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LENNOX INTERNATIONAL INC.
$100,000,000
SENIOR NOTES
MASTER SHELF AGREEMENT
DATED AS OF OCTOBER 15, 1999
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THIS AGREEMENT CONTAINS CONFIDENTIALLY
PROVISIONS (SECTION 20)
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TABLE OF CONTENTS
Page
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1. AUTHORIZATION OF ISSUE OF NOTES...........................................1
2. PURCHASE AND SALE OF NOTES................................................2
2.1. Facility.............................................................2
2.2. Issuance Period......................................................2
2.3. Periodic Spread Information..........................................2
2.4. Request for Purchase.................................................3
2.5. Rate Quotes..........................................................3
2.6. Acceptance...........................................................3
2.7. Market Disruption....................................................4
2.8. Fees.................................................................4
2.8.1 Facility Fee.......................................................4
2.8.2 Delayed Delivery Fee...............................................4
2.8.3.Cancellation Fee...................................................5
3. CLOSING...................................................................5
3.1. Closings.............................................................5
3.2. Rescheduled Closings.................................................6
4. CONDITIONS OF CLOSING.....................................................6
4.1. Certain Documents....................................................6
4.2. Representations and Warranties; No Default...........................7
4.3. Purchase Permitted by Applicable Laws................................7
4.4. Legal Matters........................................................8
4.5. Proceedings..........................................................8
4.6. Changes in Corporate Structure.......................................8
4.7. Fees.................................................................8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
5.1. Organization; Power and Authority....................................8
5.2. Authorization, etc...................................................9
5.3. Disclosure...........................................................9
5.4. Organization and Ownership of Shares of Subsidiaries.................9
5.5. Financial Statements.................................................9
5.6. Compliance with Laws, Other Instruments, etc........................10
5.7. Governmental Authorizations, etc....................................10
5.8. Litigation; Observance of Statutes and Orders.......................10
5.9. Taxes...............................................................11
5.10. Title to Property; Leases..........................................11
5.11. Licenses, Permits, etc.............................................11
5.12. Compliance with ERISA..............................................11
5.13. Private Offering by the Company....................................12
5.14. Use of Proceeds; Margin Regulations................................12
5.15. Existing Indebtedness..............................................13
5.16. Foreign Assets Control Regulations, etc............................13
5.17. Status under Certain Statutes......................................13
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5.18. Hostile Tender Offers..............................................13
5.19. Year 2000..........................................................13
6. REPRESENTATIONS OF THE PURCHASERS........................................14
6.1. Purchase for Investment.............................................14
6.2. Source of Funds.....................................................14
7. INFORMATION AS TO COMPANY................................................15
7.1. Financial and Business Information..................................15
7.2. Officer's Certificate...............................................18
7.3. Inspection; Confidentiality.........................................18
8. PREPAYMENT OF THE NOTES..................................................19
8.1. Required Prepayments................................................19
8.2. Optional Prepayments with Make-Whole Amount.........................19
8.3. Allocation of Partial Prepayments...................................19
8.4. Maturity; Surrender, etc............................................20
8.5. Purchase of Notes...................................................20
8.6. Make-Whole Amount...................................................20
9. AFFIRMATIVE COVENANTS....................................................21
9.1. Compliance with Law.................................................21
9.2. Insurance...........................................................22
9.3. Maintenance of Properties...........................................22
9.4. Payment of Taxes....................................................22
9.5. Corporate Existence, etc............................................22
9.6. Purchase of Note Upon Change of Control.............................23
9.7. Most Favored Lender's Status........................................24
9.8. Covenant to Secure Notes Equally....................................25
9.9. Environmental Matters...............................................25
10. NEGATIVE COVENANTS.......................................................26
10.1. Transactions with Affiliates.......................................26
10.2. Merger, Consolidation, etc.........................................26
10.3. Sale of Assets, etc................................................27
10.4. Incurrence of Indebtedness.........................................28
10.5. Liens..............................................................28
10.6. Restricted Payments................................................30
10.7. Consolidated Net Worth.............................................30
10.8. Limitation on Dividend Restrictions, etc...........................30
10.9. Limitation on Restricted Indebtedness..............................30
10.10. Preferred Stock of Restricted Subsidiaries........................30
10.11. No Redesignation of Restricted Subsidiaries.......................30
10.12. Additional Provisional Covenants..................................30
10.12.1. Lines of Business..............................................30
10.12.2. Liens..........................................................30
10.12.3. Financial Covenants............................................31
10.12.4. Limitation on Restricted Indebtedness..........................33
11. EVENTS OF DEFAULT........................................................33
12. REMEDIES ON DEFAULT, ETC.................................................35
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12.1. Acceleration.......................................................35
12.2. Other Remedies.....................................................35
12.3. Rescission.........................................................35
12.4. Waivers or Election of Remedies, Expenses, etc.....................36
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................36
13.1. Registration of Notes..............................................36
13.2. Transfer and Exchange of Notes.....................................36
13.3. Replacement of Notes...............................................37
14. PAYMENTS ON NOTES........................................................37
14.1. Place of Payment...................................................37
14.2. Home Office Payment................................................37
15. EXPENSES, ETC............................................................38
15.1. Transaction Expenses...............................................38
15.2. Survival...........................................................38
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.............38
17. AMENDMENT AND WAIVER.....................................................39
17.1. Requirements.......................................................39
17.2. Solicitation of Holders of Notes...................................39
17.3. Binding Effect, etc................................................39
17.4. Notes held by Company, etc.........................................40
18. NOTICES..................................................................40
19. REPRODUCTION OF DOCUMENTS................................................41
20. CONFIDENTIAL INFORMATION.................................................41
21. SUBSTITUTION OF PURCHASER................................................42
22. MISCELLANEOUS............................................................42
22.1. Successors and Assigns.............................................42
22.2. Payments Due on Non-Business Days..................................43
22.3. Severability.......................................................43
22.4. Construction.......................................................43
22.5. Counterparts.......................................................43
22.6. Governing Law......................................................43
Schedule A--Purchaser Schedule
Schedule B--Defined Terms
Exhibit 1--Form of Note
Exhibit 2.4--Form of Request for Purchase
Exhibit 2.6--Form of Confirmation of Acceptance
Exhibit 4.4(e)--Form of Opinion of Counsel to the Company
Exhibit 5.4--Lennox International Inc. Subsidiaries
Exhibit 5.15--Lennox International Inc. and Restricted Subsidiaries Indebtedness
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LENNOX INTERNATIONAL INC.
0000 XXXX XXXX XXXX.
XXXXXXXXXX, XXXXX 00000
As of October 15, 1999
To: The Prudential Insurance Company of America
(herein called "PRUDENTIAL")
Each Prudential Affiliate (as hereinafter defined)
which becomes bound by certain provisions of this
Agreement as hereinafter provided (together with
Prudential, the "PURCHASERS")
c/o Prudential Capital Group
Gateway Center Four
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Ladies and Gentlemen:
The undersigned, Lennox International Inc. (the "COMPANY"),
hereby agrees with each Purchaser as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company has
authorized the issue of its senior promissory notes (the "NOTES") in the
aggregate principal amount of $100,000,000, to be dated the date of issue
thereof; to mature, in the case of each Note so issued, no more than 15 years
after the date of original issuance thereof; to have an average life, in the
case of each note so issued, of no more than 12 years after the date of
original issuance thereof; to bear interest on the unpaid balance thereof from
the date thereof at the rate per annum, and to have such other particular
terms, as shall be set forth, in the case of each Note so issued, in the
Confirmation of Acceptance with respect to such Note delivered pursuant to
Section 2.6; and to be substantially in the form of Exhibit 1 attached hereto.
The term "NOTES" as used herein shall include each Note delivered pursuant to
any provision of this Agreement and each Note delivered in substitution or
exchange for any such Note pursuant to any such provision. Notes which have (i)
the same final maturity, (ii) the same installment payment dates, (iii) the
same installment payment amounts (as a percentage of the original principal
amount of each Note), (iv) the same interest rate, (v) the same interest
payment periods, and (vi) the same original date of issuance are herein called
a "SERIES" of Notes. Capitalized terms used herein have the meanings specified
in Schedule B.
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2. PURCHASE AND SALE OF NOTES.
2.1. FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Notes pursuant to
this Agreement. The willingness of Prudential to consider such purchase of
Notes is herein called the "FACILITY". At any time, the aggregate principal
amount of Notes stated in Section 1, minus the aggregate principal amount of
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 NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2.2. ISSUANCE PERIOD. Notes may be issued and sold pursuant
to this Agreement until the earlier of (i) the third anniversary of the date of
this Agreement (or if any such anniversary is not a Business Day, the Business
Day next preceding such anniversary) and (ii) the thirtieth day after
Prudential shall have given to the Company, or the Company shall have given to
Prudential, a notice stating that it elects to terminate the issuance and sale
of Notes pursuant to this Agreement (or if such thirtieth day is not a Business
Day, the Business Day next preceding such thirtieth day). The period during
which Notes may be issued and sold pursuant to this Agreement is herein called
the "ISSUANCE PERIOD".
2.3. PERIODIC SPREAD INFORMATION. Provided no Default or
Event of Default exists, not later than 9:30 A.M. (New York City local time) on
a Business Day during the Issuance Period if there is an Available Facility
Amount on such Business Day, the Company may request by telecopier or
telephone, and Prudential will, to the extent reasonably practicable, provide
to the Company on such Business Day (or, if such request is received after 9:30
A.M. (New York City local time) on such Business Day, on the following Business
Day), information (by telecopier or telephone) with respect to various spreads
at which Prudential or Prudential Affiliates might be interested in purchasing
Notes of different average lives; provided, however, that the Company may not
make such requests more frequently than once in every five Business Days or
such other period as shall be mutually agreed to by the Company and Prudential.
The amount and content of information so provided shall be in the sole
discretion of Prudential but it is the intent of Prudential to provide
information which will be of use to the Company in determining whether to
initiate procedures for use of the Facility. Information so provided shall not
constitute an offer to purchase Notes, and neither Prudential nor any
Prudential Affiliate shall be obligated to purchase Notes at the spreads
specified. Information so provided shall be representative of potential
interest only for the period commencing on the day such information is provided
and ending on the earlier of the fifth
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Business Day after such day and the first day after such day on which further
spread information is provided. Prudential may suspend or terminate providing
information pursuant to this Section 2.3 if, in its sole discretion, it
determines that there has been an adverse change in the credit quality of the
Company after the date of this Agreement.
2.4. REQUEST FOR PURCHASE. The Company may from time to time
during the Issuance Period make requests for purchases of Notes (each such
request being a "REQUEST FOR PURCHASE"). Each Request for Purchase shall be
made to Prudential by telecopier and confirmed by nationwide overnight delivery
service (or local same-day delivery service to the Dallas office of Prudential
Capital Group), and shall (i) specify the aggregate principal amount of Notes
covered thereby, which shall not be less than $10,000,000 and not be greater
than the Available Facility Amount at the time such Request for Purchase is
made, (ii) specify the principal amounts, final maturities, installment payment
dates and amounts and interest payment periods (quarterly or semi-annual in
arrears) of the Notes covered thereby, (iii) specify the use of proceeds of
such Notes, (iv) specify the proposed day for the closing of the purchase and
sale of such Notes, which shall be a Business Day during the Issuance Period
not less than 10 days and not more than 25 days after the making of such
Request for Purchase, (v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of such
Notes are to be transferred on the Closing Day for such purchase and sale, (vi)
certify that the representations and warranties contained in Section 5 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 or such representations
and warranties that specifically relate to an earlier date, and that there
exists on the date of such Request for Purchase no Event of Default or Default,
and (vii) be substantially in the form of Exhibit 2.4 attached hereto. Each
Request for Purchase shall be in writing and shall be deemed made when received
by Prudential.
2.5. RATE QUOTES. Not later than five Business Days after the
Company shall have given Prudential a Request for Purchase pursuant to Section
2.4, Prudential may provide (by telephone 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, installment payment schedules, and interest payment
periods of Notes specified in such Request for Purchase. Each quote shall
represent the interest rate per annum payable on the outstanding principal
balance of such Notes until such balance shall have become due and payable, at
which Prudential or a Prudential Affiliate would be willing to purchase such
Notes at 100% of the principal amount thereof.
2.6. ACCEPTANCE. Within 30 minutes after Prudential shall
have provided any interest rate quotes pursuant to Section 2.5 or, in the event
that due to conditions in the market place it shall not be feasible to hold
such interest rate quotes open 30 minutes, such shorter period as Prudential
may specify to the Company (such period being the "ACCEPTANCE WINDOW"), the
Company may, subject to Section 2.7, elect to accept such interest rate quotes
as to not less than $10,000,000 aggregate principal amount of the Notes
specified in the related Request for Purchase. Such election shall be made by
an Authorized Officer of the Company notifying Prudential by telephone or
telecopier within the Acceptance Window (but not earlier
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than 9:30 A.M. or later than 1:30 P.M., New York City local time) that the
Company elects to accept such interest rate quotes, specifying the Notes (each
such Note being an "ACCEPTED NOTE") as to which such acceptance (an
"ACCEPTANCE") relates. The day the Company notifies an Acceptance with respect
to any Accepted Notes is herein called the "ACCEPTANCE DAY" for such Accepted
Notes. Any interest rate quotes as to which Prudential does not receive an
Acceptance within the Acceptance Window shall expire, and no purchase or sale
of Notes hereunder shall be made based on such expired interest rate quotes.
