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CONFORMED EXECUTION COPY
Exhibit 4(b)
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BEARINGS, INC.
NOTE PURCHASE AND PRIVATE SHELF FACILITY
WITH
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
$80,000,000 MAXIMUM AGGREGATE PRINCIPAL AMOUNT
Dated as of October 31, 1992,
As Amended on November 27, 1996
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TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF PRIVATE SHELF NOTES......................... 1
2. PURCHASE AND SALE OF NOTES............................................ 1
3. CONDITIONS OF CLOSING................................................. 5
4. PREPAYMENTS........................................................... 6
5. AFFIRMATIVE COVENANTS................................................. 7
6. NEGATIVE COVENANTS.................................................... 9
7. EVENTS OF DEFAULT..................................................... 12
8. REPRESENTATIONS, COVENANTS AND WARRANTIES............................. 15
9. REPRESENTATIONS OF THE PURCHASERS..................................... 18
10. DEFINITIONS........................................................... 19
11. MISCELLANEOUS......................................................... 25
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LIST OF ATTACHMENTS
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PURCHASER SCHEDULE
EXHIBIT A -- FORM OF PRIVATE SHELF NOTE
EXHIBIT B -- FORM OF REQUEST FOR PURCHASE
EXHIBIT C -- FORM OF CONFIRMATION OF ACCEPTANCE
EXHIBIT D-1 -- FORM OF OPINION OF COMPANY'S SPECIAL COUNSEL
(Initial Closing)
EXHIBIT D-2 -- FORM OF OPINION OF COMPANY'S COUNSEL
(Private Shelf Note Closings)
EXHIBIT E -- LIST OF AGREEMENTS RESTRICTING DEBT
EXHIBIT F -- LIST OF SUBSIDIARIES
EXHIBIT G -- LIST OF ENCUMBRANCES
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BEARINGS, INC.
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
As of October 31, 1992,
As Amended on November 27, 1996
To: The Prudential Insurance Company
of America (herein called "PRUDENTIAL")
Each Prudential Affiliate which becomes bound by this Agreement as
hereinafter provided (together with Prudential, the "PURCHASERS")
c/o Prudential Capital Group
9700 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
The undersigned, Bearings, Inc., an Ohio corporation (herein called the
"COMPANY"), hereby agrees with you as set forth below. Reference is made to
paragraph 10 hereof for definitions of capitalized terms used herein and not
otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF PRIVATE SHELF NOTES. The
Company will authorize the issue of its senior promissory notes (herein called
the "PRIVATE SHELF NOTES") in the aggregate principal amount of $80,000,000, to
be dated the date of issue thereof, to mature, in the case of each Private Shelf
Note so issued, no less than seven (7) years and no more than fifteen (15) years
after the issuance thereof (and, unless otherwise agreed by the Company,
Prudential and the applicable Purchasers, have an average life of approximately
6.75 years), to bear interest on the unpaid balance thereof from the date
thereof at the rate per annum (and to have such other particular terms
consistent with the terms of this Agreement) as shall be set forth in the
Confirmation of Acceptance with respect to such Private Shelf Note delivered
pursuant to paragraph 2E, and to be substantially in the form of Exhibit A
attached hereto. The terms "PRIVATE SHELF NOTE" and "PRIVATE SHELF NOTES" as
used herein shall include each Private Shelf Note delivered pursuant to any
provision of this Agreement and each Private Shelf Note delivered in
substitution or exchange for any such Private Shelf Note pursuant to any such
provision. The terms "NOTE" or "NOTES" as used herein shall include each Private
Shelf Note (whether designated a Series A Note, Series B Note or Series C Note,
etc.) delivered pursuant to any provision of this Agreement and each Note
delivered in substitution or exchange for any such Note pursuant to any such
provision. Notes which have (i) the same final maturity, (ii) the same principal
prepayment dates, (iii) the same principal prepayment amounts (as a percentage
of the original principal amount of each Note), (iv) the same interest rate, (v)
the same interest payment periods, and (vi) which are otherwise designated a
"Series" hereunder or in the Confirmation of Acceptance whether or not the
foregoing conditions are satisfied, are herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. FACILITY. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties set forth herein, Prudential
agrees to purchase and the Company agrees to issue Private Shelf Notes pursuant
to the terms of this Agreement in an aggregate principal amount of $80,000,000
in increments of at least
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$40,000,000 on or before December 24, 1992 (the "ISSUANCE PERIOD"). Prudential's
agreement to purchase Private Shelf Notes hereunder is referred to herein as the
"FACILITY". At any time, $80,000,000 minus the aggregate principal amount of
Private Shelf Notes purchased and sold pursuant to this Agreement prior to such
time is herein called the "AVAILABLE FACILITY AMOUNT" at such time. A maximum of
two (2) draws may be made under the Facility which shall automatically expire
concurrently with the second draw hereunder. Prudential agrees to use reasonable
efforts to facilitate the prompt completion of the procedures specified in this
Agreement for draws under the Facility.
2B. PERIODIC SPREAD INFORMATION. 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 within a reasonable time after such request,
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 will consider purchasing Private Shelf
Notes.
2C. REQUEST FOR PURCHASE. The Company may from time to time during the
Issuance Period make requests for purchases of Private Shelf Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase
shall be made to Prudential by telecopier and confirmed by nationwide overnight
delivery service, and shall (i) specify the aggregate principal amount of
Private Shelf Notes covered thereby, which shall not be less than $40,000,000
and shall not be greater than the Available Facility Amount at the time such
Request for Purchase is made, (ii) specify the final maturities, principal
payment dates and amounts and interest payment periods (quarterly in arrears) of
the Private Shelf Notes covered thereby, (iii) specify the use of proceeds of
such Private Shelf Notes, (iv) specify the proposed day for the closing of the
purchase and sale of such Private Shelf Notes, which shall be a Business Day
during the Issuance Period not more than thirty (30) days after the making of
such Request for Purchase and in any event no more than ten (10) days after any
Acceptance with respect to such Request for Purchase under paragraph 2E, (v)
specify the number of the account and the name and address of the depository
institution to which the purchase prices of such Private Shelf Notes are to be
transferred on the Private Shelf Closing Day for such purchase and sale, (vi)
certify that the representations and warranties contained in paragraph 8 hereof
are true on and as of the date of such Request for Purchase except to the extent
of changes caused by the transactions herein contemplated and that there exists
on the date of such Request for Purchase no Event of Default or Default (and
that no Event of Default or Default shall arise as the result of the purchase
and sale of such Private Shelf Notes), and (vii) be substantially in the form of
Exhibit B attached hereto. Each Request for Purchase shall be in writing and
shall be deemed made when received by Prudential.
2D. RATE QUOTES. As soon as practicable and in any event not later than
five (5) Business Days after the Company shall have given Prudential a Request
for Purchase pursuant to xxxxxxxxx 0X, Xxxxxxxxxx shall provide (by telephone
and promptly thereafter confirmed by telecopier, in each case no earlier than
9:30 A.M. and no later than 1:00 P.M. New York City local time) interest rate
quotes for the several principal amounts, maturities, prepayment schedules and
interest payment periods of Private Shelf Notes specified in such Request for
Purchase. Each quote shall represent the interest rate per annum payable on the
outstanding principal balance of such Private Shelf Notes until such balance
shall have become due and payable, at which Prudential or a Prudential Affiliate
would be willing to purchase such Private Shelf Notes at 100% of the principal
amount thereof. Such rate quotes shall be made and determined by Prudential in
accordance with the internal methods and
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procedures used by Prudential to price comparable transactions with companies
similarly situated with similar credit risks.
2E. ACCEPTANCE. Within one hour after Prudential shall have provided
any interest rate quotes pursuant to paragraph 2D or such shorter period as
Prudential may reasonably specify to the Company (such period herein called the
"ACCEPTANCE WINDOW"), the Company may, subject to the terms of paragraph 2F,
elect to accept such interest rate quotes as to not less than $40,000,000
aggregate principal amount of the Private Shelf Notes specified in the
applicable Request for Purchase. Such election shall be made by an Authorized
Officer of the Company notifying Prudential by telephone or telecopier within
the Acceptance Window (but not earlier than 9:30 A.M. or later than 2:00 P.M.,
New York City local time) that the Company elects to accept such interest rate
quotes, specifying the Private Shelf Notes (each such Private Shelf Note being
herein called an "ACCEPTED NOTE") as to which such acceptance (herein called an
"ACCEPTANCE") relates. The day the Company notifies Prudential of an Acceptance
with respect to any Accepted Notes is herein called the "ACCEPTANCE DAY" for
such Accepted Notes. Any interest rate quotes as to which Prudential does not
receive an Acceptance within the Acceptance Window shall expire, and no purchase
or sale of Private Shelf Notes hereunder shall be made based on such expired
interest rate quotes. In the event the closing with respect to any Accepted
Notes fails to occur within ten (10) days of the Acceptance Day for any reason
(other than Prudential's failure to fund the purchase price of the Private Shelf
Notes after all conditions to closing specified in paragraph 3A have been
satisfied on or before 11:30 A.M. New York City local time on the last Business
Day preceding the end of such ten day period), the interest rate applicable to
such Accepted Notes may increase based upon the costs of the delayed closing to
Prudential as reasonably determined by Prudential. Subject to paragraph 2F and
the other terms and conditions hereof, the Company agrees to sell to Prudential
or a Prudential Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the
principal amount of such Notes. Prior to the close of business on the Business
Day next following the Acceptance Day, the Company, Prudential and each
Prudential Affiliate which is to purchase any such Accepted Notes will execute a
confirmation of such Acceptance substantially in the form of Exhibit C attached
hereto (herein called a "CONFIRMATION OF ACCEPTANCE").
