<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1997
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PACKARD BIOSCIENCE COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3829 06-0676652
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
800 RESEARCH PARKWAY
MERIDEN, CONNECTICUT 06450
(203) 238-2351
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
BEN D. KAPLAN
VICE PRESIDENT & CHIEF FINANCIAL OFFICER
PACKARD BIOSCIENCE COMPANY
800 RESEARCH PARKWAY
MERIDEN, CONNECTICUT 06450
(203) 238-2351
(Address, including zip code, and telephone number, including
area code, of agents for service of process)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
ANDREW R. BROWNSTEIN, ESQ. PAUL F. MCALENNEY, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ DAY, BERRY & HOWARD
51 WEST 52ND STREET CITY PLACE I
NEW YORK, NEW YORK 10019 185 ASYLUM STREET
(212) 403-1000 HARTFORD, CONNECTICUT 06103
(860) 275-0100
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
9 3/8% Senior Subordinated Notes due 2007,
Series B....................................... $150,000,000 100% $150,000,000 $45,454.55
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 26, 1997
PRELIMINARY PROSPECTUS
[LOGO]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
OFFER TO EXCHANGE
ALL OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR ANY AND ALL OF THE OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
PACKARD BIOSCIENCE COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
Packard BioScience Company, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal" and, together with this Prospectus, the "Exchange Offer"), to
exchange an aggregate of up to $150,000,000 principal amount of 9 3/8% Senior
Subordinated Notes due 2007, Series B (the "Exchange Notes") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a registration statement of which this Prospectus forms a part, for
an identical face amount of the issued and outstanding 9 3/8% Senior
Subordinated Notes due 2007 (the "144A Notes" and, together with the Exchange
Notes, the "Notes") of the Company from the Holders (as defined herein) thereof
in integral multiples of $1,000. As of the date of this Prospectus, there are
$150,000,000 aggregate principal amount of the 144A Notes outstanding. The terms
of the Exchange Notes are identical in all material respects to the 144A Notes,
except that the Exchange Notes have been registered under the Securities Act,
and therefore will not bear legends restricting their transfer and will not
contain certain provisions providing for an increase in the interest rate
payable on the 144A Notes under certain circumstances relating to the
Registration Rights Agreement (as defined herein), which provisions will
terminate as to all of the Notes upon the consummation of the Exchange Offer.
The Exchange Notes will be obligations of the Company evidencing the same
indebtedness as the 144A Notes, and will be entitled to the benefits of the same
Indenture (as defined herein). See "The Exchange Offer."
Interest on the Exchange Notes will be payable semi-annually in arrears on
March 1 and September 1 of each year, commencing September 1, 1997. The Exchange
Notes will mature on March 1, 2007. The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, in cash, at any time on or after
March 1, 2002, at the redemption prices set forth herein, together with accrued
and unpaid interest, if any, to the date of redemption. In addition, on or prior
to March 1, 2000, the Company may redeem up to 30% of the originally issued
Exchange Notes, at a price of 109 3/8% of the principal amount thereof, together
with accrued and unpaid interest, if any, to the redemption date, with the net
proceeds of one or more Public Equity Offerings (as defined herein), provided
that not less than $105 million in principal amount of Exchange Notes is
outstanding immediately after giving effect to such redemption. Upon the
occurrence of a Change of Control (as defined herein), each holder of Exchange
Notes will, subject to the limitations described herein, have the right to
require the Company to purchase all or a portion of such holder's Exchange Notes
at a purchase price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date of purchase. See "Description of the
Exchange Notes."
The Exchange Notes will represent unsecured senior subordinated obligations
of the Company and will be subordinated in right of payment to all existing and
future Senior Indebtedness (as defined herein) of the Company, including
indebtedness under the New Credit Agreement (as defined herein). The Exchange
Notes will rank PARI PASSU with all senior subordinated indebtedness, if any, of
the Company and will rank senior to all other subordinated indebtedness, if any,
of the Company. In addition, the business operations of the Company are
conducted in part through its subsidiaries and the Exchange Notes will also be
effectively subordinated to all existing and future liabilities of the Company's
subsidiaries. As of December 31, 1996, on a PRO FORMA basis after giving effect
to the Recapitalization (as defined herein), the Company would have had
approximately $40.0 million of Senior Indebtedness outstanding and the Company's
subsidiaries would have had approximately $1.7 million of Indebtedness (as
defined herein) outstanding (excluding the guarantees by the Company's
subsidiaries under the New Credit Agreement).
(COVER TEXT CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS," BEGINNING ON PAGE 16, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
<PAGE>
The Company will accept for exchange any and all validly tendered 144A Notes
on or prior to the Expiration Date (as defined herein). Tenders of 144A Notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. The Exchange Offer is
not conditioned upon any minimum principal amount of 144A Notes being tendered
for exchange. For certain conditions to the Exchange Offer, see "The Exchange
Offer--Conditions."
The 144A Notes were issued and sold on March 4, 1997 in a transaction not
registered under the Securities Act in reliance upon an exemption from the
registration requirements thereof. In general, the 144A Notes may not be offered
or sold unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act.
The Exchange Notes are being offered hereby in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement. The
Company has agreed to pay the expenses of the Exchange Offer. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission") set forth in no-action letters issued to third parties, the
Company believes that the Exchange Notes issued pursuant to the Exchange Offer
in exchange for 144A Notes may be offered for resale, resold or otherwise
transferred by any Holder thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, PROVIDED that such Exchange Notes are acquired
in the ordinary course of such Holder's business and such Holder does not intend
to participate and has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. In some cases, certain
broker-dealers may be required to deliver a prospectus in connection with the
resale of such Exchange Notes.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with any resale of Exchange Notes
received in exchange for such 144A Notes where such 144A Notes were acquired by
such broker-dealer for its own account as a result of market-making activities
or other trading activities (other than 144A Notes acquired directly from the
Company). The Company has agreed that it will make this Prospectus available to
any broker-dealer for use in connection with any such resale.
Prior to this Exchange Offer, there has been no public market for the 144A
Notes or Exchange Notes. If a market for the Exchange Notes should develop, the
Exchange Notes could trade at a discount from their principal amount. The
Company does not intend to list the Exchange Notes on any securities exchange
nor does the Company intend to apply for quotation of the Exchange Notes through
the NASDAQ System. The Initial Purchasers (as defined herein) have indicated to
the Company that they intend to make a market in the Notes, but are not
obligated to do so and such market-making activities may be discontinued at any
time. As a result, no assurance can be given that an active trading market for
the Exchange Notes will develop.
The Exchange Notes issued pursuant to this Exchange Offer will be issued in
the form of Global Exchange Notes (as defined herein), which will be deposited
with, or on behalf of, The Depository Trust Company (the "Depository" or "DTC")
and registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Exchange Notes representing the Exchange Notes will be
shown on, and transfers thereof will be effected through, records maintained by
the DTC and its participants. Notwithstanding the foregoing, 144A Notes held in
certificated form will be exchanged solely for Certificated Exchange Notes (as
defined herein). After the initial issuance of the Global Exchange Notes,
Certificated Exchange Notes will be issued in exchange for the Global Exchange
Notes only on the terms set forth in the Indenture. See "Description of the
Exchange Notes--Book-Entry, Delivery and Form."
2
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement" or "Exchange Offer Registration Statement") under
the Securities Act with respect to the Exchange Notes being offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement. For further
information with respect to the Company and the Exchange Notes offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and, where such contract or other document is an exhibit
to the Registration Statement, each such statement is qualified in all respects
by the provisions in such exhibit, to which reference is hereby made. Copies of
the Registration Statement may be examined without charge at the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the web site maintained by the Commission
(http://www.sec.gov) and at the Commission's Regional Offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any portion of the Registration Statement can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon
completion of the Exchange Offer, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file periodic reports and other information with the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of any material so filed can
be obtained from the Public Reference Section of the Commission, upon payment of
certain fees prescribed by the Commission. In addition, pursuant to the
Indenture covering the Notes, the Company has agreed to file with the
Commission, and provide to the Holders, the annual reports and the information,
documents and other reports otherwise required pursuant to Section 13 of the
Exchange Act. Such requirements may be satisfied through the filing and
provision of such documents and reports which would otherwise be required
pursuant to Section 13 of the Exchange Act in respect of the Company.
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS UNDER "PROSPECTUS SUMMARY,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS," IN ADDITION TO CERTAIN STATEMENTS CONTAINED
ELSEWHERE IN THIS PROSPECTUS, ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE THUS
PROSPECTIVE. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE MOST
SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER FACTORS ARE DISCUSSED UNDER
"RISK FACTORS," BEGINNING ON PAGE 16 OF THIS PROSPECTUS, AND HOLDERS OF 144A
NOTES ARE URGED TO CAREFULLY CONSIDER SUCH FACTORS.
------------------------
Tri-Carb-Registered Trademark-, InstantImager-Registered Trademark- and
MultiPROBE-Registered Trademark- are registered trademarks of the Company and
HTRF-TM-, Discovery-TM- and TopCount-TM- are trademarks of the Company.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND
NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT
REQUIRES OTHERWISE, REFERENCES TO THE "COMPANY" INCLUDE PACKARD BIOSCIENCE
COMPANY AND ITS SUBSIDIARIES. UNLESS OTHERWISE INDICATED, INDUSTRY DATA
CONTAINED HEREIN IS DERIVED FROM PUBLICLY AVAILABLE INDUSTRY TRADE JOURNALS,
REPORTS AND OTHER PUBLICLY AVAILABLE SOURCES, WHICH THE COMPANY HAS NOT
INDEPENDENTLY VERIFIED BUT WHICH THE COMPANY BELIEVES TO BE RELIABLE, AND WHERE
SUCH SOURCES WERE NOT AVAILABLE, FROM COMPANY ESTIMATES, WHICH THE COMPANY
BELIEVES TO BE REASONABLE, BUT WHICH CANNOT BE INDEPENDENTLY VERIFIED. SEE
"GLOSSARY OF TERMS" IN APPENDIX A FOR DEFINITIONS OF CERTAIN TERMS AND ACRONYMS.
THE COMPANY
The Company is a leading developer, manufacturer and marketer of analytical
instruments and related products and services for use in the drug discovery and
molecular biology segments of the life sciences industry and in the nuclear
instrumentation industry. Through its wholly-owned subsidiary, the Packard
Instrument Company, Inc. ("Packard Instrument"), the Company supplies
bioanalytical instruments, and related biochemical supplies and services, to the
drug discovery and molecular biology markets, and through the Canberra Nuclear
Products Group ("Canberra Nuclear"), the Company manufactures analytical
instruments and systems used to detect, identify and quantify radioactive
materials for the nuclear industry and related markets. The Company believes
that it is the worldwide market leader in most of its primary product markets,
with well-recognized brand names and a reputation for high-quality, reliable
instruments. For the year ended December 31, 1996, the Company had revenues and
EBITDA (as defined herein) of $184.0 million and $37.0 million, respectively.
Packard Instrument is a worldwide leader in the manufacturing and marketing
of bioanalytical instruments for use in the drug discovery and molecular biology
segments of the life sciences industry. Packard Instrument's instruments and
biochemicals are used principally in laboratory research related to immunology,
genetics, virology, biochemistry, toxicology and metabolism studies, primarily
as part of the drug discovery research process. Over the past five years,
pharmaceutical and biotechnology companies have attempted to advance the drug
discovery process through accelerated drug screening and have invested
considerable resources in this process, resulting in increased demand for
Packard Instrument's products. Packard Instrument's primary products include
bioanalytical spectrometers, microplate readers, imaging systems, robotic liquid
handling systems and biochemicals and related supplies. Packard Instrument's
strong, long-term relationships with its customers have been a key component of
its development of new products which respond to these industry trends. In
addition, the Company believes that the quality and reliability of its products
have generated a large installed base of instruments which allows Packard
Instrument to generate a recurring stream of revenue from service and from sales
of biochemicals and other consumables. Packard Instrument distributes and
services its instruments through an extensive international sales and service
organization to many of the leading pharmaceutical, biotechnology and
agrochemical companies as well as to prominent academic, federal and hospital
laboratories.
Canberra Nuclear is the worldwide market leader in the manufacture and
marketing of precision instruments which use advanced analytical techniques to
quantify and identify radioisotopes. Canberra Nuclear offers its customers a
full array of nuclear instruments and related services including: (i) a broad
product line of basic hardware and software for detection, signal processing,
data acquisition and display, and basic analysis of all types of radiation; (ii)
"applied systems," which are integrated systems of software and hardware that
address a specific application and serve as turn-key operations; and (iii)
product and applications training and customer service and support. This
comprehensive product and service offering has enabled Canberra Nuclear to amass
what it believes to be the largest base of installed equipment in the nuclear
instrument industry, which generates a recurring stream of service revenues.
Canberra Nuclear's customers include government institutions, utilities,
research laboratories, commercial analytical laboratories and international,
national and local regulatory agencies. In support of its worldwide customer
base,
4
<PAGE>
Canberra Nuclear has developed an extensive sales and service organization, with
locations near most major nuclear sites in the world.
COMPANY STRENGTHS
LEADING MARKET POSITION. The Company believes that it has the leading
market position in each of its two principal businesses. The Company believes
that Packard Instrument has an approximate 25% market share of the worldwide
market segments in the life sciences industry in which it currently competes and
that Canberra Nuclear holds a more than 50% market share of the worldwide
commercial nuclear instrument market. In addition, the Company estimates that
Canberra Nuclear has an approximate 60% market share in the market for turn-key
systems that meet customer's specific application requirements, a market segment
that the Company believes will grow faster than the market for individual
instruments. The Company's well-recognized name and reputation for quality and
reliability have allowed it to gain leading market positions across most of its
primary product lines.
LONG-TERM CUSTOMER RELATIONSHIPS. The Company has long-term relationships
with its customers in both the life sciences and nuclear instrumentation
industries. Packard Instrument's relationships with its customers, which include
most of the major pharmaceutical companies worldwide, have resulted in
collaborative research and development efforts with its customers that have been
key to Packard Instrument's new product development strategy and that have
helped Packard Instrument to maintain its leading market position. Canberra
Nuclear similarly enjoys strong relationships with major nuclear instrumentation
industry participants, including commercial enterprises and government entities
such as the United States Department of Energy ("DOE").
RECURRING REVENUES FROM INSTALLED BASE. The Company generates recurring
revenue from service and the sale of consumables due to its large installed base
of equipment. The Company believes that it has the largest installed equipment
base in the nuclear instrument industry and one of the largest installed bases
in the market segments of the life science industry in which it competes. The
Company estimates that Packard Instrument's installed base in the life sciences
industry consists of over 14,000 bioanalytical instruments. The Company
estimates that Canberra Nuclear's installed base in the nuclear instrument
industry includes more than 150 waste characterization systems, more than 300
whole body counting systems, hundreds of safeguards systems and thousands of
radiochemistry systems. Both Packard Instrument and Canberra Nuclear offer their
customers service and support for the instruments they sell. In addition,
Packard Instrument offers its customers consumables for its instruments.
Consumable sales and service provide the Company with stable, recurring revenue
for years after an instrument has been sold. Approximately 33% of the Company's
revenues for fiscal 1996 was generated by service of its equipment and the sale
of consumables. For those instruments covered by service contracts, service
contract revenues per instrument per year average 8% to 13% of the equipment's
original selling price. Canberra Nuclear's applied systems generally require
more aftermarket service than Canberra Nuclear's other instruments, and as this
market segment grows, the Company believes that revenue from the provision of
related services may also increase. The Company believes that its installed base
represents a competitive advantage because many customers tend to remain with an
existing supplier who can provide accurate and reliable products and related
services.
EXTENSIVE WORLDWIDE SALES AND SERVICE ORGANIZATION. The Company has
developed an extensive worldwide sales, service and distribution network. The
Company primarily provides service and support for its instruments on a fixed
fee, one-year contract basis, which includes field service, customer support,
applications assistance and extensive training. The Company's worldwide service
organization includes approximately 160 personnel at Packard Instrument and
approximately 90 personnel at Canberra Nuclear who are, in each case,
factory-trained and educated. Packard Instrument has sales and service
operations in 13 countries, and approximately 43 independent distributors with
over 68 offices in more than 51 countries. Canberra Nuclear has locations near
most major nuclear sites in the world, with sales and service
5
<PAGE>
operations in nine countries, and approximately 50 independent distributors with
over 70 offices in more than 60 countries. In addition to the recurring stream
of revenue from the Company's service and support organization, the close
contact and relationship between its service and support personnel and its
customers also provide the Company with access to new product and application
ideas as well as sales opportunities.
EXPERIENCED MANAGEMENT. The Company's management has substantial experience
in the life sciences industry and in the nuclear instrumentation industry. The
Company's top 14 managers average 21 years of experience with the Company. The
Company's Chief Executive Officer has held such position since 1965. Revenues in
1965 were $119,000 and have grown to $184.0 million for the year ended December
31, 1996. Upon consummation of the Recapitalization, the Company's management
beneficially owned approximately 20% of the Common Stock of the Company on a
fully diluted basis (excluding New Options (as defined herein) to be granted
subsequent to the Recapitalization Closing (as defined herein) pursuant to a
management stock incentive plan). See "Management--Management Stock Incentive
Plan."
BUSINESS STRATEGY
LEVERAGE BRAND RECOGNITION AND HIGH QUALITY. Through its applications
expertise and long history in its businesses, the Company has established and
will seek to maintain its recognized brand name and reputation for high quality,
reliable products and services. This reputation and recognized brand name, along
with the Company's extensive sales and service organization, should assist in
its efforts to further penetrate the markets for its existing products and
improve its market position in the industry segments in which it operates. The
Company monitors such quality statistics as "perfect" installations of its
equipment and, in the case of Packard Instrument, mean time between failures of
its products. The Company's goal is to be the supplier of choice for all end
users of its analytical instruments and systems. The Company will also seek to
use its established brand name and reputation for quality to compete on factors
other than price in order to maintain its margins.
GENERATE GROWTH THROUGH NEW PRODUCT DEVELOPMENT. The Company intends to
continue to emphasize new product development in order to provide
technologically advanced products to its customers for existing and new
applications and reinforce its market leadership. In particular, the Company
intends to continue to target a number of its new products toward the evolving
drug discovery market. Packard Instrument has an aggressive new product
introduction strategy that leverages its extensive distribution system and
recognized brand name. With its 90 research and development professionals and
its global service capabilities, Packard Instrument seeks to refine and market
technological advances that it obtains through internal development,
acquisitions or external collaborations with other companies or individuals.
Packard Instrument has capitalized on its strong customer relationships and
established reputation to learn about new applications desired by the
marketplace, enabling it to anticipate and respond to its customers' needs. The
Company believes that the introduction of its new products and product
enhancements and extensions should assist in its efforts to further penetrate
its markets.
Canberra Nuclear has implemented a strategy of developing turn-key systems
which meet a specific application requirement, require less technical training
to operate, and offer greater economic benefit than traditional stand-alone
components. This "systems" strategy is well suited to Canberra Nuclear's
strengths of applications know-how, worldwide service, software and hardware
expertise, and advanced training capabilities. In addition to selling its
measurement equipment, Canberra Nuclear has started offering transaction-based
database and spectroscopy services requested by its customers. Canberra
Nuclear's strategy is to develop its capabilities as a components manufacturer,
systems integrator, and applications expert in order to maintain and improve its
margins for both its products and services.
IMPLEMENT ADDITIONAL MANUFACTURING COST REDUCTIONS. The Company believes
that Packard Instrument is a low cost producer and that it can maintain this
position with continued emphasis on production cycle time, reduction in the
number of suppliers and increased use of outsourced standard components and sub-
6
<PAGE>
assemblies. Canberra Nuclear has lowered its costs of manufacturing and service
significantly in the last several years through increased emphasis on
efficiency, primarily as a result of personnel and facilities reductions,
standardization of systems and increased automation of design. The Company
believes that Canberra Nuclear will strive to lower its manufacturing costs in
the future.
EMPHASIZE RECURRING REVENUES FROM SERVICES AND CONSUMABLES. The Company
intends to continue placing emphasis on expanding its service organization and
adding new biochemical and supply products to its existing product line in order
to increase its revenue from services and consumables. The Company is expanding
the type of value-added services it provides by increasing the applications
knowledge of its service staff which, as a result, should be able to provide
more consultative assistance to customers. Packard Instrument is positioning
itself to address the emerging demand for non-radioisotopic biochemicals and
supplies. The Company believes that new non-radioisotopic assays will address
new areas of the biochemicals and supplies market. The Company is also expanding
its product line to include a broader array of microplates and vials that
complement its existing product lines and new instruments. Canberra Nuclear is
emphasizing recurring service revenues by expanding its database service
activities serving the U.S. nuclear utility industry and positioning itself to
compete in transaction-based database and spectroscopy services for customers in
the nuclear power and DOE markets.
THE RECAPITALIZATION
The Company entered into a Recapitalization and Stock Purchase Agreement
(the "Recapitalization Agreement"), dated as of November 26, 1996, by and among
the Company, CII Acquisition LLC (the "Acquisition Entity") and each of the
management stockholders party thereto (the "Management Stockholders"), to effect
a recapitalization of the Company and related transactions (the
"Recapitalization"). Pursuant to the Recapitalization Agreement, the Company
completed a tender offer (the "Tender Offer") in which it repurchased for an
aggregate price of approximately $208.6 million all of the shares of common
stock of the Company ("Common Stock") other than certain shares retained by the
Management Stockholders and certain other stockholders (the "Continuing
Stockholders"). In addition, (i) the Acquisition Entity assigned its right to
acquire shares of Common Stock under the Recapitalization Agreement to
Stonington Capital Appreciation 1994 Fund, L.P. (the "Fund"), which is the sole
member of the Acquisition Entity, and two institutional investors, (ii) the
Fund, the two institutional investors and a member of the Board of Directors of
the Company acquired shares of Common Stock from the Company and certain shares
of Common Stock beneficially owned by the Management Stockholders for an
aggregate purchase price of approximately $71.5 million and (iii) the Management
Stockholders and the Continuing Stockholders retained certain shares of Common
Stock and options to purchase shares of Common Stock ("Existing Options") with
an implied value of approximately $31.9 million. Upon consummation of the
Recapitalization, the Fund, the two institutional investors and a member of the
Board of Directors owned approximately 69% of the Common Stock and the
Management Stockholders and Continuing Stockholders beneficially owned
approximately 31% of the Common Stock, each on a fully diluted basis (excluding
New Options to be granted subsequent to the Recapitalization Closing). Pursuant
to the Recapitalization, Existing Options were cancelled in exchange for a
payment of approximately $3.3 million in the aggregate. See
"Management--Management Investment" and "Ownership of Capital Stock." The
closing of the Recapitalization (the "Recapitalization Closing") occurred
simultaneously with the closing of the Tender Offer and the offering of the 144A
Notes (the "144A Note Offering"). The balance of the funds needed to consummate
the Recapitalization came from borrowings under a credit agreement (the "New
Credit Agreement") and from cash on hand. The foregoing equity and debt
transactions are herein referred to as part of the Recapitalization. See "The
Recapitalization" and "Description of the New Credit Agreement."
7
<PAGE>
The following table sets forth the sources and uses of funds related to the
Recapitalization:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
SOURCES OF FUNDS:
Cash on hand.................................................................. $ 21.2
New Credit Agreement (1)...................................................... 40.0
144A Notes.................................................................... 150.0
Equity from the Fund (2)...................................................... 71.5
Exercise of stock options (3)................................................. 8.3
------
Total....................................................................... $ 291.0
------
------
USES OF FUNDS:
Purchases of Common Stock from existing stockholders by:
The Company (4)............................................................. $ 211.9
The Fund (2)................................................................ 54.0
Repayment of existing indebtedness (5)........................................ 4.6
Transaction fees and expenses (6)............................................. 20.5
------
Total....................................................................... $ 291.0
------
------
</TABLE>
- ------------------------
(1) The New Credit Agreement consists of a $40 million six-year term loan and
includes a $75 million five-year Revolving Credit Facility (as defined
herein), which was undrawn as of the Recapitalization Closing. See
"Description of the New Credit Agreement."
(2) Excludes approximately $31.9 million implied value of equity retained by the
Management Stockholders and the Continuing Stockholders. Includes equity
from the Fund, the two institutional investors and an outside director, and
consists of approximately $17.5 million for purchase of shares of Common
Stock from the Company and approximately $54.0 million for the purchase of
shares of Common Stock beneficially owned by Management Stockholders.
(3) Represents proceeds received from the exercise of Existing Options by
Management Stockholders.
(4) Consists of approximately $208.6 million for repurchase of Common Stock and
approximately $3.3 million for redemption of Existing Options. See "The
Recapitalization."
(5) Primarily represents overdrafts at certain foreign subsidiaries, certain
treasury stock notes and certain building loans outstanding at December 31,
1996 which had interest rates that range from 3.5% to 7.9% and which had
maturities, in the case of the overdrafts, of less than one year, in the
case of the treasury stock notes, ranging from five to eight years and, in
the case of the building loans, of up to 16 years.
(6) Includes fees related to financing for the Recapitalization; legal,
financial advisory and other fees of the Company; and legal, accounting and
other fees of the Acquisition Entity. Also includes $1.2 million for payment
of bonuses to management and $2.4 million for the payment of a lump sum
amount to satisfy the Company's obligations under certain executive
officers' Supplemental Executive Retirement Plans.
8
<PAGE>
THE 144A NOTE OFFERING
<TABLE>
<S> <C>
The 144A Notes............... The 144A Notes were sold by the Company in the 144A Note
Offering on March 4, 1997, and were subsequently resold to
Qualified Institutional Buyers (as defined herein) pursuant
to Rule 144A under the Securities Act and to institutional
investors that are Accredited Investors (as defined herein)
in a manner exempt from registration under the Securities
Act.
Registration Rights
Agreement.................. In connection with the 144A Note Offering, the Company
entered into the Registration Rights Agreement, which grants
Holders of the 144A Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy such
exchange and registration rights, which generally terminate
upon the consummation of the Exchange Offer.
</TABLE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........... $150,000,000 aggregate principal amount of 9 3/8% Senior
Subordinated Notes due 2007, Series B.
The Exchange Offer........... $1,000 principal amount of the Exchange Notes in exchange
for each $1,000 principal amount of 144A Notes. As of the
date hereof, $150,000,000 aggregate principal amount of 144A
Notes are outstanding. The Company will issue the Exchange
Notes to Holders on or promptly after the Expiration Date.
The terms of the Exchange Notes are substantially identical
in all material respects (including principal amount,
interest rate and maturity) to the terms of the 144A Notes
for which they may be exchanged pursuant to the Exchange
Offer, except that the Exchange Notes are freely
transferrable by holders thereof (other than as provided
herein), and are not subject to any covenant regarding
registration under the Securities Act. See "The Exchange
Offer." Other than compliance with applicable federal and
state securities laws, including the requirement that the
Registration Statement be declared effective by the
Commission, there are no material federal or state
regulatory requirements to be complied with in connection
with the Exchange Offer.
Interest Payments............ The Exchange Notes will bear interest from March 4, 1997,
the date of issuance of the 144A Notes, or the most recent
interest payment date to which interest on such 144A Notes
has been paid, whichever is later. Accordingly, Holders of
144A Notes that are accepted for exchange will not receive
interest on such 144A Notes that is accrued but unpaid at
the time of tender, but such interest will be payable on the
first interest payment date after the Expiration Date.
Minimum Condition............ The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of 144A Notes being tendered for
exchange.
Expiration Date.............. 5:00 p.m., New York City time, on , 1997 unless
the Exchange Offer is extended, in which case the term
"Expiration Date"
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
means the latest date and time to which the Exchange Offer
is extended.
Exchange Date................ The date of acceptance for exchange of the 144A Notes will
be the first business day following the Expiration Date.
Withdrawal Rights............ Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. See "The Exchange
Offer-- Withdrawal of Tenders."
Acceptance of 144A Notes and
Delivery of Exchange
Notes...................... The Company will accept for exchange any and all 144A Notes
which are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See "The
Exchange Offer-- Conditions."
Procedures for Tendering 144A
Notes...................... To tender in the Exchange Offer, a Holder must complete,
sign and date the accompanying Letter of Transmittal, or a
facsimile thereof, have the signatures therein guaranteed if
required by instruction 4 of the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal, or
such facsimile, together with the 144A Notes and any other
required documentation to the Exchange Agent (as defined
herein) at the address set forth herein prior to 5:00 p.m.,
New York City time, on the Expiration Date. See "The
Exchange Offer-- Procedures for Tendering" and "Plan of
Distribution." By executing the Letter of Transmittal, each
Holder will represent to the Company that, among other
things, the Holder or the person receiving such Exchange
Notes, whether or not such person is the Holder, is
acquiring the Exchange Notes in the ordinary course of
business and that neither the Holder nor any such other
person intends to participate or has any arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes. In lieu of physical
delivery of the certificates representing 144A Notes,
tendering Holders may transfer 144A Notes pursuant to the
procedure for book-entry transfer as set forth under "The
Exchange Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose 144A Notes are registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender in the Exchange Offer
should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial owner must,
prior to completing and executing the Letter of Transmittal
and delivering the 144A Notes, either make appropriate
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
arrangements to register ownership of the 144A Notes in such
beneficial owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered
ownership may take considerable time. See "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of 144A Notes who wish to tender their 144A Notes
and whose 144A Notes are not immediately available or who
cannot deliver their 144A Notes, the Letter of Transmittal
or any other documents required by the Letter of Transmittal
to the Exchange Agent (or comply with the requirements for
book-entry transfer) prior to the Expiration Date must
tender their 144A Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer-- Guaranteed
Delivery Procedures."
Federal Income Tax
Consequences............... The issuance of the Exchange Notes to Holders pursuant to
the terms set forth in this Prospectus will not constitute
an exchange for federal income tax purposes. Consequently,
no gain or loss would be recognized by Holders upon receipt
of the Exchange Notes. See "Certain Federal Income Tax
Consequences of the Exchange Offer."
Use of Proceeds.............. There will be no proceeds to the Company from the exchange
of 144A Notes pursuant to the Exchange Offer.
Exchange Agent............... The Bank of New York is serving as exchange agent (the
"Exchange Agent") in connection with the Exchange Offer. See
"The Exchange Offer--Exchange Agent."
</TABLE>
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the 144A Notes (which they replace) except that (i) the Exchange Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, and (ii) the holders of Exchange Notes
generally will not be entitled to further registration rights under the
Registration Rights Agreement, which rights generally will be satisfied when the
Exchange Offer is consummated. The Exchange Notes will evidence the same debt as
the 144A Notes and will be entitled to the benefits of the Indenture. See
"Description of the Exchange Notes."
<TABLE>
<S> <C>
Securities Offered........... $150,000,000 aggregate principal amount of 9 3/8% Senior
Subordinated Notes due 2007, Series B.
Maturity Date................ March 1, 2007.
Interest Payment Dates....... March 1 and September 1 of each year, commencing September
1, 1997.
Optional Redemption.......... The Exchange Notes will be redeemable at the option of the
Company, in whole or in part, in cash, at any time on or
after March 1, 2002, at the redemption prices set forth
herein, together with accrued and unpaid interest, if any,
to the date of redemption. In addition, on or prior to March
1, 2000, the Company may redeem up to 30% of the originally
issued Notes, at a price of 109 3/8% of the principal amount
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
thereof, together with accrued and unpaid interest to the
redemption date, with the net proceeds of one or more Public
Equity Offerings; PROVIDED that not less than $105 million
in principal amount of Notes is outstanding immediately
after giving effect to such redemption. See "Description of
the Exchange Notes--Optional Redemption."
Change of Control............ Upon the occurrence of a Change of Control, each holder of
Exchange Notes will, subject to the limitations described
herein, have the right to require the Company to purchase
all or a portion of such holder's Exchange Notes at a
purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon
to the date of purchase. See "Description of the Exchange
Notes--Purchase of Notes Upon a Change of Control."
Ranking...................... The Exchange Notes will be unsecured senior subordinated
obligations of the Company and will be subordinated in right
of payment to all existing and future Senior Indebtedness of
the Company, including indebtedness under the New Credit
Agreement. The Exchange Notes will rank PARI PASSU with all
senior subordinated indebtedness, if any, of the Company,
and will rank senior to all other subordinated indebtedness,
if any, of the Company. In addition, the business operations
of the Company are conducted in part through its
subsidiaries and the Exchange Notes will also be effectively
subordinated to all existing and future liabilities of the
Company's subsidiaries. As of December 31, 1996, on a PRO
FORMA basis after giving effect to the Recapitalization, the
Company would have had approximately $40.0 million of Senior
Indebtedness outstanding and the Company's subsidiaries
would have had approximately $1.7 million of Indebtedness
outstanding (excluding the guarantees of the Company's
subsidiaries under the New Credit Agreement).
Certain Covenants............ The Indenture pursuant to which the 144A Notes were issued
and pursuant to which the Exchange Notes will be issued
contains certain covenants, including, among others,
covenants with respect to the following matters: (i)
limitation on indebtedness; (ii) limitation on restricted
payments; (iii) limitation on certain transactions with
affiliates; (iv) limitation on disposition of proceeds of
asset sales; (v) limitation on liens; (vi) limitation on
other senior subordinated indebtedness; (vii) limitation of
guarantees by subsidiaries; (viii) limitation on dividends
and other payment restrictions affecting subsidiaries; (ix)
limitation on the issuance of preferred stock of
subsidiaries; and (x) restrictions on mergers,
consolidations or the sale of all or substantially all of
the assets of the Company. See "Description of the Exchange
Notes--Certain Covenants."
Exchange Offer; Registration
Rights..................... In the event that any changes in the law or the applicable
interpretations of the staff of the Commission do not permit
the Company to effect the Exchange Offer, or if a Holder of
the 144A Notes is not permitted to participate in the
Exchange Offer or does not receive freely tradeable Exchange
Notes pursuant to the Exchange Offer or if any of the
Initial Purchasers so request, the Registration Rights
Agreement provides that the Company will use its best
efforts
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
to cause to become effective within 135 days of the Issue
Date (as defined herein) (or within 30 days of the request
of any Initial Purchaser) a shelf registration statement
(the "Shelf Registration Statement") with respect to the
resale of the 144A Notes and to keep such Shelf Registration
Statement effective until two years after the Issue Date or
such shorter period ending when all the 144A Notes eligible
for sale thereunder have been sold thereunder. The interest
rate on the 144A Notes is subject to increase under certain
circumstances if the Company is not in compliance with its
obligations under the Registration Rights Agreement. See
"Exchange Offer; Registration Rights."
Absence of a Public Market
for the Notes.............. The Exchange Notes will be new securities for which there is
currently no established trading market. Although the
Initial Purchasers have informed the Company that they
currently intend to make a market in the Exchange Notes,
they are not obligated to do so, and any such market-making
may be discontinued at any time without notice, at their
sole discretion. Accordingly, there can be no assurance as
to the development or the liquidity of any market for the
Exchange Notes. The Company does not intend to apply for
listing of the Exchange Notes on any securities exchange or
for quotation through the NASDAQ National Market or any
other quotation system.
</TABLE>
RISK FACTORS
See "Risk Factors" beginning on page 16 for a discussion of certain factors
which should be considered by participants in the Exchange Offer.
13
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth summary historical and pro forma consolidated
financial data with respect to the Company for the periods ended and as of the
dates indicated. The summary historical consolidated financial data for the
years ended December 31, 1996, 1995 and 1994 are derived from the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus. The summary historical consolidated financial data for the years
ended December 31, 1993 and 1992 are derived from audited consolidated financial
statements of the Company that are not included in this Prospectus. The
unaudited summary pro forma consolidated balance sheet data give effect to the
Recapitalization as if it had occurred as of December 31, 1996. The unaudited
summary pro forma consolidated financial data do not purport to represent what
the Company's financial condition would actually have been had the
Recapitalization in fact occurred as of such date or to project the Company's
financial condition for any future period or as of any future date. This
information should be read in conjunction with the consolidated financial
statements and pro forma financial statements of the Company and the notes
thereto appearing elsewhere in this Prospectus, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Unaudited Pro
Forma Condensed Consolidated Financial Statements."
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Packard Instrument revenues................................. $ 95,454 $ 92,371 $ 101,335 $ 107,156 $ 122,676
Canberra Nuclear revenues................................... 66,084 64,364 64,049 61,958 61,342
---------- ---------- ---------- ---------- ----------
Total revenues.............................................. 161,538 156,735 165,384 169,114 184,018
Cost of sales and service expense........................... 85,458 81,228 85,299 82,635 85,757
---------- ---------- ---------- ---------- ----------
Gross profit................................................ 76,080 75,507 80,085 86,479 98,261
Research and development expenses........................... 12,633 13,494 13,726 14,414 17,852
Selling, general and administrative expenses................ 46,755 45,066 45,062 47,322 48,830
Other charges (1)........................................... -- -- 3,450 -- 837
---------- ---------- ---------- ---------- ----------
Income from operations...................................... 16,692 16,947 17,847 24,743 30,742
Interest expense............................................ 447 175 558 616 122
Other (income) expense, net................................. (647) 630 (2,940) (1,153) (1,149)
Flood costs (savings) (2)................................... 6,000 1,897 (551) -- --
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes and minority
interest.................................................. 10,892 14,245 20,780 25,280 31,769
Provision for income taxes.................................. 3,722 2,488 8,470 9,875 11,187
Minority interest in income of subsidiary................... 342 909 768 800 1,346
---------- ---------- ---------- ---------- ----------
Net income.................................................. $ 6,828 $ 10,848 $ 11,542 $ 14,605 19,236
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
OTHER DATA:
Packard Instrument EBITDA (3)............................... --(7) $ 14,162 $ 18,075 $ 19,947 27,284
Canberra Nuclear EBITDA (3)................................. --(7) 7,461 7,834 9,471 9,730
---------- ---------- ---------- ---------- ----------
Total EBITDA (3)............................................ $ 21,366 21,623 25,909 29,418 37,014
Depreciation and amortization............................... 4,674 4,676 4,612 4,675 5,135
Capital expenditures........................................ 7,506 4,436 1,577 3,327 2,715
Ratio of earnings to fixed charges (4)...................... 6.9x 11.2x 12.5x 13.9x 22.8x
EBITDA margin............................................... 13.2% 13.8% 15.7% 17.4% 20.1%
(CONTINUED ON FOLLOWING PAGE)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
PRO FORMA FINANCIAL DATA (5): 1996
---------------
<S> <C>
(DOLLARS IN
THOUSANDS)
EBITDA (3).................................................................. $ 37,014
Cash interest expense (6)................................................... 18,117
Depreciation and amortization............................................... 5,135
Capital expenditures........................................................ 2,715
Ratio of EBITDA to cash interest expense (3)(6)............................. 2.04x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-------------------------
<S> <C> <C>
BALANCE SHEET DATA: HISTORICAL PRO FORMA (5)
---------- -------------
(DOLLARS IN THOUSANDS)
Working capital................................................................. $ 59,216 $ 46,159
Total assets.................................................................... 137,925 133,423
Total debt...................................................................... 6,390 191,708
Stockholders' equity (deficiency)............................................... 80,593 (109,227)
</TABLE>
- ------------------------
(1) Amount in 1994 relates to a restructuring charge incurred in connection with
the Company's shutdown of its Itasca, Illinois facility and the relocation
of most of those operations to Meriden, Connecticut. Most of these costs
incurred related to employee terminations and a lease buy-out. Amount in
1996 relates to expenses incurred in connection with the Recapitalization.
