Composite Conformed Copy
of
Note Purchase Agreement
Dated as of December 15, 1995
Re:
$40,000,000 6.81% Senior Notes, Series A,
Due December 15, 2005
and
$35,000,000 6.70% Senior Notes, Series B,
Due December 15, 2005
of
PITTWAY CORPORATION
Separate Note Purchase Agreements, each dated as of December 15, 1995, in the
form attached hereto, were entered into among Pittway Corporation and the
institutions named below. Each of said Note Purchase Agreements was executed
on behalf of Pittway Corporation by Xxxx X. Xxxxxxxx, its Financial Vice
President and Treasurer. The separate Note Purchase Agreements were addressed
to the institutions as shown on Schedule A attached to said Note Purchase
Agreements and were accepted by the officers of the respective institutions as
shown below:
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ Xxxx X. Xxxxxx
Its Assistant Vice-President
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY
By /s/ Xxxxxxx X. Xxxxxxxxxx
Its Vice President and Assistant Treasurer
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Xxxxxxx X. Xxxxxxx
Its Vice President
Corporate Fixed-Income Securities
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
By /s/ Xxxxxxx X. Xxxxxxx
Its Attorney-in-Fact
WEST COAST LIFE INSURANCE COMPANY
By /s/ Xxxxxxx X. Xxxxxxx
Its Attorney-in-Fact
Pittway Corporation
$40,000,000
6.81% SENIOR NOTES, SERIES A, DUE DECEMBER 15, 2005
AND
$35,000,000
6.70% SENIOR NOTES, SERIES B, DUE DECEMBER 15, 2005
_____________
Note Purchase Agreement
_____________
DATED AS OF DECEMBER 15, 1995
Table of Contents
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. Authorization of Notes......................................1
SECTION 2. Sale and Purchase of Notes..................................1
SECTION 3. Closing.....................................................2
SECTION 4. Conditions to Closing.......................................2
Section 4.1. Representations and Warranties............................2
Section 4.2. Performance; No Default...................................2
Section 4.3. Compliance Certificates...................................3
Section 4.4. Opinions of Counsel.......................................3
Section 4.5. Purchase Permitted By Applicable Law, Etc.................3
Section 4.6. Sale of Other Notes.......................................3
Section 4.7. Payment of Special Counsel Fees...........................3
Section 4.8. Private Placement Number..................................3
Section 4.9. Changes in Corporate Structure............................4
Section 4.10. Proceedings and Documents.................................4
SECTION 5. Representations and Warranties of the Company...............4
Section 5.1. Organization; Power and Authority.........................4
Section 5.2. Authorization, Etc........................................4
Section 5.3. Disclosure................................................4
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates................................................5
Section 5.5. Financial Statements......................................5
Section 5.6. Compliance with Laws, Other Instruments, Etc..............6
Section 5.7. Governmental Authorizations, Etc..........................6
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.6
Section 5.9. Taxes.....................................................7
Section 5.10. Title to Property; Leases.................................7
Section 5.11. Licenses, Permits, Etc....................................7
Section 5.12. Compliance with ERISA.....................................7
Section 5.13. Private Offering by the Company...........................8
Section 5.14. Use of Proceeds; Margin Regulations.......................9
Section 5.15. Existing Debt and Indebtedness; Future Liens..............9
Section 5.16. Status under Certain Statutes.............................9
Section 5.17. Environmental Matters.....................................9
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SECTION 6. Representations of the Purchaser............................10
Section 6.1. Purchase for Investment..................................10
Section 6.2. Source of Funds..........................................10
SECTION 7. Information as to Company...................................12
Section 7.1. Financial and Business Information.......................12
Section 7.2. Officer's Certificate....................................15
Section 7.3. Inspection...............................................16
SECTION 8. Prepayment of the Notes.....................................16
Section 8.1. Required Prepayments.....................................16
Section 8.2. Optional Prepayments with Make-Whole Amount..............16
Section 8.3. Optional Prepayment of Series B Notes Without Premium....17
Section 8.4. Allocation of Partial Prepayments........................17
Section 8.5. Maturity; Surrender, Etc.................................17
Section 8.6. Purchase of Notes........................................18
Section 8.7. Make-Whole Amount........................................18
SECTION 9. Affirmative Covenants.......................................19
Section 9.1. Compliance with Law......................................19
Section 9.2. Insurance................................................20
Section 9.3. Maintenance of Properties................................20
Section 9.4. Payment of Taxes and Claims..............................20
Section 9.5. Corporate Existence, Etc.................................20
SECTION 10. Negative Covenants Applicable to Series A Notes.............21
Section 10.1. Limitation on Debt of Restricted Subsidiaries............21
Section 10.2. Maintenance of Financial Condition.......................21
Section 10.3. Limitation on Liens......................................21
Section 10.4. Sales of Assets..........................................23
Section 10.5. Limitation on Designation of Unrestricted Subsidiaries...24
Section 10.6. Amendments of Series B Notes.............................24
Section 10.7. Loans to Officers, Etc...................................24
SECTION 11. Negative Covenants Applicable to Series B Notes.............24
Section 11.1. Limitation on Indebtedness of Restricted Subsidiaries....24
Section 11.2. Maintenance of Financial Condition.......................24
Section 11.3. Limitation on Liens......................................25
Section 11.4. Sales of Assets..........................................26
SECTION 12. Negative Covenants Applicable to All Notes..................27
Section 12.1. Sale and Leaseback.......................................27
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Section 12.2. Restricted Payments......................................27
Section 12.3. Permitted Investments....................................28
Section 12.4. Transactions with Affiliates.............................28
Section 12.5. Merger, Consolidation, Etc...............................28
Section 12.6. Designation of Restricted and Unrestricted Subsidiaries..29
SECTION 13. Events of Default...........................................30
SECTION 14. Remedies on Default, Etc....................................32
Section 14.1. Acceleration.............................................32
Section 14.2. Other Remedies...........................................33
Section 14.3. Rescission...............................................34
Section 14.4. No Waivers or Election of Remedies, Expenses, Etc........34
SECTION 15. Registration; Exchange; Substitution of Notess..............34
Section 15.1. Registration of Notes....................................34
Section 15.2. Transfer and Exchange of Notes...........................35
Section 15.3. Replacement of Notes.....................................35
SECTION 16. Payments on Notes...........................................36
Section 16.1. Place of Payment.........................................36
Section 16.2. Home Office Payment......................................36
SECTION 17. Expenses, Etc...............................................36
Section 17.1. Transaction Expenses.....................................36
Section 17.2. Survival.................................................37
SECTION 18. Survival of Representations and Warranties;
Entire Agreement............................................37
SECTION 19. Amendment and Waiver........................................37
Section 19.1. Requirements.............................................37
Section 19.2. Solicitation of Holders of Notes.........................37
Section 19.3. Binding Effect, Etc......................................38
Section 19.4. Notes Held by Company, etc...............................38
SECTION 20. Notices.....................................................38
SECTION 21. Reproduction of Documents...................................39
SECTION 22. Confidential Information....................................39
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SECTION 23. Miscellaneous...............................................40
Section 23.1. Successors and Assigns...................................40
Section 23.2. Payments Due on Non-Business Days........................40
Section 23.3. Severability.............................................41
Section 23.4. Construction.............................................41
Section 23.5. Counterparts.............................................41
Section 23.6. Governing Law............................................41
Signature..................................................................41
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SCHEDULE A - INFORMATION RELATING TO PURCHASERS
SCHEDULE B - DEFINED TERMS
SCHEDULE 5.3 - Disclosure Materials
SCHEDULE 5.4 - Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 - Financial Statements
SCHEDULE 5.8 - Certain Litigation
SCHEDULE 5.11 - Patents, etc.
SCHEDULE 5.12 - Plans
SCHEDULE 5.14 - Use of Proceeds
SCHEDULE 5.15 - Debt and Indebtedness as of September 30, 1995
SCHEDULE 10.3(f) - Existing Liens
SCHEDULE 12.3 - Certain Existing Investments
EXHIBIT 1-A - Form of 6.81% Senior Note, Series A, due
December 15, 2005
EXHIBIT 1-B - Form of 6.70% Senior Note, Series B, due
December 15, 2005
EXHIBIT 4.4(a) - Form of Opinion of Special Counsel for the Company
EXHIBIT 4.4(b) - Form of Opinion of Special Counsel for the Purchasers
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Pittway Corporation
000 XXXXX XXXXXX XXXXX, XXXXX 000
XXXXXXX, XXXXXXXX 00000-0000
6.81% SENIOR NOTES, SERIES A, DUE DECEMBER 15, 2005
AND
6.70% SENIOR NOTES, SERIES B, DUE DECEMBER 15, 2005
Dated as of December 15, 1995
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
PITTWAY CORPORATION, a Delaware corporation (the "Company"), agrees with
you as follows:
SECTION 1. Authorization of Notes.
The Company will authorize the issue and sale of (a) $40,000,000
aggregate principal amount of its 6.81% Senior Notes, Series A, due December
15, 2005(the "Series A Notes"), and (b) $35,000,000 aggregate principal amount
of its 6.70% Senior Notes, Series B, due December 15, 2005 (the "Series B
Notes" and collectively with the Series A Notes, the "Notes", such term to
include any such notes issued in substitution therefor pursuant to Sec. 15 of
this
Agreement or the Other Agreements (as hereinafter defined)). The Series A
Notes shall be substantially in the form set out in Exhibit 1-A and the Series
B Notes shall be substantially in the form set out in Exhibit 1-B, in each
case with such changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement, and
references to a "Series" or "Series of Notes" shall mean separately the
Series A Notes and the Series B Notes.
SECTION 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Sec. 3, Notes of the Series and in the principal amount
specified opposite your name in Schedule A at the purchase price of 100% of
the principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements
(the "Other Agreements") identical with this Agreement with the other
purchasers named in Schedule A (the "Other Purchasers"), providing for the
sale at such Closing to the Other Purchasers of Notes of the Series and in the
principal amounts specified opposite their respective names in Schedule A.
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Your obligation hereunder, and the obligations of the Other Purchasers under
the Other Agreements, are several and not joint obligations, and you
shall have no obligation under the Other Agreements and no liability to any
Person for the performance or nonperformance by the Other Purchasers
thereunder.
