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Exhibit 4(f)
BEARINGS, INC.
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As of November 27, 1996
The Prudential Insurance Company
of America (herein called "PRUDENTIAL")
Each Prudential Affiliate which becomes
bound by this Agreement as hereinafter
provided (together with Prudential, the
"PURCHASERS")
c/o Prudential Capital Group
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned, BEARINGS, INC., an Ohio corporation (herein called the
"COMPANY"), hereby agrees with you as set forth below. Reference is made to
paragraph 10 hereof for definitions of capitalized terms used herein and not
otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF PRIVATE SHELF NOTES. The Company will
authorize the issue of its senior promissory notes (herein called the "PRIVATE
SHELF NOTES") in the aggregate principal amount of $50,000,000, to be dated the
date of issue thereof, to mature, in the case of each Private Shelf Note so
issued, no less than seven (7) years and no more than twenty (20) years after
the 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
consistent with the terms of this Agreement) as shall be set forth in the
Confirmation of Acceptance with respect to such Private Shelf Note delivered
pursuant to paragraph 2E, and to be substantially in the form of EXHIBIT A
attached hereto. The terms "Private Shelf Note" and "Private Shelf Notes" as
used herein shall include each Private Shelf Note delivered pursuant to any
provision of this Agreement and each Private Shelf Note delivered in
substitution or exchange for any such Private Shelf Note pursuant to any such
provision. The terms "NOTE" or "NOTES" as used herein shall include each Private
Shelf Note (whether designated a Series A Note, Series B Note or Series C Note,
etc.) 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) which are otherwise designated a
"Series" hereunder or in the Confirmation of Acceptance whether or not the
foregoing conditions are satisfied, are herein called a "SERIES" of Notes.
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2. PURCHASE AND SALE OF NOTES.
2A. FACILITY. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties set forth herein, 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 Private Shelf Notes pursuant to this Agreement. The
willingness of Prudential to consider such purchase of Private Shelf Notes is
herein called the "FACILITY". At any time, $50,000,000, minus the aggregate
principal amount of Private Shelf Notes purchased and sold pursuant to this
Agreement prior to such time, minus the aggregate principal amount of "ACCEPTED
NOTES" (as hereinafter defined) which have not yet been purchased and sold
hereunder prior to such time, is herein called the "AVAILABLE FACILITY AMOUNT"
at such time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER
PURCHASES OF PRIVATE SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS
UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE PRIVATE SHELF NOTES, OR TO QUOTE
RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF PRIVATE
SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY
PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B. ISSUANCE PERIOD. Private Shelf Notes may be issued and sold
pursuant to this Agreement until the earlier of (i) June 25, 1999 and (ii) the
thirtieth day after Prudential shall have given to the Company, or the Company
shall have given to Prudential, a written notice stating that it elects to
terminate the Facility. The period during which Private Shelf Notes may be
issued and sold pursuant to this Agreement is herein called the "ISSUANCE
PERIOD".
2C. REQUEST FOR PURCHASE. The Company may from time to time during the
Issuance Period make requests for purchases of Private Shelf Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase
shall be made to Prudential by telecopier and confirmed by nationwide overnight
delivery service, and shall (i) specify the aggregate principal amount of
Private Shelf Notes covered thereby, which shall not be less than $5,000,000 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
in arrears) of the Private Shelf Notes covered thereby, (iii) specify the use of
proceeds of such Private Shelf Notes, (iv) specify the proposed day for the
closing of the purchase and sale of such Private Shelf Notes, which shall be a
Business Day during the Issuance Period not more than thirty (30) days after the
making of such Request for Purchase and in any event not less than three (3)
days after any Acceptance with respect to such Request for Purchase under
paragraph 2E, (v) specify the number of the account and the name and address of
the depository institution to which the purchase prices of such Private Shelf
Notes are to be transferred on the Private Shelf Closing Day for such purchase
and sale, (vi) certify that the representations and warranties contained in
paragraph 8 hereof are true on and as of the date of such Request for Purchase
except to the extent of changes caused by the transactions herein contemplated
and that there exists on the date of such Request for Purchase no Event of
Default or Default (and that no Event of Default or Default shall arise as the
result of
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the purchase and sale of such Private Shelf Notes), and (vii) 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.
2D. RATE QUOTES. As soon as practicable and in any event not later than
five (5) Business Days after the Company shall have given Prudential a Request
for Purchase pursuant to ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ may, but shall be under no
obligation to, provide (by telephone and promptly thereafter confirmed by
telecopier, in each case no earlier than 9:30 A.M. and no later than 1:30 P.M.
New York City local time) interest rate quotes for the several principal
amounts, maturities, prepayment schedules and interest payment periods of
Private Shelf Notes specified in such Request for Purchase. Each quote shall
represent the interest rate per annum payable on the outstanding principal
balance of such Private Shelf Notes until such balance shall have become due and
payable, at which Prudential or a Prudential Affiliate would be willing to
purchase such Private Shelf Notes at 100% of the principal amount thereof. Such
rate quotes shall be made and determined by Prudential in accordance with the
internal methods and procedures then used by Prudential to price comparable
transactions with companies similarly situated with similar credit risks.
2E. ACCEPTANCE. Within the Acceptance Window, the Company may, subject
to the terms of paragraph 2F, elect to accept such interest rate quotes as to
not less than $5,000,000 aggregate principal amount of the Private Shelf Notes
specified in the applicable Request for Purchase. Such election shall be made by
an Authorized Officer of the Company notifying Prudential by telephone or
telecopier within the Acceptance Window (but not earlier than 9:30 A.M. or later
than 2:00 P.M., New York City local time) that the Company elects to accept such
interest rate quotes, specifying the Private Shelf Notes (each such Private
Shelf 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 Private Shelf Notes hereunder shall be made
based on such expired interest rate quotes. In the event the closing with
respect to any Accepted Notes fails to occur within ten (10) days of the
Acceptance Day for any reason (other than Prudential's failure to fund the
purchase price of the Private Shelf Notes after all conditions to closing
specified in paragraph 3A have been satisfied on or before 11:30 A.M. New York
City local time on the last Business Day preceding the end of such ten day
period), the interest rate applicable to such Accepted Notes may increase based
upon the costs of the delayed closing to Prudential as reasonably determined by
Prudential. Subject to paragraph 2F 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 the applicable Confirmation of Acceptance to
Prudential within three Business Days following receipt of 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
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respect to such Accepted Notes by so notifying the Company in writing.
2F. MARKET DISRUPTION. Notwithstanding the provisions of paragraph 2E,
if Prudential shall have provided interest rate quotes pursuant to paragraph 2E
and thereafter, prior to the time an Acceptance with respect to such quotes
shall have been notified to Prudential in accordance with paragraph 2E, the
domestic market for U.S. Treasury securities or derivatives shall have closed or
there shall occur a general suspension, material limitation, or significant
disruption of trading in securities generally on the New York Stock Exchange or
in the domestic market for U.S. Treasury securities, then such interest rate
quotes shall expire, and no purchase or sale of Private Shelf Notes hereunder
shall be made based on such expired interest rate quotes. If the Company
thereafter notifies Prudential of the Acceptance of any such interest rate
quotes, such Acceptance shall be ineffective for all purposes of this Agreement,
and Prudential shall promptly notify the Company that the provisions of this
paragraph 2F are applicable with respect to such Acceptance.