(2) Fiscal 1992 amount relates to costs incurred with the Company's relocation
to a new facility in Meriden, Connecticut and the write-off of $3,120 in
unamortized leasehold improvements after the flooding of the old
headquarters. In 1993, additional costs were incurred for temporary
facilities and a provision was made for the termination of the remaining
lease obligation of the old headquarters. During 1994, the recorded
obligation to the previous landlord was settled for an amount less than that
accrued as of December 31, 1993.
(3) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents, for any period, the sum of income from operations and
depreciation and amortization exclusive of other charges, and certain other
one-time charges of $0.3 million in 1996. EBITDA includes 100% of the EBITDA
generated by Packard Japan KK ("Packard Japan"), the Company's 60% owned
subsidiary. The amount of Packard Japan's operating income represented by
the 40% interest not owned by the Company was $744, $1,612, $1,647, $1,668
and $2,649 for the years ended 1992, 1993, 1994, 1995 and 1996,
respectively. The Company expects that Packard Japan will repurchase during
1997 and 1998 the outstanding 40% minority interest in its capital stock
from the holder thereof (subject to Japanese laws and regulations) for
aggregate consideration of approximately $7.5 million. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to service and/or incur indebtedness. Management believes that presentation
of EBITDA is helpful to investors. However, EBITDA should not be considered
as an alternative to net income as a measure of the Company's operating
results or to cash flows as a measure of liquidity. In addition, although
the EBITDA measure of performance is not recognized under generally accepted
accounting principles, it is widely used by industrial companies as a
general measure of a company's operating performance because it assists in
comparing performance on a relatively consistent basis across companies
without regard to depreciation and amortization, which can vary
significantly depending on accounting methods (particularly where
acquisitions are involved) or non-operating factors such as historical cost
bases. Because EBITDA is not calculated identically by all companies, the
presentation herein may not be comparable to other similarly titled measures
of other companies.
(4) For the purposes of computing the ratio of earnings to fixed charges,
earnings consists of income before provision for income taxes and minority
interest, and fixed charges consists of interest expense which includes
amortization of deferred financing costs and the portion of rental expense
deemed representative of the interest factor.
(5) Presented on a PRO FORMA basis as though the Recapitalization had occurred
at the beginning of the periods presented or as of the date presented. The
Recapitalization will be recorded as a recapitalization for financial
reporting purposes, and, accordingly, the historical basis of the Company's
assets and liabilities will not be impacted by the Recapitalization.
(6) Reflects the interest expense from the debt incurred necessary to effect the
Recapitalization. Cash interest expense excludes the amortization of the
deferred financing costs from the Recapitalization, which would have been
$1,545 for the year ended December 31, 1996.
(7) Data not available.
15
<PAGE>
RISK FACTORS
HOLDERS OF 144A NOTES SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION IN THIS PROSPECTUS, THE FOLLOWING FACTORS BEFORE DECIDING TO TENDER
144A NOTES IN THE EXCHANGE OFFER. THE RISK FACTORS SET FORTH BELOW ARE GENERALLY
APPLICABLE TO THE 144A NOTES AS WELL AS THE EXCHANGE NOTES.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
The Company incurred substantial indebtedness in connection with the
Recapitalization and, following the 144A Note Offering, the Company is highly
leveraged. As of December 31, 1996, after giving PRO FORMA effect to the
Recapitalization on a recapitalization accounting basis, the Company would have
had total indebtedness of $191.7 million and stockholders' equity (deficiency)
of $(109.2) million. After giving PRO FORMA effect to the Recapitalization, the
Company's ratio of earnings to fixed charges would have been 1.6x for the year
ended December 31, 1996. See "Capitalization" and "Unaudited Pro Forma Condensed
Consolidated Financial Statements." The Company may incur additional
indebtedness in the future, including Senior Indebtedness, subject to
limitations imposed by the Indenture and the New Credit Agreement.
The Company's ability to make scheduled payments of principal of, to pay
interest on or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which, to a certain extent, are
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond its control. There can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
working capital borrowings will be available in an amount sufficient to enable
the Company to service its indebtedness, including the Notes, or make necessary
capital expenditures or investments in research and development. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including, but not limited to, the
following: (i) a substantial portion of the Company's cash flow from operations
will be required to be dedicated to debt service and will not be available to
the Company for its operations; (ii) the Company's ability to obtain additional
financing in the future for acquisitions, capital expenditures, working capital
or general corporate purposes could be limited; (iii) certain of the Company's
borrowings are at variable rates of interest, which could result in higher
interest expense in the event of increases in interest rates; (iv) the
indebtedness outstanding under the New Credit Agreement is secured by the
capital stock of certain of the subsidiaries of the Company and will mature
prior to the maturity of the Notes; and (v) the Company may be substantially
more leveraged than certain of its competitors, which may place the Company at a
relative competitive disadvantage and make the Company more vulnerable to
changing market conditions and regulations. See "Description of the Exchange
Notes" and "Description of the New Credit Agreement."
RANKING OF THE EXCHANGE NOTES; ASSET ENCUMBRANCES; STRUCTURAL SUBORDINATION
The Exchange Notes will be senior subordinated obligations of the Company
and, as such, will be subordinated in right of payment to all existing and
future Senior Indebtedness, including indebtedness under the New Credit
Agreement. The Exchange Notes will rank PARI PASSU with all senior subordinated
indebtedness, if any, of the Company and will rank senior to all other
subordinated indebtedness, if any, of the Company. The Exchange Notes will also
be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries. At December 31, 1996, on a PRO FORMA basis after giving
effect to the Recapitalization, there would have been outstanding $40.0 million
of Senior Indebtedness, all of which would have been secured borrowings under
the New Credit Agreement, approximately $1.7 million of indebtedness of the
Company's subsidiaries, and no PARI PASSU or subordinated indebtedness would
have been outstanding. In addition, on such a PRO FORMA basis, at December 31,
1996, the Company would have had available an additional $75.0 million under the
revolving loan tranche of the New Credit Agreement
16
<PAGE>
and, provided certain tests were met, would have been able to borrow additional
Senior Indebtedness. By reason of such subordination, in the event of the
insolvency, liquidation, reorganization, dissolution or other winding-up of the
Company or upon a default in payment with respect to, or the acceleration of,
any Senior Indebtedness, the holders of such Senior Indebtedness and any other
creditors who are holders of Senior Indebtedness and creditors of subsidiaries
must be paid in full before the holders of the Exchange Notes may be paid. If
the Company incurs additional PARI PASSU debt, the holders of such debt would be
entitled to share ratably with the holders of the Exchange Notes in any proceeds
distributed in connection with any insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company. This will have the effect of
reducing the amount of proceeds paid to holders of the Exchange Notes. In
addition, no payments may be made with respect to the principal of or interest
on the Exchange Notes if a payment default exists with respect to Designated
Senior Indebtedness (as defined herein) and, under certain circumstances, no
payments may be made with respect to the principal of or interest on the
Exchange Notes for certain periods of time if a non-payment default exists with
respect to Designated Senior Indebtedness. See "Description of the Exchange
Notes."
The Company conducts a portion of its business through subsidiaries. The
Company will, in part, be dependent on the cash flow of such subsidiaries and
distributions thereof from such subsidiaries to the Company in order to meet its
debt service obligations. As a result of the structure of the Company, the
holders of the Exchange Notes will be structurally subordinated to all creditors
of the subsidiaries of the Company, including the guarantees by certain
subsidiaries of the Company's obligations under the New Credit Agreement. The
Company's rights, and the rights of its creditors, to participate in the
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization will be subject to the prior claims of such subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subject to the claims of any secured creditor of such subsidiary and of any
holder of indebtedness of such subsidiary senior to that held by the Company. As
of December 31, 1996, on a PRO FORMA basis after giving effect to the
Recapitalization, there would have been approximately $1.7 million of
indebtedness of the Company's subsidiaries outstanding (excluding the guarantees
of the New Credit Agreement obligations by certain of the Company's
subsidiaries).
The Company's obligations under the New Credit Agreement are secured by
security interests in substantially all of the current and future assets of the
Company and its domestic subsidiaries (including a pledge of all of the issued
and outstanding shares of the capital stock of Packard Instrument and 65% of the
capital stock of certain of the Company's foreign subsidiaries). In the event of
a default on secured indebtedness (whether as a result of the failure to comply
with a payment or other covenant, a cross-default, or otherwise), the parties
granted such security interests will have a prior secured claim on the assets of
the Company. Moreover, if such parties should attempt to foreclose on their
collateral, it is possible that there would be insufficient assets remaining
after satisfaction in full of all such indebtedness to satisfy in full the
claims of the holders of the Exchange Notes and the Company's financial
condition and the value of the Exchange Notes could be materially adversely
affected. See "Description of the New Credit Agreement."
RESTRICTIONS IMPOSED BY INDEBTEDNESS
The New Credit Agreement and the Indenture contain covenants that, among
other things and subject to certain exceptions, restrict the ability of the
Company to incur additional indebtedness, pay dividends, prepay subordinated
indebtedness, dispose of certain assets, enter into sale and leaseback
transactions, create liens, make capital expenditures and make certain
investments or acquisitions and otherwise restrict corporate activities. In
addition, under the New Credit Agreement, the Company is required to satisfy
specified financial covenants, including a minimum fixed charge coverage ratio,
a consolidated interest coverage ratio and a maximum leverage ratio. The ability
of the Company to comply with such provisions
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may be affected by events beyond the Company's control. The breach of any of
these covenants could result in a default under the New Credit Agreement. In the
event of any such default, depending on the actions taken by the lenders under
the New Credit Agreement, the Company could be prohibited from making any
payments on the Exchange Notes. In addition, such lenders could elect to declare
all amounts borrowed under the New Credit Agreement, together with accrued
interest, to be due and payable. A default under the New Credit Agreement or the
instruments governing the Company's other indebtedness could constitute a
cross-default under the Indenture and any instruments governing the Company's
other indebtedness, and a default under the Indenture could constitute a
cross-default under the New Credit Agreement and any instruments governing the
Company's other indebtedness.
HIGHLY COMPETITIVE INDUSTRIES
The life sciences instrumentation industry and the nuclear instrumentation
industry are each highly competitive, and the Company encounters competition in
each industry from several manufacturers in both domestic and foreign markets.
Many of its competitors are significantly larger and have greater resources than
those of the Company. Moreover, the Company encounters different competitors in
each of its key product lines, and there can be no assurance that the Company
will not encounter increased competition in the future, which could have a
material adverse effect on the Company's financial condition and results of
operations.
Packard Instrument competes principally on the basis of quality, product
features, product performance, price and service. Competition within the markets
which Packard Instrument serves is primarily driven by the need for innovative
products that address the needs of its customers in each market in which it
competes. There can be no assurance that Packard Instrument's competitors will
not develop products or services that are more effective or less expensive than
Packard Instrument's products or which could render certain of Packard
Instrument's products less competitive. If Packard Instrument's competitors
expand their product lines or intensify their efforts within existing product
lines, competition may increase significantly. Delays in the launch by Packard
Instrument of new products may result in decreased revenues from sales of
instruments, together with related sales of biochemicals, other consumables and
services, during the period of the delay, as well as during subsequent periods,
due to the longer period needed to establish an installed base and any loss of
market share due to its customers' purchases of competitors' products during the
delay. See "--Technology and the Development of New Products."
Canberra Nuclear competes principally on the basis of applications
expertise, quality, product reliability, performance, price and service. The
nuclear instrumentation market is a very mature and stable market in which
Canberra Nuclear encounters, and expects to continue to encounter, competition.
Although the industry remains fragmented, there has been a recent trend toward
consolidation among the suppliers of instrumentation. There can be no assurance
as to the future of the competitive environment in which Canberra Nuclear
operates or whether Canberra Nuclear will remain competitive in such
environment.
DEPENDENCE ON CAPITAL SPENDING POLICIES AND GOVERNMENT FUNDING
Packard Instrument's customers include pharmaceutical, biotechnology and
chemical companies and clinical diagnostic laboratories and companies. Canberra
Nuclear's customers include electric utility companies, nuclear fuel cycle
companies and environmental laboratories. The capital spending policies of these
companies have a significant effect on the demand for Packard Instrument and
Canberra Nuclear products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of equipment and the policies regarding capital
expenditures during industry downturns or recessionary periods. Any decrease in
capital spending
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by these companies could have a material adverse effect on the Company's
business and results of operations.
In addition, departments and agencies of the U.S. federal government,
notably the DOE, as well as of other NATO states are important customers of
Canberra Nuclear. The DOE in total represented approximately 6% of the Company's
fiscal 1996 revenues and approximately 17% of Canberra Nuclear's fiscal 1996
revenues. Many of the Company's customers, including universities, government
research laboratories, private foundations and other institutions, obtain
funding for the purchase of the Company's products from grants by governments or
government agencies. If government funding necessary to purchase the Company's
products was to decrease, the Company's business and results of operations could
be materially adversely affected.
LIMITED SOURCES OF SUPPLY FOR GERMANIUM CRYSTALS
Canberra Nuclear purchases high purity germanium crystals as part of the
manufacture of high resolution radiation detectors. Germanium detectors and
products related thereto represent a significant portion of total Canberra
Nuclear sales. The sources of supply of these crystals are limited to two
manufacturers from whom Canberra Nuclear makes purchases. Canberra Nuclear has
secured under contract what it believes to be a long term, dependable supply of
these crystals from one of the two manufacturers. Features of that contract
include: price increase limitations linked to the costs of crystal production; a
four year notice period required for termination by either party; and the grant
to Canberra Nuclear of a right of first refusal to acquire the germanium crystal
vendor's production capability if the vendor proposes to sell or discontinue its
crystal business. Notwithstanding the terms of this contract, there can be no
assurance that the supply of germanium crystals will continue at the level and
prices Canberra Nuclear currently enjoys.
RELIANCE ON PATENTS AND OTHER INTELLECTUAL PROPERTY; RISK OF TERMINATION OF
LICENSE AGREEMENTS; RISK OF INTELLECTUAL PROPERTY LITIGATION
The Company, particularly Packard Instrument, owns numerous United States
and foreign patents, and has patent applications pending in the United States
and abroad. The Company also owns numerous United States and foreign registered
trademarks and trade names and has applications for the registration of
trademarks and trade names pending in the United States and abroad. In addition,
the Company possesses a wide array of unpatented proprietary technology and
know-how and licenses certain intellectual property rights to and from third
parties. See "Business--Intellectual Property."
The Company's ability to compete effectively with other companies depends,
to a significant extent, on its ability to maintain the proprietary nature of
its owned and licensed intellectual property. There can be no assurance as to
the degree of protection offered by the claims of the various patents, the
likelihood that patents will be issued on pending patent applications or, with
regard to the licensed intellectual property, that the licenses will not be
terminated. Moreover, certain of the Company's licenses (such as the license
from CIS bio international for HTRF-TM- (as defined herein) reagents used in the
microplate reader product line) can be terminated by the licensor if the Company
fails to meet certain specified performance targets. If the Company were unable
to maintain the proprietary nature of its intellectual property with respect to
its significant current or proposed products, the Company's business,
particularly Packard Instrument, could be materially adversely affected. There
can be no assurance that the Company will be able to obtain patent protection
for products or processes discovered using the Company's technologies.
Furthermore, there can be no assurance that any patents issued to the Company,
or for which the Company has license rights, will not be challenged,
invalidated, narrowed or circumvented, or that the rights granted thereunder
will provide significant proprietary protection or competitive advantages to the
Company. There can be no assurance that, if challenged, the Company's issued or
licensed patents would
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be held valid by a court of competent jurisdiction. Legal standards relating to
the breadth and scope of patent claims are uncertain. Accordingly, the valid
scope of patent claims cannot be predicted. There can be no assurance that the
claims of the patents owned or licensed by the Company will be interpreted by a
court broadly enough to offer significant patent protection to the Company, or
that the claims of a third party's patents will not be interpreted by a court
broadly enough to cover some of the Company's products.
Litigation, which could result in substantial costs to the Company, may be
necessary to enforce patents issued or licensed to the Company or to determine
the scope and validity of third-party proprietary rights. Uncertainties
resulting from the initiation and continuation of any patent or related
litigation could have a material adverse effect on the Company's financial
condition and results of operations. An adverse outcome in connection with an
infringement or validity proceeding could subject the Company to significant
liabilities and expenses (e.g., reasonable royalties, lost profits, attorneys'
fees, trebling of damages for willfulness), require disputed rights to be
licensed from third parties or require the Company to cease using the disputed
intellectual property or cease the sale of a commercial product, any of which
could have a material adverse effect on the Company's financial condition or
results of operations. For a discussion of litigation relating to certain of the
Company's patents and other intellectual property, see "Business--Legal
Proceedings."
POTENTIAL DECLINE IN USE OF RADIOISOTOPIC PROCESSES AND INSTRUMENTS
A majority of the testing in the life sciences industry today uses
radioisotopic processes and instruments. Radioisotopic methods, such as the
Company's traditional bioanalytical spectrometer product lines, allow a
researcher to recognize the activity of a particular molecule or compound by
labeling it with a radioactive molecule. The Company's traditional bioanalytical
spectrometer product lines are radioisotopic instruments which have historically
been a significant portion of the Company's revenue. Because of their
radioactivity, isotopic labels are environmentally unfriendly and difficult and
potentially dangerous to handle. Their by-products bring about waste disposal
problems that are becoming increasingly more expensive. The Company believes
that, as a result, the trend in the life sciences industry is toward the use of
nonisotopic instrumentation. The Company believes that its recent focus on
nonisotopic methodologies, including fluorescent and chemiluminescent
instruments, has led to increased sales to the life sciences market. However,
there can be no assurance that any decline in traditional radioisotopic methods
will not have a material adverse impact on the Company's results of operations
or financial condition.
TECHNOLOGY AND THE DEVELOPMENT OF NEW PRODUCTS
The markets for the Company's products are characterized by technological
change, evolving industry standards and frequent new product introductions and
product enhancements. Many of the Company's products require significant
planning, design, development and testing, at the technological, product and
manufacturing process levels. In addition, the introduction of new products and
technologies may render existing and/or future products uncompetitive. There can
be no assurance that any of the products currently being developed by the
Company, or those to be developed in the future, will be technologically
feasible or accepted by the marketplace, that any such development will be
completed in any particular time frame, or that the Company's products or
proprietary technologies will not become uncompetitive or obsolete.
FOREIGN OPERATIONS
During fiscal 1996, 52% of the Company's revenues were generated by its
foreign subsidiaries. International operations and exports to foreign markets
are subject to a number of special risks, including, but not limited to, risks
with respect to currency exchange rates, economic and political destabilization,
other disruption of markets, restrictive actions by foreign governments (such as
restrictions on transfer of
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funds, export duties and quotas, foreign customs and tariffs and unexpected
changes in regulatory environments), changes in foreign laws regarding trade and
investment (including the protection of patents and other intellectual
property), difficulty in obtaining distribution and support, nationalization,
the laws and policies of the United States affecting trade, foreign investment
and loans, and foreign tax laws. There can be no assurance that one or a
combination of these factors will not have a material adverse impact on the
Company's ability to increase or maintain its foreign sales or on its results of
operations. Additionally, the U.S. dollar value of the Company's net sales
varies with currency exchange rate fluctuations. Significant increases in the
value of the dollar could have a material adverse effect on the Company's
financial condition and results of operations.
The Company's ability to service its indebtedness will be dependent, in
part, on its ability to utilize the cash flow generated by its foreign
operations. In general, United States federal and international tax laws provide
that income of international subsidiaries is subject to tax only in the local
jurisdiction and is not subject to United States federal income tax unless, and
only to the extent, such income is distributed as a dividend or deemed dividend
to the United States parent company. The Company plans to cause its
international subsidiaries to pay dividends to the Company. The Company may make
loans to its foreign subsidiaries, and, in that event, payments by the Company's
foreign subsidiaries to the Company on such intercompany loans may result in the
repatriation of a substantial portion of the cash flow of such subsidiaries
without the payment of taxes abroad. There can be no assurance, however, that
the interest payments on such intercompany loans will not be recharacterized as
dividends, which could have adverse tax consequences to the Company.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local, and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the possession, distribution, handling, generation,
emission, release, discharge, export, import, treatment, storage and disposal
and clean up of, certain materials, substances and wastes. To the best of the
Company's knowledge, its operations are in material compliance with all
applicable environmental laws and regulations as currently interpreted.
Management cannot predict with any certainty whether future events, such as
changes in existing laws and regulations or the discovery of conditions not
currently known to the Company, may give rise to additional environmental costs.
Furthermore, actions by federal, state, local and foreign governments concerning
environmental matters could result in laws or regulations that could increase
the costs of producing the Company's products or providing its services, or
otherwise adversely affect the demand for its products or services. See
"Business--Environmental Matters." For a discussion of potential litigation
relating to environmental matters, see "Business--Legal Proceedings."
DEPENDENCE ON KEY PERSONNEL
The Company's business is managed by a small number of key executive
officers. The loss of the services of certain of these executives could have a
material adverse impact on the Company. The Company has entered into employment
arrangements with certain key executive officers. In addition, the Management
Stockholders beneficially own approximately 20% of the Common Stock of the
Company on a fully diluted basis (excluding New Options to be granted subsequent
to the Recapitalization Closing). See "The Recapitalization" and "Management."
The Company maintains key man life insurance policies on certain of its senior
officers.
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CONTROL OF THE COMPANY
The Fund owns approximately 69% of the voting equity of the Company on a
fully diluted basis (excluding New Options to be granted subsequent to the
Recapitalization Closing). The Fund's ownership includes shares of Common Stock
purchased by two institutional investors (which represent approximately 2.4% of
the voting equity of the Company on a fully diluted basis (excluding New Options
to be granted subsequent to the Recapitalization Closing)), the votes of which,
pursuant to the terms of the Stockholders Agreement, are controlled by the Fund.
The directors of the Company consist of three Management Stockholders, four
designees of the Fund and one independent director mutually agreed upon between
the Fund and the Chief Executive Officer of the Company (with a second
independent director to be named). The Fund has the right to nominate at any
time and from time to time all directors of the Company (including the right to
expand the Board of Directors of the Company (the "Board") and to fill vacancies
created thereby) and has the right to remove such directors at any time and from
time to time, and each of the Management Stockholders and Continuing
Stockholders have agreed to vote in favor of such nomination or removal of
directors. As a result, the Fund has the ability to elect all of the directors
of the Company, appoint new management and approve any action requiring the
approval of the Company's stockholders, including adopting amendments to the
Company's certificate of incorporation and approving mergers or sales of
substantially all of the Company's assets, in each case, subject to any
contractual restrictions which may apply to the Company. There can be no
assurance that the interests of the Fund will not conflict with the interests of
the holders of the Exchange Notes. See "Management," "Ownership of Capital
Stock" and "Certain Transactions."
FRAUDULENT CONVEYANCE
The Company believes that the indebtedness represented by the Notes was
incurred for proper purposes and in good faith, and that, based on present
forecasts, asset valuations and other financial information, the Company is,
and, upon the consummation of the Recapitalization, the Company was, solvent,
had sufficient capital for carrying on its business and was able to pay its
debts as they mature. Notwithstanding this belief, however, under federal or
state fraudulent transfer laws, if a court of competent jurisdiction in a suit
by an unpaid creditor or a representative of creditors (such as a trustee in
bankruptcy or a debtor-in-possession) were to find that the Company did not
receive fair consideration (or reasonably equivalent value) for incurring the
Notes or any debt being refinanced thereby and at the time of the incurrence of
such indebtedness, the Company was insolvent, was rendered insolvent by reason
of such incurrence, was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital, intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
matured, or that the Company intended to hinder, delay or defraud its creditors,
then such court could, among other things, (a) void all or a portion of the
Company's obligations to the holders of the Notes, the effect of which would be
that the holders of the Notes may not be repaid in full, (b) recover all or a
portion of the payments made to holders of the Notes, and/or (c) subordinate the
Company's obligations to the holders of the Notes to other existing and future
indebtedness of the Company to a greater extent than would otherwise be the
case, the effect of which would be to entitle such other creditors to be paid in
full before any payment could be made on the Notes. The measure of insolvency
for purposes of the foregoing will vary depending upon the law of the relevant
jurisdiction. Generally, however, a company would be considered insolvent for
purposes of the foregoing if the sum of the company's debts is greater than all
of the company's property at a fair valuation, or if the present fair saleable
value of the company's assets is less than the amount that will be required to
pay its probable liability on its existing debts as they become absolute and
mature. There can be no assurance as to what standards a court would apply to
determine whether the Company was solvent at the relevant time, or whether,
whatever standard was applied, the Notes would not be voided on another of the
grounds set forth above.
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LACK OF PRIOR MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are being offered to the Holders of the 144A Notes. The
144A Notes were offered and sold in March 1997 to "Qualified Institutional
Buyers" and "Accredited Investors" (as defined in Rule 144A and Rule 501(a) (1),
(2), (3) or (7) under the Securities Act, respectively) and are eligible for
trading in the Private Offerings, Resale and Trading through Automatic Linkages
("PORTAL") Market.
The Exchange Notes will constitute a new class of securities with no
established trading market. Although the Exchange Notes will generally be
permitted to be resold or otherwise transferred by nonaffiliates of the Company
without compliance with the registration requirements under the Securities Act,
the Company does not intend to apply for a listing of the Exchange Notes on any
securities exchange or to arrange for the Exchange Notes to be quoted on the
NASDAQ National Market or other quotation system. As a result, there can be no
assurance as to the liquidity of markets that may develop for the Exchange
Notes, the ability of the holders of the Exchange Notes to sell their Exchange
Notes or the price at which such holders would be able to sell their Exchange
Notes. If such markets were to exist, the Exchange Notes could trade at prices
that may be lower than the initial market values thereof depending on many
factors, including prevailing interest rates and the markets for similar
securities. Although there is currently no market for the Exchange Notes, the
Initial Purchasers have advised the Company that they currently intend to make a
market in the Exchange Notes. However, the Initial Purchasers are not obligated
to do so, and any market-making with respect to the Exchange Notes may be
discontinued at any time without notice.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes for 144A Notes pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of such 144A Notes,
a properly completed, duly executed Letter of Transmittal and all other required
documents. Therefore, Holders desiring to tender their 144A Notes in exchange
for Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities with
respect to the tenders of 144A Notes for exchange. Any 144A Notes that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, the registration
rights under the Registration Rights Agreement generally will terminate. In
addition, any Holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale. Each broker-dealer that receives Exchange Notes for
its own account in exchange for 144A Notes, where such 144A Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "The Exchange Offer."
RESTRICTIONS ON TRANSFER
The 144A Notes were offered and sold by the Company in a private offering
exempt from registration pursuant to the Securities Act and have been resold
pursuant to Rule 144A under the Securities Act and to a limited number of other
institutional Accredited Investors. As a result, the 144A Notes may not be
reoffered or resold by purchasers except pursuant to an effective registration
statement under the Securities Act, or pursuant to an applicable exemption from
such registration, and the 144A Notes are legended to restrict transfer as
aforesaid. Each Holder (other than any Holder who is an affiliate or promoter of
the Company) who duly exchanges 144A Notes for Exchange Notes in the Exchange
Offer will receive Exchange Notes that are freely transferable under the
Securities Act. Holders who participate in
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the Exchange Offer should be aware, however, that if they accept the Exchange
Offer for the purpose of engaging in a distribution, the Exchange Notes may not
be publicly reoffered or resold without complying with the registration and
prospectus delivery requirements of the Securities Act. As a result, each Holder
accepting the Exchange Offer will be deemed to have represented, by its
acceptance of the Exchange Offer, that it acquired the Exchange Notes in the
ordinary course of business and that it is not engaged in, and does not intend
to engage in, a distribution of the Exchange Notes. If existing Commission
interpretations permitting free transferability of the Exchange Notes following
the Exchange Offer are changed prior to consummation of the Exchange Offer, the
Company will use its best efforts to register the 144A Notes for resale under
the Securities Act. See "Prospectus Summary--The Exchange Offer" and "Exchange
Offer; Registration Rights."
The 144A Notes currently may be sold pursuant to the restrictions set forth
in Rule 144A under the Securities Act or pursuant to another available exemption
under the Securities Act without registration under the Securities Act. To the
extent that 144A Notes are tendered and accepted in the Exchange Offer, the
trading market for the untendered and tendered but unaccepted 144A Notes could
be adversely affected.
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THE EXCHANGE OFFER
THE FOLLOWING DISCUSSION SETS FORTH OR SUMMARIZES WHAT THE COMPANY BELIEVES
ARE THE MATERIAL TERMS OF THE EXCHANGE OFFER, INCLUDING THOSE SET FORTH IN THE
LETTERS OF TRANSMITTAL DISTRIBUTED WITH THIS PROSPECTUS. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE DOCUMENTS
UNDERLYING THE EXCHANGE OFFER, COPIES OF WHICH ARE FILED AS EXHIBITS TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART, AND ARE INCORPORATED
BY REFERENCE HEREIN.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of 144A Notes pursuant to the Purchase
Agreement, dated February 21, 1997 (the "Purchase Agreement"), between the
Company and the Initial Purchasers, the Initial Purchasers became entitled to
the benefits of the Registration Rights Agreement, dated as of March 4, 1997,
between the Company and the Initial Purchasers (the "Registration Rights
Agreement").
Under the Registration Rights Agreement, the Company must use its best
efforts to (a) file a registration statement in connection with a registered
exchange offer within 45 days after March 4, 1997, the date the 144A Notes were
issued (the "Issue Date"), (b) cause such registration statement to become
effective under the Securities Act within 105 days of the Issue Date, (c) keep
such registration statement effective until the closing of the Exchange Offer
and (d) cause such registered exchange offer to be consummated within 135 days
after the Issue Date. Within the applicable time periods, the Company will
endeavor to register under the Securities Act all of the Exchange Notes pursuant
to a registration statement under which the Company will offer each Holder of
144A Notes the opportunity to exchange any and all of the outstanding 144A Notes
held by such Holder for Exchange Notes in an aggregate principal amount equal to
the aggregate principal amount of 144A Notes tendered for exchange by such
Holder. Subject to limited exceptions, the Exchange Offer being made hereby, if
commenced and consummated within such applicable time periods, will satisfy
those requirements under the Registration Rights Agreement. In such event, the
144A Notes would remain outstanding and would continue to accrue interest, but
would not retain any rights under the Registration Rights Agreement. Holders of
144A Notes seeking liquidity in their investment would have to rely on
exemptions to registration requirements under the securities laws, including the
Securities Act. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
term "Holder" with respect to the Exchange Offer means any person in whose name
the 144A Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder.
Because the Exchange Offer is for any and all 144A Notes, the number of 144A
Notes tendered and exchanged in the Exchange Offer will reduce the principal
amount of 144A Notes outstanding. Following the consummation of the Exchange
Offer, Holders who did not tender their 144A Notes generally will not have any
further registration rights under the Registration Rights Agreement, and such
144A Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such 144A Notes could be adversely
affected. The 144A Notes are currently eligible for sale pursuant to Rule 144A
through the PORTAL System. Because the Company anticipates that most Holders of
144A Notes will elect to exchange such 144A Notes for Exchange Notes due to the
absence of restrictions on the resale of Exchange Notes under the Securities
Act, the Company anticipates that the liquidity of the market for any 144A Notes
remaining after the consummation of the Exchange Offer may be substantially
limited. See "Exchange Offer; Registration Rights."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all 144A
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
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of Exchange Notes in exchange for each $1,000 principal amount of outstanding
144A Notes accepted in the Exchange Offer. Holders may tender some or all of
their 144A Notes pursuant to the Exchange Offer.
The form and terms of the Exchange Notes are the same as the form and terms
of the 144A Notes except that (i) the Exchange Notes have been registered under
the Securities Act and hence will not bear legends restricting the transfer
thereof and (ii) the holders of the Exchange Notes generally will not be
entitled to certain rights under the Registration Rights Agreement, which rights
generally will terminate upon consummation of the Exchange Offer. The Exchange
Notes will evidence the same debt as the 144A Notes and will be entitled to the
benefits of the Indenture.
Holders of 144A Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
The Company shall be deemed to have accepted validly tendered 144A Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
of 144A Notes for the purposes of receiving the Exchange Notes from the Company
and delivering Exchange Notes to such Holders.
If any tendered 144A Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted 144A Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders of 144A Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of 144A Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Exchange Offer shall remain open for acceptance for a period of not less
than 30 days after notice is mailed to Holders (the "Exchange Period"). The
Expiration Date will be 5:00 p.m., New York City time, on , 1997,
unless the Company, in its sole discretion, extends the Exchange Offer, in which
case the Expiration Date will be the latest business day to which the Exchange
Offer is extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
Holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. Such
announcement may state that the Company is extending the Exchange Offer for a
specified period of time.
The Company reserves the right (i) to delay accepting any 144A Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not accept 144A
Notes not previously accepted if any of the conditions set forth under
"--Conditions" shall have occurred and shall not have been waived by the
Company, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the Holders of such
amendment and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the amendment and the
manner of disclosure to Holders, if the Exchange Offer would otherwise expire
during such five to ten business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to
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<PAGE>
publish, advertise, or otherwise communicate any such public announcement, other
than by making a timely release to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes is payable semiannually on March 1 and
September 1 of each year at the rate of 9 3/8% PER ANNUM. The Exchange Notes
will bear interest from March 4, 1997, the date of issuance of the 144A Notes,
or the most recent interest payment date to which interest on such 144A Notes
has been paid, whichever is later. Accordingly, Holders of 144A Notes that are
accepted for exchange will not receive interest that is accrued but unpaid on
the 144A Notes at the time of tender, but such interest will be payable in
respect of the Exchange Notes delivered in exchange for such 144A Notes on the
first interest payment date after the Expiration Date.
PROCEDURES FOR TENDERING
Only a Holder of 144A Notes may tender such 144A Notes in the Exchange
Offer. To tender in the Exchange Offer, a Holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by instruction 4 of the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
the 144A Notes and any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the 144A
Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
The tender by a Holder of 144A Notes and the acceptance thereof by the
Company will constitute an agreement between such Holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
THE METHOD OF DELIVERY OF 144A NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR 144A NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT SUCH TENDER FOR SUCH HOLDERS.
Any beneficial holder whose 144A Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his 144A Notes, either make
appropriate arrangements to register ownership of the 144A Notes in such
holder's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution") unless the 144A Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible
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<PAGE>
Institution. In the event that signatures on a Letter of Transmittal or a notice
of withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any 144A Notes listed therein, such 144A Notes must be endorsed or
accompanied by appropriate bond powers and a proxy which authorizes such person
to tender the 144A Notes on behalf of the registered holder, in each case signed
as the name of the registered holder or holders appears on the 144A Notes with
the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any 144A Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the 144A
Notes at the DTC for the purpose of facilitating the Exchange Offer, and subject
to the establishment thereof, any financial institution that is a participant in
the DTC may make book-entry delivery of the 144A Notes by causing the DTC to
transfer such 144A Notes into the Exchange Agent's account with respect to the
144A Notes in accordance with the DTC's procedures for such transfer. Although
delivery of the 144A Notes may be effected through book-entry transfer into the
Exchange Agent's account at the DTC, a Letter of Transmittal properly completed
and duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the DTC does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered 144A Notes and withdrawal of the tendered 144A
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all 144A Notes not properly tendered or any 144A Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular 144A Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including, the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of 144A Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of 144A Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of 144A Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any 144A Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such Holder by the Exchange Agent to the tendering Holders of 144A Notes, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their 144A Notes and (i) whose 144A Notes are not
immediately available, or (ii) who cannot deliver their 144A Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
a. the tender is made through an Eligible Institution;
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<PAGE>
b. prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the 144A Notes, the
certificate or registration number or numbers of such 144A Notes and the
principal amount of 144A Notes tendered, stating that the tender is being
made thereby, and guaranteeing that, within five business days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) together
with the certificate(s) representing the 144A Notes to be tendered in proper
form for transfer (or a confirmation of book-entry transfer of such 144A
Notes into the Exchange Agent's account at the Depository) and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
c. such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered 144A Notes in proper form for transfer (or a confirmation of
book-entry transfer of such 144A Notes into the Exchange Agent's account at
the Depository) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days
after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of 144A Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of 144A Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at the address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the 144A Notes to be withdrawn (the "Depositor"),
(ii) identify the 144A Notes to be withdrawn (including the certificate or
registration number(s) and principal amount of such 144A Notes, or, in the case
of notes transferred by book-entry transfer, the name and number of the account
at the DTC to be credited), (iii) be signed by the Depositor in the same manner
as the original signature on the Letter of Transmittal by which such 144A Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee (as defined herein) with
respect to the 144A Notes register the transfer of such 144A Notes into the name
of the Depositor withdrawing the tender, (iv) specify the name in which any such
144A Notes are to be registered, if different from that of the Depositor and (v)
include a statement that such Holder is withdrawing his election to have such
144A Notes exchanged. All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be determined by the
Company, whose determination shall be final and binding on all parties. Any 144A
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the 144A Notes so withdrawn are validly retendered. Any 144A Notes which
have been tendered but which are not accepted for payment will be returned to
the Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn 144A Notes may be retendered by following one of the procedures
described under "--Procedures for Tendering" at any time prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange Exchange Notes for, any 144A
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such 144A Notes, if:
(i) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the
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<PAGE>
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
(ii) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any 144A
Notes and return all tendered 144A Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all 144A Notes tendered prior to the expiration of
the Exchange Offer subject, however, to the rights of Holders to withdraw such
144A Notes (see "--Withdrawals of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
144A Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Company will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
Holders, and, depending upon the significance of the waiver and the manner of
disclosure to the registered Holders, the Company will extend the Exchange Offer
for a period of five to ten business days if the Exchange Offer would otherwise
expire during such five to ten business-day period.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance and requests for additional copies
of this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED
BY HAND OR OVERNIGHT DELIVERY: Facsimile Transmissions: MAIL:
<S> <C> <C>
The Bank of New York (Eligible Institutions The Bank of New York
101 Barclay Street Only) 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level (212) 571-3080 Attention:Reorganization
Attention:Reorganization To Confirm by Telephone Section,
Section, or for Information Call: Arwen Gibbons
Arwen Gibbons
(212) 815-6333
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone or in person by officers and regular employees of
the Company, and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith and pay other registration expenses, including fees and
expenses of the Trustee, filing fees, blue sky fees and printing and
distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of 144A Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or 144A Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the 144A Notes
tendered, or if tendered 144A Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of 144A Notes pursuant to the
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<PAGE>
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the 144A
Notes, which is the aggregate principal amount of the 144A Notes, as reflected
in the Company's accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized in connection with the
Exchange Offer. The expense of the Exchange Offer will be amortized over the
term of the Exchange Notes.
