warranties of the Company or
the Parent Guarantor, as the case may be, under this Agreement or the Parent
Guaranty, as the case may be. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
Section 15. Amendment and Waiver.
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Section 15.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company, the Parent Guarantor and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of SECTION 1, 2, 3, 4,
5 or 6 hereof, or any defined term (as it is used therein), will be effective as
to you unless consented to by you in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of SECTION 10
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of SECTIONS 7, 9(a), 9(b), 10 or 15.
Section 15.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this SECTION 15 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. Neither the Company nor any of its Subsidiaries will
directly or indirectly pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, or grant any security,
to any holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes of any waiver or amendment of any of the terms and
provisions hereof or of any Subsidiary Guaranty unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
Section 15.3. Binding Effect, Etc. Any amendment or waiver consented
to as provided in this SECTION 15 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
and the Parent Guarantor without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to
or affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course
of dealing between the Parent Guarantor or any of its Subsidiaries (including,
without limitation,
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<PAGE>
the Company) and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
Section 15.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Parent Guarantor or any of its Subsidiaries (including,
without limitation, the Company) or any of the Affiliates of the Parent
Guarantor shall be deemed not to be outstanding.
Section 16. Notices.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in SCHEDULE A, or at such other address as you or
it shall have specified to the Company and the Parent Guarantor in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company and the
Parent Guarantor in writing,
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of Vice President of Finance, Chief
Financial Officer, or at such other address as the Company shall have
specified to the holder of each Note in writing, or
(iv) if to the Parent Guarantor, to the Parent Guarantor at 500
Westridge Drive, Watsonville, California 95076-4100, to the attention of
Vice President of Finance, Chief Financial Officer, or at such other
address as the Parent Guarantor shall have specified to the holder of each
Note in writing.
Notices under this SECTION 16 will be deemed given only when actually received.
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<PAGE>
Section 17. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This SECTION 17
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
Section 18. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Parent Guarantor, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in SECTION 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this SECTION 18), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Parent Guarantor of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
SECTION 18), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
Section 19. Miscellaneous.
Section 19.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
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<PAGE>
Section 19.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 19.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 19.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 19.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
SECTION 19.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF CALIFORNIA, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE
LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you,
the Company and the Parent Guarantor.
Very truly yours,
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<PAGE>
West Marine Finance Company, Inc.
By
[Title]
Accepted as of ____________________.
[Variation]
By
_____________________________________
Its
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<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
THE TRAVELERS INSURANCE COMPANY $7,000,000
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, premium or interest") to:
The Travelers Insurance Company -- Consolidated Private
Placement Account No. 910-2-587434
The Chase Manhattan Bank, N.A
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: TRAL & CO
TAXPAYER I.D. NUMBER: 06-0566090
SCHEDULE A
(to Note Purchase Agreement)
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
THE TRAVELERS INSURANCE COMPANY $5,000,000
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, premium or interest") to:
The Travelers Insurance Company -- Consolidated Private
Placement Account No. 910-2-739365
The Chase Manhattan Bank, N.A
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 06-0566090
A-1
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
THE TRAVELERS INSURANCE COMPANY $2,000,000
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, premium or interest") to:
The Travelers Insurance Company -- Consolidated Private
Placement Account No. 910-2-720464
The Chase Manhattan Bank, N.A
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 06-0566090
A-2
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
CONNECTICUT GENERAL LIFE INSURANCE COMPANY $9,000,000
c/o CIGNA Investments, Inc. (Three separate Notes
900 Cottage Grove Road each in the amount of
Hartford, Connecticut 06152-2307 $3,000,000)
Attention: Private Securities Division - S-307
Fax: 860-726-7203
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA #021000021
OBI=[West Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due
2004, PPNE95423* AA 7; (as among principal, premium and interest of the
payment being made); contact name and phone.]
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, Connecticut 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S-307
Operations Group
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
with a copy to:
A-3
<PAGE>
Chase Manhattan Bank, N.A.
Private Placement Servicing
P. O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
Name of Nominee in which Notes are to be issued: CIG & Co.