2F. Market Disruption. Notwithstanding the provisions of paragraph 2E,
if Prudential shall have provided interest rate quotes pursuant to paragraph 2E
and thereafter, prior to the time an Acceptance with respect to such quotes
shall have been notified to Prudential in accordance with paragraph 2E, 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 Private Shelf
Notes hereunder shall be made based on such expired interest rate quotes. If the
Company thereafter notifies Prudential of the Acceptance of any such interest
rate quotes, such Acceptance shall be ineffective for all purposes of this
Agreement, and Prudential shall promptly notify the Company that the provisions
of this paragraph 2F are applicable with respect to such Acceptance.
2G. PRIVATE SHELF CLOSING. Not later than 11:30 A.M. (New York City
local time) on the Private Shelf Closing Day for any Accepted Notes, the Company
will deliver to each Purchaser listed in the Confirmation of Acceptance relating
thereto at the offices of Prudential Capital Group, 9700 Sears Tower, 000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 Attention: Law Department, the Private
Shelf Notes to be purchased by such Purchaser in the form of a single Accepted
Note for the Accepted Notes which have exactly the same terms (or such greater
number of Notes in authorized denominations as such Purchaser may request) dated
the Private Shelf Closing Day and registered in such
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Purchaser's name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account specified in the Request for Purchase of such Private
Shelf Notes. If the Company fails to tender to any Purchaser the Accepted Notes
to be purchased by such Purchaser on the scheduled Private Shelf Closing Day for
such Accepted Notes as provided above in this paragraph 2G, or any of the
conditions specified in paragraph 3A shall not have been fulfilled by the time
required on such scheduled Private Shelf Closing Day, the Company shall, prior
to 1:00 P.M., New York City local time, on such scheduled Private Shelf Closing
Day notify such Purchaser in writing whether (x) such closing is to be
rescheduled (such rescheduled date to be a Business Day during the Issuance
Period not less than one Business Day and not more than 30 Business Days after
such scheduled Private Shelf Closing Day (the "RESCHEDULED CLOSING DAY")) and
certify to such Purchaser that the Company reasonably believes that it will be
able to comply with the conditions set forth in paragraph 3 on such Rescheduled
Closing Day and that the Company will pay the Delayed Delivery Fee, if any, in
accordance with paragraph 2H(2) or (y) such closing is to be canceled as
provided in paragraph 2H(3). In the event that the Company shall fail to give
such notice referred to in the preceding sentence, such Purchaser may at its
election, at any time after 1:00 P.M., New York City local time, on such
scheduled Private Shelf Closing Day, notify the Company in writing that such
closing is to be canceled as provided in paragraph 2H(3).
2H. FEES.
2H(1). FACILITY FEE. The Company agrees to pay Prudential in
immediately available funds a fee (the "FACILITY FEE") on December 24, 1992 in
an amount equal to one-eighth of one percent (.125%) of the Unused Facility
Amount which will exist as of the close of business on such date; provided,
however, that the Facility Fee shall be canceled if the Unused Facility Amount
is less than or equal to $40,000,000 on December 24, 1992. The term "UNUSED
FACILITY AMOUNT" shall mean, at any time, the Available Facility Amount at such
time plus the aggregate principal amount of Accepted Notes which have not been
purchased and sold hereunder prior to such time.
2H(2). DELAYED DELIVERY FEE. If the closing of the purchase and sale of
any Accepted Note is delayed for any reason (other than Prudential's failure to
fund the purchase price of the Accepted Notes after all conditions to closing
specified in paragraph 3A have been satisfied on or before 11:30 A.M. New York
City local time on the last Business Day preceding the 31st day after the
Acceptance Day) beyond the original Closing Day for such Accepted Note, the
Company will pay to Prudential on the last Business Day of each calendar month,
commencing with the first such day to occur more than 30 days after the
Acceptance Day for such Accepted Note and ending with the last such day to occur
prior to the Cancellation Date or the actual closing date of such purchase and
sale, and on the Cancellation Date or actual closing date of such purchase and
sale (if such Cancellation Date or closing date occurs more than 30 days after
the Acceptance Day for such Accepted Note), a fee (herein called the "DELAYED
DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X Full Price
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, i.e., the yield per
annum on 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 thirty first day
after the Acceptance Day of such Accepted Note (in the case of the first such
payment
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with respect to such Accepted Note) or from and including the date of the
immediately preceding payment (in the case of any subsequent delayed delivery
fee payment with respect to such Accepted Note) to but excluding the date of
such payment; and "Full Price" means the principal amount, i.e., the principal
amount of the Accepted Note for which such calculation is being made. If the
Delayed Delivery Fee is zero or negative, there will be no Delayed Delivery Fee.
Nothing contained herein shall obligate any Purchaser to purchase any Accepted
Note on any day other than the Closing Day for such Accepted Note, as the same
may be rescheduled from time to time in compliance with paragraph 2G.
2H(3). CANCELLATION FEE. If the Company at any time notifies Prudential
in writing that the Company is canceling the closing of the purchase and sale of
any Accepted Note, or if Prudential notifies the Company in writing under the
circumstances set forth in the last sentence of paragraph 2G that the closing of
the purchase and sale of such Accepted Note is to be canceled, or if the closing
of the purchase and sale of such Accepted Note is not consummated on or prior to
the last day of the Issuance Period (the date of any such notification, or the
last day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay Prudential in immediately available
funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X Full Price
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Note(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "Full-Price"
has the meaning set forth in paragraph 2H(2), above. The foregoing bid and ask
prices shall be as reported by Telerate Systems, Inc. (or, if such data for any
reason ceases to be available through Telerate Systems, Inc., any publicly
available source of similar market data selected by Prudential). Each price
shall be based on a U.S. Treasury security having a par value of $100.00 and
shall be rounded to the second decimal place. If the Price Increase is zero or
negative, there will be no Cancellation Fee.
3. CONDITIONS OF CLOSING. Prudential's and any Purchaser's
obligation to purchase and pay for any Private Shelf Notes, is subject in each
case to the satisfaction, on or before the applicable Closing Day for such
Notes, of the conditions set forth in paragraph 3A and the Company's obligation
to issue any Private Shelf Note is subject to the conditions set forth in
paragraph 3B.
3A(1). OPINION OF COMPANY'S COUNSEL. On the Initial Closing Day,
Prudential shall have received from Xxxxxxxx, Xxxx and Xxxxx, special counsel
for the Company, a favorable opinion satisfactory to Prudential and
substantially in the form of Exhibit D-1 attached hereto.
3A(2). OPINION OF COMPANY'S COUNSEL. On each Private Shelf Closing Day,
each Purchaser shall have received from Xxxxxx X. Xxxxxxx, Esq., general counsel
of the Company (or other counsel reasonably acceptable to the Purchasers), a
favorable opinion satisfactory to the Purchasers and substantially in the form
of Exhibit D-2 attached hereto.
3A(3). REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties contained in paragraph 8 hereof shall be true on and as of the
applicable Closing Day, except to the extent of changes caused by the
transactions herein contemplated; there shall exist on the applicable Closing
Day no Event of Default or Default; and the Company shall have delivered to each
Purchaser an Officer's Certificate, dated the applicable Closing Day, to both
such effects.
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3A(4). FEES. On or before each Private Shelf Closing Day, the Company
shall have paid in full to Prudential any fee required by paragraph 2H(1) and to
the Purchasers any fee required by paragraph 2H(2) or 2H(3).
3A(5). PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Notes to be purchased on the applicable Closing Day on the terms
and conditions herein provided (including the use of the proceeds of such Notes
by the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation G,
T or X of the Board of Governors of the Federal Reserve System) and shall not
subject any Purchaser to any material tax (other than ordinary income taxes),
material penalty, material liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as such Purchaser may
have requested no less than 5 days before any scheduled closing to establish
compliance with this condition.
3A(6). LEGAL MATTERS. Counsel for the Purchasers shall be satisfied as
to all legal matters in all material respects relating to such purchase and
sale.