Subject to Section 2.7 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 2.6
attached hereto (a "CONFIRMATION OF ACCEPTANCE").
2.7. MARKET DISRUPTION. Notwithstanding the provisions of
Section 2.6, if Prudential shall have provided interest rate quotes pursuant to
Section 2.5 and thereafter prior to the time an Acceptance with respect to such
quotes shall have been notified to Prudential in accordance with Section 2.6
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 market for U.S. Treasury securities and other financial instruments,
then such interest rate quotes shall expire, and no purchase or sale of Notes
hereunder shall be made based on such expired interest rate quotes. If the
Company thereafter notifies Prudential of the Acceptance of any such interest
rate quotes, such Acceptance shall be ineffective for all purposes of this
Agreement, and Prudential shall promptly notify the Company that the provisions
of this Section 2.7 are applicable with respect to such Acceptance.
2.8. FEES.
2.8.1. FACILITY FEE. The Company will pay to Prudential in
immediately available funds a fee (the "FACILITY Fee") (i) at the time of the
execution and delivery of this Agreement by the Company and Prudential, in an
amount equal to $25,000 and (ii) on each Closing Day, in an amount equal to
0.125% of the aggregate principal amount of Notes sold on such Closing Day.
2.8.2. DELAYED DELIVERY FEE. If the closing of the purchase
and sale of any Accepted Note is delayed for any reason (other than the failure
of the Purchasers to purchase such Accepted Note if all conditions in Section 4
hereof have been fulfilled) beyond the original Closing Day for such Accepted
Note, the Company will pay to Prudential on the Cancellation Date or actual
closing date of such purchase and sale (if such Cancellation Date or closing
date occurs on a date later than the date specified in the Confirmation of
Acceptance for such Accepted Note), a fee (the "DELAYED DELIVERY FEE")
calculated as follows:
(BEY - MMY) X DTS/360 X PA
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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 an alternative investment 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
originally scheduled Closing Day with respect to such Accepted Note to but
excluding the date of such payment; and "PA" means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery Fee be less than zero. Nothing contained
herein shall obligate any Purchaser to purchase any Accepted Note on any day
other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with Section 3.
2.8.3. 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 Section 3.3 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
the "CANCELLATION DATE"), the Company will pay Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning specified in Section 2.8.2. The foregoing bid and ask prices shall be
as reported by Telerate Systems, Inc. (or, if such data for any reason ceases
to be available through Telerate Systems, Inc., any publicly available source
of similar market data). Each price shall be based on a U.S. Treasury security
having a par value of $100.00 and shall be rounded to the second decimal place.
In no case shall the Cancellation Fee be less than zero.
3. CLOSING.
3.1. CLOSINGS. Not later than 11:30 A.M. (New York City local
time) on the Closing Day for any Accepted Notes, the Company will deliver to
each Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of Prudential Capital Group 0000 Xxxx Xxx., Xxxxx 0000X, Xxxxxx, Xxxxx
00000 the Accepted Notes to be purchased by such Purchaser in the form of one
or more Notes in authorized denominations as such Purchaser may request for
each Series of Accepted Notes to be purchased on the Closing Day, dated the
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Closing Day and registered in such Purchaser's name (or in the name of its
nominee), against payment of the purchase price thereof by transfer of
immediately available funds for credit to the Company's account specified in
the Request for Purchase of such Notes.
3.2. RESCHEDULED CLOSINGS. If the Company fails to tender to
any Purchaser the Accepted Notes to be purchased by such Purchaser on the
scheduled Closing Day for such Accepted Notes as provided above in Section 3.1,
or any of the conditions specified in Section 4 shall not have been fulfilled
by the time required on such scheduled Closing Day, the Company shall, prior to
1:00 P.M., New York City local time, on such scheduled Closing Day notify 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
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 Section 4 on such Rescheduled Closing Day and that the
Company will pay the Delayed Delivery Fee in accordance with Section 2.8.2 or
(y) such closing is to be canceled as provided in Section 2.8.3. 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 Closing Day, notify the Company in
writing that such closing is to be canceled as provided in Section 2.8.3.
4. CONDITIONS OF CLOSING.
The obligation of any Purchaser to purchase and pay for any
Accepted Notes is subject to the satisfaction, on or before the Closing Day for
such Accepted Notes, of the following conditions:
4.1. CERTAIN DOCUMENTS. Such Purchaser shall have received
the following, each dated the date of the applicable Closing Day:
(a) The Accepted Note(s) to be purchased by such Purchaser.
(b) Certified copies of the resolutions of the Board of
Directors of the Company authorizing this Agreement and the Accepted
Notes, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this
Agreement and the Accepted Notes.
(c) A certificate of the Secretary or an Assistant Secretary
of the Company certifying the names and true signatures of the
officers of the Company authorized to sign this Agreement and the
Accepted Notes and the other documents to be delivered hereunder.
(d) Certified copies of the Certificate of Incorporation and
By-laws of the Company.
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(e) Favorable opinions of Xxxx X. Xxxxxxx, Assistant General
Counsel of the Company, satisfactory to such Purchaser and
substantially in the form of Exhibit 4.4(e) attached hereto and as to
such other matters as such Purchaser may reasonably request. The
Company hereby directs each such counsel to deliver such opinion,
agrees that the issuance and sale of any Accepted Notes will
constitute a reconfirmation of such direction, and understands and
agrees that each Purchaser receiving such an opinion will and is
hereby authorized to rely on such opinion.
(f) A good standing certificate for the Company from the
Secretary of State of DELAWARE dated of a recent date and such other
evidence of the status of the Company as such Purchaser may reasonably
request.
(g) For any Closing Day occurring before January 1, 2000, a
duly completed response to the Year 2000 Due Diligence Questionnaire
supplied by the Securities Valuation Office of the National
Association of Insurance Commissioners or copies of the Company's Year
2000 disclosure contained in the most recent Securities Act and/or
Securities Exchange Act of 1934 filing together with a letter from the
Company identifying them as such.
(h) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by
such Purchaser.
4.2. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in Section 5 shall be true on and as
of such Closing Day, except to the extent of changes caused by the transactions
herein contemplated or such representations and warranties specifically relate
to an earlier date; there shall exist on such Closing Day no Event of Default
or Default; and the Company shall have delivered to such Purchaser an Officer's
Certificate, dated such Closing Day, to both such effects.
4.3. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of
and payment for the Accepted Notes to be purchased by such Purchaser on the
terms and conditions herein provided (including the use of the proceeds of such
Notes by the Company) shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the Securities Act or
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and shall not subject such Purchaser to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation, and such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this condition.
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4.4. LEGAL MATTERS. Counsel for such Purchaser, including any
special counsel for the Purchasers retained in connection with the purchase and
sale of such Accepted Notes, shall be satisfied as to all legal matters relating
to such purchase and sale, and such Purchaser shall have received from such
counsel favorable opinions as to such legal matters as it may request.
4.5. 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 satisfactory in substance and form to such
Purchaser, and it shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
4.6. CHANGES IN CORPORATE STRUCTURE. The Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of
the liabilities of any other entity, except as permitted by this Agreement of
which the Company shall have notified Prudential in writing prior to submitting
the Request for Purchase for the Accepted Notes to be purchased on such Closing
Day.
4.7. FEES. The Company shall have paid on or before such
Closing Day all fees required to be paid pursuant to Section 2.8.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser that:
5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes and
to perform the provisions hereof and thereof.
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5.2. AUTHORIZATION, ETC. This Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
5.3. 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 any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. There has been no change in the financial condition,
operations, business, properties or prospects of the Company or any of its
Subsidiaries since the date of the most recent audited financial statements
furnished by the Company and referred to in Section 5.5 except changes that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the most recent audited financial statements furnished by
the Company to each Purchaser and referred to in Section 5.5.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) Schedule 5.4 is (except as noted therein) a complete and
correct list of the Company's Subsidiaries as of September 30, 1999, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Company and each other
Subsidiary, and specifying whether such Subsidiary is designated a Restricted
Subsidiary.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
5.5. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial
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officer of the Company: (i) a balance sheet of the Company as at December 31 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 90 days prior to such date for which
audited financial statements have not been released) and statements of income,
stockholders' equity and cash flows of the Company for each such year, all
reported on by Xxxxxx Xxxxxxxx, LLP; and (ii) a balance sheet of the Company 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 statements of income, stockholders' equity and cash flows 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 GAAP consistently followed throughout the periods involved
(except to the extent stated therein) and show all liabilities, direct and
contingent, of the Company required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company as
at the dates thereof, and the statements of income, stockholders' equity and
cash flows fairly present the results of the operations of the Company and cash
flows for the periods indicated.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach
of any of the terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS
(a) There are no actions, suits or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or
any Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
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(b) Neither the Company nor any Subsidiary is in default
under any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
5.9. TAXES. The Company and its Subsidiaries have filed all
income tax returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments payable by them, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Federal
income tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 1995.
5.10. TITLE TO PROPERTY; LEASES. The Company and its
Subsidiaries have good and sufficient title to their respective Material
properties, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business or as otherwise permitted
herein, of which the Company shall have notified Prudential in writing prior to
submitting the Request for Purchase for the Accepted Notes to be purchased on a
Closing Day for which this representation is to be given), in each case free
and clear of Liens prohibited by this Agreement, except for those defects in
title and Liens that, individually or in the aggregate, would not have a
Material Adverse Effect. All Material leases are valid and subsisting and are
in full force and effect in all material respects.
5.11. LICENSES, PERMITS, ETC. The Company and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that are Material, without known conflict with the rights of others,
except for those conflicts that, individually or in the aggregate, would not
have a Material Adverse Effect.
5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event, transaction or
condition has occurred or exists that would reasonably be expected to result in
the incurrence of any such
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liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate accrued plan benefit
liabilities under each of the Plans that are subject to Title IV of ERISA
(other than Multiemployer Plans), determined in accordance with Financial
Accounting Standards Board Statement No. 87 as of the end of such Plan's most
recently ended plan year on the basis of the actuarial assumptions specified
for funding purposes in such Plan's most recent actuarial valuation report, did
not exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities by more than $3,000,000 in the case of any single Plan
and by more than $3,000,000 in the aggregate for all Plans.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries was
approximately $17,955,591 as of December 31, 1998.
(e) The execution and delivery of this Agreement and the
issuance and sale of the Notes to a Purchaser hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first
sentence of this Section 5.12(e) is made in reliance upon and subject to the
accuracy of the representation of such Purchaser in Section 6.2 as to the
sources of the funds to be used to pay the purchase price of the Notes to be
purchased by such Purchaser.
5.13. PRIVATE OFFERING BY THE COMPANY. Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar securities
for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than the
Purchasers and other Institutional Investors, each of which has been offered
the Notes at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS The Company will
apply the proceeds of the sale of Notes as set forth in the Request for
Purchase for such Notes. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the
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Company in a violation of Regulation X of said Board (12 CFR 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 5% of the value of the consolidated
assets of the Company and its Restricted Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of
the value of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation U.
5.15. EXISTING INDEBTEDNESS. Except as described therein,
Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness of the Company and its Restricted Subsidiaries (other than
Indebtedness of Restricted Subsidiaries to the Company or other Wholly-Owned
Restricted Subsidiaries) as of September 30, 1999. Neither the Company nor any
of its Restricted Subsidiaries has outstanding any indebtedness except as
permitted by Sections 10.4 and 10.9. Neither the Company nor any Restricted
Subsidiary is in default, and no waiver of default is currently in effect, in
the payment of any principal or interest on any Indebtedness of the Company or
such Restricted Subsidiary, and no event or condition exists with respect to
any Indebtedness of the Company or any Restricted Subsidiary the outstanding
principal amount of which exceeds $3,000,000 in the aggregate that would permit
(or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment. To the knowledge
of the Responsible Officers of the Company, no event or condition exists with
respect to any Indebtedness of the Company or any Restricted Subsidiary that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the
sale of the Notes by the Company hereunder nor its use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company nor
any Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
5.18. HOSTILE TENDER OFFERS. None of the proceeds of the sale
of any Notes will be used to finance a Hostile Tender Offer.