Taxpayer I.D. Number for CIG & Co.: 13-3574027
A-4
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, $3,000,000
on behalf of one or more separate accounts
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division - S-307
Fax: 860-726-7203
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA #021000021
OBI=[West Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due
2004; PPNE95423* AA 7; due date and application (as among principal,
premium and interest of the payment being made); contact name and phone.]
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, Connecticut 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S-307
Operations Group
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
with a copy to:
A-5
<PAGE>
Chase Manhattan Bank, N.A.
Private Placement Servicing
P. O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
Name of Nominee in which Notes are to be issued: CIG & Co.
Taxpayer I.D. Number for CIG & Co.: 13-3574027
A-6
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY $9,000,000
c/o Hartford Investment Management Company
c/o Investment Department - Private Placements
P. O. Box 1744
Hartford, Connecticut 06114-1744
Facsimile: (860) 843-4906
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, interest or premium") to:
Chase Manhattan Bank
4 New York Plaza
New York, New York 10004
ABA #021000021
Chase NYC/Cust
A/C #900-9-000200 for F/C/T G 06956 - EBD
Attention: Bond Interest/Principal - West Marine Finance Company, Inc. due
2004
PPN# 95423* AA 7 Prin $___________ Int $___________
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, and written confirmation of each such payment,
to be addressed:
Hartford Investment Management Company
c/o Portfolio Support
P. O. Box 1744
Hartford, Connecticut 06114-1744
Telefacsimile: (860) 297-8876
Name of Nominee in which Notes are to be issued: None
A-7
<PAGE>
Taxpayer I.D. Number: 06-0838648
A-8
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
COVA FINANCIAL SERVICES LIFE $3,000,000
INSURANCE COMPANY
c/o Conning Asset Management
P. O. Box 396
St. Louis, Missouri 63166
Attention: Securities Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, interest or premium") to:
NORTHERN CHGO/Trust
ABA #071000152
Credit wire account #5186041000
Account 26-02881/COVA Financial Services Life Insurance Company
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Conning Asset Management
P. O. Box 418
St. Louis, Missouri 63166
Attention: Investment Accounting
and
COVA Financial Services Life Insurance Co.
c/o The Northern Trust Company
P. O. Box 92996
Chicago, Illinois 60675
A-9
<PAGE>
All notices and communications, other than those in respect to payments to be
addressed to:
Conning Asset Management
P. O. Box 396
St. Louis, Missouri 63166
Attention: Securities Division
and
COVA Financial Services Life Insurance Co.
c/o The Northern Trust Company
P. O. Box 92996
Chicago, Illinois 60675
Name of Nominee in which Notes are to be issued: ELL & CO
Taxpayer I.D. Number: 36-6412623
A-10
<PAGE>
Name and Address Principal Amount
of Purchaser of Notes to be
Purchased
RGA REINSURANCE COMPANY $2,000,000
c/o Conning Asset Management
P.O. Box 396
St. Louis, Missouri 63166
Attention: Securities Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "West
Marine Finance Company, Inc., 6.85% Senior Guaranteed Notes due 2004, PPNE95423*
AA 7, principal, interest or premium") to:
General American Life Insurance Company
c/o The Bank of New York
ABA #021000018
BNF: IOC566
ATTN: P & I DEPARTMENT
Notices
All notices of payments on or in respect of the Notes and written confirmation
of each such payment to be addressed to:
Conning Asset Management
P. O. Box 418
St. Louis, Missouri 63166
Attention: Investment Accounting
and
General American Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Newark, New Jersey 07195
A-11
<PAGE>
All other notices and communications to be addressed to:
Conning Asset Management
P. O. Box 396
St. Louis, Missouri 63166
Attention: Securities Division
and
General American Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Newark, New Jersey 07195
Name of Nominee in which Notes are to be issued: None
TAXPAYER I.D. NUMBER: 43-1235868
A-12
<PAGE>
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Acquiring Person" means a "person" or "group of persons" within the
meaning of Sections'13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Parent Guarantor or any Subsidiary or any corporation of which the Parent
Guarantor and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Parent
Guarantor.