3A(7). PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in substance and form to each
Purchaser, and each Purchaser shall have received all such counterpart originals
or certified or other copies of such documents as it may reasonably request.
3A(8). SALE OF NOTES OF SAME SERIES TO OTHER PURCHASERS. The Company
shall have tendered to the other Purchasers (if any) the Notes of the same
Series to be purchased by them at the closing.
3B. CONDITIONS TO COMPANY'S OBLIGATION UNDER PARAGRAPH . The
Company's obligation to issue Private Shelf Notes shall be subject to the
following conditions:
(i) the rate quotes provided by Prudential to the Company
pursuant to paragraph 2D shall not exceed 131 basis points above the
interpolated Treasury rate corresponding to the weighted average life
of the applicable Notes;
(ii) in the event that the interest rate quote provided by
Prudential to the Company pursuant to paragraph 2D equals or exceeds
9.63% per annum, then the Company's obligation to offer Notes for
purchase in an aggregate principal amount of $80,000,000 under
paragraph 1 shall be reduced to $20,000,000;
(iii) if the conditions specified in paragraph 2F are
applicable, then the Company's obligations to offer Notes for purchase
under paragraph 2A shall be suspended until such conditions are no
longer applicable but the Company obligation to offer Notes shall in no
event continue beyond January 31, 1993; and
(iv) after all conditions to closing under paragraph 3A have
been satisfied, the applicable Purchaser shall fund the purchase price
of the Notes on the applicable Closing Day.
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect to the required prepayments specified in paragraph 4A and under the
circumstances specified in paragraphs 4B and 4E.
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4A. REQUIRED PREPAYMENT OF PRIVATE SHELF NOTES. Until each respective
Series of Private Shelf Notes shall be paid in full, each respective Series of
Private Shelf Notes shall be subject to such required prepayments, if any, as
are specified for such Series of Private Shelf Notes in accordance with the
provisions of paragraph 2C hereof. Any prepayment made by the Company pursuant
to any other provision of this paragraph 4 shall not reduce or otherwise affect
its obligation to make any prepayment as specified in the respective Series of
Private Shelf Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. Subject to the
limitations set forth below, the Notes shall be subject to prepayment, in whole
at any time or from time to time in part (in $100,000 increments and not less
than $2,000,000 per occurrence), at the option of the Company, at 100% of the
principal amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note so prepaid. Any
partial prepayment of the Notes pursuant to this paragraph 4B shall be applied
in satisfaction of required payments of principal in the inverse order of their
scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give to the holder
of each Note of a Series irrevocable written notice of any optional prepayment
pursuant to paragraph 4B with respect to such Series not less than 30 days prior
to the prepayment date, specifying (i) such prepayment date, (ii) the aggregate
principal amount of the Notes of such Series to be prepaid on such date, (iii)
the principal amount of the Notes of such holder to be prepaid on that date, and
(iv) stating that such optional prepayment is to be made pursuant to paragraph
4B. Notice of optional prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together with interest thereon to
the prepayment date and together with the Yield-Maintenance Amount, if any, with
respect thereto, shall become due and payable on such prepayment date.
4D. PARTIAL PAYMENTS PRO RATA. In the case of each prepayment pursuant
to paragraphs 4A or 4B of less than the entire unpaid principal amount of all
outstanding Notes of any Series, the amount to be prepaid shall be applied pro
rata to all outstanding Notes of such Series (including, for the purpose of this
paragraph 4D only, all Notes of such Series prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates other than by prepayment pursuant to paragraphs 4A or 4B) according
to the respective unpaid principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than (i) by prepayment
pursuant to paragraphs 4A or 4B or (ii) upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the time
outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in paragraph 4D. In the event
that (i) the Company at any time requests in writing the approval by the holders
of the Notes of a merger, acquisition, recapitalization or reorganization, the
consummation of which would result in an Event of Default or Default hereunder,
and (ii) the Required Holders shall have failed to grant such approval within
ninety (90) days of the date of such written request, then the Company may,
subject to the terms of the first sentence of this paragraph 4E and
simultaneously with the consummation of such prohibited transaction, prepay the
Notes of the nonconsenting holders at 100% of the principal amount so prepaid
plus interest thereon to the
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prepayment date and the Yield-Maintenance Amount, if any, with respect to such
Note within one hundred fifty (150) days of the date of the written request.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 60 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries
for the period from the beginning of the current fiscal year to the end
of such quarterly period, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the Company,
subject to changes resulting from year-end adjustments; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Quarterly Report on Form 10-Q of the Company for such quarterly period
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 120 days
after the end of each fiscal year, consolidated statements of income,
stockholders' equity, and cash flows of the Company and its
Subsidiaries for such year, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year, setting forth
in each case in comparative form corresponding consolidated figures
from the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and, reported on by
independent public accountants of recognized national standing selected
by the Company whose report shall be without limitation as to scope of
the audit and satisfactory in substance to the Required Holder(s);
provided, however, that delivery pursuant to clause (iii) below of
copies of the Annual Report on Form 10-K of the Company for such fiscal
year filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission),
excluding registration statements on Form S-8;
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other financial data as
such Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraph 6 and stating
that, to the best of their knowledge based upon reasonable inquiry, there exists
no Event of Default or Default, or, if any Event of Default
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12
or Default exists, specifying the nature and period of existence thereof and
what action the Company proposes to take with respect thereto. Together with
each delivery of financial statements required by clause (ii) above, the Company
will deliver to each Significant Holder a report of such accountants stating
that, in making the audit necessary for their report on such financial
statements, they have obtained no knowledge of any Event of Default or Default,
or, if they have obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted auditing
standards.
The Company also covenants that immediately after any Responsible Officer
obtains knowledge of an Event of Default or Default, it will deliver to each
Significant Holder an Officer's Certificate specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense, to visit and inspect any of the properties of the Company and
its Subsidiaries, to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants and, if a Default or Event of Default shall be continuing, to
examine the corporate books and financial records of the Company and its
Subsidiaries and obtain copies thereof or extracts therefrom, all at such
reasonable times as the Company and such Significant Holder shall agree but in
any event within three Business Days from request of any Purchaser and during
normal business hours.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6B(1) (unless the prior written consent to the
creation or assumption thereof shall have been obtained pursuant to paragraph
11C), it will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all other Debt
thereby secured so long as any such other Debt shall be so secured.
5E. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary shall maintain, with financially sound and reputable insurers,
insurance in such amounts and against such liabilities and hazards as is
ordinarily carried by companies similarly situated in the same or similar lines
of business.
6. NEGATIVE COVENANTS. Unless the Required Holders shall otherwise
consent in writing, the Company agrees to observe and perform each of the
negative covenants set forth below so long as any Note shall remain outstanding.
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13
6A(1). LIQUIDITY. The Company covenants that it will not permit
Consolidated Current Assets less Consolidated Current Liabilities determined at
the end of any fiscal quarter to fall below an amount equal to $125,000,000.
6A(2). CURRENT RATIO. The Company covenants that it will not permit the
ratio (expressed as a percentage) of Consolidated Current Assets to Consolidated
Current Liabilities determined at the end of any fiscal quarter to fall below
150%.
6A(3). CONSOLIDATED TANGIBLE NET WORTH. The Company covenants that it
will not permit Consolidated Tangible Net Worth determined at the end of any
fiscal quarter to fall below $115,000,000 PLUS an amount equal to 30% of annual
Consolidated Net Income (less 0% in the event of a loss), applied at the end of
each fiscal year commencing with the fiscal year ending June 30, 1996.
6B. CREDIT AND OTHER RESTRICTIONS. The Company covenants that it
will not and will not permit any Subsidiary to:
6B(1). LIEN RESTRICTIONS. Create, incur, assume or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable securing of Notes in
accordance with the provisions of paragraph 5D hereof), except:
(i) Liens for taxes or other governmental charges not yet due
or which are being actively contested in good faith by appropriate
proceedings;
(ii) Liens incidental to the conduct of its business or the
ordinary operation or use of its property which were not incurred in
connection with the borrowing of money or obtaining credit or advances;
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary;
(iv) Liens identified on EXHIBIT G to the Existing Agreement a
copy of which is attached hereto;
(v) Liens relating to the ledger balances, consignments, and
other similar arrangements and other Liens (including Liens consisting
of Capitalized Lease Obligations and/or purchase money security
interests) to secure Debt, provided that (x) the Debt to which the Lien
relates is permitted by paragraph 6B(2) and (y) the aggregate amount of
Debt (plus, without duplication, the aggregate amount of such ledger
balances, consignments and other similar arrangements) secured by such
Liens does not exceed at any time 20% of Consolidated Tangible Net
Worth; and
(vi) Liens consisting of survey exceptions, minor encumbrance
easements and rights of way, or zoning or other restrictions as to the
use of real properties; provided, however, that such Liens in the
aggregate do not materially impair the usefulness of such property in
the business of the Company and its Subsidiaries, taken as a whole.
