▇▇▇▇▇▇ INTERNATIONAL, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
As of December 6, 1995
The Prudential Insurance Company
of America ("Prudential")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential
the "Purchasers")
c/o Prudential Capital Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇ International, Inc. (herein called the
"Company"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes (the "Notes") in the aggregate principal
amount of $125,000,000, to be dated the date of issue thereof, to mature, in the
case of each Note so issued, no more than fifteen years after the date of
original issuance thereof, to bear interest on the unpaid balance thereof from
the date thereof at the rate per annum, and to have such other particular terms,
as shall be set forth, in the case of each Note so issued, in the Confirmation
of Acceptance with respect to such Note delivered pursuant to paragraph 2B(5),
and to be substantially in the form of Exhibit A attached hereto. The terms
"Note" and "Notes" as used herein shall include each Note delivered pursuant to
any provision of this Agreement and each Note delivered in substitution or
exchange for any such Note pursuant to any such provision. Notes which have (i)
the same final maturity, (ii) the same principal prepayment dates, (iii) the
same principal prepayment amounts (as a percentage of the original principal
amount of each Note), (iv) the same interest rate, (v) the same interest payment
periods and (vi) the same date of issuance (which, in the case of a Note issued
in exchange for another Note, shall be deemed for these purposes the date on
which such Note's ultimate predecessor Note was issued), are herein called a
"Series" of Notes.
2A. Intentionally Omitted.
2B. PURCHASE AND SALE OF NOTES.
2B(1). Facility. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Notes pursuant to
this Agreement. The willingness of Prudential to consider such purchase of
Notes is herein called the "Facility". At any time, the aggregate principal
amount of Notes stated in paragraph 1, minus the aggregate principal amount of
Notes purchased and sold pursuant t o this Agreement prior to such time, minus
the aggregate principal amount of Accepted Notes (as hereinafter defined) which
have not yet been purchased and sold hereunder prior to such time, is herein
called the "Available Facility Amount" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). Issuance Period. Notes may be issued and sold pursuant to this
Agreement until the earlier of (i) the third anniversary of the date of this
Agreement (or if such anniversary is not a Business Day, the Business Day next
preceding such anniversary) and (ii) the thirtieth day after Prudential shall
have given to the Company, or the Company shall have given to Prudential,
written notice stating that it elects to terminate the issuance and sale of
Notes pursuant to this Agreement (or if such thirtieth day is not a Business
Day, the Business Day next preceding such thirtieth day). The period during
which Notes may be issued and sold pursuant to this Agreement is herein called
the "Issuance Period".
2B(3). Request for Purchase. The Company may from time to time during
the Issuance Period make requests for purchases of Notes (each such request
being herein called a "Request for Purchase"). Each Request for Purchase shall
be made to Prudential by telecopier or overnight delivery service, and shall (i)
specify the aggregate principal amount of Notes covered thereby, which shall not
be less than $10,000,000 and shall not be greater than the Available Facility
Amount at the time such Request for Purchase is made, (ii) specify the principal
amounts, final maturities, principal prepayment dates and amounts and interest
payment periods (quarterly or semi-annually in arrears) of the Notes covered
thereby, (iii) specify the use of proceeds of such Notes, (iv) specify the
proposed day for the closing of the purchase and sale of such Notes, which shall
be a Business Day during the Issuance Period not less than 10 days and not more
than 30 days after the making of such Request for Purchase, (v) specify the
number of the account and the name and address of the depository institution to
which the aggregate purchase price of such Notes are to be transferred on the
Closing Day for such purchase and sale, (vi) certify that the
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representations and warranties contained in paragraph 8 are true on and as of
the date of such Request for Purchase and that there exists on the date of such
Request for Purchase no Event of Default or Default, (vii) specify the
Designated Spread for such Notes and (viii) be substantially in the form of
Exhibit B attached hereto. Each Request for Purchase shall be in writing and
shall be deemed made when received by Prudential.
2B(4). Rate Quotes. Not later than five Business Days after the
Company shall have given Prudential a Request for Purchase pursuant to
paragraph 2B(3), Prudential may, but shall be under no obligation to, provide
to the Company by telephone or telecopier, in each case between 9:30 A.M. and
1:30 P.M. New York City local time (or such later time as Prudential may elect)
interest rate quotes for the several principal amounts, maturities, principal
prepayment schedules, and interest payment periods of Notes specified in such
Request for Purchase. Each quote shall represent the interest rate per annum
payable on the outstanding principal balance of such Notes at which Prudential
or a Prudential Affiliate would be willing to purchase such Notes at 100% of
the principal amount thereof.
2B(5). Acceptance. Within 30 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2B(4) or such shorter
period as Prudential may specify to the Company (such period herein called the
"Acceptance Window "), the Company may, subject to paragraph 2B(6), elect to
accept such interest rate quotes as to not less than $10,000,000 aggregate
principal amount of the Notes specified in the related Request for Purchase.
Such election shall be made by an Authorized Officer of the Company notifying
Prudential by telephone or telecopier within the Acceptance Window that the
Company elects to accept such interest rate quotes, specifying the Notes (each
such Note being herein called an "Accepted Note") as to which such acceptance
(herein called an "Acceptance") relates. The day the Company notifies
Prudential of an Acceptance with respect to any Accepted Notes is herein called
the "Acceptance Day" for such Accepted Notes. Any interest rate quotes as to
which Prudential does not receive an Acceptance within the Acceptance Window
shall expire, and no purchase or sale of Notes hereunder shall be made based on
such expired interest rate quotes. Subject to paragraph 2B(6) and the other
terms and conditions hereof, the Company agrees to sell to Prudential or a
Prudential Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the
principal amount of such Notes. As soon as practicable following the Acceptance
Day, the Company, Prudential and each Prudential Affiliate which is to purchase
any such Accepted Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto (herein called a
"Confirmation of Acceptance"). If the Company should fail to execute and return
to Prudential within five Business Days following receipt thereof a Confirmation
of Acceptance with respect to any Accepted Notes, Prudential may at its election
at any time prior to its receipt thereof cancel the closing with respect to such
Accepted Notes by so notifying the Company in writing.
2B(6). Market Disruption. Notwithstanding the provisions of paragraph
2B(5), if Prudential shall have provided interest rate quotes pursuant to
paragraph 2B(4) and thereafter prior to the time an Acceptance with respect to
such quotes shall have been notified to Prudential in
3
accordance with paragraph 2B(5) the domestic market for U.S. Treasury
securities or derivatives shall have closed or there shall have occurred a
general suspension, material limitation, or significant disruption o f trading
in securities generally on the New York Stock Exchange or in the domestic
market for U.S. Treasury securities or derivatives, then such interest rate
quotes shall be deemed to have then expired, and no purchase or sale of Notes
hereunder shall be made based on such expired interest rate quotes. If the
Company thereafter notifies Prudential of the Acceptance of any such interest
rate quotes, such Acceptance shall be ineffective for all purposes of this
Agreement, and Prudential shall promptly notify the Company in writing that the
provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance, certifying the reason for such ineffectiveness.