5.19. YEAR 2000. The Company and its Subsidiaries have
conducted an analysis of, and developed a compliance program with respect to,
the effect of the Year 2000 upon the key software, tradeware,
telecommunications, physical plant and automated processes of the Company and
its Subsidiaries and upon their key customers and suppliers. The Company
anticipates that such compliance program will be substantially completed by
October
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31, 1999 and that the impact of Year 2000 on the Company, its
Subsidiaries and the key customers and suppliers of the Company and its
Subsidiaries will not be such as to have a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. PURCHASE FOR INVESTMENT. Each Purchaser represents that
it is purchasing the Notes for its own account or for one or more separate
accounts maintained by it or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, provided that the
disposition of its or their property shall at all times be within its or their
control. Each Purchaser understands that the Notes have not been registered
under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes.
6.2. SOURCE OF FUNDS. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by such Purchaser to pay the purchase price of
the Notes to be purchased by such Purchaser hereunder:
(a) the Source is an "INSURANCE COMPANY GENERAL ACCOUNT" (as
the term is defined in PTCE 95-60 (issued July 12, 1995)) in respect of which
the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance
Commissioners (the "NAIC ANNUAL STATEMENT")) for the general account
contract(s) held by or on behalf of any employee benefit plan together with the
amount of the reserves and liabilities for the general account contract(s) held
by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTCE 95-60) or by the same
employee organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
such Purchaser's state of domicile; or
(b) the Source is a separate account that is maintained
solely in connection with such Purchaser's fixed contractual obligations under
which the amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account or to any
participant or beneficiary of such plan (including any annuitant), are not
affected in any manner by the investment performance of the separate account;
or
(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTCE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTCE 91-38
(issued July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
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(d) the Source constitutes assets of an "INVESTMENT FUND"
(within the meaning of Part V of the QPAM Exemption) managed by a "QUALIFIED
PROFESSIONAL ASSET MANAGER" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by
the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g)
of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "CONTROL" in Section V(e)
of the QPAM Exemption) owns a 5% or more interest in the Company and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this
paragraph (f); or
(g) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of
(i) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and its Subsidiaries
as at the end of such quarter, and
(ii) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries and of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter,
all in reasonable detail and setting forth, in the case of such consolidated
statements, in comparative form the figures for the corresponding periods in
the previous fiscal year, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial position
of the companies being reported on and their results of operations and cash
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20
flows, subject to changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this Section 7.1(a); provided further that if
such Form 10-Q does not contain consolidating information for the Company and
its Restricted Subsidiaries, the Company shall also deliver to each such holder
the consolidating information described in this Section 7.1(a);
(b) Annual Statements -- within 120 days after the end of
each fiscal year of the Company, duplicate copies of
(i) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries and of the Company and its Subsidiaries, for such year;
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied, (1) in the case of the consolidated statements, by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances, and (2) in the case of
the consolidating statements, either certified by a Senior Financial Officer as
fairly stating, or accompanied by a report thereon by such accountants
containing a statement to the effect that such consolidating financial
statements fairly state, the financial position and the results of operations
and cash flows of the companies being reported upon in all material respects in
relation to the consolidated financial statements for the periods indicated as
a whole; provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of clauses (i) and (ii) of this Section 7.1(b);
provided further that if such Form 10-K does not contain consolidating
information for the Company and its Restricted Subsidiaries, the Company shall
also deliver to each such holder the consolidating information described in
this Section 7.1(b); and
(iii) a certificate of such accountants stating that in
making the examination for such report, they have obtained no knowledge of any
Default or Event of Default, or, if they have obtained knowledge of any Default
or Event of Default, specifying the nature and period of existence thereof and
the action the Company has taken or proposes to take with respect thereto.
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(c) SEC and Other Reports - if the Company or any Restricted
Subsidiary shall be required to file reports with the Securities and Exchange
Commission, promptly upon their becoming available, one copy of (i) each
financial statement, report, notice or proxy statement sent by the Company or
any Restricted Subsidiary to public securities holders generally, and (ii) each
regular or periodic report, each registration statement that shall have become
effective (without exhibits except as expressly requested by such holder), and
each final prospectus and all amendments thereto filed by the Company or any
Restricted Subsidiary with the Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default, a written notice specifying the
nature and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becomes aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that
the Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in effect on
the date hereof and the potential cost to the Company or such ERISA Affiliate
resulting therefrom exceeds $500,000; or
(ii) the taking by the PBGC of steps to institute, or the
threatening in writing by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan, or the receipt by the Company or any ERISA Affiliate
of a notice from a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to have a
Material Adverse Effect; and
(f) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Restricted Subsidiaries or relating to the ability of the Company to perform
its obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
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7.2. OFFICER'S CERTIFICATE. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the Company was
in compliance with the requirements of Section 10.3 through Section 10.9
hereof, inclusive, and with all Additional Covenants, if any, that involve
calculations during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section or Additional
Covenant, as the case may be, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections or Additional Covenants, as the case may be, and the
calculation of the amount, ratio or percentage then in existence);
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made, under
his or her supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the failure of
the Company or any Subsidiary to comply with any Environmental Law), specifying
the nature and period of existence thereof and what action the Company shall
have taken or proposes to take with respect thereto;
(c) Management's Discussion and Analysis -- a written
discussion and analysis by management of the financial condition and results of
operations of the lines of business conducted by each material Restricted
Subsidiary for such accounting period; and
(d) Litigation -- a written statement that, to the best of
such Officer's knowledge after due inquiry, except as otherwise disclosed in
writing to each holder of Notes, there is no litigation (including derivative
actions), arbitration proceeding or governmental proceeding pending to which
the Company or any Subsidiary is a party, or with respect to the Company or any
Subsidiary or their respective properties, which has a significant possibility
of materially and adversely affecting the business, operations, properties or
condition of the Company or of the Company and its Subsidiaries taken as a
whole.
7.3. INSPECTION; CONFIDENTIALITY. The Company shall permit the
representatives of each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Restricted Subsidiaries
with the Company's officers and (with the consent of the Company, which consent
will not be unreasonably withheld) its independent public accountants, and (with
the consent of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each Restricted
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Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing;
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries), all at
such times and as often as may be requested; and
(c) Technical Data - anything herein to the contrary
notwithstanding, neither the Company nor any of its Subsidiaries shall have any
obligations to disclose pursuant to this Agreement any engineering, scientific,
or other technical data without significance to a holder's analysis of the
financial position of the Company and its Subsidiaries.
8. PREPAYMENT OF THE NOTES.
8.1. REQUIRED PREPAYMENTS. The Notes of each Series shall be
subject to required prepayments, if any, set forth in the Notes of such Series.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes of any Series, in an amount not less
than $1,000,000 (plus integral multiples of $100,000) of the aggregate
principal amount of the Notes of such Series then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the Series of Notes to be prepaid in whole or part,
the aggregate principal amount of the Notes of each Series to be prepaid on
such date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes of the Series to be prepaid a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
partial prepayment of the Notes of any Series, the principal amount of the Notes
to be prepaid shall be allocated among all of the Notes of such Series at the
time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment. Any
partial prepayment of Notes of any Series pursuant to Section 8.2 shall
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be applied in satisfaction of payments of principal of the Notes of such Series
in inverse order of their scheduled due dates.
8.4. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and canceled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES. The Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to Section 9.6. The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment or purchase
of Notes pursuant to Section 9.6 or any other provision of this Agreement and no
Notes may be issued in substitution or exchange for any such Notes.
8.6. MAKE-WHOLE AMOUNT. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero, and provided, further,
that separate calculations of the Make-Whole Amount shall be made for each
Series of Notes. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which interest on the
Notes is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as "PAGE 678" on the Telerate Access Service (or such other
display as may replace Page 678 on Telerate Access Service) for actively traded
U.S. Treasury securities having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or (ii) if such yields are
not reported as of such
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time or the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield will be determined, if necessary, by (a) converting U.S.
Treasury xxxx quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the actively
traded U.S. Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security with
the duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of
years (calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with respect to
such Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date on
which interest payments are due to be made under the terms of the Notes, then
the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid pursuant
to Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. COMPLIANCE WITH LAW. The Company will and will cause each
of its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not reasonably
be expected, individually or in the aggregate, to have a
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materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Restricted Subsidiaries
taken as a whole.
9.2. INSURANCE. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
9.3. MAINTENANCE OF PROPERTIES. The Company will and will
cause each of its Subsidiaries to maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
have a materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Restricted Subsidiaries
taken as a whole.
9.4. PAYMENT OF TAXES. The Company will and will cause each of
its Subsidiaries to file all income tax or similar tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments, governmental
charges, or levies payable by any of them, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
provided that neither the Company nor any Subsidiary need pay any such tax or
assessment if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate would not reasonably be expected to have a materially adverse
effect on the business, operations, affairs, financial condition, properties or
assets of the Company and its Restricted Subsidiaries taken as a whole.
9.5. CORPORATE EXISTENCE, ETC. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.2 and 10.3, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Restricted Subsidiaries
(unless merged into the Company or a Restricted Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have a materially adverse effect
on the business, operations, affairs, financial condition, properties or assets
of the Company and its Restricted Subsidiaries taken as a whole.
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9.6. PURCHASE OF NOTE UPON CHANGE OF CONTROL. At least 15
Business Days (or, in the case of any transaction permitted by Section 10.2
resulting in a Change of Control, at least 45 days) and not more than 90 days
prior to the occurrence of any Change of Control, the Company will give written
notice thereof to each holder of an outstanding Note in the manner and to the
address specified for notices pursuant to this Section 9.6 for such holder in
Schedule A or as otherwise specified by such holder in writing to the Company.
Such notice shall contain (i) an offer by the Company to purchase, on the date
of such Change of Control or, if such notice shall be delivered less than 35
days prior to the date of such Change of Control, on the date 35 days after the
date of such notice (the "PURCHASE DATE"), all Notes held by each such holder
at a price equal to 100% of the principal amount thereof, together with
interest accrued thereon to the Purchase Date, (ii) the estimated amount of
accrued interest, showing in reasonable detail the calculation thereof and
(iii) the Company's estimate of the date on which such Change of Control shall
occur. Said offer shall be deemed to lapse as to any such holder which has not
replied affirmatively thereto in writing within 35 days of the giving of such
notice. As soon as practicable (and in any event at least 24 hours) prior to
such Change of Control, the Company shall give written confirmation of the date
thereof to each such holder which has affirmatively replied to the notice given
pursuant to the first sentence of this Section 9.6. In the event that the
Company shall purchase any Notes pursuant to this Section 9.6, the same shall
thereafter be canceled and not reissued and shall not be deemed "OUTSTANDING"
for any purpose of this Agreement.
For the purposes of this Section 9.6, a "CHANGE OF CONTROL"
shall be deemed to occur if any New Owner shall acquire beneficial ownership of
shares in the Company having Voting Rights pertaining thereto which would allow
such New Owner to elect more members of the board of directors than could be
elected by the exercise of all Voting Rights pertaining to shares in the
Company then owned beneficially by the Xxxxxx Family. As used in this Section
9.6:
(i) "VOTING RIGHTS" pertaining to shares of a corporation
means the rights to cast votes for the election of
directors of such corporation in ordinary circumstances
(without consideration of voting rights which exist
only in the event of contingencies).
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(ii) "XXXXXX FAMILY" means all persons who are lineal
descendants of X.X. Xxxxxx (by birth or adoption), all
spouses of such descendants, all estates of such
descendants or spouses which are in the course of
administration, all trusts for the benefit of such
descendants or spouses, and all corporations or other
entities in which, directly or indirectly, such
descendants or spouses (either alone or in conjunction
with other such descendants or spouses) have the right,
whether by ownership of stock or other equity interests
or otherwise, to direct the management and policies of
such corporations or other entities (each such person,
spouse, estate, trust, corporation or entity being
referred to herein as a "MEMBER" of the Xxxxxx Family).
In addition, so long as any employee stock ownership
plan exercises its Voting Rights in the same manner as
members of the Xxxxxx Family (exclusive of employee
stock ownership plans) who have a majority of the
Voting Rights exercised by all such members of the
Xxxxxx Family, such employee stock ownership plan shall
be deemed a member of the Xxxxxx Family.
(iii) "NEW OWNER" means any person (other than a member of
the Xxxxxx Family), or any syndicate or group of
persons (exclusive of all members of the Xxxxxx Family)
which would be deemed a "PERSON" for the purposes of
Section 13(d) of the Exchange Act, who directly or
indirectly acquires shares in the Company.
Notwithstanding anything in this Section 9.6 to the contrary, if an Event of
Default exists following a Change of Control and the Notes are accelerated
pursuant to the provisions of Section 12.1, the holders of the Notes shall be
entitled to receive the Make-Whole Amount relating to such accelerated amount
as provided in Section 12.1.
