EXHIBIT 10(e)
BRIDGEPORT HYDRAULIC COMPANY
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Note Agreement
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Dated as of January 24, 1991
$20,000,000
9.55% Senior Notes due February 1, 2021
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF NOTES . . . . . . . . . . . .1
1.1 Issue of Notes. . . . . . . . . . . . . . . .1
1.2 The Closing. . . . . . . . . . . . . . . . .1
1.3 Representations and Closing Conditions. . . .1
SECTION 2. PAYMENTS . . . . . . . . . . . . . . . . . . . . .2
2.1 Required Payments. . . . . . . . . . . . . .2
2.2 Optional Prepayments. . . . . . . . . . . . .2
2.3 Partial Payment Pro Rata. . . . . . . . . . .4
SECTION 3. INFORMATION AS TO COMPANY . . . . . . . . . . . .4
3.1 Financial and Business Information. . . . . .4
3.2 Officer's Certificates . . . . . . . . . . .6
3.3 Inspection. . . . . . . . . . . . . . . . . .6
SECTION 4. COMPANY BUSINESS COVENANTS . . . . . . . . . . . .6
4.1 Funded Debt. . . . . . . . . . . . . . . . .7
4.2 Liens and Encumbrances. . . . . . . . . . . .7
4.3 Distributions and Restricted Investments. . .9
4.4 Sale of Property and Subsidiary Stock. . . .9
4.5 Merger and Consolidation . . . . . . . . . .11
4.6 Transactions with Affiliates; Restricted
Subsidiaries. . . . . . . . . . . . . . . .11
4.7 Nature of Business. . . . . . . . . . . . . .12
4.8 Insurance. . . . . . . . . . . . . . . . . .12
4.9 Maintenance, Etc. . . . . . . . . . . . . . .12
4.10 Records. . . . . . . . . . . . . . . . . . .12
4.11 Incorporation. . . . . . . . . . . . . . . .12
4.12 Compliance with Laws. . . . . . . . . . . . .12
4.13 Payment of Expenses; Indemnification, Etc.. .13
4.14 Taxes. . . . . . . . . . . . . . . . . . . .14
4.15 ERISA. . . . . . . . . . . . . . . . . . . .14
4.16 Sale and Leaseback of Property. . . . . . . .15
4.17 First Mortgage Bonds. . . . . . . . . . . . .16
4.18 DPUC Approval. . . . . . . . . . . . . . . .16
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SECTION 5. DEFAULT . . . . . . . . . . . . . . . . . . . . .16
5.1 Nature of Default. . . . . . . . . . . . . .16
5.2 Default Remedies. . . . . . . . . . . . . . .17
SECTION 6. INTERPRETATION OF THIS AGREEMENT. . . . . . . . .18
6.1 Terms Defined. . . . . . . . . . . . . . . .18
6.2 Accounting Principles. . . . . . . . . . . .27
6.3 Directly or Indirectly. . . . . . . . . . . .27
6.4 Governing Law. . . . . . . . . . . . . . . .27
6.5 Rank. . . . . . . . . . . . . . . . . . . . .27
6.6 Section Headings and Table of Contents. . . .27
SECTION 7. PURCHASER'S SPECIAL RIGHTS . . . . . . . . . . . .27
7.1 Direct Payment. . . . . . . . . . . . . . . .27
7.2 Issue Taxes. . . . . . . . . . . . . . . . .28
7.3 Note Register. . . . . . . . . . . . . . . .28
7.4 Exchange of Notes. . . . . . . . . . . . . .28
7.5 Replacement of Notes. . . . . . . . . . . . .28
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . .29
8.1 Notices. . . . . . . . . . . . . . . . . . .29
8.2 Reproduction of Documents. . . . . . . . . .29
8.3 Purchase for Investment; ERISA. . . . . . . .30
8.4 Successors and Assigns. . . . . . . . . . . .30
8.5 Amendment and Waiver; Acquisition of Notes. .30
8.6 Duplicate Originals. . . . . . . . . . . . .31
8.7 Payments Due on Holidays. . . . . . . . . . .31
Attachment A - Payment and Communications
Attachment B - 9.55% Senior Notes Due February 1, 2021
Attachment C - Warranties and Representations
Attachment D - Closing Conditions
Attachment E - Description of Company Counsel's Closing Opinion
Attachment F - Description of Special Counsel's Closing Opinion
Attachment G - Designated Real Property
Attachment H - Restricted Subsidiaries
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BRIDGEPORT HYDRAULIC COMPANY
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NOTE AGREEMENT
$20,000,000
9.55% Senior Notes due February 1, 2021
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January 24, 1991
To each of the institutions listed
on Attachment A:
Dear Purchaser:
BRIDGEPORT HYDRAULIC COMPANY, a Connecticut corporation (the
"Company"), hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF NOTES
1.1 Issue of Notes.
The Company will authorize the issue of $20,000,000 principal
amount of its 9.55% Senior Notes due February 1, 2021 (the "Notes").
The Notes will be in the form of the Notes set out in Attachment B.
1.2 The Closing.
The Company agrees to sell to you and you agree to purchase from
the Company, in accordance with the provisions of this Agreement, the
principal amount of the Notes shown opposite your name on Attachment
A, at par. The closing of your purchase will be held at 10:00 a.m. on
January 24, 1991 or such other date as shall have been agreed to by
you and the Company (the "Closing Date") at the offices of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Greenwich, Connecticut. On the Closing Date, the Company will
deliver to you a Note or Notes, as applicable, in the principal amount
or amounts of your purchase or purchases, dated the Closing Date and
payable to you, against payment in immediately available funds.
1.3 Representations and Closing Conditions.
To induce you to enter into this Agreement and to purchase the
Notes, the Company makes the warranties and representations set
forth in Attachment C, effective as of the date of the Company's
execution of this Agreement. Your obligation to purchase the Notes at the
closing is subject to the satisfaction of all of the conditions
precedent listed in Attachment D.
SECTION 2. PAYMENTS
2.1 Required Payments.
Until the Notes are paid in full, the Company will pay interest
on the unpaid principal amount of the Notes from the date of the Note
at the rate of 9.55% per annum, payable semi-annually on the first day
of August and of February in each year, commencing August 1, 1991.
The entire outstanding principal amount and interest shall be due and
payable on the maturity date of the Notes.
2.2 Optional Prepayments.
(a) The Company shall have the option, at any time on or after
February 1, 2001 and from time to time, of prepaying the Notes, either
in whole or in part, by payment of the designated principal amount to
be prepaid with interest accrued to the date of prepayment, together
with the Make Whole Premium Amount attributable to the amount of such
prepayment.
(b) In case:
(i) at any time, the Company shall have requested in
writing the consent of each holder of the Notes for the
Company or any Subsidiary to take any action otherwise
prohibited or restricted by Sections 4.1 through 4.7 or 4.16
hereof, solely in order to permit the Company or such
Subsidiary to take such action and not in whole or in part,
directly or indirectly, for the purpose of prepaying the
Notes or any part thereof, and shall have furnished to the
holders of the Notes at the time outstanding such
information with respect to such action as any such holder
may reasonably request; and
(ii) within 45 days after the mailing of such request, the
Company shall not have received the written consent to such
action of the holders of at least 66-2/3% in aggregate
principal amount of all Notes at the time outstanding
(excluding Notes owned by the Company and its Affiliates),
and if such action is a sale by the Company of its
properties as an entirety or substantially as an entirety,
or a consolidation or merger to which the Company is to be a
party, then, in any such event, at the time of giving notice
of prepayment as provided in Section 2.2(d), the Company
shall have on hand a bona fide proposal for such sale,
consolidated or merger;
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Then, notwithstanding Sections 4.1 through 4.7 or 4.16, the
Company may take any such action within 195 days of such request if
the Company gives the notice provided in Section 2.2(d) and,
concurrently with the consummation of such action, prepays in full the
Notes held by all holders who shall not have so given their consent,
such prepayment to be made at the principal amount of the Notes so
prepaid, together with interest accrued to the date of prepayment and
the Make Whole Premium Amount attributable to such prepayment;
provided that if such action is not consummated within 195 days after
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the request, such prepayment may not be made by the Company and the
principal amount of the Notes specified for such prepayment in the
notice thereof shall not, by reason of such notice, mature and become
due and payable on the date fixed for such prepayment. If such action
involves a merger or consolidation in which the Company is not the
surviving corporation, or is a sale by the Company of its properties
as an entirety or substantially as an entirety, then for the purposes
of subdivision (ii) of this Section 2.2(b), the consent of any holder
of the Notes shall be conditioned upon the effective assumption by the
purchasing or surviving Person, as the case may be, of all of the
Company's obligations under this Agreement and the Notes in accordance
with the terms hereof and thereof.