SECTION 3. Closing.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on December 15, 1995 or on such other Business Day thereafter as
may be agreed upon by the Company and you and the Other Purchasers. At the
Closing the Company will deliver to you the Notes to be purchased by you in
the form of a single Note (or such greater number of Notes in denominations of
at least $1,000,000 as you may request) dated the date of the Closing and
registered in your name (or in the name of your nominee), against delivery by
you to the Company or its order of immediately available funds in the amount
of the purchase price therefor by wire transfer of immediately available funds
for the account of the Company to account number 76-30751 at Bank of America
Illinois (ABA No. 000000000). If at the Closing the Company shall fail to
tender such Notes to you as provided above in this Sec. 3, or any of the
conditions specified in Sec. 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
SECTION 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.
Section 4.2. Performance; No Default. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Restricted Subsidiary (nor, in the case of Sec. 12.2, any
Subsidiary) shall have entered into any transaction since September 30, 1995
that would have been prohibited by Sec. 10, 11 or 12 had such Sections applied
since such date.
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Section 4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sec. 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement and the Other Agreements.
Section 4.4. Opinions of Counsel. You shall have received opinions
in form and substance satisfactory to you, dated the date of the Closing (a)
from Xxxxxxxx & Xxxxx, counsel for the Company, covering the matters set forth
in Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you) and (b)
from Xxxxxxx and Xxxxxx, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may
reasonably request.
Section 4.5. Purchase Permitted By Applicable Law, Etc. On the date
of the Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as
to the character of the particular investment, (ii) not violate any applicable
law or regulation (including, without limitation, Regulation G, T or X of the
Board of Governors of the Federal Reserve System) and (iii) not subject you to
any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
Section 4.6. Sale of Other Notes. Contemporaneously with the
Closing, the Company shall sell to the Other Purchasers, and each Other
Purchaser shall purchase, the Notes to be purchased by it at the Closing as
specified in Schedule A.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Sec. 17.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Sec. 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.
Section 4.8. Private Placement Number. A Private Placement number
issued by Standard & Poor's CUSIP Service Bureau shall have been obtained for
each Series of Notes.
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Section 4.9. Changes in Corporate Structure. Except for the merger
of Pittway Real Estate, Inc. into the Company, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of
the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.
Section 4.10. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.
SECTION 5. Representations and Warranties of the Company.
The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreements and the Notes and to perform the provisions
hereof and thereof.
Section 5.2. Authorization, Etc. This Agreement, the Other
Agreements and the Notes have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company has delivered or caused to be
delivered to you and the Other Purchasers a copy of a Private Placement
Memorandum dated September 22, 1995 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3,
this Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
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they were made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed in Schedule
5.5, since December 31, 1994, there has been no change in the financial
condition, operations, business or properties of the Company or any Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material Adverse Effect
that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of
the Company specifically for use in connection with the transactions
contemplated hereby. You acknowledge that the Company intends to effect the
distribution described in clause (2) of the final sentence of Sec. 10.4,
without consideration.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, the percentage of
shares of each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary and whether such
Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries and officers and directors
of the Company, and (iii) of the Company's directors and executive officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Restricted Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another
Restricted Subsidiary free and clear of any Lien (except as otherwise
disclosed in Schedule 5.4).
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or
in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Restricted Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
(d) No Restricted Subsidiary is a party to, or otherwise subject to
any legal restriction or any agreement (other than the agreements listed on
Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Restricted Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or
any of its Restricted Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Restricted Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its
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Subsidiaries, and of the Company and its Restricted Subsidiaries, listed on
Schedule 5.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries, or of the
Company and its Restricted Subsidiaries, as of the respective dates specified
in such Schedule and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved
except as set forth in the notes thereto (subject, in the case of any interim
financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Notes to be purchased by you will not (i) contravene, result in any breach of,
or constitute a default under, or result in the creation of any Lien in
respect of any property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other agreement or instrument to which the Company
or any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) other than a violation
caused by you, violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary. The representations of the Company in clauses (ii) and (iii)
above are made in reliance upon and subject to the accuracy of your
representations in Sec. 6 of this Agreement, to the extent applicable.
Section 5.7. Governmental Authorizations, Etc. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Authority is required to be made or obtained by the Company in
connection with the execution, delivery or performance by the Company of this
Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders. (a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Subsidiary or any property of the Company or
any Subsidiary in any court or before any arbitrator of any kind or before or
by any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
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Section 5.9. Taxes. The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate actions and with respect to which
the Company or a Subsidiary, as the case may be, has established reserves to
the extent and in such amounts as are in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The
Federal income tax liabilities of the Company and its consolidated
Subsidiaries have been determined by the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ended December 31, 1990.
Section 5.10. Title to Property; Leases. The Company and its
Subsidiaries have good and sufficient title to their respective properties
that individually or in the aggregate are Material, including all such
properties reflected in the most recent audited balance sheet referred to in
Sec. 5.5 or purported to have been acquired by the Company or any Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary
course of business), in each case free and clear of Liens prohibited by this
Agreement. All leases that individually or in the aggregate are Material are
valid and subsisting and are in full force and effect in all material
respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in
Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known Material conflict with the rights of
others;
(b) to the best knowledge of the Company, no product of the Company
or its Subsidiaries infringes in any Material respect any license, permit,
franchise, authorization, patent, copyright, service xxxx, trademark, trade
name or other right owned by any other Person and the Company has not received
notice from any Person of a claimed Material infringement which remains
unresolved; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service xxxx, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate has operated and administered each Plan in compliance with all
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applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to any Plans, and no event, transaction or
condition has occurred or exists that could reasonably be expected to result
in the incurrence of any such liability by the Company or any ERISA Affiliate,
or in the imposition of any Lien on any of the assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
Plan that is subject to the minimum funding requirements of Section 302 of
ERISA or Section 412 of the Code, determined as of the end of such Plan's most
recently ended plan year on the basis of the actuarial assumptions specified
for funding purposes in such Plan's most recent actuarial valuation report,
did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has
the meaning specified in section 4001 of ERISA and the terms "current value"
and "present value" have the meanings specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B
of the Code or applicable state continuation coverage laws) of the Company and
its Restricted Subsidiaries is not Material.
(e) Schedule 5.12 contains a complete and correct list of all Plans.
(f) The execution and delivery of this Agreement and the issuance and
sale of Notes to you hereunder will not result in a non-exempt prohibited
transaction under section 406 of ERISA or section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Sec. 5.12(f) is made in reliance upon and subject to the accuracy of your
representation in Sec. 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.
Section 5.13. Private Offering by the Company. Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any person other
than you, the Other Purchasers and not more than 45 other insurance companies
or pension funds, each of which has substantial assets and extensive
experience in investments in securities similar to the Notes and each of which
has been offered the Notes at a private sale for investment. Neither the
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Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 CFR 207) under such circumstances as to involve a violation
of such Regulation, or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation
of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer
in a violation of Regulation T of said Board (12 CFR 220). Margin stock does
not constitute more than 10% of the value of the consolidated assets of the
Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 10% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in said
Regulation G.
Section 5.15. Existing Debt and Indebtedness; Future Liens. (a)
Except as described therein, Schedule 5.15 sets forth a complete and correct
list of all outstanding Debt and Indebtedness of the Company and its
Restricted Subsidiaries as of September 30, 1995, since which date there has
been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt or Indebtedness of the Company
or its Restricted Subsidiaries. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Debt or Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any Debt or
Indebtedness of the Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt or Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Restricted Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not permitted
by Sec. 10.3 and 11.3.
Section 5.16. Status under Certain Statutes. Neither the Company nor
any Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
Section 5.17. Environmental Matters. Except as otherwise disclosed
to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim, against the Company or any of its Subsidiaries or any of
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their respective real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any Subsidiary has knowledge of any facts
which could reasonably be expected to give rise to any claim, public or
private, against any of them of violation of Environmental Laws or damage to
the environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to
other assets or their use, except, in each case, such as could not reasonably
be expected to result in a Material Adverse Effect;
(c) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them, or disposed of any Hazardous Materials, in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(d) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.This Sec. 5.17,
together with the representation set forth in Sec. 5.8(b), sets forth the sole
and exclusive representations and warranties of the Company with respect to
environmental matters.
SECTION 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
your or their property shall at all times be within your or their control.
You understand that the Notes have not been registered under the Securities
Act and may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes.
Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds
(a "Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) if you are an insurance company, the Source is an "insurance
company general account" within the meaning of PTE 95-60 and the purchase and
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holding of Notes by you is eligible for and satisfies the requirements of PTE
95-60, it being understood and agreed that in making such representation, such
insurance company is relying on the truth and accuracy of the representation
of the Company set forth in Sec. 5.12(e); or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a
bank collective investment fund, within the meaning of the PTE 91-38 (issued
June 12, 1991) and, except as you have disclosed to the Company in writing
pursuant to this paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund and all other requirements for an exemption under
PTE 90-1 or 91-38, as applicable, are met; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established
or maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such QPAM
and (ii) the names of all employee benefit plans whose assets are included in
such investment fund have been disclosed to the Company in writing pursuant to
this paragraph (c); or
(d) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(d); or
(e) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA, and does not include
assets of any individual retirement account or individual retirement annuity
as described in Section 408 of the Code.
If you or any subsequent transferee of the Notes issued to you indicates
to the Company in writing prior to acquiring such Notes that you or such
transferee is relying on any representation contained in paragraph (b), (c) or
(d) above, the Company shall deliver a certificate on the date of the Closing,
with respect to you, and on or prior to the date of the transfer of such
Notes, with respect to any such transferee, which certificate shall state
whether (i) with respect to any plan identified pursuant to paragraph (b) or
(d) above, the Company is a "party in interest" (as defined in Title I,
Section 3(14) of ERISA) or a "disqualified person" (as defined in Section
4975(e)(2) of the Code), or (ii) with respect to any plan identified pursuant
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to paragraph (c) above, the Company or any "affiliate" (as defined in Section
V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM
as manager of the assets of any plan identified in writing pursuant to
paragraph (c) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plans.
As used in this Sec. 6.2, the terms "employee benefit plan", "party in
interest" and "separate account" shall have the respective meanings assigned
to such terms in section 3 of ERISA.
SECTION 7. Information as to Company.
Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements - within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of:
(i) a consolidated balance sheet of the Company and its Restricted
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Restricted Subsidiaries for
such quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter, and
(iii) unless identical to the matters required under clause (i)
above, a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and
(iv) unless identical to the matters required under clause (ii)
above, consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Subsidiaries for such quarter and
(in the case of the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial statements
generally, and certified by a Senior Financial Officer as fairly presenting,
in all material respects, the financial position of the companies being
reported on and their results of operations and cash flows, subject to changes
resulting from year-end adjustments, provided that delivery within the time
period specified above of copies of the Company's Quarterly Report on Form
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10-Q prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of Sec. 7.1(a)(iii) and (iv);
(b) Annual Statements - within 105 days after the end of each fiscal
year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Restricted
Subsidiaries, for such year, and
(iii) unless identical to the matters required under clause (i)
above, a consolidated balance sheet of the Company and its Subsidiaries,
as at the end of such year, and
(iv) unless identical to the matters required under clause (ii)
above, consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and,
in the case of the items referred to in Sec. 7.1(b)(i) and (ii), unless such
items are identical to the items referred to in Sec. 7.1(b)(iii) and (iv),
certified by a Senior Financial Officer in the same manner as required for
items delivered under Sec. 7.1(a), and in the case of the items referred to in
Sec. 7.1(b)(iii) and (iv), or in Sec. 7.1(b)(i) and (ii) if identical to the
items referred to in Sec. 7.1(b)(iii) and (iv), accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their
results of operations and cash flows and have been prepared in conformity
with GAAP, and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) by a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware that
any such condition or event then exists, specifying the nature and period
of the existence thereof (it being understood that such accountants shall
not be liable, directly or indirectly, for any failure to obtain
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knowledge of any Default or Event of Default unless such accountants
should have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such an
audit),
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year prepared in
accordance with the requirements therefor and filed with the Securities and
Exchange Commission, together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act
and the accountant's certificate described in clause (B) above, shall be
deemed to satisfy the requirements of Sec. 7.1(b)(iii) and (iv);
(c) SEC and Other Reports - promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders generally,
and (ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus
and all amendments thereto, filed by the Company or any Subsidiary with the
Securities and Exchange Commission or with any national securities exchange
(other than any registration statement on Form S-8 or any successor thereto or
any related prospectus or amendment) and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default - promptly, and in any
event within five Business Days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default, a written notice specifying
the nature and period of existence thereof and what action the Company is
taking or proposes to take with respect thereto;
(e) ERISA Matters - promptly, and in any event within 10 Business
Days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that
the Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect as of the date such reportable event occurred; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a written notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan;
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(iii) any incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans, or
imposition of any Lien on any of the assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with any other
such liabilities or Liens then existing, could reasonably be expected to
have a Material Adverse Effect; or
(iv) any change in the facts with regard to the status of Plans
as identified in Schedule 5.12;
(f) Notices from Governmental Authority - promptly, and in any event
within 30 days of receipt thereof, copies of any written notice to the Company
or any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information - with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder
and under the Notes as from time to time may be reasonably requested by any
such holder of Notes.
Section 7.2. Officer's Certificate;. Each set of financial
statements delivered to a holder of Notes pursuant to Sec. 7.1(a) or Sec.
7.1(b) hereof shall be accompanied by a certificate of a Senior Financial
Officer setting forth:
(a) Covenant Compliance - the information (including detailed
calculations as of the end of such quarterly or annual period) required in
order to establish whether the Company was in compliance with the requirements
of Sec. 10, 11, 12.1, 12.2, 12.3 and 12.5 during and as of the end of the
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the
calculations as of the end of such quarterly or annual period of the maximum
or minimum amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections, and the calculation as of the end of such
quarterly or annual period of the amount, ratio or percentage then in
existence); and
(b) Event of Default - a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and
its Restricted Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event
of Default or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the failure of
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the Company or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company shall have taken or proposes to take with respect thereto.
Section 7.3. Inspection. The Company shall permit the
representatives of each holder of Notes of a Series that is an Institutional
Investor:
(a) No Default - if no Default or Event of Default then exists with
respect to such Series, at the expense of such holder and upon reasonable
prior notice to the Company, to visit the principal executive office of the
Company, to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent will
not be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times and as often as may
be reasonably requested in writing; and
(b) Default - if a Default or Event of Default then exists with
respect to such Series, at the expense of the Company, to visit and inspect
any of the offices or properties of the Company or any Subsidiary, to examine
all their respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments.
(a) Series A Notes. No prepayments are required to be made with
respect to the Series A Notes prior to their expressed maturity date other
than prepayments which may be required in connection with an acceleration of
the Series A Notes pursuant to the provisions of Sec. 14.1.
(b) Series B Notes. On December 15, 1999 and on each December 15
thereafter to and including December 15, 2004, the Company will prepay
$5,000,000 principal amount (or such lesser principal amount as shall then be
outstanding) of the Series B Notes at par and without payment of the Make-
Whole Amount or any premium, provided that upon any partial prepayment of the
Series B Notes pursuant to Sec. 8.2 or Sec. 8.3 the principal amount of each
required prepayment of the Series B Notes becoming due under this Sec. 8.1 on
and after the date of such prepayment shall be reduced in the same proportion
as the aggregate unpaid principal amount of the Series B Notes is reduced as a
result of such prepayment.
Section 8.2. Optional Prepayments with Make-Whole Amount. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes of either Series, in an
amount not less than $1,000,000 of the aggregate principal amount of the Notes
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of such Series then outstanding in the case of a partial prepayment, at 100%
of the principal amount so prepaid, and accrued interest thereon to the date
of prepayment plus the applicable Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes of the Series to be prepaid written notice of each
optional prepayment under this Sec. 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes of such
Series to be prepaid on such date, the principal amount of such Notes held by
such holder to be prepaid (determined in accordance with Sec. 8.4), and the
interest to be paid on the prepayment date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a Senior
Financial Officer as to the estimated Make-Whole Amount due in connection with
such prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of such
Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date. No incorrect
determination by the Company of the Make-Whole Amount payable in connection
with any Note to be prepaid pursuant to this Sec. 8.2 or that has become or is
declared to be immediately due and payable pursuant to Sec. 14.1 shall be
binding, and the Required Holders shall be entitled to object to any such
computation of the Company and to resolve with the Company the correct
computation of such Make-Whole Amount.
Section 8.3. Optional Prepayment of Series B Notes Without Premium.
In the event the Company shall, on or after December 15, 1997, issue and sell
shares of its capital stock of any class or any warrants, rights or options to
purchase or acquire any shares of its capital stock, it may within 30 days
after such transaction, at its option and upon notice as provided below, apply
all or any portion of the net cash proceeds of such transaction to the
prepayment of up to 50% of the then outstanding principal amount of the Series
B Notes by payment of 100% of the principal amount so prepaid, and accrued
interest thereon to the date of prepayment, and without payment of the Make-
Whole Amount or any premium. The Company will give each holder of the Series
B Notes written notice of each optional prepayment under this Sec. 8.3 not
less than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date, the aggregate principal
amount of the Series B Notes to be prepaid on such date, the principal amount
of such Series B Notes held by such holder to be prepaid (determined in
accordance with Sec. 8.4), and the interest to be paid.
Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes of either Series, the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes of such Series
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
Section 8.5. Maturity; Surrender, Etc. In the case of each pre-
payment of Notes pursuant to this Sec. 8, the principal amount of each Note to
be prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
-17-
date and the applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
Section 8.6. Purchase of Notes. The Company will not and will not
permit any Affiliate which it controls or any Restricted Subsidiary to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it pursuant to any payment or prepayment
of Notes pursuant to any provision of this Agreement and no Notes may be
issued in substitution or exchange for any such Notes.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal,
provided that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:
"Applicable Spread" means (a) with respect to the Series A Notes,
.50%; and (b) with respect to the Series B Notes, .73%.
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Sec. 8.2 or has become or is
declared to be immediately due and payable pursuant to Sec. 14.1, as the
context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, the Applicable Spread plus the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Access
Service (or such other display as may replace Page 678 on Telerate Access
Service) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time
or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day for
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which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H. 15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury xxxx quotations
to bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one decimal
point) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal by
(b) the number of years (calculated to the nearest one decimal point)
that will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior
to its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to Sec. 8.2 or
Sec. 14.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant
to Sec. 8.2 or has become or is declared to be immediately due and
payable pursuant to Sec. 14.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will and will cause
each of its Restricted Subsidiaries to comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
-19-
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.2. Insurance. The Company will and will cause each of its
Restricted Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if the
Company or such Restricted Subsidiary has established reserves therefor to the
extent and in such amounts as are in accordance with GAAP) as is customary in
the case of entities of established reputations engaged in the same or a
similar business and similarly situated, unless failure to maintain such
insurance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
Section 9.3. Maintenance of Properties. The Company will and will
cause each of its Restricted Subsidiaries to maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business
carried on in connection therewith may be properly conducted at all times,
provided that this Section shall not prevent the Company or any Restricted
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business.
Section 9.4. Payment of Taxes and Claims. The Company will and will
cause each of its Restricted Subsidiaries to file all tax returns required to
be filed in any jurisdiction and to pay and discharge all taxes shown to be
due and payable on such returns and all other taxes, assessments, governmental
charges, or levies imposed on them or any of their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent and all claims for which sums
have become due and payable that have or might become a Lien on properties or
assets of the Company or any Restricted Subsidiary, provided that neither the
Company nor any Restricted Subsidiary need pay any such tax or assessment or
claim if (i) the amount, applicability or validity thereof is contested by the
Company or such Restricted Subsidiary on a timely basis in good faith and by
appropriate actions which will prevent the forfeiture or sale of any property
of the Company or such Restricted Subsidiary, and the Company or such
Restricted Subsidiary has established reserves therefor to the extent and in
such amounts as are in accordance with GAAP on the books of the Company or
such Restricted Subsidiary or (ii) the nonpayment of all such taxes and
assessments and claims in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. Subject to Sec. 12.5, the
Company will at all times preserve and keep in full force and effect its
corporate existence. Subject to Sec. 10.4, 11.4 and 12.5 the Company will at
all times preserve and keep in full force and effect the corporate existence
of each of its Restricted Subsidiaries (unless merged into the Company or a
Restricted Subsidiary) and all rights and franchises of the Company and its
Restricted Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
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SECTION 10. NEGATIVE COVENANTS APPLICABLE TO SERIES A NOTES.
The Company covenants with the holders of the Series A Notes that so long
as any of the Series A Notes are outstanding:
Section 10.1. Limitation on Debt of Restricted Subsidiaries. The
Company will not permit any Restricted Subsidiary to create, assume, incur or
in any manner become liable in respect of any Debt (other than Debt owing to
the Company or to a Restricted Subsidiary) unless (x) immediately after giving
effect thereto, the sum of (without duplication) (A) the aggregate principal
amount of such Debt of Restricted Subsidiaries then outstanding, and (B) the
aggregate principal amount of Debt of the Company and the Restricted
Subsidiaries secured by Liens pursuant to clause (h) of Sec. 10.3 then
outstanding shall not exceed 10% of Consolidated Total Assets, and (y) the
Company shall then be in compliance with the provisions of Sec. 10.2.