9.7. MOST FAVORED LENDER'S STATUS. The Company will not and
will not permit any Restricted Subsidiary to enter into, assume or otherwise be
bound or obligated under any agreement creating or evidencing Indebtedness or
any agreement executed and delivered in connection with any Indebtedness
containing one or more Additional Covenants or Additional Defaults (as defined
below), unless prior written consent to such agreement shall have been obtained
pursuant to Section 17; provided, however, in the event the Company or any
Restricted Subsidiary shall enter into, assume or otherwise become bound by or
obligated under any such agreement without the prior written consent of the
holders of the Notes, the terms of this Agreement shall, without any further
action on the part of the Company or any of the holders of the Notes, be deemed
to be amended automatically to include each Additional Covenant and each
Additional Default contained in such agreement. The Company further covenants to
promptly execute and deliver at its expense an amendment to this Agreement in
form and substance satisfactory to the Required Holders evidencing the amendment
of this Agreement to include such Additional Covenants and Additional Defaults,
provided that the execution and delivery of such amendment shall not be a
precondition to the effectiveness of such amendment as provided for in this
Section 9.7, but shall merely be for the convenience of the parties hereto.
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For purposes of this Agreement, (i) the term "ADDITIONAL
COVENANT" shall mean any affirmative or negative covenant or similar
restriction applicable to the Company or any Restricted Subsidiary (regardless
of whether such provision is labeled or otherwise characterized as a covenant)
the subject matter of which either (A) is similar to that of the covenants in
Section 9 or 10 of this Agreement, or related definitions in Schedule B to this
Agreement, but contains one or more percentages, amounts or formulas that is
more restrictive than those set forth herein or more beneficial to the holder
or holders of such other Indebtedness (and such covenant or similar restriction
shall be deemed an "ADDITIONAL COVENANT" only to the extent that it is more
restrictive or more beneficial) or (B) is different from the subject matter of
the covenants in Section 9 or 10 of this Agreement, or related definitions in
Schedule B to this Agreement; and (ii) the term "ADDITIONAL DEFAULT" shall mean
any provision which permits the holder of such Indebtedness to accelerate (with
the passage of time or giving of notice or both) the maturity thereof or
otherwise require the Company or any Restricted Subsidiary to purchase such
Indebtedness prior to the stated maturity of such Indebtedness and which either
(A) is similar to the Defaults and Events of Default contained in Section 11 of
this Agreement, or related definitions in Schedule B to this Agreement, but
contains one or more percentages, amounts or formulas that is more restrictive
or has a xxxxxxx xxxxx period than those set forth herein or is more beneficial
to the holder or holders of such other Indebtedness (and such provision shall
be deemed an "ADDITIONAL DEFAULT" only to the extent that it is more
restrictive, has a xxxxxxx xxxxx period or is more beneficial) or (B) is
different from the subject matter of the Defaults and Events of Default
contained in Section 11 of this Agreement, or related definitions in Schedule B
to this Agreement.
9.8. COVENANT TO SECURE NOTES EQUALLY. If the Company shall
create, assume or permit to exist any Lien upon any of its property or assets,
or permit any Restricted Subsidiary to create, assume or permit to exist any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than those Liens permitted by the provisions of Section 10.5,
the Company shall make or cause to be made effective provision whereby the Notes
will be secured equally and ratably with any and all other obligations thereby
secured, with the documentation for such security to be reasonably satisfactory
to the Required Holders and, in any such case, the Notes shall have the benefit,
to the fullest extent that, and with such priority as, the holders of the Notes
may be entitled under applicable law, of an equitable Lien on such property. Any
violation of Section 10.5 will constitute an Event of Default, whether or not
provision is made for an equal and ratable Lien pursuant to this Section 9.8.
9.9. ENVIRONMENTAL MATTERS.
(a) The Company will and will cause each of its Subsidiaries
to comply in all material respects with all applicable Environmental Laws if,
individually or in the aggregate, failure to comply therewith could reasonably
be expected to have a material adverse effect on the financial condition or
results of operations of the Company or the Company and its Subsidiaries, taken
as a whole.
(b) The Company will not and will not permit any of its
Subsidiaries to cause or allow any Hazardous Substance to be present at any
time on, in, under or above any
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real property or any part thereof in which the Company or any Subsidiary has a
direct interest (including without limitation ownership thereof or any
arrangement for the lease, rental or other use thereof, or the retention of any
mortgage or security interest therein or thereon), except in a manner and to an
extent that is in compliance in all material respects with all applicable
Environmental Laws or that will not have a material adverse effect on the
financial condition or results of operations of the Company or the Company and
its Subsidiaries, taken as a whole.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES. The Company will not
permit any Restricted Subsidiary to enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate.
10.2. MERGER, CONSOLIDATION, ETC. The Company will not
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as the
case may be, shall be a solvent corporation organized and existing under the
laws of the United States or any State thereof (including the District of
Columbia), and, if the Company is not such corporation, such corporation shall
have executed and delivered to each holder of any Notes its assumption of the
due and punctual performance and observance of each covenant and condition of
this Agreement, the Other Agreements and the Notes, together with a favorable
opinion of counsel satisfactory to each such holder covering such matters
relating to such corporation and such assumption as such holder may reasonably
request; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default would exist;
(c) immediately prior to and after giving effect to such
transaction, the Company or such successor, as the case may be, would be
permitted by the provisions of Sections 10.4 and 10.9 to incur at least $1.00
of additional Indebtedness and $1.00 of additional Restricted Indebtedness,
respectively; and
(d) in the case of any such transaction which would involve
or result in a Change of Control, the Company shall have complied with Section
9.6.
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No such conveyance, transfer or lease of substantially all of
the assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore have become such in the manner
prescribed in this Section 10.2 from its liability under this Agreement or the
Notes.
10.3. SALE OF ASSETS, ETC. The Company will not, and will not
permit any of its Restricted Subsidiaries to, make any Transfer, provided that
the foregoing restriction does not apply to a Transfer if:
(a) the property that is the subject of such Transfer
constitutes either (i) inventory held for sale, or (ii) equipment, fixtures,
supplies or materials no longer required in the operation of the business of
the Company or such Restricted Subsidiary or that is obsolete, and, in the case
of any Transfer described in clause (i) or (ii), such Transfer is in the
ordinary course of business (each such Transfer, an "ORDINARY COURSE
TRANSFER"); or
(b) such Transfer is from
(i) a Restricted Subsidiary to the Company or another
Restricted Subsidiary, or
(ii) the Company to a Restricted Subsidiary, or
(iii) the Company to a Subsidiary (other than a Restricted
Subsidiary) or from a Restricted Subsidiary to
another Subsidiary (other than a Restricted
Subsidiary) and in either case is for Fair Market
Value, so long as immediately before and immediately
after the consummation of such transaction, and
after giving effect thereto, no Default or Event of
Default exists or would exist (each such Transfer,
an "INTERGROUP TRANSFER");
(c) such Transfer is not an Ordinary Course Transfer or an
Intergroup Transfer (such Transfers collectively referred to as "EXCLUDED
TRANSFERS"), and all of the following conditions shall have been satisfied with
respect thereto (the date of the consummation of such Transfer being referred
to herein as the "PROPERTY DISPOSITION DATE"):
(i) the book value of the assets included in such
Transfer, together with the book value of the assets
included in all other Transfers (other than Excluded
Transfers) during the fiscal year which includes the
Property Disposition Date, shall not exceed fifteen
percent (15%) of Consolidated Assets as of the end
of the most recent fiscal year;
(ii) the book value of the assets included in such
Transfer, together with the book value of the assets
included in all other Transfers (other than Excluded
Transfers) from January 1, 1998 through the Property
Disposition Date, shall not exceed thirty percent
(30%) of Consolidated Assets as of the end of the
most recent fiscal year; and
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(iii) immediately after giving effect to such Transfer, no
Default or Event of Default would exist and the
Company would be permitted by the provisions of
Sections 10.4 and 10.9 to incur at least $1.00 of
additional Indebtedness and $1.00 of additional
Restricted Indebtedness, respectively.
If, within twelve (12) months after the Property Disposition Date, the Company
or a Restricted Subsidiary acquires assets similar to the assets included in
the Transfer, then, only for the purpose of determining compliance with
Sections 10.3(c)(i) and (ii), the lesser of the book value of the assets
acquired or the book value of the assets included in the Transfer shall not be
taken into account.
10.4. INCURRENCE OF INDEBTEDNESS. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume, guarantee, or otherwise become directly or indirectly liable
with respect to any Indebtedness, unless on the date the Company or such
Restricted Subsidiary becomes liable with respect to any such Indebtedness and
immediately after giving effect thereto and to the substantially concurrent
retirement of any other Indebtedness,
(a) no Default or Event of Default would exist, and
(b) Consolidated Indebtedness would not exceed sixty percent
(60%) of Consolidated Capitalization.
For purposes of this Section 10.4, any Person becoming a
Restricted Subsidiary after the date of this Agreement shall be deemed to have
incurred all of its then outstanding Indebtedness at the time it becomes a
Restricted Subsidiary.
10.5. LIENS. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges
the payment of which is not at the time required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet due;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations, surety
bonds, appeal bonds, bids, leases (other than Capital Leases), performance
bonds, purchase, construction or sales contracts and other similar obligations,
in each case not
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incurred or made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment or
other obligation it secures (i) shall not, within ninety (90) days after the
entry thereof, have been discharged or execution thereof stayed pending appeal,
or shall not have been discharged within ninety (90) days after the expiration
of any such stay or (ii) exceeds, together with the amounts of all other
obligations secured by attachment or judgment Liens at the time existing in
respect of property of the Company and its Restricted Subsidiaries, $5,000,000;
(e) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances, in each
case incidental to, and not interfering with, the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries, provided that
such Liens do not, in the aggregate, materially detract from the value of such
property;
(f) Liens on property or assets of the Company or any of its
Restricted Subsidiaries securing Indebtedness or other obligations owing to the
Company or to a Wholly Owned Restricted Subsidiary;
(g) Liens existing on the date of this Agreement on the
building referred to in item C of Schedule 5.15 and securing the Indebtedness
referred to in item C of Schedule 5.15;
(h) any Lien renewing, extending or refunding any Lien
permitted by Subsection (g) above, provided that (i) the principal amount of
Indebtedness secured by such Lien immediately prior to such extension, renewal
or refunding is not increased or the maturity thereof reduced, (ii) such Lien
is not extended to any other property, and (iii) immediately after such
extension, renewal or refunding no Default or Event of Default would exist and
the Company would be permitted by the provisions of Sections 10.4 and 10.9 to
incur at least $1.00 of additional Indebtedness and $1.00 of additional
Restricted Indebtedness, respectively; and
(i) other Liens not otherwise permitted by Subsections (a)
through (h) above, provided that (i) the total obligations secured by such
other Liens shall not exceed 10% of Consolidated Capitalization and (ii)
immediately after giving effect to the creation thereof, the Company would be
permitted by the provisions of Sections 10.4 and 10.9 to incur at least $1.00
of additional Indebtedness and $1.00 of additional Restricted Indebtedness,
respectively.
For purposes of this Section 10.5, any Person becoming a
Restricted Subsidiary after the date of this Agreement shall be deemed to have
incurred all of its then outstanding Liens at the time it becomes a Restricted
Subsidiary, and any Person extending, renewing or refunding any Indebtedness
secured by any Lien shall be deemed to have incurred such Lien at the time of
such extension, renewal or refunding.
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10.6. RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, declare or make, or incur any
liability to declare or make, any Restricted Payment, unless immediately after
giving effect to such action:
(a) no Default or Event of Default would exist; and
(b) the Company would be permitted by the provisions of
Sections 10.4 and 10.9 to incur at least $1.00 of additional Indebtedness and
$1.00 of additional Restricted Indebtedness, respectively.
10.7. CONSOLIDATED NET WORTH. The Company will not permit
Consolidated Net Worth as at the last day of any fiscal quarter of the Company
to be less than the sum of (a) $261,000,000, plus (b) 15% of its aggregate
Consolidated Net Income (but only if a positive number) for the period
beginning April 1, 1998 and ending at the end of each fiscal quarter
thereafter.
10.8. LIMITATION ON DIVIDEND RESTRICTIONS, ETC. The Company
will not permit any Restricted Subsidiary to enter into, adopt, create or
otherwise be or become bound by or subject to any contract or charter or by-law
provision limiting the amount of, or otherwise imposing restrictions on the
declaration, payment or setting aside of funds for the making of, dividends or
other distributions in respect of the capital stock of such Restricted
Subsidiary to the Company or another Restricted Subsidiary.
10.9. LIMITATION ON RESTRICTED INDEBTEDNESS. The Company will
not at any time permit the aggregate amount of Restricted Indebtedness to
exceed 10% of Consolidated Capitalization.
10.10. PREFERRED STOCK OF RESTRICTED SUBSIDIARIES. The
Company will not permit any Restricted Subsidiary to issue or permit to remain
outstanding any Preferred Stock unless such Preferred Stock is issued to and at
all times owned and held by the Company or a Wholly-Owned Restricted
Subsidiary.