"Bank Credit Agreement" shall mean that certain Credit Agreement dated
November 24, 1997, between and among the Company and the Bank Lenders, as the
same may from time to time be modified, amended, extended, renewed or replaced.
"Bank Lenders" shall mean Bank of America National Trust & Savings
Association, as agent, letter of credit issuing bank and bank, NationsBank of
Texas, National Association, as a letter of credit issuing bank and bank, and
Fleet National Bank, as a letter of credit issuing bank and bank.
"Business Day" means (a) for the purposes of SECTION 7.7 of the Note
Agreements only, any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed, and
(b) for the purposes of any other provision of this Agreement, any day other
than a Saturday, a Sunday or a day on which commercial banks in Chicago,
Illinois or San Francisco, California are required or authorized to be closed.
"Capitalized Lease" means any lease the obligation for Rentals with respect
to which is required to be capitalized on a consolidated balance sheet of the
lessee and its subsidiaries in accordance with GAAP.
SCHEDULE B
(to Note Purchase Agreement)
<PAGE>
"Capitalized Rentals" of any Person means as of the date of any
determination thereof, without duplication, the amount at which the aggregate
Rentals due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a consolidated balance
sheet of such Person.
"Change of Control" means the earliest to occur of: (a) the date a tender
offer or exchange offer results in an Acquiring Person, directly or indirectly,
beneficially owning more than 50% of the Voting Stock of the Parent Guarantor
then outstanding, or (b) the date an Acquiring Person becomes, directly or
indirectly, the beneficial owner of more than 50% of the Voting Stock of the
Parent Guarantor then outstanding, or (c) the date of a merger between the
Parent Guarantor and any other Person, a consolidation of the Parent Guarantor
with any other Person or an acquisition of any other Person by the Parent
Guarantor, if immediately after such event, the Acquiring Person shall hold more
than 50% of the Voting Stock of the Parent Guarantor outstanding immediately
after giving effect to such merger, consolidation or acquisition.
"Change of Control Delayed Prepayment Date" is defined in SECTION 7.3(b)(i)
of the Note Agreements.
"Change of Control Prepayment Date" is defined in SECTION 7.3(a) of the
Note Agreements.
"Closing" is defined in SECTION 3 of the Note Agreements.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means West Marine Finance Company, Inc., a California
corporation, and its successors and assigns.
"Company Notice" is defined in SECTION 7.3 of the Note Agreements.
"Confidential Information" is defined in SECTION 10 of the Parent Guaranty.
"Consolidated Adjusted Funded Debt" means, without duplication, (a) all
Indebtedness of the Parent Guarantor and its Subsidiaries for borrowed money or
which has been incurred in connection with the acquisition of assets in each
case having a final maturity of more than one year from the date of origin
thereof (or which is renewable or extendible at the option of the obligor for a
period or periods more than one year from the date of origin), including all
payments in respect thereof that are required to be made within one year from
the date of any
B-2
<PAGE>
determination of Consolidated Adjusted Funded Debt, whether or not the
obligation to make such payments shall constitute a current liability of the
obligor under GAAP, (b) all Capitalized Rentals of the Parent Guarantor and its
Subsidiaries, (c) all Guaranties by the Parent Guarantor and its Subsidiaries of
Adjusted Funded Debt of others, and (d) an amount equal to the product derived
by multiplying Rentals payable by the Parent Guarantor and its Subsidiaries
under Long-Term Leases times six; provided that for the purposes of any
computation of Consolidated Adjusted Funded Debt, there shall, in any event, be
included any Indebtedness (whether or not characterized as long-term
Indebtedness in accordance with GAAP) outstanding under the Bank Credit
Agreement or outstanding under any other note, loan or credit agreement entered
into by the Parent Guarantor or any of its Subsidiaries with an Institutional
Investor or Investors.
"Consolidated Adjusted Net Capitalization" means as of the date of any
determination thereof, without duplication, the sum of (a) Consolidated Adjusted
Funded Debt plus (b) Consolidated Net Worth.