Section 10.2. Maintenance of Financial Condition. The Company will
not at any time permit Consolidated Total Debt to exceed 50% of Series A Total
Capitalization, after deducting from Series A Total Capitalization the amount
of all assets which are then included as Permitted Investments under clause
(l) of the definition thereof (other than any such Permitted Investments under
clause (l) which are Investments in Unrestricted Subsidiaries made after the
date of the Closing).
Section 10.3. Limitation on Liens. The Company will not, and will not
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations
in priority to the payment of its or their general creditors, or acquire or
agree to acquire any property or assets upon conditional sales agreements or
other title retention devices, except:
(a) Liens for taxes and assessments or governmental charges or
levies and Liens securing claims or demands of mechanics and materialmen,
provided payment thereof is not at the time required by Sec. 9.4;
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Restricted Subsidiary shall at
any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured; provided that reserves
therefor have been established to the extent and in such amounts as are
in accordance with GAAP;
(c) Liens incidental to the conduct of business or the ownership
of properties and assets (including without limitation Liens in
connection with workers' compensation, unemployment insurance and other
like laws, warehousemen's and attorneys' liens and statutory landlords'
liens) and Liens to secure the performance of bids, tenders or trade
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contracts, or to secure statutory obligations, surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money; provided in
each case, the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions; provided that reserves
therefor have been established to the extent and in such amounts as are
in accordance with GAAP;
(d) minor encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar purposes, or zoning
or other restrictions as to the use of real properties, which are
necessary for the conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation of
the business of the Company and its Restricted Subsidiaries;
(e) Liens securing Debt of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(f) Liens existing on the date of the Closing and reflected in
Schedule 10.3(f);
(g) Liens, including Capital Leases, incurred after the Closing
given to secure the payment of the purchase price incurred in connection
with the acquisition or construction of fixed assets useful and intended
to be used in carrying on the business of the Company or a Restricted
Subsidiary, including Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition by the Company or a
Restricted Subsidiary of any business entity then owning such fixed
assets, whether or not such existing Liens were originally given to
secure the payment of the purchase price of the fixed assets to which
they attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition (such existing Liens being herein
called the "Existing Liens"), provided that (i) the Lien shall attach
solely to the fixed assets acquired, constructed or purchased, or any
accessions or attachments thereto, (ii) at the time of acquisition or
construction of such fixed assets, the aggregate amount remaining unpaid
on all Debt secured by Liens (other than Existing Liens) on such fixed
assets whether or not assumed by the Company or a Restricted Subsidiary
shall not exceed an amount equal to 100% of the lesser of the total
purchase price or fair market value at the time of acquisition or
construction of such fixed assets (as determined in good faith by the
chief financial officer of the Company), and (iii) all such Debt shall
have been incurred within the limitations provided in Sec. 10.1 and Sec.
10.2;and
(h) Liens, which would otherwise not be permitted by clauses (a)
through (g) above, securing Debt of the Company or a Restricted
Subsidiary; provided that (x) immediately after giving effect thereto,
the sum of (without duplication) (A) the aggregate principal amount of
Debt of the Company and the Restricted Subsidiaries secured by Liens
pursuant to this clause (h) then outstanding, and (B) the aggregate
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principal amount of Debt of Restricted Subsidiaries (other than to the
Company or a Restricted Subsidiary) then outstanding, shall not exceed
10% of Consolidated Total Assets, and (y) the Company shall then be in
compliance with the provisions of Sec. 10.2.
Section 10.4. Sales of Assets. The Company will not, and will not
permit any Restricted Subsidiary to sell, lease or otherwise dispose of any
substantial part of the assets of the Company and its Restricted Subsidiaries.
As used in this Sec. 10.4, a sale, lease or other disposition of assets shall
be deemed to be a "substantial part" of the assets of the Company and its
Restricted Subsidiaries only if the net proceeds received therefor, when added
to the net proceeds received for all other assets sold, leased or otherwise
disposed of by the Company and its Restricted Subsidiaries subsequent to the
Closing and during the 365 day period immediately preceding such sale, lease
or other disposition, exceeds 10% of Consolidated Total Assets (determined as
at the end of the fiscal quarter of the Company immediately preceding such 365
day period) and a merger by a Restricted Subsidiary into another Person
without such Restricted Subsidiary being the survivor of such merger and in
which such Person is not the Company or a Restricted Subsidiary or a Person
which thereupon becomes a Restricted Subsidiary shall be deemed a disposition
by such Restricted Subsidiary of all of its assets; provided that in all such
sales, leases or other dispositions, the Company and the Restricted
Subsidiaries shall have received no less than fair market value or fair rental
value therefor. Computations under this Sec. 10.4 shall include all issues or
sales of any shares of any class (including as "shares" for the purposes of
this Sec. 10.4, any warrants, rights or options to purchase or otherwise
acquire shares or other Securities exchangeable for or convertible into
shares) of any Restricted Subsidiary to any Person other than the Company or a
Restricted Subsidiary over which the Company shall have at least the same
degree of ownership and control as it did with respect to the Restricted
Subsidiary issuing or selling such shares, except shares issued or sold for
the purpose of qualifying directors, or except shares issued or sold in
satisfaction of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of stock to the
Company and/or Restricted Subsidiaries whereby the Company and/or such
Restricted Subsidiaries maintain their same proportionate interest in such
Restricted Subsidiary. Computations under this Sec. 10.4 shall not include:
(1) sales, leases or other dispositions in the ordinary course
of business of the Company or any Restricted Subsidiary;
(2) a one-time sale or other distribution of the stock and/or
assets of Penton Publishing, Inc. and Xxxxxx & Xxxxx/Peneco, Inc.,
provided that, on the date thereof, such stock and/or assets do not
comprise more than 20% of Consolidated Total Assets; or
(3) sales, leases or other dispositions (i) by the Company to
any Wholly-Owned Restricted Subsidiary, or (ii) by any Restricted
Subsidiary to the Company or to any Wholly-Owned Restricted Subsidiary,
or (iii) by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to another Restricted Subsidiary, provided that (x) in the
case of any sale, lease or other disposition pursuant to clause (iii),
the same is made for fair market value or fair rental value, and (y)
-23-
immediately after the consummation of any sale, lease or other
disposition pursuant to clause (i), (ii) or (iii) and after giving effect
thereto, no Default or Event of Default exists or would exist.
Section 10.5. Limitation on Designation of Unrestricted Subsidiaries.
The provisions of Sec. 12.6 to the contrary notwithstanding:
(a) the Company will not designate any Subsidiary which has been
a Restricted Subsidiary but has subsequently been designated as an
Unrestricted Subsidiary to be a Restricted Subsidiary; and
(b) the Company will not designate any Restricted Subsidiary to
be an Unrestricted Subsidiary in order to cure or avoid a Default or an
Event of Default.
Section 10.6. Amendments of Series B Notes. The Company will not
amend this Agreement or the Series B Notes or in any other manner provide for
or permit the holders of the Series B Notes (a) to be prepaid with a Make-
Whole Amount, or similar premium, computed using an Applicable Spread of less
than .73%; or (b) to have applicable thereto an Event of Default which is of
the nature of the Event of Default provided for in Sec. 13(h) which is more
favorable to the holders of the Series B Notes than that set forth in Sec.
13(h) on the date of Closing.
Section 10.7. Loans to Officers, Etc. The Company will not at any
time permit the aggregate unpaid principal amount of all loans or advances by
the Company or a Restricted Subsidiary to officers, directors or employees of
the Company or a Restricted Subsidiary to exceed $5,000,000.
SECTION 11. NEGATIVE COVENANTS APPLICABLE TO SERIES B NOTES.
The Company covenants with the holders of the Series B Notes that so long as
any of the Series B Notes are outstanding:
Section 11.1. Limitation on Indebtedness of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to create, assume, incur
or in any manner become liable in respect of any Indebtedness (other than
Indebtedness owing to the Company or to a Restricted Subsidiary) unless (x)
immediately after giving effect thereto, the sum of (without duplication) (A)
the aggregate principal amount of such Indebtedness of Restricted Subsidiaries
then outstanding, and (B) the aggregate principal amount of Indebtedness of
the Company and the Restricted Subsidiaries secured by Liens pursuant to
clause (h) of Sec. 11.3 then outstanding shall not exceed 10% of Consolidated
Total Assets, and (y) the Company shall then be in compliance with the
provisions of Sec. 11.2.
Section 11.2. Maintenance of Financial Condition. The Company will
not at any time permit Consolidated Total Indebtedness to exceed 50% of Series
B Total Capitalization, after deducting from Series B Total Capitalization the
amount of all assets which are then included as Permitted Investments under
clause (l) of the definition thereof (other than any such Permitted
-24-
Investments under clause (l) which are Investments in Unrestricted
Subsidiaries made after the date of the Closing).
Section 11.3. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create or incur, or suffer to be
incurred or to exist, any Lien on its or their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or
acquire or agree to acquire any property or assets upon conditional sales
agreements or other title retention devices, except:
(a) Liens for taxes and assessments or governmental charges or
levies and Liens securing claims or demands of mechanics and materialmen,
provided payment thereof is not at the time required by Sec. 9.4;
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Restricted Subsidiary shall at
any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured; provided that reserves
therefor have been established to the extent and in such amounts as are
in accordance with GAAP;
(c) Liens incidental to the conduct of business or the ownership
of properties and assets (including without limitation Liens in
connection with workers' compensation, unemployment insurance and other
like laws, warehousemen's and attorneys' liens and statutory landlords'
liens) and Liens to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations, surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money; provided in
each case, the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions; provided that reserves
therefor have been established to the extent and in such amounts as are
in accordance with GAAP;
(d) minor encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar purposes, or zoning
or other restrictions as to the use of real properties, which are
necessary for the conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation of
the business of the Company and its Restricted Subsidiaries;
(e) Liens securing Indebtedness of a Restricted Subsidiary to
the Company or to another Restricted Subsidiary;
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(f) Liens existing on the date of the Closing and reflected in
Schedule 10.3(f);
(g) Liens, including Capital Leases, incurred after the Closing
given to secure the payment of the purchase price incurred in connection
with the acquisition or construction of fixed assets useful and intended
to be used in carrying on the business of the Company or a Restricted
Subsidiary, including Existing Liens (as defined in Sec. 10.3(g)),
provided that (i) the Lien shall attach solely to the fixed assets
acquired, constructed or purchased, or any accessions or attachments
thereto, (ii) at the time of acquisition or construction of such fixed
assets, the aggregate amount remaining unpaid on all Indebtedness secured
by Liens (other than Existing Liens) on such fixed assets whether or not
assumed by the Company or a Restricted Subsidiary shall not exceed an
amount equal to 100% of the lesser of the total purchase price or fair
market value at the time of acquisition or construction of such fixed
assets (as determined in good faith by the chief financial officer of the
Company), and (iii) all such Indebtedness shall have been incurred within
the limitations provided in Sec. 11.1 and Sec. 11.2; and
(h) Liens, which would otherwise not be permitted by clauses (a)
through (g) above, securing Indebtedness of the Company or a Restricted
Subsidiary; provided that (x) immediately after giving effect thereto,
the sum of (without duplication) (A) the aggregate principal amount of
Indebtedness of the Company and the Restricted Subsidiaries secured by
Liens pursuant to this clause (h) then outstanding, and (B) the aggregate
principal amount of Indebtedness of Restricted Subsidiaries (other than
to the Company or a Restricted Subsidiary) then outstanding, shall not
exceed 10% of Consolidated Total Assets, and (y) the Company shall then
be in compliance with the provisions of Sec. 11.2.