(c) In case the Company shall elect to rely on the last
paragraph of Section 4.4 in the event of a sale, lease, transfer or
other disposition of any Property, then (unless the Consolidated
Funded Debt to be prepaid pursuant to such clause had been directly
secured by the sold, leased, transferred or disposed of assets and
such security interest was not incurred by the Company in anticipation
of such sale, lease, transfer or disposition) the Company shall mail a
notice of such election at least 45 days prior to the date the Company
intends to use the proceeds of such sale, lease, transfer or other
disposition in accordance with Section 4.4 to reduce outstanding
Consolidated Funded Debt. In such case each holder of Notes shall
have the option, exercisable by written notice to the Company within
30 days of the mailing of the Company's notice, to require prepayment
of the Notes held by such holder at the principal amount of the Notes
to be prepaid, without premium, together with interest accruing to the
date of prepayment, on a pro rata basis with the Consolidated Funded
Debt being paid.
(d) The Company will give notice of any optional prepayment of
the Notes to each holder of Notes at least 5 days before the date
fixed for prepayment, specifying (1) such date, (2) the principal
amount of the Notes and of such holder's Notes to be prepaid on such
date, and (3) the Make Whole Premium Amount, if any, and accrued
interest applicable to the prepayment.
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2.3 Partial Payment Pro Rata.
If there is more than one Note outstanding, the principal amount
of each optional partial payment of the Notes (except a prepayment of
some, but not all, of the Notes under Section 2.2(b) or 2.2(c)) will
be allocated among the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective outstanding principal amounts
of the Notes.
SECTION 3. INFORMATION AS TO COMPANY
3.1 Financial and Business Information.
The Company will deliver to you, if at the time you or your
nominee holds any Notes (or if you are obligated to purchase any
Notes), and to each other holder of outstanding Notes:
(a) Quarterly Statements - within 45 days after the end of each
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of the first three quarterly fiscal periods in each fiscal year of the
Company, two copies of
(i) balance sheets of the Company and of each Restricted
Subsidiary as at the end of such quarter; and
(ii) statements of income, shareholder's equity, and cash
flows (or changes in financial position if applicable) of the
Company and of each Restricted Subsidiary for the portion of the
fiscal year ending with such quarter
accompanied by a certificate signed by the principal financial officer
of the Company stating that such financial statements present fairly
the financial condition of the companies being reported upon and have
been prepared in accordance with generally accepted accounting
principles or the Company's standard accounting principles, in either
case consistently applied, except as set forth in such certificate;
(b) Annual Statements - within '90 days after the end of each
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fiscal year of the Company, four copies of:
(i) a balance sheet of the Company and of each Restricted
Subsidiary as at the end of that year, and
(ii) statements of income, shareholder's equity, and cash
flows (or changes in financial position if applicable) of
the Company and of each Restricted Subsidiary for that year,
setting forth in each case in comparative form the figures for the
previous fiscal year and accompanied by an opinion of a firm of
independent certified public accountants of recognized national
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standing stating that such financial statements present fairly the
financial condition of the companies being reported upon and have been
prepared in accordance with generally accepted accounting principles
or the accounting requirements of the DPUC, in either case
consistently applied (except for changes in application in which such
accountants concur);
(c) SEC and Other Reports - promptly upon their becoming
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available, one copy, if any, of each periodic report (including Form
8-K, 10-K and 10-Q), proxy statement and registration statement or
prospectus relating to Securities of THC filed with or delivered to
any securities exchange, the Securities and Exchange Commission or any
successor agencies;
(d) Notice of Event of Default - immediately upon becoming aware
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of the existence of any Event of Default, a written notice describing
its nature;
(e) Notice of Claimed Default - immediately upon becoming aware
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(i) that the holder of any Note or of any bank debt or other Security
of the Company or any Restricted Subsidiary has given notice (or taken
any other action) with respect to a claimed default, breach, Event of
Default, or (ii) of any claim, action, or administrative proceeding
pending or to the knowledge of the Company or any Restricted
Subsidiary, threatened against or affecting the Company or any
Restricted Subsidiary in any court or before any governmental
authority or arbitration board or tribunal which would, if adversely
determined, materially and adversely affect the Properties, business,
franchises, prospects, or financial condition of the Company and any
Restricted Subsidiaries, taken as a whole, the rates to be charged by
the Company or any Utility Subsidiary or the valuation of the
Company's or such Utility Subsidiary's Properties for rate-making
purposes, or the ability of the Company to perform this Agreement or
the Notes, a notice describing the notice given (or action taken) and
the nature of the claimed default, breach, or Event of Default or the
claim, action or administrative proceeding pending or threatened; and
(f) Notice of Regulatory Action - promptly upon receipt thereof,
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copies of any notices received from Federal or state regulatory
agencies relating to an order, ruling, statute, other law or
information which would materially and adversely affect the
Properties, business, franchises, prospects, or financial condition of
the Company and any Restricted Subsidiaries, taken as a whole, the
rates to be charged by the Company or any Utility Subsidiary or the
valuation of the Company's or such or Utility Subsidiary's Properties
for rate-making purposes, or the ability of the Company to perform
this Agreement or the Notes;
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(g) Accounting Reports - promptly after receipt, copies of any
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report as to material inadequacies in accounting controls submitted by
independent accountants in connection with any audit of the Company or
any Restricted Subsidiary; and
(h) Requested Information - with reasonable promptness, any
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other data and information which may be reasonably requested from time
to time.
3.2 Officer's Certificates.
With each set of financial statements delivered pursuant to
Section 3.1(a) or 3.1(b), the Company will deliver a certificate
signed by its principal financial officer or its Treasurer and setting
forth:
(a) Covenant Compliance - the information required in order to
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establish compliance with Section 4 during the period covered by the
income statements then being furnished; and
(b) Event of Default - that the signer has reviewed the relevant
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terms of this Agreement and has made, or caused to be made, under the
signer's supervision, a good faith review of the transactions and
conditions of the Company and its Subsidiaries during the period
covered by the income statements then being furnished and that the
review has not disclosed the existence of any Event of Default or, if
an Event of Default exists, describing its nature.
3.3 Inspection.
The Company will permit your representatives, while you or your
nominee holds any Note, or the representatives of any other holder of
the Notes, at your or such holder's expense, to visit and inspect any
of the Properties of the Company or any Restricted Subsidiary, to
examine and make copies and extracts of all their books of account,
records, reports and other papers, and to discuss their respective
affairs, finances and accounts with their respective officers,
employees with management duties and independent public accountants,
all at reasonable times and as often as may be reasonably requested to
the extent you or such holder may deem necessary to familiarize
yourself or themselves, as the case may be, with the financial
condition of the Company.
SECTION 4. COMPANY BUSINESS COVENANTS
The Company covenants that on and after the date of this
Agreement until the Notes are paid in full:
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4.1 Funded Debt.