2G. PRIVATE SHELF CLOSING. Not later than 11:30 A.M. (New York City
local time) on the Private Shelf 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 Prudential Capital Group, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Law Department, the Private Shelf
Notes to be purchased by such Purchaser in the form of a single Accepted Note
for the Accepted Notes which have exactly the same terms (or such greater number
of Notes in authorized denominations as such Purchaser may request) dated the
Private Shelf Closing Day and registered in such Purchaser's name (or in the
name of its nominee), against payment of the purchase price thereof by transfer
of immediately available funds for credit to the Company's account specified in
the Request for Purchase of such Private Shelf Notes. If the Company fails to
tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on
the scheduled Private Shelf Closing Day for such Accepted Notes as provided
above in this paragraph 2G, or any of the conditions specified in paragraph 3A
shall not have been fulfilled by the time required on such scheduled Private
Shelf Closing Day, the Company shall, prior to 1:00 P.M., New York City local
time, on such scheduled Private Shelf Closing Day notify such Purchaser in
writing whether (x) 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 30 Business Days after such scheduled Private Shelf Closing Day
(the "RESCHEDULED CLOSING DAY")) and certify to such 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, if any, in accordance with paragraph 2H(2) or (y) such
closing is to be cancelled as provided in paragraph 2H(3). In the event that the
Company shall fail to give such notice referred to in the preceding sentence,
such Purchaser may at its election, at any time after 1:00 P.M., New York City
local time, on such scheduled Private Shelf Closing Day, notify the Company in
writing that such closing is to be cancelled as provided in paragraph 2H(3).
Notwithstanding anything to the contrary contained 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 which consent shall not be unreasonably denied.
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2H. FEES.
2H(1). ISSUANCE FEE. On each Private Shelf Closing Day which occurs
after the first anniversary date of this Agreement, the Company agrees to pay
Prudential in immediately available funds a fee (the "ISSUANCE FEE") in an
amount equal to 0.15% of the aggregate principal amount of Notes sold on such
Private Shelf Closing Day.
2H(2). DELAYED DELIVERY FEE. If the closing of the purchase and sale of
any Accepted Note is delayed for any reason (other than Prudential's failure to
fund the purchase price of the Accepted Notes after all conditions to closing
specified in paragraph 3A have been satisfied on or before 11:30 A.M. New York
City local time on the last Business Day preceding the 31st day after the
Acceptance Day) beyond the original Private Shelf Closing Day for such Accepted
Note, the Company will pay to Prudential on the last Business Day of each
calendar month, commencing with the first such day to occur more than 30 days
after the Acceptance Day for such Accepted Note and ending with the last such
day to occur prior to the Cancellation Date or the actual closing date of such
purchase and sale, and on the Cancellation Date or actual closing date of such
purchase and sale (if such Cancellation Date or closing date occurs more than 30
days after the Acceptance Day for such Accepted Note), a fee (herein called the
"DELAYED DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X Full Price
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 Notes 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 thirty-first day after the Acceptance Day of 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 immediately 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 "FULL PRICE" means the principal
amount, i.e., the principal amount of the Accepted Note for which such
calculation is being made. If the Delayed Delivery Fee is zero or negative,
there will be no Delayed Delivery Fee. Nothing contained herein shall obligate
any Purchaser to purchase any Accepted Note on any day other than the Private
Shelf Closing Day for such Accepted Note, as the same may be rescheduled from
time to time in compliance with paragraph 2G.
2H(3). 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 2E or the penultimate
sentence of paragraph 2G 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
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called the "CANCELLATION DATE"), the Company will pay Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X Full Price
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Note(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "FULL PRICE"
has the meaning set forth in paragraph 2H(2), above. 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). Each price
shall be based on a U.S. Treasury security having a par value of $100.00 and
shall be rounded to the second decimal place. If the Price Increase is zero or
negative, there will be no Cancellation Fee.
2H(4). STRUCTURING FEE. In consideration for the time, effort and
expense involved in the preparation, negotiation and execution of this Agreement
and the amendment of the Existing Agreement, the Company agrees to pay
Prudential on the date of the execution of this Agreement in immediately
available funds a fee (the "STRUCTURING FEE") in the amount of $10,000.
3. CONDITIONS OF CLOSING. Prudential's and any Purchaser's obligation
to purchase and pay for any Private Shelf Notes, is subject in each case to the
satisfaction, on or before the applicable Closing Day for such Notes, of the
conditions set forth in paragraph 3A.
3A(1). OPINION OF COMPANY'S COUNSEL. On the Initial Closing Day,
Prudential shall have received from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., general counsel of
the Company, a favorable opinion satisfactory to Prudential and substantially in
the form of EXHIBIT D-1 attached hereto.
3A(2). OPINION OF COMPANY'S COUNSEL. On each Private Shelf Closing Day,
each Purchaser shall have received from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., general counsel
of the Company (or other counsel reasonably acceptable to the Purchasers), a
favorable opinion satisfactory to the Purchasers and substantially in the form
of EXHIBIT D-2 attached hereto.
3A(3). REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties contained in paragraph 8 hereof shall be true on and as of the
applicable Closing Day, except to the extent of changes caused by the
transactions herein contemplated; there shall exist on the applicable Closing
Day no Event of Default or Default; and the Company shall have delivered to each
Purchaser an Officer's Certificate, dated the applicable Closing Day, to both
such effects.
3A(4). FEES. On or before the Initial Closing Day, the Company shall
have paid in full to Prudential the Structuring Fee required by paragraph 2H(4).
On or before each Private Shelf Closing Day, the Company shall have paid in full
to Prudential any Issuance Fee required by paragraph 2H(1) and to the Purchasers
any Delayed Delivery Fee or Cancellation Fee required by paragraph 2H(2) or
2H(3).
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3A(5). PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Notes to be purchased on the applicable Private Shelf Closing
Day on the terms and conditions herein provided (including the use of the
proceeds of such Notes by the Company) shall not violate any applicable law or
governmental regulation (including, without limitation, Section 5 of the
Securities Act or Regulation G of the Board of Governors of the Federal Reserve
System) and shall not subject any Purchaser to any material tax (other than
ordinary income taxes), material penalty, material liability or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such certificates or other evidence as
such Purchaser may have requested no less than 5 days before any scheduled
closing to establish compliance with this condition.
3A(6). LEGAL MATTERS. Counsel for the Purchasers shall be satisfied as
to all legal matters in all material respects relating to such purchase and
sale.
3A(7). PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in substance and form to each
Purchaser, and each Purchaser shall have received all such counterpart originals
or certified or other copies of such documents as it may reasonably request.
3A(8). SALE OF NOTES OF SAME SERIES TO OTHER PURCHASERS. The Company
shall have tendered to the other Purchasers (if any) the Notes of the same
Series to be purchased by them at the closing.
4. PREPAYMENTS. The Notes shall be subject to prepayment with respect
to the required prepayments specified in paragraph 4A and under the
circumstances specified in paragraphs 4B and 4E.