6B(2). DEBT RESTRICTION. Create, incur, assume or suffer to exist any
Debt, except:
(i) Debt in existence on March 28, 1996;
(ii) Debt of any Subsidiary to the Company or to any other
Subsidiary; and
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14
(iii) additional Debt of the Company and/or any Subsidiary
subject to the proviso set forth below;
PROVIDED, HOWEVER, (x) that the aggregate principal amount of consolidated Debt
of the Company and its Subsidiaries shall not exceed at any time an amount equal
to 58% of Consolidated Capitalization and (y) Priority Debt shall not exceed at
any time an amount equal to 20% of Consolidated Tangible Net Worth.
6B(3). LOANS, ADVANCES AND INVESTMENTS. Make or permit to remain
outstanding loans or advances to, or own, purchase or acquire any stock
obligations or securities of, or any other interest in, or make any capital
contributions to, any Person (collectively, "INVESTMENTS"), except that the
Company or any Subsidiary may:
(i) make or permit to remain outstanding loans or advances to
any Subsidiary;
(ii) own, purchase or acquire stock, obligations or securities
of a Subsidiary or of a corporation which immediately after such
purchase or acquisition will be a Subsidiary;
(iii) acquire and own (a) stock of the Company so long as no
Default or Event of Default exists after giving effect to the
acquisition thereof and (b) stock, obligations or securities received
in settlement of debts (created in the ordinary course of business)
owing to the Company or any Subsidiary;
(iv) own, purchase or acquire prime commercial paper, banker's
acceptances and certificates of deposit in the United States and
Canadian commercial banks (having capital resources in excess of $100
million U.S.), repurchase agreements with respect to the foregoing, in
each case due within one year from the date of purchase and payable in
the United States in United States dollars, obligations of the United
States Government or any agency thereof, and obligations guaranteed by
the United States Government;
(v) make or permit to remain outstanding relocation, travel
and other like advances to officers and employees in the ordinary
course of business;
(vi) permit to remain outstanding Investments existing on
March 28, 1996; and
(vii) make other Investments not in excess of 15% of
Consolidated Tangible Net Worth.
6B(4). DISPOSITION OF CERTAIN ASSETS. Sell, lease, transfer or
otherwise dispose of any assets of the Company or any Subsidiary other than in
an Excluded Transfer, unless the net book value of the assets sold, leased,
transferred or otherwise disposed of outside of the ordinary course of business
in the then most recent 24 month period together with the net book value of any
assets then proposed to be sold, leased, transferred or otherwise disposed of
outside of the ordinary course of business do not exceed 30% of Consolidated
Tangible Net Worth. For purposes of this paragraph and paragraph 6B(2), a sale
of the Company's or its Subsidiaries' receivables in connection with financing
of the Company or any of its Subsidiaries under a securitization program shall
be deemed to constitute Debt of the Company or any such Subsidiary and not a
sale of assets.
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15
6B(5). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise
dispose of, or part with control of, any shares of stock or debt of any
Subsidiary, except to the Company or any Subsidiary, and except that all shares
of stock and debt of any Subsidiary at the time owned by or owed to the Company
and all Subsidiaries may by sold as an entirety for fair market value (as
determined in good faith by the Board of Directors of the Company) provided that
the net book value of the assets of such Subsidiary, together with the net book
value of the assets of the Company and any other Subsidiaries sold during the
then most recent 24 month period do not exceed 30% of Consolidated Tangible Net
Worth.
6B(6). MERGER AND CONSOLIDATION. Merge with or consolidate into any
other company, except (i) Subsidiaries may be merged into the Company, (ii) the
Company may merge with another entity provided that the Company is the surviving
corporation and no Default or Event of Default under this Agreement would exist
after giving effect to the merger or as a result thereof, (iii) any Subsidiary
may be merged with or into another corporation provided that the surviving
corporation is a Subsidiary (in the case of a merger that does not involve the
Company) or the Company and no Default or Event of Default would exist after
giving effect to the merger or as a result thereof, or (iv) the Company may be
merged into a Subsidiary or a newly created entity organized under the laws of
any state of the United States which has conducted no previous business and at
the time of such merger shall have no liabilities, if, in either case, the
surviving corporation assumes the obligations of the Company under the Notes in
a manner reasonably satisfactory to the Required Holders of the Notes and no
Default or Event of Default shall exist after giving effect to the merger or as
a result thereof.
6B(7). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, discount or
pledge any of its notes receivable or accounts receivable other than receivables
sold constituting Debt under clause (vii) of the definition thereof provided
that (i) the aggregate face amount of all such receivables sold shall not exceed
$70,000,000, and (ii) after giving effect to such sale, the Company is in
compliance with paragraph 6B(2).
6B(8). LEASE OBLIGATIONS. Lease real property or personal property
(excluding data processing equipment, vehicles, and other equipment leased in
the ordinary course of business) for terms exceeding three years if after giving
effect thereto the aggregate amount of all payments in any fiscal year payable
by the Company and its Subsidiaries would exceed an aggregate of 15% of
Consolidated Tangible Net Worth.
6B(9). RESTRICTED TRANSACTIONS. Deal directly or indirectly with an
Affiliate, any Person related by blood, adoption, or marriage to any Affiliate
or any Person owning 5% or more of the Company's stock, provided that (i) the
Company may deal with such Persons in the ordinary course of business at arm's
length, (ii) the Company may make loans or advances to officers permitted by
paragraph 6B(3) and (iii) in addition to the foregoing, so long as the stock of
the Company is publicly held, the Company may deal with such Persons so long as
the aggregate amount of such transactions does not exceed $1,000,000 in any
fiscal year.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of,
or Yield-Maintenance Amount payable with respect to, any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
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16
(ii) the Company defaults in the payment of any interest on
any Note for more than five (5) days after the date due; or
(iii) (A) (1) the Company or any Subsidiary defaults (whether
as primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed
(including any obligation under a conditional sale or other title
retention agreement entered into as a means of acquiring the subject
property, any obligation issued or assumed as full or partial payment
for property if secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of
credit) beyond any period of grace provided with respect thereto, or
(2) the Company or any Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under which any
of the foregoing obligations are issued or created (or if any other
event thereunder or under any such agreement shall occur and be
continuing), and the effect of such default under clause (1) above or
failure or event under clause (2) above is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due (or to be
repurchased by the Company or any Subsidiary) prior to any stated
maturity, provided that the aggregate amount of all obligations as to
which such a payment default shall occur and be continuing or such a
failure or other event causing or permitting acceleration (or resale to
the Company or any Subsidiary) shall occur and be continuing exceeds
$5,000,000; or (B) the Company or any Subsidiary fails to perform or
observe any term or condition of any agreement or lease (other than
those specified in clause (A) of this paragraph 7A(iii)) beyond any
applicable grace period with respect thereto (or if any other event
thereunder shall occur and be continuing beyond any applicable grace
period), if the effect of such failure or event is to cause, or permit
the holder or holders of such obligation (or trustee on behalf of such
holder or holders) to cause, such obligation to become due prior to any
stated maturity or require the repurchase, redemption or defeasance of
such obligation, provided that the aggregate amount of all obligations
as to which such failure or other event causing or permitting
acceleration or requiring the repurchase, redemption or defeasance
shall exceed $10,000,000; or
(iv) any representation or warranty made by the Company herein
or by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as such
debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
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17
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of
the Company or any Subsidiary, or of any substantial part of the assets
of the Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Company or any Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any one or more unpaid or unsatisfied judgments or
decrees in excess of $5,000,000 in the aggregate at any one time
outstanding is entered against the Company and/or its Subsidiaries,
excluding those judgments or decrees (A) that shall have been stayed,
vacated or bonded, (B) which are not final and non-appealable, provided
that the Company or such Subsidiary is contesting any such judgment or
decree in good faith and by appropriate proceedings diligently pursued,
(C) for and to the extent the Company or any Subsidiary is insured and
with respect to which the insurer specifically has assumed
responsibility in writing therefor, (D) for and to the extent the
Company or any Subsidiary are otherwise indemnified if the terms of
such indemnification are satisfactory to the Required Holders or (E)
that have been outstanding for less than 60 days;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable at par together with interest accrued thereon,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company, (b) if such event is an Event of Default specified
in clause (viii), (ix) or (x) of this paragraph 7A with respect to the Company,
all of the Notes at the time outstanding shall automatically become immediately
due and payable at par together with interest accrued thereon, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and (c) if such event is not an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, the Required Holder(s) of any Series of Notes may at its or their
option, by notice in writing to the Company, declare all of the Notes of such
Series to be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each Note of such
Series, without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company, provided that the Yield-Maintenance
Amount, if any, with respect to each Note of such Series shall be due and
payable upon such declaration only if (x) such event is an Event of Default
specified in any of clauses (i) to (vi), inclusive, or (xi) or (xii) of this
paragraph 7A, (y) the Required Holders of such Series shall have given to the
Company, at least 10 Business Days before
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18
such declaration, written notice stating its or their intention so to declare
the Notes of such Series to be immediately due and payable and identifying one
or more such Events of Default whose occurrence on or before the date of such
notice permits such declaration, and (z) one or more of the Events of Default so
identified shall be continuing at the time of such declaration.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes of a Series shall have been declared immediately due and payable pursuant
to paragraph 7A, the Required Holder(s) of such Series may, by notice in writing
to the Company, rescind and annul such declaration and its consequences if (i)
the Company shall have paid all overdue interest on the Notes of such Series,
the principal of and Yield-Maintenance Amount, if any, payable with respect to
any Notes of such Series which have become due otherwise than by reason of such
declaration, and interest on such overdue interest and overdue principal and
Yield-Maintenance Amount at the rate specified in the Notes of such Series, (ii)
the Company shall not have paid any amounts which have become due solely by
reason of such declaration, (iii) all Events of Default and Defaults, other than
non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C, and (iv)
no judgment or decree shall have been entered for the payment of any amounts due
pursuant to the Notes of such Series or this Agreement (as this Agreement
pertains to the Notes of such Series). No such rescission or annulment shall
extend to or affect any subsequent Event of Default or Default or impair any
right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Ohio, each Subsidiary
is a corporation existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and the Company has and each
Subsidiary has the corporate power to own its respective property and to carry
on its respective business as now being conducted. The names and jurisdictions
of incorporation of each Subsidiary are set forth on Exhibit F.