2B(7). Facility Closings. Not later than 11:30 A.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Company will deliver
to each Purchaser listed in the Confirmation of Acceptance relating thereto at
the offices of the Prudential Capital Group, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, the Accepted Notes to be purchased by such Purchaser in
the form of one or more Notes in authorized denominations as such Purchaser may
request for each Series of Accepted Notes to be purchased on the Closing Day,
dated the Closing Day and registered in such Purchaser's name (or in the name
of its nominee), against payment of the purchase price thereof by transfer of
immediately available funds for credit t o the Company's account specified in
the Request for Purchase of such Notes. If the Company fails to tender to any
Purchaser the Accepted Notes to be purchased by such Purchaser on the scheduled
Closing Day for such Accepted Notes as provided above in this paragraph 2B(7),
or any of the conditions specified in paragraph 3 shall not have been fulfilled
by the time required on such scheduled Closing Day, the Company shall, prior to
1:00 P.M., New York City local time, on such scheduled Closing Day notify
Prudential (which notification shall be deemed received by each Purchaser) in
writing whether (i) such closing is to be rescheduled (such rescheduled date to
be a Business Day during the Issuance Period not less than one Business Day and
not more than 10 Business Days after such scheduled Closing Day (the
"Rescheduled Closing Day")) and certify to Prudential (which certification
shall be for the benefit of each Purchaser) that the Company reasonably
believes that it will be able to comply with the conditions set forth in
paragraph 3 on such Rescheduled Closing Day and that the Company will pay the
Delayed Delivery Fee in accordance with paragraph 2B(8)(iii) or (ii) such
closing is to be canceled. In the event that the Company shall fail to give
such notice referred to in the preceding sentence, Prudential (on behalf of
each Purchaser) may at its election, at any time after 1:00 P.M., New York City
local time, on such scheduled Closing Day, notify the Company in writing that
such closing is to be canceled. Notwithstanding anything to the contrary
appearing in this Agreement, the Company may not elect to reschedule a closing
with respect to any given Accepted Notes on more than one occasion, unless
Prudential shall have otherwise consented in writing.
2B(8). Fees.
2B(8)(i). Facility Fee. In consideration for the time, effort and
expense involved in the preparation, negotiation and execution of this
Agreement, on each of the first and second anniversaries of the date of this
Agreement, the Company will pay to Prudential in immediately
4
available funds a fee in the amount of $25,000 (such amounts referred to
individually as a "Facility Fee Installment" and collectively as the "Facility
Fee"). The amount of the Facility Fee Installments shall be reduced (by
application in the order in which they become due), on a dollar for dollar
basis, if and to the extent that one or more Issuance Fees have been paid by the
Company pursuant to paragraph 2B(8)(ii). Except as provided in the balance of
this paragraph 2B(8)(i), the Company shall not be obligated to pay the Facility
Fee if the Issuance Period is terminated pursuant to clause (ii) of paragraph
2B(2). If during the twelve month period immediately preceding the date on
which a Facility Fee Installment is due the Issuance Period terminates as a
result of a Designated Termination, a Reduced Facility Fee Installment shall be
due on such due date. If the Issuance Period is terminated as a result of a
Designated Termination and the last d ay of the Issuance Period occurs prior to
the first anniversary of the date of this Agreement, in no event shall the
Reduced Facility Fee Installment scheduled for the second anniversary of the
date of this Agreement be due or owing.
2B(8)(ii). Issuance Fee. The Company will pay to Prudential in
immediately available funds a fee (herein called the "Issuance Fee") on each
Closing Day in an amount equal to 0.10% of the aggregate principal amount of
Notes sold on such Closing Day. No Issuance Fee shall be due at any time after
the aggregate amount of the Issuance Fees and Facility Fee paid by the Company
under this Agreement equals $50,000.
2B(8)(iii). Delayed Delivery Fee. If the closing of the purchase and
sale of any Accepted Note is delayed for any reason beyond the original Closing
Day for such Accepted Note, the Company will (unless the Company has satisfied
all applicable conditions of closing set forth in clauses (i) through (iv) of
paragraph 3A, paragraph 3C and paragraph 3E) pay to Prudential (a) on the
Cancellation Date or actual closing date of such purchase and sale and (b) if
earlier, the next Business Day following 90 days after the Acceptance Day for
such Accepted Note and on each Business Day following 90 days after the prior
payment hereunder, a fee (herein called the "Delayed Delivery Fee") calculated
as follows:
(BEY - MMY) X DTS/365 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield per
annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Note) to but
excluding the date of such payment; and "PA" means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery
5
Fee be less than zero. Nothing contained herein shall obligate any Purchaser to
purchase any Accepted Note on any day other than the Closing Day for such
Accepted Note, as the same may be rescheduled from time to time in compliance
with paragraph 2B(7).
2B(8)(iv). Cancellation Fee. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company in writing
under the circumstances set forth in the last sentence of paragraph 2B(5) or the
penultimate sentence of paragraph 2B(7) that the closing of the purchase and
sale of such Accepted Note is to be canceled, or if the closing of the purchase
and sale of such Accepted Note is not consummated on or prior to the last day of
the Issuance Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the "Cancellation
Date"), the Company will pay to Prudential in immediately available funds an
amount (the "Cancellation Fee") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as reasonably determined
by Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the
bid price (as reasonably determined by Prudential) of the Hedge Treasury
Notes(s) on the Acceptance Day for such Accepted Note by (b) such bid price; and
"PA" has the meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid
and ask prices shall be as reported by Telerate Systems, Inc. (or, if such data
for any reason ceases to be available through Telerate Systems, Inc., any
publicly available source of similar market data selected by Prudential and
reasonably acceptable to the Company). Each price s hall be based on a U.S.
Treasury security having a par value of $100.00 and shall be rounded to the
second decimal place. In no case shall the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase and pay for any Notes is subject to the satisfaction,
on or before the Closing Day for such Notes, of the following
conditions:
3A. Certain Documents. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day (if so indicated
below, such condition need be satisfied only on the Initial Closing Day):
(i) The Note(s) to be purchased by such Purchaser.
(ii) On the Initial Closing Day, certified copies of the
resolutions of the Board of Directors of the Company authorizing the execution
and delivery of this Agreement and the issuance of the Notes, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Notes. On each
Closing Day after the Initial Closing Day, such Purchaser shall receive
certification that the foregoing resolutions remain in full force and effect.
6
(iii) A certificate of the Secretary or an Assistant Secretary
and one other officer of the Company certifying the names and true signatures of
the officers of the Company authorized to sign this Agreement and the Notes and
the other documents to be delivered hereunder.
(iv) On the Initial Closing Day, certified copies of the
Certificate of Incorporation and By-laws of the Company. On each Closing Day
after the Initial Closing Day, such Purchaser shall receive either (a)
certification that the foregoing Certificate of Incorporation and By-laws have
not been amended or otherwise modified and that such instruments remain in full
force and effect or (b) if such instruments have been amended or otherwise
modified subsequent to the Initial Closing Date, certified copies of the
Certificate of Incorporation and By-laws as then in effect.
(v) A favorable opinion of ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, special
counsel to the Company (or such other counsel designated by the Company and
acceptable to the Purchaser(s)) satisfactory to such Purchaser and substantially
in the form of Exhibit D attached hereto and as to such other matters as such
Purchaser may reasonably request. The Company hereby directs each such counsel
to deliver such opinion, agrees that the issuance and sale of any Notes will
constitute a reconfirmation of such direction, and understands and agrees that
each Purchaser receiving such an opinion will and is hereby authorized to rely
on such opinion.
(vi) A long-form good standing certificate (a short-form good
standing certificate shall be deemed sufficient for purposes of this paragraph
3A(vi) on each Closing Day after the Initial Closing Day) for the Company from
the Secretary of State of Delaware dated of a recent date and such other
evidence of the status of the Company as such Purchaser may reasonably request.
(vii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related
to the transactions contemplated hereby as may be
reasonably requested by such Purchaser.
3B. Opinion of Purchaser's Special Counsel. Such Purchaser shall
have received from ▇▇▇▇▇ ▇. ▇▇▇▇▇, Assistant General Counsel of Prudential, or
such other counsel who is acting as special counsel for it in connection with
this transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3C. Representations and Warranties; No Default. The representations
and warranties contained in paragraph 8 shall be true on and as of such Closing
Day, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on such Closing Day no Event of Default or
Default (assuming for purposes hereof, if no Notes are then outstanding, that
Notes have been issued and are outstanding); and the Company shall have
delivered to such Purchaser an Officer's Certificate, dated such Closing Day, to
both such effects.
7
3D. Purchase Permitted by Applicable Laws. The purchase of and
payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds from the sale of
such Notes by the Comp any) shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the Securities Act or
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and shall not subject such Purchaser to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation.