Section 11.4. Sales of Assets. The Company will not, and will not
permit any Restricted Subsidiary to sell, lease or otherwise dispose of any
substantial part of the assets of the Company and its Restricted Subsidiaries.
As used in this Sec. 11.4, a sale, lease or other disposition of assets shall
be deemed to be a "substantial part" of the assets of the Company and its
Restricted Subsidiaries only if the net proceeds received therefor, when added
to the net proceeds received for all other assets sold, leased or otherwise
disposed of by the Company and its Restricted Subsidiaries subsequent to the
Closing and during the 365 day period immediately preceding such sale, lease
or other disposition, exceeds 10% of Consolidated Total Assets (determined as
at the end of the fiscal quarter of the Company immediately preceding such 365
day period) and a merger by a Restricted Subsidiary into another Person
without such Restricted Subsidiary being the survivor of such merger and in
which such Person is not the Company or a Restricted Subsidiary or a Person
which thereupon becomes a Restricted Subsidiary shall be deemed a disposition
by such Restricted Subsidiary of all of its assets; provided that in all such
sales, leases or other dispositions, the Company and the Restricted
Subsidiaries shall have received no less than fair market value or fair rental
value therefor. Computations under this Sec. 11.4 shall include all issues or
sales of any shares of any class (including as "shares" for the purposes of
this Sec. 11.4, any warrants, rights or options to purchase or otherwise
acquire
-26-
shares or other Securities exchangeable for or convertible into shares) of any
Restricted Subsidiary to any Person other than the Company or a Restricted
Subsidiary over which the Company shall have at least the same degree of
ownership and control as it did with respect to the Restricted Subsidiary
issuing or selling such shares, except shares issued or sold for the purpose
of qualifying directors, or except shares issued or sold in satisfaction of
the validly pre-existing preemptive rights of minority shareholders in
connection with the simultaneous issuance of stock to the Company and/or
Restricted Subsidiaries whereby the Company and/or such Restricted
Subsidiaries maintain their same proportionate interest in such Restricted
Subsidiary. Computations under this Sec. 11.4 shall not include:
(1) sales, leases or other dispositions in the ordinary course
of business of the Company or any Restricted Subsidiary;
(2) a one-time sale or other distribution of stock and/or
assets, provided that, on the date of such transaction, such stock and/or
assets do not comprise more than 20% of Consolidated Total Assets; or
(3) sales, leases or other dispositions (i) by the Company to
any Wholly-Owned Restricted Subsidiary, or (ii) by any Restricted
Subsidiary to the Company or to any Wholly-Owned Restricted Subsidiary,
or (iii) by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to another Restricted Subsidiary, provided that (x) in the
case of any sale, lease or other disposition pursuant to clause (iii),
the same is made for fair market value or fair rental value, and (y)
immediately after the consummation of any sale, lease or other
disposition pursuant to clause (i), (ii) or (iii) and after giving effect
thereto, no Default or Event of Default exists or would exist.
SECTION 12. NEGATIVE COVENANTS APPLICABLE TO ALL NOTES
The Company covenants with the holders of the Notes that so long as any
of the Notes are outstanding:
Section 12.1. Sale and Leaseback. The Company will not, and will not
permit any Restricted Subsidiary to, sell or transfer any property (other than
real property) to any Person other than the Company or a Restricted Subsidiary
and thereupon lease, as lessee, the same property unless such lease
constitutes a Capital Lease and, after giving effect thereto, the Company
would be in compliance with the provisions of Sec. 10.2, 11.2, 10.3 and 11.3.
Section 12.2. Restricted Payments. The Company will not except as
hereinafter provided:
(a) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company);
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
-27-
capital stock (other than in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
if after giving effect thereto any Event of Default shall have occurred and be
continuing.
Notwithstanding the foregoing, the Company may (i) pay any dividend which
it has declared, provided that such declaration did not violate this Sec. 12.2
and such dividend is paid within 60 days after such declaration, and (ii) make
the distribution referred to in clause (2) of the final sentence of Sec. 10.4,
without consideration.
Section 12.3. Permitted Investments. The Company will not, and will
not permit any of its Restricted Subsidiaries to, make or suffer to exist any
Investments other than Permitted Investments.
Section 12.4. Transactions with Affiliates. The Company will not and
will not permit any Restricted Subsidiary to enter into directly or indirectly
any transaction or group of related transactions (including without limitation
the purchase, lease, sale or exchange of properties of any kind or the
rendering of any service) with any Affiliate, unless such transaction or
transactions (i) are in the ordinary course and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate, or (ii) could not, individually or
in the aggregate, be reasonably expected to have a Material Adverse Effect.
Section 12.5. Merger, Consolidation, Etc. The Company will not and
will not permit any of its Restricted Subsidiaries to, consolidate with or
merge with any other corporation or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of related
transactions to any Person (except that a Restricted Subsidiary may (x) merge
with another Person as long as the Restricted Subsidiary is the survivor of
such merger, (y) consolidate with or merge with, or convey, transfer or lease
all or substantially all of its assets in a single transaction or a series of
related transactions, to (i) another Restricted Subsidiary, (ii) a Person
which upon consummation of such action becomes a Restricted Subsidiary, or
(iii) the Company; provided that in a merger with the Company, the Company
shall be the survivor of such merger, and (z) convey, transfer or lease all or
substantially all of its assets, or merge with another Person without the
Restricted Subsidiary being the survivor of such merger, in compliance with
the provisions of Sec. 10.4 and Sec. 11.4, if immediately after giving effect
to any such transaction no Default or Event of Default would exist); provided
that the foregoing restriction does not apply to the consolidation or merger
of the Company with, or the conveyance, transfer or lease of all or
substantially all of the assets of the Company to, any Person so long as:
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(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease all or substantially all of the assets of the Company, as the case
may be, shall be a solvent corporation organized and existing under the
laws of the United States or any State thereof (including the District of
Columbia), and, if the Company is not such corporation, such corporation
(i) shall have executed and delivered to each holder of any Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Agreements and the
Notes and (ii) shall have caused to be delivered to each holder of any
Notes an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption
are enforceable in accordance with their terms and comply with the terms
hereof;
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore have become such in the manner
prescribed in this Sec. 12.5 from its liability under this Agreement or the
Notes.
Section 12.6. Designation of Restricted and Unrestricted
Subsidiaries. (a) Subject to Sec. 10.5(b) so long as any of the Series A
Notes are outstanding, the Company, pursuant to a determination by its chief
financial officer, may at any time and from time to time, upon not less than
30 days' prior written notice given to each holder of the Notes, designate any
Restricted Subsidiary as an Unrestricted Subsidiary, provided that (i) at the
time of such designation the Subsidiary so designated does not own, directly
or indirectly, any capital stock or Debt of any other Restricted Subsidiary,
and (ii) immediately after such designation and after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing.
(b) Any notice of designation pursuant to Sec. 12.6(a) shall be
accompanied by a certificate of a Responsible Officer of the Company (i)
stating that the provisions of Sec. 12.6(a) will be complied with in
connection with such designation, (ii) setting forth the name of each
Subsidiary which will become an Unrestricted Subsidiary as a result of such
designation, and (iii) setting forth reasonably detailed pro forma
computations demonstrating compliance with clause (ii) of Sec. 12.6(a).
(c) Subject to Sec. 10.5(a) so long as any of the Series A Notes are
outstanding, the Company may at any time and from time to time, pursuant to a
determination by its chief financial officer, upon not less than 30 days'
prior written notice given to each holder of the Notes, designate any
Unrestricted Subsidiary as a Restricted Subsidiary, provided that immediately
after such designation and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing.
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(d) Any notice of designation pursuant to Sec. 12.6(c) shall be
accompanied by a certificate of a Responsible Officer of the Company (i)
stating that the requirement contained in the proviso to Sec. 12.6(c) will be
complied with and setting forth reasonably detailed pro forma computations
demonstrating such compliance, (ii) setting forth the name of each
Unrestricted Subsidiary which will become a Restricted Subsidiary as a result
of such designation, and (iii) setting forth, as to each such Unrestricted
Subsidiary which will become a Restricted Subsidiary, each of the
representations set forth in Sec. 5.4(b), (c) and (d).