8B. FINANCIAL STATEMENTS. The Company has furnished Prudential and each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) a consolidated
balance sheet of the Company and its Subsidiaries as of the last day in each of
the five fiscal years of the Company most recently completed prior to the date
as of which this representation is made or repeated to
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19
such Purchaser (other than fiscal years completed within 120 days prior to such
date for which audited financial statements have not been released) and a
consolidated statement of income, stockholders' equity and statement of cash
flows of the Company and its Subsidiaries for each such year, all certified by
Deloitte & Touche for such other accounting firm as may be reasonably acceptable
to such Purchaser); and (ii) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of the quarterly period (if any) most recently
completed prior to such date and after the end of such fiscal year (other than
quarterly periods completed within 60 days prior to such date for which
financial statements have not been released) and the comparable quarterly period
in the preceding fiscal year and consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
periods from the beginning of the fiscal years in which such quarterly periods
are included to the end of such quarterly periods, prepared by the Company. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income and
statements of cash flows fairly present the results of the operations of the
Company and its Subsidiaries for the periods indicated. There has been no
material adverse change in the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole since the end of
the most recent fiscal year for which such audited financial statements have
been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary or any properties or rights of the Company or any
Subsidiary, by or before any court, arbitrator or administrative or governmental
body which could be reasonably expected to result in any material adverse change
in the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any Subsidiary has any
Debt outstanding except as permitted by paragraph 6B(2). There exists no payment
default or other default in any material respect under the provisions of any
instrument evidencing such Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. To the best knowledge of the Responsible
Officers based upon reasonable inquiry, the Company has, and each Subsidiary
has, good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other properties and
assets, including the properties and assets reflected in the most recent audited
balance sheet referred to in paragraph 8B (other than properties and assets
disposed of in the ordinary course of business), subject to no Lien of any kind
except Liens permitted by paragraph 6B(1). The Company and each Subsidiary
enjoys peaceful and undisturbed possession of all leases necessary in any
material respect for the conduct of their respective businesses, none of which
contains any unusual or burdensome provisions which could be reasonably expected
to materially affect or impair the operation of such businesses. All such leases
are valid and subsisting and are in full force and effect.
8F. TAXES. To the best knowledge of the Responsible Officers based upon
reasonable inquiry, the Company has, and each Subsidiary has, filed all Federal,
State and other income tax returns which are required to be filed, and each has
paid all taxes as shown on such returns and on all assessments received by it to
the extent that such taxes have become due, except such taxes as are being
contested in good faith by appropriate
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20
proceedings for which adequate reserves have been established in accordance with
generally accepted accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, or financial condition. Neither the
execution nor delivery of this Agreement or the Notes, nor the offering,
issuance and sale of the Notes, nor fulfillment of nor compliance with the terms
and provisions hereof and of the Notes will conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to,
the charter or by-laws of the Company or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders), nor
to the best of the Responsible Officers' knowledge based upon reasonable
inquiry, any instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any of its Subsidiaries is subject. Neither
the Company nor any of its Subsidiaries is a party to, or otherwise subject to
any provision contained in, any instrument evidencing indebtedness of the
Company or any of its Subsidiaries, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, indebtedness of the Company
of the type to be evidenced by the Notes except as set forth in the agreements
listed in EXHIBIT E attached hereto.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than Institutional Investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
Section 5 of the Securities Act or to the registration provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. REGULATION G, ETC. Neither the Company nor any Subsidiary owns or
has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System (herein called "margin stock"). The proceeds of the sale of any Private
Shelf Notes will be used for the purposes stated in the relevant Request for
Purchase. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock or for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation G. Neither
the Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934, as amended, in
each case as in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
Neither
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21
the Company, any Subsidiary or any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the Company
and its Subsidiaries taken as a whole. The execution and delivery of this
Agreement and the issuance and sale of the Notes will be exempt from, or will
not involve any transaction which is subject to the prohibitions of, section 406
of ERISA and will not involve any transaction in connection with which a penalty
could be imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. The representation by the Company in the
next preceding sentence is made in reliance upon and subject to the accuracy of
each Purchaser's representation in paragraph 9B.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or compliance with the
terms and provisions of this Agreement.
8L. ENVIRONMENTAL COMPLIANCE. To the best knowledge of the Responsible
Officers based upon reasonable inquiry, the Company and its Subsidiaries and all
of their respective properties and facilities have complied at all times and in
all respects with all federal, state, local and regional statutes, laws,
ordinances and judicial or administrative orders, judgments, rulings and
regulations relating to protection of the environment except, in any such case,
where failure to comply would not result in a material adverse effect on the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
8M. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
8N. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely affects or in the
future may (so far as the Company can now foresee) materially adversely affect
the business, property or assets, or financial condition of the Company and its
Subsidiaries taken as a whole and which has not been set forth in this Agreement
or in the other documents, certificates and statements furnished to the
Purchasers by the Company prior to the date hereof in connection with the
transactions contemplated hereby.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes to be
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
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22
9B. SOURCE OF FUNDS. No part of the funds used by such Purchaser to
pay the purchase price of the Notes being purchased by such Purchaser hereunder
constitutes assets allocated to any separate account maintained by such
Purchaser. For the purpose of this paragraph 9B, the term "separate account"
shall have the meaning specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined
in paragraphs 1 and 2 shall have the respective meanings specified therein, and
the following terms shall have the meanings specified with respect thereto
below:
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4A or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (calculated on the same
periodic basis as that on which interest on such Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
xxxx quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
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23
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4A or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2E.
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2E.
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2E.
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2E.
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its
chief executive officer, its chief operating officer, its chief financial
officer, its corporate secretary, and any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Prudential, and (ii) in the
case of Prudential, Xxxxx Xxxxxx, Regional Vice President, Xxxx Xxxxxxxx,
President, Xxx Xxxxxxx, Vice President and any officer of Prudential designated
as its "Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers or a member of its Law Department.
Any action taken under this Agreement on behalf of the Company by any individual
who on or after the date of this Agreement shall have been an Authorized Officer
of the Company and whom Prudential in good faith believes to be an Authorized
Officer of the Company at the time of such action shall be binding on the
Company even though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this Agreement on behalf of
Prudential by any individual who on or after the date of this Agreement shall
have been an Authorized Officer of Prudential and whom the Company in good faith
believes to be an Authorized Officer of Prudential at the time of such action
shall be binding on Prudential even though such individual shall have ceased to
be an Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in
paragraph 2A.
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday, (ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2C hereof only, a
day on which The Prudential Insurance Company of America is not open for
business.
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24
"CANCELLATION DATE" shall have the meaning specified in paragraph
2H(3).
"CANCELLATION FEE" shall have the meaning specified in paragraph 2H(3).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CLOSING DAY" shall mean the Initial Closing Day or a Private Shelf
Closing Day, as the case may be.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in
paragraph 2E.
"CONSOLIDATED CAPITALIZATION" shall mean Consolidated Tangible Net
Worth of the Company and its Subsidiaries plus Debt.
"CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
shall mean the consolidated current assets and consolidated current liabilities
of the Company and its Subsidiaries each determined in accordance with generally
accepted accounting principles, provided that inventory shall be valued at
current cost. The current portion of Funded Debt shall not be included in the
calculation of Consolidated Current Liabilities.