Neither the Company nor any Restricted Subsidiary will become
liable for or permit any of its Property to become subject to any
Funded Debt or Guaranty of Funded Debt (other than Funded Debt and
Guaranties of Funded Debt to the Company or any Restricted Subsidiary,
the Notes and existing Funded Debt or Guaranties of Funded Debt as of
the Closing Date or any renewals, extensions and refinancings of
Funded Debt or Guaranties of Funded Debt), if immediately after giving
effect thereto, Consolidated Funded Debt would exceed 66-2/3% of
Consolidated Total Capitalization.
4.2 Liens and Encumbrances.
Neither the Company nor any Restricted Subsidiary will (a) cause
or permit or (b) agree or consent to cause or permit in the future
(upon the happening of a contingency or otherwise), any of its
Property (other than Designated Real Property), whether now owned or
subsequently acquired, to be subject to Lien unless the Notes will be
secured equally and ratably with all other obligations secured
thereby, except:
(1) Liens securing the payment of taxes, assessments or
governmental charges or levies or the demands of suppliers,
mechanics, carriers, warehousers, landlords and other like
Persons, provided that all claims which the Liens secure are
not yet due or are being actively contested in good faith
and by appropriate proceedings;
(2) Liens incurred or deposits made (A) in the ordinary
course of business (including leases, zoning restrictions,
easements and similar title exceptions or encumbrances) that
are not incurred in connection with the borrowing of money,
provided such Liens do not materially interfere with the
conduct of the business of the Company and its Subsidiaries
taken as a whole, (B) in connection with worker's
compensation, unemployment insurance, social security and
other like laws which are not currently dischargeable, or
(C) to secure the performance of letters of credit, bids,
tenders, sales contracts, leases, statutory obligations,
surety, appeal and performance bonds and other similar
obligations or transactions;
(3) attachment, judgment and other similar Liens arising in
connection with court or administrative proceedings,
provided that the Company or the Restricted Subsidiary (A)
attempts in good faith to stay the execution and
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enforcement of such Liens and (B) all claims which the Liens secure
are being actively contested in good faith and by appropriate
proceedings;
(4) Liens on Property of the Company or a Restricted
Subsidiary, provided that they secure only obligations to
the Company or a Subsidiary;
(5) existing Liens at the Closing Date, including the Lien
of the Mortgage;
(6) (i) any Lien on Property or on rights relating thereto
acquired, constructed or improved by the Company or a
Restricted Subsidiary after the date of this Agreement
to secure any rights granted with respect to such
Property in connection with the provision of all or a
part of the purchase price or the cost of acquisition,
construction or improvement of such Property, which
Lien is created contemporaneously with, or within
18 months after, such acquisition or the completion of
such construction or improvement, or
(ii) any Lien on Property existing on such Property at
the time of acquisition thereof by the Company or a
Restricted Subsidiary, or
(iii) any Lien existing on the Property of a Person
at the time such Person becomes a Restricted
Subsidiary, or
(iv) any Lien on Property or the capital stock of a
Subsidiary created at the time of its acquisition by
the Company or a Restricted Subsidiary to secure all or
a part of the purchase price;
(7) Inchoate Liens arising under ERISA;
(8) Liens incurred in connection with industrial revenue
bonds, pollution control bonds, water facility bonds or
similar financings;
(9) Liens securing pledges, deposits, performance bonds or
similar security interests not incurred in connection with
the borrowing of money;
(10) Liens securing any Debt of any Utility Subsidiary; or
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(11) Liens granted in connection with a refinancing
permitted hereunder, if the Property subject to such Lien
was subject to a permitted Lien immediately prior to such
refinancing and the new Lien does not secure a higher amount
of debt than did the prior Lien.
If any Property is subjected to a Lien in violation of this
Section, the Notes shall have the benefit, to the full extent that,
and with such priority as, the holders may be entitled thereto under
applicable law, of an equitable Lien on such Property securing the
Notes, except where the effect thereof would in any way limit a
Noteholder's rights under this Agreement. Such violation of this
Section shall constitute, on the terms set forth in Section 5.1, an
Event of Default hereunder, whether or not any such provision is made
pursuant to this Section.
4.3 Distributions and Restricted Investments.
Neither the Company nor any Restricted Subsidiary will declare,
make or incur any liability to make any Distribution or acquire any
Restricted Investment if, immediately after giving effect thereto, the
sum of such Distributions and Restricted Investments would exceed the
amount obtained by adding (a) Consolidated Net Income accumulated
after September 30, 1990, plus (b) $16,000,000, plus (c) the net cash
proceeds received by the Company after September 30, 1990 from the
issuance of additional shares of capital stock, or other Securities
subsequently converted into capital stock, plus (d) the net cash
received by the Company after September 30, 1990 as a capital
contribution from THC, plus (e) repayments to the Company or its
Restricted Subsidiaries of any loans, advances, or investments which
constituted Restricted Investments.
4.4 Sale of Property and Subsidiary Stock.
Except as permitted by Section 4.5, neither the Company nor any
Restricted Subsidiary will (a) sell, lease or otherwise transfer all
or a substantial part of its Property (by merger, consolidation or
otherwise); or (b) permit any Restricted Subsidiary to issue or
transfer any shares of its stock or any other Securities exchangeable
or convertible into its stock (such stock and other Securities being
called "Subsidiary Stock" below), if the effect would be to reduce the
direct or indirect proportionate interest of the Company in the
outstanding Subsidiary Stock of the Restricted Subsidiary whose shares
are the subject of the transaction; provided that these restrictions
do not apply to:
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(1) the sale, lease, transfer or other disposition of Property
(other than Subsidiary Stock) in the ordinary course of business;
(2) any such transaction if the following conditions are met:
(a) the aggregate net book value of such Property and all
other Property disposed of by the Company and its Restricted
Subsidiaries (other than as permitted by any other provision of
this Section 4.4) during any fiscal year does not exceed 15% of
Consolidated Total Assets at the time of such disposition (in
computing the net book value of Property disposed of during any
fiscal year, any sale, lease, transfer or other disposition by
the Company or a Restricted Subsidiary of Property shall be
excluded to the extent that the net proceeds of such disposition
are used to acquire, construct or improve other Property); and
(b) if the Property to be sold, leased, transferred, or
otherwise disposed of is an interest in a Restricted Subsidiary,
such disposition may be made only if the Restricted Subsidiary
proposed to be sold, leased, transferred or otherwise disposed of
has no continuing investment in any other Restricted Subsidiary
not being simultaneously disposed of, or in the Company;
(3) the sale, lease, transfer or other disposition of any
such assets by the Company or a Restricted Subsidiary to the
Company or any other Restricted Subsidiary;
(4) the sale, lease, transfer or other disposition by the
Company or a Restricted Subsidiary of Property as a result of
condemnation or the exercise of the right of eminent domain or in
anticipation or threat of such action;
(5) the sale, lease, transfer or other disposition of all
or any portion of Designated Real Property; or
(6) the issue of directors' qualifying shares.
Notwithstanding any other provision herein to the contrary, the
Company or any Restricted Subsidiary may sell, lease, transfer or
otherwise dispose of any of such assets if it offers to apply the net
proceeds of such sale, lease, transfer or other disposition to reduce
outstanding Consolidated Funded Debt at par; provided, however, that
if the Company proposes to use the
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proceeds of such sales, leases, or transfers to reduce
any outstanding Consolidated Funded Debt other
than the Notes, then each holder of the Notes shall have the option
pursuant to Section 2.2(c) to require prepayment of the Notes held by
such holder, without premium, on a pro rata basis with the
Consolidated Funded Debt being paid, unless and to the extent such
Consolidated Funded Debt had been directly secured by the sold,
leased, transferred or disposed of assets and such security interest
was not incurred by the Company or such Restricted Subsidiary in
anticipation of such sale, lease transfer, or disposition.