RESALE OF THE EXCHANGE NOTES
Under existing Commission interpretations, the Exchange Notes would, in
general, be freely transferable after the Exchange Offer by any holder of such
Exchange Notes (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 of the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
PROVIDED that such Exchange Notes acquired pursuant to the Exchange Offer are
obtained in the ordinary course of such holder's business, and such holder does
not intend to participate, and has no arrangement or understanding to
participate in the distribution of such Exchange Notes. Any holder who tenders
into the Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of the Exchange Notes may not rely on the
position of the staff of the Commission enunciated in EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988) or MORGAN STANLEY & CO., INCORPORATED
(available June 5, 1991) or similar interpretive letters, but rather must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. In addition, any such resale
transaction should be covered by an effective registration statement containing
the selling security holders information required by Item 507 of Regulation S-K
of the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for 144A Notes, where such 144A Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Company has agreed to make available a prospectus meeting the requirements of
the Securities Act to any such broker-dealer for use in connection with any
resale of any Exchange Notes acquired in the Exchange Offer. A broker-dealer
which delivers such a prospectus to purchasers in connection with such resales
will be subject to certain of the civil liability provisions under the
Securities Act and will be bound by the provisions of the Registration Rights
Agreement (including certain indemnification rights and obligations).
By tendering in the Exchange Offer, each Holder will represent to the
Company, among other things, (i) the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of its business, (ii)
neither the holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of the Exchange Notes and
(iii) the holder and any such other person acknowledge that if they participate
in the Exchange Offer for the purpose of distributing the Exchange Notes (a)
they must, in the absence of an exemption therefrom, comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on the
no-action letters referenced above and (b) failure to comply with such
requirements in such instance could result in such holder incurring liability
under the Securities Act for which such holder is not indemnified by the
Company. Further, by tendering in the Exchange Offer, each holder that may be
deemed an "affiliate" (as defined in Rule 405 of the Securities Act), of the
Company will represent to the Company that such holder understands and
acknowledges that the Exchange Notes may not be
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<PAGE>
offered for resale, resold, or otherwise transferred by that Holder without
registration under the Securities Act or an exemption therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of 144A Notes who do not tender their 144A Notes generally will not have
any further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder that does not exchange such Holder's 144A
Notes for Exchange Notes will continue to hold the untendered 144A Notes and
will be entitled to all the rights and limitations applicable thereto under the
Indenture, except to the extent that such rights or limitations, by their terms,
terminate or cease to have further effectiveness as a result of the Exchange
Offer.
The 144A Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such 144A Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) pursuant to an effective registration statement under the Securities Act,
(iii) so long as the 144A Notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a Qualified Institutional Buyer in a transaction
meeting the requirements of Rule 144A, (iv) outside the United States to a
foreign person pursuant to the exemption from the registration requirements of
the Securities Act provided by Regulation S thereunder, (v) pursuant to an
exemption from registration under the Securities Act provided by Rule 144
thereunder (if available) or (vi) to an Accredited Investor in a transaction
exempt from the registration requirements of the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United States
or other applicable jurisdiction. See "Risk Factors--Restrictions on Transfer."
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders are urged to consult their
financial and tax advisors in making their own decision on what action to take.
The Company may in the future seek to acquire untendered 144A Notes, to the
extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any 144A Notes that are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any untendered
144A Notes.
In any state where the Exchange Offer does not fall under a statutory
exemption to the blue sky rules, the Company has filed the appropriate
registrations and notices, and has made the appropriate requests, to permit the
Exchange Offer to be made in such state.
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<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "IRS") will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conditions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to Holders. Certain Holders of the 144A Notes (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. Each Holder of a 144A Note should consult his, her or its own tax advisor
as to the particular tax consequences of exchanging such Holder's 144A Notes for
Exchange Notes, including the applicability and effect of any state, local or
foreign tax laws.
The issuance of the Exchange Notes to Holders of the 144A Notes pursuant to
the terms set forth in this Prospectus will not constitute an exchange for
United States federal income tax purposes. Consequently, no gain or loss would
be recognized by Holders of the 144A Notes upon receipt of the Exchange Notes,
and ownership of the Exchange Notes will be considered a continuation of
ownership of the 144A Notes. For purposes of determining gain or loss upon the
subsequent sale or exchange of the Exchange Notes, a Holder's basis in the
Exchange Notes should be the same as such Holder's basis in the 144A Notes
exchanged therefor. A Holder's holding period for the Exchange Notes should
include the Holder's holding period for the 144A Notes exchanged therefor. The
issue price, original issue discount inclusion and other tax characteristics of
the Exchange Notes should be identical to the issue price, original issue
discount inclusion and other tax characteristics of the 144A Notes exchanged
therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the Exchange Notes."
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<PAGE>
THE COMPANY
The Company is a leading developer, manufacturer and marketer of analytical
instruments and related products and services for use in the drug discovery and
molecular biology segments of the life sciences industry and in the nuclear
instrumentation industry. Through its wholly-owned subsidiary, Packard
Instrument, the Company supplies bioanalytical instruments, and related
biochemical supplies and services, to the drug discovery and molecular biology
markets, and through Canberra Nuclear, the Company manufactures analytical
instruments and systems used to detect, identify and quantify radioactive
materials for the nuclear industry and related markets. The Company believes
that it is the worldwide market leader in most of its primary product markets,
with well-recognized brand names and a reputation for high-quality, reliable
instruments. For the year ended December 31, 1996, the Company had revenues and
EBITDA of $184.0 million and $37.0 million, respectively.
The Company was founded in 1965 by Emery G. Olcott, its current President
and Chief Executive Officer. The Company began as a manufacturer of nuclear
instrument modules ("NIMs"), which are electronic devices used to detect and to
measure radioactive materials and the energy they emit. Throughout the 1970s and
into the early 1980s, the Company maintained a leadership position in the
nuclear spectroscopy market and continued to grow. Expertise in measuring
radiation exposure of humans (health physics) was increased through the
acquisition of Radiation Management Corporation in early 1983. Major subsequent
acquisitions included Nuclear Data, Inc. in 1989, which specialized in computer-
based spectroscopy systems and health physics software, and Jomar Systems, Inc.
in 1990, which specialized in neutron counting devices.
In 1986, the Company purchased Packard Instrument from a subsidiary of
United Technologies Corporation. Packard Instrument was founded in 1949 by Lyle
E. Packard. The original product manufactured by Packard Instrument was a geiger
counter particularly suited to laboratory measurements of low energy
radioactivity. In 1954, Packard Instrument introduced the first commercial
liquid scintillation counter, called the Tri-Carb-Registered Trademark-
Spectrometer. With a rapid succession of technological innovations, Packard
Instrument established leadership in the emerging scintillation spectrometry
industry. In 1967, Packard Instrument was acquired by the American Bosch Arma
Corporation, which later became part of the Automotive Division of United
Technologies Corporation. During the 1960s and 1970s, Packard Instrument
increased its international presence, establishing several sales and service
companies in Europe and Australia. In 1980, Packard Instrument developed a
manufacturing presence for biochemicals and supplies in Groningen, The
Netherlands. The Company's acquisition of Packard Instrument capitalized on its
knowledge of nuclear physics, but at the same time diversified its product
portfolio by addressing entirely new markets. In 1988, the Company acquired
Radiomatic Instruments and Chemical Co., a manufacturer of flow scintillation
analyzers, which complemented Packard Instrument's product line.
The principal executive offices of the Company are located at 800 Research
Parkway, Meriden, Connecticut 06450. Its telephone number is (203) 238-2351.
34
<PAGE>
THE RECAPITALIZATION
On March 4, 1997, the Recapitalization was effected pursuant to the terms of
the Recapitalization Agreement. Pursuant to the Recapitalization Agreement, the
Company completed the Tender Offer in which it repurchased for an aggregate
price of approximately $208.6 million all of the shares of Common Stock other
than certain shares retained by the Management Stockholders and the Continuing
Stockholders. In addition, (i) the Acquisition Entity assigned its right to
acquire shares of Common Stock under the Recapitalization Agreement to the Fund
and two institutional investors, (ii) the Fund, the two institutional investors
and a member of the Board of Directors of the Company acquired shares of Common
Stock from the Company and certain shares of Common Stock beneficially owned by
the Management Stockholders for an aggregate purchase price of approximately
$71.5 million and (iii) the Management Stockholders and the Continuing
Stockholders retained certain shares of Common Stock and Existing Options with
an implied value of approximately $31.9 million. Upon consummation of the
Recapitalization, the Fund, the two institutional investors and a member of the
Board of Directors owned approximately 69% of the Common Stock and the
Management Stockholders and Continuing Stockholders beneficially owned
approximately 31% of the Common Stock, each on a fully diluted basis (excluding
New Options to be granted subsequent to the Recapitalization Closing). Pursuant
to the Recapitalization, Existing Options were cancelled in exchange for a
payment of approximately $3.3 million in the aggregate. See
"Management--Management Investment" and "Ownership of Capital Stock." The Tender
Offer was closed, and the Common Stock validly tendered and not withdrawn was
purchased by the Company, concurrently with the acquisition of Common Stock by
the Fund and the two institutional investors and with the consummation of the
144A Note Offering. The balance of the funds needed to consummate the
Recapitalization came from borrowings under the New Credit Agreement, from the
proceeds of the 144A Note Offering and from cash on hand. See "Description of
the New Credit Agreement."
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<PAGE>
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of Notes pursuant
to the Exchange Offer.
The net proceeds of the 144A Note Offering were approximately $143.0
million. The proceeds of the 144A Note Offering were used to fund a portion of
the Recapitalization and to meet a portion of certain other cash requirements
arising out of or in connection with the Recapitalization, including transaction
fees and expenses. The following table sets forth the sources and uses of funds
related to the Recapitalization:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Cash on hand.................................................................. $ 21.2
New Credit Agreement (1)...................................................... 40.0
144A Notes.................................................................... 150.0
Equity from the Fund (2)...................................................... 71.5
Exercise of stock options (3)................................................. 8.3
------
Total......................................................................... $ 291.0
------
------
USES OF FUNDS:
Purchases of Common Stock from existing stockholders by:
The Company (4)............................................................. $ 211.9
The Fund (2)................................................................ 54.0
Repayment of existing indebtedness (5)........................................ 4.6
Transaction fees and expenses (6)............................................. 20.5
------
Total......................................................................... $ 291.0
------
------
</TABLE>
- ------------------------
(1) The New Credit Agreement consists of a $40 million six-year term loan and
includes a $75 million five-year Revolving Credit Facility, which was
undrawn as of the Recapitalization Closing. See "Description of the New
Credit Agreement."
(2) Excludes approximately $31.9 million implied value of equity retained by the
Management Stockholders and the Continuing Stockholders. Includes equity
from the Fund, the two institutional investors and an outside director, and
consists of approximately $17.5 million for purchase of shares of Common
Stock from the Company and approximately $54.0 million for the purchase of
shares of Common Stock beneficially owned by Management Stockholders.
(3) Represents proceeds received from the exercise of Existing Options by
Management Stockholders.
(4) Consists of approximately $208.6 million for repurchase of Common Stock and
approximately $3.3 million for redemption of Existing Options. See "The
Recapitalization."
(5) Primarily represents overdrafts at certain foreign subsidiaries, certain
treasury stock notes and certain building loans outstanding at December 31,
1996 which had interest rates that range from 3.5% to 7.9% and which had
maturities, in the case of the overdrafts, of less than one year, in the
case of the treasury stock notes, ranging from five to eight years and, in
the case of the building loans, of up to 16 years.
(6) Includes fees related to financing for the Recapitalization; legal,
financial advisory and other fees of the Company; and legal, accounting and
other fees of the Acquisition Entity. Also includes $1.2 million for payment
of bonuses to management and $2.4 million for the payment of a lump sum
amount to satisfy the Company's obligations under certain executive
officers' Supplemental Executive Retirement Plans.
36
<PAGE>
CAPITALIZATION
The following table sets forth, as of December 31, 1996, the cash, cash
equivalents, short-term debt and capitalization of the Company on an historical
basis and on a pro forma basis (unaudited) to give effect to the
Recapitalization (including the receipt and application by the Company of the
estimated net proceeds of the 144A Note Offering). See "Use of Proceeds,"
"Unaudited Pro Forma Condensed Consolidated Financial Statements" and "Selected
Historical Consolidated Financial Data."
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1996
----------------------
<S> <C> <C>
ACTUAL PRO FORMA
--------- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents......................................... $ 37,826 $ 16,613
--------- -----------
--------- -----------
Short-term debt (1)............................................... $ 3,524 $ 1,708
--------- -----------
Long-term debt:
New Credit Agreement (2)........................................ -- 40,000
144A Notes...................................................... -- 150,000
Other debt...................................................... 2,866 --
--------- -----------
Total long-term debt.......................................... 2,866 190,000
--------- -----------
Total debt.................................................... 6,390 191,708
Stockholders' equity (deficiency)................................. 80,593 (109,227)
--------- -----------
Total capitalization.......................................... $ 86,983 $ 82,481
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(1) Represents bank overdrafts partially repaid at the Recapitalization Closing.
(2) At December 31, 1996, on a pro forma basis after giving effect to the
Recapitalization, the Company would have been able to borrow up to $75
million under the Revolving Credit Facility, none of which was drawn down at
the Recapitalization Closing. See "Description of the New Credit Agreement."
37
<PAGE>
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated balance sheet of the Company
as of December 31, 1996 (the "Pro Forma Balance Sheet") and the unaudited pro
forma condensed consolidated statement of income of the Company for the year
ended December 31, 1996 (the "Pro Forma Statement of Income" and, together with
the Pro Forma Balance Sheet, each a "Pro Forma Financial Statement") have been
prepared to give effect to the Recapitalization described elsewhere in this
Prospectus and in the accompanying Notes to the Unaudited Pro Forma Condensed
Consolidated Financial Statements. See "The Recapitalization." The Pro Forma
Financial Statements do not purport to represent what the Company's results of
operations or financial condition would actually have been had the
Recapitalization in fact occurred as of such dates or to project the Company's
results of operations or financial condition for any future period or as of any
date.
The Pro Forma Statement of Income has been derived from the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus adjusted to give pro forma effect to the Recapitalization as if it
had occurred as of January 1, 1996. The Pro Forma Balance Sheet has been derived
from the audited consolidated financial statements of the Company included
elsewhere in this Prospectus, adjusted to give pro forma effect to the
Recapitalization, as if it had occurred as of December 31, 1996.
The Recapitalization will be recorded as a recapitalization for financial
reporting purposes. Accordingly, the historical basis of the Company's assets
and liabilities will not be impacted by the Recapitalization.
The Pro Forma Financial Statements should be read in conjunction with the
historical consolidated financial statements of the Company and the notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this Prospectus.
38
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 37,826 $ (21,213)(1) $ 16,613
Accounts receivable, net............................................. 40,860 40,860
Inventories.......................................................... 21,798 21,798
Refundable income taxes.............................................. -- 5,511(2) 5,511
Deferred income taxes................................................ 1,689 1,689
Other................................................................ 4,743 4,743
---------- ----------- -----------
Total current assets............................................... 106,916 (15,702) 91,214
Property, plant and equipment, net................................... 17,587 17,587
Goodwill, net of amortization........................................ 147 147
Deferred income taxes................................................ 1,238 1,238
Deferred financing costs............................................. -- 11,200(3) 11,200
Other assets......................................................... 12,037 12,037
---------- ----------- -----------
Total assets....................................................... $ 137,925 $ (4,502) $ 133,423
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Notes payable........................................................ $ 3,524 $ (1,816)(1) $ 1,708
Current portion of long-term obligations............................. 829 (829)(1) --
Accounts payable..................................................... 11,118 11,118
Accrued liabilities.................................................. 15,943 15,943
Income taxes payable................................................. 6,685 6,685
Deferred income...................................................... 9,601 9,601
---------- ----------- -----------
Total current liabilities.......................................... 47,700 (2,645) 45,055
Long-term obligations, less current portion.......................... 2,037 (2,037)(1) --
Term Loan Facility................................................... -- 40,000(1) 40,000
144A Notes........................................................... -- 150,000(1) 150,000
Other non-current liabilities........................................ 4,875 4,875
Minority interest in equity of subsidiary............................ 2,720 2,720
---------- ----------- -----------
Total liabilities.................................................. 57,332 185,318 242,650
---------- ----------- -----------
Stockholders' equity (deficiency)...................................... 80,593 (189,820)(4) (109,227)
---------- ----------- -----------
Total liabilities and stockholders' equity (deficiency)............ $ 137,925 $ (4,502) $ 133,423
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
39
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(1) Represents the adjustments to the Company's cash and debt to account for the
effects of the Recapitalization. For a description of the sources and uses
of funds, see "Use of Proceeds."
(2) Represents the tax benefit to be derived from the currently deductible
transaction fees and expenses as well as the tax benefit from the exercise
and redemption of stock options calculated at the statutory tax rate.
(3) Represents the deferred financing costs incurred as a result of the
Recapitalization.
(4) Represents the net change in stockholders' equity (deficiency) as a result
of the Recapitalization, including transaction fees and expenses, less
capitalized deferred financing costs and the income tax benefit referred to
in (2) above.
40
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenues........................................................... $ 184,018 $ 184,018
Cost of sales and service expense.................................. 85,757 85,757
---------- -----------
Gross profit................................................... 98,261 98,261
Research and development expenses.................................. 17,852 17,852
Selling, general and administrative expenses....................... 48,830 48,830
Other charges...................................................... 837 837
---------- -----------
Operating profit............................................... 30,742 30,742
Interest expense................................................... (122) $ (17,995)(1) (18,117)
Amortization of deferred financing costs........................... -- (1,545)(2) (1,545)
Other income, net.................................................. 1,149 1,149
---------- ----------- -----------
Income before provision for income taxes and
minority interest............................................ 31,769 (19,540) 12,229
Provision for income taxes......................................... 11,187 (7,816)(3) 3,371
Minority interest in income of subsidiary.......................... 1,346 1,346
---------- ----------- -----------
Net income..................................................... $ 19,236 $ (11,724) $ 7,512
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income.
41
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(1) The following represent adjustments to interest expense as a result of the
Recapitalization:
<TABLE>
<S> <C>
Interest expense with respect to the New Credit Agreement................... $ 3,357
Interest expense with respect to the 144A Notes............................. 14,063
Bank and other finance fees................................................. 575
-----------
Net change.................................................................. $ 17,995
-----------
-----------
</TABLE>
The interest rate on the New Credit Agreement and 144A Notes was at a
weighted average interest rate of 9.2%. For each 0.25% change in average
interest rate on the New Credit Agreement, annual pro forma interest expense
would change by $100.
(2) Represents amortization expense of deferred financing costs related to the
Recapitalization. Approximately $11,200 has been deferred and will be
amortized over the lives of the related debt securities. The weighted
average amortization period for the deferred financing costs is 7.25 years.
The remainder of the Recapitalization fees and expenses has been charged
against stockholders' equity (deficiency) in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet.
(3) Represents the estimated income tax effects of pre-tax pro forma adjustments
at the Company's statutory rate of 40% for all periods presented.
42
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data with respect to the Company for the periods ended and as of the dates
indicated. The selected historical consolidated financial data for the years
ended December 31, 1996, 1995 and 1994 are derived from the audited consolidated
financial statements of the Company included elsewhere in this Prospectus. This
information should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto appearing elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The selected historical consolidated financial data for
the years ended December 31, 1993 and 1992 are derived from audited consolidated
financial statements of the Company that are not included in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Total revenues................................................... $ 161,538 $ 156,735 $ 165,384 $ 169,114 $ 184,018
Cost of sales and service expense................................ 85,458 81,228 85,299 82,635 85,757
--------- --------- --------- --------- ---------
Gross profit..................................................... 76,080 75,507 80,085 86,479 98,261
Research and development expenses................................ 12,633 13,494 13,726 14,414 17,852
Selling, general and administrative expenses..................... 46,755 45,066 45,062 47,322 48,830
Other charges (1)................................................ -- -- 3,450 -- 837
--------- --------- --------- --------- ---------
Income from operations........................................... 16,692 16,947 17,847 24,743 30,742
Interest expense................................................. 447 175 558 616 122
Other (income) expense, net...................................... (647) 630 (2,940) (1,153) (1,149)
Flood costs (savings) (2)........................................ 6,000 1,897 (551) -- --
--------- --------- --------- --------- ---------
Income before provision for income taxes and minority interest... 10,892 14,245 20,780 25,280 31,769
Provision for income taxes....................................... 3,722 2,488 8,470 9,875 11,187
Minority interest in income of subsidiary........................ 342 909 768 800 1,346
--------- --------- --------- --------- ---------
Net income....................................................... $ 6,828 $ 10,848 $ 11,542 $ 14,605 $ 19,236
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER DATA:
EBITDA (3)....................................................... $ 21,366 $ 21,623 $ 25,909 $ 29,418 $ 37,014
Depreciation and amortization.................................... 4,674 4,676 4,612 4,675 5,135
Capital expenditures............................................. 7,506 4,436 1,577 3,327 2,715
Ratio of earnings to fixed charges (4)........................... 6.9x 11.2x 12.5x 13.9x 22.8x
EBITDA margin.................................................... 13.2% 13.8% 15.7% 17.4% 20.1%
BALANCE SHEET DATA:
Working capital.................................................. $ 38,935 $ 46,191 $ 44,776 $ 51,341 $ 59,216
Total assets..................................................... 99,168 112,384 115,212 120,602 137,925
Long-term debt (net of current portion).......................... 3,491 2,547 2,399 1,753 2,037
Stockholders' equity............................................. 56,841 65,581 65,867 72,429 80,593
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
43
<PAGE>
- --------------------------
(1) Amount in 1994 relates to a restructuring charge incurred in connection with
the Company's shutdown of its Itasca, Illinois facility and the relocation
of most of its operations to Meriden, Connecticut. Most of these costs
incurred related to employee terminations and a lease buy-out. Amount in
1996 relates to expenses incurred in connection with the Recapitalization.
(2) Fiscal 1992 amount relates to costs incurred with the Company's relocation
to a new facility in Meriden, Connecticut and the write-off of $3,120 in
unamortized leasehold improvements after the flooding of the old
headquarters. In 1993, additional costs were incurred for temporary
facilities and a provision was made for the termination of the remaining
lease obligation of the old headquarters. During 1994, the recorded
obligation to the previous landlord was settled for an amount less than that
accrued as of December 31, 1993.
(3) EBITDA represents, for any period, the sum of income from operations and
depreciation and amortization exclusive of other charges, and certain other
one-time charges of $0.3 million in 1996. EBITDA includes 100% of the EBITDA
generated by Packard Japan, the Company's 60% owned subsidiary. The amount
of Packard Japan's operating income represented by the 40% interest not
owned by the Company was $744, $1,612, $1,647, $1,668 and $2,649 for the
years ended 1992, 1993, 1994, 1995 and 1996, respectively. The Company
expects that Packard Japan will repurchase during 1997 and 1998 the
outstanding 40% minority interest in its capital stock from the holder
thereof (subject to Japanese laws and regulations) for aggregate
consideration of approximately $7.5 million. EBITDA is presented because it
is a widely accepted financial indicator of a company's ability to service
and/ or incur indebtedness. Management believes that presentation of EBITDA
is helpful to investors. However, EBITDA should not be considered as an
alternative to net income as a measure of the Company's operating results or
to cash flows as a measure of liquidity. In addition, although the EBITDA
measure of performance is not recognized under generally accepted accounting
principles, it is widely used by industrial companies as a general measure
of a company's operating performance because it assists in comparing
performance on a relatively consistent basis across companies without regard
to depreciation and amortization, which can vary significantly depending on
accounting methods (particularly where acquisitions are involved) or
non-operating factors such as historical cost bases. Because EBITDA is not
calculated identically by all companies, the presentation herein may not be
comparable to other similarly titled measures of other companies.
(4) For the purposes of computing the ratio of earnings to fixed charges,
earnings consists of income before provision for income taxes and minority
interest, and fixed charges consists of interest expense which includes
amortization of deferred financing costs and the portion of rental expense
deemed representative of the interest factor.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS OF THE COMPANY COVER PERIODS BEFORE COMPLETION OF THE
RECAPITALIZATION. ACCORDINGLY, THE DISCUSSION AND ANALYSIS OF SUCH PERIODS DO
NOT REFLECT THE SIGNIFICANT IMPACT THAT THE RECAPITALIZATION WILL HAVE ON THE
COMPANY. ACCORDINGLY, THE FINANCIAL INFORMATION INCLUDED IN THE FOLLOWING
DISCUSSION MAY NOT NECESSARILY REFLECT THE RESULTS OF OPERATIONS, FINANCIAL
POSITION AND CASH FLOWS OF THE COMPANY IN THE FUTURE. THE FOLLOWING DISCUSSION
SHOULD BE READ IN CONJUNCTION WITH THE SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA, THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS, AND THE OTHER FINANCIAL INFORMATION AND DATA APPEARING ELSEWHERE
HEREIN.
GENERAL
The Company's revenues are comprised of sales of bioanalytical instruments
and related biochemical supplies and services to the drug discovery and
molecular biology markets, as well as sales of analytical instruments, systems
and services used for the detection, identification and quantification of
radioactive materials for the nuclear industry and related markets.
The Company operates a global business, with net sales that are diversified
by geographic region and by product line. Packard Instrument has an extensive
direct sales and service organization in the United States, Australia, Austria,
Belgium, Denmark, France, Germany, Italy, Japan, The Netherlands, Russia,
Switzerland and the United Kingdom. Canberra Nuclear's direct sales and service
organization is comprised of operations in the United States, Australia,
Austria, Belgium, France, Germany, Russia and the United Kingdom. Outside of
these countries, both Packard Instrument and Canberra Nuclear maintain large
independent distributor networks. In the three fiscal years 1994 to 1996, net
sales to foreign third parties were 58%, 62% and 63%, respectively, of total net
sales. See Note 11 to Consolidated Financial Statements.
The Company's sales include significant service revenue derived from Packard
Instrument's and Canberra Nuclear's large base of installed equipment. In
addition, Packard Instrument also generates significant revenue from the sale of
consumable biochemicals and supplies. These provide the Company with a stable
stream of revenue after an instrument has been sold. The table below illustrates
the percentage of total sales that the three major categories of sales have
generated in the last three years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1995 1996
-------------------- -------------------- --------------------
CONSOLIDATED NET SALES (DOLLARS IN MILLIONS): $ % $ % $ %
--------- --- --------- --- --------- ---
<S> <C> <C> <C> <C> <C> <C>
Instruments and systems............................ $ 115.4 70% $ 113.2 67% $ 124.1 68%
Services........................................... 32.9 20 35.6 21 37.2 20
Chemicals and supplies............................. 17.1 10 20.3 12 22.7 12
--------- --- --------- --- --------- ---
Total.......................................... $ 165.4 100% $ 169.1 100% $ 184.0 100%
--------- --- --------- --- --------- ---
--------- --- --------- --- --------- ---
</TABLE>
Packard Instrument's total revenues increased by 21% from 1994 to 1996. This
growth is primarily a result of the growth in funding of research by
pharmaceutical and biotechnology companies, driven principally by their desire
to accelerate drug screening and development, the demand for increased
automation at many research laboratories and a trend toward non-radioisotopic
bioanalytical research. Sales of certain of Packard Instrument's products,
including microplate readers, robotic liquid handling systems and biochemicals
and supplies have grown during the period, partially offset by declines in sales
of certain bioanalytical spectrometers, which employ radioisotopic analytical
methods. See "Risk Factors-- Potential Decline in Use of Radioisotopic Processes
and Instruments."
45
<PAGE>
Packard Instrument actively engages in new product development through both
internal development and outside collaborations in response to demand for higher
efficiency bioanalytical instrumentation from the drug discovery and molecular
biology markets and growing demand for non-radioisotopic methods. Packard
Instrument's spending on research and development has increased since 1994.
Packard Instrument's research and development expenditures were approximately
10% of Packard Instrument's revenues for 1996, as compared to 9% in 1994.
Canberra Nuclear's total revenues decreased by 4% from 1994 to 1996. This
decline is primarily a result of three factors: discontinuation of certain less
profitable product lines, the reorganization of the mission and operations of
the DOE as a result of the end of the Cold War and delays in orders by electric
utilities due, in part, to deregulation in the United States. The Company
believes that certain emerging industry trends may benefit Canberra Nuclear in
the future. These trends include (i) environmental cleanup projects, a new
mission of the DOE, which will require nuclear waste characterization systems;
(ii) safeguarding nuclear material resulting from weapons and facilities
decommissioning, another new mission of the DOE, which will increase the need to
monitor, account for and protect such materials; (iii) the deregulation of U.S.
electric utilities which, the Company believes, will ultimately generate demand
for Canberra Nuclear's labor saving health physics and radiochemistry software;
and (iv) growth in the use of nuclear energy in the Pacific Rim.
Canberra Nuclear's research and development expenditures were approximately
8% of Canberra Nuclear's revenues for 1996. Several new products have been
developed recently which the Company believes respond to market demand for new
modes of radiation counting. These include portable spectroscopy instruments,
x-ray detectors for materials science research and waste counting systems.
From 1994 to 1996, the Company's overall operating margins have improved
from 11% to 17%, with Packard Instrument's operating margins (which exclude
allocation of general corporate, other charges and consolidating adjustments)
increasing from 18% to 21% and Canberra Nuclear's operating margins (which
exclude allocation of general corporate expenses, other charges and
consolidating adjustments) increasing from 10% to 14% during the same period.
The overall improvement for the Company is primarily a result of higher product
gross margins and increased service profits at both Packard Instrument and
Canberra Nuclear. In addition, a higher mix of Packard Instrument revenues,
which had higher operating margins than Canberra Nuclear, improved the Company's
overall operating margin. Packard Instrument's product gross margins improved
primarily as a result of increased manufacturing efficiency in its Downers
Grove, Illinois facility and better margins at its European sales subsidiaries.
Packard Instrument's service margins increased in its European region. Canberra
Nuclear's higher product gross margins were primarily a result of increased
manufacturing efficiency. Canberra Nuclear's service profits increased
significantly in both the U.S. and Europe.
The Company's sales subsidiaries outside the United States primarily bill
their customers in their respective local currencies. Approximately 50% of the
Company's revenues are based on sales denominated in currencies other than the
U.S. dollar. As a result of this foreign exchange exposure, the Company
generally purchases foreign currency forward contracts with the objective of
mitigating the effect on cash flow of potential fluctuation in foreign
currencies. See Note 1 to the Consolidated Financial Statements. Independent
representatives outside the United States are billed in U.S. dollars and
therefore represent no currency exposure for the Company.
On a PRO FORMA basis, assuming the Recapitalization had been effected as of
December 31, 1996, the Company's total consolidated indebtedness would have
increased by approximately $185.3 million, to $191.7 million. The primary
effects of the Recapitalization on the Company's future operating results will
include reduced reported profitability to the extent interest expense is above
historical amounts resulting from higher debt levels. In addition, the Company
will record an estimated $9.3 million in charges for transaction fees and
expenses that will be recorded in the consolidated statements of income and
stockholders' equity in the first quarter of fiscal 1997. The Company expects to
generate sufficient cash
46
<PAGE>
from operations to fund its working capital and capital expenditure needs and
make required interest and principal payments on its indebtedness for the
foreseeable future. See "--Liquidity and Capital Resources" and "Risk
Factors--Substantial Leverage; Ability to Service Indebtedness" and
"--Restrictions Imposed by Indebtedness."
RESULTS OF OPERATIONS
The following table sets forth operating results as a percentage of total
revenues for the historical periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1994 1995 1996
--------- --------- ---------
Total revenues...................................................................... 100.0% 100.0% 100.0%
Cost of sales and service expense................................................... 51.6 48.9 46.6
Gross profit........................................................................ 48.4 51.1 53.4
Research and development expenses................................................... 8.3 8.5 9.7
Selling, general and administrative expenses........................................ 27.2 28.0 26.5
Other charges....................................................................... 2.1 -- 0.5
--------- --------- ---------
Operating profit.................................................................... 10.8% 14.6% 16.7%
--------- --------- ---------
--------- --------- ---------
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Total revenues increased to $184.0 million in 1996 from $169.1 million in
1995, an increase of $14.9 million or 8.8%. If average exchange rates in 1996
had remained unchanged from those in 1995, total revenues in 1996 would have
been 3.2% higher than reported. Packard Instrument's total revenues increased to
$122.7 million in 1996 from $107.1 million in 1995, an increase of $15.6 million
or 14.6%. This increase was primarily a result of strong growth in sales of
certain instrument product lines, including a substantial increase in sales by
Packard Instrument's Japanese subsidiary. Canberra Nuclear's total revenues
decreased to $61.3 million in 1996 from $62.0 million in 1995, a decrease of
$0.7 million or 1.1%. This decrease was primarily a result of an unfavorable
change in average exchange rates, partially offset by higher sales of standalone
instruments.
Gross profit increased to $98.3 million in 1996 from $86.5 million in 1995,
an increase of $11.8 million or 13.6%. Gross profit margin increased to 53.4% in
1996 from 51.1% in 1995. This increase was primarily a result of a higher mix of
sales from Packard Instrument's Japanese subsidiary, improved Company-wide
manufacturing efficiencies and better sales and service margins at Packard
Instrument's European subsidiaries.
Research and development expenses increased to $17.9 million in 1996 from
$14.4 million in 1995, an increase of $3.5 million or 24.3%. This increase was
primarily a result of higher spending by Packard Instrument for product
enhancement and new product development.
Selling, general and administrative expenses increased to $48.8 million in
1996 from $47.3 million in 1995, an increase of $1.5 million or 3.2%. As a
percent of total revenues, selling, general and administrative expenses
decreased to 26.5% in 1996 from 28.0% in 1995. The decrease as a percent of
total revenues was primarily a result of spreading certain fixed selling,
general and administrative costs over a higher revenue base.
In 1996, the Company incurred a charge of $0.8 million for expenses related
to the Recapitalization. There were no unusual charges in 1995.
Operating profit increased to $30.7 million in 1996 from $24.7 million in
1995, an increase of $6.0 million or 24.3%. Operating profit margin increased to
16.7% in 1996 from 14.6% in 1995. Packard
47
<PAGE>
Instrument's operating profit (which excludes allocation of general corporate
expenses, other charges and consolidating adjustments) increased to $25.7
million in 1996 from $19.2 million in 1995, an increase of $6.5 million or
33.9%. Packard Instrument's operating profit margin increased to 21.0% in 1996
from 18.0% in 1995. Canberra Nuclear's operating profit (which excludes
allocation of general corporate expenses, other charges and consolidating
adjustments) increased to $8.4 million in 1996 from $8.3 million in 1995, an
increase of $0.1 million or 1.2%. Canberra Nuclear's operating profit margin
increased to 13.7% in 1996 from 13.3% in 1995.
Net income increased to $19.2 million in 1996 from $14.6 million in 1995, an
increase of $4.6 million or 31.5%.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Total revenues increased to $169.1 million in 1995 from $165.4 million in
1994, an increase of $3.7 million or 2.3%. If average exchange rates in 1995 had
remained unchanged from those in 1994, total revenues in 1995 would have been
5.3% lower than reported. Packard Instrument's total revenues increased to
$107.1 million in 1995 from $101.3 million in 1994, an increase of $5.8 million
or 5.7%. This increase was primarily a result of strong growth in instrument
unit sales in the microplate reader and robotic liquid handling system product
lines, the introduction of more environmentally safe biochemicals, the
acquisition of a new product line from DuPont NEN Life Science Products and
growth in service revenue, which was partially offset by declines in sales of
the bioanalytical spectrometer, imaging system and other instrument product
lines. Canberra Nuclear's total revenues decreased to $62.0 million in 1995 from
$64.1 million in 1994, a decrease of $2.1 million or 3.3%. This decrease was
primarily a result of the discontinuation of several less profitable product
lines, a decline in domestic shipments to the DOE because of uncertainty
surrounding the DOE's role and funding following the Cold War and a decline in
sales to domestic nuclear power plants due to cost pressures resulting from the
potential deregulation of the U.S. electric utility industry.
Gross profit increased to $86.5 million in 1995 from $80.1 million in 1994,
an increase of $6.4 million or 8.0%. Gross profit margin increased to 51.1% in
1995 from 48.4% in 1994. This increase was primarily a result of manufacturing
and service expense cost savings from the 1994 closing of Canberra Nuclear's
operations in Itasca, Illinois, other operational efficiencies implemented at
both Canberra Nuclear and Packard Instrument and the 1995 depreciation of the
United States dollar against most of the Company's major trading currencies.
Research and development expenses increased to $14.4 million in 1995 from
$13.7 million in 1994, an increase of $0.7 million or 5.0%. This increase was
primarily a result of Packard Instrument increasing its commitment to new
product development in 1995 and Canberra Nuclear increasing its investment in
systems engineering.