"Consolidated Fixed Charges" for any period means on a consolidated basis,
without duplication, the sum of (a) all Rentals payable during such period by
the Parent Guarantor and its Subsidiaries under Long-Term Leases, and (b) all
Interest Expense on all Indebtedness of the Parent Guarantor and its
Subsidiaries payable during such period.
"Consolidated Net Income" for any period means, without duplication, the
after-tax net income or loss, as the case may be, determined on a consolidated
basis for the Parent Guarantor and its Subsidiaries, but excluding (a)
extraordinary gains) and (b) extraordinary losses (and any taxes or credits on
such extraordinary losses), but not excluding losses which the Company
accelerates into the period in respect of which the determination of
Consolidated Net Income is being made which otherwise would be treated as an
ordinary loss but for the decision of the Company to accelerate and treat the
same as an extraordinary loss, in any such case all determined in accordance
with GAAP.
"Consolidated Net Income Available for Fixed Charges" for any period means,
without duplication, the sum of (a) Consolidated Net Income during such period
plus (to the extent deducted in determining Consolidated Net Income), (b) all
provisions for any federal, state or other income taxes made by the Parent
Guarantor and its Subsidiaries during such period and (c) Consolidated Fixed
Charges during such period.
"Consolidated Net Worth" means, as of the date of any determination
thereof, without duplication, the amount of the capital stock accounts (net of
treasury stock, at cost) plus (or minus in the case of a deficit) the surplus in
retained earnings of the Parent Guarantor and its Subsidiaries as determined in
accordance with GAAP.
B-3
<PAGE>
"Consolidated Total Assets" means as of the date of any determination
thereof, without duplication, total assets of the Parent Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means that rate of interest that is 2% per annum above the
rate of interest stated in clause (a) of the first paragraph of the Notes.
"Environmental Laws" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Parent Guarantor under
Section 414 of the Code.
"Event of Default" is defined in SECTION 9 of the Note Agreements.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
B-4
<PAGE>
(ii) any jurisdiction in which the Parent Guarantor or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Parent Guarantor or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, without duplication, any
obligation (except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing or
in effect guaranteeing any Indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such Indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or obligation
against loss in respect thereof.
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 Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
B-5
<PAGE>
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to
SECTION 11.1 of the Note Agreements.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and for the deferred purchase
price of property acquired by such Person (excluding accounts payable and
other accrued expenses arising in the ordinary course of business but
including all liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such property);
(b) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capitalized Leases;
(c) 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);
(d) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money); and
(e) any Guaranty of such Person with respect to liabilities of
others of a type described in any of clauses (a) through (d) hereof.
Indebtedness 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 notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Expense" of the Parent Guarantor and its Subsidiaries for any
period means, without duplication, all interest (including the interest
component on Rentals on Capitalized Leases) less all interest income for such
period.
B-6
<PAGE>
"Investments" means, without duplication, all investments, in cash or by
delivery of property, made directly or indirectly in any property or assets or
in any Person, whether by acquisition of shares of capital stock, Indebtedness
or other obligations or Securities or by loan, advance, capital contribution or
otherwise.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Parent Guarantor or a Subsidiary shall be deemed to be the owner
of any property which it has acquired or holds subject to a conditional sale
agreement, Capitalized Lease or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
"Long-Term Lease" shall mean any lease of real or personal property (other
than a Capitalized Lease) having an original term, including any period for
which the lease may be renewed or extended at the option of the lessor of more
than three years.
"Make-Whole Amount" is defined in SECTION 7.7 of the Note Agreements.
"Material" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Parent Guarantor
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Parent Guarantor and its Subsidiaries taken as a whole, or (b) the ability of
the Parent Guarantor to perform its obligations under the Parent Guaranty, or
(c) the ability of any Subsidiary Guarantor to perform its respective
obligations under the Subsidiary Guaranty, or (d) the validity or enforceability
of this Agreement or the Notes.
"Memorandum" is defined in SECTION 2.3 of the Guaranty Agreement.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in Section 4001(a)(3) of ERISA).
B-7
<PAGE>
"Noteholder Notice" is defined in SECTION 7.3(a) of the Note Agreements.