4.5 Merger and Consolidation.
Neither the Company nor any Restricted Subsidiary will be a party
to any merger or consolidation or sell, lease or otherwise transfer
all or substantially all of its Property (other than a merger or
consolidation with or sale to the Company or a Restricted Subsidiary),
provided that (i) the Company may merge or consolidate with another
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Person and may sell, lease or otherwise transfer all or substantially
all of its Property as an entirety to another Person if the surviving
or acquiring Person: (A) is organized under the laws of the United
States or a jurisdiction thereof , (B) expressly assumes the covenants
and obligations in the Notes and this Agreement, (C) could,
immediately after giving effect to the transaction, incur at least
$1.00 of additional Funded Debt pursuant to Section 4.1, and (D) would
not, immediately after giving effect to the transaction, be in default
of any covenants under this Agreement, and (ii) a Restricted
Subsidiary may be a party to a merger or consolidation or sell, lease
or otherwise transfer all or substantially all of its Property as an
entirety, provided that, immediately after giving effect to the
transaction, (A) the surviving or acquiring Person would be a
Restricted Subsidiary and (B) the Company would not be in default of
any covenant under this Agreement.
4.6 Transactions with Affiliates; Restricted Subsidiaries.
Neither the Company nor any Restricted Subsidiary will enter into
any transaction (including the purchase, sale or exchange of Property
or the rendering of any service) with any Affiliate, except in the
ordinary course of business and upon fair and reasonable terms which,
taken as a whole, are fair to THC and its Subsidiaries, provided, that
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any such transaction would not materially and adversely affect the
properties, business, franchises, prospects or financial condition of
the Company and any Restricted Subsidiaries, taken as a whole. Each
Restricted Subsidiary will be maintained as a Restricted Subsidiary
unless otherwise permitted by Section 4.4 or 4.5 or in the definition
of "Restricted Subsidiary."
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4.7 Nature of Business.
The Company shall not, and shall not permit any Restricted
Subsidiary which is a Restricted Subsidiary on the date hereof, to
engage in any business if, as a result, the Company and such
Restricted Subsidiaries, taken as a whole, would not be engaged
primarily in substantially the same lines of business as are engaged
in by the Company and its Restricted Subsidiaries on the date hereof.
4.8 Insurance.
The Company shall and shall cause each Restricted Subsidiary to
maintain insurance with responsible insurance companies in such amount
and against such risks as is customarily and reasonably carried by
owners of similar business and property, and the Company will furnish
you and any other holder of outstanding Notes, upon request, with full
information as to the insurance carried.
4.9 Maintenance, Etc.
The Company will maintain, preserve and keep, and will cause each
Restricted Subsidiary to maintain, preserve and keep, its Properties
which are used or useful in the conduct of its business (whether owned
in fee or a leasehold interest) in good repair and working order and
from time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the efficiency thereof
shall be maintained, except as may otherwise be permitted under
Section 4.4 or 4.5.
4.10 Records.
The Company shall and shall cause each Subsidiary to keep and
maintain full and accurate accounts and records of its operations to
enable the Company to prepare financial statements in accordance with
generally accepted accounting principles.
4.11 Incorporation.
The Company shall and shall cause each of its Restricted
Subsidiaries to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation, except as may otherwise be permitted
under Section 4.4 or 4.5.
4.12 Compliance with Laws.
The Company shall and shall cause each of its Restricted
Subsidiaries to comply with all laws, rules, regulations, orders,
-12-
writs, judgments, injunctions, decrees or awards to which it may be
subject and the failure to comply with which would materially and
adversely affect the Properties, business, franchises, prospects, or
financial condition of the Company and its Restricted Subsidiaries,
taken as a whole, the rates to be charged by the Company or any
Utility Subsidiary or the valuation of the Company's or such Utility
Subsidiary's Properties for rate-making purposes, or the ability of
the Company to perform this Agreement or the Notes.
4.13 Payment of Expenses; Indemnification, Etc.
Whether or not the Notes are sold, the Company shall:
(1) pay the reasonable fees and disbursements of your
special counsel, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, unless your failure to
purchase the Notes constitutes a breach of this Agreement;
(2) pay, and hold you and any other holder of outstanding
Notes harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing
matters and save you and any other holder of outstanding Notes
harmless from and against any and all liabilities with respect to
or resulting from any delay or omission to pay such taxes;
(3) pay all costs related to modifications or consents
initiated by or requested by the Company relating to this
Agreement; and
(4) pay all expenses, costs, outlays and reasonable
attorneys' fees (including the allocated costs and expenses of
your in-house counsel) of any kind and character relating to
(i) the exchange of Notes or amendments, waivers or consents
pursuant to, or the enforcement and protection of your rights
under, the provisions of this Agreement or the Notes, or (ii) the
enforcement of any provisions of, or the collection of amounts
due you under, the Notes or this Agreement, or (iii) the
preparation for, negotiations regarding, consultations concerning
or the defense of legal proceedings involving any claim or claims
made or threatened against you arising out of this Agreement or
the Notes; provided, however, that the Company shall not be
required to reimburse you for any such expenses, costs, outlays
or fees incurred in connection with any action or proceeding to
enforce any of the provisions of this Agreement or the Notes
which a court of competent jurisdiction determines has not been
undertaken by you in good faith.
-13-
The Company's obligations under this Section 4.13 shall survive
the termination of this Agreement and the payment of the Notes.
4.14 Taxes.
The Company shall and shall cause each Restricted Subsidiary to
pay when due all taxes, assessments and governmental charges and
levies upon the Company or its Restricted Subsidiaries or the
Company's or its Restricted Subsidiaries' income, profits or
Properties, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
have been set aside.
4.15 ERISA.
The Company shall and shall cause each of its Common Control
Entities to comply in all material respects with ERISA, the Code and
all other applicable laws and regulations and:
(1) deliver a copy to you and any other holder of outstanding
Notes within 30 days of the receipt by, or the requisite
filing or notification date for, the Company or any Common
Control Entity, of a:
(i) notice of a reportable event for a Plan to the PBGC;
(ii) notice of an intent to terminate a Plan to the PBGC;
(iii) notice from the PBGC relating to the failure of
the Company or any Common Control Entity to timely pay premiums
to the PBGC, its intent to terminate any Plan, the appointment of
a trustee to a Plan or the imposition of employer liability on
the Company or any Common Control Entity;
(iv) notice and demand for payment of withdrawal liability
by the Company or any Common Control Entity from a multi-employer
plan;
(v) notice of any claim made against the Company or any
Common Control Entity for unpaid contributions with respect to a
Plan;
(vi) notice by the Department of Labor of any penalty,
audit, investigation or any purported violation of ERISA with
respect to a Plan;
-14-
(vii) notice by the Internal Revenue Service or the
Treasury Department of any income tax delinquency, excise tax,
penalty, audit or investigation with respect to a Plan; or
(viii) any complaint filed in court, judgment, award or
settlement agreement with respect to a Plan that may result in a
liability to the Company or any Common Control Entity or may
result in a material adverse effect on the operations, properties
or condition (financial or otherwise) of the Company or any
Common Control Entity.
4.16 Sale and Leaseback of Property.
Neither the Company nor any Restricted Subsidiary will enter into
any sale and leaseback transaction involving Property of the Company
or a Restricted Subsidiary unless:
(a) the term of the lease, including any renewals thereof,
does not exceed five years;
(b) the Company offers to apply the net proceeds of such sale to
reduce outstanding Consolidated Funded Debt at par on a pro rata
basis or to purchase, construct or improve other Property of at
least equivalent value to such net proceeds;
(c) immediately prior to such transaction, the Property could
have been subjected to a Lien to secure Debt in a principal
amount equal to the proceeds of such sale without violation of
the restrictions contained in Section 4.2 of this Agreement;
(d) any such transaction relating to Property acquired or
constructed after the date of this Agreement occurs within 18
months of the date of acquisition or completion of construction;
(e) such transaction represents a sale by a Restricted
Subsidiary to the Company or any other Restricted Subsidiary or
by the Company to a Restricted Subsidiary; or
(f) the net proceeds of such sale are treated as Funded Debt and
would be permitted under the restrictions contained in Section
4.1 of this Agreement.