SECTION 13. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) in the case of Notes of either Series, the Company defaults
in the payment of any principal on any Note of such Series when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise; or
(b) in the case of Notes of either Series, the Company defaults
in the payment of any interest or Make-Whole Amount, if any, on any Note
of such Series for more than five Business Days after the same becomes
due and payable; or
(c) in the case of the Series A Notes, the Company defaults in
the performance of or compliance with any term contained in Sec. 10.1,
Sec. 10.2, Sec. 10.3, Sec. 10.4, or Sec. 10.7 or in Sec. 12.1 through
12.5, both inclusive, and such default is not remedied within ten
Business Days; or
(d) in the case of the Series A Notes, the Company defaults in
the performance of or compliance with any term contained herein (other
than those referred to in Sec. 11 or in paragraphs (a), (b) or (c) of
this Sec. 13) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default
from any holder of a Series A Note (any such written notice to be
identified as a "notice of default" and to refer specifically to this
paragraph (d) of Sec. 13); or
(e) in the case of the Series B Notes, the Company defaults in
the performance of or compliance with any term contained herein (other
than those referred to in Sec. 10 or in paragraphs (a) and (b) of this
Sec. 13) and such default is not remedied within 30 days after written
notice thereof to the holders of the Series B Notes shall have been given
by the Company; or
(f) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement
or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
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(g) in the case of the Series A Notes, (i) the Company or any
Restricted Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole
amount or interest on any Debt (including, without limitation, the Series
B Notes) that is outstanding in an aggregate principal amount of at least
$10,000,000 beyond any period of grace provided with respect thereto, or
(ii) the Company or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in
an aggregate outstanding principal amount of at least $10,000,000 or of
any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Debt has become, or has been declared (or one or more Persons are
entitled to declare such Debt to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment, or (iii) as
a consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), (x) the Company or any
Restricted Subsidiary has become obligated to purchase or repay Debt
before its regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at least
$10,000,000, or (y) one or more Persons have the right to require the
Company or any Restricted Subsidiary so to purchase or repay such Debt;
provided, however, that the provisions of this paragraph (g) of Sec. 13
shall not apply to any Debt which is payable solely out of the property
or assets of a partnership, joint venture or similar entity of which the
Company or any Restricted Subsidiary is a participant without further
recourse to or liability of the Company or any Restricted Subsidiary; or
(h) in the case of the Series B Notes, the Company or any
Restricted Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole
amount or interest on any Indebtedness (including, without limitation,
the Series A Notes) that is outstanding in an aggregate principal amount
of at least $10,000,000 beyond any period of grace provided with respect
thereto; provided, however, that the provisions of this paragraph (h) of
Sec. 13 shall not apply to any Indebtedness which is payable solely out of
the property or assets of a partnership, joint venture or similar entity
of which the Company or any Restricted Subsidiary is a participant
without further recourse to or liability of the Company or any Restricted
Subsidiary; or
(i) the Company or any Restricted Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of
any bankruptcy, insolvency, reorganization, moratorium or other similar
law of any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
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(j) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Restricted Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Restricted Subsidiaries, or any
such petition shall be filed against the Company or any of its Restricted
Subsidiaries and such petition shall not be dismissed within 60 days; or
(k) a final judgment or judgments for the payment of money
aggregating in excess of $25,000,000 are rendered against one or more of
the Company and its Restricted Subsidiaries and an amount thereof
aggregating in excess of $25,000,000 is not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or is not
discharged within 60 days after the expiration of such stay; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a written notice of
intent to terminate any Plan shall have been filed with the PBGC or the
PBGC shall have instituted proceedings under ERISA section 4042 to
terminate or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company or any ERISA Affiliate in writing that a Plan
will become a subject of any such proceedings, (iii) as of the then most
recent dates as of which actuarial evaluations were prepared, the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $10,000,000, (iv) the Company or any
ERISA Affiliate shall have incurred any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating
to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any
Restricted Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that
would increase the liability of the Company or any Restricted Subsidiary
thereunder; and any such event or events described in clauses (i) through
(vi) above, either individually or together with any other such event or
events, could reasonably be expected to have a Material Adverse Effect.
As used in Sec. 13(l), the terms "employee benefit plan" and "employee welfare
benefit plan" shall have the respective meanings assigned to such terms in
section 3 of ERISA.
SECTION 14. REMEDIES ON DEFAULT, ETC.
Section 14.1. Acceleration. (a) If an Event of Default with respect
to the Company described in paragraph (i) or (j) of Sec. 13 (other than an
Event of Default described in clause (i) of paragraph (i) or described in
clause (vi) of paragraph (i) by virtue of the fact that such clause
encompasses
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clause (i) of paragraph (i)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any Event of Default described in paragraph (c), (d) or (g) of
Sec. 13 has occurred and is continuing, any holder or holders of 51% or more
in principal amount of the Series A Notes at the time outstanding may at any
time at its or their option, by notice or notices to the Company, declare all
the Series A Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (e) or (h) of Sec.
13 has occurred and is continuing, any holder or holders of 51% or more in
principal amount of the Series B Notes at the time outstanding may at any time
at its or their option, by notice or notices to the Company, declare all the
Series B Notes than outstanding to be immediately due and payable.
(d) If any other Event of Default other than those described in
clauses (a), (b) or (c) of this Sec. 14.1 has occurred and is continuing, any
holder or holders of 51% or more in principal amount of the Notes of either
Series at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes of such Series then
outstanding to be immediately due and payable.
(e) If any Event of Default described in paragraph (a) or (b) of Sec.
13 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it
or them to be immediately due and payable.
Upon any Note's becoming due and payable under this Sec. 14.1, whether
automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (x) all accrued and unpaid
interest thereon and (y) the applicable Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for),
and that the provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a result of an
Event of Default, is intended to provide compensation for the deprivation of
such right under such circumstances.
Section 14.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing with respect to any Series of Notes, and
irrespective of whether any Notes of such Series have become or have been
declared immediately due and payable under Sec. 14.1, the holder of any Note
of such Series at the time outstanding may proceed to protect and enforce the
rights of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note of such Series, or for an injunction against a violation
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of any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
Section 14.3. Rescission. At any time after any Notes of any Series
have been declared due and payable pursuant to clause (b), (c) (d) or (e) of
Sec. 14.1, the holders of not less than 66-2/3% in principal amount of the
Notes of such Series then outstanding, by written notice to the Company, may
rescind and annul any such declaration and its consequences with respect to
such Series if (a) the Company has paid all overdue interest on the Notes of
such Series, all principal of and Make-Whole Amount, if any, on any Notes of
such Series that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes of such Series, at the applicable Default
Rate, (b) all Events of Default and Defaults with respect to such Series,
other than non-payment of amounts that have become due solely by reason of
such declaration, have been cured or have been waived pursuant to Sec. 19, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes of such Series. No rescission and annulment
under this Sec. 14.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
Section 14.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Sec. 17, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all reasonable costs and expenses of such holder
incurred in any enforcement or collection under this Sec. 14, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
SECTION 15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 15.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a Note
that is an Institutional Investor promptly upon request therefor, a complete
and correct copy of the names and addresses of all registered holders of
Notes.
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Section 15.2. Transfer and Exchange of Notes.
(a) Subject to Sec. 6.1, upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and
in the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
of the same Series as the surrendered Note, shall (subject to Sec. 6.1) be
payable to such Person as such holder may request and shall be substantially
in the form of Exhibit 1-A or Exhibit 1-B, as appropriate. Each such new Note
shall be dated and bear interest from the date to which interest shall have
been paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes.
(b) Notes shall not be transferred in denominations of less than
$1,000,000, provided that if necessary to enable the registration of transfer
by a holder of its entire holding of Notes of either Series, one Note of such
Series may be in a denomination of less than $1,000,000. Any transferee, by
its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Sec. 6.2 and that
it is not a Competitor.
Section 15.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in the
case of an Institutional Investor, notice from such Institutional Investor of
such ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, you or an Other Purchaser or another holder of a
Note with a minimum net worth of at least $1,000,000, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note of such Series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated
Note or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
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SECTION 16. PAYMENTS ON NOTES.
Section 16.1. Place of Payment. Subject to Sec. 16.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal executive office
of the Company in such jurisdiction. The Company may at any time, by notice
to each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company in
the United States or the principal office of a bank or trust company in the
United States.
Section 16.2. Home Office Payment. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
Sec. 16.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Sec. 16.1. Prior to any sale or other disposition of any Note
held by you or your nominee you will, at your election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Sec. 15.2. The Company will afford the benefits of
this Sec. 16.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has made
the same agreement relating to such Note as you have made in this Sec. 16.2.
SECTION 17. EXPENSES, ETC.
Section 17.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of a special counsel and,
if reasonably required, local or other counsel) incurred by you and the Other
Purchasers or holders of Notes in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the reasonable costs
and expenses incurred in enforcing or defending (or determining whether or how
to enforce or defend) any rights under this Agreement or the Notes or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Notes, or by reason of
being a holder of any Note, and (b) the reasonable costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses, if any,
of brokers and finders (other than those retained by you).
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Section 17.2. Survival. The obligations of the Company under this
Sec. 17 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
SECTION 19. AMENDMENT AND WAIVER.
Section 19.1. Requirements. This Agreement, insofar as it relates to
Notes of a particular Series, and the Notes of a particular Series may be
amended, and the observance of any term hereof, insofar as it relates to such
Notes, or of such Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Company and the holder or
holders of at least 51% in unpaid principal amount of the Notes of such
Series, except that (a) no amendment or waiver of any of the provisions of
Sec. 1, 2, 3, 4, 5 or 6 hereof, or any defined term (as it is used therein),
will be effective as to you unless consented to by you in writing, and (b) no
such amendment or waiver may, without the written consent of the holder of
each Note of such Series at the time outstanding, (i) subject to the
provisions of Sec. 14 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes of such Series, (ii) change the percentage
of the principal amount of the Notes of such Series the holders of which are
required to consent to any such amendment or waiver, or (iii) amend any of
Sec. 8, 13(a), 13(b), 14, 19 or 22.
Section 19.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
of the Series with respect to which an amendment, waiver or consent is being
sought (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered decision with respect
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to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of such Notes. The Company will deliver executed or true
and correct copies of each amendment, waiver or consent effected pursuant to
the provisions of this Sec. 19 to each holder of outstanding Notes, without
regard to Series, promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes of the Series affected.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder of
Notes of any Series as consideration for or as an inducement to the entering
into by such holder of any waiver or amendment of any of the terms and
provisions hereof related to such Series unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes of such Series then outstanding even if such
holder did not consent to such waiver or amendment.
Section 19.3. Binding Effect, Etc. Any amendment or waiver consented
to as provided in this Sec. 19 applies equally to all holders of Notes of the
Series affected and is binding upon them and upon each future holder of any
such Note and upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein,
the term "this Agreement" and references thereto shall mean this Agreement as
it may from time to time be amended or supplemented.
Section 19.4. Notes Held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes of either Series then outstanding approved or
consented to any amendment, waiver or consent to be given under this Agreement
or the Notes of such Series, or have directed the taking of any action
provided herein or in such Notes to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of such Notes then
outstanding, Notes of such Series directly or indirectly owned by the Company
or any of its Restricted Subsidiaries or Affiliates shall be deemed not to be
outstanding.
SECTION 20. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
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(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of Financial Vice President, or
at such other address as the Company shall have specified to the holder
of each Note in writing.
Notices under this Sec. 20 will be deemed given only when actually received.
SECTION 21. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and you may destroy any original document so reproduced.
The Company agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you
in the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Sec. 21 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
SECTION 22. CONFIDENTIAL INFORMATION.