"Notes" is defined in SECTION 1 of the Note Agreements.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company or the Parent Guarantor, as the case may
be, whose responsibilities extend to the subject matter of such certificate.
"Other Agreements" is defined in SECTION 2 of the Note Agreements.
"Other Purchasers" is defined in SECTION 2 of the Note Agreements.
"Parent Guarantor" means West Marine Co., Inc., a Delaware corporation, and
its successors and assigns.
"Parent Guaranty" is defined SECTION 2 of the Note Agreements.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Priority Indebtedness" means, as of the date of any determination
thereof, without duplication, (a) all Indebtedness of Subsidiaries (other than
(i) Indebtedness of the Company and other Subsidiaries of the Parent Guarantor,
if and to the extent the Parent Guarantor's other Subsidiaries shall
concurrently with the creation, issuance, assumption, guarantee or incurrence of
such Indebtedness comply with the requirements of Section 4.8 of the Parent
Guaranty, and (ii) Indebtedness of Subsidiaries other than the Company owing to
the Parent Guarantor or to another Subsidiary) and (b) all Indebtedness of the
Parent Guarantor and its Subsidiaries secured by Liens within the limitations of
Section 5.6(g) of the Parent Guaranty.
B-8
<PAGE>
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Purchaser" is defined in SECTION 1 of the Note Agreements.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"Rentals" means and includes as of the date of any determination, without
duplication, thereof all fixed payments (including as such all payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the property) payable by the Parent Guarantor or a Subsidiary, as
lessee or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Parent Guarantor or a
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "perentage leases" shall be computed solely on the basis of
the minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues. For purposes of any determination hereunder, Rentals
shall be reduced by the net Rental received by the Parent Guarantor and its
Subsidiaries as lessor or sublessor of any property.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Parent Guarantor, any of its Subsidiaries (including, without
limitation, the Company) or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company or the Parent Guarantor, as the case may be, with
responsibility for the administration of the relevant portion of this Agreement.
"Restricted Investments" shall mean all Investments, other than:
(a) Investments by the Parent Guarantor and its Subsidiaries in and
to Subsidiaries, including any Investment in a corporation which, after
giving effect to such Investment, will become a Subsidiary;
(b) Investments in property or assets to be used in the ordinary
course of the business of the Parent Guarantor and its Subsidiaries as
described in Section 4.6 of the Parent Guaranty;
(c) receivables arising from the sale of goods and services in the
ordinary course of business of the Parent Guarantor and its Subsidiaries;
B-9
<PAGE>
(d) Investments in commercial paper of corporations organized under
the laws of the United States or any state thereof maturing in 270 days or
less from the date of issuance which, at the time of acquisition by the
Parent Guarantor or any Subsidiary, is accorded a rating of "A-1" by
Standard & Poor's Ratings Group a division of McGraw-Hill, Inc., a New York
corporation, and "P-1" by Moody's Investors Service, Inc.;
(e) Investments in direct obligations of the United States of
America or any agency or instrumentality of the United States of America,
the payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case, maturing within
twelve months from the date of acquisition thereof;
(f) Investments in certificates of deposit and time deposits
maturing within one year from the date of issuance thereof, issued by a
bank or trust company organized under the laws of the United States or any
State thereof, having capital and surplus aggregating at least
$200,000,000; provided that at the time of acquisition thereof by the
Parent Guarantor or a Subsidiary, (i) the senior unsecured long-term debt
of such bank or trust company or of the holding company of such bank or
trust company is rated "A-" or better by Standard & Poor's Ratings Group a
division of McGraw-Hill, Inc., a New York corporation, or "A3" or better by
Moody's Investors Service, Inc. or (ii) such Investments are fully insured
by the Federal Depository Insurance Corporation;
(g) Investments in repurchase agreements with respect to any
Security described in clause (e) of this definition entered into with a
depository institution or trust company acting as principal described in
clause (f) of this definition if such repurchase agreements are by their
terms to be performed by the repurchase obligor and such repurchase
agreements are deposited with a bank or trust company of the type described
in clause (f) of this definition;
(h) Investments in readily-marketable obligations of indebtedness of
any state of the United States or any municipality organized under the laws
of any State of the United States or any political subdivision thereof
which, at the time of acquisition by the Parent Guarantor or any
Subsidiary, are accorded either of the two highest ratings by Standard &
Poor's Ratings Group, a division of McGraw-Hill, Inc., a New York
corporation, Moody's Investors Service, Inc. or another nationally
recognized credit rating agency of similar standard which in any such case
mature no later than one year after the date of acquisition thereof; and
(i) other Investments of the Parent Guarantor and its Subsidiaries
not described in the foregoing clauses (a) through (h); provided that the
aggregate amount of all such other Investments shall not at any time exceed
20% of Consolidated Net Worth.