-15-
4.17 First Mortgage Bonds.
The Company will not issue any additional First Mortgate Bonds,
unless the Notes are equally and ratably secured by the Mortgage.
4.18 DPUC Approval.
The Company agrees to comply in all material respects with all
orders of the DPUC set forth in the December 19, 1990 Decision of the
DPUC (Docket No. 90-12-02) approving the issuance and sale of the
Notes.
SECTION 5. DEFAULT
5.1 Nature of Default.
An "Event of Default" shall exist if any of the following occurs
and is continuing:
(a) Principal, Premium or Interest Payments - failure to
---------------------------------------
pay principal on any Note on or before the date such principal
payment is due, or failure to pay any premium or interest on any
Note on or before the date the payment is due and payable and
continuance of such failure to pay any premium or interest on any
Note for ten Business Days, provided that any payment made after
its due date shall also include interest on the overdue amount
(to the extent permitted by applicable law) at the rate of 10.55%
per annum;
(b) Breach of Company Business Covenants - failure to
------------------------------------
comply with any covenant contained in Sections 3 or 4.1 through
4.6, 4.8, 4.11, 4.12, and 4.14 through 4.16, which failure
continues for more than 30 days after it first becomes known to
any officer of the Company;
(c) Other Breaches - failure to comply with any other
--------------
provision of this Agreement, which continues for more than 45
days after notice has been given to the Company by any holder of
the Notes;
(d) Default on Indebtedness or Other Security - any event
-----------------------------------------
shall occur (other than the mere passage of time) or any
condition shall exist in respect of any Funded Debt or under any
agreement securing or relating to Funded Debt, the effect of
which event or condition is to cause (or permit one or more
Persons to cause) more than $5,000,000 in aggregate principal
amount of Funded Debt or other Securities of the Company, THC or
any Restricted Subsidiary to become due before its (or their)
stated maturity or before its (or their) regularly scheduled
dates of payment;
-16-
(e) Involuntary Bankruptcv Proceedings. Etc. - a
-----------------------------------------
custodian, receiver, liquidator or trustee of the Company or any
Restricted Subsidiary, or of any of the Property of either, is
appointed or takes possession and such appointment or possession
remains in effect for more than 90 days; or the Company or any
Restricted Subsidiary generally fails to pay its debts as they
become due; or the Company or any Restricted Subsidiary is
adjudicated bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code against the Company or
any Restricted Subsidiary; or any Property of either is
sequestered by court order and the order remains in effect for
more than 90 days; or a petition is filed against the Company or
any Restricted Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently
in effect, and is not dismissed within 90 days after filing;
(f) Voluntary Bankruptcy Proceeding, Etc. - the Company or
------------------------------------
any Restricted Subsidiary files petition in voluntary bankruptcy
or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency , readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now
or subsequently in effect; or consents to the filing of any
petition against it under any such law; or consents to the
appointment of or taking possession by a custodian, receiver,
trustee or liquidator of the Company, or any Restricted
Subsidiary, or of all or any part of the Property of either; or
makes an assignment for the benefit of its creditors; or admits
in writing its general inability to pay its debts as they become
due;
(g) Representations or Warranties - any of the
------------------------------
representations, warranties, certifications or statements of the
Company made herein or in any certificate, financial statement or
other notice delivered pursuant hereto shall prove to be untrue
or misleading as of the Closing Date in any material respect; or
(h) Judgments - the Company or a Restricted Subsidiary
---------
suffers one or more outstanding 'final judgments against it
aggregating more than $5,000,000 not covered by insurance and
such judgment or judgments shall continue unsatisfied and not
appealed, stayed, bonded, vacated or suspended by agreement with
the beneficiary thereof, for a period of 90 days.
5.2 Default Remedies.
(a) Acceleration - If an Event of Default described in
------------
Section 5.1.(a) exists, any holder of Notes may, at its option,
exercise any right, power or remedy permitted by law, including
-17-
the right, by notice to the Company, to declare the Notes held by
such holder to be immediately due and payable. If any other
Event of Default exists, the holder or holders of at least 35% in
outstanding principal amount of the Notes (exclusive of Notes
owned by the Company, Restricted Subsidiaries and Affiliates)
may, at its or their option, exercise any right, power or remedy
permitted by law, including the right, by notice to the Company,
to declare all the outstanding Notes to be immediately due and
payable. Upon each declaration, the principal of the Notes
declared due shall become immediately due and payable, together
with all accrued interest and together with, to the extent
permitted by applicable law, the Make Whole Premium Amount, and
the Company will immediately make payment, without any
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived. No course of dealing or delay
or failure to exercise any right on the part of any holder of the
Notes shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers or remedies. Upon an
Event of Default, the Company will pay or reimburse the holders
of the Notes for all costs and expenses (including reasonable
attorneys, fees) incurred by them in collecting any sums due on
the Notes or in otherwise enforcing any of their rights.
(b) Annulment of Acceleration - In the event of each
-------------------------
declaration pursuant to Section 5.2(a), other than a declaration
of acceleration pursuant to an Event of Default described in
Section 5.1.(a), the holder or holders of at least 66-2/3% of the
outstanding principal amount of the Notes (exclusive of Notes
owned by the Company, Restricted Subsidiaries and Affiliates) may
annul such declaration and its consequences if no judgment or
decree has been entered for the payment of any amount due
pursuant to such declaration and if all sums payable under the
Notes and under this Agreement (except any principal or interest
on the Notes or the premium amount in Section 2.2(a) which has
become payable solely by reason of such declaration) shall have
been duly paid.
SECTION 6. INTERPRETATION OF THIS AGREEMENT.
6.1 Terms Defined.
As used in this Agreement (including Attachments) accounting
terms shall be defined in accordance with generally accepted
accounting principles, except the following terms, which have the
respective meanings set forth below or in the Section indicated:
Accrued Benefit - shall have the meaning assigned to that term in
----------------
Section 3(23) of ERISA.
-18-
Accumulated Funding Deficiency - shall have the meaning assigned
------------------------------
to that term in Section 302(a)(2) of ERISA and Section 412(a) of the
Code.
Affiliate - means a Person (other than a Restricted Subsidiary)
---------
which directly or indirectly controls, or is controlled by, or is
under common control with, the Company. The term "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.
Agreement - means this Note Agreement dated as of January 24,
---------
1991 between the Company and you (including Attachments), as amended
or modified from time to time.
Business Day - means a day other than a Saturday, a Sunday, or in
------------
the case of any Note with respect to which the provisions of Section
7.1 hereof are applicable, a day on which the bank designated (by the
holder of such Note) to receive (for such holder's account) payments
on such Note is, or banks located in the State of Connecticut are,
required or authorized by law to be closed.
Capital Lease - means any lease the obligation for rentals with
-------------
respect to which is required to be capitalized on a balance sheet of
the lessee in accordance with generally accepted accounting
principles.
Closing Date - Section 1.2
------------
Code - means the Internal Revenue Code of 1986, as now in effect
----
or as hereafter amended. All citations to sections of the Code are
to such sections as they may from time to time be amended or
renumbered.
Common Control Entity - means any corporation or other trade or
---------------------
business under common control with the Company as determined under
Sections 414(b) or (c) of the Code.
Consolidated Funded Debt - at any date means the aggregate amount
------------------------
of Funded Debt of the Company and all Restricted Subsidiaries at such
date, determined on a consolidated basis, but excluding indebtedness
if owed or guaranteed by a Restricted Subsidiary to the Company or any
other Restricted Subsidiary or by the Company to a Restricted
Subsidiary.