Selling, general and administrative expenses increased to $47.3 million in
1995 from $45.1 million in 1994, an increase of $2.2 million or 5.0%. As a
percent of total revenues, selling, general and administrative expenses
increased to 28.0% in 1995 from 27.2% in 1994. This increase was primarily a
result of 1995 inflationary increases.
There were no unusual charges or expenses in 1995. In 1994, the Company
incurred a $3.5 million expense for closing Canberra Nuclear's Nuclear Data
facility in Itasca, Illinois. In addition, unusual charges in 1994 were a $0.6
million gain relating to an overaccrual in prior years of costs related to a
1992 flood of the Company's leased headquarters building in Meriden,
Connecticut.
Operating profit increased to $24.7 million in 1995 from $17.8 million in
1994, an increase of $6.9 million or 38.6%. Operating profit margin increased to
14.6% in 1995 from 10.8% in 1994. Packard Instrument's operating profit (which
excludes allocation of general corporate expenses and consolidating adjustments)
increased to $19.2 million in 1995 from $17.8 million in 1994, an increase of
$1.4 million or
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7.8%. Packard Instrument's operating profit margin increased to 18.0% in 1995
from 17.6% in 1994. Canberra Nuclear's operating profit (which excludes
allocation of general corporate expenses and consolidating adjustments)
increased to $8.3 million in 1995 from $6.7 million in 1994, an increase of $1.6
million or 23.5%. Canberra Nuclear's operating profit margin increased to 13.3%
in 1995 from 10.4% in 1994.
Net income increased to $14.6 million in 1995 from $11.5 million in 1994, an
increase of $3.1 million or 26.5%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's free cash flow has historically been used to fund capital
expenditures, working capital requirements, debt service, stockholder dividends
and stock repurchases. Following the Recapitalization, interest expense
associated with the borrowings of $40.0 million under the New Credit Agreement
and $150.0 million under the 144A Notes, as well as scheduled principal payments
of term loans under the New Credit Agreement, significantly increased cash
requirements. The Company's interest expense following the Recapitalization will
be substantially higher than immediately prior to such transaction.
The New Credit Agreement provides for a six-year $40 million Term Loan
Facility. Loans under the New Credit Agreement bear interest at floating rates
based upon the interest rate option selected by the Company. Quarterly
amortization is required, commencing in the third calendar quarter of 1997, in
the amount of $200,000 in the first fiscal year after funding, $400,000 per year
in the second through fifth fiscal years after funding, $19.2 million in the
sixth fiscal year after funding and $19.0 million in the seventh fiscal year
after funding. The Revolving Credit Facility of $75 million will mature five
years after the date of initial funding of the term loans described above. The
New Credit Agreement contains operating covenants, financial covenants and
events of default. Borrowings under the New Credit Agreement are secured by
substantially all of the Company's assets, the stock of Packard Instrument and
65% of the stock of certain of the Company's foreign subsidiaries. No amounts
were drawn down under the Revolving Credit Facility in connection with the
Recapitalization Closing. The Company is required to pay a commitment fee of
0.5% per year on the average daily unused portion of the Revolving Credit
Facility, payable quarterly in arrears. See "Description of the New Credit
Agreement" and "Risk Factors-- Restrictions Imposed by Indebtedness."
In addition to the New Credit Agreement, the Company has also issued $150.0
million of 144A Notes in connection with the Recapitalization. The 144A Notes
are subordinated to the indebtedness under the New Credit Agreement. The
Indenture governing the 144A Notes imposes certain restrictions on the Company
and its subsidiaries, including restrictions on the ability to incur
indebtedness, pay dividends, make investments, grant liens and engage in certain
other activities. The 144A Notes may be required to be purchased by the Company
upon a Change of Control (as defined) and in certain circumstances with the
proceeds of asset sales. See "Description of the Exchange Notes."
Operating activities generated $14.7 million, $18.8 million and $33.2
million in cash flow in each of 1994, 1995 and 1996, respectively. The increase
in cash flow from operating activities from 1994 to 1995 of $4.1 million was
primarily a result of a $3.1 million increase in net earnings. The increase in
cash flow from operating activities from 1995 to 1996 of $14.4 million was
primarily a result of a $4.6 million increase in net income and a $6.7 million
increase in accounts payables and other accrued expenses.
The Company's capital expenditures totaled $2.7 million in 1996, $3.3
million in 1995 and $1.6 million in 1994. Capital expenditures have primarily
been for machinery, equipment and the purchase and expansion of facilities. The
Company's expenditures for technology acquisitions, including product lines,
patent rights and licenses acquired, totaled $4.0 million in 1996, $0.7 million
in 1995 and $0.6 million in 1994.
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The Company expects that its majority-owned Japanese subsidiary, Packard
Japan, will repurchase during 1997 and 1998 the outstanding 40% minority
interest in its capital stock from the holder thereof (subject to Japanese laws
and regulations) for aggregate consideration of approximately $7.5 million.
The Company is subject to various federal, state, local and foreign
environmental laws and regulations in the jurisdictions in which it operates.
The Company does not currently anticipate any material adverse effect on its
operations or financial condition as a result of its efforts to comply with, or
its liabilities under, environmental laws. The Company does not currently
anticipate any material capital expenditures for environmental control
facilities. Some risk of environmental liability is inherent in the Company's
business, and there can be no assurance that material environmental costs will
not arise in the future. In particular, the Company might incur capital and
other costs to comply with increasingly stringent environmental policies.
Although it is difficult to predict future environmental costs, the Company does
not anticipate any material adverse effect on its operations, financial
condition or competitive position as a result of future costs of environmental
compliance. The Company and provincial authorities in Groningen, The
Netherlands, are in the process of negotiating a remediation plan involving
groundwater contamination at the Company's Netherlands facility. Although the
liability associated with this matter could be material, the Company believes
that any liability in such matter is covered by the indemnification provisions
of the purchase agreement with the site's prior owner. See "Business--Legal
Proceedings."
The Company believes that existing cash balances and cash flow from
operating activities, together with borrowings available under the New Credit
Agreement, will be sufficient to fund working capital needs, capital spending
requirements and debt service requirements of the Company for at least the next
12 months.
SEASONALITY
For 1995, quarterly revenues as a percentage of total revenues were
approximately 23%, 25%, 24%, and 28%, respectively, for the first through fourth
quarters of the calendar year. For 1996, quarterly revenues as a percentage of
total revenues were approximately 25%, 24%, 22% and 29%, respectively, for the
first through fourth quarters of the calendar year. Seasonality in revenues,
which is typical of most years, has historically been caused by the Company's
Canberra Nuclear business, which is dependent upon customer's seasonal
purchasing patterns. Quarterly operating profit as a percentage of total
operating profit was approximately 18%, 26%, 21% and 35%, respectively, for the
first through fourth quarters of 1995. In 1996, quarterly operating profit as a
percentage of total operating profit was approximately 32%, 24%, 15% and 29%,
respectively, for the first through fourth quarters, reflecting unusually strong
first quarter revenues and profit for Packard Japan. The relatively fixed nature
of manufacturing and non-manufacturing overheads, especially in Canberra
Nuclear's business, has historically resulted in the increased level of fourth
quarter revenues and operating profit.
BACKLOG
As of February 28, 1997 and 1996, the Company's backlog was approximately
$30.8 million and $30.6 million, respectively. The Company includes in backlog
only those orders for which it has received firm purchase orders and does not
include in backlog orders for service. The Company's backlog as of any
particular date may not be representative of actual sales for any succeeding
period.
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BUSINESS
GENERAL
The Company is a leading developer, manufacturer and marketer of analytical
instruments and related products and services for use in the drug discovery and
molecular biology segments of the life sciences industry and in the nuclear
instrumentation industry. Through its wholly-owned subsidiary, Packard
Instrument, the Company supplies bioanalytical instruments, and related
biochemical supplies and services, to the drug discovery and molecular biology
markets, and through Canberra Nuclear, the Company manufactures analytical
instruments and systems used to detect, identify and quantify radioactive
materials for the nuclear industry and related markets. The Company believes
that it is the worldwide market leader in most of its primary product markets,
with well-recognized brand names and a reputation for high-quality, reliable
instruments. For the year ended December 31, 1996, the Company had revenues and
EBITDA of $184.0 million and $37.0 million, respectively.
Packard Instrument is a worldwide leader in the manufacturing and marketing
of bioanalytical instruments for use in the drug discovery and molecular biology
segments of the life sciences industry. Packard Instrument's instruments and
biochemicals are used principally in laboratory research related to immunology,
genetics, virology, biochemistry, toxicology and metabolism studies, primarily
as part of the drug discovery research process. Over the past five years,
pharmaceutical and biotechnology companies have attempted to advance the drug
discovery process through accelerated drug screening and have invested
considerable resources in this process, resulting in increased demand for
Packard Instrument's products. Packard Instrument's primary products include
bioanalytical spectrometers, microplate readers, imaging systems, robotic liquid
handling systems and biochemicals and related supplies. Packard Instrument's
strong, long-term relationships with its customers have been a key component of
its development of new products which respond to these industry trends. In
addition, the Company believes that the quality and reliability of its products
have generated a large installed base of instruments which allows Packard
Instrument to generate a recurring stream of revenue from service and from sales
of biochemicals and other consumables. Packard Instrument distributes and
services its instruments through an extensive international sales and service
organization to many of the leading pharmaceutical, biotechnology and
agrochemical companies as well as to prominent academic, federal and hospital
laboratories.
Canberra Nuclear is the worldwide market leader in the manufacture and
marketing of precision instruments which use advanced analytical techniques to
quantify and identify radioisotopes. Canberra Nuclear offers its customers a
full array of nuclear instruments and related services including: (i) a broad
product line of basic hardware and software for detection, signal processing,
data acquisition and display, and basic analysis of all types of radiation; (ii)
"applied systems," which are integrated systems of software and hardware that
address a specific application and serve as turn-key operations; and (iii)
product and applications training and customer service and support. This
comprehensive product and service offering has enabled Canberra Nuclear to amass
what it believes to be the largest base of installed equipment in the nuclear
instrument industry, which generates a recurring stream of service revenues.
Canberra Nuclear's customers include government institutions, utilities,
research laboratories, commercial analytical laboratories and international,
national and local regulatory agencies. In support of its worldwide customer
base, Canberra Nuclear has developed an extensive sales and service
organization, with locations near most major nuclear sites in the world.
COMPANY STRENGTHS
LEADING MARKET POSITION. The Company believes that it has the leading
market position in each of its two principal businesses. The Company believes
that Packard Instrument has an approximate 25% market share of the worldwide
market segments in the life sciences industry in which it currently competes and
that Canberra Nuclear holds a more than 50% market share of the worldwide
commercial nuclear instrument market. In addition, the Company estimates that
Canberra Nuclear has an approximate 60%
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market share in the market for turn-key systems that meet customer's specific
application requirements, a market segment that the Company believes will grow
faster than the market for individual instruments. The Company's well-recognized
name and reputation for quality and reliability have allowed it to gain leading
market positions across most of its primary product lines.
LONG-TERM CUSTOMER RELATIONSHIPS. The Company has long-term relationships
with its customers in both the life sciences and nuclear instrumentation
industries. Packard Instrument's relationships with its customers, which include
most of the major pharmaceutical companies worldwide, have resulted in
collaborative research and development efforts with its customers that have been
key to Packard Instrument's new product development strategy and that have
helped Packard Instrument to maintain its leading market position. Canberra
Nuclear similarly enjoys strong relationships with major nuclear instrumentation
industry participants, including commercial enterprises and government entities
such as the DOE.
RECURRING REVENUES FROM INSTALLED BASE. The Company generates recurring
revenue from service and the sale consumables due to its large installed base of
equipment. The Company believes that it has the largest installed equipment base
in the nuclear instrument industry and one of the largest installed bases in the
market segments of the life science industry in which it competes. The Company
estimates that Packard Instrument's installed base in the life sciences industry
consists of over 14,000 bioanalytical instruments. The Company estimates that
Canberra Nuclear's installed base in the nuclear instrument industry includes
more than 150 waste characterization systems, more than 300 whole body counting
systems, hundreds of safeguards systems and thousands of radiochemistry systems.
Both Packard Instrument and Canberra Nuclear offer their customers service and
support for the instruments they sell. In addition, Packard Instrument offers
its customers consumables for its instruments. Consumable sales and service
provide the Company with stable, recurring revenue for years after an instrument
has been sold. Approximately 33% of the Company's revenues for fiscal 1996 was
generated by service of its equipment and the sale of consumables. For those
instruments covered by service contracts, service contract revenues per
instrument per year average 8% to 13% of the equipment's original selling price.
Canberra Nuclear's applied systems generally require more aftermarket service
than Canberra Nuclear's other instruments, and as this market segment grows, the
Company believes that revenue from the provision of related services may also
increase. The Company believes that its installed base represents a competitive
advantage because many customers tend to remain with an existing supplier who
can provide accurate and reliable products and related services.
EXTENSIVE WORLDWIDE SALES AND SERVICE ORGANIZATION. The Company has
developed an extensive worldwide sales, service and distribution network. The
Company primarily provides service and support for its instruments on a fixed
fee, one-year contract basis, which includes field service, customer support,
applications assistance and extensive training. The Company's worldwide service
organization includes approximately 160 personnel at Packard Instrument and
approximately 90 personnel at Canberra Nuclear who are, in each case,
factory-trained and educated. Packard Instrument has sales and service
operations in 13 countries and approximately 43 independent distributors with
over 68 offices in more than 51 countries. Canberra Nuclear has locations near
most major nuclear sites in the world, with sales and service operations in nine
countries, and approximately 50 independent distributors with over 70 offices in
more than 60 countries. In addition to the recurring stream of revenue from the
Company's service and support organization, the close contact and relationship
between its service and support personnel and its customers also provide the
Company with access to new product and application ideas as well as sales
opportunities.
EXPERIENCED MANAGEMENT. The Company's management has substantial experience
in the life sciences industry and in the nuclear instrumentation industry. The
Company's top 14 managers average 21 years of experience with the Company. The
Company's Chief Executive Officer has held such position since 1965. Revenues in
1965 were $119,000 and have grown to $184.0 million for the year ended December
31, 1996. Upon consummation of the Recapitalization, the Company's management
beneficially
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owned approximately 20% of the Common Stock of the Company on a fully diluted
basis (excluding New Options to be granted subsequent to the Recapitalization
Closing pursuant to a management stock incentive plan). See
"Management--Management Stock Incentive Plan."
BUSINESS STRATEGY
LEVERAGE BRAND RECOGNITION AND HIGH QUALITY. Through its applications
expertise and long history in its businesses, the Company has established and
will seek to maintain its recognized brand name and reputation for high quality,
reliable products and services. This reputation and recognized brand name, along
with the Company's extensive sales and service organization, should assist in
its efforts to further penetrate the markets for its existing products and
improve its market position in the industry segments in which it operates. The
Company monitors such quality statistics as "perfect" installations of its
equipment and, in the case of Packard Instrument, mean time between failures of
its products. The Company's goal is to be the supplier of choice for all end
users of its analytical instruments and systems. The Company will also seek to
use its established brand name and reputation for quality to compete on factors
other than price in order to maintain its margins.
GENERATE GROWTH THROUGH NEW PRODUCT DEVELOPMENT. The Company intends to
continue to emphasize new product development in order to provide
technologically advanced products to its customers for existing and new
applications and reinforce its market leadership. In particular, the Company
intends to continue to target a number of its new products toward the evolving
drug discovery market. Packard Instrument has an aggressive new product
introduction strategy that leverages its extensive distribution system and
recognized brand name. With its 90 research and development professionals and
its global service capabilities, Packard Instrument seeks to refine and market
technological advances that it obtains through internal development,
acquisitions or external collaborations with other companies or individuals.
Packard Instrument has capitalized on its strong customer relationships and
established reputation to learn about new applications desired by the
marketplace, enabling it to anticipate and respond to its customers' needs. The
Company believes that the introduction of its new products and product
enhancements and extensions should assist in its efforts to further penetrate
its markets.
Canberra Nuclear has implemented a strategy of developing turn-key systems
which meet a specific application requirement, require less technical training
to operate, and offer greater economic benefit than traditional stand-alone
components. This "systems" strategy is well suited to Canberra Nuclear's
strengths of applications know-how, worldwide service, software and hardware
expertise, and advanced training capabilities. In addition to selling its
measurement equipment, Canberra Nuclear has started offering transaction-based
database and spectroscopy services requested by its customers. Canberra
Nuclear's strategy is to develop its capabilities as a components manufacturer,
systems integrator, and applications expert in order to maintain and improve its
margins for both its products and services.
IMPLEMENT ADDITIONAL MANUFACTURING COST REDUCTIONS. The Company believes
that Packard Instrument is a low cost producer and that it can maintain this
position with continued emphasis on production cycle time, reduction in the
number of suppliers and increased use of outsourced standard components and
sub-assemblies. Canberra Nuclear has lowered its costs of manufacturing and
service significantly in the last several years through increased emphasis on
efficiency, primarily as a result of personnel and facilities reductions,
standardization of systems and increased automation of design. The Company
believes that Canberra Nuclear will strive to lower its manufacturing costs in
the future.
EMPHASIZE RECURRING REVENUES FROM SERVICES AND CONSUMABLES. The Company
intends to continue placing emphasis on expanding its service organization and
adding new biochemical and supply products to its existing product line in order
to increase its revenue from services and consumables. The Company is expanding
the type of value-added services it provides by increasing the applications
knowledge of its service staff which, as a result, should be able to provide
more consultative assistance to customers.
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Packard Instrument is positioning itself to address the emerging demand for
non-radioisotopic biochemicals and supplies. The Company believes that new
non-radioisotopic assays will address new areas of the biochemicals and supplies
market. The Company is also expanding its product line to include a broader
array of microplates and vials that complement its existing product lines and
new instruments. Canberra Nuclear is emphasizing recurring service revenues by
expanding its database service activities serving the U.S. nuclear utility
industry and positioning itself to compete in transaction-based database and
spectroscopy services for customers in the nuclear power and DOE markets.
INDUSTRY OVERVIEW
The Company believes that it is well-positioned to capitalize on favorable
trends influencing both the life sciences industry and the market for nuclear
instruments. In the life sciences industry, these trends include the growth in
funding from the pharmaceutical and biotechnology industries, driven principally
by the desire to accelerate drug screening and development, the demand for
increased automation at pharmaceutical, biotechnology and clinical laboratories,
and the growth of non-radioisotopic bioanalytical research. In the market for
nuclear instruments, the Company believes that, although its traditional
businesses will be affected by the deregulation in the United States of nuclear
power plants, opportunities may increase as a result of certain emerging trends,
including: (i) environmental cleanup projects, a new mission of the DOE, which
will require nuclear waste characterization systems; (ii) safeguarding nuclear
material resulting from weapons and facilities decommissioning, another new
mission of the DOE, which will increase the need to monitor, account for and
protect such materials; (iii) the deregulation of U.S. electric utilities which,
the Company believes, will ultimately generate demand for Canberra Nuclear's
labor saving health physics and radiochemistry software; and (iv) growth in the
use of nuclear energy in the Pacific Rim.
PACKARD INSTRUMENT
Life science is the study of the characteristics, behavior and structure of
living organisms and their component systems. Life science researchers utilize a
variety of instruments and related biochemicals and supplies in the study of
life processes, drug discovery, biotechnology and environmental testing. Two
major branches of life science are cellular biology and molecular biology.
Cellular biology is the study of live, intact cells. Molecular biology is the
study of cell components including DNA, RNA and proteins. The Company estimates
that in 1996 annual sales to the global life sciences industry for
instrumentation, related service and biochemicals totaled approximately $2.7
billion. The segments of this industry on which the Company focuses are
bioanalytical spectrometers, microplate readers, imaging systems, robotic liquid
handling systems, and radioisotopic and non-radioisotopic biochemicals and
supplies, for which the Company estimates annual sales total approximately $440
million in the aggregate.
The bioanalytical instrument market includes primarily bioanalytical
spectrometers, microplate readers, imaging systems and robotic liquid handling
systems. Bioanalytical spectrometers are used to measure biologically active
molecules, cells and sub-cellular components, the composition and function of
body tissues and organs, the dynamics of living systems, and the mechanics of
disease. They are used by researchers in pharmaceutical companies, biotechnology
companies, and academic institutions as well as customers in hospitals,
environmental testing laboratories and clinical testing laboratories.
Bioanalytical spectrometer samples are contained in vials, test tubes and
special transparent tubing.
Microplate readers are used primarily by researchers at drug companies and
biotechnology companies when studying cellular and molecular biology.
Microplates are used in drug discovery and development for screening potential
drug candidates and by scientists conducting evaluation assays. Microplate
readers quantify the results of tests performed in the depressions, or "wells,"
of small plastic trays. Microplate readers miniaturize the tests and, therefore,
reduce the amount of samples, labels and time needed to perform such tests.
Because of their advanced technology and differentiating characteristics, both
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bioanalytical spectrometers and microplate readers are sold at higher margins
than more standard instruments.
Imaging systems are also used in the study of molecular and cellular biology
primarily by researchers in drug companies and biotechnology companies. Imaging
system samples are analyzed in flat (two-dimensional) formats. Robotic liquid
handling systems are used in laboratories to transfer liquids from one piece of
labware or apparatus to another, add or mix reagents, perform dilutions, perform
washing steps, or otherwise manipulate liquid samples for analytical procedures.
These instruments have become important as laboratory research tools because
microplate readers have reduced the size and increased the number of samples.
Robotics are necessary to complete precise measurements and handle a large
number of minute samples. Packard Instrument sells robotic liquid handlers that
are used to prepare samples in microplate readers and bioanalytical
spectrometers.
A major application of Packard Instrument's bioanalytical instruments is for
use as a part of the drug discovery process. The pharmaceutical industry has
traditionally gained most of its drug leads by evaluating natural and synthetic
compounds from their chemical libraries for molecules with possible therapeutic
benefit. However, new tools for drug discovery allowing for more rapid, thorough
and efficient identification of drug leads have evolved over the past five
years. In addition, two major technological innovations have substantially
increased the number of possible drug leads, and new avenues for disease
treatment are now available. First, molecular and cellular biology and the study
of genetics have facilitated the identification of complex disease mechanisms
and identified genetic targets as potential and known causes of diseases.
Second, combinatorial chemistry, the production of hundreds of thousands of
compounds from functionally diverse chemicals, has enabled chemists to
synthesize huge numbers of new substances which can then be tested for
disease-fighting capability. As a result of these innovations, the challenge for
all pharmaceutical companies is how to screen this large number of candidate
drug compounds against a proliferating number of disease targets. Pharmaceutical
groups require the capability to screen millions of potential drug leads against
many new disease targets in shorter time periods and have turned to
instrumentation for "high throughput screening."
Makers of bioanalytical instruments, like Packard Instrument, have addressed
this need and helped to make the new approach to drug discovery possible by
combining the detection capabilities of its bioanalytical instruments with
advances in "high throughput screening." "High throughput screening" is a
general term that refers to the automated systems and new instruments currently
being used in drug research. Using high throughput screening, research groups
have been able to screen tens and even hundreds of thousands of compounds a
week, well beyond previous limits. The result has been an increase in both the
speed with which tests can be conducted and the volume of information available
on the binding characteristics of a given drug molecule or biological target.
The bioanalytical instrument market includes products that provide
researchers with the ability to detect the activity of biological samples by
measuring minute amounts of light. Today, there exist three different labeling
methods: isotopic, fluorescent and chemiluminescent labeling. Fluorescent and
chemiluminescent labels are considered nonisotopic methods. Isotopic methods
allow a researcher to recognize the activity of a particular molecule or
compound by labeling it with a radioactive molecule. Rather than utilize
radioactivity, fluorescent or chemiluminescent labeling distinguishes a specific
molecule or compound to be analyzed by attaching an organic light-emitting
molecule.
Although a majority of the tests today use radioisotopic processes and
instruments, the Company believes that the trend is toward the use of
nonisotopic instrumentation. Because isotopic labeling has been the most widely
used ultrasensitive biological test, it is the benchmark against which the
reliability and sensitivity of nonisotopic methods are measured. Radioisotopic
labeling is the most specific, easy to use and cost effective method of testing
compounds. Additionally, the Company believes that scientists who currently use
radioisotopes tend to be reluctant to switch methodology because of the
potential sources for experimental error involved in altering their testing
methods. Because radioisotopes are chemically
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identical to stable elements, they can be used as effective labels without
modifying reaction chemistry. However, the Company believes that the trend
towards gradual substitutions of many of the isotopic methods is likely. Because
of their radioactivity, isotopic labels are environmentally unfriendly and
difficult and potentially dangerous to handle. Their by-products bring about
waste disposal problems that are becoming increasingly more expensive.
CANBERRA NUCLEAR
The Company estimates that worldwide sales in 1996 of instruments and
services to the segments of the nuclear industry it serves were approximately
$180 million, of which approximately $100 million were generated by commercial
suppliers such as Canberra Nuclear. The remaining sales were generated by
captive systems integrators (E.G., DOE facilities such as Los Alamos), which
build their own equipment. The Company estimates that Canberra Nuclear has a
more than 50% market share of the $100 million worldwide commercial nuclear
instrument market. Due to privatization of the DOE facilities and to
deregulation of the U.S. electric utility industry, the Company believes the
captive portion of this market is gradually beginning to open to commercial
companies like Canberra Nuclear.
The traditional end markets for Canberra Nuclear's products are the
radiochemistry, nuclear research and worker health and safety markets.
Radiochemistry is a basic analytical tool for the investigation of the chemical
composition of substances by analyzing their radioactive isotopic constituents.
As the use of radiochemical techniques has grown in recent years, the need has
grown for highly automated instruments, like those manufactured by Canberra
Nuclear, that can analyze a larger number of samples in less time. The nuclear
research market has historically focused on basic research in nuclear physics.
In areas such as the Pacific Rim and South America, funding for such research
has increased, while in many industrialized countries, the focus has shifted
from basic research to applied topics such as environmental restoration. The
worker health and safety market requires instruments that measure the intake of
radioactive substances by workers who are exposed to nuclear materials.
In addition to these traditional end markets, the Company believes that
demand for its instruments may develop in the future in several emerging
markets. Given concerns about contamination of the environment (both radioactive
and non-radioactive), there is a need for measuring instruments both to monitor
radioactive and hazardous sites and to verify the success of remediation and
containment projects. The market for instruments used to characterize nuclear
waste has developed as decisions are made regarding the permanent disposal of
nuclear waste which is, for the most part, currently stored on-site by waste
generators. The use of nuclear instruments to help safeguard the Cold War's
legacy of weapons grade nuclear material is emerging as a market for Canberra
Nuclear's instruments. Finally, in addition to safeguarding nuclear materials,
the decontamination and decommissioning of nuclear weapons and other nuclear
sites also represents a market opportunity for makers of nuclear instruments.
The United States market is the most mature nuclear instrument market,
especially in the areas of research and radiochemistry. The Company believes
that existing nuclear facilities in the United States represent opportunities in
the areas of waste characterization and decontamination and decommissioning.
Worker health and safety is becoming an increasingly important market in the
United States with the advent of more stringent regulatory requirements at DOE
facilities. Additionally, the Company believes that the move to privatization of
DOE facilities is creating opportunities for new transaction-based services.
Western Europe, like the United States, is a mature market. However, the
Company believes that it differs from the United States due to its high degree
of commercial fuel reprocessing which creates additional safeguards and other
measurement opportunities. Central Europe and the former Soviet Union face the
same legacy of contaminated facilities as does the United States, but on an even
larger scale.
In other parts of the world, the Company believes that Asia is the primary
growth opportunity for commercial applications of nuclear power. This growth
potential is primarily due to Japan's aggressive
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pursuit of energy self-sufficiency, as well as Korea, Taiwan, India and China
becoming more active nuclear markets. China and India, however, are subject to
certain United States export controls which may limit Canberra Nuclear's ability
to sell goods and services into those markets. In addition, South America is
increasing its use of nuclear energy resulting in increased opportunities to
supply safeguards, radiochemistry and waste characterization systems.
PRODUCTS AND SERVICES
PACKARD INSTRUMENT
Packard Instrument provides the following products:
BIOANALYTICAL SPECTROMETERS. Bioanalytical spectrometers, used broadly
throughout life sciences research, use sensitive light measuring methods for
detecting radioisotopic labeled compounds. Packard Instrument is a leading
manufacturer and marketer of bioanalytical spectrometry instruments, including
its Liquid Scintillation Counter ("LSC"), Gamma Counter and Flow Scintillation
Analyzer ("FSA") instruments. LSC and FSA spectrometers measure the emission of
beta particles from labeled samples by detecting the light these particles emit
in a liquid scintillation cocktail. Gamma Counters measure light given off when
gamma rays from labeled samples strike a sodium iodide crystal detector. Packard
Instrument's bioanalytical spectrometers typically range in price from
approximately $18,000 to $100,000 per instrument.
MICROPLATE READERS. Packard Instrument's microplate readers provide
high-throughput microplate scintillation counting used to screen compounds in
drug discovery, molecular and cellular biology, immunology and biomedical
research. Packard Instrument's current products perform detection using both
radioisotopic and chemiluminescence methods. Additionally, Packard Instrument
has begun to develop microplate readers using the fluorescence method for
detection, including its new Homogeneous Time-Resolved Fluorescence (HTRF-TM-)
instrument, the Discovery-TM-. HTRF-TM- is a proprietary non-isotopic detection
technique licensed from CIS bio international and marketed by Packard Instrument
for high throughput screening applications. Through the introduction of the
Matrix 9600 and TopCount instruments in the early 1990s, Packard Instrument
rapidly penetrated the microplate reader market, recently becoming the largest
supplier of these types of instruments. Packard Instrument's microplate readers
typically range in price from approximately $12,000 to $180,000 per instrument.
IMAGING SYSTEMS. Packard Instrument's current imaging systems provide flat
sample imaging of the emissions from samples, including gels, blots and high
density microplates for use in drug development and molecular and cellular
biology, including areas such as genomics, neuroscience, immunology and
biochemistry. Packard Instrument entered the imaging market with the
introduction of its InstantImager in 1993. The Company believes that its product
provides significant benefits to users in terms of real-time, fast sample
turnaround and enhanced quantitation capabilities. Packard Instrument has
broadened its product line through the addition of a low-cost storage phosphor
imager in 1996 and intends to introduce additional products in this area over
the next several years. Packard Instrument's imaging systems typically range in
price from approximately $28,000 to $75,000 per instrument.
ROBOTIC LIQUID HANDLING SYSTEMS. Packard Instrument's robotic liquid
handling systems are used to prepare small volume samples to be dispensed into
the wells of microplates, which are then screened by microplate readers. Packard
Instrument believes that it has a strong position in the drug discovery market,
the current primary market for the Company's robotic liquid handling systems,
where its MultiPROBE robotic liquid handler is often sold in conjunction with
the TopCount microplate reader. Packard Instrument is in the process of
developing the next generation instrument for this segment, the MultiPROBE II.
Another new product, the Biochip Processor-TM- with ultrasmall volume liquid
handling capability and high precision mechanics to prepare samples in higher
density microplates, is scheduled to be introduced by the end of the third
quarter of 1997. Packard Instrument's robotic liquid handling systems typically
range in price from approximately $26,000 to $105,000 per system.
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OTHER INSTRUMENTS. Packard Instrument manufactures other instruments for
certain original equipment manufacturers, which principally include hydrogen
generators and the new KRYPTOR fluorescence immunoassay instrument, developed in
conjunction with CIS bio international for the oncology segment of the clinical
diagnostic market.
BIOCHEMICALS AND SUPPLIES. Packard Instrument believes that it is the
leading biochemicals manufacturer for scintillation cocktails and supplies, with
an estimated 44% share of the radioisotopic market segment, which Packard
Instrument estimates to be $50 million annually. Biochemicals and supplies sold
by Packard Instrument are laboratory consumables used in the operation of life
science analytical instruments. Biochemicals principally include light-emitting
scintillation cocktails used in conjunction with Packard Instrument's
bioanalytical spectrometers. Scintillation cocktails are solutions of
biochemicals and radioactively labeled compounds used in a particular
bioanalytical spectrometer called a liquid scintillation counter. Supplies
include such items as vials, microplates, luminescence and fluorescence reagents
and are used in conjunction with Packard Instrument's bioanalytical
spectrometers and microplate readers. In early 1995, Packard Instrument
introduced luminescence reagents for its TopCount product and, in 1996,
introduced HTRF-TM- reagents licensed from CIS bio international. In 1997,
Packard Instrument intends to introduce fluorescence reagents licensed from
Aurora Biosciences Corporation. Packard Instrument expects these new
introductions to help penetrate the nonisotopic reagent market.
SERVICE AND SUPPORT. Packard Instrument provides purchasers of its
instruments with service and support primarily on a fixed fee, annual contract
basis. Packard Instrument's service and support include field service, customer
support, applications assistance and extensive training through an organization
of approximately 160 factory-trained and educated service and application
support personnel around the world. Its installed product base provides it with
stable, recurring aftermarket service and support revenue as well as product
upgrade and replacement opportunities.
CANBERRA NUCLEAR
Canberra Nuclear is the world's largest manufacturer and distributor of
analytical instruments used to detect, identify and quantify radioactive
materials. Whereas there are many manufacturers of gross counting instruments
that measure radiation without regard to the source or type of emitter, the
Company believes that it is a leader among those companies that manufacture
instruments which can both quantify and identify the radioisotopes under
investigation through spectroscopic analysis. In addition to its products,
Canberra Nuclear provides a variety of services to its customers, including
aftermarket product support and on-site analysis.
INSTRUMENTS AND DETECTORS. Nuclear instruments are stand-alone electronic
measurement components. These products are not used independently but are the
building blocks for assembling radiation measurement applications, which are
utilized for a variety of purposes. Canberra Nuclear has three key instrument
product lines: NIMs, radiation detectors and Multi-Channel Analyzers ("MCAs").
NIMs are used to amplify, filter, shape, time and in other ways process the
signals generated by radiation detectors. MCAs are used to sort digitized data
from the NIMs into frequency distributions according to incoming pulse heights.
APPLIED SYSTEMS. Applied systems are integrated turn-key radiation
measurement systems that have all the required hardware and software necessary
to meet specific application needs. This category of products has recently been
the fastest growing segment of Canberra Nuclear's business. Canberra Nuclear
manufactures both standard systems that can be used for a wide variety of
applications as well as customized systems, such as waste characterization and
safeguards systems, used for more specific applications. Canberra Nuclear's
standard systems are used for worker health and safety systems, radioactive
waste analysis, environmental monitoring and safeguards applications. The worker
health and safety systems include whole body counters, in vitro analysis systems
and database information systems, and provide accurate measurement of internal
radiation dosage and control access to radiation areas, a key component in the
assessment of worker health and safety. Canberra Nuclear provides such systems
as permanent installations, mobile facilities and temporary rental units, and
all are available as complete turn-key systems.
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The Company believes that Canberra Nuclear has been a commercial leader in
radioactive waste analysis systems for over 15 years. The new waste assay
systems that the Company has developed and is continuing to develop address the
needs of temporary and permanent off-site repositories that are currently being
planned and established for radioactive waste.
Canberra's full array of transportable radioanalysis systems, which range
from hand-held systems to mobile trailers, address the requirements for
environmental restoration and monitoring. With the introduction of its new
on-site characterization system, Canberra believes it is positioned to capture
business from analytical laboratories.
The Company believes that the application of safeguards, the means of
accounting for and protecting fissile materials from diversion, is expanding due
to: (i) the growth of reprocessing facilities and associated mixed oxide (MOX)
fuel facilities, (ii) the submission of former weapons facilities to
international inspection, (iii) the large volume of weapons materials being
extracted from decommissioned weapons and (iv) the disposition of those
materials in new facilities. This growth in safeguards should provide
opportunities for Canberra's new safeguards systems.
AFTERMARKET SERVICE AND SUPPORT. Canberra Nuclear's instrumentation and
applied system product segments generate continuing service demand in the form
of maintenance, product enhancement, general repair and training. Canberra
Nuclear believes that it has developed a reputation in the industry for high
quality customer service, provided by approximately 90 factory-trained and
educated service personnel worldwide. Its installed product base provides it
with stable, recurring aftermarket service and support revenue as well as
product upgrade and replacement opportunities.
TRANSACTION-BASED SERVICES. Canberra Nuclear has started conducting the
analysis and other transaction-based services required by its customers. These
services were developed in response to the DOE's privatization initiatives. An
example of Canberra Nuclear's full service approach is its ability to assume
total performance responsibility for nuclear waste characterization in
connection with environmental restoration projects. Canberra Nuclear can provide
all necessary equipment, mobile systems and personnel to characterize and sort
waste into treatment and disposal streams. Canberra Nuclear's environmental
restoration specialists review data and work with team members to maximize
operational efficiencies. Canberra Nuclear provides characterization of
containerized waste based on fixed-unit pricing.
RESEARCH AND DEVELOPMENT
The Company's research and development ("R&D") efforts are focused on
supporting its business development efforts, and each project is scrutinized for
feasibility, return on investment and time to market. The Company has a program
of both internal and external R&D projects in support of its overall growth
initiatives. Since 1992, the Company has been spending approximately 9% of net
sales on R&D. In 1996, R&D expenditures increased to approximately 10% to
support the introduction of various new products. For the three-year period
ending December 31, 1996, the Company spent a total of $46 million on R&D.
Packard Instrument's principal R&D mission is to develop a broad portfolio
of technologies, products and core competencies in what it believes are the two
most attractive business segments of the life sciences industry, drug discovery
and molecular and cellular biology. Packard Instrument's R&D focus is on the
development and rapid commercialization of technology. Rather than seek to
develop fundamental technological advances through its own research, Packard
Instrument emphasizes evolutionary technological improvements and the commercial
application of technologies obtained through acquisitions, licenses, joint
ventures or collaborations as well as its own research. Because of its strong,
long-term customer relationships, Packard Instrument's customers often identify
technologies of which the customer has become aware that would be suitable for
development and commercialization by Packard Instrument. In addition, Packard
Instrument's global research and technology collaborations complement its
internal R&D resources by expanding the breadth of Packard Instrument's basic
research. Packard Instrument's
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R&D is organized into a group for core technology products and a group for new
technology development. Products are developed by cross-functional teams and
reviewed by a peer group to enhance institutional learning.