10.11. NO REDESIGNATION OF RESTRICTED SUBSIDIARIES. The
Company will not designate any Restricted Subsidiary as, or take or permit to
be taken any action that would cause any Restricted Subsidiary to become, an
Unrestricted Subsidiary.
10.12. ADDITIONAL PROVISIONAL COVENANTS. So long as the
Company is bound by a substantially similar covenant contained in the New
Credit Agreement or any other agreement creating or evidencing Indebtedness
(collectively, "ADDITIONAL AGREEMENTS"), the Company covenants as follows:
10.12.1. LINES OF BUSINESS. The Company will not and will not
permit any of its Restricted Subsidiaries to engage in any line of business
other than such lines of business in which it is presently engaged and those
businesses reasonably related thereto.
10.12.2. LIENS. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly create, incur, assume
or permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts
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receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except (i) Liens
permitted by subsections (a) through (h) of Section 10.5 of this Agreement, and
(ii) other Liens not otherwise permitted by Subsections (a) through (h) of
Section 10.5 of this Agreement, provided that (x) the fair market value of the
assets subject to such other Liens shall not exceed 15% of Consolidated Net
Worth, and (y) immediately after giving effect to the creation thereof, the
Company would be permitted by the provisions of Sections 10.4 and 10.9 to incur
at least $1.00 of additional Indebtedness and $1.00 of additional Restricted
Indebtedness, respectively.
10.12.3. FINANCIAL COVENANTS.
(a) COVERAGE RATIO. As of the end of each fiscal
quarter, the Company shall not permit the ratio of Cash Flow for the four fiscal
quarters then ending to Interest Expenses for such period to be less than 3.00
to 1.00.
(b) CONSOLIDATED INDEBTEDNESS TO ADJUSTED EBITDA. As
of the last day of each fiscal quarter, the Company shall not permit the ratio
of Consolidated Indebtedness outstanding as of such day to the Adjusted EBITDA
for the four (4) fiscal quarters then ended to exceed 3.00 to 1.00.
For the purposes of this section 10.12.3, the following terms shall have the
indicated meanings:
"CASH FLOW" means, for any period, the total of the
following for the Company and the Restricted Subsidiaries calculated on a
consolidated basis without duplication for such period in accordance with GAAP:
(A) EBITDA minus (B) capital expenditures.
"ADJUSTED EBITDA" shall mean, for any period (the
"SUBJECT PERIOD"), the sum of (a) EBITDA plus (b), to the extent not included in
EBITDA, all Acquired EBITDA. The term "ACQUIRED EBITDA" shall mean, with respect
to any Person acquired, or substantially all of whose assets have been acquired,
by the Company or any Restricted Subsidiary during the Subject Period (herein a
"TARGET"), the total of the following for the portion of the Subject Period
prior to the acquisition of such Person or its assets (the "TEST PERIOD")
determined on a consolidated basis in accordance with GAAP consistently applied
from financial statements audited by a certified public accountant satisfactory
to the Administrative Agent and covering the Test Period (provided that audited
financial statements are not required if the annual earnings before interest,
taxes, depreciation and amortization of the Target for the completed twelve
month period prior to its acquisition is less than $5,000,000, calculated in the
same manner as set forth in the definition of Acquired EBITDA but for such
twelve month period) and otherwise on a basis acceptable to the Administrative
Agent:
i) the consolidated net income (or net loss) of the
Target from operations, excluding the following:
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a) the proceeds of any life insurance policy;
b) any gain arising from (1) the sale or other
disposition of any assets (other than current assets) to the extent that the
aggregate amount of gains exceeds the aggregate amount of losses from the sale,
abandonment or other disposition of assets (other than current assets), (2) any
write-up of assets, or (3) the acquisition by the Target of its outstanding
securities constituting Indebtedness;
c) any amount representing the interest of the
Target in the undistributed earnings of any other Person;
d) any earnings of any other Person accrued prior
to the date it becomes a Subsidiary of the Target or is merged into or
consolidated with the Target or a Subsidiary of Target and any earnings, prior
to the date of acquisition, of any other Person acquired in any other manner;
and
e) any deferred credit (or amortization of a
deferred credit) arising from the acquisition of any Person; plus
ii) to the extent deducted in computing such
consolidated net income (or loss), without duplication, the sum of (A) any
deduction for (or less any gain from) income or franchise taxes included in
determining such consolidated net income (or loss); plus (B) interest expense
(including the interest portion of Capital Leases) deducted in determining such
consolidated net income (or loss); plus (C) amortization and depreciation
expense deducted in determining such consolidated net income (or loss); minus,
iii) to the extent added in computing such consolidated
net income (or loss) all income that has been included in the calculation of
such net income for such period that will be eliminated in the future after the
acquisition of such Target, as approved by the Administrative Agent.
"ADMINISTRATIVE AGENT" has the meaning specified in the
New Credit Agreement.
"EBITDA" means, for any period, the total of the
following calculated for the Company and the Restricted Subsidiaries without
duplication on a consolidated basis in accordance with GAAP consistently applied
for such period: (a) Consolidated Net Income from operations; plus (b) any
deduction for (or less any gain from) income or franchise taxes included in
determining Consolidated Net Income; plus (c) interest expense (including the
interest portion of Capital Leases) deducted in determining Consolidated Net
Income; plus (d) amortization and depreciation expense deducted in determining
Consolidated Net Income.
"INTEREST EXPENSES" means, for any period, the total
interest expenses (including the interest portion of Capital Leases) for the
Company and the Restricted
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Subsidiaries calculated on a consolidated basis without duplication in
accordance with GAAP.
10.12.4. "LIMITATION ON RESTRICTED INDEBTEDNESS The Company
will not at any time permit the aggregate amount of Restricted Indebtedness to
exceed 15% of Consolidated Net Worth.
If the Company ceases to be bound by any covenant contained in this Section
10.12 in all Additional Agreements, this Agreement shall, without further
action on the part of the Company or any Holder, be deemed to be amended
automatically to delete such covenant.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 7.1(d), 9.6, 10.2 through 10.11 or 10.12.2,
10.12.3 or 10.12.4; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) or any Additional Covenant and such default is
not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written
notice to be identified as a "NOTICE OF DEFAULT" and to refer specifically to
this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement or in
any writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date as
of which made; or
(f) (i) the Company or any Restricted Subsidiary is in
default (as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Indebtedness
that is outstanding in an aggregate principal amount of at least $5,000,000
beyond any period of grace provided with respect thereto, or (ii) the Company
or any Restricted Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $5,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Indebtedness has become, or has been declared
due and payable before its stated maturity or before its regularly scheduled
dates of payment; or
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(g) the Company or any Restricted Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company or any
of its Restricted Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Company or any of its Restricted Subsidiaries, or any such petition shall be
filed against the Company or any of its Restricted Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of the
Company and its Restricted Subsidiaries and which judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or
(j) if (i) any Plan subject to the minimum funding standards
of ERISA or the Code shall fail to satisfy such standards for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or the
PBGC shall have notified the Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii) the aggregate amount of
unfunded accrued plan benefit liabilities under all Plans subject to Title IV
of ERISA, determined in accordance with Financial Accounting Standards Board
Statement No. 87 or 132, as the case may be, as of the end of such Plans' most
recently ended plan year on the basis of actuarial assumptions specified for
funding purposes in such Plans' most recent actuarial valuation report, shall
exceed $5,000,000, (iv) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Restricted Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Restricted Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either
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individually or together with any other such event or events, would reasonably
be expected to have a Materially Adverse Effect.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 66 2/3% in principal amount of
the Notes at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes
held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount, shall all be immediately due and payable, in each and
every case without presentment, demand, protest or further notice, all of which
are hereby waived. The Company acknowledges, and the parties hereto agree, that
each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Company (except as herein specifically provided for)
and that the provision for payment of a Make-Whole Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
12.2 OTHER REMEDIES. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become
or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce
the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
12.3 RESCISSION. At any time after any Notes have been
declared due and
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payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less
than 66 2/3% in principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and any
overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
12.4. WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all costs and expenses of such holder incurred
in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or his attorney duly authorized
in writing and accompanied by the address for notices of each transferee of
such Note or part thereof), the Company shall execute and deliver, at the
Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) of the same Series in exchange therefor, in an
aggregate principal amount equal to the unpaid
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principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $2,000,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $2,000,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.
13.3. REPLACEMENT OF NOTES. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $100,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof the Company at its own expense shall execute and deliver,
in lieu thereof, a new Note of the same Series, dated and bearing interest from
the date to which interest shall have been paid on such lost, stolen, destroyed
or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York, at the principal office of The
Bank of New York in such jurisdiction. The Company may at any time, by notice
to each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company in
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
14.2. HOME OFFICE PAYMENT. So long as a Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, purchase price, Make-Whole Amount, if
any, and interest by the method and at the address specified for such purpose
below such Purchaser's in Schedule A, or by such other method or at such other
address as such Purchaser shall have from time to time specified to the Company
in writing for such purpose, without the presentation or surrender of such Note
or the making of any notation thereon, except that upon written request of the
Company made concurrently
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with or reasonably promptly after payment or prepayment in full of any Note,
such Purchaser shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by a Purchaser or
its nominee such Purchaser will, at its election, either endorse thereon the
amount of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to the Company in exchange for a new Note or
Notes pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by a Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser have made in
this Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser or
holder of a Note in connection with such transactions (other than the
negotiation, execution and delivery of this Agreement) and in connection with
any amendments, waivers or consents under or in respect of this Agreement or
the Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes. The Company will pay, and will save each Purchaser and
each other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those retained by
such Purchaser).
15.2. SURVIVAL. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein and in any
Request for Purchase shall survive the execution and delivery of this Agreement
and the Notes, the purchase or transfer by a Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of a Purchaser or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the
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Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes and each Confirmation of Acceptance embody the entire agreement
and understanding between each Purchaser and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or
any defined term (as it is used therein), will be effective as to any holder of
Notes unless consented to by such holder of Notes in writing, (b) no such
amendment or waiver may, without the written consent of the holder of each Note
at the time outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal or purchase price of, or reduce the rate
or change the time of payment or method of computation of interest or purchase
price of, or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8, 9.6,
11(a), 11(b), 12, 17 or 20, and (c) no amendment or waiver of any of the
provisions of Section 2 hereof, or any defined term (as it is used therein),
will be effective unless consented to in writing by Prudential.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder of
Notes as consideration for or as an inducement to the entering into by any
holder of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether
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such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
18. NOTICES.
All notices and communications provided for hereunder (other
than communications provided for in Section 2) shall be in writing and sent (a)
by telecopy if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges prepaid). Any
such notice must be sent:
(i) if to a Purchaser or its nominee, to such Purchaser or
its nominee at the address specified for such
communications in Schedule A, or at such other address
as such Purchaser or its nominee shall have specified
to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified
to the Company in writing, or
(iii) if to the Company, to the Company at its principal
executive offices at 0000 Xxxx Xxxx Xxxx., Xxxxxxxxxx,
Xxxxx 00000, telecopier number 000-000-0000, to the
attention of Chief Financial Officer, or at such other
address as the Company shall have specified to the
holder of each Note in writing.
Any communication pursuant to Section 2 shall be made by the method specified
for such communication in Section 2, and shall be effective to create any rights
or obligations under this Agreement only if, in the case of a telephone
communication, an Authorized Officer of the party conveying the information and
of the party receiving the information are parties to the telephone call, and in
the case of a telecopier communication, the communication is signed by an
Authorized Officer of the party conveying the information, addressed to the
attention of an Authorized Officer of the party receiving the information, and
in fact received at the telecopier
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terminal the number of which is listed for the party receiving the
communication in Schedule A, with respect to a Purchaser, or this Section 18,
with respect the Company, or at such other telecopier terminal as the party
receiving the information shall have specified in writing to the party sending
such information.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by a Purchaser on a Closing Day (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to such Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 19 shall not prohibit the Company or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means information delivered to a Purchaser by or on behalf of the
Company or any Subsidiary in connection with the transactions contemplated by
or otherwise pursuant to this Agreement that is proprietary in nature and that
was clearly marked or labeled or otherwise adequately identified when received
by such Purchaser as being confidential information of the Company or such
Subsidiary, provided that such term does not include information that (a) was
publicly known or otherwise known to a Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any person acting on such Purchaser's behalf, (c)
otherwise becomes known to such Purchaser other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
such Purchaser under Section 7.1 that are otherwise publicly available. Each
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by such Purchaser in good faith to protect
confidential information of third parties delivered to such Purchaser, provided
that such Purchaser may deliver or disclose Confidential Information to (i)
such Purchaser's directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by such Purchaser's Notes), (ii)
such Purchaser's financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in accordance
with the terms of this Section 20, (iii)
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any other holder of any Note, (iv) any Institutional Investor to which such
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which such Purchaser offers to purchase any security of
the Company or a Subsidiary (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having jurisdiction
over such Purchaser, (vii) the National Association of Insurance Commissioners
or any similar organization, or any nationally recognized rating agency that
requires access to information about such Purchaser's investment portfolio, or
(viii) any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and this Agreement. Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement. On reasonable request by the Company in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee), such holder
will enter into an agreement with the Company embodying the provisions of this
Section 20.