4A. REQUIRED PREPAYMENT OF PRIVATE SHELF NOTES. Until each respective
Series of Private Shelf Notes shall be paid in full, each respective Series of
Private Shelf Notes shall be subject to such required prepayments, if any, as
are specified for such Series of Private Shelf Notes in accordance with the
provisions of paragraph 2C hereof. Any prepayment made by the Company pursuant
to any other provision of this paragraph 4 shall not reduce or otherwise affect
its obligation to make any prepayment as specified in the respective Series of
Private Shelf Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. Subject to the
limitations set forth below, the Notes shall be subject to prepayment, in whole
at any time or from time to time in part (in $100,000 increments and not less
than $2,000,000 per occurrence), 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 Note so prepaid. Any
partial prepayment of the Notes pursuant to this paragraph 4B shall be applied
in satisfaction of required payments of principal in the inverse order of their
scheduled due dates.
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4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give to the holder
of each Note of a Series irrevocable written notice of any optional prepayment
pursuant to paragraph 4B with respect to such Series not less than 30 days prior
to the prepayment date, specifying (i) such prepayment date, (ii) the aggregate
principal amount of the Notes of such Series to be prepaid on such date, (iii)
the principal amount of the Notes of such holder to be prepaid on that date, and
(iv) stating that such optional prepayment is to be made pursuant to paragraph
4B. Notice of optional prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together with interest thereon to
the prepayment date and together with the Yield-Maintenance Amount, if any, with
respect thereto, shall become due and payable on such prepayment date.
4D. PARTIAL PAYMENTS PRO RATA. In the case of each prepayment pursuant
to paragraphs 4A or 4B of less than the entire unpaid principal amount of all
outstanding Notes of any Series, 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 of such Series 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 paragraphs 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 (i) by prepayment
pursuant to paragraphs 4A or 4B or (ii) upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes 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 held by each other holder of Notes 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. In the event
that (i) the Company at any time requests in writing the approval by the holders
of the Notes of a merger, acquisition, recapitalization or reorganization, the
consummation of which would result in an Event of Default or Default hereunder,
and (ii) the Required Holders shall have failed to grant such approval within
ninety (90) days of the date of such written request, then the Company may,
subject to the terms of the first sentence of this paragraph 4E and
simultaneously with the consummation of such prohibited transaction, prepay the
Notes of the nonconsenting holders 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 such Note within one hundred fifty (150) days of the
date of the written request.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
each Significant Holder in triplicate:
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(i) as soon as practicable and in any event within 60 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries
for the period from the beginning of the 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 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 lO-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 120
days after the end of each fiscal year, consolidated statements of
income, stockholders' equity, and cash flows of the Company and its
Subsidiaries for such year, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year, setting forth
in each case in comparative form corresponding consolidated figures
from the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and, reported on by
independent public accountants of recognized national standing selected
by the Company whose report shall be without limitation as to scope of
the audit and satisfactory in substance to the Required Holder(s);
PROVIDED, HOWEVER, that delivery pursuant to clause (iii) below of
copies of the Annual Report on Form 10-K of the Company for such 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 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),
excluding registration statements on Form S-8;
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other financial data
as such Significant 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 an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the
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provisions of paragraph 6 and stating that, to the best of their knowledge based
upon reasonable inquiry, 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 report 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 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 thereof and what action the Company proposes to take with
respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. 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 discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants and, if a Default or Event of Default shall be continuing, to
examine the corporate books and financial records of the Company and its
Subsidiaries and obtain copies thereof or extracts therefrom, all at such
reasonable times as the Company and such Significant Holder shall agree but in
any event within three Business Days from request of any Purchaser and during
normal business hours.
5D. 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 the 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.
5E. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary shall maintain, with financially sound and reputable insurers,
insurance in such
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amounts and against such liabilities and hazards as is ordinarily carried by
companies similarly situated in the same or similar lines of business.
6. NEGATIVE COVENANTS. Unless the Required Holders shall otherwise
consent in writing, the Company agrees to observe and perform each of the
negative covenants set forth below so long as any Note shall remain outstanding.
6A(1). LIQUIDITY. The Company covenants that it will not permit
Consolidated Current Assets less Consolidated Current Liabilities determined at
the end of any fiscal quarter to fall below an amount equal to $125,000,000.
6A(2). CURRENT RATIO. The Company covenants that it will not permit the
ratio (expressed as a percentage) of Consolidated Current Assets to Consolidated
Current Liabilities determined at the end of any fiscal quarter to fall below
150%.
6A(3). CONSOLIDATED TANGIBLE NET WORTH. The Company covenants that it
will not permit Consolidated Tangible Net Worth determined at the end of any
fiscal quarter to fall below $115,000,000 PLUS an amount equal to 30% of annual
Consolidated Net Income (less 0% in the event of a loss), applied at the end of
each fiscal year commencing with the fiscal year ending June 30, 1996.
6B. CREDIT AND OTHER RESTRICTIONS. The Company covenants that it will
not and will not permit any Subsidiary to:
6B(1). LIEN RESTRICTIONS. Create, incur, assume or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable securing of Notes in
accordance with the provisions of paragraph 5D hereof), except:
(i) Liens for taxes or other governmental charges 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 ordinary operation or use of its property which were not incurred
in connection with the borrowing of money or obtaining credit or
advances;
(iii) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or another
Subsidiary;
(iv) Liens identified on EXHIBIT G to the Existing
Agreement a copy of which is attached hereto;
(v) Liens relating to the ledger balances, consignments,
and other similar arrangements and other Liens (including Liens
consisting of Capitalized Lease Obligations and/or purchase money
security interests) to secure Debt,
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provided that (x) the Debt to which the Lien relates is permitted by
paragraph 6B(2) and (y) the aggregate amount of Debt (plus, without
duplication, the aggregate amount of such ledger balances, consignments
and other similar arrangements) secured by such Liens does not exceed
at any time 20% of Consolidated Tangible Net Worth; and
(vi) Liens consisting of survey exceptions, minor
encumbrances, easements and rights of way, or zoning or other
restrictions as to the use of real properties; PROVIDED, HOWEVER, that
such Liens in the aggregate do not materially impair the usefulness of
such property in the business of the Company and its Subsidiaries,
taken as a whole.
6B(2). DEBT RESTRICTION. Create, incur, assume or suffer to exist any
Debt, except:
(i) Debt in existence on March 28, 1996;
(ii) Debt of any Subsidiary to the Company or to any other
Subsidiary; and
(iii) additional Debt of the Company and/or any Subsidiary
subject to the proviso set forth below;
PROVIDED, HOWEVER, (x) that the aggregate principal amount of consolidated Debt
of the Company and its Subsidiaries shall not exceed at any time an amount equal
to 58% of Consolidated Capitalization and (y) Priority Debt shall not exceed at
any time an amount equal to 20% of Consolidated Tangible Net Worth.