The Company believes that Canberra Nuclear's technical expertise and new
product development efforts are among the best in the commercial nuclear
instrument industry. It employs approximately 30 Ph.D. nuclear spectroscopists,
Ph.D. nuclear engineers, certified health physicists, master-degreed physicists,
nuclear engineers and radiochemists. The Company believes that this group of
scientists and engineers enables Canberra Nuclear to transform research-level
systems into standardized, user-friendly products that enjoy broad market
support. An important route to technology commercialization is through
Cooperative Research and Development Agreements ("CRADA") with the DOE. The
CRADA process is one in which a commercial company and a national laboratory
share the cost of developing and commercializing innovative technologies. The
Company has entered into various CRADA in 1996 requiring milestone payments and
future royalty payments upon satisfaction of certain criteria as specified in
such agreements. The Company has a successful history of technology transfers
from DOE national laboratories.
MARKETING, SALES AND SERVICE
Packard Instrument's marketing organization consists of approximately 17
professionals, subdivided into two groups: (i) product managers with
responsibility for maintaining a leadership position with existing products, and
(ii) new market development managers with responsibility for cultivating new
markets, developing new applications, and identifying new products in Packard
Instrument's principal growth areas of drug discovery and molecular and cellular
biology. Packard Instrument's marketing strategy relies heavily on extensive
training of direct sales and distributor organizations, consultative selling
approaches, responsive on-site customer support, applications education and the
use of electronic communication vehicles such as Lotus Notes, E-mail and an
Internet WorldWide Website. These communication links give product managers,
market development managers and application scientists the ability to have
interactive dialogue with customers around the world, helping to guide Packard
Instrument's efforts to find new ways to deliver customer benefits and to
identify product innovations.
Packard Instrument has an extensive direct sales and service organization in
the United States, Australia, Austria, Belgium, Denmark, France, Germany, Italy,
Japan, The Netherlands, Russia, Switzerland and the United Kingdom. Products are
also sold through exclusive, independent distributors in Canada, Mexico, South
Korea, Spain, Taiwan and 30 other countries active in bioanalytical research.
Packard Instrument's sales representatives are compensated with a combination of
base salary and, to the extent sales and service goals are achieved or exceeded,
incentive compensation. Through its global organization of direct sales
representatives and distributors, who are supported by a network of experienced
application and service support personnel, Packard Instrument has access to life
sciences researchers in academic, government, hospital and industrial
laboratories worldwide.
Packard Instrument has skilled service engineers and technical specialists
available worldwide providing service, maintenance and application consulting in
the laboratory. With the added convenience of service agreements and routine,
preventive and value-added maintenance, Packard Instrument seeks to ensure that
its instrumentation is producing precise results for its customers. In addition,
the close relationship between customers and service personnel provide Packard
Instrument with access to new product and application ideas as well as new sales
opportunities.
Canberra Nuclear's marketing organization is subdivided into two groups: (i)
industry or market specialists, who are responsible for sales and marketing
strategy in Canberra's largest industry segments (i.e. nuclear power, nuclear
fuel manufacturing and weapons material production); and (ii) product or
applications managers who are responsible for specific product or applications
segments in all industries. The two groups work as a team in defining and
promoting products and applications into each market
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segment. They also form a team with the sales engineers for significant sales
situations. In addition, there is a business development group which is
responsible for strategic marketing for Canberra Nuclear and investigation into
and implementation of new opportunities, both from a technical and market
perspective. Canberra Nuclear's marketing strategy is to position Canberra
Nuclear as an applications expert. In so doing, Canberra Nuclear seeks to
exploits its ability to offer worldwide distribution, worldwide service,
multi-platform software support, as well as worldwide applications and training
support.
In the United States, Canberra Nuclear's sales force consists of 14 sales
engineers who cover the breadth of its product line with extensive support from
field and in-house specialists. Canberra Nuclear's European sales force is
comprised of direct sales operations in Austria, Belgium, France, Germany and
the United Kingdom, and distributors in the remainder of Europe. The sales
organization for other international markets consists of direct sales operations
in Russia and Australia, one minority-owned distributor covering Central Europe
and the Ukraine, and approximately 50 independent exclusive distributors
covering approximately 60 countries. Canberra Nuclear compensates its sales
force with a combination of base salary and, to the extent sales and service
goals are achieved or exceeded, incentive compensation. Canberra Nuclear
provides worldwide service and support through one manufacturing location in the
United States and one in Europe, three U.S.-based field service offices and
sales and service offices in nine countries. The Company has sales and service
operations near most major nuclear sites with a strong international presence
and contacts in emerging markets such as South America. The Company believes
that it is well recognized in the industry for high quality service, and that
its extensive sales and distribution network provide it with strong
relationships with almost every major user of nuclear instruments in the world.
As of December 31, 1996, the number of Company employees in sales and
marketing and service were approximately as follows:
<TABLE>
<CAPTION>
PACKARD CANBERRA
INSTRUMENT NUCLEAR TOTAL
--------------- ------------- -----
<S> <C> <C> <C>
Sales and Marketing................................... 135 78 213
Service............................................... 161 90 251
--- --- ---
Total............................................... 296 168 464
--- --- ---
--- --- ---
</TABLE>
CUSTOMERS
The Company's customers include pharmaceutical, biotechnology, electric
utility, chemical and industrial companies as well as academic institutions,
government laboratories and private foundations. Customers of Packard Instrument
include Amgen Inc., Bristol-Meyers Squibb Company, Fujisawa Pharmaceutical Co.
Ltd., Genentech, Inc., Gen-Probe Incorporated, Glaxo Wellcome PLC, Harvard
Medical School, Hoffman LaRoche AG, Merck & Co., Inc., National Institutes of
Health, Pasteur Institute, and the University of California. Customers of
Canberra Nuclear include Los Alamos National Laboratory, Savannah River Site,
Rocky Flats, Commonwealth Edison Company, Southern Nuclear Company, Duke Power
Company, Power Reactor and Nuclear Fuel Development Corporation, COGEMA, EURATOM
and the International Atomic Energy Agency. Sales to the DOE were approximately
6% of the Company's fiscal 1996 revenues and approximately 17% of Canberra
Nuclear's fiscal 1996 revenues. Total DOE sales are diversified among 13 major
nuclear sites in the United States, each with numerous and distinct projects,
laboratories and priorities. Moreover, the nuclear mission of the DOE is divided
into three diverse categories: environmental restoration and management, treaty
obligations (SALT, START, and Safeguards) and new weapons production. No
customer of the Company accounted for more than 10% of the Company's revenues in
fiscal 1996.
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MANUFACTURING
The Company has created a well-disciplined, low cost manufacturing culture
and believes that it is a low cost producer for instruments manufactured by both
Packard Instrument and Canberra Nuclear. The Company's manufacturing facilities
have established a "focused cell system" in which employees are divided into
distinct manufacturing cells, each of which is wholly responsible for a specific
product line. Employees are also cross-trained to work on multiple cells. The
Company utilizes "just-in-time" inventory management, which resulted in
inventory turns of approximately four times per year in 1996. To further reduce
its average production cycle time and the cost of raw materials, the Company
will seek to increase its use of outsourced standard components and
sub-assemblies as well as standard, "off-the-shelf" products, such as printed
circuit boards and power supplies.
Packard Instrument manufactures all of its instruments at its Downers Grove,
Illinois facility, except for the chemical production of scintillation and
luminescence products, which occurs at Packard Instrument's facility in
Groningen, The Netherlands. Packard Instrument's manufacturing operations are
certified to ISO 9001 quality standards, and all Packard Instrument products
sold in the United States, Canada and Mexico are certified by the Canadian
Standards Association, which monitors safety standards throughout North America.
All of Packard Instrument's instruments sold in Europe are in conformity with
current European Community directives regarding safety, quality and
electromagnetic compatibility and have qualified under the European Community's
"CE Mark."
Canberra Nuclear manufactures its nuclear instruments, radiation detectors
and applied systems at its Meriden, Connecticut facility with three separate
manufacturing groups. Certain of Canberra Nuclear's radiation detectors are also
manufactured in its Olen, Belgium facility. Canberra Nuclear has established a
certified and documented quality system as a means of ensuring that products and
services conform to specifications, and this system has been certified to ISO
9001 standards and complies with the American National Standards Institute
quality standards. The Company has also qualified a significant portion of its
product line under the "CE Mark."
COMPETITION
Packard Instrument competes with several manufacturers in both domestic and
foreign markets within the drug discovery and molecular biology segments of the
life sciences instrumentation industry. Moreover, Packard Instrument encounters
different competitors in each of its key product lines. Beckman Instruments,
Inc., EG&G Wallac Inc. and Tecan AG compete in a number of Packard Instrument's
product lines, and several companies compete in one of Packard Instrument's
product lines.
Packard Instrument competes principally on the basis of quality, product
features, product performance, price and service. Competition within the markets
that Packard Instrument serves is primarily driven by the need for innovative
products that address the needs of customers. Packard Instrument attempts, to
the extent possible, to counter competition by seeking to develop differentiated
new products and provide quality products and services that meet customers'
needs. See "Risk Factors--Technology and the Development of New Products" and
"--Highly Competitive Industries."
Canberra Nuclear's end markets are characterized by a small number of large
competitors. Over the past decade, significant consolidation in the industry has
been led by Canberra Nuclear, Eurisys Mesures (a subsidiary of SGN/COGEMA) in
France and British Nuclear Fuels PLC in the United Kingdom. Within the applied
systems market, the Company believes that it is the only company that has a
leading position within every market category. Canberra Nuclear competes
principally on the basis of applications expertise and also benefits from
superior quality, product reliability, performance and service. EG&G Ortec and
Eurisys Mesures compete in a number of Canberra Nuclear's product lines, and
several companies compete in one of Canberra Nuclear's product lines.
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RAW MATERIALS
The Company uses many standard parts and components in its products and
believes there are a number of competent vendors for most parts and components.
However, a number of important components are developed by and purchased from
single sources due to price, quality, technology or other considerations.
Canberra Nuclear purchases high purity germanium crystals as part of the
manufacture of high resolution radiation detectors. Germanium detectors
represent a significant portion of total Canberra Nuclear sales. The sources of
supply of these crystals are limited to two manufacturers from whom Canberra
Nuclear makes purchases. Canberra Nuclear has secured under contract what it
believes to be a long term, dependable supply of these crystals from one of the
two manufacturers. Features of that contract include: price increase limitations
linked to the costs of crystal production; a four year notice period required
for termination by either party; and the grant to Canberra Nuclear of a right of
first refusal to acquire the germanium crystal vendor's production capability if
the vendor proposes to sell or discontinue its crystal business. Notwithstanding
the terms of this contract, there can be no assurance that the supply of
germanium crystals will continue at the level and prices Canberra Nuclear
currently enjoys. See "Risk Factors--Limited Sources of Supply for Germanium
Crystals."
INTELLECTUAL PROPERTY
The Company owns numerous United States and foreign patents, and has patent
applications pending in the United States and abroad. Further, the Company
licenses certain intellectual property rights to or from third parties. In
addition to its patent portfolio, the Company possesses a wide array of
unpatented proprietary technology and know-how. The Company also owns numerous
United States and foreign trademarks and trade names and has applications for
the registration of trademarks and trade names pending in the United States and
abroad. The Company believes that patents and other proprietary rights are
important to the development of its business, but also relies upon trade
secrets, know-how, continuing technological innovations and licensing
opportunities to develop and maintain its competitive position.
Packard Instrument licenses technology from a number of third parties,
including, among others, licenses in connection with certain of its liquid
handling systems, imager products and microplate readers. The licenses are
generally long-term and require Packard Instrument to pay royalties to the
licensor in connection with sales of the product utilizing the licensed
technology. Certain of the licenses, including the license agreement with CIS
bio international for HTRF-TM- technology in connection with Packard
Instrument's Discovery-TM- product, may be terminated by the licensor if Packard
Instrument fails to meet certain volume targets. The licenses are generally
exclusive licenses, but some are nonexclusive in particular geographic regions
and others may be made nonexclusive if Packard Instrument fails to meet certain
volume targets. Packard Instrument does not believe that it is dependent on any
single license or that the loss of any single license would have a material
adverse effect on the Company's results of operations.
In some cases, litigation or other proceedings may be necessary to defend
against or assert claims of infringement, to enforce patents issued to the
Company or its licensors, to protect trade secrets, know-how or other
intellectual property rights owned by the Company, or to determine the scope and
validity of the proprietary rights of the Company or of third parties. Such
litigation could result in substantial costs to and diversion of resources by
the Company. An adverse outcome in any such litigation or proceeding could
subject the Company to significant liabilities and expenses (e.g., reasonable
royalties, lost profits, attorney's fees, trebling of damages for willfulness,
etc.), require the Company to cease using the disputed intellectual property or
cease the sale of a commercial product, or require the Company to license the
disputed rights from third parties, any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company is currently involved in two separate litigations with EG&G
Instruments, Inc. ("EG&G Instruments") concerning intellectual property. See
"--Legal Proceedings."
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EMPLOYEES
As of December 31, 1996, the Company had 991 employees. Sixty-nine percent
of employees as of that date were located in the United States. The Company's
workforce is non-union, and the Company believes that its relations with
employees are satisfactory.
LEGAL PROCEEDINGS
The Company is currently, and is from time to time, subject to claims and
suits arising in the ordinary course of its business, including those relating
to product liability, safety and health and employment matters. In certain such
actions, plaintiffs request punitive or other damages that may not be covered by
insurance. The Company accrues for these items as they become known and can be
reasonably estimated. It is the opinion of management that the various asserted
claims and litigation in which the Company is currently involved will not have a
material adverse effect on the Company's financial position or results of
operations. However, no assurance can be given as to the ultimate outcome with
respect to such claims and litigation. The resolution of such claims and
litigation could be material to the Company's operating results for any
particular period, depending upon the level of income for such period.
The Company is currently involved in two separate litigations with EG&G
Instruments, a subsidiary of EG&G, Inc., concerning intellectual property
rights. In the first lawsuit, Packard Instrument sued EG&G Instruments on March
5, 1996 in District Court I in Munich, Germany, 21st Civil Division. Packard
Instrument contends that EG&G Instruments' 1450 cross-talk free microplate
infringes a Packard Instrument German patent. The EG&G Instruments product at
issue competes with a Packard Instrument Viewplate product. In the second
lawsuit, EG&G Instruments sued the Company on September 17, 1996 in the United
States District Court for the Eastern District of Tennessee, alleging patent
infringement. The lawsuit concerns an automatic pole-zero cancellation circuit
which is utilized in three amplifiers presently manufactured and sold by the
Company, and EG&G Instruments is seeking a judgment of infringement, a permanent
injunction, damages not less than a reasonable royalty and an accounting of the
Company's profits with pre-judgment interest. EG&G Instruments has also asserted
that the Company's infringement is willful and therefore has requested that
damages be trebled and that attorneys' fees be awarded. The Company has
counterclaimed, alleging EG&G's patents are invalid. Although the Company
believes that it will prevail in this litigation and intends to defend this
claim vigorously, there can be no assurance as to the outcome of the lawsuit or
that, if determined adversely, the outcome would not have a material adverse
effect on the Company's financial condition or results of operations.
The Company and provincial authorities in Groningen, The Netherlands, are in
the process of negotiating a remediation plan involving groundwater
contamination at the Company's Duinkerkenstraat facility. The Company believes
that the causes of this contamination entirely predate the Company's acquisition
of Packard Instrument in 1986 and has sought indemnification under the purchase
agreement from United Technologies Automotive Holdings, Inc. ("UTAH"), a
subsidiary of United Technologies Corporation. UTAH has assumed an active role
in seeking to resolve this matter and, to date, has held Packard Instrument
harmless pursuant to an indemnification procedures agreement entered into by the
parties in 1989. The Groningen property is owned by Packard Instruments B.V.
("PIBV"), a subsidiary of the Company. Although the liability associated with
this matter could be material, the Company believes that any liability of PIBV
in this matter is covered by the indemnification provisions of the purchase
agreement with UTAH. However, there can be no assurance that UTAH will continue
to indemnify the Company for all liability, and that the Company will not incur
any material costs, related to contamination at the Duinkerkenstraat facility in
Groningen.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the possession,
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distribution, handling, generation, emission, release, discharge, export,
import, treatment, storage and disposal and clean up of, certain materials,
substances and wastes. To the best of the Company's knowledge, its operations
are in material compliance with all applicable environmental laws and
regulations as currently interpreted. The Company and local authorities in
Groningen, The Netherlands, are in the process of negotiating a remediation plan
involving groundwater contamination at the Duinkerkenstraat facility. See
"--Legal Proceedings."
Management cannot predict with any certainty whether future events, such as
changes in existing laws and regulations or the discovery of conditions not
currently known to the Company, may give rise to additional environmental costs.
Furthermore, actions by federal, state, local and foreign governments concerning
environmental matters could result in laws or regulations that could increase
the costs of producing the Company's products, or providing its services, or
otherwise adversely affect the demand for its products or services. During
fiscal 1996, the Company did not expense any amount relating to environmental
remediation. See "Risk Factors--Environmental Matters."
PROPERTIES
As of December 31, 1996, the Company owned the manufacturing facilities set
forth below:
<TABLE>
<CAPTION>
FACILITY FUNCTION SQUARE FEET
- --------------------------------------------- ----------------------------------------------------- -----------
<S> <C> <C>
Meriden, Connecticut......................... Headquarters, training, service, customer support, 170,000
engineering, software development and manufacturing
(Packard Instrument and Canberra Nuclear)
Downers Grove, Illinois...................... Manufacturing, service, and engineering and R&D 109,000
(Packard Instrument)
Groningen, The Netherlands................... Manufacturing (chemicals and supplies) (Packard 31,000
Instrument)
Olen, Belgium................................ Detector manufacturing (Canberra Nuclear) 10,000
</TABLE>
The Company believes that its facilities are suitable for their present and
intended purposes and are adequate for the Company's current and expected level
of operation.
REGULATION
The Company, in the ordinary course of business, handles a variety of
low-level radioactive sources for purposes of quality control and calibration of
its products. The Company maintains United States Nuclear Regulatory Commission
("NRC") and appropriate state licenses for all sources of radiation in its
possession. In addition, the Company has a radiation safety program at each
licensed site the objective of which is to assure proper handling and control of
all radioactive materials. The Company believes that it is in material
compliance with all of its NRC and state licenses.
Under NRC regulations, the NRC must be advised of any proposed transfer of
the ownership of a license granted by the NRC. Pursuant to these regulations,
the NRC was advised of and consented to the transfer of ownership effected by
the Recapitalization.
65
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information concerning the executive officers
and directors of the Company as of the Recapitalization Closing. In addition to
the board members indicated below, one additional board member is expected to be
designated.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Emery G. Olcott..................... 58 Chairman, Chief Executive Officer and President
Richard T. McKernan................. 59 Senior Vice President and Director of the Company and President,
Packard Instrument Company, Inc.
George Serrano...................... 51 Vice President, Secretary and Director of the Company and President,
Canberra Nuclear Products Group
Benjamin Campagnuolo................ 56 Vice President, International Sales, Canberra Nuclear Products Group
Michael A. Catalano, Jr. ........... 49 Vice President and General Manager, Applied Systems Division,
Canberra Nuclear Products Group
Michael J. Charland................. 48 Vice President and General Manager, Instruments Division, Canberra
Nuclear Products Group
Eugene A. Della Vecchia............. 57 Vice President, Sales, Packard Instrument Company, Inc.
Gerald W. Gaughran.................. 64 Vice President and General Manager, Downers Grove Facility, Packard
Instrument Company, Inc.
Ben D. Kaplan....................... 39 Vice President and Chief Financial Officer
Orren K. Tench, Jr. ................ 55 Vice President and General Manager, Detector Products Division,
Canberra Nuclear Products Group
Staf van Cauter..................... 48 Vice President, Marketing and Business Development, Packard
Instrument Company, Inc.
Charles M. Wherlock................. 56 Vice President, Worldwide Service and Subsidiary Operations, Packard
Instrument Company, Inc.
Michael A. Zebarth.................. 49 Vice President, Business Development, Canberra Nuclear Products Group
Robert F. End....................... 41 Director
Bradley J. Hoecker.................. 35 Director
Stephen M. McLean................... 39 Director
Alexis P. Michas.................... 39 Director
Peter P. Tong....................... 55 Director
</TABLE>
EMERY G. OLCOTT is the Chief Executive Officer and President of the Company,
positions he has held for at least five years. He also became Chairman effective
as of the Recapitalization Closing. Mr. Olcott co-founded the Company in 1965.
Mr. Olcott is a Director of Yankee Energy System, Inc., a gas distribution
company.
66
<PAGE>
RICHARD T. MCKERNAN is the President of Packard Instrument, a position he
has held for at least five years, and a Senior Vice President and Director of
the Company.
GEORGE SERRANO is the President of Canberra Nuclear, a position he has held
since January 1994. Mr. Serrano became a Director of the Company effective as of
the Recapitalization Closing. Mr. Serrano is also a Vice President and Secretary
of the Company, a position he has held for at least five years. From April 1991
to December 1993, he was the Vice President for Canberra International
Operations, during which time he managed the Company's sales and service
subsidiaries and European operations.
BENJAMIN CAMPAGNUOLO is Vice President of International Sales for Canberra
Nuclear, a position he has held for at least five years.
MICHAEL A. CATALANO, JR. is the Vice President and General Manager of the
Applied Systems Division of Canberra Nuclear, a position he has held since 1992.
MICHAEL J. CHARLAND is the Vice President and General Manager of the
Instruments Division of Canberra Nuclear, a position he has held for at least
five years.
EUGENE A. DELLAVECCHIA is the Vice President of Sales for Packard Instrument
Company, Inc., a position he has held for at least five years.
GERALD W. GAUGHRAN is Vice President and General Manager of Packard
Instrument's Downers Grove, Illinois facility, a position he has held since
1994. From 1989 to 1994, he was the Executive Vice President and General Manager
of the Nuclear Data Systems Division of Canberra Nuclear.
BEN D. KAPLAN has been a Vice President and the Chief Financial Officer of
the Company since February 1997. From August 1992 to January 1997, he was a
partner at Arthur Andersen LLP, a public accounting firm, and prior to August
1992, Mr. Kaplan was a Senior Manager at Arthur Andersen LLP.
ORREN K. TENCH, JR. is Vice President and General Manager of Canberra
Nuclear's Detector Products Division, a position he has held since 1992.
STAF VAN CAUTER is the Vice President of Marketing and Business Development
for Packard Instrument, a position he has held since 1992.
CHARLES M. WHERLOCK is Vice President of Subsidiary Operations and Worldwide
Service of Packard Instrument, a position he has held since 1994. Prior to his
present position, he was Vice President of Operations responsible for the
manufacturing facility and U.S. service from Downers Grove, Illinois, from 1992
to 1994.
MICHAEL A. ZEBARTH is the Vice President of Business Development of Canberra
Nuclear, a position he has held since September 1995. From 1993 to September
1995, he was the Vice President of International Operations, Worldwide Sales and
Marketing for Canberra Nuclear, and from 1992 to 1993, he was the Vice President
and General Manager of the Applied Systems Division of Canberra Nuclear.
ROBERT F. END is a Partner and a Director of Stonington Partners, Inc.
("Stonington"), a position that he has held since 1993, and is also a Partner
and a Director of Stonington Partners Inc. II, a Delaware corporation
("Stonington II"), a position he has held since 1994. He has also been a
Director of Merrill Lynch Capital Partners, Inc. ("MLCP"), a private investment
firm associated with Merrill Lynch & Co., since 1993 and a Consultant to MLCP
since 1994. He was a Partner of MLCP from 1993 to 1994 and Vice President of
MLCP from 1989 to 1993. Mr. End was also a Managing Director of the Investment
Banking Division of Merrill Lynch & Co. from 1993 to July 1994 and a Director of
the Investment Banking Division of Merrill Lynch & Co. from 1990 to 1993. Mr.
End is also a Director of Goss Graphic Systems, Inc. and United Artists Theatre
Circuit, Inc. and several privately held corporations.
BRADLEY J. HOECKER is a Principal of Stonington, a position that he has held
since 1993. He was a Principal of MLCP from 1993 to 1994 and an Associate of
MLCP from 1989 to 1993 and has been a Consultant to MLCP since 1994. Mr. Hoecker
was also an Associate in the Investment Banking Division of Merrill Lynch & Co.
from 1989 to 1994. Mr. Hoecker is also a Director of several privately held
corporations.
67
<PAGE>
STEPHEN M. MCLEAN is a Partner and a Director of Stonington, a position that
he has held since 1993, and is also a Partner and a Director of Stonington II, a
position he has held since 1994. He has also been a Director of MLCP since 1987
and a Consultant to MLCP since 1994. He was a Partner of MLCP from 1993 to 1994
and a Senior Vice President of MLCP from 1987 to 1993. Mr. McLean was also a
Managing Director of the Investment Banking Division of Merrill Lynch & Co. from
1987 to 1994. Mr. McLean is also a Director of CMI Industries, Inc., Dictaphone
Corporation, Pathmark Stores, Inc., Supermarkets General Holding Corp. and
several privately held corporations.
ALEXIS P. MICHAS is a Managing Partner and a Director of Stonington, a
position he has held since 1993, and is also a Managing Partner and a Director
of Stonington II, a position he has held since 1994. Mr. Michas has also been a
Director of MLCP since 1989. He was a Partner of MLCP from 1993 to 1994 and
Senior Vice President of MLCP from 1989 to 1993. Mr. Michas was also a Managing
Director of the Investment Banking Division of Merrill Lynch & Co. from 1991 to
1994 and a Director in the Investment Banking Division of Merrill Lynch & Co.
from 1990 to 1991. Mr. Michas is also a Director of Blue Bird Corporation,
Borg-Warner Automotive, Inc., Borg-Warner Security Corporation, Dictaphone
Corporation, Goss Graphic Systems, Inc. and several privately held corporations.
PETER P. TONG served as the Co-President of Marquette Electronics, Inc., a
manufacturer of medical equipment, from January 1996 to May 1996. From 1991 to
1996, he served as President, Chairman and Chief Executive Officer of E for M
Corporation, also a manufacturer of medical equipment. Since May 1996, Mr. Tong
has been self-employed as a private investor. Mr. Tong is also a director of
Dictaphone Corporation, Marquette Electronics, Inc. and several privately held
corporations.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company will initially be composed of nine
members. Pursuant to the Stockholders' Agreement, four members of the Board of
Directors are designated by Stonington, three members are Management
Stockholders and two are outside directors chosen jointly by Stonington and the
Chief Executive Officer of the Company. Messrs. End, Hoecker, McLean and Michas
have been designated by Stonington, Messrs. Olcott, McKernan and Serrano have
been designated as the Management Stockholders, and Mr. Tong and another
individual to be designated serve as the independent directors. Messrs. End,
McLean and Michas serve as members of the Compensation Committee, and Messrs.
End, Hoecker and McLean serve as members of the Audit Committee.
MANAGEMENT INVESTMENT
As a part of the Recapitalization, the Management Stockholders, who are
comprised of Messrs. Olcott, McKernan, Serrano, Tench and van Cauter, and other
key members of management, retained certain shares of Common Stock and Existing
Options such that, upon consummation of the Recapitalization, such Management
Stockholders, together with the Continuing Stockholders, beneficially owned
approximately 31% of the Common Stock on a fully diluted basis (excluding New
Options to be granted subsequent to the Recapitalization Closing). In addition,
the Management Stockholders exercised, immediately prior to the Recapitalization
Closing, Existing Options held by them that were not being retained as a part of
the Recapitalization, and the Common Stock purchased pursuant to such exercise,
along with other shares of Common Stock beneficially owned by the Management
Stockholders that were not being retained as a part of the Recapitalization,
were purchased by the Fund for a price per share equal to that being offered in
the Tender Offer. The executive officers named in the Summary Compensation Table
below, and all directors and executive officers as a group, sold shares of
Common Stock beneficially owned by them to the Fund in the following amounts:
Mr. Olcott--1,204,869 shares; Mr. McKernan-- 257,325 shares; Mr.
Serrano--179,148 shares; Mr. Tench-- 196,326 shares; Mr. van Cauter--50,641
shares; and all directors and executive officers as a group -- 2,095,778 shares.
See "The Recapitalization" and "Ownership of Capital Stock." In connection with
the Recapitalization Closing, the Management Stockholders and the Continuing
Stockholders entered into the Stockholders Agreement. See "Certain
Transactions--Stockholders Agreement" and "--Management Stock Incentive Plan."
68
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
Chief Executive Officer and to each of its four most highly compensated
executive officers (other than the Chief Executive Officer) whose total
compensation exceeded $100,000 during the last fiscal year, for the year ended
December 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- ------------------------------------------------ --------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
($) ($) (#) ($)
Emery G. Olcott, Chairman, Chief Executive
Officer and President......................... 1996 $ 358,752 $ 330,000 30,000 $ 51,448
Richard T. McKernan, President,
Packard Instrument............................ 1996 241,539 145,000 50,000 18,805
George Serrano, President, Canberra Nuclear..... 1996 158,848 94,000 25,000 10,287
Staf van Cauter, Vice President................. 1996 173,312 38,500 20,000 7,389
Orren K. Tench, Jr., Vice President and
General Manager............................... 1996 139,539 60,000 -- 9,037
</TABLE>
- ------------------------
(1) Represents split-dollar premiums in the amount of $44,059, $11,416, $2,898
and $1,648 paid by the Company on behalf of Messrs. Olcott, McKernan,
Serrano and Tench, respectively, and Company contributions made pursuant to
the Company's defined contribution plans in the amount of $7,389 for each of
Messrs. Olcott, McKernan, Serrano, van Cauter and Tench.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS GRANT DATE
OPTIONS/SARS GRANTED TO EXERCISE OR PRESENT
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE ($)(2)
- --------------------------------- ------------- --------------- ----------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Emery G. Olcott.................. 30,000 18.18% $ 16.00 September 6, 2006 $ 158,862
Richard T. McKernan.............. 50,000 30.30 16.00 September 6, 2006 264,769
George Serrano................... 25,000 15.15 16.00 September 6, 2006 132,385
Staf van Cauter.................. 20,000 12.12 16.00 September 6, 2006 105,908
Orren K. Tench, Jr............... 0 -- -- -- --
</TABLE>
- ------------------------
(1) The terms of the stock options granted in fiscal 1996 provided that such
options would become exercisable in 20% annual installments commencing with
the date of grant. Upon consummation of the Recapitalization, these options
became fully vested.
(2) The Grant Date Present Value was determined using the Black-Scholes model of
option pricing. The assumptions used in calculating the Grant Date Present
Value were as follows: expected volatility, 0%; risk-free rate of return,
7.11%; dividend yield, 2.5%; expected life, 10 years; and minimum option
value, $5.30.
69
<PAGE>
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND OPTION/SAR VALUES AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
ON VALUE ------------------------------ -------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- --------------- ----------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Emery G. Olcott................ -- -- 374,000 -- $ 2,431,900 --
Richard T. McKernan............ -- -- 218,000 -- 1,098,620 --
George Serrano................. -- -- 128,500 -- 685,025 --
Staf van Cauter................ -- -- 55,000 -- 283,622 --
Orren K. Tench, Jr............. -- -- -- -- -- --
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENTS
The Company entered into Supplemental Executive Retirement Agreements
("SERPs") with each of Messrs. Olcott, McKernan and Tench. The SERPs were not
funded, but provided that, upon a change of control, the Company would establish
grantor trusts funded with assets to fund the benefits under them. At the
Recapitalization Closing, in lieu of establishing such grantor trusts, the
Company made a lump sum payment to Messrs. Olcott, McKernan and Tench of $2.4
million in the aggregate to satisfy the Company's obligations under the SERPs,
and the SERPs were terminated.
EMPLOYMENT AGREEMENTS
At the Recapitalization Closing, the Company entered into employment
agreements with Mr. Olcott and Mr. McKernan, and expects to enter into
employment agreements with certain other executive officers. Set forth below is
a summary of the material provisions of the employment agreements with Mr.
Olcott and Mr. McKernan, which is qualified in its entirety by reference to the
provisions of such employment agreements, copies of which are filed as exhibits
to the Registration Statement of which this Prospectus forms a part, and are
incorporated herein by reference. The terms of the employment agreements with
the other executive officers have not been finally determined.
The employment agreements with Mr. Olcott and Mr. McKernan (each, an
"Executive") supersede any other agreement between either of them and the
Company concerning their employment. Mr. Olcott serves as Chairman, Chief
Executive Officer and President of the Company, and Mr. McKernan serves as
Senior Vice President and a Director of the Company, and as President of Packard
Instrument, each with an initial employment term of three years (which, in each
case, will be automatically extended for additional 13-month terms on the first
day of the calendar month following each anniversary of the date of the
employment agreements, beginning on the second anniversary of the date of the
employment agreements, unless affirmatively terminated by the Company). The
agreed-upon annual base salary for each of them is equal to their base salaries
immediately prior to the Recapitalization, with annual increases no less than
the increase in the U.S. Consumer Price Index--All Urban Consumers. Each
Executive is also eligible to receive an annual cash bonus determined in
accordance with the terms of the Company's annual bonus incentive plans then in
effect.
Upon termination of employment by the Company other than for "cause" or
"disability," or upon termination by the Executive for "good reason" (as such
terms are defined in the employment agreements), the Company will pay to the
Executive an amount in cash equal to the sum of (i) accrued annual base salary
as of the date of termination, a pro rata portion of the target annual bonus
accrued to the date of termination and any other accrued but unpaid annual
bonuses, vacation pay or deferred compensation
70
<PAGE>
not yet paid (the "Accrued Obligations"), (ii) annual base salary and annual
bonus amounts for the remainder of the employment period, and (iii) additional
contributions to the thrift savings plan, if any, to which the Executive would
have been entitled had his employment continued for a period of three years
after the date of termination. In addition, the Executive will be entitled to
participate in all welfare benefit plans for a period of three years after the
date of termination on terms at least as favorable as those that would have been
applicable had his employment not been terminated and, to the extent that any
form of compensation will not be fully vested or require additional service, the
Executive will be credited with additional service of three years after the date
of termination. Upon termination of employment due to death or disability, the
Company will pay to the Executive or to his respective beneficiaries, all
amounts that would have been due had such Executive remained in the employ of
the Company until the end of his employment period. If employment is terminated
for cause, the Company will pay to the Executive annual base salary through the
date of termination and any deferred compensation not yet paid, and if the
Executive voluntarily terminates employment other than for good reason, the
Company will pay to the Executive in a lump sum the Accrued Obligations other
than any accrued bonus amount.
The employment agreements with Mr. Olcott and Mr. McKernan also provide
that, during their employment and (unless employment terminates by reason of
death or disability) for one year after their employment ends or, if later, for
one year after their employment would have ended had it not been previously
terminated, they will not solicit any employees of the Company or compete with
the Company. In consideration for such noncompetition covenant, the Company will
pay to each Executive the sum of his annual base salary and his target annual
bonus, such amount payable in equal monthly installments during the portion of
the noncompetition period following the date of termination.
MANAGEMENT STOCK INCENTIVE PLAN
At the Recapitalization Closing, the Company adopted the Management Stock
Incentive Plan (the "Plan") pursuant to which directors, officers and key
employees of the Company and its subsidiaries (the "Eligible Participants") will
be granted nonstatutory stock options exercisable into shares of Common Stock
(the "New Options"). The Plan is not related to the Company's Stock Option Plan
of 1971, pursuant to which Existing Options have been granted, as discussed
above, and is a separate plan established by the Company at the Recapitalization
Closing. The Plan is administered by either the Compensation Committee of the
Board (the "Committee") or the Board. The Committee or the Board has the
discretion to select those to whom New Options will be granted (from among those
eligible). The Board or the Committee has the authority to interpret and
construe the Plan, and any interpretation or construction of the provisions of
the Plan or of any New Options granted under the Plan by the Board or the
Committee will be final and conclusive.
New Options to purchase up to 473,420 shares of Common Stock at an exercise
price equal to $22.25 per share (the "Incentive Options") are permitted to be
granted under the Plan. As to certain of the Incentive Options, twenty percent
of such Incentive Options will vest and become exercisable per year on each of
the first through fifth anniversaries of the date of grant, provided that the
Eligible Participant continues to be employed by the Company or a subsidiary of
the Company. As to the remaining Incentive Options, one-third of such Incentive
Options will vest and become exercisable per year on each of the first through
third anniversaries of the date of grant, provided that the Eligible Participant
continues to be employed by the Company or a subsidiary of the Company. In
addition, New Options to purchase up to 139,026 shares of Common Stock at an
exercise price equal to $27.25 per share (the "Performance Options") are
permitted to be granted under the Plan. All of the Performance Options will be
vested and fully exercisable immediately upon the date of grant. In the event of
an Extraordinary Transaction (as defined in the Plan) of the Company prior to
the fifth anniversary of the date of grant of an Incentive Option (or the third
anniversary in the case of the Incentive Options that vest over a three-year
period), all outstanding Incentive Options will become fully vested upon
consummation of the Extraordinary Transaction.
71
<PAGE>
The terms and conditions of a New Option grant will be set forth in a
related New Option agreement (the "New Option Agreement"). New Options granted
under the Plan will terminate upon the earliest to occur of (a) the tenth
anniversary of the date of the New Option Agreement; (b) the date on which the
Company acquires any shares of Common Stock, Existing Options or New Options
held by the Eligible Participant in connection with the exercise of a Put Right
(as defined in the Stockholders Agreement); (c) the one-hundred-eighty-day
anniversary of the date of death, Retirement (as defined in the Stockholders
Agreement) or Disability (as defined in the Stockholders Agreement) of the
Eligible Participant; (d) the thirty-day anniversary of the date that the
Eligible Participant ceases to be a full-time employee of the Company or its
subsidiaries for any reason other than as set forth in (c) above or in (e)
below; and (e) immediately upon an Eligible Participant's voluntary termination
of employment other than due to death, Retirement or Disability, or termination
for Cause (as defined in the Stockholders Agreement). Payment of the New Option
exercise price must be made in cash.