3E. Payment of Fees. The Company shall have paid to Prudential any
fees due it pursuant to this Agreement, including any Facility Fee due pursuant
to paragraph 2B(8)(i), any Issuance Fee due pursuant to paragraph 2B(8)(ii) and
any Delayed Delivery Fee due pursuant to paragraph 2B(8)(iii).
4. PREPAYMENTS. The Notes shall be subject to required prepayment
as and to the extent provided in paragraph 4A. The Notes shall also be subject
to prepayment under the circumstances set forth in paragraph 4B. Any prepayment
made by t he Company pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any required prepayment
referenced in paragraph 4A.
4A. Required Prepayments of Notes. Each Series of Notes shall be
subject to required prepayments, if any, set forth in the Notes of such Series,
provided that upon any partial prepayment of a Series of Notes pursuant to
paragraph 4B the principal amount of each required prepayment (if any) of such
Series of Notes becoming due under this paragraph 4A on and after the date of
such prepayment, and the payment due at maturity of such Series of Notes, shall
be reduced in the same proportion as the aggregate unpaid principal amount of
such Series of Notes is reduced as a result of such prepayment. No Yield-
Maintenance Amount or premium shall be payable in connection with any required
prepayment made pursuant to this paragraph 4A.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes of
each Series shall be subject to prepayment, in whole at any time or in part from
time to time (in integral multiples of $500,000 and in a minimum amount of
$1,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note.
4C. Notice of Optional Prepayment. The Company shall give the
holder of each Note of a Series to be prepaid pursuant to paragraph 4B
irrevocable written notice of such prepayment not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date, the aggregate
principal amount of the Notes of such Series to be prepaid on such date, the
principal amount of the Notes of such Series held by such holder to be prepaid
on that date and that such prepayment is to be made pursuant to paragraph 4B.
Notice of prepayment having been given as aforesaid, the principal amount of the
Notes specified in such notice, together
8
with interest thereon to the prepayment date and together with the Yield-
Maintenance Amount, if any, herein provided, shall become due and payable on
such prepayment date.
4D. Application of Prepayments. In the case of each prepayment of
less than the entire unpaid principal amount of all outstanding Notes of any
Series pursuant to paragraph 4A or 4B, the amount to be prepaid shall be applied
pro rata to all outstanding Notes of such Series (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A or 4B) according to the respective
unpaid principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall not
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraphs 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes of any Series held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes of such Series held by each other holder of
Notes of such Series at the time outstanding upon the same terms and conditions.
Any Notes so prepaid or otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company
covenants as follows:
5A. Financial Statements; Notice of Defaults. The Company covenants
that it will deliver to each Significant Holder in triplicate:
as soon as practicable and in any event within 45 days after the end of
each quarterly period (other than the last quarterly period) in each fiscal
year, consolidated statements of income, cash flows and shareholders' equity of
the Company an d its Subsidiaries for the period from the beginning of the then
current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable detail and
certified to by an authorized financial officer of the Company, subject to
changes resulting from year-end adjustments; provided, however, that delivery
pursuant to clause (iii) below of copies of the Quarterly Report on Form 10-Q of
the Company for such quarterly period filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidated statements of income, cash flows
and shareholders' equity of the
9
Company and its Subsidiaries for such fiscal year, and a consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal year,
setting forth in each case in comparative form corresponding consolidated
figures from the preceding annual audit, all in reasonable detail and form and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with generally accepted accounting
principles, and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis for such
opinion in the circumstances; provided, however, that delivery pursuant to
clause (iii) below of copies of the Annual Report on Form 10-K of the Company
for such fiscal year filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall send to
its public stockholders and copies of all registration statements (without
exhibits) and all reports (if any) which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report (exclusive of the "management letter" delivered in connection with any
audit) submitted to the Company by independent accountants in connection with
any annual, interim or special audit made by them of the books of the Company;
and
(v) with reasonable promptness, such other financial data as
such holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder a certificate
from an Authorized Officer of the Company having knowledge of the Company's
financial matter s (a) demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of ▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇(▇), ▇▇(▇), ▇▇(▇) ▇▇▇ ▇▇(▇), (▇) identifying the sixty consecutive day
period referenced in clause (v) of the definition of Funded Debt and, if
applicable, the maximum amount of Current Debt referenced therein and (c)
stating that, to the best knowledge of such officer, there exists no Event of
Default or Default, or, if any Event of Default or Default exists, specifying
the nature and period of existence thereof and what action the Company proposes
to take with respect thereto. Together with each delivery of financial
statements required by clause (ii) above, the Company will deliver to each
Significant Holder a certificate of such accountants stating that, in making the
audit necessary for their report on such financial statements, they have
obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature and
period of existence thereof. Such accountants, however, shall not be liable to
anyone by reason of their failure to
10
obtain knowledge of any Event of Default or Default which would not be disclosed
in the course of an audit conducted in accordance with generally accepted
auditing standards.
The Company also covenants that immediately after any Responsible
Officer obtains knowledge of an Event of Default or Default, it will deliver to
each Significant Holder an Officer's Certificate specifying the nature and
period of existence t hereof and what action the Company proposes to take with
respect thereto.
5B. Inspection of Property. The Company covenants that it will
permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with any Responsible Officer of the Company and its independent
public accountants, all upon reasonable prior notice and during regular business
hours and as often as such Significant Holder may reasonably request. By this
provision the Company authorizes its accountants to have discussions with any
Significant Holder contemplated by this paragraph 5B so long as a Responsible
Officer is permitted to attend.
5C. Covenant to Secure Notes Equally. The Company covenants that,
if it or any Subsidiary shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, other than Liens permitted
by the provisions of paragraph 6B(1)(unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to paragraph
11C), it will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all other Debt
thereby secured so long as any such other Debt shall be so secured.
5D. Maintenance of Insurance. The Company covenants that it and
each Subsidiary will maintain, with financially sound and reputable insurers,
insurance in such amounts and against such liabilities and hazards as
customarily is maintained by other companies operating similar businesses.
Together with each delivery of financial statements under paragraph 5A, the
Company will, upon the request of any Significant Holder, deliver an Officer's
Certificate specifying the details of such insurance in effect.
Notwithstanding the foregoing, nothing contained in this paragraph 5D shall
prevent the Company or any Subsidiary from maintaining a self-insurance program
if and to the extent it is consistent with sound business practice for
companies of similar size engaged in similar business activities.
5E. Compliance with Environmental Laws. The Company covenants that
it will, and will cause each of the Subsidiaries to, comply in a timely fashion
with, or operate pursuant to valid waivers of the provisions of, all
Environmental Laws, except where noncompliance would not materially and
adversely affect the business, condition (financial or otherwise) or operations
of the Company and the Subsidiaries taken as a whole.
11
6. NEGATIVE COVENANTS. At all times during which any Note or other
amount due hereunder is outstanding and unpaid, the Company
covenants as follows:
6A. Fixed Charge Coverage. The Company will not permit the ratio of
(i) Operating Cash Flow to (ii) Fixed Charges, in each case for the four
consecutive fiscal quarter period ended at the end of any fiscal quarter, to be
less than 2.50 t o 1.00.