6B(3). LOANS, ADVANCES AND INVESTMENTS. Make or permit to remain
outstanding loans or advances to, or own, purchase or acquire any stock
obligations or securities of, or any other interest in, or make any capital
contributions to, any Person (collectively, "INVESTMENTS"), except that the
Company or any Subsidiary may:
(i) make or permit to remain outstanding loans or
advances to any Subsidiary;
(ii) own, purchase or acquire stock, obligations or
securities of a Subsidiary or of a corporation which immediately after
such purchase or acquisition will be a Subsidiary;
(iii) acquire and own (a) stock of the Company so long as
no Default or Event of Default exists after giving effect to the
acquisition thereof and (b) stock, obligations or securities received
in settlement of debts (created in the ordinary course of business)
owing to the Company or any Subsidiary;
(iv) own, purchase or acquire prime commercial paper,
banker's acceptances and certificates of deposit in the United States
and Canadian
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commercial banks (having capital resources in excess of $100 million
U.S.), repurchase agreements with respect to the foregoing, in each
case due within one year from the date of purchase and payable in the
United States in United States dollars, obligations of the United
States Government or any agency thereof, and obligations guaranteed by
the United States Government;
(v) make or permit to remain outstanding relocation,
travel and other like advances to officers and employees in the
ordinary course of business;
(vi) permit to remain outstanding Investments existing on
March 28, 1996; and
(vii) make other Investments not in excess of 15% of
Consolidated Tangible Net Worth.
6B(4). DISPOSITION OF CERTAIN ASSETS. Sell, lease, transfer or
otherwise dispose of any assets of the Company or any Subsidiary other than in
an Excluded Transfer, unless the net book value of the assets sold, leased,
transferred or otherwise disposed of outside of the ordinary course of business
in the then most recent 24 month period together with the net book value of any
assets then proposed to be sold, leased, transferred or otherwise disposed of
outside of the ordinary course of business do not exceed 30% of Consolidated
Tangible Net Worth. For purposes of this paragraph and paragraph 6B(2), a sale
of the Company's or its Subsidiaries' receivables in connection with financing
of the Company or any of its Subsidiaries under a securitization program shall
be deemed to constitute Debt of the Company or any such Subsidiary and not a
sale of assets.
6B(5). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise
dispose of, or part with control of, any shares of stock or debt of any
Subsidiary, except to the Company or any Subsidiary, and except that all shares
of stock and debt of any Subsidiary at the time owned by or owed to the Company
and all Subsidiaries may by sold as an entirety for fair market value (as
determined in good faith by the Board of Directors of the Company) provided that
the net book value of the assets of such Subsidiary, together with the net book
value of the assets of the Company and any other Subsidiaries sold during the
then most recent 24 month period do not exceed 30% of Consolidated Tangible Net
Worth.
6B(6). MERGER AND CONSOLIDATION. Merge with or consolidate into any
other company, except (i) Subsidiaries may be merged into the Company, (ii) the
Company may merge with another entity provided that the Company is the surviving
corporation and no Default or Event of Default under this Agreement would exist
after giving effect to the merger or as a result thereof, (iii) any Subsidiary
may be merged with or into another corporation provided that the surviving
corporation is a Subsidiary (in the case of a merger that does not involve the
Company) or the Company and no Default or Event of Default would exist after
giving effect to the merger or as a result thereof, or (iv) the Company may be
merged into a Subsidiary or a newly created entity organized under the laws of
any state of the United States which has conducted no previous business and at
the time of such merger shall have no liabilities, if, in either case, the
surviving corporation assumes the obligations of the Company under the Notes in
a manner
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reasonably satisfactory to the Required Holders of the Notes and no Default or
Event of Default shall exist after giving effect to the merger or as a result
thereof.
6B(7). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, discount or
pledge any of its notes receivable or accounts receivable other than receivables
sold constituting Debt under clause (vii) of the definition thereof provided
that (i) the aggregate face amount of all such receivables sold shall not exceed
$70,000,000, and (ii) after giving effect to such sale, the Company is in
compliance with paragraph 6B(2).
6B(8). LEASE OBLIGATIONS. Lease real property or personal property
(excluding data processing equipment, vehicles, and other equipment leased in
the ordinary course of business) for terms exceeding three years if after giving
effect thereto the aggregate amount of all payments in any fiscal year payable
by the Company and its Subsidiaries would exceed an aggregate of 15% of
Consolidated Tangible Net Worth.
6B(9). RESTRICTED TRANSACTIONS. Deal directly or indirectly with an
Affiliate, any Person related by blood, adoption, or marriage to any Affiliate
or any Person owning 5% or more of the Company's stock, provided that (i) the
Company may deal with such Persons in the ordinary course of business at arm's
length, (ii) the Company may make loans or advances to officers permitted by
paragraph 6B(3) and (iii) in addition to the foregoing, so long as the stock of
the Company is publicly held, the Company may deal with such Persons so long as
the aggregate amount of such transactions does not exceed $1,000,000 in any
fiscal year.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal
of, or Yield-Maintenance Amount payable with respect to, any Note when
the same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than five (5) days after the date due; or
(iii) (A) (1) the Company or any Subsidiary defaults
(whether as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation for money
borrowed (including any obligation under a conditional sale or other
title retention agreement entered into as a means of acquiring the
subject property, any obligation issued or assumed as full or partial
payment for property if 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 (2) the Company or any Subsidiary fails to perform or
observe any other agreement, term or condition contained in any
agreement under which any of the foregoing
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obligations are issued or created (or if any other event thereunder or
under any such agreement shall occur and be continuing), and the effect
of such default under clause (1) above or failure or event under clause
(2) above is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due (or to be repurchased by the Company or
any Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default
shall occur and be continuing or such a failure or other event causing
or permitting acceleration (or resale to the Company or any Subsidiary)
shall occur and be continuing exceeds $5,000,000; or (B) the Company or
any Subsidiary fails to perform or observe any term or condition of any
agreement or lease (other than those specified in clause (A) of this
paragraph 7A(iii)) beyond any applicable grace period with respect
thereto (or if any other event thereunder shall occur and be continuing
beyond any applicable grace period), if the effect of such failure or
event is to cause, or permit the holder or holders of such obligation
(or trustee on behalf of such holder or holders) to cause, such
obligation to become due prior to any stated maturity or require the
repurchase, redemption or defeasance of such obligation, provided that
the aggregate amount of all obligations as to which such failure or
other event causing or permitting acceleration or requiring the
repurchase, redemption or defeasance shall exceed $10,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment
for the benefit of creditors or is generally not paying its debts as
such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company or any Subsidiary, or of
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any substantial part of the assets of the Company or any Subsidiary, or
commences a voluntary case under the Bankruptcy Law of the United
States or any proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Subsidiary) relating to the Company or
any Subsidiary under the Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any one or more unpaid or unsatisfied judgments or
decrees in excess of $5,000,000 in the aggregate at any one time
outstanding is entered against the Company and/or its Subsidiaries,
excluding those judgments or decrees (A) that shall have been stayed,
vacated or bonded, (B) which are not final and non-appealable, provided
that the Company or such Subsidiary is contesting any such judgment or
decree in good faith and by appropriate proceedings diligently pursued,
(C) for and to the extent the Company or any Subsidiary is insured and
with respect to which the insurer specifically has assumed
responsibility in writing therefor, (D) for and to the extent the
Company or any Subsidiary are otherwise indemnified if the terms of
such indemnification are satisfactory to the Required Holders or (E)
that have been outstanding for less than 60 days;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable at par together with interest accrued thereon,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company, (b) if such event is an Event of Default specified
in clause (viii), (ix) or (x) of this paragraph 7A with respect to the Company,