The number of shares of Common Stock that are available for New Options
under the Plan is 612,446 shares. If New Options granted under the Plan are
repurchased by the Company pursuant to the "Put Rights" and "Call Rights"
contained in the Stockholders Agreement, the shares covered by such New Options
will again be available for grant under the Plan. In the event of the
declaration of a stock dividend, or a reorganization, merger, consolidation,
acquisition, disposition, separation, recapitalization, stock split, split-up,
spin-off, combination or exchange of any shares of Common Stock or like event,
the number or character of the shares subject to the New Option or the exercise
price of any New Option may be appropriately adjusted as deemed appropriate by
the Committee or the Board.
The Plan terminates upon, and no New Options will be granted after, the
tenth anniversary of the Recapitalization Closing, unless the Plan has sooner
terminated due to grant and full exercise of New Options covering all the shares
of Common Stock available for grant under the Plan. The Board may at any time
amend, suspend or discontinue the Plan; provided, however, that the Board may
not alter, amend, discontinue or revoke or otherwise impair any outstanding New
Options granted under the Plan and which remain unexercised in a manner adverse
to the holders thereof, except if the written consent of such holder is
obtained.
COMPENSATION OF DIRECTORS
During 1996, the Company paid non-employee directors $1,500 for each board
or committee meeting attended. Directors who are full-time employees of the
Company receive no additional compensation for serving on the Board or its
committees. The Company does not pay any compensation to directors who are
designees of Stonington for serving on the Board or its committees. The
compensation to be paid to the two outside directors has not yet been
determined. At the Recapitalization Closing, Peter P. Tong was granted Incentive
Options for 10,000 shares of Common Stock and purchased 11,235 shares of Common
Stock from the Company at the same price per share of Common Stock paid by the
Company in the Tender Offer. During 1996, the Company had consulting
arrangements with David R. Meredith and Dr. Gerhard Kremer, who were directors
of the Company prior to the Recapitalization. Messrs. Meredith and Kremer were
paid $30,000, and $50,000, respectively, pursuant to these arrangements during
fiscal 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee during 1996 consisted of Emery G.
Olcott, the Company's President and Chief Executive Officer, David R. Meredith
and Charles Panneciere. The Company and Mr. Meredith have entered into a
consulting arrangement, as described under "--Compensation of Directors."
OWNERSHIP OF CAPITAL STOCK
The following table sets forth certain information regarding beneficial
ownership of the Common Stock of the Company immediately after the consummation
of the Recapitalization by (i) each stockholder
72
<PAGE>
known to the Company to own beneficially more than 5% of the outstanding Common
Stock of the Company and (ii) each director, each executive officer and all
directors and officers as a group. Except as set forth in the footnotes to the
table, each stockholder listed below has informed the Company that such
stockholder has sole voting and investment power with respect to the shares of
Common Stock of the Company beneficially owned by such stockholder.
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED(A)
NAME AND ADDRESS OF -------------------------
BENEFICIAL OWNER NUMBER PERCENT(B)
- ----------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Stonington Capital Appreciation 1994 Fund, L.P. (c)................................ 3,202,248 73.6%
Emery G. Olcott (d)................................................................ 292,366 6.7%
Richard T. McKernan (e)............................................................ 101,952 2.3%
George Serrano (f)................................................................. 66,000 1.5%
Staf van Cauter (g)................................................................ 22,000 *
Orren K. Tench, Jr................................................................. 90,000 2.1%
Robert F. End (h).................................................................. 0 --
Bradley J. Hoecker................................................................. 0 --
Stephen M. McLean (h).............................................................. 0 --
Alexis P. Michas (h)............................................................... 0 --
Peter P. Tong (i).................................................................. 13,235 *
Directors and executive officers as a group (18 persons) (h)(j).................... 692,049 15.3%
</TABLE>
- ------------------------
* Signifies less than 1%.
(a) The figures assume exercise by only the stockholder or group named in each
row of all options for the purchase of Common Stock held by such stockholder
or group which are exercisable within 60 days of the date of the
Recapitalization Closing. The figures do not take into account options to be
granted subsequent to the Recapitalization Closing pursuant to the
Management Stock Incentive Plan, other than options granted at the
Recapitalization Closing to Peter P. Tong.
(b) Figures are based upon 4,353,506 shares of Common Stock outstanding on the
date of the Recapitalization Closing.
(c) The Fund is the record holder of 3,089,889 shares of Common Stock. The Fund
also controls, but disclaims beneficial ownership of, an additional 112,359
shares purchased by two institutional investors pursuant to the Stockholders
Agreement. The Fund is a Delaware limited partnership whose limited partners
consist of certain institutional investors, formed to invest in corporate
acquisitions organized by Stonington. Stonington Partners, L.P. ("SPLP"), a
Delaware limited partnership, is the general partner of the Fund, with a 1%
economic interest in the Fund. Except for such economic interest, SPLP
disclaims beneficial ownership of the shares set forth above. Stonington II
is the general partner of SPLP with a 1% economic interest in SPLP. Except
for such economic interests, Stonington II disclaims beneficial ownership of
the shares set forth above.
Pursuant to a management agreement with the Fund, Stonington has full
discretionary authority with respect to the investments of the Fund,
including the authority to make and dispose of such investments. Stonington
disclaims beneficial ownership of the shares set forth above. The address
for each of the entities and individuals listed in this footnote is c/o
Stonington Partners, Inc., 767 Fifth Avenue, New York, NY 10153.
(d) Includes shares held by Mr. Olcott's spouse, mother and minor child and
family trusts of which Mr. Olcott is trustee. Includes 30,000 shares subject
to options which are exercisable within 60 days of the
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Recapitalization Closing. Mr. Olcott's address is c/o Packard BioScience
Company, 800 Research Parkway, Meriden, Connecticut 06450.
(e) Includes shares held by Mr. McKernan's spouse and the McKernan Family
Partnership. Includes 30,000 shares subject to options which are exercisable
within 60 days of the Recapitalization Closing.
(f) Includes 26,000 shares subject to options which are exercisable within 60
days of the Recapitalization Closing.
(g) Includes 17,000 shares subject to options which are exercisable within 60
days of the Recapitalization Closing.
(h) Excludes shares held by the Fund of which Mr. End, Mr. McLean and Mr. Michas
may be deemed to be beneficial owners as a result of their ownership of
stock in, and membership on the Boards of Directors of, Stonington and
Stonington II, but they disclaim such beneficial ownership.
(i) Includes 2,000 shares subject to options which are exercisable within 60
days of the Recapitalization Closing. Does not include 8,000 shares subject
to options which are not currently exercisable.
(j) Includes shares held by certain family members, trusts and similar entities.
Includes 165,000 shares subject to options which are exercisable within 60
days of the Recapitalization Closing.
CERTAIN TRANSACTIONS
STOCKHOLDERS AGREEMENT
The Company, the Fund, two institutional investors, the Management
Stockholders, certain Continuing Stockholders and other stockholders of the
Company (each, a "Stockholder") entered into a stockholders agreement (the
"Stockholders Agreement"), which contains, among other terms and conditions,
provisions relating to corporate governance, certain restrictions with respect
to the transfer of Common Stock by certain parties thereunder, certain rights
related to puts and calls and certain registration rights granted by the Company
with respect to shares of Common Stock.
Pursuant to the terms of the Stockholders Agreement, each of the
Stockholders has agreed to elect an initial slate of directors of the Company
who have been nominated by the Fund; provided that such initial slate shall
consist of three Management Stockholders, four designees of the Fund and two
independent directors mutually agreed upon by the Fund and the Chief Executive
Officer of the Company. After the initial slate of directors has been elected,
the Fund has the right to nominate at any time and from time to time all
directors of the Company (including the right to reduce or expand the Board of
Directors and to fill vacancies created thereby) and, subject to applicable law,
has the right to remove such directors at any time and from time to time and
each of the Stockholders has agreed to vote in favor of such nomination or
removal of directors. As of the Recapitalization Closing, the Company has eight
Board members.
Pursuant to the terms of the Stockholders Agreement, in the event that,
prior to an Initial Public Offering (as defined in the Stockholders Agreement),
the Fund proposes to sell securities which, in the aggregate, represent 40% or
more of the common equity on a fully diluted basis to a third party which is
not, and following such sale will not be, an affiliate of the Fund, the
Management Stockholders and the Continuing Stockholders have the right to elect
to participate in such sale with respect to a certain number of shares of Common
Stock held by them on a pro rata basis. In the event that, prior to an Initial
Public Offering, the Fund proposes to sell securities which, in the aggregate,
represent 40% or more of the common equity on a fully diluted basis to a third
party which is not, and following such sale will not be, an affiliate of the
Fund, the Fund has the right to require each Management Stockholder, Continuing
Stockholder and such other Stockholders who have agreed to be bound by the
Stockholders Agreement to participate in such sale with respect to a certain
number of shares of Common Stock held by them on a pro rata basis.
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Management Stockholders and Continuing Stockholders are not permitted,
without the prior consent of the Company, to sell or transfer shares of Common
Stock, other than to permitted transferees (I.E., family members, in the case of
Management Stockholders, and, upon the death of a Management Stockholder or a
Continuing Stockholder, to his or her estate or executors), prior to the
occurrence of the earlier of the fifth anniversary of the Recapitalization
Closing and an Initial Public Offering. Following an Initial Public Offering,
Management Stockholders and Continuing Stockholders may transfer shares subject
to applicable restrictions under the Securities Act, and other federal and state
securities laws. On or after the fifth anniversary and prior to the tenth
anniversary of the Recapitalization Closing, if an Initial Public Offering has
not occurred, Management Stockholders and Continuing Stockholders are permitted
to sell Common Stock to third parties after first giving the Company, the other
Management Stockholders and the Continuing Stockholders a right of first refusal
for the same number of shares of Common Stock at the same price.
Prior to the earlier of an Initial Public Offering or the tenth anniversary
of the Recapitalization Closing, the Company has the right to require a
Management Stockholder to sell to the Company his or her shares of Common Stock,
New Options and Existing Options upon a termination of employment for any
reason. Such right is exercisable within a period of 190 days after the date of
termination of employment, subject to certain extensions, at a price per share,
depending on the reason for termination of employment and whether such shares
were shares of Common Stock retained by such Management Stockholder in the
Recapitalization or Existing Options, equal to the Fair Value Price (as defined
in the Stockholders Agreement) or the Original Purchase Price (as defined in the
Stockholders Agreement) of a share of Common Stock and at a price per New Option
or Existing Option equal to the difference between the Fair Value Price or the
Original Purchase Price of the shares of Common Stock covered by such New Option
or Existing Option and the exercise price of the shares of Common Stock covered
by such New Option or Existing Option, multiplied by the number of shares of
Common Stock covered by the New Option or Existing Option.
Prior to the earlier of an Initial Public Offering or the tenth anniversary
of the Recapitalization Closing, each Management Stockholder has the right to
require the Company to purchase his or her shares of Common Stock, New Options
or Existing Options upon termination of employment due to death, Disability,
Retirement or certain instances of Involuntary Termination (as defined in the
Stockholders Agreement). Such a right is exercisable within a period of 180 days
after the date of termination of employment due to death, Disability, Retirement
or certain instances of Involuntary Termination, subject to certain extensions,
(a) at a price per share of Common Stock equal to the Fair Value Price thereof,
and (b) at a price per New Option or Existing Option equal to the difference
between the Fair Value Price of the shares of Common Stock covered by such New
Option or Existing Option and the exercise price of the shares of Common Stock
covered by such New Option or Existing Option, multiplied by the number of
shares of Common Stock covered by the New Option or Existing Option. If the
payment for the shares of Common Stock, New Options or Existing Options would
constitute or cause a breach or default under any agreement or instrument to
which the Company or any of its subsidiaries is bound or violate any law
applicable to the Company or any of its subsidiaries, the Company is permitted
to pay for the shares or options with a subordinated note of the Company that
will, among other things, contain subordination terms which are reasonably
satisfactory to the relevant senior lenders to the Company or any of its
subsidiaries.
In the event that a Management Stockholder's employment is terminated due to
Voluntary Resignation (as defined in the Stockholders Agreement) or Involuntary
Termination, but not if such termination is for Cause, and the Company does not
repurchase such Management Stockholder's Existing Options pursuant to the
Company's rights set forth in the preceding paragraph, the Stockholders
Agreement provides that the term of such Existing Options shall be extended for
five years from such termination or until 30 days following an Initial Public
Offering, if sooner. The Company has also agreed, pursuant to the Stockholders
Agreement, to indemnify Management Stockholders against additional tax liability
arising
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from the exercise of "Put Rights" and "Call Rights" contained in the
Stockholders Agreement resulting in "dividend" distributions under Section 302
of the Code.
Stockholders are, subject to certain limitations, entitled to register
shares of Common Stock in connection with a registration statement prepared by
the Company to register common equity beneficially owned by the Fund. The Fund
has the right to require the Company to take such steps as necessary to register
all or part of the Common Stock held by the Fund under the Securities Act
pursuant to the provisions of the Stockholders Agreement. After an Initial
Public Offering, Stockholders other than the Fund have the right on one occasion
to require the Company to take such steps as necessary to register shares of
Common Stock held by such Stockholders under the Securities Act, subject to
certain minimum amounts and other limitations. The Stockholders Agreement
contains customary terms and provisions with respect to, among other things,
registration procedures and certain rights to indemnification granted by parties
thereunder in connection with the registration of Common Stock subject to such
agreement.
OTHER RELATED PARTY TRANSACTIONS
Prior to the Recapitalization, Compagnie Oris Industrie, S.A. ("Oris") owned
30.7% of the outstanding Common Stock of the Company. Oris sold all of its
shares of Common Stock pursuant to the Tender Offer and does not own any Common
Stock of the Company. In 1996, Packard Instrument entered into an agreement with
CIS bio international ("CIS"), an affiliate of Oris, pursuant to which Packard
Instrument agreed to become the exclusive worldwide manufacturer of the KRYPTOR
system for CIS. The agreement terminates on December 31, 2002 but may be
extended upon agreement of the parties. In 1995, Packard Instrument entered into
another agreement with CIS pursuant to which Packard Instrument obtained a
10-year license to certain HTRF-TM- technology owned by CIS. Packard Instrument
agreed to pay CIS $700,000 plus specified annual royalties. CIS may cancel the
license or make it nonexclusive if certain targets are not met. CIS may also
cancel the license if the Company is controlled by a competitor of CIS. The
Company had revenues from CIS of approximately $641,000, $99,000 and $1,065,000
for 1994, 1995 and 1996, respectively, and CIS reimbursed the Company for
certain R&D expenses in the amounts of $1,577,000, $2,961,000 and $1,536,000 for
1994, 1995 and 1996, respectively. The Company also had a non-interest bearing,
trade receivable from CIS of approximately $703,000 and $1,061,000 at December
31, 1995 and 1996, respectively.
Stonington received a structuring fee of $2.5 million with respect to its
activities in structuring the Recapitalization and related transactions. In
addition, Stonington was reimbursed for certain out-of-pocket fees and expenses
incurred by Stonington in establishing investment entities and arranging for
financing for the Recapitalization.
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DESCRIPTION OF THE NEW CREDIT AGREEMENT
In connection with the Recapitalization, the Company and certain foreign
subsidiary borrowers entered into the New Credit Agreement with Bank of America
National Trust and Savings Association ("BofA"), BancAmerica Securities, Inc.
("BancAmerica Securities"), Canadian Imperial Bank of Commerce ("CIBC"), CIBC
Wood Gundy Securities Corp. ("CIBC Wood Gundy") and certain banks and financial
institutions, as lenders (collectively, the "Lenders"), providing for (i) a $40
million six-year term loan facility (the "Term Loan Facility") and (ii) a $75
million five-year revolving credit facility (the "Revolving Credit Facility"
and, together with the Term Loan Facility, the "Bank Facilities").
The execution of the Bank Facilities, and the delivery of required
documentation thereunder, occurred simultaneously with the closing of the 144A
Note Offering and the closing of the Recapitalization.
The Term Loan Facility matures six years after the date of the initial
funding under the Bank Facilities (the "Initial Funding Date"). Quarterly
amortization is required, commencing in the third calendar quarter of 1997, in
the amount of $200,000 in the first fiscal year after the Initial Funding Date,
$400,000 per year in the second through fifth fiscal years after the Initial
Funding Date, $19.2 million in the sixth fiscal year after the Initial Funding
Date and $19.0 million in the seventh fiscal year after the Initial Funding
Date.
In addition, the Company is required to make prepayments on the Term Loan
Facility and reduce the commitments under the Revolving Credit Facility under
certain circumstances, including upon certain asset sales and issuance of debt
or equity securities. Mandatory prepayments or commitment reductions will be
applied first to the prepayment of the loans under the Term Loan Facility and
second to the permanent reduction of the Revolving Credit Facility. Each such
prepayment of the Term Loan Facility will be applied to the installments thereof
ratably in accordance with the then outstanding amounts thereof without premium
or penalty and may not be reborrowed. Each holder of term loans under the Term
Loan Facility has the right to refuse any mandatory prepayment, in which case
the amount so refused would be retained by the Company. The Term Loan Facility
bears interest, at the Company's option, at the customary base rate (either
BofA's reference rate, or the federal funds rate plus 0.5%) plus 1.75% or at the
customary reserve adjusted Eurodollar rate plus 2.75%. As shown in Note 1 to the
Unaudited Pro Forma Condensed Consolidated Statements of Income, interest
expense for the year ended December 31, 1996, on a pro forma basis, on the Term
Loan Facility would have been approximately $3.4 million.
The Revolving Credit Facility matures five years after the Initial Funding
Date. Pursuant to the New Credit Agreement, the proceeds of loans under the
Revolving Credit Facility may be used to finance a portion of the
Recapitalization and the ongoing working capital needs of the Company. The
Revolving Credit Facility was undrawn as of the Recapitalization Closing. A
portion of the Revolving Credit Facility is available to finance acquisitions,
subject to certain limitations, including pro forma compliance with financial
covenants, and a portion is available in various foreign currencies to the
Company's foreign subsidiaries. The Revolving Credit Facility also has a
sublimit for letters of credit. The Revolving Credit Facility bears interest, at
the Company's option, at the customary base rate plus 1.375% or at the customary
reserve adjusted Eurodollar rate plus 2.375%. The Company is also required to
pay a commitment fee of 0.5% per year on the average daily unused portion of the
Revolving Credit Facility, payable quarterly in arrears.
The Bank Facilities are guaranteed by Packard Instrument. The Bank
Facilities are also secured by a perfected first priority security interest in
all of the Company's and its domestic subsidiaries' tangible and intangible
assets, whether owned as of the Initial Funding Date or thereafter acquired
(including, without limitation, intellectual property, real property, all of the
capital stock of Packard Instrument and 65% of the capital stock of certain of
the Company's foreign subsidiaries).
The Bank Facilities contain certain financial covenants, including, but not
limited to, a minimum fixed charge coverage test, a minimum interest coverage
test, a maximum leverage test and a maximum capital expenditures limit. In
addition, the Bank Facilities contain other customary affirmative and negative
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covenants relating to (among other things) limitations on other indebtedness,
liens, investments, guarantees, restricted payments, mergers and acquisitions,
sales of assets, leases, transactions with affiliates and conduct of business,
with customary exceptions and baskets. The Bank Facilities contain customary
events of default, including failure to make payments when due, failure to make
interest payments or payments of fees after a grace period, cross-defaults,
violations of covenants, material inaccuracies of representations and
warranties, bankruptcy, material judgments, invalidity of guaranties or any
security document and certain changes of control.
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DESCRIPTION OF THE EXCHANGE NOTES
The 144A Notes were issued and the Exchange Notes will be issued under the
Indenture dated as of March 4, 1997 (the "Indenture") between the Company and
The Bank of New York, as trustee (the "Trustee"). References to "(Section
)" mean the applicable Section of the Indenture.
Upon the effectiveness of the Registration Statement of which this
Prospectus forms a part, the Indenture will be subject to and governed by the
Trust Indenture Act. The following summaries of the material provisions of the
Indenture do not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act. A copy of the Indenture is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
is incorporated herein by reference. For definitions of certain capitalized
terms used in the following summary, see "--Certain Definitions" or "Exchange
Offer; Registration Rights."
GENERAL
The Exchange Notes will mature on March 1, 2007, will be limited to
$150,000,000 aggregate principal amount, and will be unsecured senior
subordinated obligations of the Company. The Exchange Notes will be issued
solely in exchange for an equal principal amount of outstanding 144A Notes
pursuant to the Exchange Offer. The terms of the Exchange Notes will be
identical to the 144A Notes, but since the Exchange Notes will have been
registered under the Securities Act, they will generally be freely tradeable by
holders thereof who are not affiliates of the Company. References in this
Section to the "Notes" will be references to the 144A Notes and/or Exchange
Notes, depending upon which are outstanding. Each Exchange Note will bear
interest at the rate set forth on the cover page hereof from March 4, 1997 or
from the most recent interest payment date to which interest has been paid,
payable semiannually on March 1 and September 1 in each year, commencing
September 1, 1997, to the Person in whose name the Exchange Note (or any
predecessor Note) is registered at the close of business on the February 15 or
August 15 next preceding such interest payment date. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months. (Sections 202,
301, 309 and 313)
Principal of, premium, if any, and interest on the Notes are payable, and
the Notes are exchangeable and transferable, at the office or agency of the
Company in The City of New York maintained for such purposes (which initially
will be the corporate trust office of the Trustee); PROVIDED, HOWEVER, that
payment of interest may be made at the option of the Company by check mailed to
the Person entitled thereto as shown on the security register. (Sections 301,
305 and 1002) The Exchange Notes will be issued only in fully registered form
without coupons, in denominations of $1,000 and any integral multiple thereof.
(Section 302) No service charge will be made for any registration of transfer,
exchange or redemption of Notes, except in certain circumstances for any tax or
other governmental charge that may be imposed in connection therewith. (Section
305)
Settlement for the Exchange Notes will be made in same day funds. All
payments of principal and interest will be made by the Company in same day
funds. The Exchange Notes will trade in the Same Day Funds Settlement System of
the Depositary until maturity, and secondary market trading activity for the
Exchange Notes will therefore settle in same day funds.
When issued, the Exchange Notes will be a new class of securities with no
established trading market. No assurance can be given as to the liquidity of the
trading market for the Exchange Notes. See "Risk Factors--Lack of Prior Market
for the Exchange Notes."
OPTIONAL REDEMPTION
The Notes are subject to redemption at any time on or after March 1, 2002,
at the option of the Company, in whole or in part, on not less than 30 nor more
than 60 days' prior notice in amounts of $1,000 or an integral multiple thereof
at the following redemption prices (expressed as percentages of the
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principal amount), if redeemed during the 12-month period beginning March 1 of
the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2002............................................................................. 104.688%
2003............................................................................. 103.125%
2004............................................................................. 101.563%
</TABLE>
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
In addition, at any time on or prior to March 1, 2000, the Company may, at
its option, use the net proceeds of one or more Public Equity Offerings to
redeem up to an aggregate of 30% of the aggregate principal amount of Notes
originally issued under the Indenture at a redemption price equal to 109 3/8% of
the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the redemption date; provided that at least $105 million
aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption. In order to effect the foregoing redemption, the
Company must mail a notice of redemption no later than 60 days after the related
Public Equity Offering and must consummate such redemption within 90 days of the
closing of the Public Equity Offering.
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable. (Sections 203, 1101, 1104,
1105 and 1107)
PURCHASE OF NOTES UPON A CHANGE OF CONTROL
If a Change of Control shall occur at any time, then each holder of Notes
shall have the right to require that the Company purchase such holder's Notes in
whole or in part in integral multiples of $1,000, at a purchase price (the
"Change of Control Purchase Price") in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
date of purchase (the "Change of Control Purchase Date"), pursuant to the offer
described below (the "Change of Control Offer") and in accordance with the other
procedures set forth in the Indenture.
Within 30 days of any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each holder
of Notes, by first-class mail, postage prepaid, at his address appearing in the
security register, stating, among other things, that a Change of Control has
occurred and the date of such event, the circumstances and relevant facts
regarding such Change of Control (including, but not limited to, information
with respect to pro forma historical income, cash flow and capitalization after
giving effect to such Change of Control); the purchase price and the purchase
date which shall be fixed by the Company on a business day no earlier than 30
days nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act; that
any Note not tendered will continue to accrue interest; that, unless the Company
defaults in the payment of the Change of Control Purchase Price, any Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date; and certain other
procedures that a holder of Notes must follow to accept a Change of Control
Offer or to withdraw such acceptance. (Section 1015)
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. See "-- Ranking." The
failure of the Company to make or consummate the Change of Control Offer or pay
the Change of Control Purchase Price when due will give the Trustee and the
holders of the Notes the rights described under "--Events of Default."
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The term "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing law
of the Indenture) to represent a specific quantitative test. As a consequence,
in the event the holders of the Notes elected to exercise their rights under the
Indenture and the Company elected to contest such election, there could be no
assurance as to how a court interpreting New York law would interpret the
phrase.
The existence of a holder's right to require the Company to repurchase such
holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction which constitutes a Change of Control.
In addition to the obligations of the Company under the Indenture with
respect to the Notes in the event of a "Change of Control," the Bank Credit
Facility also contains an event of default upon a "Change of Control" as defined
therein which obligates the Company to repay amounts outstanding under the Bank
Credit Facility upon an acceleration of the indebtedness issued thereunder.
Indebtedness pursuant to the Bank Credit Facility is senior in right of payment
to the Notes under the Indenture. See "Description of New Credit Agreement."
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
RANKING
The payment of the principal of, premium, if any, and interest on the Notes
is subordinated, as set forth in the Indenture, in right of payment to the prior
payment in full in cash or cash equivalents or, as acceptable to the holders of
Senior Indebtedness, in any other manner, of all Senior Indebtedness. The Notes
are senior subordinated indebtedness of the Company ranking PARI PASSU with all
other existing and future senior subordinated indebtedness of the Company and
senior to all existing and future Subordinated Indebtedness of the Company.
(Sections 1301 and 1302)
Upon the occurrence of any default in the payment of any Designated Senior
Indebtedness beyond any applicable grace period and after the receipt by the
Trustee from representatives of holders of any Designated Senior Indebtedness
(collectively, a "Senior Representative") of written notice of such default, no
payment (other than payments previously made pursuant to the provisions
described under
"--Defeasance or Covenant Defeasance of Indenture") or distribution of any
assets of the Company or any Subsidiary of any kind or character (excluding
certain permitted equity interests or subordinated securities) may be made on
account of the principal of, premium, if any, or interest on, the Notes, or on
account of the purchase, redemption, defeasance or other acquisition of or in
respect of, the Notes unless and until such default shall have been cured or
waived or shall have ceased to exist or such Designated Senior Indebtedness
shall have been discharged or paid in full in cash or cash equivalents or, as
acceptable to the holders of Senior Indebtedness, in any other manner, after
which the Company shall resume making any and all required payments in respect
of the Notes, including any missed payments.
Upon the occurrence and during the continuance of any non-payment default
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may then be accelerated immediately (a "Non-payment Default")
and after the receipt by the Trustee and the Company from a Senior
Representative of written notice of such Non-payment Default, no payment (other
than payments previously made pursuant to the provisions described under
"--Defeasance or Covenant Defeasance of Indenture") or distribution of any
assets of the Company of any kind or character (excluding certain permitted
equity interests or subordinated securities) may be made by the Company or any
Subsidiary on account of the principal of, premium, if any, or interest on the
Notes or on account of the purchase, redemption, defeasance or other acquisition
of or in respect of, the Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Trustee and the Company from a Senior Representative
and shall end on the earliest of (i) the 179th
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day after such commencement, (ii) the date on which such Non-payment Default
(and all Non-payment Defaults as to which notice is also given after such
Payment Blockage Period is initiated) is cured, waived or ceases to exist or on
which such Designated Senior Indebtedness is discharged or paid in full in cash
or cash equivalents or, as acceptable to the holders of Senior Indebtedness, in
any other manner or (iii) the date on which such Payment Blockage Period (and
all Non-payment Defaults as to which notice is given after such Payment Blockage
Period is initiated) shall have been terminated by written notice to the Company
or the Trustee from the Senior Representative initiating such Payment Blockage
Period, after which, in the case of each of clauses (i), (ii) and (iii), the
Company will promptly resume making any and all required payments in respect of
the Notes, including any missed payments. In no event will a Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Company or the
Trustee of the notice initiating such Payment Blockage Period (such 179-day
period referred to as the "Initial Period"). Any number of notices of
Non-payment Defaults may be given during the Initial Period; provided that
during any period of 365 consecutive days only one Payment Blockage Period,
during which payment of principal of, premium, if any, or interest on, the Notes
may not be made, may commence and the duration of such period may not exceed 179
days. No Non-payment Default with respect to any Designated Senior Indebtedness
that existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. (Section 1303)
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "--Events of Default."
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Company or
its assets, or any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary, or whether or not involving insolvency or
bankruptcy, or any assignment for the benefit of creditors or any other
marshalling of assets or liabilities of the Company, all Senior Indebtedness
must be paid in full before any payment or distribution (excluding distributions
of certain permitted equity interest or subordinated securities) is made on
account of the principal of, premium, if any, or interest on the Notes or on
account of the purchase, redemption, defeasance or other acquisition of, or in
respect of, the Notes (other than payments previously made pursuant to the
provisions described under "--Defeasance or Covenant Defeasance of Indenture").
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be otherwise
payable to the holders of the Notes will be paid to the holders of the Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full, and
the Company may be unable to meet its obligations fully with respect to the
Notes.
"Senior Indebtedness" under the Indenture means the principal of, premium,
if any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) and all other monetary
obligations on any Indebtedness of the Company (other than as otherwise provided
in this definition), whether outstanding on the date of the Indenture or
thereafter created, incurred or assumed, and whether at any time owing, actually
or contingently, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceedings under any state, federal or foreign bankruptcy laws whether or
not allowable as a claim in such proceeding), and all other monetary obligations
of every kind and nature of the Company from time to time owed to the lenders
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under the Bank Credit Facility; provided, however, that any Indebtedness under
any refinancing, refunding or replacement of the Bank Credit Facility shall not
constitute Senior Indebtedness to the extent the Indebtedness thereunder is by
its express terms subordinate to any other Indebtedness of the Company.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Notes, (ii) Indebtedness that is by its terms
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
any liability for foreign, federal, state, local or other tax owed or owing by
the Company to the extent such liability constitutes Indebtedness, (vi)
Indebtedness of the Company to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's subsidiaries and (vii) that portion of any
Indebtedness which at the time of issuance is issued in violation of the
Indenture.
"Designated Senior Indebtedness" under the Indenture means (i) all Senior
Indebtedness under, or in respect of, the Bank Credit Facility, and (ii) any
other Senior Indebtedness which at the time of determination, has an aggregate
principal amount outstanding of at least $15 million and is specifically
designated in the instrument evidencing such Senior Indebtedness or the
agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Company.
As of December 31, 1996, on a pro forma basis after giving effect to the
Recapitalization and the sale of the Notes, the Company would have had
outstanding approximately $40.0 million aggregate principal amount of Senior
Indebtedness, all of which would have been secured, and the Company's
Subsidiaries would have had approximately $1.7 million of Indebtedness
(excluding the guarantees by the Company's Subsidiaries of Senior Indebtedness).
The Company also would have had no PARI PASSU or Subordinated Indebtedness
outstanding.
The Indenture limits, but does not prohibit, the incurrence by the Company
and its Subsidiaries of additional Indebtedness, and the Indenture prohibits the
incurrence by the Company of Indebtedness that is subordinated in right of
payment to any Senior Indebtedness of the Company and senior in right of payment
to the Notes.
The Notes are effectively subordinated to all Indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Company's Subsidiaries. Any right of the Company to receive assets of any
such Subsidiary upon the liquidation or reorganization of any such Subsidiary
(and the consequent right of the holders of the Notes to participate in those
assets) is effectively subordinated to the claims of that Subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such Subsidiary, in which case the claims of the Company would still
be subordinate to any security in the assets of such Subsidiary and any
Indebtedness of such Subsidiary senior to that held by the Company.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON INDEBTEDNESS. The Company will not, and will not permit any
of its Subsidiaries to, create, issue, incur, assume, guarantee or otherwise in
any manner become directly or indirectly liable for the payment of or otherwise
incur (collectively, "incur"), any Indebtedness (including any Acquired
Indebtedness but excluding Permitted Indebtedness), unless such Indebtedness is
incurred by the Company or constitutes Acquired Indebtedness of a Subsidiary
and, in each case, the Company's Consolidated Fixed Charge Coverage Ratio for
the four full fiscal quarters for which financial statements are available
immediately preceding the incurrence of such Indebtedness taken as one period is
at least equal to or greater than 2.0. (Section 1008)
LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will not, and will not
permit any Subsidiary to, directly or indirectly:
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(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of the Company's Capital Stock (other than dividends or
distributions payable solely in shares of its Qualified Capital Stock or in
options, warrants or other rights to acquire shares of such Qualified
Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, the Company's Capital Stock or any Capital Stock of any
Affiliate of the Company (other than Capital Stock of any Wholly Owned
Subsidiary of the Company) or options, warrants or other rights to acquire
such Capital Stock;
(iii) prior to any scheduled principal payment, sinking fund payment or
maturity of any Subordinated Indebtedness, make any principal payment on, or
repurchase, redeem, defease, retire or otherwise acquire for value, such
Subordinated Indebtedness (other than any such Indebtedness owed to the
Company or a Wholly Owned Subsidiary);
(iv) declare or pay any dividend or distribution on any Capital Stock of
any Subsidiary to any Person (other than (a) to the Company or any of its
Wholly Owned Subsidiaries or (b) to all holders of Capital Stock of such
Subsidiary on a PRO RATA basis); or
(v) make any Investment in any Person (other than any Permitted
Investments)
(any of the foregoing actions described in clauses (i) through (v), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if other than
cash, as determined by the board of directors of the Company, whose
determination shall be conclusive and evidenced by a board resolution), unless
(1) immediately before and immediately after giving effect to such proposed
Restricted Payment on a PRO FORMA basis, no Default or Event of Default shall
have occurred and be continuing and such Restricted Payment shall not be an
event which is, or after notice or lapse of time or both, would be, an "event of
default" under the terms of any Indebtedness of the Company or its Subsidiaries;
(2) immediately before and immediately after giving effect to such Restricted
Payment on a PRO FORMA basis, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the provisions described
under "--LIMITATION ON INDEBTEDNESS;" and (3) after giving effect to the
proposed Restricted Payment, the aggregate amount of all such Restricted
Payments declared or made after the date of the Indenture plus the Permitted
Payments made under clause (b)(vii), do not exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of the Company accrued on a
cumulative basis during the period beginning on the first day of the
fiscal quarter beginning after the date of the Indenture and ending on
the last day of the Company's last fiscal quarter ending prior to the
date of the Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after the date of the Indenture
by the Company either (x) as capital contributions in the form of common
equity to the Company or (y) from the issuance or sale (other than to any
of its Subsidiaries) of Qualified Capital Stock of the Company or any
options, warrants or rights to purchase such Qualified Capital Stock of
the Company (except, in each case, to the extent such proceeds are used
to purchase, redeem or otherwise retire Capital Stock or Subordinated
Indebtedness as set forth below in clause (ii) or (iii) of paragraph (b)
below), in each case, other than Net Cash Proceeds received from the
issuance or sale of Qualified Capital Stock or options, warrants or
rights to purchase Qualified Capital Stock in the Recapitalization;
(C) the aggregate Net Cash Proceeds received after the date of the Indenture
by the Company (other than from any of its Subsidiaries) upon the
exercise of any options, warrants or rights to purchase Qualified Capital
Stock of the Company;
(D) the aggregate Net Cash Proceeds received after the date of the Indenture
by the Company from the conversion or exchange, if any, of debt
securities or Redeemable Capital Stock of the Company or its Subsidiaries
into or for Qualified Capital Stock of the Company plus, to the extent
such debt securities or Redeemable Capital Stock were issued after the
date of the Indenture, the aggregate of Net Cash Proceeds from their
original issuance; and
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(E) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after the date of the Indenture,
an amount equal to the lesser of the return of capital with respect to
such Investment and the initial amount of such Investment, in either
case, less the cost of the disposition of such Investment.