-19-
Consolidated Net Income - means net earnings after income taxes
-----------------------
of the Company and each Restricted Subsidiary (only for the period
during which it is a Restricted Subsidiary), including any earnings of
any Unrestricted Subsidiary actually remitted to the Company or any
Restricted Subsidiary, determined on a consolidated basis, excluding:
(1) any extraordinary items, including, without
limitation, any gain arising from any write-up of assets and
loss from any write-down of assets; and
(2) net earnings of any Person prior to becoming a
Restricted Subsidiary.
Consolidated Net Worth - means the sum of the consolidated
----------------------
capital, surplus and retained earnings accounts of the Company and its
Restricted Subsidiaries as determined in accordance with the
accounting requirements of the DPUC.
Consolidated Total Capitalization - Consolidated Funded Debt and
---------------------------------
Consolidated means the sum of the Net Worth.
Consolidated Total Assets - at any date means the aggregate
-------------------------
amount of assets of the Company and Restricted Subsidiaries,
determined on a consolidated basis in accordance with the accounting
requirements of the DPUC.
Current Debt - with respect to any Person, means:
------------
(A) all liabilities for borrowed money, including,
without limitation
(i) all obligations under Capital Leases, and
(ii) all liabilities secured by any Lien
existing on Property owned by that Person (whether
or not those liabilities have been assumed)
which, in either case, are payable on demand or
within one year from their creation, or are
(without duplication) liabilities constituting
principal payments due within one year from the
date of determination on indebtedness for borrowed
money expressed to mature more than one year from
the date of its creation, except any liabilities which
-20-
are renewable or extendible at the option of
are renewable or extendible at the option of the
debtor to a date more than one year from the date
of creation thereof; and
(B) the aggregate amount of Guaranties by such Person
of all such liabilities of other Persons.
Debt - means as of the date of any determination thereof the
----
aggregate of Current Debt plus Funded Debt.
Designated Real Property - means that property, consisting of
------------------------
approximately 2,900 acres of unimproved real property, designated in
Attachment G hereto and determined by the Company not to be needed for
utility operations.
Distribution - means:
------------
(1) dividends or other distributions in respect of
capital stock of the Company (except distributions in such
stock); and
(2) the redemption or acquisition of such stock or of
warrants, rights or other options to purchase such stock
(except (a) when solely in exchange for such stock, (b)
mandatory sinking fund redemptions of the preferred stock of
the Company, and (c) optional "double-up" redemptions of
Series A Preferred Stock described in paragraph numbered
24(d) of the certificate amending the Company's certificate
of incorporation filed with the Secretary of the State of
the State of Connecticut on December 14, 1970);
in the case of (1) or (2) above valued at the fair market
value of the Property being dividend, distributed, or
otherwise transferred as a Distribution.
DPUC - shall mean the Connecticut Department of Public Utility
----
Control.
Employee Pension Benefit Plan - shall have the meaning assigned
-----------------------------
to that term in Section 3(2) of ERISA.
Employer Liability - means the liability computed under Sections
------------------
4062, 4063 and 4064 of ERISA.
ERISA - means the Employee Retirement Income Security Act of
-----
1974, as now in effect or as hereafter amended. All citations to
sections of ERISA are to such sections as they may from time to time
be amended or renumbered.
-21
Event of Default - Section 5.1.
----------------
First Mortgage Bonds - shall mean bonds issuable pursuant to and
--------------------
secured by the Mortgage,
Funded Debt - with respect to any Person, means without
-----------
duplication:
(1) its liabilities for borrowed money, other than
Current Debt; and
(2) any Capital Lease obligation, other than Current Debt.
Guaranty - with respect to any Person, means all guaranties of,
--------
and all other obligations which in effect guaranty, any Funded Debt of
any other Person (the "primary obligor") in any manner (except those
which, in effect, guarantee any indebtedness or the obligation of the
Company or any Restricted Subsidiary), including obligations incurred
through an agreement, contingent or otherwise, by such Person:
(1) to purchase such Funded Debt or any Property
constituting security therefor;
(2) to advance or supply funds for the purchase or
payment of such Funded Debt; or
(3) to lease Property, or to purchase Securities or
other Property or services, primarily for the purpose of
assuring the owner of such Funded Debt of the ability of the
primary obligor to make payment of the Funded Debt;
but excluding endorsements in the ordinary course of
business of negotiable instruments for deposit or
collection.
The amount of any Guaranty shall be deemed to be the outstanding
principal amount of such Funded Debt.
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 the interest is based on common law, statute or contract
(including 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
not include minor reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions and other minor
title exceptions affecting Property,
-22-
provided that they do not constitute security for a
--------
monetary obligation, and shall not include
negative pledge or other agreements restricting Liens. For the
purposes of this Agreement, the Company or a Restricted Subsidiary
shall be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement, financing 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 be deemed to be a Lien.
Make Whole Premium Amount -
-------------------------
(a) with respect to Notes or portions thereof being prepaid
prior to February 1, 2001, means a premium equal to the excess, if
any, of the Present Value of the Outstanding Dollar Years of the
amount being so prepaid over such amount as of the date of prepayment.
The Make Whole Premium Amount shall in no event be less than zero.
(b) with respect to Notes or portions thereof being prepaid on
or after February 1, 2001, means the product of (i) the principal
amount then to be prepaid times (ii) the applicable percentage set out
below:
If Prepaid During the
12-month Period Beginning Applicable Percentage
------------------------- ---------------------
February 1, 2001 4.775 %
February 1, 2002 4.2975 %
February 1, 2003 3.82 %
February 1, 2004 3.3425 %
February 1, 2005 2.865 %
February 1, 2006 2.3875 %
February 1, 2007 1.91 %
February 1, 2008 1.4325 %
February 1, 2009 0.955 %
February 1, 2010 0.4775 %
Thereafter 0 %
Anything in the foregoing to the contrary notwithstanding, the Company
shall not be permitted to prepay the Notes except as provided in
Section 2.2.
Mortgage - shall mean the First Mortgage, dated June 1, 1924,
--------
between the Company and CityTrust (as successor to The Bridgeport
Trust Company), as Trustee, as supplemented and amended from time to
time.
Notes - Section 1.1.
-----
PBGC - shall mean the Pension Benefit Guaranty Corp.
----
-23-
Plan - means any "employee benefit plan," (as that term is
----
defined in Section 3(3) of ERISA) as well as any other written or
formal plan, arrangement or contract involving direct or indirect
compensation, under which the Company or any Subsidiary has any
present or future obligations or liability on behalf of its employees
or former employees or their dependents or beneficiaries, including
but not limited to, each retirement, pension, profit-sharing, thrift,
savings, target benefit, employee stock ownership, cash or deferred,
multiple employer, multi-employer or other similar plan or program,
each other deferred or incentive compensation, bonus, stock option,
employee stock purchase, "phantom stock" or stock appreciation right
plan, each other program providing payment or reimbursement for or of
medical, surgical, hospital, drug rehabilitation, dental or visual
care, psychiatric counselling, or vacation, sick, disability or
severance pay and each other "fringe benefit" plan or arrangement.
Person - means an individual, partnership, corporation, trust or
------
unincorporated organization, and a government or a governmental agency
or political subdivision.
Present Value of the Outstanding Dollar Years - at any time with
---------------------------------------------
respect to Notes or portions thereof being prepaid prior to maturity
means, the amount calculated by discounting all remaining scheduled
payments of principal and interest thereon from the scheduled due date
to the date of prepayment, in accordance with accepted financial
practice and at a discount factor (applied on a semiannual basis)
equal to the sum of (i) the Treasury Constant Yield with respect to
such remaining scheduled payments of principal, plus (ii) 50 basis
points.
Property - means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
Reportable Event - means any of the events enumerated in Section
----------------
4043(b) of ERISA or the regulations issued thereunder except such
events for which the 30-day notice has been waived under PBGC
Regulation 2615.