21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of
its Affiliates as the purchaser of the Notes that such Purchaser has agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "PURCHASER" is used in this Agreement (other than in this Section 21),
such word shall be deemed to refer to such Affiliate in lieu of such Purchaser.
In the event that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to such Purchaser all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "PURCHASER" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate,
but shall refer to such Purchaser, and such Purchaser shall have all the rights
of an original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
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22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal or purchase price of or Make-Whole Amount or interest on any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day.
22.3. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
22.4. CONSTRUCTION. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
22.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
22.6. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York.
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
LENNOX INTERNATIONAL INC
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
Executive Vice President and
Chief Financial Officer
The foregoing is hereby
agreed to as of the
date hereof.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/Xxxxxxx X. Xxx
--------------------------
Xxxxxxx X. Xxx
Vice President
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SCHEDULE A
Name and Address of Purchaser
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(1) Unless otherwise specified, all payments on account of Notes held by
such purchaser shall be made by wire transfer of immediately available
funds for credit to:
Account No. 000-0000-000
The Bank of New York
New York, New York
ABA No.: 000-000-000
Each such wire transfer shall set forth the name of the Company, a reference to
Senior Notes due __________ PPN _____, and the due date and application (as
among principal, interest and Make-Whole Amount) of the payment being made.
with sufficient information to identify the source
and application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Xxxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Trade Management Group
(3) All other communications:
The Prudential Insurance Company of America
c/o Prudential Capital Group
0000 Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxx, XX 00000
Attention: Managing Director
Recipient of telephonic prepayment notices:
Manager, Trade Management Group
(000)000-0000
(4) Tax I.D. No. 00-0000000
(5) Authorized officers: Xxxxxx X. Xxxx, Xxxxxxx X. Xxx, Xxx X. Xxxx, Xxx X.
Xxxxxxx, R. Xxxxx Xxxxxx and any other Vice President of Prudential Capital
Group.
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SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"ACCEPTANCE" is defined in Section 2.6.
"ACCEPTANCE DAY" is defined in Section 2.6.
"ACCEPTANCE WINDOW" is defined in Section 2.6.
"ACCEPTED NOTE" is defined in Section 2.6.
"ADDITIONAL AGREEMENTS" is defined in Section 10.12.
"ADDITIONAL COVENANT" is defined in Section 9.7.
"ADDITIONAL DEFAULT" is defined in Section 9.7.
"AFFILIATE" means, at any time, and with respect to any
Person, any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "AFFILIATE" is a reference to an
Affiliate of the Company.
"AGREEMENT" is defined in Section 17.3.
"AUTHORIZED OFFICER" means (i) in the case of the Company, its
chief executive officer, its chief financial officer, its principal accounting
officer, treasurer or any vice president of the Company designated as an
"Authorized Officer" of the Company for the purpose of this Agreement in an
Officer's Certificate executed by the Company's chief executive officer or chief
financial officer and delivered to Prudential, and (ii) in the case of
Prudential, any officer of Prudential designated as its "Authorized Officer" in
Schedule A or any officer of Prudential designated as its "Authorized Officer"
for the purpose of this Agreement in a certificate executed by one of its
Authorized Officers. Any action taken under this Agreement on behalf of the
Company by any individual who on or after the date of this Agreement shall have
been an Authorized Officer of the Company and whom Prudential in good faith
believes to be an Authorized Officer of the Company at the time of such action
shall be binding on the Company even though such individual shall have ceased to
be an Authorized Officer of the Company, and any action taken under this
Agreement on behalf of Prudential by
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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" is defined in Section 2.1.
"BUSINESS DAY" means (a) for the purposes of Section 8.6 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, (b) for the purposes of
Section 2.3 only any day other than a Saturday or a Sunday, a day on which
commercial banks in New York City are required or authorized to be closed and a
day on which Prudential is not open for business, (c) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York, or Dallas, Texas are
required or authorized to be closed.
"CANCELLATION DATE" is defined in Section 2.8.3.
"CANCELLATION FEE" is defined in Section 2.8.3.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"CHANGE OF CONTROL" is defined in Section 9.6.
"CLOSING DAY" for any Accepted Note means the Business Day
specified for the closing of the purchase and sale of such Note in the Request
for Purchase of such Note, provided that (i) if the Acceptance Day for such
Accepted Note is less than five Business Days after the Company shall have made
such Request for Purchase and the Company and the Purchaser which is obligated
to purchase such Note agree on an earlier Business Day for such closing, the
"CLOSING DAY" for such Accepted Note shall be such earlier Business Day, and
(ii) if the closing of the purchase and sale of such Accepted Note is
rescheduled pursuant to Section 2.8.3, the Closing Day for such Accepted Note,
for all purposes of this Agreement except Section 2.8.3, shall mean the
Rescheduled Closing Day with respect to such Closing.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
"COMPANY" means Lennox International Inc., a Delaware corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONFIRMATION OF ACCEPTANCE" is defined in Section 2.6.
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"CONSOLIDATED ASSETS" means the total assets of the Company and
its Restricted Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Restricted Subsidiaries prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Restricted Subsidiaries.
"CONSOLIDATED CAPITALIZATION" means, at any time, the sum of
Consolidated Net Worth and Consolidated Indebtedness.
"CONSOLIDATED INDEBTEDNESS" means, as of any date of
determination, the total of all Indebtedness of the Company and its Restricted
Subsidiaries outstanding on such date, after eliminating all offsetting debits
and credits between the Company and its Restricted Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Restricted Subsidiaries in
accordance with GAAP.
"CONSOLIDATED NET INCOME" for any period means the net income (or
net loss) of the Company and its Restricted Subsidiaries for such period,
determined in accordance with GAAP, excluding
(a) the proceeds of any life insurance policy;
(b) any gain arising from (1) the sale or other disposition of any
assets (other than current assets) to the extent that the aggregate amount of
gains exceeds the aggregate amount of losses from the sale, abandonment or other
disposition of assets (other than current assets), (2) any write-up of assets,
or (3) the acquisition by the Company or any Restricted Subsidiary of its
outstanding securities constituting Indebtedness;
(c) any amount representing the interest of the Company or any
Restricted Subsidiary in the undistributed earnings of any other Person;
(d) any earnings of any other Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or a Restricted Subsidiary and any earnings, prior to the date of
acquisition, of any other Person acquired in any other manner; and
(e) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person.
"CONSOLIDATED NET WORTH" means, at any time,
(a) the sum of (i) the par value (or value stated on the books of
the Company) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and its Restricted Subsidiaries at
such time plus (ii) the amount of paid-in-capital and retained earnings of the
Company and its Restricted Subsidiaries at such time, in each case as such
amounts would be shown on a consolidated balance sheet of the Company and its
Restricted Subsidiaries as of such time prepared in accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.
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"DEFAULT" means an event or condition the occurrence or existence
of which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"DEFAULT RATE" means with respect to any series of Notes that rate
of interest that is the greater of (i) 2% per annum above the rate of interest
stated in clause (a) of the first paragraph of the Notes of such Series or (ii)
2% over the rate of interest publicly announced by The Chase Manhattan Bank in
New York, New York as its "BASE" or "PRIME" rate.
"DELAYED DELIVERY FEE" is defined in Section 2.8.2.
"DISTRIBUTION" means, in respect of any corporation, association
or other business entity:
(a) dividends or other distributions or payments on capital stock
or other equity interest of such corporation, association or other business
entity (except distributions in such stock or other equity interests); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the net proceeds of a
sale of such stock or other equity interests.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED TRANSFERS" is defined in Section 10.3.
"FACILITY" is defined in Section 2.1.
"FACILITY FEE" is defined in Section 2.8.1.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an arm's
length sale at such time between an informed and willing buyer and an informed
and willing seller (neither being under a compulsion to buy or sell).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
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"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such Indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any other
Person or otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof. In any computation of the
Indebtedness or other liabilities of the obligor under any Guaranty, the
Indebtedness or other obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"HAZARDOUS SUBSTANCE" means any contaminant, pollutant or toxic or
hazardous substance, and any substance that is defined or listed as a hazardous,
toxic or dangerous substance under any Environmental Law or that is otherwise
regulated or prohibited under any Environmental Law as a hazardous, toxic or
dangerous substance.
"HEDGE TREASURY NOTE(S)" means, 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" means, 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
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interests in any other entity, or securities convertible into or representing
the beneficial ownership of, or rights to acquire, any such shares or equity
interests, if such shares, equity interests, securities or rights are of a class
which is publicly traded on any securities exchange or in any over-the-counter
market, other than purchases of such shares, equity interests, securities or
rights representing less than 5% of the equity interests or beneficial ownership
of such corporation or other entity for portfolio investment purposes, and such
offer or purchase has not been duly approved by the board of directors of such
corporation or the equivalent governing body of such other entity prior to the
date on which the Company makes the Request for Purchase of such Note.
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing obligations
for borrowed money, but excluding in any event obligations in respect of (1)
trade or commercial letters of credit issued for the account of such Person in
the ordinary course of its business and (2) stand-by letters of credit issued to
support obligations of such Person that do not constitute Indebtedness);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) above to the extent
such Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.
"ISSUANCE PERIOD" is defined in Section 2.2.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 10% of the aggregate principal
amount of the Notes then outstanding, (c) any bank, trust company, savings and
loan association or other financial
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institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form and (d) any Prudential Affiliate.
"INTERGROUP TRANSFER" is defined in Section 10.3.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and its
Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, affairs, financial condition, assets or properties of
the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability
of the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
"MULTIEMPLOYER PLAN" means any Plan that is a "MULTIEMPLOYER PLAN"
(as such term is defined in section 4001(a)(3) of ERISA).
"NEW CREDIT AGREEMENT" means the Revolving Credit Facility
Agreement dated as of July 29, 1999 among the Company, the lenders listed in
Schedule 2.01 thereto, Chase Bank of Texas National Association as
administrative agent, Wachovia Bank, N.A., as syndication agent, and The Bank of
Nova Scotia, as documentation agent.
"NEW OWNER" is defined in Section 9.6.
"XXXXXX FAMILY" is defined in Section 9.6.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other Authorized Officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"ORDINARY COURSE TRANSFER" is defined in Section 10.3.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "EMPLOYEE BENEFIT PLAN" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which
7
57
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"PROPERTY DISPOSITION DATE" is defined in Section 10.3.
"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, any
investment fund over which Prudential or any subsidiary of Prudential has sole
investment authority and any other entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, Prudential.
"PURCHASE DATE" is defined in Section 9.6.
"PURCHASERS" means, with respect to any Accepted Notes the
Persons, either Prudential or a Prudential Affiliate, which is purchasing such
Accepted Notes.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"REQUEST FOR PURCHASE" is defined in Section 2.4.
"REQUIRED HOLDER(S)"means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESCHEDULED CLOSING DAY" is defined in Section 3.2.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED INDEBTEDNESS" means, without duplication, (i)
Indebtedness of the Company or any Restricted Subsidiary which is secured by a
Lien not otherwise permitted under subsections (a) through (h) of Section 10.5,
and (ii) Indebtedness of a Restricted Subsidiary owing to any Person other than
the Company or a Wholly-Owned Subsidiary.
"RESTRICTED PAYMENT" means any Distribution in respect of the
Company or any Restricted Subsidiary (other than on account of capital stock or
other equity interests of a Restricted Subsidiary owned legally and beneficially
by the Company or another Restricted Subsidiary), including, without limitation,
any Distribution resulting in the acquisition by the Company of Securities which
would constitute treasury stock. For purposes of this Agreement, the amount of
any Restricted Payment made in property shall be the greater of (x) the Fair
8
58
Market Value of such property (as determined in good faith by the board of
directors (or equivalent governing body) of the Person making such Restricted
Payment) and (y) the net book value thereof on the books of such Person, in each
case determined as of the date on which such Restricted Payment is made.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which
is (a) listed as a Restricted Subsidiary in Schedule 5.4 or (b) organized under
the laws of, and conducts substantially all of its business and maintains
substantially all of its property and assets within, the United States or any
state thereof (including the District of Columbia).
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY" has the meaning set forth in Section 2(1) of the
Securities Act.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SERIES" is defined in Section 1.
"SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"TRANSFER" means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including capital stock of, or a Security issued by, a Subsidiary.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary other than a
Restricted Subsidiary.
"VOTING RIGHTS" is defined in Section 9.6.
9
59
"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).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" or "WHOLLY-OWNED SUBSIDIARY"
means, at any time, any Restricted Subsidiary or Subsidiary, respectively, one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Restricted Subsidiaries or
Wholly-Owned Subsidiaries, respectively, at such time.