"CONSOLIDATED NET INCOME" shall mean consolidated net income of the
Company and its Subsidiaries as determined in accordance with generally accepted
accounting principles.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean the sum of (i) the par
value (or value stated on the books of the Company) of the capital stock of all
classes of the Company, plus (or minus in the case of a surplus deficit) (ii)
the amount of the consolidated surplus, whether capital or earned, of the
Company and its Subsidiaries, plus (iii) the amount of paid in capital, less the
sum of treasury stock, unamortized debt discount and expense, goodwill,
trademarks, trade names, patents, non-current deferred charges and other
intangible assets and any write-up of the value of any asset, all determined on
a consolidated basis for the Company and all Subsidiaries in accordance with
generally accepted accounting principles.
"DEBT" shall mean and include, (i) any obligation payable for borrowed
money (including capitalized lease obligations but excluding reserves for
deferred income taxes and other reserves to the extent that such reserves do not
constitute an obligation); (ii) indebtedness payable which is secured by any
lien on property owned by the Company or any Subsidiary; (iii) guarantees,
endorsements (other than endorsements of negotiable instruments for collection
in the ordinary course of business) and other contingent liabilities (whether
direct or indirect) in connection with the obligation, stock or dividends of any
Person; (iv) obligations under any contract providing for the making of loans,
advances or capital contributions to any Person, in each case in order to enable
such Person primarily to maintain working capital, net worth or any other
balance sheet condition or to pay debts, dividends or expenses; (v) ledger
balances, consignments and other similar arrangements but only to the extent
required to be shown as debt on the consolidated balance sheet of the Company in
accordance with generally accepted accounting principles; and (vi) obligations
under any other contract which, in economic effect, is substantially equivalent
to a guarantee; all as determined in accordance with generally accepted
accounting principles. The term Debt shall not include obligations under the
Company's compensation or benefit plans in effect from time to time to the
extent not required to be shown as debt on the consolidated
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25
balance sheet of the Company prepared in accordance with generally accepted
accounting principles.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2H(2).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FACILITY" shall have the meaning specified in paragraph 2A.
"FACILITY FEE" shall have the meaning specified in paragraph 2H(1).
"FUNDED DEBT" shall mean with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable, more than one year
from, or is directly or indirectly renewable or extendible at the option of the
debtor to a date more than one year (including an option of the debtor under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year) from, the date on which Funded Debt
is to be determined.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"INITIAL CLOSING DAY" shall mean October 31, 1992.
"INSTITUTIONAL INVESTOR" shall mean Prudential, any Prudential
Affiliate or any bank, bank affiliate, financial institution, insurance company,
pension fund, endowment or other organization which regularly acquires debt
instruments for investment.
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26
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2A.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"PLAN" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"PRIVATE SHELF CLOSING DAY" for any Accepted Note shall mean the
Business Day specified for the closing of the purchase and sale of such Private
Shelf Note in the Request for Purchase of such Private Shelf Note, provided that
if the closing of the purchase and sale of such Accepted Note is rescheduled
pursuant to paragraph 2G, the Private Shelf Closing Day for such Accepted Note,
for all purposes of this Agreement except paragraph 2H(3), shall mean the
Rescheduled Closing Day with respect to such Closing.
"PRIVATE SHELF NOTE" and "PRIVATE SHELF NOTES" shall have the meanings
specified in paragraph 1.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all
of the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean, with respect to any Accepted Notes the
Persons, either Prudential or a Prudential Affiliate, who is purchasing such
Accepted Notes.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph
2C.
"REQUIRED HOLDER(S)" shall mean, with respect to the Notes of any
series, at any time, the holder or holders of at least 50.01% of the aggregate
principal amount of the Notes of such series outstanding at such time.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2G.
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"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company or any other officer of the Company involved principally in its
financial administration or its controllership function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph l.
"SIGNIFICANT HOLDER" shall mean (i) Prudential or any Prudential
Affiliate, so long as Prudential or any Prudential Affiliate shall hold any Note
or any amount remains available under the Facility or (ii) any other holder of
at least 10% of the aggregate principal amount of any Series of Notes from time
to time outstanding. To the extent that any notice or document is required to be
delivered to the Significant Holders under this Agreement, such requirement
shall be satisfied with respect to Prudential and all Prudential Affiliates by
giving notice, or delivery of a copy of any such document, to Prudential
(addressed to Prudential and each such Prudential Affiliate).
"SUBSIDIARY" shall mean any corporation organized under the laws of any
state of the United States or Canada which conducts the major portion of its
business in and makes the major portion of its sales to Persons located in the
United States and Canada, and 80% of the stock of every class of which, except
directors' qualifying shares, is owned by the Company either directly or through
Subsidiaries.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"UNUSED FACILITY AMOUNT" shall have the meaning specified in paragraph
2H(1).
"VOTING STOCK" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "general accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles. Notwithstanding the foregoing, if any
change in generally accepted accounting principles from those applied in the
preparation of the financial statements referred to in paragraph 8B is
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), the initial application of which change is
made after the date of this Agreement, and any such change results in a change
in the method of calculation of financial covenants, standards or terms found in
this Agreement, the parties hereto agree that until such time as the parties
hereto agree upon an amendment to this Agreement addressing such change, such
financial covenants, standards and terms shall be construed and calculated as
though such change had not taken place. The parties hereto agree to enter into
good faith negotiations in order to amend the affected provisions so as to
reflect such accounting changes with the desired result that the criteria for
evaluating the Company's financial
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condition shall be the same after such changes as if such changes had not been
made. When used herein, the term "financial statement" shall include the notes
and schedules thereto.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 Noon, New York City local time, on the date due) to
(i) the account or accounts specified in the applicable Confirmation of
Acceptance (in the case of any Private Shelf Note) or (ii) such other account or
accounts in the United States as such Purchaser may designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, such
Purchaser will make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as each
Purchaser has made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses of
any special counsel engaged by the Purchasers or any Transferee in connection
with this Agreement (other than with respect to the costs incurred in connection
with the Initial Closing Day or any draw under the Facility), the transactions
contemplated hereby and any subsequent proposed modification of, or proposed
consent under, this Agreement, whether or not such proposed modification shall
be effected or proposed consent granted, and (ii) the costs and expenses,
including attorneys' fees, incurred by any Purchaser or any Transferee in
enforcing (or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or the
transactions contemplated hereby or by reason of any Purchaser's or any
Transferee's having acquired any Note, including without limitation costs and
expenses incurred in any bankruptcy case. The obligations of the Company under
this paragraph 11B shall survive the transfer of any Note or portion thereof or
interest therein by any Purchaser or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to change or affect the rate or
time of payment of interest on or any Yield Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential
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(and not without the written consent of Prudential) the provisions of paragraph
2 may be amended or waived (except insofar as any such amendment or waiver would
affect any rights or obligations with respect to the purchase and sale of Notes
which shall have become Accepted Notes prior to such amendment or waiver), and
(iv) with the written consent of all of the Purchasers which shall have become
obligated to purchase Accepted Notes of any Series (and not without the written
consent of all such Purchasers), any of the provisions of paragraphs 2 and 3 may
be amended or waived insofar as such amendment or waiver would affect only
rights or obligations with respect to the purchase and sale of the Accepted
Notes of such Series or the terms and provisions of such Accepted Notes. Each
holder of any Note at the time or thereafter outstanding shall be bound by any
consent authorized by this paragraph 11C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein and in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $1,000,000 except as may be necessary to reflect any amount not evenly
divisible by $l,000,000; provided, however, that no such minimum denomination
shall apply to Notes issued to, or issued upon transfer by any holder of the
Notes to, Prudential or one or more Prudential Affiliates or accounts managed by
Prudential or Prudential Affiliates or to any other entity or group of
affiliates with respect to which the Notes so issued or transferred shall be
managed by a single entity. The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Each installment of principal payable on each
installment date upon each new Note issued upon any such transfer or exchange
shall be in the same proportion to the unpaid principal amount of such new Note
as the installment of principal payable on such date on the Note surrendered for
registration of transfer or exchange bore to the unpaid principal amount of such
Note. No reference need be made in any such new Note to any installment or
installments of principal previously due and paid upon the Note surrendered for
registration of transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
- 26 -
30
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not. The Company shall not assign its rights under paragraph 2.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that
Prudential, each Purchaser and each holder of any Note may deliver copies of any
financial statements and other documents delivered to it, and disclose any other
information disclosed to it, by or on behalf of the Company or any Subsidiary in
connection with or pursuant to this Agreement to (i) its directors, officers,
employees, agents and professional consultants, (ii) any Purchaser or holder of
any Note, (iii) any Institutional Investor to which it offers to sell any Note
or any part thereof other than a Competitor, (iv) any Institutional Investor to
which it sells or offers to sell a participation in all or any part of any Note
other than a Competitor, (v) any Institutional Investor from which it offers to
purchase any security of the Company, (vi) any federal or state regulatory
authority having jurisdiction over it, (vii) the National Association of
Insurance Commissioners or any similar organization, or (viii) any other Person
to which such delivery or disclosure may be necessary (a) in compliance with any
law, rule, regulation or order applicable to it, (b) in response to any subpoena
or other legal process or informal investigative demand, (c) in connection with
any litigation to which it is a party or (d) in order to enforce its rights
under this Agreement. Subject to the disclosure permitted in the first sentence
of this paragraph, Prudential, each such Purchaser, each such holder and any
Person designated by any of the foregoing Persons under paragraph 5C each agree
to use their best efforts to hold in confidence and not to disclose any
Confidential Information. "Confidential Information" shall mean financial
statements and reports delivered pursuant to paragraph 5A and other non-public
information regarding the Company which was obtained pursuant to paragraph 5B or
paragraph 5C; PROVIDED, HOWEVER, that such term shall not include information
(x) which was publicly known, or otherwise known to you at the time of
disclosure, (y) which subsequently becomes publicly known through no act or
omission by you or any of your agents or (z) which otherwise becomes known to
you other than through disclosure by the Company to you. For purposes of this
paragraph, "Competitors" shall mean any Person which has (1) any of the
following Standard Industrial Classification Codes ("SIC Codes"): 5084, 5085,
and 5063, or (2) a pension or benefit plan maintained by a Person which has any
of the foregoing SIC Codes. Prudential and each
- 27 -
31
Purchaser shall be entitled to rely on a certificate from a Person that it is
not a "Competitor" of the Company. The Company shall be entitled to modify or
supplement in writing the foregoing SIC Codes with the consent of the Required
Holders which consent shall not be unreasonably denied.