6B. Lien, Debt and Other Restrictions. The Company will not and
will not permit any Subsidiary to:
6B(1). Liens. Create, assume or suffer to exist any Lien upon any of
its properties or assets, whether now owned or hereafter acquired (whether or
not provision is made for the equal and ratable securing of the Notes in
accordance with the provisions of paragraph 5C), except:
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) Liens incidental to the conduct of its business or the
ownership of its property and assets which do not secure Debt and which do not
in the aggregate materially impair the use of its property or assets in the
operation of its business,
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or a Non-
Dilutive Subsidiary,
(iv) Liens existing on the date hereof securing Debt existing
on the date hereof, in each case as described on
Schedule 6B(1) , and
(v) other Liens securing Debt (including Liens securing
Capitalized Lease Obligations),
provided that Priority Debt shall at no time exceed 25% of Consolidated
Capitalization;
6B(2). Debt. Create, incur, assume or suffer to exist any Debt,
except:
(i) Debt of any Subsidiary to the Company or a Non-Dilutive
Subsidiary,
(ii) Debt evidenced by the Notes, and
(iii) additional Debt of the Company and of Subsidiaries
(including Debt outstanding on the date hereof),
provided that (i) the Funded Debt Ratio shall not exceed .50 to 1.00 at any time
and (ii) Priority Debt shall at no time exceed 25% of Consolidated
Capitalization;
12
6B(3). Merger and Consolidation. Merge or consolidate with or into any
other Person, except that:
(i) any Subsidiary may merge or consolidate with or into the
Company, provided that the Company is the continuing or
surviving corporation,
(ii) any Subsidiary may merge or consolidate with or into a
Non-Dilutive Subsidiary, provided that the Non-Dilutive
Subsidiary is the continuing or surviving corporation,
(iii) the Company may merge or consolidate with any other
solvent corporation, provided that (a) the Company shall be the continuing or
surviving corporation or (b) if the continuing or surviving corporation is not
the Company, such continuing or surviving corporation is organized under the
laws of the District of Columbia, any state of the United States of America,
Japan or any country which is a member of the European Community (or any
successor organization or association) a nd has expressly assumed in writing
the obligations of the Company under this Agreement and the Notes (which
assumption shall be pursuant to an agreement in the form attached hereto as
Exhibit E) and the Company shall have caused to be delivered to each holder of
Notes an opinion of independent counsel reasonably satisfactory to the Required
Holders of the Notes, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms and
comply with the terms hereof (which opinion may be subject to bankruptcy and
other customary exceptions), and (c) no Default or Event of Default exists or
would exist immediately after giving effect to such merger or consolidation,
and
(iv) the Company may sell or otherwise dispose of all or
substantially all of its assets (other than stock and Debt of Subsidiaries,
which may only be sold or otherwise disposed of pursuant to paragraph 6B(4)) to
any Person for consideration which represents the fair market value (as
determined in good faith by the Board of Directors of the Company) at the time
of such sale or other disposition if (a) the acquiring Person is organized under
the laws of the District of Columbia , any state of the United States of
America, Japan or any country which is a member off the European Community (or
any successor organization or association) and has expressly assumed in writing
the obligations of the Company under this Agreement and the Notes (which
assumption shall be pursuant to an agreement in the form attached hereto as
Exhibit E) and the Company shall have caused to be delivered to each holder of
Notes an opinion of independent counsel reasonably satisfactory to the Required
Holders of the Notes, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and comply with
the terms hereof (which opinion may be subject to bankruptcy and other customary
except ions), and (b) no Default or Event of Default exists or would exist
immediately after giving effect to such sale or disposition;
13
6B(4). Sale of Stock and Debt of Subsidiaries. Transfer any shares of
stock or Debt of any Subsidiary, except that (i) such shares of stock or Debt
may be Transferred to the Company or a Non-Dilutive Subsidiary, (ii) such shares
of stock ma y be Transferred to the extent such Subsidiary will continue to be a
Subsidiary thereafter and such Transfer is treated as a pro rata Transfer of
assets of such Subsidiary and is permitted by clause (v) of paragraph 6B(5) or
(iii) all shares of stock and Debt of any Subsidiary at the time owned by or
owed to the Company and all Subsidiaries may be sold as an entirety for a cash
consideration which represents the fair value (as determined in good faith by
the Board of Directors of the Company) at the time of sale of the shares of
stock and Debt so sold; provided that in the case of the foregoing clause (iii),
(a) such sale or other disposition is treated as a Transfer of assets of such
Subsidiary and is permitted by clause (v) of paragraph 6 B(5) and (b) at the
time of such sale, such Subsidiary shall not own, directly or indirectly, any
shares of stock or Debt of any other Subsidiary (unless all of the shares of
stock and Debt of such other Subsidiary owned, directly or indirectly, by t he
Company and all Subsidiaries are simultaneously being sold as permitted by this
paragraph 6B(4));
6B(5). Transfer of Assets. Transfer any of its assets, except as
provided in clause (iv) of paragraph 6B(3) and except that:
(i) any Subsidiary may Transfer assets to the Company or a
Non-Dilutive Subsidiary,
(ii) the Company or any Subsidiary may sell inventory in the
ordinary course of business,
(iii) the Company may Transfer shares of capital stock of Hach
Company owned by it as of June 30, 1995, as well as any shares received after
such date as stock dividends with respect to the shares of capital stock owned
on such date ,
(iv) the Company and Subsidiaries may Transfer Designated
Investments so long as at the time of Transfer Designated Investments, together
with any capital stock described in clause (iii) above, do not constitute 50% or
more of Consolidated Capitalization, and
(v) the Company or any Subsidiary may otherwise Transfer
assets (other than Designated Investments), so long as after giving effect
thereto (a) the Annual Percentage of Earnings Capacity Transferred pursuant to
this clause (v) and paragraph 6B(4) shall not exceed 10%, (b) the Annual
Percentage of Total Assets Transferred pursuant to this clause (v) and
paragraph 6B(4) shall not exceed 10% and (c) no Default or Event of Default
would exist, provided that, for purposes of the foregoing calculations, there
shall be excepted any Transfer to the extent the proceeds of which were or are
applied to the prepayment of unsecured senior debt of the Company within 30
days after the date of Transfer, provided further that no Transfer of assets
may be made pursuant to the exception set forth in the immediately preceding
proviso unless no Default or Event of
14
Default exists on the date of such Transfer, or would exist after giving effect
to such Transfer and prepayment; or
6B(6). Affiliate Transactions. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, in the ordinary course of business or otherwise, any
Affiliate of the Company, unless such transaction is demonstrably no less
favorable to the Company or such Subsidiary than could be obtained on an arm's-
length basis.
6C. Line of Business. The Company covenants that it will not permit
more than 50% of the book value of the consolidated assets of the Company and
Subsidiaries to at any time be devoted to any business or activity other than
the specialty chemical businesses engaged in by the Company and Subsidiaries on
the date of this Agreement and related specialty chemical businesses. For
purposes of this paragraph 6C, the following assets shall be deemed to be
devoted to specialty chemical businesses engaged in by the Company on the date
of this Agreement: (i) cash and cash equivalents and (ii) capital stock of
Hach Company and any other corporation which is engaged in the specialty
chemical businesses engaged in by the Company and Subsidiaries on the date of
this Agreement or related specialty chemical businesses.