all of the Notes at the time outstanding shall automatically become immediately
due and payable at par together with interest accrued thereon, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and (c) if such event is not an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, the Required Holder(s) of any Series of Notes may at its or their
option, by notice in writing to the Company, declare all of the Notes of such
Series to be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each Note of such
Series, without presentment,
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demand, protest or other notice of any kind, all of which are hereby waived by
the Company, provided that the Yield-Maintenance Amount, if any, with respect to
each Note of such Series shall be due and payable upon such declaration only if
(x) such event is an Event of Default specified in any of clauses (i) to (vi),
inclusive, or (xi) or (xii) of this paragraph 7A, (y) the Required Holders of
such Series shall have given to the Company, at least 10 Business Days before
such declaration, written notice stating its or their intention so to declare
the Notes of such Series to be immediately due and payable and identifying one
or more such Events of Default whose occurrence on or before the date of such
notice permits such declaration, and (z) one or more of the Events of Default so
identified shall be continuing at the time of such declaration.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes of a Series shall have been declared immediately due and payable pursuant
to paragraph 7A, the Required Holder(s) of such Series may, by notice in writing
to the Company, rescind and annul such declaration and its consequences if (i)
the Company shall have paid all overdue interest on the Notes of such Series,
the principal of and Yield-Maintenance Amount, if any, payable with respect to
any Notes of such Series which have become due otherwise than by reason of such
declaration, and interest on such overdue interest and overdue principal and
Yield-Maintenance Amount at the rate specified in the Notes of such Series, (ii)
the Company shall not have paid any amounts which have become due solely by
reason of such declaration, (iii) all Events of Default and Defaults, other than
non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C, and (iv)
no judgment or decree shall have been entered for the payment of any amounts due
pursuant to the Notes of such Series or this Agreement (as this Agreement
pertains to the Notes of such Series). 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
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:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Ohio, each Subsidiary
is a corporation existing and
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in good standing under the laws of the jurisdiction in which it is incorporated,
and the Company has and each Subsidiary has the corporate power to own its
respective property and to carry on its respective business as now being
conducted. The names and jurisdictions of incorporation of each Subsidiary are
set forth on EXHIBIT F attached hereto.
8B. FINANCIAL STATEMENTS. The Company has furnished Prudential and each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) a consolidated
balance sheet of the Company and its Subsidiaries as of the last day in each of
the five 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 120 days prior to such date for which audited
financial statements have not been released) and a consolidated statement of
income, stockholders' equity and statement of cash flows of the Company and its
Subsidiaries for each such year, all certified by Deloitte & Touche LLP (or such
other independent public accountants of recognized national standing selected by
the Company or other accounting firm as may be reasonably acceptable to such
Purchaser); 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 60 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,
stockholders' equity and cash flows of the Company and its Subsidiaries 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 true and
correct 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 and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income and
statements of cash flows fairly present the results of the operations of the
Company and its Subsidiaries for the periods indicated. There has been no
material adverse change in the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole since 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 Subsidiary or any properties or rights of the Company or any
Subsidiary, by or before any court, arbitrator or administrative or governmental
body which could be reasonably expected to result in any material adverse change
in the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any Subsidiary has any
Debt outstanding except as permitted by paragraph 6B(2). There exists no payment
default or other default in any material respect under the provisions of any
instrument evidencing such Debt or of any agreement relating thereto.
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8E. TITLE TO PROPERTIES. To the best knowledge of the Responsible
Officers based upon reasonable inquiry, the Company has, and each Subsidiary
has, good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other properties and
assets, including the properties and assets reflected in the most recent audited
balance sheet referred to in paragraph 8B (other than properties and assets
disposed of in the ordinary course of business), subject to no Lien of any kind
except Liens permitted by paragraph 6B(1). The Company and each Subsidiary
enjoys peaceful and undisturbed possession of all leases necessary in any
material respect for the conduct of their respective businesses, none of which
contains any unusual or burdensome provisions which could be reasonably expected
to materially affect or impair the operation of such businesses. All such leases
are valid and subsisting and are in full force and effect.
8F. TAXES. To the best knowledge of the Responsible Officers based upon
reasonable inquiry, the Company has, and each Subsidiary has, filed all Federal,
State and other income tax returns which are required to be filed, and each has
paid all taxes as shown on such returns and on all assessments received by it to
the extent that such taxes have become due, except such taxes as are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the 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 (other than Liens permitted
by this Agreement) pursuant to, the charter or code of regulations of the
Company or any of its Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), nor to the best of the Responsible
Officers' knowledge based upon reasonable inquiry, any 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 indebtedness of the Company or any of its Subsidiaries,
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, indebtedness of the Company of the type to be evidenced by the
Notes except as set forth in the agreements listed in EXHIBIT E attached hereto
(as such EXHIBIT E may have been modified from time to time by written
supplements thereto delivered by the Company and accepted in writing by
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
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Securities Act or to the registration provisions of any securities or
Blue Sky law of any applicable jurisdiction.
8I. REGULATION G, ETC. The proceeds of the sale of any Private Shelf
Notes will be used for the purposes stated in the relevant Request for Purchase.
None of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors of
the Federal Reserve System (herein called "margin stock") or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally incurred
to purchase or carry any stock that is then currently a margin stock or for any
other purpose which might constitute the purchase of such Notes transaction a
"purpose credit" within the meaning of such Regulation G, unless the Company
shall have delivered to the Purchaser which is purchasing such Notes, on the
Private Shelf Closing Day for such Notes an opinion of counsel satisfactory to
such Purchaser stating that the purchase of such Notes does not constitute a
violation of such Regulation G. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation G of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934, as amended, in each
case as in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
Neither the Company, any Subsidiary or 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
Company and its Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the issuance and sale of the Notes will be exempt from, or
will not involve any transaction which is subject to the prohibitions of,
section 406 of ERISA and will not involve any transaction in connection with
which a penalty could be imposed under section 502(i) of ERISA or a tax could be
imposed pursuant to section 4975 of the Code. The representation by the Company
in the next preceding sentence is made in reliance upon and subject to the
accuracy of each Purchaser's representation in paragraph 9B.
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
other action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of closing 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 of this Agreement.
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8L. ENVIRONMENTAL COMPLIANCE. To the best knowledge of the Responsible
Officers based upon reasonable inquiry, the Company and its Subsidiaries and all
of their respective properties and facilities have complied at all times and in
all respects with all applicable federal, state, local and regional statutes,
laws, ordinances and judicial or administrative orders, judgments, rulings and
regulations relating to protection of the environment 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 or the ability of the Company to perform its
obligations under this Agreement.