Restricted Investments - means all Property, including all
----------------------
investments in any Person whether by acquisition of stock,
indebtedness, other obligation or Security, or by loan, advance,
capital contribution, or otherwise, except:
(1) investments in the Company or one or more Restricted
Subsidiaries or any Person who immediately after such
investment becomes a Restricted Subsidiary;
(2) direct obligations of the United States of America, or
any of its agencies or obligations fully guaranteed by the
United States of America, provided that such obligations
--------
mature within one year from the date acquired;
-24-
(3) certificates of deposit or repurchase agreements
maturing within one year from the date acquired and issued
by banks or trust companies organized under the laws of the
United States or any of its states having combined capital
and surplus greater than $250 million;
(4) commercial paper and taxable or tax-exempt instruments
having either of the two highest ratings by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Corporation and
maturing within one year from the date acquired;
(5) instruments maturing after one year from the date
acquired and having either of the two highest ratings by
▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation, provided such instruments have either a "put"
or rate reset feature recurring not less often then
annually;
(6) investments in the debt obligations of or loans to any
Affiliate company;
(7) acquisition or ownership of stock or Securities
received in settlement of Debt or other obligations owing to
the Company or any Restricted Subsidiary;
(8) Property to be used by the Company or its Restricted
Subsidiaries in the ordinary course of business; and
(9) current assets arising from the sale of goods and
services by the Company or its Restricted Subsidiaries in
the ordinary course of business.
The amount of any Restricted Investment shall be valued at its
net book value.
Restricted Subsidiary - means any Subsidiary,
---------------------
(i) organized under the laws of the United States, Puerto
Rico, or Canada, or a jurisdiction thereof;
(ii) which conducts substantially all of its business and
has substantially all of its Property within the United States
and Canada;
(iii) a majority of each class of common stock of which
is legally and beneficially owned by the Company and its
Restricted Subsidiaries; and
-25-
(iv) designated as a Restricted Subsidiary on Attachment H
hereto.
A Subsidiary may be subsequently designated as a Restricted
Subsidiary by the Company if no Event of Default would occur as a
result of such designation. A Restricted Subsidiary may subsequently
be designated by the Company as an Unrestricted Subsidiary if (a) no
Event of Default would occur as a result of such designation, and (b)
at least $1.00 of additional Funded Debt could be incurred by the
Company and its remaining Restricted Subsidiaries immediately
thereafter pursuant to Section 4.1.
Security - shall have the same meaning as in Section 2(l) of the
--------
Securities Act of 1933, as amended.
Subsidiary - means a corporation in which the Company owns,
----------
directly or indirectly 50% or more of the voting Stock which enables
it ordinarily, in the absence of contingencies, to elect a majority of
the corporate directors (or Persons performing similar functions).
THC - means The Hydraulic Company.
---
Treasury Constant Yield - means the yield to maturity implied by
-----------------------
the Treasury Constant Maturity Series yields reported (for the latest
day for which such yields shall have been so reported as to the
Business Day next preceding the date of payment with respect to any
Notes or portions thereof being paid prior to maturity) in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded United States Treasury securities
having a constant maturity equal to the remaining weighted average
life to final maturity (calculated in accordance with accepted
financial practice) of the Notes or portions thereof being prepaid as
of such date. Such implied yield shall be determined (i) by
calculating the remaining average life to final maturity of the Notes
or portions thereof being prepaid rounded to the nearest one-twelfth
year and (ii) if necessary, by interpolating linearly between Treasury
Constant Maturity Series yields.
Unrestricted Subsidiary - means any Subsidiary which is not at
-----------------------
the time a Restricted Subsidiary.
Utility Subsidiary - means any Restricted Subsidiary that is a
------------------
utility company, the rates of which are regulated by state or federal
regulatory agencies.
Voting Stock - means Securities, the holders of which are
------------
ordinarily, in the absence of contingencies, entitled to elect the
corporate directors (or persons performing similar functions)
irrespective of whether or not, at the time, stock of any other
-26-
class or classes shall have or might have special voting powers or rights
by reason of the happening of any contingency.
Withdrawal Liability - means the liability described in Section
--------------------
4201 of ERISA.
6.2 Accounting Principles.
The character or amount of any asset or liability or item of
income or expense required to be determined under this Agreement and
each consolidated or other accounting computation required to be made
under this Agreement shall be determined or made in accordance with
generally accepted accounting principles at the time in effect, to the
extent applicable, except where such principles are inconsistent with
the requirements of this Agreement.
6.3 Directly or Indirectly.
Where any provision in this Agreement refers to any action which
any Person is prohibited from taking, the provision shall be
applicable whether the action is taken directly or indirectly by such
Person, including actions taken by, or on behalf of, any partnership
in which such Person is general partner, and all liabilities of such
partnerships shall be considered liabilities of such Person under this
Agreement.
6.4 Governing Law.
This Agreement and the Notes shall be governed by and construed
in accordance with the local law of the State of Connecticut.
6.5 Rank.
The Notes shall rank pari passu with any and all of the Company's
---- -----
unsecured obligations to any financial institutions outstanding as of
the Closing Date that are not specifically made subordinate to the Notes.
6.6 Section Headings and Table of Contents.
The title of the Sections and the Table of Contents appear as a
matter of convenience only, do not constitute a part of this Agreement
and shall not affect the construction hereof.
SECTION 7. PURCHASER'S SPECIAL RIGHTS
7.1 Direct Payment.
The Company agrees that, notwithstanding any provision in this
Agreement or the Notes to the contrary, it will pay all sums
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becoming due to any institutional holder of Notes in the manner provided
in Attachment A or in any other commercially reasonable manner consistent
with the terms of this Agreement as such holder may designate to the
Company in writing (without presentment of or notation on the Notes).
Any holder of Notes which elects the benefit of this Section agrees
that in the event of a transfer of its Notes (a) a notation will be
made thereon prior to such transfer of all principal, if any, paid on
its Notes, and the date to which interest has been paid, and (b)
notice will be given to the Company of the name and address of the
transferee of the transferred Notes.
7.2 Issue Taxes.
The Company will pay all taxes, if any, in connection with the
issuance and sale of the Notes and in connection with any
modification of the Notes and will save you harmless against any
and all liabilities relating to such taxes.
7.3 Note Register.
The Company will cause to be kept a register for the registration
and transfer of Notes. The names and addresses of the holders of
Notes, and all transfers of and the names and addresses of the
transferees of Notes, will be registered in the register. The Person
in whose name any Registered Note is registered shall be deemed and
treated as the owner and holder thereof for all purposes of this
Agreement, and the Company shall not be affected by any notice or
knowledge to the contrary.
7.4 Exchange of Notes.
Upon surrender of any Note to the Company, the Company, upon
request, will execute and deliver at its expense (except as provided
below) new Notes, in denominations of at least $50,000 (except as may
be necessary to reflect any principal amount not evenly divisible by
$50,000), in an aggregate principal amount equal to the outstanding
principal amount of the surrendered Note. Each new Note shall be
payable to any holder as the surrendering holder may request and shall
be a Registered Note. Each new Note shall be dated and bear interest
from the date to which interest has been paid on the surrendered Note
or dated the date of the surrendered Note if no interest has 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
transfer.
7.5 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, and
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(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of the
Note is an institutional holder, its own agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation of the Note,
the Company at its expense will execute and deliver a new Note, dated
and bearing interest from the date to which interest has been paid on
the lost, stolen, destroyed or mutilated Note or dated the date of the
lost, stolen, destroyed or mutilated Note if no interest has been paid
thereon.
SECTION 8. MISCELLANEOUS
8.1 Notices.
(a) All notices and other communications under this Agreement or
under the Notes will be in writing and will be mailed by first class
mail, postage prepaid:
(1) if to you, in the manner provided in Attachment A or in any
other manner as you may have most recently advised the Company in
writing, or
(2) if to the Company, at its address shown at the beginning of
this Agreement, or at any other address as it may have most recently
furnished in writing to you and to all other holders of the Notes.