7. EVENTS OF DEFAULT.
7A. Events of Default; Acceleration. If any of the following events
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law o r otherwise):
(i) the Company defaults in the payment of any principal of,
or Yield- Maintenance Amount payable with respect to,
any Note when the same shall become due, either by the
terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 10 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as
primary obligoror as guarantor or other surety) in any payment of principal of
or interest on any other obligation for money borrowed (or any Capitalized Lease
Obligation, an y obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf o f such
holder or holders) to cause, such obligation to become due (or to be
15
repurchased by the Company or any Subsidiary) prior to any stated maturity,
provided that the aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or other event causing
or permitting acceleration (or resale to the Company or any Subsidiary) shall
occur and be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any material
respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6 (other than paragraph 6B(6); or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein (including paragraph 6B(6)) and
such failure shall not be remedied within 30 days after any Responsible Officer
obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its
debts as such debts become due; or
(viii) any decree or order for relief in respect of the Company
or any Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official of the Company or
any Subsidiary, or of any substantial part of the assets of the Company or any
Subsidiary, or commences a voluntary case under the Bankruptcy Law of the United
States or any proceedings (other than proceedings for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Company or any Subsidiary under
the Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the Company
or such Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or approving
the petition in any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 60 days after the entry thereof; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the
dissolution of the Company and such order, judgment or
decree remains unstayed and in effect for more than 60
days: or
16
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up of the
Company or such Subsidiary which requires the divestiture of assets
representing a substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a substantial part, of the consolidated
assets of the Company and its Subsidiaries (determined in accordance with
generally accepted accounting principles) or which requires the divestiture of
assets, or stock of a Subsidiary, which shall have contributed a substantial
part of the consolidated net income of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting principles) for
any of the three fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount in
excess of $5,000,000 is rendered against the Company or any Subsidiary and,
within 60 days after entry thereof, any such judgment is not discharged or
execution thereof stayed pending appeal, or within 60 days after the expiration
of any such stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity as
an employer under a Multiemployer Plan, makes a complete or partial withdrawal
from such Multiemployer Plan resulting in the incurrence by such withdrawing
employer of a withdrawal liability in an amount exceeding $5,000,000;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Note s held by such holder to be, and all of the Notes held
by such holder shall thereupon be and become, immediately due and payable at par
together with interest accrued thereon, without presentment, demand, protest or
notice of any kind, all of which a re hereby waived by the Company, (b) if such
event is an Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, all of the Notes at the time
outstanding shall automatically become immediately due an d payable together
with interest accrued thereon and, to the extent not prohibited by applicable
law, together with the Yield-Maintenance Amount, if any, with respect to each
Note, without presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Company, and (c) with respect to any event constituting
an Event of Default, the Required Holder(s) of the Notes may at its or their
option during the continuance of such Event of Default, by notice in writing to
the Comp any, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if any, with
respect to each Note without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company.
7B. Rescission of Acceleration. At any time after any or all of the
Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in writing to the Company, rescind and annul such declaration and
its consequences if (i) the Company shall have paid all overdue interest on the
17
Notes of such Series, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes of such Series which have become due otherwise
than by reason of such declaration, and interest on such overdue interest and
overdue principal and Yield-Maintenance Amount at the rate specified in the
Notes of such Series, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall
be declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur
and be continuing, the holder of any Note may proceed to protect and enforce
its rights under this Agreement and such Note by exercising such remedies as
are available to such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance
of any covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows (all references to "Subsidiary"
and "Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company
has no Subsidiaries at the time the representations herein are made or
repeated):
8A. Organization. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, each Material
Subsidiary is duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and the Company has and each Material
Subsidiary has the corporate power to own its respective property and to carry
on its respective business as now being conducted.
8B. Financial Statements. The Company has furnished each Purchaser
of any Accepted Notes with the following financial statements, identified as
such by a principal financial officer of the Company: (i) a consolidated
balance sheet of the Company and its Subsidiaries as at December 31 in each of
the three fiscal years of the Company most recently completed prior to the date
as of which this representation is made or repeated to such Purchaser (other
than fiscal years completed within 90 days prior to such date for which audited
financial statements have not been
18
released) and consolidated statements of income, cash flows and shareholders'
equity of the Company and its Subsidiaries for each such year, all reported on
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and (ii) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of the quarterly period (if any) most recently
completed prior to such date and after the end of such fiscal year (other than
quarterly periods completed within 45 days prior to such date for which
financial statements have not been released) and the comparable quarterly period
in the preceding fiscal year and consolidated statements of income, cash flows
and shareholders' equity for the periods from the beginning of the fiscal years
in which such quarterly periods are included to the end of such quarterly
periods, prepared by the Company. Such financial statements (including any
related schedules and/or notes) are correct and complete in all material
respects (subject, as to interim statements, to changes resulting from audits
and year-end adjustments), have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
involved, except as may be otherwise noted therein. The balance sheets fairly
present the financial condition of the Company and its Subsidiaries as at the
dates thereof, and the statements of income, stockholders' equity and cash flows
fairly present the results of the operations of the Company and its Subsidiaries
and their cash flows for the periods indicated. There has been no material
adverse change in the business, property or assets, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole
since the end of the most recent fiscal year for which such audited financial
statements have been furnished.
8C. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which could reasonably be expected to result in any
material adverse change in the business, property or assets, condition
(financial or otherwise) or operations o f the Company and its Subsidiaries
taken as a whole.
8D. Outstanding Debt; No Defaults. Neither the Company nor any of
its Subsidiaries has outstanding any Debt except as permitted by paragraph
6B(2). No Default or Event of Default exists under the Agreement (assuming for
purposes hereof, if no Notes are outstanding, that Notes have been issued and
are outstanding).
8E. Title to Properties. The Company has and each of its Material
Subsidiaries has good and indefeasible title to its respective real properties
(other than properties which it leases) and good title to all of its other
respective proper ties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6B(1). Each of the
Subsidiaries of the Company which is not a Material Subsidiary has good and
indefeasible title to its respective material real properties (other than
properties which it leases) and good title to all of its other respective
material properties and assets, including the material properties and assets
reflected in the most recent audited balance sheet referred to in paragraph 8B
(other than properties and assets disposed of in the ordinary course of
business), subject to no Lien of any kind except Liens permitted by paragraph
6B(1).
19
All leases necessary in any material respect for the conduct of the respective
businesses of the Company and its Material Subsidiaries are valid and subsisting
and are in full force and effect.
8F. Taxes. The Company has and each of its Subsidiaries has filed
all federal, state and other income tax returns which, to the best knowledge of
the officers of the Company and its Subsidiaries, are required to be filed, and
each has pa id all taxes as shown on such returns and on all assessments
received by it to the extent that such taxes have become due, except such taxes
as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles.
8G. Conflicting Agreements and Other Matters. Neither the execution
nor delivery of this Agreement or the Notes, nor the offering, issuance and
sale of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to,
the charter or by-laws of the Company or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries is subject. Neither the Company nor any
of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Debt of the Company or such Subsidiary,
any agreement relating thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of the Company of the type to be evidenced by the Notes
except as set forth in the agreements listed in Schedule 8G attached hereto (as
such Schedule 8G may have been modified from time to time by written supplements
thereto delivered by the Company to Prudential).
8H. Offering of Notes. Neither the Company nor any agent acting on
its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes or
any similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than institutional investors, and
neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. Use of Proceeds; Regulation G, etc. Neither the Company nor any
of its Subsidiaries, directly or indirectly, will take or permit to be taken any
action, or use the proceeds of the issue and sale of any Notes in a manner which
would result in the issue and sale of any Notes or the carrying out of any of
the transactions contemplated hereby, being violative of Regulations G or T (12
C.F.R., Chapter II), any other regulation of the Board of Governors of the
Federal Reserve System o r the Exchange Act.
20
8J. ERISA. No accumulated funding deficiency (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole. Neither the Company, any Subsidiary nor any
ERISA Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries take n as a whole. The execution and delivery of this Agreement
and the issuance and sale of the Notes will be exempt from or will not involve
any transaction which is subject to the prohibitions of section 406 of ERISA
and will not involve any transaction in connection with which a penalty could
be imposed under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of the
representation of each Purchaser in paragraph 9B as to the source of funds to
be used by it to purchase any Notes.
8K. Governmental Consent. Neither the nature of the Company or of
any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor
any circumstance in connection with the offering, issuance, sale or delivery of
the Notes is such as to require any authorization, consent, approval, exemption
or any action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Closing Day for any
Notes with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. Environmental Compliance. The Company and its Subsidiaries and
all of their respective properties and facilities have complied at all times and
in all respects with all Environmental laws except, in any such case, where
failure to comply would not result in a material adverse effect on the business,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole.
8M. Regulatory Status. Neither the Company nor any Subsidiary is
(i) an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Act of 1935, as amended or (iii) a "public
utility" within the meaning of the Federal Power Act, as amended.
8N. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith
21
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. There is no fact peculiar to the Company or any of its
Subsidiaries which materially adversely affects or in the future may (so far as
the Company can now reasonably foresee) materially adversely affect the
business, property or assets, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole and which has not been
disclosed to such Purchaser in writing.