8M. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
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 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 can be reasonably expected to (so far as the Company can now reasonably
foresee) materially adversely affect the business, property or assets, or
financial condition of the Company and its Subsidiaries taken as a whole and
which has not been set forth in this Agreement or in the other documents,
certificates and statements furnished to the Purchasers by the Company prior to
the date hereof in connection with the transactions contemplated hereby.
8O. SECTION 144A. The Notes are not of the same class as securities, if
any, of the Company listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes to be
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
9B. SOURCE OF FUNDS. The source of the funds being used by such
Purchaser to pay the purchase price of the Notes being purchased by such
Purchaser hereunder constitutes assets allocated to: (i) the "insurance company
general account" of such Purchaser (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction Class Exemption
("PTCE") 95-60), and as of the date of the purchase of the Notes such Purchaser
satisfies all of the applicable requirements for relief under Section I and IV
of PTCE 95-60 or (ii) a separate account maintained by such Purchaser in which
no employee benefit plan, other than employee benefit plans identified on a list
which has been furnished by such Purchaser
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to the Company, participates to the extent of 10% or more. For the purpose of
this paragraph 9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN"
shall have the respective meanings specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined
in paragraphs 1 and 2 shall have the respective meanings specified therein, and
the following terms shall have the meanings specified with respect thereto
below:
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.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the 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 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 Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
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"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 2E.
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2E.
"ACCEPTANCE WINDOW" shall mean, with respect to any interest rate quote
made by Prudential pursuant to paragraph 2D, the time period designated by
Prudential during which the Company may elect to accept such interest rate quote
as to not less than $5,000,000 in aggregate principal amount of Private Shelf
Note specified in the Request for Purchase.
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2E.
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its
chief executive officer, its chief operating officer, its chief financial
officer, its corporate secretary, and 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, ▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director, ▇▇▇▇ ▇▇▇▇▇▇, Senior
Managing Director, P. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, Senior Vice President, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Senior Vice President and
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 or
a member of its Law Department. 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
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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 2A.
"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 are required or
authorized to be closed and (iii) for purposes of paragraph 2C hereof only, a
day on which The Prudential Insurance Company of America is not open for
business.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2H(3).
"CANCELLATION FEE" shall have the meaning specified in paragraph 2H(3).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CLOSING DAY" shall mean the Initial Closing Day or a Private Shelf
Closing Day, as the case may be.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in
paragraph 2E.
"CONSOLIDATED CAPITALIZATION" shall mean Consolidated Tangible Net
Worth of the Company and its Subsidiaries plus Debt.
"CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
shall mean the consolidated current assets and consolidated current liabilities
of the Company and its Subsidiaries each determined in accordance with generally
accepted accounting principles, provided that inventory shall be valued at
current cost. The current portion of Funded Debt shall not be included in the
calculation of Consolidated Current Liabilities.
"CONSOLIDATED NET INCOME" shall mean consolidated net income of the
Company and its Subsidiaries as determined in accordance with generally accepted
accounting principles.
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"CONSOLIDATED TANGIBLE NET WORTH" shall mean the sum of (i) the par
value (or value stated on the books of the Company) of the capital stock of all
classes of the Company, plus (or minus in the case of a surplus deficit) (ii)
the amount of the consolidated surplus, whether capital or earned, of the
Company and its Subsidiaries, plus (iii) the amount of paid in capital, less the
sum of treasury stock, unamortized debt discount and expense, goodwill,
trademarks, trade names, patents, non-current deferred charges and other
intangible assets and any write-up of the value of any asset, all determined on
a consolidated basis for the Company and all Subsidiaries in accordance with
generally accepted accounting principles.
"COUNTY BONDS GUARANTY" shall have the meaning assigned to such term in
the Inducement Agreement.
"DEBT" shall mean and include, (i) any obligation payable for borrowed
money (including capitalized lease obligations but excluding reserves for
deferred income taxes and other reserves to the extent that such reserves do not
constitute an obligation); (ii) indebtedness payable which is secured by any
lien on property owned by the Company or any Subsidiary; (iii) guarantees,
endorsements (other than endorsements of negotiable instruments for collection
in the ordinary course of business) and other contingent liabilities (whether
direct or indirect) in connection with the obligation, stock or dividends of any
Person (other than under the Project Bonds Guaranty and the County Bonds
Guaranty); (iv) obligations under any contract providing for the making of
loans, advances or capital contributions to any Person, in each case in order to
enable such Person primarily to maintain working capital, net worth or any other
balance sheet condition or to pay debts, dividends or expenses; (v) ledger
balances, consignments and other similar arrangements but only to the extent
required to be shown as debt on the consolidated balance sheet of the Company in
accordance with generally accepted accounting principles; (vi) obligations under
any other contract which, in economic effect, is substantially equivalent to a
guarantee; (vii) the face amount of receivables sold to any Person for the
purpose of enabling such Person to incur Debt or sell interests in such
receivables to finance the purchase price of such receivables, and (viii)
guaranteed purchase contracts which are required to be shown as debt on the
Company's consolidated balance sheet in accordance with generally accepted
accounting principles (but not including guaranteed purchase contracts to the
extent that the obligations thereunder are not required to be shown as debt on
the Company's consolidated balance sheet in accordance with generally accepted
accounting principles); all as determined in accordance with generally accepted
accounting principles. The term Debt shall not include (a) obligations under the
Company's compensation or benefit plans in effect from time to time to the
extent not required to be shown as debt on the consolidated balance sheet of the
Company prepared in accordance with generally accepted accounting principles and
(b) trade payables incurred in the ordinary course of business (including ledger
balances, consignments and other similar arrangements) to the extent such trade
payables (including ledger balances, consignments and other similar
arrangements) are not required to be shown as debt on the consolidated balance
sheet of the Company prepared in accordance with generally accepted accounting
principles.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2H(2).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
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"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCLUDED TRANSFER" shall mean any sell, lease, transfer or other
disposition of any assets of the Company or any Subsidiary which is either (i)
made in the ordinary course of business or (ii) made to the Company or any
Subsidiary and after giving effect to such transaction the Company's ultimate
percentage ownership of the assets sold, leased, transferred or other disposed
of has not been reduced (giving the Company appropriate credit for indirect
ownership of assets by virtue of ownership through any Subsidiary but only to
the extent of the Company's percentage ownership of such Subsidiary).
"EXISTING AGREEMENT" shall mean that certain Note Purchase and Private
Shelf Agreement dated as of October 31, 1992 between the Company and Prudential.
"FACILITY" shall have the meaning specified in paragraph 2A.
"FUNDED DEBT" shall mean with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable, more than one year
from, or is directly or indirectly renewable or extendible at the option of the
debtor to a date more than one year (including an option of the debtor under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year) from, the date on which Funded Debt
is to be determined.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such
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other entity prior to the date on which the Company makes the Request for
Purchase of such Note.
"INDUCEMENT AGREEMENT" shall mean that certain Inducement Agreement
dated as of March 1, 1996 between the Company and Prudential, a copy of which is
attached hereto as EXHIBIT H.
"INITIAL CLOSING DAY" shall mean November 27, 1996.
"INSTITUTIONAL INVESTOR" shall mean Prudential, any Prudential
Affiliate or any bank, bank affiliate, financial institution, insurance company,
pension fund, endowment or other organization which regularly acquires debt
instruments for investment.