11I. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first class
mail or nationwide overnight delivery service (with charges prepaid) or by hand
delivery or telecopy and (i) if to Prudential, addressed to Prudential at the
address specified for such communications in the Purchaser Schedule attached
hereto or to such other address as Prudential shall have specified in writing to
the Company, (ii) if to any Purchaser (other than Prudential), addressed to such
Purchaser at the address specified in the Confirmation of Acceptance (in the
case of any Private Shelf Notes), or at such other address as any Purchaser
shall have specified in writing to the Company, and (iii) if to any other holder
of any Note, addressed to such other holder at such address as such other holder
shall have specified in writing to the Company or, if any such other holder
shall not have so specified an address to the Company, then addressed to such
other holder in care of the last holder of such Note which shall have so
specified an address to the Company, and (iv) if to the Company, addressed to it
at Bearings, Inc., 0000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxx X.
Xxxxxxx, Vice President-Finance and Treasurer, or at ouch other address as the
Company shall have specified to the holder of each Note in writing; provided,
however, that any such communication to the Company may also, at the option of
the Person sending such communication, be delivered by any other means either to
the Company at its address specified above or to any officer of the Company.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall be included in the computation of the interest payable on such Business
Day.
11K. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
reasonable judgment (exercised in good faith) of the Person or Persons making
such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF ILLINOIS.
- 28 -
32
11O. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11P. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between the
Company and Prudential. This Agreement shall also inure to the benefit of each
Purchaser which shall have executed and delivered a Confirmation of Acceptance,
and each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
Very truly yours,
BEARINGS, INC.
By: /s/ Xxxx X. Xxxxxxx
Title: Vice President & Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxxxx X. Xxxxxxx XX
-------------------------------
Vice President
- 29 -
33
PURCHASER SCHEDULE
Bearings, Inc.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(1) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Three Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attention: Investment Administration Unit
Telecopy: (000) 000-0000
(2) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
9700 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Regional Vice President
Telecopy: (000) 000-0000
(3) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(4) Tax Identification No.: 00-0000000
- 30 -
34
EXHIBIT A
---------
[FORM OF PRIVATE SHELF NOTE]
BEARINGS, INC.
SENIOR NOTE
(Fixed Rate)
SERIES ________
No. _________
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES: 1
FINAL MATURITY DATE:
PRINCIPAL INSTALLMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, BEARINGS, INC. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Ohio, hereby promises to pay to ______________________________, or registered
assigns, the principal sum of ______________________________ DOLLARS ton 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--30-day month)
(a) on the unpaid balance thereof 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
Yield-Maintenance Amount (as defined in the Note 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) 2% plus the Interest Rate specified above or (ii) 2%
over the rate of interest publicly announced by Xxxxxx Guaranty Trust Company of
New York from time to time in New York City as its Prime Rate.
Payments of principal of, and interest on, and any Yield-Maintenance
Amount payable with respect to, this Note are to be made at the main office of
Xxxxxx Guaranty Trust Company of New York in New York City or at such other
place as the holder hereof shall designate to the Company in writing, in lawful
money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of October 31, 1992 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
"Prudential Affiliate" (as defined in the Agreement) which becomes a party
thereto, on the other hand, and is entitled to the benefits thereof. As
--------
1 Insert "April 30, July 30, October 30 and January 30" if interest payments are
quarterly.
A-1
35
provided in the Agreement, this Note is subject to prepayment, in whole or from
time to time in part on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the 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
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 shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall
occur and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of Illinois and
shall be construed and enforced in accordance with the law of such State.
BEARINGS, INC.
By:
----------------------------
Title:
A-1
36
EXHIBIT B
[FORM OF REQUEST FOR PURCHASE]
BEARINGS, INC.
Reference is made to the Note Purchase and Private Shelf Agreement
(the "Agreement"), dated as of October 31, 1992, between Bearings, Inc. (the
"Company"), and The Prudential Insurance Company of America and each Prudential
Affiliate which becomes a party thereto. All terms used herein that are defined
in the Agreement have the respective meanings specified in the Agreement.
Pursuant to Xxxxxxxxx 0X 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
--------- -------- ----------- --------
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the Notes:
______________, or, if earlier, the last Business Day which is no
more than ten (10) days after the Acceptance Day for the Notes
covered by this Request for Purchase.
--------
* Minimum principal amount of $____________
B-2
37
5. The purchase price of the Notes is to be transferred to:
Name, Address Name and
and ABA Routing Number of Telephone No.
Number of Bank Account of Bank Officer
-------------- --------- ---------------
6. The Company certifies (a) that the representations and warranties
contained in paragraph 8 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 and (b)
that there exists on the date of this Request for Purchase no Event
of Default or Default.
Dated: BEARINGS, INC.
By:________________________________
Authorized Officer
B-3
38
EXHIBIT C
---------
[FORM OF CONFIRMATION OF ACCEPTANCE]
BEARINGS, INC.
Reference is made to the Note Purchase and Private Shelf Agreement
(the "Agreement"), dated as of October 31, 1992 between Bearings, 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.
Prudential or the Prudential Affiliate which is named below as a
Purchaser of Notes hereby confirms the representations as to such Notes set
forth in paragraph 9 of the Agreement, and agrees to be bound by the provisions
of paragraphs 2E and 2G of the Agreement relating to the purchase and sale of
such Notes.
Pursuant to paragraph 2E of the Agreement, an Acceptance with
respect to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: 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:
(g) Payment and notice instructions: As set forth on
attached Purchaser Schedule
(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:
(g) Payment and notice instructions: As set forth on
attached Purchaser Schedule
[(C), (D)....... same information as above.]
C-1
39
II. Closing Day: [Must be within 10 days of the date of this Confirmation of
Acceptance.]
Dated: BEARINGS, INC.
By:______________________________
Title:___________________________
[THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA]
By:_______________________________
Vice President
[PRUDENTIAL AFFILIATE]
By:_______________________________
Vice President
C-2
40
Exhibit D-1
-----------
[TH&F LETTERHEAD]
October 31, 1992
The Prudential Insurance Company of America
c/o Prudential Capital Group
9700 Sears Tower
000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Dear Sirs:
We have acted as counsel for Bearings, Inc., an Ohio corporation
(the "Company"), in connection with the Note Purchase and Private Shelf
Facility, dated as of October 31, 1992, between the Company and you (the
Agreement). All terms used herein that are defined in the Agreement have the
respective meanings specified in the Agreement.
In this connection, we have examined such certificates of public
officials, certificates of officers of the Company and copies certified to our
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as we have deemed relevant and
necessary as a basis for our opinion hereafter set forth. We have relied upon
such certificates of public officials and of officers of the Company with
respect to the accuracy of material factual matters contained therein which were
not independently established. With respect to the opinion expressed in
paragraph 3 below, we have also relied upon the representation made by you in
paragraph 9A of the Agreement. With respect to the opinion expressed in para
graph 4 below, we have relied solely upon the opinion of Xxxxxx X. Xxxxxxx, Vice
President-General Counsel of the Company and upon our review of the Company's
Amended and Restated Articles of Incorporation and Code of Regulations.