8O. Hostile Tender Offers. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. Nature of Purchase. Such Purchaser (i) is an institutional
investor and is acquiring the Notes to be purchased by it hereunder for the
purpose of investment and not with a view to or for distribution of any
thereof, provided that the disposition of such Purchaser's property shall at
all times be and remain within its control, (ii) understands that the Notes
have not been registered under the Securities Act or any foreign law or any
other securities law and, therefore, cannot be sold or otherwise transferred
unless they are registered under the Securities Act or unless an exemption from
such registration is available and (iii) has been advised that the Company does
not contemplate registering, and is not legally required to register, the Notes
under the Securities Act.
9B. Source of Funds. One or both of the following two
representations is true with respect to such Purchaser:
(i) Such Purchaser is an "insurance company" and the funds being
used by such Purchaser to pay the purchase price of the Notes being purchased by
such Purchaser hereunder constitute assets of the Purchaser's "insurance company
general account" (as both such terms are defined in Section V of United States
Department of Labor Prohibited Transaction Class Exemption ("PTCE" 95-60), the
Purchaser has disclosed to the Company the names of all employee benefit plans
having an interest as contractholder in such insurance company general account
as to which the amount of the reserves for the contract(s) held by or on behalf
of such plan (determined under Section 807(d) of the Code) exceed 10% of the
total of all liabilities of the genera l account or are expected to exceed 10%
of the total of all liabilities of the general account as of the date of such
purchase, and, as of the date of the purchaser, such Purchaser satisfies all of
the applicable requirements for relief under Section IV of PTCE 95-60.
(ii) The funds being used by such Purchaser to pay the purchase price
of the Notes being purchased by such Purchaser hereunder constitute assets of
one or more separate accounts maintained by it, and it has disclosed to the
Company the names of all employee benefit plans whose assets in such separate
account or accounts
22
exceed 10% of the total assets or are expected to exceed 10% of the total assets
of such separate account or accounts as of the date of such purchase, and the
Purchase r will comply with the record keeping requirements of Section III of
PTCE 90-1 or any successor thereto.
For the purpose of this paragraph 9B, all employee benefit plans maintained by
the same employer (or, for purposes of clause (i), by an employer and any
affiliates of such employer as defined in Section V(A) of PTCE 95-60), or by the
same employee organization, are deemed to be a single plan. As used in this
paragraph 9B, the terms "separate account", employee benefit plan", "employer",
and "employee organization" shall have the respective meanings set forth in
Section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this
Agreement, the terms defined in paragraphs 10A and 10B (or within the text of
any other paragraph) shall have the respective meanings specified therein and
all accounting matters shall be subject to determination as provided in
paragraph 10C.
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"Designated Spread" shall mean 0% in the case of each Note of any Series
unless the Confirmation of Acceptance with respect to the Notes of such Series
specifies a different Designated Spread in which case it shall mean, with
respect to each Note of such Series, the Designated Spread so specified.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual bas is) equal to the Reinvestment Yield with respect to
such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, the Designated Spread over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields
23
reported, for the latest day for which such yields shall have been so reported
as of the Business Day next preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be determined,
if necessary, by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Call ed Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. Other Terms.
"Acceptance" shall have the meaning specified in paragraph 2B(5).
"Acceptance Day" shall have the meaning specified in paragraph 2B(5).
"Acceptance Window" shall have the meaning specified in paragraph 2B(5).
"Accepted Note" shall have the meaning specified in paragraph 2B(5).
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be
24
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall have the meaning specified in paragraph 11C.
"Annual Percentage of Assets Transferred" shall mean, with respect to
any four consecutive fiscal quarter period of the Company, the sum of the
Percentages of Assets Transferred for each asset of the Company and Subsidiaries
which is Transfer red pursuant to clause (v) of paragraph 6B(5) during such
period.
"Annual Percentage of Earnings Capacity Transferred" shall mean, with
respect to any four consecutive fiscal quarter period of the Company, the sum of
the Percentages of Earnings Capacity Transferred for each asset of the Company
and its Subsidiaries that is Transferred pursuant to clause (v) of paragraph
6B(5) during such period.
"Authorized Officer" shall mean (i) in the case of the Company, its
chief executive officer, its chief financial officer, any vice president of the
Company designated as an "Authorized Officer" of the Company in the Information
Schedule attached hereto or any vice president of the Company designated as an
"Authorized Officer" of the Company for the purpose of this Agreement in an
Officer's Certificate executed by the Company's chief executive officer or chief
financial officer and delivered to Prudential, and (ii) in the case of
Prudential, any officer of Prudential designated as its "Authorized Officer" in
the Information Schedule or any officer of Prudential designated as its
"Authorized Officer" for the purpose of this Agreement in a certificate executed
by one of its Authorized Officers. Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom
Prudential in good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though such
individual shall have ceased to be an Authorized Officer of the Company, and
any action taken under this Agreement on behalf of Prudential by any individual
who on or after the date of this Agreement shall have been an Authorized
Officer of Prudential and whom the Company in good faith believes to be an
Authorized Officer of Prudential at the time of such action shall be binding on
Prudential even though such individual shall have ceased to be an Authorized
Officer of Prudential.
"Available Facility Amount" shall have the meaning specified in
paragraph 2B(1).
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Business Day" shall mean any day other than (i) a Saturday or a Sunday,
(ii) a day on which commercial banks in New York City or Chicago, Illinois, are
required or authorized to be closed and (iii) for purposes of paragraph 2B(3)
hereof only , a day on which The Prudential Insurance Company of America is not
open for business.
25
"Cancellation Date" shall have the meaning specified in paragraph
2B(8)(iv).
"Cancellation Fee" shall have the meaning specified in paragraph
2B(8)(iv).
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof account ed for as indebtedness (net of interest expenses) in accordance
with such principles.
"Closing Day" shall mean, with respect to any Accepted Note, the
Business Day specified for the closing of the purchase and sale of such
Accepted Note in the Request for Purchase of such Accepted Note, provided that
(i) if the Company and the Purchaser which is obligated to purchase such
Accepted Note agree on an earlier Business Day for such closing, the "Closing
Day" for such Accepted Note shall be such earlier Business Day, and (ii) if the
closing of the purchase and sale of such Accepted Note is rescheduled pursuant
to paragraph 2B(7), the Closing Day for such Accepted Note, for all purposes of
this Agreement except references to "original Closing Day" in paragraph
2B(8)(iii), shall mean the Rescheduled Closing Day with respect to such
Accepted Note.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confirmation of Acceptance" shall have the meaning specified in
paragraph 2B(5).
"Consolidated Capitalization" shall mean, as of any time of
determination thereof, the sum of (i) Consolidated Net Worth and (ii)
Consolidated Funded Debt.
"Consolidated Cash" shall mean, as of any time of determination thereof,
the aggregate amount of cash and marketable securities classified as current
assets in accordance with generally accepted accounting principles of the
Company and Subsidiaries on a consolidated basis, exclusive of any cash and
marketable securities located outside of the United States which could not be
repatriated (or, in the case of marketable securities, the proceeds of which
could not be repatriated) for any legal or other reason within thirty days from
the date of such determination.
"Consolidated Funded Debt" shall mean, as of any time of determination
thereof, the total amount of Funded Debt of the Company and Subsidiaries as
determined on a consolidated basis.
"Consolidated Net Income" shall mean, as to any period, the net income
of the Company and Subsidiaries determined on a consolidated basis, exclusive of
extraordinary gains and losses.
"Consolidated Net Worth" shall mean, as of any time of determination
thereof, the net worth of the Company and Subsidiaries determined on a
consolidated basis.
26
"Current Debt" shall mean, with respect to any Person, all Indebtedness
of such Person for borrowed money which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or within one year
from the date of the creation thereof and is not directly or indirectly
renewable or extendible at the option of the debtor to a date more than one
year from the date of the creation thereof, provided that Indebtedness for
borrowed money outstanding under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit over a period of more than one
year shall constitute Funded Debt and not Current Debt, even though such
Indebtedness by its terms matures on demand or within one yea r from the date
of the creation thereof.