"ISSUANCE FEE" shall have the meaning specified in paragraph 2H(1).
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2A.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"PLAN" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"PRIORITY DEBT" shall mean, as of any time of determination thereof,
the aggregate amount of (i) obligations of the Company secured by Liens
permitted by clauses (iv) or (v) of paragraph 6B(1) and (ii) Debt of
Subsidiaries.
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"PRIVATE SHELF CLOSING DAY" for any Accepted Note shall mean the
Business Day specified for the closing of the purchase and sale of such Private
Shelf Note in the Request for Purchase of such Private Shelf Note, provided that
if the closing of the purchase and sale of such Accepted Note is rescheduled
pursuant to paragraph 2G, the Private Shelf Closing Day for such Accepted Note,
for all purposes of this Agreement except paragraph 2H(3), shall mean the
Rescheduled Closing Day with respect to such Closing.
"PRIVATE SHELF NOTE" and "PRIVATE SHELF NOTES" shall have the meanings
specified in paragraph 1.
"PROJECT BOND GUARANTY" shall have the meaning assigned to such term in
the Inducement Agreement.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all
of the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean, with respect to any Accepted Notes the
Persons, either Prudential or a Prudential Affiliate, who is purchasing such
Accepted Notes.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph
2C.
"REQUIRED HOLDER(S)" shall mean, with respect to the Notes of any
series, at any time, the holder or holders of at least 50.01% of the aggregate
principal amount of the Notes of such series outstanding at such time.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2G.
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer 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 or any Prudential
Affiliate, so long as Prudential or any Prudential Affiliate shall hold any Note
or any amount remains available under the Facility or (ii) any other holder of
at least 10% of the aggregate principal amount of any Series of Notes from time
to time outstanding. To the extent that any notice or document is required to be
delivered to the Significant Holders under this Agreement, such requirement
shall be satisfied with respect to Prudential and all Prudential Affiliates by
giving notice, or delivery of
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a copy of any such document, to Prudential (addressed to Prudential and each
such Prudential Affiliate).
"SUBSIDIARY" shall mean any corporation, association, partnership,
limited partnership, limited liability company, joint venture or other business
entity of which more than 80% of the Voting Stock, membership interests or other
equity interests is owned or controlled directly or indirectly by the Company,
or one or more of the Subsidiaries of the Company, or a combination thereof.
"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 "general 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. Notwithstanding the foregoing, if any
change in generally accepted accounting principles from those applied in the
preparation of the financial statements referred to in paragraph 8B is
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), the initial application of which change is
made after the date of this Agreement, and any such change results in a change
in the method of calculation of financial covenants, standards or terms found in
this Agreement, the parties hereto agree that until such time as the parties
hereto agree upon an amendment to this Agreement addressing such change, such
financial covenants, standards and terms shall be construed and calculated as
though such change had not taken place. The parties hereto agree to enter into
good faith negotiations in order to amend the affected provisions so as to
reflect such accounting changes with the desired result that the criteria for
evaluating the Company's financial condition shall be the same after such
changes as if such changes had not been made. When used herein, the term
"financial statement" shall include the notes and schedules thereto.
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 terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 Noon, New York
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City local time, on the date due) to (i) the account or accounts specified in
the applicable Confirmation of Acceptance (in the case of any Private Shelf
Note) or (ii) such other account or accounts in the United States as such
Purchaser may 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, such Purchaser 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 each Purchaser has 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
reasonable 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 this Agreement (other than with respect to the legal fees and
expenses incurred in connection with the Initial Closing Day or any draw under
the Facility), the transactions contemplated hereby and any subsequent Company
proposed modification of, or Company proposed consent under, this Agreement,
whether or not such Company proposed modification shall be effected or Company
proposed consent granted, and (ii) the costs and expenses, including 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. The obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any Purchaser or
any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to change or affect the rate or
time of payment of interest on or any Yield-Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of 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 2 may be amended or
waived (except insofar as any such
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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 2 and 3 may be amended or waived insofar as such amendment or
waiver would affect only rights or obligations with respect to the purchase and
sale of the Accepted Notes of such Series or the terms and provisions of such
Accepted Notes. Each holder of any Note at the time or thereafter outstanding
shall be bound by any consent authorized by this paragraph 11C, whether or not
such Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein and in the Notes, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $1,000,000 except as may be necessary to reflect any amount not evenly
divisible by $1,000,000; provided, however, that no such minimum denomination
shall apply to Notes issued to, or issued upon transfer by any holder of the
Notes to, Prudential or one or more Prudential Affiliates or accounts managed by
Prudential or Prudential Affiliates or to any other entity or group of
affiliates with respect to which the Notes so issued or transferred shall be
managed by a single entity. The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Each installment of principal payable on each
installment date upon each new Note issued upon any such transfer or exchange
shall be in the same proportion to the unpaid principal amount of such new Note
as the installment of principal payable on such date on the Note surrendered for
registration of transfer or exchange bore to the unpaid principal amount of such
Note. No reference need be made in any such new Note to any installment or
installments of principal previously due and paid upon the Note surrendered for
registration of transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of
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such Note, the Company will make and deliver a new Note, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not. The Company shall not assign its rights under paragraph 2.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that
Prudential, each Purchaser and each holder of any Note may deliver copies of any
financial statements and other documents delivered to it, and disclose any other
information disclosed to it, by or on behalf of the Company or any Subsidiary in
connection with or pursuant to this Agreement to (i) its directors, officers,
employees, agents and professional consultants, (ii) any Purchaser or holder of
any Note, (iii) any Institutional Investor to which it offers to sell any Note
or any part thereof other than a Competitor, (iv) any Institutional Investor to
which it sells or offers to sell a participation in all or any part of any Note
other than a Competitor, (v) any Institutional Investor from which it offers to
purchase any security of the Company, (vi) any federal or state regulatory
authority having jurisdiction over it, (vii) the National Association of
Insurance Commissioners or any similar organization, or (viii) any other Person
to which such delivery or disclosure may be necessary (a) in compliance with any
law, rule, regulation or order applicable to it, (b) in response to any subpoena
or other legal process or informal investigative demand, (c) in connection with
any litigation to which it is a party or (d) in order to enforce its rights
under this Agreement. Subject to the disclosure permitted in the first sentence
of this paragraph, Prudential, each such Purchaser, each such holder and any
Person designated by any of the foregoing Persons under paragraph 5C each agree
to use their best efforts to hold in confidence and not to
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disclose or use (other than for internal purposes which shall not include any
usage that would subject the Company or its officers to any fine or penalty
under any securities laws or regulations) any Confidential Information.