Based on the foregoing, it is our opinion that:
1. The Company is validly existing in good standing under the laws
of the State of Ohio. The Company has the corporate power to carry on its
business as now being conducted.
2. The Agreement has been duly authorized by all requisite
corporate action and duly executed and delivered by authorized officers of the
Company, and is a valid obligation of the Company, legally binding upon and
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance,
sale and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, ask
amended.
41
The Prudential Insurance Company of America
Page 2
4. Insofar as is known to us after having made due inquiry with
respect thereto, the execution and delivery of the Agreement, the offering of
the Notes and fulfillment of and compliance with the provisions of the Agreement
do not conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or assets of the
Company pursuant to, or require any authorization, consent, approval, exemption,
or other action by or notice to or filing with any court, administrative or
governmental body or other Person (other than routine filings after the date
hereof with the Securities and Exchange Commission and/or state Blue Sky
authorities) pursuant to, the charter or by-laws of the Company, any applicable
law (including any securities or Blue Sky law), statute, rule or regulation or
any mortgage, deed of trust, indenture, loan agreement or other material
agreement (including, without limitation, any agreement listed in Exhibit E to
the Agreement), instrument, order, judgment or decree known to us to which the
Company or any of its Subsidiaries is a party or otherwise subject.
The opinions set forth above are subject to the following
qualifications and assumptions:
A. We are admitted to practice in the State of Ohio and have
reviewed and relied upon Ohio law and the federal laws of the United States
only, and we have undertaken no review of the laws or applications of laws of
any other jurisdiction. Accordingly, this opinion is limited to the laws and
application thereof of Ohio and the federal laws of the United States. For
purposes of this opinion, we have assumed that Illinois law is substantively
equivalent to Ohio law although we have not reviewed Illinois law.
B. As used in this letter, the phrases "to our knowledge" or
"known to us" with reference to matters of fact, mean that after inquiries of
officers of the Company and on the basis of information that has come to our
attention during the course of our representation of the Company in connection
with the Agreement, we find no reason to believe that the opinions expressed
herein are factually incorrect; beyond that we have made no independent factual
investigations for the purpose of rendering this opinion.
C. We have assumed that the Agreement is a valid, binding and
enforceable obligation of Prudential which has been duly authorized, executed
and delivered by it.
D. We express no opinion as to the availability of any specific
remedy upon breach of any of the agreements, documents or obligations referred
to herein beyond the practical realization of the benefits intended to be
provided to you thereby. In addition, we express no opinion with respect to the
recoverability of attorneys' fees pursuant to any provision requiring the
payment thereof.
Very truly yours,
42
Exhibit D-2
-----------
[BEARINGS, INC. LETTERHEAD]
[Dates of Draws]
The Prudential Insurance Company of America
c/o Prudential Capital Group
9700 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
[Names and addresses of other purchasers]
Dear Sir:
I am the general counsel of Bearings, Inc., an Ohio corporation
(the "Company"), and have acted as counsel for the Company in connection with
the $80,000,000 Maximum Aggregate Principal Amount Private Shelf Facility, dated
as of October 29, 1992, between the Company and you (the "Agreement.), pursuant
to which the Company has issued to you today its Series _____ Private Shelf
Notes in the aggregate principal amount of $______________ (the "Notes"). All
terms used herein that are defined in the Agreement have the respective meanings
specified in the Agreement.
In this connection, I have examined such certificates of public
officials, certificates of officers of the Company and copies certified to my
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as I have deemed relevant and
necessary as a basis for our opinion hereafter set forth. We have relied upon
such certificates of public officials and of officers of the Company with
respect to the accuracy of material factual matters contained therein which were
not independently established. With respect to the opinion expressed in
paragraph 3 below, I have also relied upon the representation made by you in
paragraph 9A of the Agreement.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Ohio. Each Subsidiary
is a corporation validly existing in good standing under the laws of its
jurisdiction of incorporation. The Company has, and each Subsidiary has, the
corporate power to carry on its business as now being conducted.
2. The Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and is a valid obligation of the Company, legally
binding upon and enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and (b) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance,
sale and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes
43
The Prudential Insurance Company of America
Page 2
under the Securities Act or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of regulation G, T or X
of the Board of Governors of the Federal Reserve System.
5. Insofar as is known to me after having made due inquiry with
respect thereto, the execution and delivery of the Agreement, the offering of
the Notes and fulfillment of and compliance with the provisions of the Agreement
do not conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or assets of the
Company pursuant to, or require any authorization, consent, approval, exemption,
or other action by or notice to or filing with any court, administrative or
governmental body or other Person (other than routine filings after the date
hereof with the Securities and Exchange Commission and/or state Blue Sky
authorities) pursuant to, the charter or by-laws of the Company, any applicable
law (including any securities or Blue Sky law), statute, rule or regulation or
any mortgage, deed of trust, indenture, loan agreement or other material
agreement (including, without limitation, any agreement listed in Exhibit E to
the Agreement), instrument, order, judgment or decree known to me to which the
Company or any of its Subsidiaries is a party or otherwise subject.
The execution and delivery of the Agreement, the offering,
issuance and sale of the Notes and fulfillment of and compliance with the
respective provisions of the Agreement and the Notes do not conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of the Company pursuant to, or require
any authorization, consent, approval, exemption, or other action by or notice to
or filing with any court, administrative or governmental body or other Person
(other than routine filings after the date hereof with the Securities and
Exchange Commission and/or state Blue Sky authorities) pursuant to, the charter
or by-laws of the Company, any applicable law (including any securities or Blue
Sky law), statute, rule or regulation or (insofar as is known to me after having
made due inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Exhibit E to the Agreement), instrument,
order, judgment or decree known to me to which the Company or any of its
Subsidiaries is a party or otherwise subject.
The opinions set forth above are subject to the following
qualifications and assumptions:
A. I am admitted to practice in the State of Ohio and have
reviewed and relied upon Ohio law and the federal laws of the United States
only, and I have undertaken no review of the laws or applications of laws of any
other jurisdiction. Accordingly, this opinion is limited to the laws and
application thereof of Ohio and the federal laws of the United States. For
purposes of this opinion, I have assumed that Illinois law is substantively
equivalent to Ohio law although I have not reviewed Illinois law.
B. As used in this letter, the phrase known to men with reference
to matters of fact, mean that after inquiries of officers of the Company and on
the basis of information that has come to my attention during the course of our
representation of the Company in connection with the Agreement, I find no reason
to believe that the opinions expressed herein are factually incorrect; beyond
that I have made no independent factual investigations for the purpose of
rendering this opinion.
44
The Prudential Insurance Company of America
Page 3
C. I have assumed that the Agreement is a valid, binding and
enforceable obligation of Prudential which has been duly authorized, executed
and delivered by it.
D. I express no opinion as to the availability of any specific
remedy upon breach of any of the agreements, documents or obligations referred
to herein beyond the practical realization of the benefits intended to be
provided to you thereby. In addition, I express no opinion with respect to the
recoverability of attorneys' fees pursuant to any provision requiring the
payment thereof.
Very truly yours,
45
EXHIBIT E
---------
LIST OF AGREEMENTS RESTRICTING DEBT
Director borrowing resolutions in effect from time to time may limit the total
amount of indebtedness which the Company is authorized to incur. Presently those
resolutions limit total borrowings to $140,000,000 (with temporary authority up
to $190,000,000 through 12/31/92).
Other than that none.
46
EXHIBIT F
---------
LIST OF SUBSIDIARIES
Active
------
Xxxxx Bearings, Incorporated
Xxxxxxxx Bearings, Inc.
King Bearing, Inc.
Inactive
--------
Bearings, Inc. (TN)
Bearings Continental, Inc.
Bearings Pan American, Inc.
Bearing Sales & Service, Inc.
The Ohio Ball Bearing Company
Industrial Distributions, Inc.
Bearings, Inc. (AL)
47
EXHIBIT G
---------
LIST OF ENCUMBRANCES
1. Possible liens of landlords for rents arising under applicable state laws.
2. Restrictions, easements, reservations and other encumbrances on real
properties owned by the Company or any Subsidiary, none of which materially
interfere with the operations of such properties.
3. Liens arising out of Ledger Balance Inventories, consignments and similar
arrangements with suppliers.
4. Rights, if any, of creditors of customers to inventories on consignment
with customers where no UCC filing has been made by the Company.
5. Financing statements, if any, filed in connection with equipment leases,
none of which are material to the financial condition to the Company or its
subsidiaries.
6. Guarantee by Company to Xxxx & Bradstreet and its customers with respect
to debt of subsidiaries.
7. Statutory liens, including mechanics liens, on vehicles, real estate and
other equipment, none of which are material to the financial condition of
the Company or its subsidiaries.