"Debt" shall mean Current Debt and Funded Debt.
"Delayed Delivery Fee" shall have the meaning specified in paragraph
2B(8)(iii).
"Designated Investments" shall mean all investments in (i) capital stock
(other than capital stock of Hach Company described in clause (iii) of paragraph
6B(5)) and rights to acquire the same and (ii) debt which does not have an
investment grade rating from either ▇▇▇▇▇'▇ Investors Service, Inc. or Standard
and Poor's Corporation (or, if neither such rating agency is then in the
business of rating debt, by another nationally recognized rating agency),
excluding in each case capital stock and investments in Subsidiaries.
"Designated Termination" shall mean a termination of the Issuance Period
resulting from the Company's provision of a notice of termination as
contemplated by clause (ii) of paragraph 2B(2). Notwithstanding the foregoing,
such a termination s hall not constitute a "Designated Termination" if the
applicable notice is provided by the Company within five Business Days following
Prudential's failure to provide an interest rate quote (as contemplated by
paragraph 2B(4)), unless (i) the applicable Request for Purchase failed to
conform in all material respects with the requirements of paragraph 2B(3), (ii)
a Default or Event of Default existed at the time the applicable Request for
Purchase was received, (iii) a Default or Event of Default would have existed
upon the issuance of the Notes described in the applicable Request for Purchase,
or (iv) a market disrupting event described in paragraph 2B(6) existed at any
time during the five Business Day period following receipt of the applicable
Request for Purchase.
"Environmental Laws" shall mean all federal, state, local and foreign
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes, and any and all regulations, codes,
plans, orders, decrees, judgments, injunctions, notices or demand letter s
issued, entered, promulgated or approved thereunder.
27
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement(s) in connection
with such event for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act, and "Default" shall mean any
of such events, whether or not any such requirement(s) have been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facility" shall have the meaning specified in paragraph 2B(1).
"Facility Fee" shall have the meaning specified in paragraph 2B(8)(i).
"Fixed Charges" shall mean, for any period, for the Company and its
Subsidiaries on a consolidated basis, the sum of (i) operating lease rental
expense and (ii) interest expense.
"Funded Debt" shall mean with respect to any Person without duplication,
(i) any obligation payable more than one year from the date
of creation thereof which under generally accepted accounting principle should
be shown on the balance sheet as a liability (including Capitalized Lease
Obligations and excluding reserves for deferred income taxes and other reserves
to the extent not constituting an obligation),
(ii) any obligation payable more than one year from the date
of creation thereof which is secured by any Lien on
property owned by such Person, whether or not the
obligation secured thereby shall have been assumed by
such Person,
(iii) all Swaps of such Person,
(iv) all obligations of the type described in the foregoing
clauses (i), (ii) and (iii) with respect to which such
Person has become liable by way of a Guarantee,
(v) to the extent Current Debt of such Person and each of
its Subsidiaries was not concurrently reduced to zero for a period of sixty
consecutive days during the most recently completed fiscal year of such Person,
an amount equal to the maximum amount of such Current Debt outstanding during a
sixty consecutive day period occurring in such most recently completed fiscal
year as selected by such Person.
28
"Funded Debt Ratio" shall mean, as of any time of determination thereof,
the ratio of (i) Consolidated Funded Debt less Consolidated Cash to (ii)
Consolidated Capitalization less Consolidated Cash.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or service, regardless of the non-delivery or non-
furnishing thereof, in any such case if the purpose or intent of such agreement
is to provide assurance that such obligation will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such obligation will be protected against loss in respect thereof. The
amount of any Guarantee shall be equal to the outstanding principal amount of
the obligation guaranteed or such lesser amount to which the maximum exposure
of the guarantor shall have been specifically limited.
"Hedge Treasury Note" shall mean, with respect to any Accepted Note, the
actively traded United States Treasury Note whose duration (as reasonably
determined by Prudential) most closely matches the duration of such Accepted
Note.
"Hostile Tender Offer" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"including" shall mean, unless the context clearly requires otherwise,
"including, without limitation".
29
"Indebtedness" shall mean, with respect to any Person, without
duplication, (i) all items (excluding items of contingency reserves or of
reserves for deferred income taxes) which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined, (ii) all indebtedness secured by any
Lien on any property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been assumed, and
(iii) all indebtedness of others with respect to which such Person has become
liable by way of Guarantee.
"Initial Closing Day" shall mean the first Closing Day to occur under
and pursuant to this Agreement.
"Issuance Period" shall have the meaning specified in paragraph 2B(2).
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of securing the payment or performance of an obligation.
"Material Subsidiary" shall mean, at any date as of which its status as
such shall be determined, any Subsidiary which meets one or both of the
following descriptions:
(i) the investments of the Company and Subsidiaries in such Subsidiary
exceed in the aggregate 10% of the consolidated net asset value of
the Company and Subsidiaries as of such date; or
(ii) the equity of the Company and its Subsidiaries in the income
before income taxes and extraordinary items of such Subsidiary exceeds 10% of
such income of the Company and its Subsidiaries on a consolidated basis for the
twelve-month period ending on the last day of the Company's then most recently
ended fiscal quarter.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA.
"Non-Dilutive Subsidiary" shall mean a Subsidiary in which, as compared
to the other Subsidiary in question, the Company directly or indirectly through
Non-Dilutive Subsidiaries owns an equal or greater percentage of both (i)
Voting Stock an d (ii) economic interest.
"Notes" shall have the meaning specified in paragraph 1.
30
"Officer's Certificate" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"Operating Cash Flow" shall mean, for any period, Consolidated Net
Income plus, to the extent deducted in determining same, tax expense, operating
lease rental expense and interest expense.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"Percentage of Assets Transferred" shall mean, with respect to each
asset Transferred pursuant to clause (v) of paragraph 6B(5), the percentage of
the total assets of the Company and Subsidiaries determined on a consolidated
basis which is represented by the book value of such asset, in each case as of
the last day of the fiscal quarter most recently ended prior to the effective
date of such Transfer.
"Percentage of Earnings Capacity Transferred" shall mean, with respect
to each asset Transferred pursuant to clause (v) of paragraph 6B(5), the
percentage of Three Year Average Consolidated Net Income produced by, or
attributable to, such asset during the fiscal year most recently ended prior to
the effective date of such Transfer.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plan" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"Preferred Stock" shall mean, with respect to any corporation or limited
liability company, any capital stock or equity interest that is preferred in
right of payment of dividends, earnings, or liquidation proceeds over any other
class of capital stock or equity interest.
"Priority Debt" shall mean (i) Debt of the Company secured by a Lien,
excluding Debt secured by Liens described on Schedule 6B(1) and (ii) Debt and
Preferred Stock of Subsidiaries, excluding that which is held by the Company or
a Non-Dilutive Subsidiary.
"Prudential" shall mean The Prudential Insurance Company of America.
"Prudential Affiliate" shall mean any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
31
"Purchasers" shall mean with respect to any Accepted Notes, Prudential
and/or the Prudential Affiliate(s), which are purchasing such Accepted Notes.
"Reduced Facility Fee Installment" shall mean that portion of the
applicable Facility Fee Installment due pursuant to paragraph 2B(8)(i)
determined by multiplying the amount thereof by a fraction, the denominator of
which shall be 365 and the numerator of which shall be the number of days
elapsed between the date of the Agreement or the first anniversary of the date
of the Agreement (as the case may be) and the date of the Designated
Termination.
"Request for Purchase" shall have the meaning specified in paragraph
2B(3).
"Required Holder(s)" shall mean the holder or holders of at least 51% of
the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding.
"Rescheduled Closing Day" shall have the meaning specified in paragraph
2B(7).
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series" shall have the meaning specified in paragraph 1.