(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(vii) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following actions (each of clauses
(i) through (vii) being referred to as a "Permitted Payment"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment was
permitted by the provisions of paragraph (a) of this Section and such
payment shall have been deemed to have been paid on such date of declaration
and shall not have been deemed a "Permitted Payment" for purposes of the
calculation required by paragraph (a) of this Section;
(ii) the repurchase, redemption, or other acquisition or retirement for
value of any shares of any class of Capital Stock of the Company in exchange
for (including any such exchange pursuant to the exercise of a conversion
right or privilege in connection with which cash is paid in lieu of the
issuance of fractional shares or scrip), or out of the Net Cash Proceeds of
a substantially concurrent issue and sale for cash (other than to a
Subsidiary) of, other shares of Qualified Capital Stock of the Company;
PROVIDED that the Net Cash Proceeds from the issuance of such shares of
Qualified Capital Stock are, to the extent so used, excluded from clause
(3)(B) of paragraph (a) of this Section;
(iii) the repurchase, redemption, defeasance, retirement or acquisition
for value or payment of principal of any Subordinated Indebtedness or
Redeemable Capital Stock in exchange for, or in an amount not in excess of
the Net Cash Proceeds of, a substantially concurrent issuance and sale for
cash (other than to any Subsidiary) of any Qualified Capital Stock of the
Company, PROVIDED that the Net Cash Proceeds from the issuance of such
shares of Qualified Capital Stock are, to the extent so used, excluded from
clause (3)(B) of paragraph (a) of this Section;
(iv) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Redeemable Capital Stock) (a "refinancing") through
the substantially concurrent issuance of new Subordinated Indebtedness of
the Company, PROVIDED that any such new Subordinated Indebtedness (1) shall
be in a principal amount that does not exceed the principal amount so
refinanced (or, if such Subordinated Indebtedness provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, then such lesser amount as of the date
of determination), plus the lesser of (I) the stated amount of any premium
or other payment required to be paid in connection with such a refinancing
pursuant to the terms of the Indebtedness being refinanced or (II) the
amount of premium or other payment actually paid at such time to refinance
the Indebtedness, plus, in either case, the amount of expenses of the
Company incurred in connection with such refinancing; (2) has an Average
Life to Stated Maturity greater than the remaining Average Life to Stated
Maturity of the Notes; (3) has a Stated Maturity for its final scheduled
principal payment later than the Stated Maturity for the final scheduled
principal payment of the Notes; and (4) is expressly subordinated in right
of payment to the Notes at least to the same extent as the Subordinated
Indebtedness to be refinanced;
(v) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of any Redeemable Capital Stock through the
substantially concurrent issuance of new Redeemable Capital Stock of the
Company, PROVIDED that any such new Redeemable Capital Stock (1) shall have
an aggregate liquidation preference that does not exceed the aggregate
liquidation preference of the amount so refinanced; (2) has an Average Life
to Stated Maturity greater than the remaining Average Life to Stated
Maturity of the Notes; and (3) has a Stated Maturity later than the Stated
Maturity for the final scheduled principal payment of the Notes;
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(vi) the repurchase, redemption, or other acquisition or retirement for
value of any shares of Capital Stock of the Company (i) upon the closing of
the Recapitalization or (ii) which were owned immediately prior to the
closing of the Recapitalization by Non-Management Stockholders (as defined
in the Recapitalization Agreement) and which the Company made an offer to
repurchase pursuant to Section 2.2 of the Recapitalization Agreement but
which were not tendered to the Company, PROVIDED that the purchase price per
share for such shares of Capital Stock of the Company shall not exceed
$22.25 per share and any such shares of Capital Stock are purchased within
90 days of the closing of the Recapitalization; and
(vii) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees,
former employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved
by the board of directors under which such individuals purchase or sell or
are granted the option to purchase or sell, shares of such common stock;
provided, however, that the aggregate amount of such repurchases in any
calendar year shall not exceed $2 million in cash or subordinated notes of
the Company issued pursuant to Section 3.1 of the Stockholders' Agreement
(plus any such amount in cash or such subordinated notes not utilized in
prior years) PROVIDED that the aggregate amount of all such repurchases in
any calendar year shall not exceed $5 million in cash or such subordinated
notes of the Company, PROVIDED, FURTHER, that such subordinated notes (the
"Management Notes") (1) have an Average Life to Stated Maturity greater than
the remaining Average Life to Stated Maturity of the Notes, (2) have a
Stated Maturity for its final scheduled principal payment later than the
Stated Maturity for the final scheduled principal payment of the Notes, and
(3) are expressly subordinated in right of payment to the Notes. (Section
1009)
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with or
for the benefit of any Affiliate of the Company (other than the Company or a
Subsidiary) unless such transaction or series of related transactions is entered
into in good faith and (a) such transaction or series of related transactions is
on terms that are no less favorable to the Company or such Subsidiary, as the
case may be, than those that would be available in a comparable transaction in
arm's-length dealings with an unrelated third party, (b) with respect to any
transaction or series of related transactions involving aggregate value in
excess of $2.5 million, the Company delivers an officers' certificate to the
Trustee certifying that such transaction or series of related transactions
complies with clause (a) above, and (c) with respect to any transaction or
series of related transactions involving aggregate value in excess of $5
million, either (A) such transaction or series of related transactions has been
approved by a majority of the Disinterested Directors of the Company, or in the
event there is only one Disinterested Director, by such Disinterested Director,
or (B) the Company delivers to the Trustee a written opinion of an investment
banking firm of national standing or other recognized independent expert with
experience appraising the terms and conditions of the type of transaction or
series of related transactions for which an opinion is required stating that the
transactions or series of related transactions are fair to the Company or such
Subsidiary from a financial point of view; PROVIDED, HOWEVER, that this
provision shall not apply to (i) any transaction with an employee or director of
the Company or any of its Subsidiaries entered into in the ordinary course of
business (including compensation and employee benefit arrangements with any
officer, director or employee of the Company or any Subsidiary, including under
any stock option or stock incentive plans), (ii) the payment of a one-time fee
to Stonington in connection with the Recapitalization in an aggregate amount not
to exceed $2.5 million plus reasonable expenses and (iii) Restricted Payments
made in accordance with "--LIMITATION ON RESTRICTED PAYMENTS" or Permitted
Payments. (Section 1010)
LIMITATION ON LIENS. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create or incur any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated
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Indebtedness (including any assumption, guarantee or other liability with
respect thereto by any Subsidiary) upon any property or assets (including any
intercompany notes) of the Company or any Subsidiary owned on the date of the
Indenture or acquired after the date of the Indenture, or any income or profits
therefrom, unless the Notes are directly secured equally and ratably with (or,
in the case of Subordinated Indebtedness, prior or senior thereto, with the same
relative priority as the Notes shall have with respect to such Subordinated
Indebtedness) the obligation or liability secured by such Lien except for Liens
(A) securing any Indebtedness which became Indebtedness pursuant to a
transaction permitted under "--Consolidation, Merger, Sale of Assets" or
securing Acquired Indebtedness which, in each case, were created prior to (and
not created in connection with, or in contemplation of) the incurrence of such
Pari Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Subsidiary) and which
Indebtedness is permitted under the provisions of "--LIMITATION ON INDEBTEDNESS"
or (B) securing any Indebtedness incurred in connection with any refinancing,
renewal, substitutions or replacements of any such Indebtedness described in
clause (A), so long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing by an amount greater
than the lesser of (i) the stated amount of any premium or other payment
required to be paid in connection with such a refinancing pursuant to the terms
of the Indebtedness being refinanced or (ii) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus, in
either case, the amount of expenses of the Company incurred in connection with
such refinancing, PROVIDED, HOWEVER, that in the case of clauses (A) and (B),
any such Lien only extends to the assets that were subject to such Lien securing
such Indebtedness prior to the related acquisition by the Company or its
Subsidiaries. (Section 1012)
LIMITATION ON SALE OF ASSETS. (a) The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, consummate an Asset Sale
unless (i) at least 75% of the consideration from such Asset Sale is received in
cash or Cash Equivalents and (ii) the Company or such Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets subject to such Asset Sale (as determined by the
board of directors of the Company and evidenced in a board resolution). For the
purposes of this covenant, "Cash Equivalents" means (x) the assumption of
Indebtedness of the Company or any Subsidiary and the release of the Company or
such Subsidiary from all liability on such Indebtedness in connection with such
Asset Sale, (y) Temporary Cash Investments, and (z) securities received by the
Company or any Subsidiary from the transferee that are promptly converted by the
Company or such Subsidiary into cash.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Senior Indebtedness then
outstanding as required by the terms thereof, or the Company determines not to
apply such Net Cash Proceeds to the permanent prepayment of such Senior
Indebtedness, or if no such Senior Indebtedness is then outstanding, then the
Company or a Subsidiary may, within 360 days of the Asset Sale invest the Net
Cash Proceeds in properties and other assets that (as determined by the board of
directors of the Company) replace the properties and assets that were the
subject of the Asset Sale or in properties and assets that will be used in the
businesses of the Company or its Subsidiaries existing on the date of the
Indenture or in businesses reasonably related thereto. The amount of such Net
Cash Proceeds not applied to repay Senior Indebtedness or used or invested
within 360 days of the Asset Sale as set forth in this paragraph constitutes
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10 million, the
Company will apply the Excess Proceeds to the repayment of the Notes and any
other Pari Passu Indebtedness outstanding with provisions requiring the Company
to make an offer to purchase or to purchase or redeem such Indebtedness with the
proceeds from any Asset Sale as follows: (A) the Company will make an offer to
purchase (an "Offer") from all holders of the Notes in accordance with the
procedures set forth in the Indenture in the maximum principal amount (expressed
as a multiple of $1,000) of Notes that may be purchased out of an amount (the
"Note Amount") equal to the product of such Excess Proceeds multiplied by a
fraction, the numerator of which is the outstanding principal amount of the
Notes, and the denominator of which is the sum of the outstanding principal
amount of the Notes and such Pari Passu Indebtedness (subject to
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proration in the event such amount is less than the aggregate Offered Price (as
defined herein) of all Notes tendered) and (B) to the extent required by such
Pari Passu Indebtedness to permanently reduce the principal amount of such Pari
Passu Indebtedness, the Company will make an offer to purchase or otherwise
repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an amount
(the "Pari Passu Debt Amount") equal to the excess of the Excess Proceeds over
the Note Amount; PROVIDED that in no event will the Company be required to make
a Pari Passu Offer in a Pari Passu Debt Amount exceeding the principal amount of
such Pari Passu Indebtedness plus the amount of any premium required to be paid
to repurchase such Pari Passu Indebtedness. The offer price for the Notes will
be payable in cash in an amount equal to 100% of the principal amount of the
Notes plus accrued and unpaid interest, if any, to the date (the "Offer Date")
such Offer is consummated (the "Offered Price"), in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate Offered
Price of the Notes tendered pursuant to the Offer is less than the Note Amount
relating thereto or the aggregate amount of Pari Passu Indebtedness that is
purchased in a Pari Passu Offer is less than the Pari Passu Debt Amount, the
Company will use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Notes and Pari Passu Indebtedness
surrendered by holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon the
completion of the purchase of all the Notes tendered pursuant to an Offer and
the completion of a Pari Passu Offer, the amount of Excess Proceeds, if any,
shall be reset at zero.
(d) The Indenture provides that, if the Company becomes obligated to make an
Offer pursuant to clause (c) above, the Notes and the Pari Passu Indebtedness
shall be purchased by the Company, at the option of the holders thereof, in
whole or in part in integral multiples of $1,000, on a date that is not earlier
than 30 days and not later than 60 days from the date the notice of the Offer is
given to holders, or such later date as may be necessary for the Company to
comply with the requirements under the Exchange Act.
(e) The Indenture provides that the Company will comply with the applicable
tender offer rules, including Rule 14e-1 under the Exchange Act, and any other
applicable securities laws or regulations in connection with an Offer. (Section
1013)
LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS. (a) The Company will
not permit any Subsidiary, directly or indirectly, to guarantee, assume or in
any other manner become liable with respect to any Pari Passu Indebtedness or
Subordinated Indebtedness of the Company unless such Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture providing for a
Guarantee of the Notes on the same terms as the guarantee of such Indebtedness
except that (A) such guarantee need not be secured unless required pursuant to
"--LIMITATION ON LIENS" and (B) if such Indebtedness is by its terms expressly
subordinated to the Notes, any such assumption, guarantee or other liability of
such Subsidiary with respect to such Indebtedness shall be subordinated to such
Subsidiary's Guarantee of the Notes at least to the same extent as such
Indebtedness is subordinated to the Notes.
(b) Notwithstanding the foregoing, any Guarantee by a Subsidiary of the
Notes shall provide by its terms that it (and all Liens securing the same) shall
be automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's Capital Stock in, or all or substantially all the assets of, such
Subsidiary, which transaction is in compliance with the terms of the Indenture
and such Subsidiary is released from its guarantees of other Indebtedness of the
Company or any Subsidiaries. (Section 1014)
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Company will not, and
will not permit any Guarantor to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise in any manner become directly or indirectly
liable for or with respect to or otherwise permit to exist any Indebtedness that
is subordinate in right of payment to any Indebtedness of the Company or such
Guarantor, as the case may be, unless such Indebtedness is also PARI PASSU with
the Notes or the Guarantee of such Guarantor or subordinate in right of payment
to the Notes or such Guarantee at least to the same extent as the Notes or such
Guarantee are subordinate in right of payment to Senior Indebtedness or Senior
Indebtedness of such Guarantor, as the case may be. (Section 1011)
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LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will not permit
(a) any Subsidiary of the Company to issue any Preferred Stock, except for (i)
Preferred Stock issued to the Company or a Wholly Owned Subsidiary, and (ii)
Preferred Stock issued by a Person prior to the time (A) such Person becomes a
Subsidiary, (B) such Person merges with or into a Subsidiary or (C) a Subsidiary
merges with or into such Person; PROVIDED that such Preferred Stock was not
issued or incurred by such Person in anticipation of the type of transaction
contemplated by subclause (A), (B) or (C) or (b) any Person (other than the
Company or a Wholly Owned Subsidiary) to acquire Preferred Stock of any
Subsidiary from the Company or any Subsidiary, except, in the case of clause (a)
or (b), upon the acquisition of all the outstanding Capital Stock of such
Subsidiary in accordance with the terms of the Indenture. (Section 1016)
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create any consensual encumbrance or restriction on
the ability of any Subsidiary to (i) pay dividends or make any other
distribution on its Capital Stock, (ii) pay any Indebtedness owed to the Company
or any other Subsidiary, (iii) make any Investment in the Company or any other
Subsidiary or (iv) transfer any of its properties or assets to the Company or
any other Subsidiary, except for: (a) any encumbrance or restriction pursuant to
any agreement in effect on the date of the Indenture and listed on a schedule to
the Indenture; (b) any encumbrance or restriction, with respect to a Subsidiary
that is not a Subsidiary of the Company on the date of the Indenture, in
existence at the time such Person becomes a Subsidiary of the Company and not
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary; (c) customary non-assignment or subletting provisions of any lease,
license or other contract; (d) any restriction entered into in the ordinary
course of business contained in any lease of any Subsidiary or any security
agreement or mortgage securing Indebtedness of any Subsidiary to the extent such
restriction restricts the transfer of property subject to such security
agreement, mortgage or lease; (e) any encumbrance or restriction existing under
any agreement that extends, renews, refinances or replaces the agreements
containing the encumbrances or restrictions in the foregoing clauses (a), (b),
(c) or (d), or in this clause (e), PROVIDED that the terms and conditions of any
such encumbrances or restrictions are no more restrictive in any material
respect than those under or pursuant to the agreement evidencing the
Indebtedness so extended, renewed, refinanced or replaced; or (f) restrictions
arising under any applicable law, rule, regulation or order. (Section 1017)
LIMITATIONS ON UNRESTRICTED SUBSIDIARIES. The Company will not make, and
will not permit its Subsidiaries to make, any Investment in Unrestricted
Subsidiaries if, at the time thereof, the aggregate amount of such Investments
would exceed the amount of Restricted Payments then permitted to be made
pursuant to the "--LIMITATION ON RESTRICTED PAYMENTS" covenant. Any Investments
in Unrestricted Subsidiaries permitted to be made pursuant to this covenant (i)
will be treated as a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or property. (Section
1018)
PROVISION OF FINANCIAL STATEMENTS. After the earlier to occur of the
consummation of the Exchange Offer and the 150th calendar day following the date
of original issue of the 144A Notes, whether or not the Company is subject to
Section 13(a) or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to Sections 13(a) or 15(d) of the Exchange
Act if the Company were so subject, such documents to be filed with the
Commission on or prior to the date (a "Required Filing Date") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date occurring after the issuance of the 144A Notes (i) transmit
by mail to all holders, as their names and addresses appear in the security
register, without cost to such holders and (ii) file with the Trustee copies of
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Sections 13(a)
or 15(d) of the Exchange Act if the Company were subject to either of such
Sections and (y) if filing such documents by the Company with the Commission is
not permitted under the Exchange Act,
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promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective holder at the
Company's cost. If any Guarantor's financial statements would be required to be
included in the financial statements filed or delivered pursuant to the
Indenture if the Company were subject to Section 13(a) or 15(d) of the Exchange
Act, the Company shall include such Guarantor's financial statements in any
filing or delivery pursuant to the Indenture. The Indenture also provides that,
so long as any of the 144A Notes remain outstanding, the Company will make
available to any prospective purchaser of 144A Notes or beneficial owner of 144A
Notes in connection with any sale thereof the information required by Rule
144A(d)(4) under the Securities Act, until such time as the Company has either
exchanged the 144A Notes for securities identical in all material respects which
have been registered under the Securities Act or until such time as the holders
thereof have disposed of such 144A Notes pursuant to an effective registration
statement under the Securities Act. (Section 1019)
ADDITIONAL COVENANTS. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in The City of New York; (iii) arrangements
regarding the handling of money held in trust; (iv) maintenance of corporate
existence; (v) payment of taxes and other claims; (vi) maintenance of
properties; and (vii) maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company will not, in a single transaction or through a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person or group of affiliated Persons, or
permit any of its Subsidiaries to enter into any such transaction or series of
related transactions if such transaction or series of related transactions, in
the aggregate, would result in a sale, assignment, conveyance, transfer, lease
or disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a Consolidated basis to any other Person or
group of affiliated Persons, unless at the time and after giving effect thereto
(i) either (a) the Company will be the continuing corporation or (b) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, conveyance,
transfer, lease or disposition all or substantially all of the properties and
assets of the Company and its Subsidiaries on a Consolidated basis (the
"Surviving Entity") will be a corporation duly organized and validly existing
under the laws of the United States of America, any state thereof or the
District of Columbia and such Person expressly assumes, by a supplemental
indenture, in a form satisfactory to the Trustee, all the obligations of the
Company under the Notes and the Indenture, as the case may be, and the Notes and
the Indenture will remain in full force and effect as so supplemented; (ii)
immediately before and immediately after giving effect to such transaction on a
PRO FORMA basis (and treating any Indebtedness not previously an obligation of
the Company or any of its Subsidiaries which becomes the obligation of the
Company or any of its Subsidiaries as a result of such transaction as having
been incurred at the time of such transaction), no Default or Event of Default
will have occurred and be continuing; (iii) immediately before and immediately
after giving effect to such transaction on a PRO FORMA basis (on the assumption
that the transaction occurred on the first day of the four-quarter period for
which financial statements are available ending immediately prior to the
consummation of such transaction with the appropriate adjustments with respect
to the transaction being included in such PRO FORMA calculation), the Company
(or the Surviving Entity if the Company is not the continuing obligor under the
Indenture) could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions of "--Certain Covenants--LIMITATION ON
INDEBTEDNESS;" (iv) at the time of the transaction each Guarantor, if any,
unless it is the other party to the transactions described above, will have by
supplemental indenture confirmed that its Guarantees shall apply to such
Person's obligations under the Indenture and the Notes; (v) at the time of the
transaction if any of the property or assets of the Company or any of its
Subsidiaries would thereupon become subject to any Lien, the provisions of
"--Certain Covenants--LIMITATION ON LIENS" are complied with; and (vi) at the
time of the transaction the Company or the Surviving Entity will have delivered,
or caused to be delivered, to the Trustee, in form and substance
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reasonably satisfactory to the Trustee, an officers' certificate and an opinion
of counsel, each to the effect that such consolidation, merger, transfer, sale,
assignment, conveyance, transfer, lease or other transaction and the
supplemental indenture in respect thereof comply with the Indenture and that all
conditions precedent therein provided for relating to such transaction have been
complied with. (Section 801)
The Indenture also provides that if any Guarantor, in a single transaction
or through a series of related transactions, consolidates with or merges with or
into any other Person (other than the Company or any Guarantor) or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its properties and assets on a Consolidated basis to any
Person or group of affiliated Persons (other than the Company or any Guarantor)
such Guarantor or successor entity will reaffirm the Guarantee of such entity
unless such Guarantee is released pursuant to paragraph (b) of "--Certain
Covenants--LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS."
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the two immediately preceding paragraphs
in which the Company or any Guarantor, as the case may be, is not the continuing
corporation, the successor Person formed or remaining shall succeed to, and be
substituted for, and may exercise every right and power of, the Company, and the
Company or any Guarantor, as the case may be, would be discharged from all
obligations and covenants under the Indenture and the Notes or its Guarantee, as
the case may be. (Section 802)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any Note
when it becomes due and payable, and such default shall continue for a
period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any Note at its Maturity (upon acceleration, optional
or mandatory redemption, required repurchase or otherwise);
(iii) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture or
any Guarantee (other than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in clause (i), (ii)
or (iv)) and such default or breach shall continue for a period of 30 days
after written notice has been given, by certified mail, (x) to the Company
by the Trustee or (y) to the Company and the Trustee by the holders of at
least 25% in aggregate principal amount of the outstanding Notes;
(iv) (a) there shall be a default in the performance or breach of the
provisions described in "-- Consolidation, Merger, Sale of Assets;" (b) the
Company shall have failed to make or consummate an Offer required in
accordance with the provisions of "--Certain Covenants--LIMITATION ON SALE
OF ASSETS;" or (c) the Company shall have failed to make or consummate a
Change of Control Offer required in accordance with the provisions of
"--Purchase of Notes Upon a Change of Control;"
(v) one or more defaults shall have occurred under any of the
agreements, indentures or instruments under which the Company, any Guarantor
or any Subsidiary then has outstanding Indebtedness in excess of $7.5
million, individually or in the aggregate, and either (a) such default
results from the failure to pay such Indebtedness at its stated final
maturity or (b) such default or defaults have resulted in the acceleration
of the maturity of such Indebtedness;
(vi) any Guarantee shall for any reason cease to be, or shall for any
reason be asserted in writing by any Guarantor or the Company not to be, in
full force and effect and enforceable in accordance with its terms except to
the extent contemplated by the Indenture and any such Guarantee;
(vii) one or more judgments, orders or decrees for the payment of money
in excess of $7.5 million, either individually or in the aggregate, shall be
rendered against the Company, any Guarantor or any Subsidiary or any of
their respective properties and shall not be discharged and either (a) any
creditor shall have commenced an enforcement proceeding upon such judgment,
order or decree or
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(b) there shall have been a period of 60 consecutive days during which a
stay of enforcement of such judgment, order or decree, by reason of an
appeal or otherwise, shall not be in effect, PROVIDED that the amount of
such money judgment, order or decree shall be calculated net of any
insurance coverage that the Company has determined in good faith is
available in whole or in part with respect to such money judgment, order or
decree;
(viii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
any Guarantor or any Significant Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or (b) a decree or order
adjudging the Company, any Guarantor or any Significant Subsidiary bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, any Guarantor or any
Significant Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Guarantor or
any Significant Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their respective
affairs, and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in effect,
for a period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Significant Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law
or any other case or proceeding to be adjudicated bankrupt or insolvent, (b)
the Company, any Guarantor or any Significant Subsidiary consents to the
entry of a decree or order for relief in respect of the Company, such
Guarantor or such Significant Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) the Company, any
Guarantor or any Significant Subsidiary files a petition or answer or
consent seeking reorganization or relief under any applicable federal or
state law, (d) the Company, any Guarantor or any Significant Subsidiary (I)
consents to the filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company, any Guarantor or such
Significant Subsidiary or of any substantial part of their respective
properties, (II) makes an assignment for the benefit of creditors or (III)
admits in writing its inability to pay its debts generally as they become
due or (e) the Company, any Guarantor or any Significant Subsidiary takes
any corporate action in furtherance of any such actions in this paragraph
(ix). (Section 501)
If an Event of Default (other than as specified in clauses (viii) and (ix)
of the prior paragraph with respect to the Company) shall occur and be
continuing with respect to the Indenture, the Trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may, and
the Trustee at the request of such holders shall, declare all unpaid principal
of, premium, if any, and accrued interest on all Notes to be due and payable, by
a notice in writing to the Company (and to the Trustee if given by the holders
of the Notes) and upon any such declaration, such principal, premium, if any,
and interest shall become due and payable immediately. If an Event of Default
specified in clause (viii) or (ix) of the prior paragraph occurs with respect to
the Company and is continuing, then all the Notes shall IPSO FACTO become and be
due and payable immediately in an amount equal to the principal amount of the
Notes, together with accrued and unpaid interest, if any, to the date the Notes
become due and payable, without any declaration or other act on the part of the
Trustee or any holder. Thereupon, the Trustee may, at its discretion, proceed to
protect and enforce the rights of the holders of Notes by appropriate judicial
proceedings.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Notes outstanding, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes
then outstanding, (iii) the principal of and premium, if any, on any Notes then
outstanding which
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have become due otherwise than by such declaration of acceleration and interest
thereon at a rate borne by the Notes and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by the
Notes; and (b) all Events of Default, other than the non-payment of principal of
the Notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in the Indenture. No such rescission shall
affect any subsequent default or impair any right consequent thereon.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the agent under the Bank Credit
Agreement of the acceleration. If any indebtedness under the Bank Credit
Agreement is outstanding, the Company may not pay the Notes until five business
days after the agent under the Bank Credit Agreement receives notice of such
acceleration, and, thereafter, may pay the Notes only if the Indenture otherwise
permits payments at that time. (Section 502)
The holders of not less than a majority in aggregate principal amount of the
Notes outstanding may on behalf of the holders of all outstanding Notes waive
any past default under the Indenture and its consequences, except a default in
the payment of the principal of, premium, if any, or interest on any Note or in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each Note affected by such
modification or amendment. (Section 513)
The Company is also required to notify the Trustee within ten business days
of the occurrence of any Default. (Section 1020) The Company is required to
deliver to the Trustee, on or before a date not more than 120 days after the end
of each fiscal year, a written statement as to compliance with the Indenture,
including whether or not any Default has occurred. (Section 1020) The Trustee is
under no obligation to exercise any of the rights or powers vested in it by the
Indenture at the request or direction of any of the holders of the Notes unless
such holders offer to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
thereby. (Section 603)
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, if any, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions, PROVIDED that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, elect to have the
obligations of the Company, any Guarantor and any other obligor upon the Notes
discharged with respect to the outstanding Notes ("defeasance"). Such defeasance
means that the Company, any such Guarantor and any other obligor under the
Indenture shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, except for (i) the rights of holders of
such outstanding Notes to receive payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (ii) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and
the maintenance of an office or agency for payment and money for security
payments held in trust, (iii) the rights, powers, trusts, duties and immunities
of the Trustee and (iv) the defeasance provisions of the Indenture. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company and any Guarantor released with respect to certain covenants that
are described in the Indenture ("covenant defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Notes. In the event covenant defeasance
occurs, certain events (not including non-payment, bankruptcy and insolvency
events) described under "--Events of Default" will no longer constitute an Event
of Default with respect to the Notes. (Sections 401, 402 and 403)
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In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit or cause to be deposited with the Trustee, in
trust, for the benefit of the holders of the Notes cash in United States
dollars, U.S. Government Obligations (as defined in the Indenture), or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants or a nationally
recognized investment banking firm, to pay and discharge the principal of,
premium, if any, and interest on the outstanding Notes on the Stated Maturity
(or on any date after March 1, 2002 (such date being referred to as the
"Defeasance Redemption Date"), if at or prior to electing either defeasance or
covenant defeasance, the Company has delivered to the Trustee an irrevocable
notice to redeem all of the outstanding Notes on the Defeasance Redemption
Date); (ii) in the case of defeasance, the Company shall have delivered to the
Trustee an opinion of independent counsel in the United States stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the Indenture, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of independent counsel in the United States
shall confirm that, the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred; (iii) in the case of covenant defeasance, the Company shall
have delivered to the Trustee an opinion of independent counsel in the United
States to the effect that the holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred; (iv) no Default or Event of Default
(other than a Default or an Event of Default resulting from the borrowing of
funds to be applied to such deposit) shall have occurred and be continuing on
the date of such deposit or insofar as clauses (viii) or (ix) under the first
paragraph under "--Events of Default" are concerned, at any time during the
period ending on the 91st day after the date of deposit (it being understood
that this condition shall not be deemed satisfied until the expiration of such
period); (v) such defeasance or covenant defeasance shall not cause the Trustee
for the Notes to have a conflicting interest as defined in the Indenture and for
purposes of the Trust Indenture Act with respect to any securities of the
Company or any Guarantor; (vi) such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default under, the Indenture
or any other material agreement or instrument to which the Company, any
Guarantor or any Subsidiary is a party or by which it is bound; (vii) such
defeasance or covenant defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; (viii) the
Company will have delivered to the Trustee an opinion of independent counsel in
the United States to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (ix) the Company shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Company with the intent
of preferring the holders of the Notes or any Guarantee over the other creditors
of the Company or any Guarantor with the intent of defeating, hindering,
delaying or defrauding creditors of the Company, any Guarantor or others; (x) no
event or condition shall exist that would prevent the Company from making
payments of the principal of, premium, if any, and interest on the Notes on the
date of such deposit or at any time ending on the 91st day after the date of
such deposit; and (xi) the Company will have delivered to the Trustee an
officers' certificate and an opinion of independent counsel, each stating that
all conditions precedent provided for relating to either the defeasance or the
covenant defeasance, as the case may be, have been complied with. (Section 404)
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes as expressly provided for in the Indenture) as to all
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outstanding Notes under the Indenture when (a) either (i) all such Notes
theretofore authenticated and delivered (except lost, stolen or destroyed Notes
which have been replaced or paid or Notes whose payment has been deposited in
trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust as provided for in the Indenture) have
been delivered to the Trustee for cancellation or (ii) all Notes not theretofore
delivered to the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable at their Stated Maturity within one year, or (z) are
to be called for redemption within one year under arrangements satisfactory to
the applicable Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company; and the Company or any Guarantor
has irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust an amount in United States dollars sufficient to pay and
discharge the entire indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation, including principal of, premium, if any, and accrued
interest on, such Notes at such Maturity, Stated Maturity or redemption date;
(b) the Company or any Guarantor has paid or caused to be paid all other sums
payable under the Indenture by the Company and any Guarantor; and (c) the
Company has delivered to the Trustee an officers' certificate and an opinion of
independent counsel each stating that (i) all conditions precedent under the
Indenture relating to the satisfaction and discharge of such Indenture have been
complied with and (ii) such satisfaction and discharge will not result in a
breach or violation of, or constitute a default under, the Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Subsidiary is a party or by which the Company, any Guarantor or any
Subsidiary is bound. (Section 1201)
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by the Company,
each Guarantor, if any, and the Trustee with the consent of the holders of at
least a majority of aggregate principal amount of the Notes then outstanding;
PROVIDED, HOWEVER, that no such modification or amendment may, without the
consent of the holder of each outstanding Note affected thereby: (i) change the
Stated Maturity of the principal of, or any installment of interest on, or
change to an earlier date any redemption date of, or waive a default in the
payment of the principal or interest on, any such Note or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which the principal of any
such Note or any premium or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment after the Stated
Maturity thereof (or, in the case of redemption, on or after the redemption
date); (ii) amend, change or modify the obligation of the Company to make and
consummate an Offer with respect to any Asset Sale or Asset Sales in accordance
with "--Certain Covenants--LIMITATION ON SALE OF ASSETS" or the obligation of
the Company to make and consummate a Change of Control Offer in the event of a
Change of Control in accordance with "--Purchase of Notes Upon a Change of
Control," including, in each case, amending, changing or modifying any
definitions relating thereto; (iii) reduce the percentage in principal amount of
such outstanding Notes, the consent of whose holders is required for any such
supplemental indenture, or the consent of whose holders is required for any
waiver or compliance with certain provisions of the Indenture; (iv) modify any
of the provisions relating to supplemental indentures requiring the consent of
holders or relating to the waiver of past defaults or relating to the waiver of
certain covenants, except to increase the percentage of such outstanding Notes
required for any such actions or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
such Note affected thereby; (v) except as otherwise permitted under
"--Consolidation, Merger, Sale of Assets," consent to the assignment or transfer
by the Company or any Guarantor of any of its rights and obligations under the
Indenture; or (vi) amend or modify any of the provisions of the Indenture
relating to the subordination of the Notes or any Guarantee thereof in any
manner adverse to the holders of the Notes or any such Guarantee. (Section 902)
Notwithstanding the foregoing, without the consent of any holders of the
Notes, the Company, any Guarantor and the Trustee may modify or amend the
Indenture: (a) to evidence the succession of another
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Person to the Company, any Guarantor or any other obligor upon the Notes, and
the assumption by any such successor of the covenants of the Company or such
Guarantor or obligor in the Indenture and in the Notes and in any Guarantee in
accordance with "--Consolidation, Merger, Sale of Assets"; (b) to add to the
covenants of the Company, any Guarantor or any other obligor upon the Notes for
the benefit of the holders of the Notes, or to surrender any right or power
conferred upon the Company or any Guarantor or any other obligor upon the Notes,
as applicable, in the Indenture, in the Notes or in any Guarantee; (c) to cure
any ambiguity, or to correct or supplement any provision in the Indenture or in
any supplementary indenture, the Notes or any Guarantee which may be defective
or inconsistent with any other provision in the Indenture, the Notes or any
Guarantee or make any other provisions with respect to matters or questions
arising under the Indenture, the Notes or any Guarantee; PROVIDED that, in each
case, such provisions shall not adversely affect the interest of the holders of
the Notes; (d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act; (e) to add a Guarantor under the Indenture; (f) to evidence and provide the
acceptance of the appointment of a successor trustee under the Indenture; or (g)
to mortgage, pledge, hypothecate or grant a security interest in favor of the
Trustee for the benefit of the holders of the Notes as additional security for
the payment and performance of the Company's and any Guarantor's obligations
under the Indenture, in any property, or assets, including any of which are
required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to the Indenture or
otherwise. (Section 901)
The holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture. (Section 1021)
GOVERNING LAW
The Indenture, the Notes and any Guarantee are governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof. (Section 113).
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as Trustee with such conflict or resign as Trustee. (Sections 608 and 611)
The holders of a majority in principal amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default occurs
(which has not been cured), the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Notes unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
(Section 603)
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition, as the case may be. Acquired Indebtedness shall
be deemed to be incurred
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on the date of the related acquisition of assets from any Person or the date the
acquired Person becomes a Subsidiary, as the case may be.
"Affiliate" means, with respect to any specified Person: (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person; (ii) any other Person that
owns, directly or indirectly, 5% or more of such specified Person's Capital
Stock or any officer or director of any such specified Person or other Person
or, with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption not more remote than first cousin; or
(iii) any other Person 5% or more of the Voting Stock of which is beneficially
owned or held directly or indirectly by such specified Person. For the purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of: (i) any Capital
Stock of any Subsidiary; (ii) all or substantially all of the properties and
assets of any division or line of business of the Company or its Subsidiaries;
or (iii) any other properties or assets of the Company or any Subsidiary other
than in the ordinary course of business. For the purposes of this definition,
the term "Asset Sale" shall not include any transfer of properties and assets
(A) that is governed by the provisions described under "-- Consolidation,
Merger, Sale of Assets," (B) that is by the Company to any Guarantor or to any
Subsidiary that after the date hereof becomes a Guarantor, or by any Subsidiary
to the Company or any Wholly Owned Subsidiary in accordance with the terms of
the Indenture, (C) that is of obsolete equipment or other obsolete assets in the
ordinary course of business, (D) that represents an Investment in a Permitted
Joint Venture in the form of contributions of assets; or (E) the Fair Market
Value of which in the aggregate does not exceed $500,000 in any transaction or
series of related transactions.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bank Credit Facility" means the Credit Agreement, dated as of the date of
the Indenture, among Bank of America National Trust and Savings Association,
BancAmerica Securities, Inc., Canadian Imperial Bank of Commerce, CIBC Wood
Gundy Securities Corp., the other Banks, the Company and certain of its
Subsidiaries, as such agreement, in whole or in part, may be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplementations or other modifications of the foregoing).
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Banks" means the lenders under the Bank Credit Facility.
"Capital Lease Obligation" of any Person means any obligation of such Person
and its Subsidiaries on a Consolidated basis under any capital lease of real or
personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock or other equity interests whether now outstanding or issued after
the date of the Indenture.
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"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than a
majority of the total outstanding Voting Stock of the Company; (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the board of directors of the Company (together with any new
directors whose election to such board or whose nomination for election by the
stockholders of the Company was approved by the Permitted Holders or by a vote
of 66 2/3% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of such
board of directors then in office; (iii) the Company consolidates with or merges
with or into any Person or conveys, transfers or leases all or substantially all
of its assets to any Person, or any corporation consolidates with or merges into
or with the Company in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where the
outstanding Voting Stock of the Company is not changed or exchanged at all
(except to the extent necessary to reflect a change in the jurisdiction of
incorporation of the Company or where (A) the outstanding Voting Stock of the
Company is changed into or exchanged for (x) Voting Stock of the surviving
corporation which is not Redeemable Capital Stock or (y) cash, securities and
other property (other than Capital Stock of the surviving corporation) in an
amount which could be paid by the Company as a Restricted Payment as described
under "--Certain Covenants--LIMITATION ON RESTRICTED PAYMENTS" (and such amount
shall be treated as a Restricted Payment subject to the provisions in the
Indenture described under "--Certain Covenants--LIMITATION ON RESTRICTED
PAYMENTS") and (B) no "person" or "group," other than Permitted Holders, owns
immediately after such transaction, directly or indirectly, more than a majority
of the total outstanding Voting Stock of the surviving corporation; or (iv) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under "--Consolidation, Merger, Sale of Assets."
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act then the body performing
such duties at such time.
"Commodity Price Protection Agreement" means any forward contract, commodity
swap, commodity option or other similar financial agreement or arrangement
relating to, or the value which is dependent upon, fluctuations in commodity
prices.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Company" means Packard BioScience Company (f/k/a Canberra Industries,
Inc.), a corporation incorporated under the laws of Delaware, until a successor
Person shall have become such pursuant to the applicable provisions of the
Indenture, and thereafter "Company" shall mean such successor Person.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss), Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges deducted in computing Consolidated Net Income (Loss) in each case, for
such period, of such Person and its Subsidiaries on a Consolidated basis, all
determined in accordance with GAAP to (b) the sum of Consolidated Interest
Expense for such period and cash dividends paid on any Preferred Stock or
Redeemable Capital Stock of such Person or any subsidiary of such Person during
such period, in each case after giving PRO FORMA effect to (i) the incurrence of
the Indebtedness giving rise to the need to make such calculation and (if
applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, on the first day of such period; (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Subsidiaries since the first day of such period
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as if such Indebtedness was incurred, repaid or retired at the beginning of such
period (except that, in making such computation, the amount of Indebtedness
under any revolving credit facility shall be computed based upon the average
daily balance of such Indebtedness during such period); (iii) in the case of
Acquired Indebtedness or any acquisition occurring at the time of the incurrence
of such Indebtedness, the related acquisition, assuming such acquisition had
been consummated on the first day of such period; and (iv) any acquisition or
disposition by the Company and its Subsidiaries of any company or any business
or any assets out of the ordinary course of business, whether by merger, stock
purchase or sale or asset purchase or sale, or any related repayment of
Indebtedness, in each case since the first day of such applicable period,
assuming such acquisition or disposition had been consummated on the first day
of such period; PROVIDED that (i) in making such computation, the Consolidated
Interest Expense attributable to interest on any Indebtedness computed on a PRO
FORMA basis and (A) bearing a floating interest rate shall be computed as if the
rate in effect on the date of computation had been the applicable rate for the
entire period and (B) which was not outstanding during the period for which the
computation is being made but which bears, at the option of such Person, a fixed
or floating rate of interest, shall be computed by applying at the option of
such Person either the fixed or floating rate and (ii) in making such
computation, the Consolidated Interest Expense of such Person attributable to
interest on any Indebtedness under a revolving credit facility computed on a PRO
FORMA basis shall be computed based upon the average daily balance of such
Indebtedness during the applicable period.