For the purposes of this Sec. 22, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, provided that such
term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or by another Person known to you to be under an
obligation of confidentiality or (d) constitutes financial statements
delivered to you under Sec. 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information in
accordance
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with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver
or disclose Confidential Information to (i) your directors, officers and
employees (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your
affiliates, financial advisors and other professional advisors who agree to
hold confidential the Confidential Information substantially in accordance
with the terms of this Sec. 22, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any
part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Sec. 22), (v) any Person from which you offer to
purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Sec. 22), (vi) any federal or state regulatory authority
having jurisdiction over you to the extent such delivery or disclosure is
required by it or is reasonably deemed necessary by you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio to the extent such delivery or disclosure is
required by it or is reasonably deemed necessary by you, or (viii) any other
Person to which such delivery or disclosure may be necessary or appropriate
(w) to effect compliance with any law, rule, regulation or order applicable to
you, (x) in response to any subpoena or other legal process, (y) in connection
with any litigation to which you are a party or (z) if an Event of Default has
occurred and is continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or
for the protection of the rights and remedies under your Notes and this
Agreement; provided, however, that in the case of clauses (viii)(x) or (y),
prompt notice of such subpoena, other legal process or potential use of such
Confidential Information in such litigation is given to the Company in order
to permit the Company to seek appropriate protective orders. Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound
by and to be entitled to the benefits of this Sec. 22 as though it were a
party to this Agreement. On reasonable request by the Company in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions
of this Sec. 22.
SECTION 23. MISCELLANEOUS.
Section 23.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.
Section 23.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due on a
date other than a Business Day shall be made on the next succeeding Business
Day without including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
-40-
Section 23.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
Section 23.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
Section 23.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 23.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of New York excluding choice-of-law principles of the
law of such State that would require the application of the laws of a
jurisdiction other than such State.
* * * * *
-41-
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
PITTWAY CORPORATION
By: /s/Xxxx X. Xxxxxxxx
Financial Vice President and Treasurer
The foregoing is hereby agreed
to as of the date thereof.
METROPOLITAN LIFE INSURANCE COMPANY
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Information Relating to Purchasers
NAME AND ADDRESS PRINCIPAL AMOUNT AND SERIES
OF PURCHASER OF NOTES TO BE PURCHASED
Metropolitan Life Insurance Company $30,000,000
One Madison Avenue Series A Notes
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Series A
Notes to be by bank wire transfer of Federal
or other immediately available funds not later
than 12:00 noon, New York time, on any date
such payment is due (identifying each payment
as Pittway Corporation, 6.81% Senior Notes,
Series A, due December 15, 2005, PPN 725790 A* 0,
principal or interest) to:
The Chase Manhattan Bank, N.A.
(ABA #000000000)
Metropolitan Branch
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
for credit to: Metropolitan Life Insurance Company
Account Number 002-2-410591
Notices
All notices and communications, including notices
with respect to payments and written confirmation
of each such payment, to be addressed as first
provided above with duplicate notice to:
Metropolitan Life Insurance Company
Xxxxx 000
Xxx Xxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Assistant Vice President
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
SCHEDULE A
(to Note Purchase Agreement)
Information Relating to Purchasers
NAME AND ADDRESS PRINCIPAL AMOUNT AND SERIES
OF PURCHASER OF NOTES TO BE PURCHASED
Metropolitan Property and Casualty
Insurance Company $10,000,000
000 Xxxxxx Xxxx Series A Notes
Xxxxxxx, Xxxxx Xxxxxx 00000
Attention: Treasurer
Payments
All payments on or in respect of the Series
A Notes to be by bank wire transfer of Federal
or other immediately available funds not later
than 12:00 noon, New York time, on any date such
payment is due (identifying each payment as
Pittway Corporation, 6.81% Senior Notes, Series A,
due December 15, 2005, PPN 725790 A* 0, principal
or interest) to:
The Chase Manhattan Bank, N.A.
(ABA #000000000)
Metropolitan Branch
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
for credit to: Metropolitan Property
and Casualty Insurance Company
Account Number 000-0-000000
Notices
All notices and communications, including notices
with respect to payments and written confirmation
of each such payment, to be addressed as first
provided above with duplicate notices to:
Metropolitan Life Insurance Company
Xxxxx 000
Xxx Xxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Assistant Vice President
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-2
NAME AND ADDRESS PRINCIPAL AMOUNT AND SERIES
OF PURCHASER OF NOTES TO BE PURCHASED
Nationwide Life Insurance Company $30,000,000
Xxx Xxxxxxxxxx Xxxxx Xxxxxx X Xxxxx
Xxxxxxxx, Xxxx 00000-0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds (identifying
each payment as Pittway Corporation, 6.70%
Senior Notes, Series B, due December 15, 2005,
PPN 725790 A@ 8, principal or interest) to:
Xxxxxx Guaranty Trust Company of New York
(ABA #021-000-238)
JOURNAL #000-00-000
For the account of Nationwide Life
Insurance Company Custody
Account #71615
Attention: Custody Service Department
Notices
All notices of payment on or in respect of
the Notes and written confirmation of each
such payment to:
Nationwide Life Insurance Company
Xxx Xxxxxxxxxx Xxxxx-0-00-00
Xxxxxxxx, Xxxx 00000-0000
Attention: Corporate Money Management
All notices and communications other than those
in respect to payments to be addressed:
Nationwide Life Insurance Company
Xxx Xxxxxxxxxx Xxxxx-0-00-00
Xxxxxxxx, Xxxx 00000-0000
Attention: Corporate Fixed-Income Securities
Telecopier Number: (000) 000-0000
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-3
NAME AND ADDRESS PRINCIPAL AMOUNT AND SERIES
OF PURCHASER OF NOTES TO BE PURCHASED
Employers Life Insurance Company $3,000,000
of Wausau SERIES B NOTES
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Payments
All payments on or in respect of the Notes to
be by bank wire transfer of Federal or other
immediately available funds (identifying each
payment as Pittway Corporation, 6.70% Senior
Notes, Series B, due December 15, 2005, PPN
725790 A@ 8, principal or interest) to:
Xxxxxx Guaranty Trust Company of New York
(ABA #021-000-238)
JOURNAL #000-00-000
For the account of Employers Life Insurance
Company of Wausau Custody Account #50135
Attention: Custody Service Department
Notices
All notices of payment on or in respect of the
Notes and written confirmation of each such
payment to:
Employers Life Insurance Company of Wausau
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
All notices and communications other than those
in respect to payments to be addressed:
Nationwide Life Insurance Company
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number:
A-4
NAME AND ADDRESS PRINCIPAL AMOUNT AND SERIES
OF PURCHASER OF NOTES TO BE PURCHASED
West Coast Life Insurance Company $2,000,000
000 Xxxxxxx Xxxxxx Series B Notes
Xxx Xxxxxxxxx, XX 00000
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds (identifying
each payment as Pittway Corporation, 6.70%
Senior Notes, Series B, due December 15, 2005,
PPN 725790 A@ 8, principal or interest) to:
Xxxxxx Guaranty Trust Company of New York
(ABA #021-000-238)
JOURNAL #000-00-000
For the account of Nationwide Life Insurance
Company Custody Account #73290
Attention: Custody Service Department
Notices
All notices of payment on or in respect of the
Notes and written confirmation of each such
payment to:
Nationwide Life Insurance Company
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
All notices and communications other than those
in respect to payments to be addressed:
Nationwide Life Insurance Company
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number:
A-5
Defined Terms
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, (a) any Person that at such time directly
or indirectly through one or more intermediaries Controls, or is Controlled
by, the Company or a Restricted Subsidiary, (b) any Person beneficially owning
or holding, directly or indirectly, 20% or more of any class of voting
interests of the Company or a Restricted Subsidiary, and (c) any Person that
at such time is an officer of the Company (as opposed to an officer of a
division of the Company) or a director of the Company or a Restricted
Subsidiary; provided that neither the Company nor a Restricted Subsidiary is
an Affiliate. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Business Day" means (a) for the purposes of Sec. 8.2 and Sec. 8.7 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the
purposes of any other provision of this Agreement, any day other than a
Saturday, a Sunday or a day on which commercial banks in New York City or
Chicago, Illinois are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"Closing" is defined in Sec. 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Pittway Corporation, a Delaware corporation.
"Competitor" means an entity that (i) is directly engaged substantially
in the publishing business or the manufacture and distribution of security
equipment and systems, or (ii) controls, is controlled by or is under common
control with another entity that is directly engaged substantially in the
publishing business or the manufacture and distribution of security equipment
and systems unless, in the case of any such control relationship, the first
entity has established, or establishes, procedures satisfactory in the
Company's reasonable judgment which will prevent Confidential Information from
being transmitted or made available to such other entity or any officer,
director, employee or agent thereof; provided that in the event the Company or
a Subsidiary which would then constitute a "significant subsidiary" under
Regulation S-X of the Securities and Exchange Commission as in effect on the
date of the Closing shall become directly engaged substantially in the conduct
of a business other than the publishing business or the manufacture and
distribution of security equipment and systems and shall request the consent
of the holders of the Notes to an amendment to this definition to include such
SCHEDULE B
(to Note Purchase Agreement)
business, the holders of the Notes shall not withhold such consent unless they
reasonably believe such inclusion of such business in this definition would
impair the ability to transfer the Notes to transferees of the type who would
normally invest in securities such as the Notes, which transferees would
include, without limitation, insurance companies, banks and trust companies,
finance and credit companies, investment banks, pension funds, mutual funds
and asset management organizations.
"Confidential Information" is defined in Sec. 22.
"Consolidated Net Worth" means, at any time,
(a) the sum of (i) the par value (or value stated on the books
of the corporation) of the capital stock (but excluding treasury stock
and capital stock subscribed and unissued) of the Company and its
Restricted Subsidiaries at such time plus (ii) the amount of the paid-in
capital and retained earnings of the Company and its Restricted
Subsidiaries at such time, in each case as such amounts would be shown on
a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such time prepared in accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.
"Consolidated Total Assets" means the consolidated total assets of the
Company and its Restricted Subsidiaries determined in accordance with GAAP.
"Consolidated Total Debt" means all Debt of the Company and its
Restricted Subsidiaries after eliminating inter-company items in accordance
with GAAP.
"Consolidated Total Indebtedness" means all Indebtedness of the Company
and its Restricted Subsidiaries after eliminating inter-company items in
accordance with GAAP.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
B-2
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP. Debt of the Company shall
not include any amount owed by it to any Restricted Subsidiary, and Debt of a
Restricted Subsidiary shall not include any amount owed by it to the Company,
pursuant to the Company's cash management program. Debt shall not in any
event include (i) any direct or indirect Guaranty of obligations (not
constituting Debt) of dealers under financing programs with third parties
sponsored by the Company or a Restricted Subsidiary, or (ii) any liability for
the deferred purchase price of a limited partnership interest or other
financial Investment.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes of the Series with respect such rate is being
determined or (ii) the rate of interest publicly announced by The Chase
Manhattan Bank, National Association in New York, New York as its "base" or
"prime" rate.