"Significant Holder" shall mean (i) Prudential, so long as Prudential or
any Prudential Affiliate shall hold any Note or the Issuance Period shall not
have terminated, or (ii) any other holder of Notes from time to time
outstanding, if the Note or Notes held by such holder, at the time of its
acquisition by such holder, equalled or exceeded $5,000,000 in aggregate
principal amount.
"Subsidiary" shall mean any corporation more than 50% of the total
combined voting power of all classes of Voting Stock of which shall, at the time
as of which any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"Swaps" shall mean, with respect to any Person, payment obligations with
respect to interest swaps or ▇▇▇▇▇▇, currency swaps or ▇▇▇▇▇▇ and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this Agreement, the
amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the end
of such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting
32
of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined.
"Three Year Average Consolidated Net Income" shall mean, as of any time
of determination thereof, the average of annual Consolidated Net Income for the
three fiscal years of the Company most recently completed as of such time of
determination .
"Transfer" shall mean, with respect to any item, the sale, exchange,
conveyance, lease, transfer or other disposition of such item.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"Voting Stock" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
10C. Accounting Principles, Terms and Determinations. All references
in this Agreement to "generally accepted accounting principles" shall be deemed
to refer to generally accepted accounting principles in effect in the United
States at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles (subject, in the case of unaudited
statements, to year end adjustments) applied on a basis consistent with the most
recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B.
33
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on, and any Yield-Maintenance Amount payable with respect to, such Note, which
comply with the term s of this Agreement, by wire transfer of immediately
available funds for credit on the date due (which wire transfer shall be
initiated by the Company not later than 12:00 noon, New York City local time, on
the date due) to (i) the account or account s in the United States of such
Purchaser specified in the Confirmation of Acceptance with respect to such Note
or (ii) such other account or accounts in the United States as such Purchaser
may from time to time designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment. Each
Purchaser agrees that, before disposing of any Note, it will make a notation
thereon (or on a schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been paid. The
Company agrees to afford the benefits of this paragraph 11A to any Transferee
which shall have made the same agreement as the Purchasers have made in this
paragraph 11A.
11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses of
any special counsel engaged by the Purchasers or any Transferee in connection
with any subsequent propose d modification of, or proposed consent under, this
Agreement, whether or not such proposed modification shall be effected or
proposed consent granted, and (ii) the costs and expenses, including reasonable
attorneys' fees, incurred by any Purchaser or any Transferee in enforcing (or
determining whether or how to enforce) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the
transactions contemplated hereby or by reason of any Purchaser's or any
Transferee's having acquired any Note, including without limitation, costs and
expenses incurred in any bankruptcy case. Notwithstanding the foregoing, the
Company shall not be obligated to reimburse Prudential or any other Purchaser
for costs and expenses (including, without limitation, any fees and expenses of
any counsel) incurred in connection with the purchase of any Notes, to the
extent incurred on or before the C losing Day for such Notes. The obligations
of the Company under this paragraph 11B shall survive the transfer of any Note
or portion thereof or interest therein by any Purchaser or any Transferee and
the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes except that, (i) with the written consent of the holders of all Notes of a
particular Series, and if an Event of Default shall have occurred and be
continuing, of the holders of all Notes of all Series, at the time outstanding
(and not without such written consents), the Notes of such Series may be amended
or the provisions thereof waived to change the maturity thereof, to change or
affect the principal thereof, or to change or affect the
34
rate or time of payment of interest on or any Yield-Maintenance Amount payable
with respect to the Notes of such Series, (ii) without the written consent of
the holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential (and not without the
written consent of Prudential) the provisions of paragraph 2B may be amended or
waived (except insofar as any such amendment or waiver would affect any rights
or obligations with respect to the purchase and sale of Notes which shall have
become Accepted Notes prior to such amendment or waiver), and (iv) with the
written consent of all of the Purchasers which shall have become obligated to
purchase Accepted Notes of any Series (and not without the written consent of
all such Purchasers), any of the provisions of paragraphs 2B and 3 may be
amended or waived insofar as such amendment or waiver would affect only rights
or obligations with respect to the purchase and sale of the Accepted Notes of
such Series or the terms and provisions of such Accepted Notes. Each holder of
any Note at the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued thereafter may bear a
notation refer ring to any such consent. No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered notes without coupons in denominations of
at least $1,000,000, except as may be necessary to reflect any principal amount
not evenly divisible by $1,000,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration of
Notes and of transfers of Notes. Upon surrender for registration of transfer
of any Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such transferee or
transferees. At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to be exchanged
at the principal office of the Company. Whenever any Notes are so surrendered
for exchange, the Company shall, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer or exchange of Notes. Each
prepayment of principal payable on each prepayment date upon each new Note
issued upon any such transfer or exchange shall be in the same proportion to
the unpaid principal amount of such new Note as the prepayment of principal
payable on such date on the Note surrendered for registration of transfer or
exchange bore to the unpaid principal amount of such Note. No reference need
be made in any such new Note to any prepayment or prepayments of principal
previously due and paid upon the Note surrendered for registration of transfer
or exchange. Every Note surrendered for registration
35
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument o f transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of such Note and, in the
case of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement in such form as shall be reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
11F. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of an y Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not (i) avoid the occurrence of a Default or Event of
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by the holder of any Note to prohibit through equitable
action or otherwise the taking of any action by the Company or any Subsidiary
which would result in a Default or Event of Default.
36
11I. Notices. All communications provided for hereunder (other than
communications provided for under paragraph 2) shall be in writing and sent by
first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to any Purchaser, addressed as specified for such
communications in the Purchaser Schedule attached to the applicable
Confirmation of Acceptance or at such other address as any such Purchaser shall
have specified to the Company in writing, (ii) if t o any other holder of any
Note, addressed to it at such address as it shall have specified in writing to
the Company or, if any such holder shall not have so specified an address, then
addressed to such holder in care of the last holder of such Note which shall
have so specified an address to the Company and (iii) if to the Company,
addressed to it at ▇▇▇▇▇▇ International, Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer. Notices given as
provided above shall be deemed effective upon receipt thereof. Any
communication pursuant to paragraph 2 shall be made by the method specified for
such communication in paragraph 2, and shall be effective to create any rights
or obligations under this Agreement only i f, in the case of a telephone
communication, an Authorized Officer of the party conveying the information and
of the party receiving the information are parties to the telephone call, and
in the case of a telecopier communication, the communication i s signed by an
Authorized Officer of the party conveying the information, addressed to the
attention of an Authorized Officer of the party receiving the information, and
in fact received at the telecopier terminal the number of which is listed for
the party receiving the communication in the Information Schedule or at such
other telecopier terminal as the party receiving the information shall have
specified in writing to the party sending such information.
11J. Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or any Yield-Maintenance Amount payable with respect to, any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day. If the date for any payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the period of such
extension shall be included in the computation of the interest payable on such
Business Day.
11K. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. Satisfaction Requirement. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser, to any holder of Notes
or to the Required H older(s), the determination of such satisfaction shall be
made by such Purchaser, such holder or the Required Holder(s), as the case
37
may be, in the sole and exclusive judgment (exercised in good faith and
reasonably) of the Person or Persons making such determination.
11N. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF ILLINOIS.
11O. Severalty of Obligations. The sales of Notes to the Purchasers
are to be several sales, and the obligations of Prudential and the Purchasers
under this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and neither
Prudential nor any Purchaser shall be responsible for the obligations of, or any
action taken or omitted by , any other such Person hereunder.
11P. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one agreement.
[Balance of page left blank intentionally.]
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11Q. Binding Agreement. When this Agreement is executed and
delivered by the Company and Prudential, it shall become a binding agreement
between the Company and Prudential. This Agreement shall also inure to the
benefit of each Purchaser which shall have executed and delivered a
Confirmation of Acceptance, and each such Purchaser shall be bound by this
Agreement.
Very truly yours,
▇▇▇▇▇▇ INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-
Finance, Secretary
and Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
c:\wpwin\▇▇▇▇▇▇\▇▇▇▇-▇▇.▇▇▇
39