"Confidential Information" shall mean financial statements and reports delivered
pursuant to paragraph 5A and other non-public information regarding the Company
which was obtained pursuant to paragraph 5B or paragraph 5C; PROVIDED, HOWEVER,
that such term shall not include information (x) which was publicly known, or
otherwise known to you at the time of disclosure, (y) which subsequently becomes
publicly known through no act or omission by you or any of your agents or (z)
which otherwise becomes known to you other than through disclosure by the
Company to you. For purposes of this paragraph, "Competitors" shall mean any
Person which has (1) any of the following Standard Industrial Classification
Codes ("SIC Codes"): 5084, 5085, and 5063, or (2) a pension or benefit plan
maintained by a Person which has any of the foregoing SIC Codes. Prudential and
each Purchaser shall be entitled to rely on a certificate from a Person that it
is not a "Competitor" of the Company. The Company shall be entitled to modify or
supplement in writing the foregoing SIC Codes with the consent of the Required
Holders which consent shall not be unreasonably denied.
11I. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first class
mail or nationwide overnight delivery service (with charges prepaid) or by hand
delivery or telecopy and (i) if to Prudential, addressed to Prudential at the
address specified for such communications in the Purchaser Schedule attached
hereto or to such other address as Prudential shall have specified in writing to
the Company, (ii) if to any Purchaser (other than Prudential), addressed to such
Purchaser at the address specified in the Confirmation of Acceptance (in the
case of any Private Shelf Notes), or at such other address as any Purchaser
shall have specified in writing to the Company, and (iii) if to any other holder
of any Note, addressed to such other holder at such address as such other holder
shall have specified in writing to the Company or, if any such other holder
shall not have so specified an address to the Company, then addressed to such
other holder in care of the last holder of such Note which shall have so
specified an address to the Company, and (iv) if to the Company, addressed to it
at Bearings, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Vice President-Finance and Treasurer, or at such other address as the
Company shall have specified to the holder of each Note in writing; provided,
however, that any such communication to the Company may also, at the option of
the Person sending such communication, be delivered by any other means either to
the Company at its address specified above or to any officer of the Company.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall be included in the computation of the interest payable on such Business
Day.
11K. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
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prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
reasonable judgment (exercised in good faith) 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 LAW OF
THE STATE OF ILLINOIS.
11O. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11P. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between the
Company and Prudential. This Agreement shall also inure to the benefit of each
Purchaser which shall have executed and delivered a Confirmation of Acceptance,
and each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
11Q. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not avoid (i) 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.
11R. AMENDMENT OF CERTAIN AGREEMENTS. Upon the execution of this
Agreement by the Company and Prudential, paragraph 5 and 6 of the Existing
Agreement are hereby amended in their entirety so as to read as set forth,
respectively, in paragraphs 5 and 6 of this Agreement and defined terms and
cross references used in paragraphs 5 and 6 of the Existing Agreement, as
amended hereby, shall be deemed to have the respective meanings ascribed thereto
in, and refer to paragraphs in, this Agreement; PROVIDED, HOWEVER, that any
reference to a "Note" or "Notes" in the Existing Agreement, as amended hereby,
shall mean the notes issued under and pursuant to the Existing Agreement. No
termination of this Agreement in whole or in part or any modification hereof,
shall affect the continued applicability of this paragraph and the
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35
covenants referred to herein to the Existing Agreement. In addition, upon the
execution of this Agreement by the Company and Prudential (i) the amounts
"$1,000,000" and "$5,000,000" appearing in paragraph 7A(iii) of the Existing
Agreement are hereby deleted and the amounts "$5,000,000 and "$10,000,000" are
hereby respectively substituted therefor and (ii) paragraphs 7A(xii) and 10C of
the Existing Agreement and paragraphs 3(xi) and 5B of the Inducement Agreement
are amended and restated in their entirety so as to read as set forth in
paragraph 7A(xii) of this Agreement (in the case of paragraphs 7A(xii) of the
Existing Agreement and 3(xi)of the Inducement Agreement) and 10C of this
Agreement (in the case of paragraph 10C of the Existing Agreement and paragraph
5B of the Inducement Agreement).
Very truly yours,
BEARINGS, INC.
By:
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
---------------------------------
Vice President
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January 30, 1998
Applied Industrial Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President-Finance
Ladies and Gentlemen:
Reference is made to that certain Private Shelf Agreement dated as of
November 27, 1996 (as amended from time to time, the "NOTE AGREEMENT") between
Applied Industrial Technologies, Inc., an Ohio corporation formerly known as
Bearings, Inc. (the "COMPANY"), and The Prudential Insurance Company of America
("PRUDENTIAL"), pursuant to which the Company proposes to issue and sell and
Prudential proposes to purchase the Company's 6.60% Series B Notes in the
original aggregate principal amount of $50,000,000, due December 8, 2007.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Note Agreement.
Pursuant to the request of the Company and in accordance with the
provisions of paragraph 11C of the Note Agreement, the parties hereto agree as
follows:
SECTION 1. Amendment. From and after the date this letter becomes
effective in accordance with its terms, the Note Agreement is amended as
follows:
1.1 Paragraph 10A of the Note Agreement is hereby amended to delete in
its entirety the definition of "Reinvestment Yield" appearing therein and to
substitute therefor the following:
"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
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
37
Applied Industrial Technologies, Inc.
January 30, 1998
Page 2
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.
1.2 Paragraph 10A of the Note Agreement is hereby further amended to
add thereto the following definition in appropriate alphabetical order:
"DESIGNATED SPREAD" shall mean (i) 0% with respect to the
Series A Notes, (ii) 0.50% for the Series B Notes and (iii) unless otherwise
specified in the Confirmation of Acceptance with respect thereto, 0% for any
other Series of Notes.
1.3 Paragraph 10B of the Note Agreement is hereby amended to add
thereto the following definitions in appropriate alphabetical order:
"SERIES A NOTES" shall mean the 7.82% Series A Notes executed
by the Company pursuant to the Existing Agreement in the original aggregate
principal amount of $80,000,000 and due December 8, 2002.
"SERIES B NOTES" shall mean the 6.60% Series B Notes executed
by the Company pursuant to this Agreement in the original aggregate principal
amount of $50,000,000 and due December 8, 2007.
1.4 The Note Agreement is hereby amended to delete in its entirety
EXHIBIT F attached thereto and to substitute therefor Exhibit F attached hereto.
SECTION 2. CONDITIONS PRECEDENT. This letter shall become effective as
of the date first above written upon the return by the Company to Prudential of
a counterpart hereof duly executed by the Company and Prudential. The letter
should be returned to: Prudential Capital Group, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Wiley ▇. ▇▇▇▇▇.
SECTION 3. REFERENCE TO AND EFFECT ON NOTE AGREEMENT. Upon the
effectiveness of this letter, each reference to the Note Agreement in any other
document, instrument or agreement shall mean and be a reference to the Note
Agreement as modified by this letter. Except as specifically set forth in
Section 1 hereof, the Note Agreement shall remain in full force and effect and
is hereby ratified and confirmed in all respects.
SECTION 4. GOVERNING LAW. THIS LETTER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE.
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Applied Industrial Technologies, Inc.
January 30, 1998
Page 3
SECTION 5. COUNTERPARTS; SECTION TITLES. This letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. The section titles contained in this letter are and shall be
without substance, meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Vice President
AGREED AND ACCEPTED:
APPLIED INDUSTRIAL
TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-----------------------------------
And by: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Vice President & Controller
-----------------------------------
F:\WORD\APPLIED TECH\SERIES B\1-30-98 MOD(3).DOC