"Environmental Laws" means any and all applicable Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to surface water or to public waste systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
B-3
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under sections 414(b), (c) or (m) of the Code.
"Event of Default" is defined in Sec. 13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Liens" is defined in Sec. 10.3(g).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
B-4
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or hazardous substances or any other substances with respect to
which liability or standards of conduct are imposed pursuant to any
Environmental Law.
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to
Sec. 15.1.
"Indebtedness" of any Person means (i) all indebtedness of such person
for borrowed money, (ii) all Capital Leases of such Person, and (iii) all
Guaranties by such Person of Indebtedness of others. Indebtedness of the
Company shall not include any amount owed by it to any Restricted Subsidiary,
and Indebtedness of a Restricted Subsidiary shall not include any amount owed
by it to the Company, pursuant to the Company's cash management program.
Indebtedness shall not in any event include (i) any direct or indirect
Guaranty of obligations (not constituting Indebtedness) of dealers under
financing programs with third parties sponsored by the Company or a Restricted
Subsidiary, or (ii) any liability for the deferred purchase price of a limited
partnership interest or other financial Investment.
"Institutional Investor" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes of such Series then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension plan,
any investment company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form.
"Investment" means any investment, made in cash or by delivery of
property by the Company or any of its Restricted Subsidiaries (i) in any
Person, whether by acquisition of stock, indebtedness or other obligation or
Security, or by loan, Guaranty, advance, capital contribution or otherwise, or
(ii) in any property. In no event shall "Investment" include: (i) any
Guaranty that constitutes Debt or Indebtedness, (ii) any direct or indirect
Guaranty of obligations (not constituting Debt or Indebtedness) of dealers
under financing programs with third parties sponsored by the Company or a
Restricted Subsidiary (but any amount paid pursuant to such a direct or
indirect Guaranty shall, to the extent not reimbursed, constitute an
"Investment"), or (iii) any liability for the deferred purchase price of any
property other than a limited partnership interest or other financial
Investment (but any liability for the deferred purchase price of a limited
partnership interest or other financial Investment shall constitute an
"Investment").
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
B-5
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Sec. 8.7.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Restricted Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, or (c) the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Sec. 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Sec. 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"Other Agreements" is defined in Sec. 2.
"Other Purchasers" is defined in Sec. 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Investment" means the following:
(a) property to be used in the ordinary course of business of
the Company and its Restricted Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Company and its Restricted
Subsidiaries;
(c) Investments in the ordinary course of business in one or
more Restricted Subsidiaries or any Person that concurrently with such
Investment becomes a Restricted Subsidiary and loans or advances, in the
B-6
ordinary course of business, to the Company from a Restricted Subsidiary
at least 80% of the voting and equity interests of which are owned by one
or more of the Company and other such Restricted Subsidiaries;
(d) Investments existing on the date of the Closing in
Unrestricted Subsidiaries and in United States Satellite Broadcasting,
Inc., Cylink Corporation and DSC Enterprises, Inc. and disclosed in
Schedule 12.3, and any restructurings or extensions thereof which do not
increase the amount thereof;
(e) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit, Eurodollar deposits,
or banker's acceptances issued by an Acceptable Bank at the time of
acquisition thereof, provided that such obligations mature within 365
days from the date of acquisition thereof;
(g) Investments in commercial paper given a rating of "A" or
better by S&P or "A" or better by Moody's at the time of acquisition
thereof, and maturing not more than 365 days from the date of creation
thereof;
(h) Investments in tax-exempt obligations of any state of the
United States of America, or any municipality of any such state, in each
case rated "A" or better by S&P or "A" or better by Moody's at the time
of acquisition thereof, provided that such obligations mature within 365
days from the date of acquisition thereof;
(i) Investments in adjustable rate preferred stock in which the
rate reset period is less than one year and which is rated "BBB" or
better by S&P or "baa" or better by Moody's at the time of acquisition
thereof;
(j) Loans and advances in the ordinary course of business, and
any restructurings or extensions thereof which do not increase the amount
thereof, to suppliers, officers, directors and employees of the Company
or a Restricted Subsidiary incidental to carrying on the business of the
Company or a Restricted Subsidiary (including, without limitation,
employee relocation loans);
(k) receivables, loans and advances from or to Unrestricted
Subsidiaries arising from activities conducted in the ordinary course of
business between the Company or its Restricted Subsidiaries on the one
hand and its Unrestricted Subsidiaries on the other hand;
(l) Investments in addition to those described in clauses (a)
through (k) provided that the aggregate amount of Investments permitted
pursuant to this clause (l) shall not at any time exceed 25% of
Consolidated Total Assets; and
(m) Investments in addition to those described in clauses (a)
through (l), provided that the aggregate amount of Investments permitted
pursuant to this clause (m) shall not at any time exceed $5,000,000 and
that no Investment in a leveraged lease or affordable housing transaction
is permitted under this clause (m).
B-7
For purposes of this Agreement, an Investment shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is to be shown on the
books of the Company and its Restricted Subsidiaries in accordance with GAAP.
As used in this definition of "Permitted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, and has capital, surplus and undivided profits aggregating at
least $250,000,000, or (ii) which is organized under the laws of any
jurisdiction outside the United States of America, has a branch office
within the United States of America and has capital, surplus and
undivided profits aggregating at least $1,000,000,000.
"Moody's" means Xxxxx'x Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"United States Governmental Security" means any direct obligation
of, or obligation guaranteed by, the United States of America, or any
agency controlled or supervised by or acting as an instrumentality of the
United States of America pursuant to authority granted by the Congress of
the United States of America, so long as such obligation or guarantee
shall have the benefit of the full faith and credit of the United States
of America which shall have been pledged pursuant to authority granted by
the Congress of the United States of America.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA), other than a Multiemployer Plan, that is or, within the preceding five
years, has been established or maintained, or to which contributions are or,
within the preceding five years, have been made or required to be made, by the
Company or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate has any liability.
"Preferred Stock" means any class of capital stock of a corporation that
is preferred over any other class of capital stock of such corporation as to
the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, xxxxxx or
inchoate.
B-8
"PTE 95-60" means the Department of Labor Prohibited Transaction
Exemption 95-60 issued July 12, 1995.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Required Holders" means the holders of 66-2/3% or more in principal
amount of each Series of Notes acting separately, or in the case of a matter
involving only a separate Series of Notes, the holders of 66-2/3% or more in
principal amount of the Notes of such Series.
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security" has the meaning set forth in Section 2(1) of the Securities
Act.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer or treasurer of the Company.
"Series" or "Series of Notes" is defined in Sec. 1.
"Series A Notes" is defined in Sec. 1.
"Series B Notes" is defined in Sec. 1.
"Series A Total Capitalization" means the sum of (i) Consolidated Total
Debt, (ii) deferred income tax liability of the Company and its Restricted
Subsidiaries determined in accordance with GAAP, and (iii) Consolidated Net
Worth.
"Series B Total Capitalization" means the sum of (i) Consolidated Total
Indebtedness, (ii) deferred income tax liability of the Company and its
Restricted Subsidiaries determined in accordance with GAAP, and (iii)
Consolidated Net Worth.
"Source" is defined in Sec. 6.2.
B-9
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect t
hereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.
"Unrestricted Subsidiary" means any Subsidiary which has been designated
as such pursuant to the provisions of this Agreement.
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests (except directors'
qualifying shares) of which are owned by any one or more of the Company and
the Company's other Wholly-Owned Restricted Subsidiaries at such time.
B-10
[Form of Series A Note]
Pittway Corporation
6.81% Senior Note, Series A, Due December 15, 2005
No. [_________] [Date]
$[____________] PPN[____________]
FOR VALUE RECEIVED, the undersigned, PITTWAY CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to [________________], or registered
assigns, the principal sum of [________________] DOLLARS on December 15, 2005,
with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 6.81% per annum from
the date hereof, payable semi-annually, on the 15th day of June and December
in each year, commencing with the first of such dates next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semi-annually 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) 8.81% or (ii) the rate of interest publicly
announced by The Chase Manhattan Bank, National Association from time to time
in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal executive office of the Company in Chicago, Illinois,
or at such other place as the Company shall have designated by written notice
to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of Senior Notes, Series A (herein called the
"Series A Notes"), issued pursuant to separate Note Purchase Agreements, dated
as of December 15, 1995 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named therein
and pursuant to which the Company is also issuing a series of Senior Notes,
Series B (herein called the "Series B Notes" and collectively with the Series
A Notes, the "Notes"). This Note is, together with such other Notes, entitled
to the benefits of said Note Purchase Agreements. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Sec. 22 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Sec. 6.2 of
the Note Purchase Agreements and that it is not a Competitor (as defined in
the Note Purchase Agreements).
EXHIBIT 1-A
(to Note Purchase Agreement)
This Note is a registered Note and, as provided in and subject to Sec.
6.1 of the Note Purchase Agreements, 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 Series A 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 will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
This Note shall be governed by the laws of the State of New York.
PITTWAY CORPORATION
By______________________________________
Financial Vice President and Treasurer
1-A-2
[Form of Series B Note]
Pittway Corporation
6.70% Senior Note, Series B, due December 15, 2005
No. [_________] [Date]
$[____________] PPN[____________]
FOR VALUE RECEIVED, the undersigned, PITTWAY CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to [________________], or registered
assigns, the principal sum of [________________] DOLLARS on December 15, 2005,
with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 6.70% per annum from
the date hereof, payable semi-annually, on the 15th day of June and December
in each year, commencing with the first of such dates next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semi-annually 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) 8.70% or (ii) the rate of interest publicly
announced by The Chase Manhattan Bank, National Association from time to time
in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal executive office of the Company in Chicago, Illinois,
or at such other place as the Company shall have designated by written notice
to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of Senior Notes, Series B (herein called the
"Series B Notes"), issued pursuant to separate Note Purchase Agreements, dated
as of December 15, 1995 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named therein
and pursuant to which the Company is also issuing a series of Senior Notes,
Series A (herein called the "Series A Notes" and collectively with the Series
B Notes, the "Notes"). This Note is, together with such other Notes, entitled
to the benefits of said Note Purchase Agreements. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Sec. 22 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Sec. 6.2 of
the Note Purchase Agreements and that it is not a Competitor (as defined in
the Note Purchase Agreements).
EXHIBIT 1-B
(to Note Purchase Agreement)
This Note is a registered Note and, as provided in and subject to Sec.
6.1 of the Note Purchase Agreements, 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 Series B 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 will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
This Note shall be governed by the laws of the State of New York.
PITTWAY CORPORATION
By____________________________________
Financial Vice President and Treasurer
1-B-2