(b) Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice
so addressed and otherwise sent or delivered shall be deemed to be
given when actually received by the addressee.
8.2 Reproduction of Documents.
This Agreement and all related documents, including (a) consents,
waivers and modifications which may subsequently be executed, (b)
documents received by you at the closing of your purchase of the Notes
(except the Notes themselves), and (c) financial statements,
certificates and other information previously or subsequently
furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other
similar process.
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The Company agrees and stipulates that any such
reproduction shall, to the extent permitted by applicable law, 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 the reproduction was made by you in the regular
course of business) and that any enlargement, facsimile or further
reproduction of the reproduction shall likewise be admissible in
evidence.
8.3 Purchase for Investment; ERISA.
(a) You represent to the Company that you are purchasing the
Notes for your own account for investment and with no present
intention of distributing or reselling any of the Notes, but without
prejudice to your right at all times to sell or otherwise dispose of
all or part of the Notes under an effective registration statement
under the Securities Act of 1933 and any applicable securities laws of
the several states, as amended, or under a registration exemption
available under the Act or those laws, provided however, that nothing
contained herein shall be construed as creating an obligation upon the
Company to register any of the Notes under the Act or such laws.
(b) You further represent that either: (1) no part of the funds
to be used by you to purchase the Notes constitutes assets allocated
to any separate account maintained by you; or (2) no part of the funds
to be used by you to purchase the Notes constitutes assets allocated
to any separate account maintained by you such that the application of
such funds constitutes a prohibited transaction under Section 406 of
ERISA.
8.4 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties, including without
limitation the holder of any Note, except that your obligation to
purchase the Notes (as provided in Section 1.2) shall be a right which
is personal to the Company and such right shall not be transferable or
assignable by the Company to any other Person (including successors at
law) whether voluntarily or involuntarily. The provisions of this
Agreement are intended to be for the benefit of all holders, from time
to time, of the Notes, and shall be enforceable by any holder, whether
or not an express assignment of rights under this Agreement has been
made by you or your successor or assign.
8.5 Amendment and Waiver; Acquisition of Notes.
(a) Amendment and Waiver. This Agreement may be amended, and
--------------------
the observance of any term of this Agreement may be waived, with (and
only with) the written consent of the Company and the holders
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of at least 66 2/3% of the outstanding principal amount of the Notes
(exclusive of Notes then owned by the Company, Restricted Subsidiaries
and Affiliates), provided that no amendment or waiver of any of the
provisions of Sections 1, 7 and Attachments C and D shall be effective
as to any holder of the Notes unless consented to by such holder in
writing, and provided further, that no amendment or waiver shall,
without the written consent of the holders of all the outstanding
Notes, (1) subject to Section 5.2(b), change the amount or time of any
prepayment, payment of principal or premium or the rate or time of
payment of interest, (2) amend Section 5, or (3) amend this Section
8.5(a). Executed or complete and correct copies of any amendment or
waiver effected pursuant to the provisions of this Section 8.5(a)
shall be delivered by the Company to each holder of outstanding Notes
promptly following the date on which the same shall become effective.
(b) Acquisition of Notes. Neither the Company nor any
--------------------
Restricted Subsidiary nor any Affiliate will, directly or indirectly,
acquire or make any offer to acquire any Notes unless the Company or
such Restricted Subsidiary or Affiliate shall contemporaneously offer
to acquire Notes, pro rata, from all holders of the Notes and upon the
same terms.
8.6 Duplicate Originals.
Two or more duplicate originals of this Agreement may be signed
by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
8.7 Payments Due on Holidays.
If any payment due on, or with respect to, any Note shall fall
due on a day other than a Business Day, then such payment shall be
made on the first Business Day following the day on which such payment
shall have so fallen due, without the payment of any additional
interest or penalty.
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return a counterpart to the Company, whereupon this Agreement will
become binding between us in accordance with its terms.
Very truly yours,
BRIDGEPORT HYDRAULIC COMPANY
By /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President
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Accepted:
FIRST COLONY LIFE INSURANCE COMPANY
By /S/J. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇,
Senior Vice President
ATTACHMENT A
Principal
Amount Manner of
Institution of Note Payment
----------- ------- -------
First Colony Life $20,000,000 By bank wire transfer of
Insurance Company Federal or other
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ immediately available funds
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (identifying each payment
Attn: ▇▇. ▇. ▇▇▇▇▇ as "Bridgeport Hydraulic
▇▇▇▇▇▇ Company 9.55% Notes due
(Federal Tax I.D. February 1, 2021, principal
No.:#540596414 or interest") to:
Crestar/Richmond ABA
#05-10-0002-0 for credit
to First Colony Life
Insurance Company Acct.
#10765400 Attn: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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ATTACHMENT B
THIS NOTE HAS BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 (THE "ACT")
AND APPLICABLE STATE LAWS AND MAY NOT BE TRANSFERRED UNLESS SUCH
TRANSFER IS REGISTERED UNDER SUCH ACT AND SUCH STATE LAWS, OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE UNDER THE ACT AND
SUCH STATE LAWS.
BRIDGEPORT HYDRAULIC COMPANY
9.55% Senior Note due February 1, 2021
No. Greenwich, Connecticut
---------------
$ January 24, 1991
--------------
Bridgeport Hydraulic Company, a Connecticut corporation (the
"Company"), for value received, hereby promises to pay
_________________ or registered assigns the principal sum of
________________ Dollars ($______________) on February 1, 2021 and to
pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal balance hereof from the date of this
Note at the rate of 9.55% per annum, semi-annually on the lst day of
February and the lst day of August each year, commencing on August 1,
1991, until the principal amount hereof shall become due and payable;
and to pay on demand interest on any overdue principal (including any
overdue prepayment of principal) and premium, if any, and (to the
extent permitted by applicable law) on any overdue payment of
interest, at the rate of 10.55% per annum; and to pay any Make Whole
Premium Amount required as specified in the Agreement (as defined
below).
Payments of principal, premium, if any, and interest shall be
made in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and
private debts by check mailed and addressed to the registered holder
hereof at the address shown in the register maintained by the Company
for such purpose, or, at the option of the holder hereof, in such
manner and at such other place in the United States of America as the
holder hereof shall have designated to the Company in writing in
accordance with the terms of the Agreement.
This Note is one of an issue of Notes of the Company issued in an
aggregate principal amount limited to $20,000,000 pursuant to the
Company's Note Agreement with First Colony Life Insurance Company,
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dated as of January 24, 1991 (the "Agreement") , and is entitled to
the benefits thereof and is subject to the resale restrictions
contained therein. As provided in such Agreement, this Note is
subject to prepayment at certain times and in certain circumstances,
in whole or in part, with or without a premium, all as specified in
said Agreement. The Company agrees to make required payments on
account of said Notes in accordance with the provisions of said
Agreement.
The Notes are issuable as registered Notes and are transferable
only by surrender thereof at the principal office of the Company in
Bridgeport, Connecticut, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this
Note or his attorney duly authorized in writing.
Under certain circumstances, as specified in said Agreement, the
principal of this Note may be declared due and payable in the manner
and with the effect provided in said Agreement.
THE MAKER ACKNOWLEDGES THAT THE DEBT EVIDENCED BY THIS NOTE ARISES OUT
OF A COMMERCIAL TRANSACTION AND WAIVES THE RIGHTS TO NOTICE AND
HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS
OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE HOLDER MAY DESIRE TO USE AND SPECIFICALLY
AUTHORIZES THE ATTORNEY FOR THE HOLDER HEREOF TO ISSUE A WRIT FOR A
PREJUDGMENT REMEDY WITHOUT A COURT ORDER.
This Note and said Agreement are governed by and construed in
accordance with the local law of the State of Connecticut.
BRIDGEPORT HYDRAULIC COMPANY
(Corporate Seal) By
--------------------------------
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