10
60
EXHIBIT 1
[FORM OF NOTE]
LENNOX INTERNATIONAL INC.
____% SENIOR NOTE, SERIES _____, DUE ____________
No. R- _____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL INSTALLMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, LENNOX INTERNATIONAL INC. (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to [___________________________],
or registered assigns, the principal sum of [___________________________]
DOLLARS [on the Final Maturity Date specified above] [, payable in installments
on the Principal Installment Dates and in the amounts specified above, and on
the Final Maturity Date specified above in an amount equal to the unpaid balance
of the principal hereof,] with interest (computed on the basis of a 360-day year
of twelve 30-day months) (a) on the unpaid balance hereof from the date hereof
at the Interest Rate per annum specified above, payable on each Interest Payment
Date specified above and on the Final Maturity Date specified above, commencing
with the Interest Payment Date next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest, and any overdue payment of any Make-Whole Amount (as defined in the
Master Shelf Agreement referred to below), payable on each Interest Payment Date
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i)____%1 or (ii) 2%
over the rate of interest publicly announced by The Bank of New York from time
to time in New York City as its Prime Rate.
---------------------
(1) Interest rate plus 2%.
1
61
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America at the main office of The Bank of New York in New York City, or at such
other place as the holder hereof shall have designated by written notice to the
Company as provided in the Master Shelf Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to a Master Shelf Agreement, dated as of October 15,
1999 (as from time to time amended, the "MASTER SHELF Agreement"), between the
Company and The Prudential Insurance Company of America and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Master Shelf Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Master Shelf Agreement.
This Note is a registered Note and, as provided in the Master
Shelf Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same Series for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time
to time in part, at the times and on the terms specified in the Master Shelf
Agreement, but not otherwise.
If an Event of Default, as defined in the Master Shelf Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Master Shelf
Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE OF LAW PRINCIPLES OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
LENNOX INTERNATIONAL INC.
By
-----------------------------
Executive Vice President and
Chief Financial Officer
2
62
EXHIBIT 2.4
[TO BE PLACED ON COMPANY LETTERHEAD]
[FORM OF REQUEST FOR PURCHASE]
LENNOX INTERNATIONAL INC.
Reference is made to the Master Shelf Agreement (the
"AGREEMENT"), dated as of October 15, 1999, between Lennox International Inc.
(the "COMPANY") and The Prudential Insurance Company of America. All terms used
herein that are defined in the Agreement have the respective meanings specified
in the Agreement.
Pursuant to Section 2.4 of the Agreement, the Company hereby
makes the following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "NOTES") ................... $
2. Individual specifications of the Notes:
Principal
Final Installment Interest
Principal Maturity Dates and Payment
Amount Date Amounts Period(2)
--------- -------- ----------- ---------
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the
Notes:
5. The purchase price of the Notes is to be transferred to:
Name and
Name and Address Number of Telephone No.
of Bank Account of Bank Officer
---------------- --------- ---------------
---------------------
(2) Specify quarterly or semi-annual.
1
63
6. The Company certifies (a) that the representations and
warranties contained in Section 5 of the Agreement are true on
and as of the date of this Request for Purchase except to the
extent of changes caused by the transactions contemplated in the
Agreement or such representations and warranties specifically
relate to an earlier date and (b) that there exists on the date
of this Request for Purchase no Event of Default or Default.
Dated:
LENNOX INTERNATIONAL INC.
By
Authorized Officer
2
64
EXHIBIT 2.6
[FORM OF CONFIRMATION OF ACCEPTANCE]
LENNOX INTERNATIONAL INC.
Reference is made to the Master Shelf Agreement (the
"AGREEMENT"), dated as of October 15, 1999, between Lennox International Inc.
(the "COMPANY") and The Prudential Insurance Company of America. All terms used
herein that are defined in the Agreement have the respective meanings specified
in the Agreement.
Each of the undersigned institutions which is named below as a
Purchaser of any Accepted Notes hereby confirms the representations as to such
Accepted Notes set forth in Section 6 of the Agreement, and agrees to be bound
by the provisions of Sections 2.6 and 3 of the Agreement relating to the
purchase and sale of such Accepted Notes.
Pursuant to Section 2.6 of the Agreement, an Acceptance with
respect to the following Accepted Notes is hereby confirmed:
I. Aggregate principal amount $
----------
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal installment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal installment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
[(C),(D) ....: same information as to any other
1
65
II. Closing Day:
III. Facility Fee:
Dated:
LENNOX INTERNATIONAL INC.
By
------------------------
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By
------------------------
Vice President
[Signature block for each named Purchaser other than Prudential]
2
66
EXHIBIT 4.4(e)
[FORM OF OPINION OF COUNSEL TO THE COMPANY]
RE: Lennox International Inc.
___% Senior Notes, Series _____,due __________
Ladies and Gentlemen:
I am an Assistant General Counsel for Lennox International
Inc., a Delaware corporation (the "COMPANY"), and as such have acted as counsel
to the Company in connection with (i) the issuance and sale by the Company of
$_____________ in aggregate principal amount of its ___% Senior Notes, Series
_____, due _____ (the "NOTES"), pursuant to the Master Shelf Agreement dated as
of October 15, 1999 (the "AGREEMENT") among the Company, The Prudential
Insurance Company of America and the other Purchasers (as defined therein), and
(ii) the purchase by you today of the Notes. This opinion is being furnished to
you pursuant to Section 4.1(e) of the Agreement with the understanding that it
will be relied upon by you in connection with the consummation of the
transactions contemplated by the Agreement. The opinions expressed herein may
also be relied upon by each subsequent institutional holder of the Notes.
Capitalized terms used herein without definition have the respective meanings
attributed thereto in the Agreement.
In so acting, I have participated in the preparation of the
Agreement and the Notes being delivered to you today. As to various factual
matters relevant to this opinion, I have made such inquiries as I have deemed
appropriate of other employees of the Company and its Subsidiaries and I have
relied upon the information given to me by such employees. I have also examined
and relied upon the representations and warranties as to factual matters
contained in or made pursuant to the Agreement and have examined and relied upon
the originals, or copies certified or otherwise identified to my satisfaction,
of such records, documents, certificates and other instruments as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
In such examination, I have assumed the genuineness of all signatures (other
than signatures of officers of the Company), the due authorization, execution
and delivery of the Agreement by you, the authenticity of all documents
submitted to me as originals (other than the Agreement and the Notes), the
conformity to original documents of all documents submitted to me as photostatic
or certified copies and the authenticity of the originals of such latter
documents.
Based upon the foregoing, I am of the opinion that:
67
1. Each of the Company and Lennox Industries Inc., Heatcraft
Inc., and Xxxxxxxxx Air Conditioning Inc. (the latter three together, the
"PRIMARY OPERATING SUBSIDIARIES") is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation
and has the corporate power and authority to own or hold under lease the
property it purports to own or hold under lease, and to transact the business it
transacts and proposes to transact, and, in the case of the Company, to execute
and deliver the Agreement and the Notes and to perform the provisions of the
Agreement and the Notes.
2. Each of the Company and the Primary Operating Subsidiaries
is duly qualified as a foreign corporation and in good standing in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it requires such qualification and in which the failure
to so qualify would have a Material Adverse Effect.
3. The execution, delivery and performance by the Company of
the Agreement and the Notes have been duly authorized by all necessary corporate
action on the part of the Company (no action of shareholders being required
therefor) and the Agreement and the Notes purchased by and delivered to you
today have been duly executed and delivered by the Company.
4. The Agreement and the Notes constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except that such enforceability may be
limited by (a) general principles of equity (regardless of whether relief is
sought in an action at law or in equity) and (b) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect affecting enforcement of creditors' rights generally.
5. There are no actions, suits or proceedings pending or, to
the best of my knowledge, threatened against or affecting the Company or any
Subsidiary or any of their respective properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
6. The execution and delivery by the Company of the Agreement
and the Notes, the consummation of the transactions contemplated by the
Agreement and the performance of the terms and provisions of the Agreement and
the Notes by the Company will not result in any breach of, or constitute a
default under the certificate of incorporation or by-laws of the Company or
(insofar as is known to me after due inquiry with respect thereto) under any
indenture, mortgage, deed of trust, bank loan or credit agreement, or other
material agreement or instrument to which the Company is a party or by which the
Company or any of
2
68
its properties may be bound or affected, or, violate any existing law,
governmental rule or regulation or any judgment, decree or ruling of any court,
arbitrator or Governmental Authority applicable to the Company.
7. No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required for the valid
execution and delivery or for the performance by the Company of the Agreement or
the Notes.
8. The offer, issue, sale and delivery of the Notes purchased
by and delivered to you today, under the circumstances contemplated by the
Agreement, constitute exempted transactions under the Securities Act, and
neither the registration of such Notes thereunder nor the qualification of an
indenture under the Trust Indenture Act of 1939, as amended, is required in
connection with such offer, issue, sale and delivery of the Notes.
9. The issuance and sale of the Notes as contemplated by the
Agreement will not involve any violations of Regulation T, U or X or any other
rule or regulation of the Board of Governors of the Federal Reserve System
pursuant to Section 7 of the Exchange Act.
10. The Company is not an investment company, or a person
directly or indirectly controlled by or acting on behalf of an investment
company, within the meaning of the Investment Company Act of 1940, as amended.
I express no opinion as to any laws other than the Federal
laws of the United States of America, the General Corporation Law of the State
of Delaware and the laws of the State of New York.
Very truly yours,
Xxxx X. Xxxxxxx
3
69
SCHEDULE 5.4
LENNOX INTERNATIONAL INC. SUBSIDIARIES R = Restricted
AS OF SEPTEMBER 30, 1999 UR = Unrestricted
RESTRICTED/
NAME OWNERSHIP JURISDICTION OF INC. NO. OF SHARES OUTSTANDING
---- --------- ------------------- -------------------------
Lennox Industries Inc. 100% Iowa 994,394 Common
SEE ANNEX A
Heatcraft Inc. 100% Mississippi 20 Common
Frigus-Xxxx X.X. de C.V. 50% Mexico
LGL de Mexico, S.A. de C.V. 1% Mexico 50,000 Common
Lennox Participacoes Ltda. 1% Brazil
Xxxxx-Xxxx do Brasil Ltda. 99% Brazil
Livernois Engineering Co. 100% Michigan 10,000 Common
Xxxxxxxxx Air Conditioning Inc. 100% Ohio 1,030 Common
Xxxxxx-Xxxxx Supply Co. 100% Nebraska 1,750 Common
Xxxxxxxxx Distributors Inc. 100% Delaware 1,000 Common
Lennox Global Ltd. 100% Delaware 1,000 Common
SEE ANNEX D
Lennox Commercial Realty Inc. 100% Iowa 10 Common
Heatcraft Technologies Inc. 100% Delaware 1,000 Common
Xxxxxx Xxxxxxxxxx 0% Xxxxxx Xxxxxxx 300,000 Cum. Preference
13,900 Ordinary
Strong LGL Colombia Ltda. 50% Colombia 10,000
LGL Peru S.A.C. 10% Peru
Excel Comfort Systems Inc. 100% Delaware 1,000 Common
LOCATION OF SUBSTANTIAL
NAME OPERATING ASSETS UNRESTRICTED
---- ---------------- ------------
Lennox Industries Inc. United States R
SEE ANNEX A
Heatcraft Inc. United States R
Frigus-Xxxx X.X. de C.V. Mexico UR
LGL de Mexico, S.A. de C.V. Mexico UR
Lennox Participacoes Ltda.
Xxxxx-Xxxx do Brasil Ltda.
Livernois Engineering Co. Michigan R
Xxxxxxxxx Air Conditioning Inc. United States R
Xxxxxx-Xxxxx Supply Co. United States R
Xxxxxxxxx Distributors Inc. United States R
Lennox Global Ltd. United States UR
SEE ANNEX D
Lennox Commercial Realty Inc. United States R
Heatcraft Technologies Inc. United States
Lennox Industries United Kingdom UR
Strong LGL Colombia Ltda. Colombia UR
LGL Peru S.A.C. Peru UR
Excel Comfort Systems Inc. Delaware R
70
ANNEX A
TO
SCHEDULE 5.4
LENNOX INDUSTRIES INC. SUBSIDIARIES
NAME OWNERSHIP JURISDICTION OF INC. NO. OF SHARES OUTSTANDING
---- --------- ------------------- -------------------------
Lennox Industries (Canada) Ltd. 100% Canada 5,250 Pref.