B-10
<PAGE>
In valuing any Investments for the purpose of applying the limitations set
forth in Section 5.8 of the Parent Guaranty, such Investments shall be valued in
accordance with GAAP.
For purposes of Section 5.8 of the Parent Guaranty, at any time when a
Person becomes a Subsidiary, all Investments of such Person at such time shall
be deemed to have been made by such Person, as a Subsidiary, at such time.
"Restricted Payments" is defined in Section 5.7 of the Parent Guaranty.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Security" shall have the same meaning as in Section 2(1) of the Securities
Act.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company or the Parent
Guarantor, as the case may be.
"Senior Indebtedness" means Indebtedness of the Company or the Parent
Guarantor, as the case may be, which is not expressed to be subordinate or
junior in rank to any other Indebtedness of the Company or the Parent Guarantor.
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Parent Guarantor.
"Subsidiary Guarantors" is defined in SECTION 2.2 of the Note Agreements.
"Subsidiary Guaranty" is defined in SECTION 2.2 of the Note Agreements.
"Subsidiary Stock" is defined in Section 5.9(c) of the Parent Guaranty.
"Voting Stock" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
B-11
<PAGE>
"Wholly-owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interest (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the Parent
Guarantor and Parent Guarantor's other Wholly-owned Subsidiaries at such time.
B-12
<PAGE>
CHANGES IN CORPORATE STRUCTURE
None
SCHEDULE 4.10
(to Note Purchase Agreement)
<PAGE>
[FORM OF NOTE]
West Marine Finance Company, Inc.
6.85% Senior Guaranteed Note due December 23, 2004
No. _________ Date
$___________ PPN 95423* AA7
For Value Received, the undersigned, West Marine Finance Co, Inc. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of California, hereby promises to pay to ________________, or
registered assigns, the principal sum of ________________ Dollars on
December 23, 2004, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.85% per
annum from the date hereof, payable semiannually, on the twenty-third day of
June and December in each year, commencing with the June 23 or December 23 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to 2% over coupon.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Watsonville, California or at such other place as the Company shall
have designated by written notice to the holder of this Note as provided in the
Note Purchase Agreements referred to below.
This Note is one of a series of Senior Guaranteed Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, each dated as of
December 22, 1997 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 10 of the Parent Guaranty (hereinafter referred
to) and (ii) to have made the representation set forth in Section 6.2 of the
Note Purchase Agreements.
EXHIBIT 1
(to Note Purchase Agreement)
<PAGE>
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note and the holder hereof are entitled equally and ratably with the
holders of all of the Notes to the rights and benefits provided pursuant to the
terms and provisions of the Parent Guaranty and the Subsidiary Guaranty (as each
such term is defined in the Note Purchase Agreements). Reference is hereby made
to each of the foregoing for a statement of the nature and extent of the
benefits and security for the Notes afforded thereby and the rights of the
holders of the Notes, the Company and the Parent Guarantor in respect thereof.
The Company will make required prepayments of principal on the dates and in
the amounts specified in the Note Purchase Agreements. This Note is also subject
to optional prepayment, in whole or from time to time in part, at the times and
on the terms specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF CALIFORNIA,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE WHICH WOULD REQUIRE
APPLICATION OF THE LAWS OF THE JURISDICTION OTHER THAN SUCH STATE.
West Marine Finance Company, Inc.
By
[Title]
65