35,031 Cl A Common
1,180 Cl B Common
Lennox Industries SW Inc. 100% Iowa 1,000 Common
Hearth Products Inc. 100% Delaware 1,000 Common
Superior Fireplace Company 100% Delaware 1,000 Common
Marco Mfg., Inc. 100% California
Marcomp
Pyro Industries, Inc. 100% Washington
Securite Cheminees International Ltee 100% Canada
-Security Chimneys International USA Ltd. 100%
-Cheminees Securite SARL 100% France
-Security Chimneys UK Limited 100% UK 2 Ordinary
Firecraft Technologies Inc. 100% Delaware 1,000 Common
Products Acceptance Corporation 100% Iowa 3,500 Common
Lennox Manufacturing Inc. 100% Delaware 1,000 Common
Lennox Retail Inc. 100% Delaware 1,000 Common
-Lennox Canada Inc. 100% Canada
SEE ANNEX B
Remainder of the Lennox Retail Inc. Subsidiaries are listed on ANNEX C
LOCATION OF SUBSTANTIAL RESTRICTED/
NAME OPERATING ASSETS UNRESTRICTED
---- ----------------------- ------------
Lennox Industries (Canada) Ltd. Canada UR
Lennox Industries SW Inc. N/A R
Hearth Products Inc. United States R
Superior Fireplace Company United States R
Marco Mfg., Inc. United States R
Marcomp
Pyro Industries, Inc. United States R
Securite Cheminees International Ltee Canada UR
-Security Chimneys International USA Ltd United States R
-Cheminees Securite SARL France UR
-Security Chimneys UK Limited UK UR
Firecraft Technologies Inc. Delaware R
Products Acceptance Corporation N/A R
Lennox Manufacturing Inc. United States R
Lennox Retail Inc. United States R
-Lennox Canada Inc. Canada UR
SEE ANNEX B
Remainder of the Lennox Retail Inc. Subsidiaries are listed on ANNEX C
71
ANNEX B
TO
SCHEDULE 5.4
LENNOX CANADA INC. SUBSIDIARIES
The following are all in Canada and are all owned 100% by Lennox Canada Inc.
unless otherwise noted and all are Unrestricted Subsidiaries:
Xxxxxxx Air Conditioning Limited
Valley Refrigeration Limited
Dearie Contracting Inc.
Dearie Martino Contractors Ltd.
Xxxxxx Air Conditioning Limited
Xxxxxx Heating & Cooling Co. Ltd.
Montwest Air Ltd.
Fahrhall Mechanical Contractors Limited
Sipco Energies Ltd.
MHR Home Comfort Center Ltd.
72
ANNEX C
TO
SCHEDULE 5.4
LENNOX RETAIL INC. SUBSIDIARIES
The following are all in the United States and are all owned 100% by Lennox
Retail Inc. unless otherwise noted and all are Restricted Subsidiaries:
X.X. Xxxxxxx, Inc. - New York
Air Engineers, Inc. - Florida
Industrial Building Services, Inc. - Florida
Xxxxxx Heating and Air Conditioning, Inc. - Xxxxxxx
Xxxxxxxxx Air Conditioning & Heating Co., Inc. - Texas
Air Experts, Inc. - Ohio
Jebco Heating & Air Conditioning, Inc. - Colorado
Air Systems of Florida, Inc. - Florida
Xxxx Refrigeration, Inc. - Texas
Airmasters Heating & Air Conditioning Co. - Michigan
Xxxx Heating & Air Conditioning, Inc. - Michigan
Xxxx Heating & Air Conditioning Co., Inc. - Indiana
Xxxx Xxxxx Htg. & A/C of Charlotte, Inc. - North Carolina
Xxxx Xxxxx Heating & Air Conditioning, Inc. - Xxxxxxx
Xxxxxxxx Sedgwick Heating & Air Conditioning Co. - Minnesota
Xxxxxxx Mechanical Inc. - Delaware
Gables Air Conditioning, Inc. - Florida
Xxxx Heating Co. Inc. - Delaware
The October Group (d/b/a Greenwood Heating) - Washington
Xxxxx Heating and Cooling, Inc. - South Dakota
73
ANNEX D
TO
SCHEDULE 5.4
LENNOX GLOBAL LTD. SUBSIDIARIES
ALL LENNOX GLOBAL SUBSIDIARIES ARE UNRESTRICTED SUBSIDIARIES
LOCATION OF SUBSTANTIAL
NAME OWNERSHIP JURISDICTION OF INC. NO. OF SHARES OUTSTANDING OPERATING ASSETS
---- --------- ------------------- ------------------------- -----------------------
LGL Asia-Pacific Pte. Ltd. 100% Rep. of Singapore 2 Ordinary Singapore
Fairco S.A. 50% Argentina Argentina
LGL Europe Holding Co. 100% Delaware 1,000 Common N/A
SEE ATTACHED ANNEX E
UK Industries Inc. 100% Delaware 1,000 Common N/A
LGL de Mexico, S.A. de C.V. 99% Mexico 50,000 Common Mexico
Lennox Participacoes Ltda. 99% Brazil
Xxxxx-Xxxx do Brasil Ltda. 1% Brazil Brazil
XxXxxx do Brasil 79% Brazil Brazil
SIWA S.A. 100% Uruguay Uruguay
Str. LGL Dominicana, S.A. 100% Dominican Republic
Strong LGL Colombia Ltda. 50% Colombia
LGL Belgium S.P.R.L. 4% Belgium 1 Common Belgium
LGL (Thailand) Ltd. 100% Thailand Thailand
LGL Peru S.A.C. 90% Peru Peru
LGL Australia (US) Inc. 100% Delaware 1,000 Common Delaware
SEE ATTACHED ANNEX F
74
ANNEX F
TO
SCHEDULE 5.4
LGL AUSTRALIA (US) INC. SUBSIDIARIES
ALL UNRESTRICTED SUBSIDIARIES
LOCATION OF SUBSTANTIAL
NAME OWNERSHIP JURISDICTION OF INC. NO. OF SHARES OUTSTANDING OPERATING ASSETS
---- --------- ------------------- ------------------------- -----------------------
LGL Co Pty Ltd 100% Australia Australia
LGL Australia Investment Pty Ltd 100% Australia Australia
LGL Australia Finance Pty Ltd 10% Australia Australia
LGL Australia Finance Pty Ltd 90% Australia Australia
LGL Australia Holdings Pty Ltd 100% Australia Australia
Xxxxx X Xxxxx Pty Ltd* 100% Australia Australia
Lennox Australia Pty. Ltd. 100% Australia 1,575,000 Com Cl A Australia
1,575,000 Com Cl B
LGL (Australia) Pty Ltd 100% Australia Australia
LGL Refrigeration Pry. Ltd. 100% Australia Australia
*Stock is pledged to seller of company to secure a portion of the
purchase price and other obligations incurred in connection with the
acquisition
75
ANNEX E
TO
SCHEDULE 5.4
LGL EUROPE HOLDING CO. SUBSIDIARIES
ALL UNRESTRICTED SUBSIDIARIES
NO. OF
NAME OWNERSHIP JURISDICTION OF INC. SHARES OUTSTANDING
---- --------- ------------------- ------------------
-LGL Holland B.V. 100% Holland
-Ets. Brancher S.A. 70% France
-Frinotec S.A. 99.68% France
-LGL France 100% France
-Herac Ltd. 100% United Kingdom
-Xxxxx-Coil S.R.O 50% Czech Republic
-LGL Germany GmbH 100% Germany 500 Common
-Xxxxx-Xxxx Warmeaustauscher GmbH 100% Germany
-Hyfra Ind. GmbH 99.9% Germany
-Xxxxxx 100% Germany
-Xxxxx Xxxx GmbH 100% Germany
-Xxxxx Xxxx 100% Germany
-Lennox Global Spain S.L. 100% Spain
-ERSA 90.1% Spain
-Aldo Marine 70% Spain
-Xxxxxx Xxxxx, S.A. 100% Spain
-Redi sur Andalucia 70% Spain
-Refac Portugal Lda. 50% Portugal
Portugal
-LGL Belgium S.P.R.L. 99.6% Belgium 249 Common
-Refac B.V. 100% Belgium
-Xxxxx Xxxxx-Xxxxx Technik
Vertriebs GmbH 50%
-HCF Lennox Limited 100% United Kingdom 100 Ordinary
-Lennox Industries 99% United Kingdom 300,000 Cum. Preference
14,040 Ordinary
-Environheat Limited 100% United Kingdom 32,765 Ordinary
-West S.R.L. 100% Italy
-Janka Radotin a.s. 100% Czech Republic
-Xxxxx Coil s.r.o 50% Czech Republic
-Janka Slovensko, s.r.o. 00% Slovak Republic
LOCATION OF SUBSTANTIAL
NAME OPERATING ASSETS
---- -----------------------
-LGL Holland B.V. Holland
-Ets. Brancher S.A. France
-Frinotec S.A. France
-LGL France France
-Herac Ltd. N/A
-Xxxxx-Coil S.R.O Czech Republic
-LGL Germany GmbH Germany
-Xxxxx-Xxxx Warmeaustauscher GmbH
-Hyfra Ind. GmbH Germany
-Xxxxxx Germany
-Xxxxx Xxxx GmbH Germany
-Xxxxx Xxxx Germany
-Lennox Global Spain S.L.
-XXXX
-Xxxx Marine
-Xxxxxx Xxxxx, S.A.
-Redi sur Andalucia Spain
-Refac Portugal Lda.
Portugal
-LGL Belgium S.P.R.L. Belgium
-Refac B.V. Belgium
-Xxxxx Xxxxx-Xxxxx Technik
Vertriebs GmbH
-HCF Lennox Limited United Kingdom
-Lennox Industries United Kingdom
-Environheat Limited N/A
-West S.R.L. Italy
-Janka Radotin a.s. Czech Republic
-Xxxxx Coil s.r.o Czech Republic
-Janka Slovensko, s.r.o. Xxxxxx Xxxxxxxx
00
SCHEDULE 5.15
LENNOX INTERNATIONAL INC.
AND RESTRICTED SUBSIDIARIES
INDEBTEDNESS AS OF
SEPTEMBER 30, 1999 (EXCEPT AS NOTED)
X. XXXXXX INTERNATIONAL INC.
(1) Agreement of Assumption and Restatement dated as of December 1,
1991 between Lennox International Inc. and the Noteholders identified
at the end thereof, pursuant to which Lennox International Inc.
delivered its:
9.53% Series F Promissory Notes due 2001 $21,000,000
9.69% Series H Promissory Notes due 2003 24,600,000
(2) Note Purchase Agreement dated as of December 1, 1993 among 100,000,000
Lennox International Inc. and the Noteholders identified at the end
thereof, pursuant to which Lennox International Inc. delivered its
6.73% Senior Promissory Notes due 2008
(3) Note Purchase Agreement dated as of July 6, 1995 between 20,000,000
Lennox International Inc. and Teachers Insurance and Annuity
Association of America, pursuant to which Lennox International Inc.
delivered its 7.06% Senior Promissory Notes due 2005
(4) Guaranty dated September 19, 1995 from Lennox International 1,004,268*
Inc. to First Bank of Natchitoches & Trust Company and Regions Bank of
Louisiana guaranteeing 50% of debt of Alliance Compressors to such
Banks under a Promissory Note dated September 19, 1995
(5) Guaranty of 50% of amounts due from Alliance Compressors 323,888*
under a Master Equipment Lease Agreement dated March 28, 1995 with
NationsBanc Leasing Corporation
(6) Letter of Credit guaranteeing debt of Refac B.V. to Stork 779,000
N.V. in connection with purchase of stock of Refac B.V. from Stork N.V.
(7) Guaranty of 50% of Frigus Xxxx X.X. de C.V. Line of Credit from 750,000
Bank One, Texas, N.A., in the maximum amount of $1,500,000
77
(8) Letter of Credit guaranteeing debt of Lennox Australia Pty 305,510
Ltd. to Alcair Industries Pty Ltd. in connection with purchase of
assets of Alcair Industries Pty Ltd.
(9) Note Purchase Agreement dated as of April 3, 1998, between Lennox
International Inc. and the Noteholders identified therein, pursuant to
which Lennox International Inc. delivered its:
6.56% Senior Notes due April 3, 2005 25,000,000
6.75% Senior Notes due April 3, 2008 50,000,000
(10) Revolving Credit Facility Agreement dated as of July 29,1999 124,000,000
(11) Guaranty of Interim Facility Loan from LGL Co. Pty Ltd to 16,390,000
Chase Manhattan Bank, Sydney, Australia
X. XXXXXX INDUSTRIES INC.
None
X. XXXXXX COMMERCIAL REALTY INC.
11.1% Mortgage Note Agreement with Texas Commerce Bank, N.A. due 6,701,300
January 1, 2000, secured by mortgage on headquarters building and an
assignment of the Lease between Lennox Commercial Realty Inc. and
Lennox Industries Inc.
D. MISCELLANEOUS CAPITAL LEASES AND OTHER DEBT** 2,890,272
------------
TOTAL OUTSTANDING INDEBTEDNESS OF LENNOX
INTERNATIONAL INC. AND RESTRICTED SUBSIDIARIES $393,744,238
============
*50% as of APRIL 30, 1999
**as of AUGUST 31, 1999
2