"Consolidated Income Tax Expense" of any Person means, for any period, the
provision for federal, state, local and foreign income taxes of such Person and
its Consolidated Subsidiaries for such period as determined in accordance with
GAAP.
"Consolidated Interest Expense" of any Person means, without duplication,
for any period, the sum of (a) the interest expense of such Person and its
Subsidiaries for such period, on a Consolidated basis, including, without
limitation, (i) amortization of debt discount, (ii) the net costs associated
with Interest Rate Agreements, Currency Hedging Arrangements and Commodity Price
Protection Agreements (including amortization of discounts), (iii) the interest
portion of any deferred payment obligation and (iv) accrued interest, plus (b)
(i) the interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Subsidiaries during such
period and (ii) all capitalized interest of such Person and its Subsidiaries
plus (c) the interest expense under any Guaranteed Debt of such Person and any
Subsidiary to the extent not included under clause (a)(iv) above, in each case
as determined on a Consolidated basis in accordance with GAAP, provided that
noncash interest accrued but not paid on any Management Notes issued pursuant to
clause (b)(vii) of "--Certain Covenants-- LIMITATION ON RESTRICTED PAYMENTS" and
amortization of deferred financing fees previously paid shall be excluded from
Consolidated Interest Expense.
"Consolidated Net Income (Loss)" of any Person means, for any period, the
Consolidated net income (or loss) of such Person and its Subsidiaries for such
period on a Consolidated basis as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income (or loss), by excluding,
without duplication, (i) all extraordinary gains or losses (less all fees and
expenses relating thereto), (ii) the portion of net income (or loss) of such
Person and its Subsidiaries on a Consolidated basis allocable to minority
interests in unconsolidated Persons to the extent that cash dividends or
distributions have not actually been received by such Person or one of its
Consolidated Subsidiaries, (iii) net income (or loss) of any Person combined
with such Person or any of its Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains (or losses) (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, (vi) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (vii) any restoration to income of any contingency reserve, except
to the extent provision for such reserve was made out of income accrued at any
time following the
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date of the Indenture, (viii) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness of such
Person or (ix) transaction costs charged during the first quarter of fiscal 1997
in connection with the Recapitalization.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its subsidiaries on a Consolidated basis for such period, as determined in
accordance with GAAP (excluding any non-cash charge which requires an accrual or
reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.
"Currency Hedging Arrangements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar agreements
or arrangements designed to protect against the fluctuations in currency values.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series of
related transactions, a member of the board of directors of the Company who does
not have any material direct or indirect financial interest in or with respect
to such transaction or series of related transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy. Fair Market Value shall be determined by the board
of directors of the Company acting in good faith and shall be evidenced by a
resolution of the board of directors.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date of the Indenture.
"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations.
"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person referred to in the definition of Indebtedness below
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (iii) to supply funds to, or in any other
manner invest in, the debtor (including any agreement to pay for property or
services without requiring that such property be received or such services be
rendered), (iv) to maintain working capital or equity capital of the debtor, or
otherwise to maintain the net worth, solvency or other financial condition of
the debtor or (v) otherwise to assure a creditor against loss; PROVIDED that the
term "guarantee" shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"Guarantor" means any Subsidiary which becomes a guarantor of the Notes,
including any Person that is required after the date of the Indenture to execute
a guarantee of the Notes pursuant to the "Limitations on Liens" covenant or the
"Limitation on Issuance of Guarantees of Indebtedness" covenant until a
successor replaces such party pursuant to the applicable provisions of the
Indenture and, thereafter, shall mean such successor.
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"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (ii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade payables arising in the ordinary course of business, (iv) all
obligations under Interest Rate Agreements, Currency Hedging Agreements or
Commodity Price Protection Agreements of such Person, (v) all Capital Lease
Obligations of such Person, (vi) all Indebtedness referred to in clauses (i)
through (v) above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien, upon or
with respect to property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such
Person, (viii) all Redeemable Capital Stock issued by such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends, and (ix) any amendment, supplement, modification,
deferral, renewal, extension, refunding or refinancing of any liability which
constitutes Indebtedness of the types referred to in clauses (i) through (viii)
above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Redeemable Capital
Stock, such Fair Market Value to be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock.
"Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the Notes including any Guarantor, to pay
principal of, premium, if any, and interest when due and payable, and all other
amounts due or to become due under or in connection with the Indenture, the
Notes and the performance of all other obligations to the Trustee and the
holders under the Indenture and the Notes, according to the respective terms
thereof.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements (including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.
"Investment" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities issued or owned by any other Person and
all other items that would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Lien" means any mortgage or deed of trust, charge, pledge, lien (statutory
or otherwise), privilege, security interest, assignment, deposit, arrangement,
easement, hypothecation, claim, preference, priority or other encumbrance upon
or with respect to any property of any kind (including any conditional sale,
capital lease or other title retention agreement, any leases in the nature
thereof, and any agreement to give any security interest), real or personal,
movable or immovable, now owned or hereafter acquired.
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"Maturity" means, when used with respect to the Notes, the date on which the
principal of the Notes becomes due and payable as therein provided or as
provided in the Indenture, whether at Stated Maturity, the Offer Date or the
redemption date and whether by declaration of acceleration, Offer in respect of
Excess Proceeds, Change of Control Offer in respect of a Change of Control, call
for redemption or otherwise.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof (without duplication in respect of all Asset Sales) in the
form of cash or Temporary Cash Investments including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Temporary Cash Investments (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Subsidiary) net of (i) brokerage commissions and other reasonable fees
and expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes payable as a result of
such Asset Sale, (iii) payments made to retire Indebtedness where payment of
such Indebtedness is secured by the assets or properties the subject of such
Asset Sale, (iv) amounts required to be paid to any Person (other than the
Company or any Subsidiary) owning a beneficial interest in the assets subject to
the Asset Sale and (v) appropriate amounts to be provided by the Company or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an officers'
certificate delivered to the Trustee and (b) with respect to any issuance or
sale of Capital Stock or options, warrants or rights to purchase Capital Stock,
or debt securities or Capital Stock that have been converted into or exchanged
for Capital Stock as referred to under "--Certain Covenants--LIMITATION ON
RESTRICTED PAYMENTS," the proceeds of such issuance or sale in the form of cash
or Temporary Cash Investments including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
of for, cash or Temporary Cash Investments (except to the extent that such
obligations are financed or sold with recourse to the Company or any
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-U.S. Subsidiaries" means Subsidiaries organized under the laws of
jurisdictions other than the United States and the states and territories
thereof.
"Pari Passu Indebtedness" means (a) any Indebtedness of the Company that is
PARI PASSU in right of payment to the Notes and (b) with respect to any
Guarantee, Indebtedness which ranks PARI PASSU in right of payment to such
Guarantee.
"Permitted Holders" means Stonington, the Fund and their respective
Affiliates.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company and Non-U.S. Subsidiaries (and
guarantees of such Indebtedness of the Company by Subsidiaries) under the
Bank Credit Facility in an aggregate principal amount at any one time
outstanding not to exceed $115 million, minus all principal payments made in
respect of any term loans thereunder and minus the amount by which any
commitments under any revolving credit facility thereunder are permanently
reduced;
(ii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to a Guarantee of the Notes;
(iii) Indebtedness of the Company or any Subsidiary outstanding on the
date of the Indenture and listed on a schedule thereto;
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(iv) Indebtedness of the Company owing to a Subsidiary; PROVIDED that
any Indebtedness of the Company owing to a Subsidiary is subordinated in
right of payment to the Notes to the same extent that the Notes are
subordinated to Senior Indebtedness and, upon an Event of Default, such
Indebtedness shall not be due and payable until such Event of Default is
cured, waived or rescinded; PROVIDED, FURTHER, that any disposition, pledge
or transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to a Subsidiary) shall be deemed to be an incurrence of
such Indebtedness by the Company not permitted by this clause (iv);
(v) Indebtedness of a Wholly Owned Subsidiary owing to the Company or
another Wholly Owned Subsidiary; PROVIDED that all amounts owing pursuant to
any such Indebtedness is immediately due and payable upon an Event of
Default and until such Event of Default is cured, waived or rescinded;
PROVIDED, FURTHER, that (a) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than the Company or a Wholly Owned
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (v), and (b) any transaction pursuant
to which any Wholly Owned Subsidiary, which has Indebtedness owing to the
Company or any other Wholly Owned Subsidiary, ceases to be a Wholly Owned
Subsidiary shall be deemed to be the incurrence of Indebtedness by such
Wholly Owned Subsidiary that is not permitted by this clause (v);
(vi) guarantees of any Subsidiary made in accordance with the provisions
of "--Certain Covenants--LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS;"
(vii) obligations of the Company entered into in the ordinary course of
business (a) pursuant to Interest Rate Agreements designed to protect the
Company or any Subsidiary against fluctuations in interest rates in respect
of Indebtedness of the Company or any Subsidiary as long as such obligations
do not exceed the aggregate principal amount of such Indebtedness then
outstanding, (b) under any Currency Hedging Arrangements, which if related
to Indebtedness do not increase the amount of such Indebtedness other than
as a result of foreign exchange fluctuations, or (c) under any Commodity
Price Protection Agreements, which if related to Indebtedness do not
increase the amount of such Indebtedness other than as a result of foreign
exchange fluctuations;
(viii) Indebtedness of the Company and its Subsidiaries represented by
Capital Lease Obligations or Purchase Money Obligations or other
Indebtedness incurred or assumed in connection with the acquisition,
improvement or development of real or personal, movable or immovable,
property in each case incurred for the purpose of financing or refinancing
all or any part of the purchase price or cost of construction or improvement
of property used in the business of the Company and any refinancings of such
Indebtedness made in accordance with subclauses (a), (b) and (c) of clause
(x) below, in an aggregate principal amount pursuant to this clause (viii)
not to exceed $5 million outstanding at any time; PROVIDED that the
principal amount of any Indebtedness permitted under this clause (viii) did
not in each case at the time of incurrence exceed the Fair Market Value, as
determined by the Company in good faith, of the acquired or constructed
asset or improvement so financed;
(ix) Indebtedness of the Company or any Subsidiary in respect of
performance bonds, bankers' acceptances, letters of credit of the Company or
any Subsidiary and surety bonds provided by the Company or any Subsidiary in
the ordinary course of business, not to exceed at any given time $5 million
outstanding in the aggregate;
(x) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness described
in clauses (ii) and (iii) of this definition of "Permitted Indebtedness,"
including any successive refinancings (a) so long as the borrower under such
refinancing is the Company or, if not the Company, the same as the borrower
of the Indebtedness being refinanced, (b) the aggregate principal amount of
Indebtedness represented thereby is not increased by such refinancing by an
amount greater than the lesser of (I) the stated amount of any premium or
other payment required to be paid in connection with such a refinancing
pursuant to the terms of the
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Indebtedness being refinanced or (II) the amount of premium or other payment
actually paid at such time to refinance the Indebtedness, plus, in either
case, the amount of expenses of the Company incurred in connection with such
refinancing and (c) (A) in the case of any refinancing of Indebtedness that
is Subordinated Indebtedness, such new Indebtedness is made subordinated to
the Notes at least to the same extent as the Indebtedness being refinanced
and (B) in the case of Pari Passu Indebtedness or Subordinated Indebtedness,
as the case may be, such refinancing does not reduce the Average Life to
Stated Maturity or the Stated Maturity of such Indebtedness;
(xi) Indebtedness of the Company and its Subsidiaries in an aggregate
principal amount not to exceed $7.5 million, the proceeds of which are used
to purchase the 40% equity interest in Packard Japan KK not presently owned
by the Company and its Subsidiaries;
(xii) Management Notes issued pursuant to clause (b)(vii) of the
covenant "LIMITATION ON RESTRICTED PAYMENTS"; and
(xiii) Indebtedness of the Company and its Subsidiaries (including
Acquired Indebtedness) in addition to that described in clauses (i) through
(xii) above, and any renewals, extensions, substitutions, refinancings or
replacements of such Indebtedness, so long as the aggregate principal amount
of all such Indebtedness shall not exceed $20 million outstanding at any one
time in the aggregate.
"Permitted Investment" means (i) Investments in any Subsidiary or any Person
which, as a result of such Investment, (a) becomes a Subsidiary or (b) is merged
or consolidated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or any Subsidiary; (ii)
Indebtedness of the Company or a Subsidiary described under clauses (iv), (v)
and (vi) of the definition of "Permitted Indebtedness"; (iii) Investments in any
of the Notes; (iv) Temporary Cash Investments; (v) Investments acquired by the
Company or any Subsidiary in connection with an Asset Sale permitted under
"--Certain Covenants--LIMITATION ON SALE OF ASSETS" to the extent such
Investments are non-cash proceeds as permitted under such covenant; (v)
Investments in existence on the date of the Indenture; (vi) guarantees of
Indebtedness of a Wholly Owned Subsidiary given by the Company or another Wholly
Owned Subsidiary and guarantees of Indebtedness of the Company given by any
Subsidiary, in each case, in accordance with the terms of the Indenture; (vii)
Investments in any Permitted Joint Venture in the aggregate amount of $20
million at any one time outstanding; and (viii) any other Investments in the
aggregate amount of $5 million at any one time outstanding. In connection with
any assets or property contributed or transferred to any Person as an
Investment, such property and assets shall be equal to the Fair Market Value (as
determined by the Company's Board of Directors) at the time of Investment.
"Permitted Joint Venture" means any joint venture in which the Company or
any Subsidiary holds Voting Stock and which develops, manufactures, sells or
licenses instrumentation, biochemicals, consumables or other related products in
connection with the biotechnological and drug discovery segments of the life
sciences industry or the nuclear instrumentation industry.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any Capital Stock of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class in such Person.
"Public Equity Offering" means an underwritten public offering of Capital
Stock (other than Redeemable Capital Stock) pursuant to a registration statement
that has been declared effective by the Commission (other than a registration
statement on Form S-8 or any successor form or otherwise relating to equity
securities issuable under any employee benefit plan of the Company).
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"Purchase Money Obligation" means any Indebtedness secured by a Lien on
assets related to the business of the Company and its Subsidiaries and any
additions and accessions thereto, which are purchased at any time after the
Notes are issued; PROVIDED that (i) the security agreement or conditional sales
or other title retention contract pursuant to which the Lien on such assets is
created (collectively a "Purchase Money Security Agreement") shall be entered
into within 180 days after the purchase or substantial completion of the
construction of such assets and shall at all times be confined solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accession thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to the Company and its Subsidiaries of the
assets subject thereto or (B) the Indebtedness secured thereby shall be with
recourse solely to the assets so purchased or acquired, any additions and
accessions thereto and any proceeds therefrom.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Recapitalization" means the transactions defined as the "Recapitalization"
in the Prospectus with respect to the Notes.
"Recapitalization Agreement" means the Recapitalization and Stock Purchase
Agreement, dated as of November 26, 1996, among the Company, the Management
Stockholders signatory thereto, and CII Acquisition LLC, as in effect on the
date of the Indenture.
"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity at the option of the
holder thereof, provided that the term "Redeemable Capital Stock" shall not
include shares of Capital Stock which would not be Redeemable Capital Stock but
for the provisions of Section 3.1 of the Stockholders' Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
"Senior Guarantor Indebtedness" means Indebtedness of a Guarantor which
secures or guarantees any Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the Commission.
"Stated Maturity" means, when used with respect to any Indebtedness or any
installment of interest thereon, the dates specified in such Indebtedness as the
fixed date on which the principal of such Indebtedness or such installment of
interest, as the case may be, is due and payable.
"Stockholders' Agreement" means the Stockholders' Agreement, dated the date
hereof, among the Company, certain management investors listed in Schedule I
thereto, certain non-management investors listed in Schedule II thereto,
Stonington Capital Appreciation 1994 Fund, L.P. and other parties thereto, as in
effect on the date of the Indenture.
"Subordinated Indebtedness" means Indebtedness of the Company or a Guarantor
subordinated in right of payment to the Notes or the Guarantee of such
Guarantor, as the case may be.
"Subsidiary" means any Person, a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the
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Company and one or more other Subsidiaries; PROVIDED that any Unrestricted
Subsidiary shall not be deemed a Subsidiary under the Notes.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit (or, with respect to non-U.S.
banking institutions, similar instruments) maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution that is a member of the Federal Reserve System or a commercial
banking institution organized and located in a country recognized by the United
States of America, in each case, that has combined capital and surplus and
undivided profits of not less than $500 million (or the foreign currency
equivalent thereof), whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's Investors
Service, Inc. ("Moody's") or any successor rating agency or "A-1" (or higher)
according to Standard & Poor's Rating Group, a division of McGraw Hill, Inc.
("S&P") or any successor rating agency, (iii) commercial paper, maturing not
more than one year after the date of acquisition, issued by a corporation (other
than an Affiliate or Subsidiary of the Company) organized and existing under the
laws of the United States of America with a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P and (iv) any money market deposit accounts or
demand deposit accounts issued or offered by a domestic commercial bank or a
commercial banking institution organized and located in a country recognized by
the United States of America, in each case having capital and surplus in excess
of $500 million (or the foreign currency equivalent thereof); PROVIDED that the
short term debt of such commercial bank has a rating, at the time of Investment,
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, or
any successor statute.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary if all of the
following conditions apply: (a) neither the Company nor any of its Subsidiaries
provides credit support for Indebtedness of such Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (b) such Unrestricted Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, (c) any Investment in such Unrestricted Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate the provisions under "--Certain Covenants-- LIMITATION ON UNRESTRICTED
SUBSIDIARIES" covenant and such Unrestricted Subsidiary is not party to any
agreement, contract, arrangement or understanding at such time with the Company
or any other Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such other Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company or, in the event such condition is not
satisfied, the value of such agreement, contract, arrangement or understanding
to such Unrestricted Subsidiary shall be deemed an Investment, and (d) such
Unrestricted Subsidiary does not own any Capital Stock in any Subsidiary of the
Company which is not simultaneously being designated an Unrestricted Subsidiary.
Any such designation by the board of directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a board resolution giving effect to
such designation and an officers' certificate certifying that such designation
complies with the foregoing conditions and shall be deemed a Restricted Payment
on the date of designation in an amount equal to the greater of (1) the net book
value of such Investment or (2) the Fair Market Value of such Investment as
determined in good faith by the Company's board of directors. The board of
directors of the Company may designate any Unrestricted Subsidiary as a
Subsidiary; PROVIDED that (i) immediately after giving effect to such
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the restrictions under
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"--Certain Covenants--LIMITATION ON INDEBTEDNESS" and (ii) all Indebtedness of
such Subsidiary shall be deemed to be incurred on the date such Unrestricted
Subsidiary becomes a Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means
Indebtedness of such Unrestricted Subsidiary (i) as to which neither the Company
nor any Subsidiary is directly or indirectly liable (by virtue of the Company or
any such Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Indebtedness), except Guaranteed Debt of the
Company or any Subsidiary to any Affiliate, in which case (unless the incurrence
of such Guaranteed Debt resulted in a Restricted Payment at the time of
incurrence) the Company shall be deemed to have made a Restricted Payment equal
to the principal amount of any such Indebtedness to the extent guaranteed at the
time such Affiliate is designated an Unrestricted Subsidiary and (ii) which,
upon the occurrence of a default with respect thereto, does not result in, or
permit any holder of any Indebtedness of the Company or any Subsidiary to
declare, a default on such Indebtedness of the Company or any Subsidiary or
cause the payment thereof to be accelerated or payable prior to its Stated
Maturity.
"Voting Stock" means Capital Stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time Capital Stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
is owned by the Company or another Wholly Owned Subsidiary.
BOOK-ENTRY DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form, without coupons. Except as described below, the Exchange Notes
will be deposited with, or on behalf of, DTC, and registered in the name of Cede
& Co. as DTC's nominee, in the form of a global Exchange Note certificate (the
"Global Exchange Note") or will remain in the custody of the Trustee pursuant to
the FAST Balance Certificate Agreement between DTC and the Trustee.
Holders of Exchange Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global Exchange Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form a certificated Exchange Note ("Certificated Exchange Note").
Upon the transfer of any Certificated Exchange Note initially issued to a
Non-Global Holder, such Certificated Exchange Note will, unless the transferee
requests otherwise or the Global Exchange Note has previously been exchanged in
whole for Certificated Exchange Notes, be exchanged for an interest in the
Global Exchange Note.
THE GLOBAL EXCHANGE NOTE. The Company expects that, pursuant to procedures
established by DTC, (a) upon deposit of the Global Exchange Note, DTC or its
custodian will credit on its internal system the principal amount at maturity of
Exchange Notes of the individual beneficial interests represented by such Global
Exchange Note to the respective accounts of persons who have accounts with DTC
and (b) ownership of beneficial interests in the Global Exchange Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
Participants (as defined herein)) and the records of Participants (with respect
to interests of persons other than Participants). Ownership of beneficial
interests in the Global Exchange Note will be limited to persons who have
accounts with DTC ("Participants") or persons who hold interests through
Participants. Qualified Institutional Buyers may hold their interests in the
Global Note directly through DTC if they are Participants in such system, or
indirectly through organizations which are Participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the Exchange Notes
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represented by such Global Exchange Note for all purposes under the Indenture.
No beneficial owner of an interest in the Global Exchange Note will be able to
transfer such interest except in accordance with DTC's procedures, in addition
to those provided for under the Indenture with respect to the Exchange Notes.
Payments of the principal of or premium and interest on the Global Exchange
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any paying agent under the
Indenture will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Exchange Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
the principal of or premium and interest on the Global Exchange Note, will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Exchange
Note as shown on the records of DTC or its nominee. The Company also expects
that payments by Participants to owners of beneficial interests in the Global
Exchange Note held through such Participants will be governed by standing
instructions and customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in federal funds. If a holder requires physical delivery of a
Certificated Exchange Note for any reason, including to sell Exchange Notes to
persons in states which require physical delivery of the Exchange Notes or to
pledge such securities, such holder must transfer its interest in the Global
Exchange Note in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the Global Exchange Note are
credited and only in respect of such portion of the aggregate principal amount
of Exchange Notes as to which such Participant or Participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Exchange Note for Certificated Exchange Notes,
which it will distribute to its Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the Global Exchange Notes among Participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED EXCHANGE NOTES. If DTC is at any time unwilling or unable to
continue as a depository for the Global Exchange Note and a successor depository
is not appointed by the Company within 90 days, the Company will issue
Certificated Exchange Notes in exchange for the Global Exchange Note.
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DESCRIPTION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE EXCHANGE NOTES
The following is a summary of the material United States federal income tax
consequences of the acquisition, ownership and disposition of the 144A Notes or
the Exchange Notes by a United States Holder (as defined below). This summary
deals only with United States Holders that will hold the 144A Notes or the
Exchange Notes as capital assets. The discussion does not cover all aspects of
federal taxation that may be relevant to, or the actual tax effect that any of
the matters described herein will have on, the acquisition, ownership or
disposition of the 144A Notes or the Exchange Notes by particular investors, and
does not address state, local, foreign or other tax laws. In particular, this
summary does not discuss all of the tax considerations that may be relevant to
certain types of investors subject to special treatment under the federal income
tax laws (such as banks, insurance companies, investors liable for the
alternative minimum tax, individual retirement accounts and other tax-deferred
accounts, tax-exempt organizations, dealers in securities or currencies,
investors that will hold the 144A Notes or the Exchange Notes as part of
straddles, hedging transactions or conversion transactions for federal tax
purposes or investors whose functional currency is not United States Dollars).
Furthermore, the discussion below is based on provisions of the Code, and
regulations, rulings, and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
U.S. federal income tax consequences different from those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING JURISDICTION.
As used herein, the term "United States Holder" means a beneficial owner of
the 144A Notes or the Exchange Notes that is (i) a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation
created or organized under the laws of the United States or any State thereof,
(iii) a person or entity that is otherwise subject to United States federal
income tax on a net income basis in respect of income derived from the 144A
Notes or the Exchange Notes, or (iv) a partnership to the extent the interest
therein is owned by a person who is described in clause (i), (ii) or (iii) of
this paragraph.
INTEREST
Interest (including any additional interest paid because of failure to
satisfy the requirements of the Registration Rights Agreement ("Additional
Interest")) paid on a 144A Note or an Exchange Note will be taxable to a United
States Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.
PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE EXCHANGE NOTES
In general (with certain exceptions described below), a United States
Holder's tax basis in an Exchange Note will equal the price paid for the 144A
Notes for which such Exchange Note was exchanged pursuant to the Exchange Offer.
A United States Holder generally will recognize gain or loss on the sale,
exchange, retirement, redemption or other disposition of a 144A Note or an
Exchange Note (or portion thereof) equal to the difference between the amount
realized on such disposition and the United States Holder's tax basis in the
144A Note or the Exchange Note (or portion thereof). Except to the extent
attributable to accrued but unpaid interest, gain or loss recognized on such
disposition of a 144A Note or an Exchange Note will be capital gain or loss and
will be long-term capital gain or loss if such 144A Note or Exchange Note was
held for more than one year. Any such gain will generally be United States
source gain.
BOND PREMIUM
If a United States Holder acquires an Exchange Note or has acquired a 144A
Note, in each case, for an amount more than its redemption price, the Holder may
elect to amortize such bond premium on a
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yield to maturity basis. Once made, such an election applies to all bonds (other
than bonds the interest on which is excludable from gross income) held by the
United States Holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the United States Holder, unless the
IRS consents to a revocation of the election. The basis of an Exchange Note will
be reduced by any amortizable bond premium taken as a deduction.
MARKET DISCOUNT
The purchase of an Exchange Note or the purchase of a 144A Note other than
at original issue may be affected by the market discount provisions of the Code.
These rules generally provide that, subject to a statutorily defined DE MINIMIS
exception, if a United States Holder purchases an Exchange Note (or purchased a
144A Note) at a "market discount," as defined below, and thereafter recognizes
gain upon a disposition of the Exchange Note (including dispositions by gift or
redemption), the lesser of such gain (or appreciation, in the case of a gift) or
the portion of the market discount that has accrued ("accrued market discount")
while the Exchange Note (and its predecessor 144A Note, if any) was held by such
United States Holder will be treated as ordinary interest income at the time of
disposition rather than as capital gain. For an Exchange Note or a 144A Note,
"market discount" is the excess of the stated redemption price at maturity over
the tax basis immediately after its acquisition by a United States Holder.
Market discount generally will accrue ratably during the period from the date of
acquisition to the maturity date of the Exchange Note, unless the United States
Holder elects to accrue such discount on the basis of the constant yield method.
Such an election applies only to the Exchange Note with respect to which it is
made and is irrevocable.
In lieu of including the accrued market discount in income at the time of
disposition, a United States Holder of an Exchange Note acquired at a market
discount (or acquired in exchange for a 144A Note acquired at a market discount)
may elect to include the accrued market discount in income currently either
ratably or using the constant yield method. Once made, such an election applies
to all other obligations that the United States Holder purchases at a market
discount during the taxable year for which the election is made and in all
subsequent taxable years of the United States Holder, unless the IRS consents to
a revocation of the election. If an election is made to include accrued market
discount in income currently, the basis of an Exchange Note (or, where
applicable, a predecessor 144A Note) in the hands of the United States Holder
will be increased by the accrued market discount thereon as it is includible in
income. A United States Holder of a market discount Exchange Note who does not
elect to include market discount in income currently generally will be required
to defer deductions for interest on borrowings allocable to such Exchange Note,
if any, in an amount not exceeding the accrued market discount on such Exchange
Note until the maturity or disposition of such Exchange Note.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest (including any Additional Interest) and principal on,
and the proceeds of sale or other disposition of the 144A Notes or the Exchange
Notes payable to a United States Holder may be subject to information reporting
requirements and backup withholding at a rate of 31% will apply to such payments
if the United States Holder fails to provide an accurate taxpayer identification
number or to report all interest and dividends required to be shown on its
federal income tax returns. Certain United States Holders (including, among
others, corporations) are not subject to backup withholding. United States
Holders should consult their tax advisors as to their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption.
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EXCHANGE OFFER; REGISTRATION RIGHTS
The Company entered into the Registration Rights Agreement with Merrill
Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Securities and CIBC Wood
Gundy (the "Initial Purchasers") pursuant to which the Company agreed, for the
benefit of the holders of the 144A Notes, at the Company's cost, to use its best
efforts (i) to file with the Commission the Registration Statement of which this
Prospectus forms a part with respect to the Exchange Offer for the Exchange
Notes within 45 days after the date of original issue of the 144A Notes, (ii) to
cause the Registration Statement to be declared effective under the Securities
Act within 105 days of the date of original issue of the 144A Notes, (iii) to
keep the Registration Statement effective until the closing of the Exchange
Offer, and (iv) to cause the Exchange Offer to be consummated within 135 days of
the original issue date of the 144A Notes. Promptly after the Registration
Statement has been declared effective, the Company will offer the Exchange Notes
in exchange for surrender of the 144A Notes. The Company will keep the Exchange
Offer open for not less than 30 days (or longer if required by applicable law)
after the date notice of the Exchange Offer is mailed to the holders of the 144A
Notes. For each 144A Note validly tendered to the Company pursuant to the
Exchange Offer and not withdrawn by the holder thereof, the holder of such 144A
Note will receive an Exchange Note having a principal amount equal to that of
the tendered 144A Note. Interest on each Exchange Note will accrue from the last
interest payment date on which interest was paid on the tendered 144A Note in
exchange therefor or, if no interest has been paid on such 144A Note, from the
date of the original issue of the 144A Note.
Based on an interpretation of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any purchaser of 144A Notes who is an "affiliate" of the Company or who intends
to participate in the Exchange Offer for the purpose of distributing the
Exchange Notes (i) will not be able to rely on the interpretation by the staff
of the Commission set forth in the above referenced no-action letters, (ii) will
not be able to tender 144A Notes in the Exchange Offer and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or transfer of the 144A Notes, unless such sale or
transfer is made pursuant to an exemption from such requirements.
Each holder of the 144A Notes who wishes to exchange 144A Notes for Exchange
Notes in the Exchange Offer will be required to make certain representations,
including that (i) it is neither an affiliate of the Company nor a broker-dealer
tendering 144A Notes acquired directly from the Company for its own account,
(ii) any Exchange Notes to be received by it were acquired in the ordinary
course of its business and (iii) at the time of commencement of the Exchange
Offer, it has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes. In addition,
in connection with any resales of Exchange Notes, any broker-dealer (a
"Participating Broker-Dealer") who acquired the 144A Notes for its own account
as a result of market-making activities or other trading activities must deliver
a prospectus meeting the requirements of the Securities Act. The Commission has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Notes (other than
a resale of an unsold allotment from the original sale of the 144A Notes) with
the Prospectus contained in the Registration Statement. Under the Registration
Rights Agreement, the Company is required to allow Participating Broker-Dealers
and other persons, if any, subject to similar prospectus delivery requirements
to use the Prospectus contained in the Registration Statement in connection with
the resale of such Exchange Notes.
In the event that any changes in law or the applicable interpretations of
the staff of the Commission do not permit the company to effect the Exchange
Offer, or if for any other reason the Registration Statement is not declared
effective within 105 days of the date of original issue of the 144A Notes or the
Exchange Offer is not consummated within 135 days of the date of original issue
of the 144A Notes, or
111
<PAGE>
upon the request of any of the Initial Purchasers, or if a holder of the 144A
Notes is not permitted by applicable law to participate in the Exchange Offer or
elects to participate in the Exchange Offer but does not receive fully tradable
Exchange Notes pursuant to the Exchange Offer, the Company will, in lieu of
effecting the registration of the Exchange Notes pursuant to the Registration
Statement and at the Company's cost, (a) as promptly as practicable, file with
the Commission the Shelf Registration Statement covering resales of the 144A
Notes, (b) use its best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act by the 135th day after the original
issue of the 144A Notes (or within 30 days of the request by any Initial
Purchaser) and (c) use its best efforts to keep effective the Shelf Registration
Statement for a period of two years after its effective date (or for such
shorter period that will terminate when all of the 144A Notes covered by the
Shelf Registration Statement have been sold pursuant thereto or cease to be
outstanding). The Company will, in the event of the filing of a Shelf
Registration Statement, provide to each holder of the 144A Notes copies of the
prospectus which is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement for the 144A Notes has become
effective and take certain other actions as are required to permit unrestricted
resales of the 144A Notes. A holder of 144A Notes who sells such 144A Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver the
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations).
In the event that (i) the Registration Statement is not filed with the
Commission on or prior to the 45th calendar day following the date of original
issue of the 144A Notes, (ii) the Registration Statement is not declared
effective on or prior to the 105th calendar day following the date of original
issue of the 144A Notes or (iii) the Exchange Offer is not consummated on or
prior to the 135th day following the date of original issue of the 144A Notes or
a Shelf Registration Statement is not declared effective on or prior to the
135th day following the date of original issue of the 144A Notes (or, if a Shelf
Registration Statement is required to be filed because of the request by any
Initial Purchaser, 30 days following the request by any such Initial Purchaser
that the Company file the Shelf Registration Statement) (each such event
referred to in clauses (i) through (iii) above, a "Registration Default"), the
interest rate borne by the 144A Notes (except in the case of clause (iii), in
which case only the 144A Notes which have not been exchanged in the Exchange
Offer) shall be increased by one-quarter of one percent per annum upon the
occurrence of any Registration Default, which rate (as increased as aforesaid)
will increase by an additional one quarter of one percent each 90-day period
that such additional interest continues to accrue under any such circumstance,
with an aggregate maximum increase in the interest rate equal to one percent
(1%) per annum. Following the cure of all Registration Defaults the accrual of
additional interest will cease and the interest rate will revert to the original
rate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part, and is incorporated herein by reference.
112
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for 144A Notes where such 144A Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that it will make this Prospectus, as amended or supplemented, available
to any Participating Broker-Dealer for use in connection with any such resale
and Participating Broker-Dealers shall be authorized to deliver this Prospectus
in connection with the sale or transfer of the Exchange Notes. In addition,
until , 1997 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time, in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the Exchange Notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such Participating Broker-Dealer that
resells the Exchange Notes that were received by it for its own account pursuant
to the Exchange Offer. Any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Day, Berry &
Howard, Hartford, Connecticut.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996,
included in this Prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
113
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996............................................. F-3
Consolidated Statements of Income for the Years Ended December 31, 1994, 1995 and 1996................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994, 1995 and 1996..... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996............... F-6
Notes to Consolidated Financial Statements............................................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Packard BioScience Company:
We have audited the accompanying consolidated balance sheets of Packard
BioScience Company (a Delaware corporation, formerly known as Canberra
Industries, Inc.) and subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Packard BioScience Company
and subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
March 10, 1997
F-2
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................................................................. $ 22,515 $ 37,826
Accounts receivable, net............................................................................... 39,797 40,860
Inventories............................................................................................ 21,145 21,798
Deferred income taxes.................................................................................. 1,625 1,689
Other.................................................................................................. 6,739 4,743
---------- ----------
Total current assets............................................................................. 91,821 106,916
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and improvements.................................................................................. 1,626 1,598
Buildings and improvements............................................................................. 14,546 14,632
Machinery, equipment and furniture..................................................................... 15,160 14,955
---------- ----------
31,332 31,185
Less--Accumulated depreciation......................................................................... 12,711 13,598
---------- ----------
18,621 17,587
---------- ----------
OTHER ASSETS:
Goodwill, net of amortization.......................................................................... 363 147
Deferred income taxes.................................................................................. 2,149 1,238
Other.................................................................................................. 7,329 12,037
---------- ----------
9,841 13,422
---------- ----------
$ 120,283 $ 137,925
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable.......................................................................................... $ 1,995 $ 3,524
Current portion of long-term obligations............................................................... 688 829
Accounts payable....................................................................................... 7,964 11,118
Accrued liabilities.................................................................................... 15,066 15,943
Income taxes payable................................................................................... 4,036 6,685
Deferred income........................................................................................ 10,731 9,601
---------- ----------
Total current liabilities........................................................................ 40,480 47,700
---------- ----------
LONG-TERM OBLIGATIONS, less current portion.............................................................. 1,753 2,037
---------- ----------
OTHER NONCURRENT LIABILITIES............................................................................. 3,961 4,875
---------- ----------
COMMITMENTS AND CONTINGENCIES--See Note 9
MINORITY INTEREST IN EQUITY OF SUBSIDIARY................................................................ 1,660 2,720
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock........................................................................................... 129 129
Paid-in capital........................................................................................ 1,030 1,320
Cumulative translation adjustment...................................................................... 4,064 2,402
Retained earnings...................................................................................... 74,827 89,088
---------- ----------
80,050 92,939
---------- ----------
Less: Treasury stock, at cost.......................................................................... 6,265 11,128
Deferred compensation............................................................................. 1,356 1,218
---------- ----------
7,621 12,346
---------- ----------
72,429 80,593
---------- ----------
$ 120,283 $ 137,925
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
NET PRODUCT SALES............................................................ $ 115,442 $ 113,169 $ 124,067
SERVICE REVENUE.............................................................. 32,852 35,603 37,197
CHEMICALS AND SUPPLIES SALES................................................. 17,090 20,342 22,754
---------- ---------- ----------
165,384 169,114 184,018
---------- ---------- ----------
COST OF PRODUCT SALES........................................................ 49,580 44,906 46,970
SERVICE EXPENSE.............................................................. 25,465 25,829 26,649
COST OF CHEMICALS AND SUPPLIES SALES......................................... 10,254 11,900 12,138
---------- ---------- ----------
85,299 82,635 85,757
---------- ---------- ----------
Gross profit............................................................. 80,085 86,479 98,261
RESEARCH AND DEVELOPMENT EXPENSES............................................ 13,726 14,414 17,852
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................................. 45,062 47,322 48,830
OTHER CHARGES (Note 6)....................................................... 3,450 -- 837
---------- ---------- ----------
Operating profit......................................................... 17,847 24,743 30,742
INTEREST EXPENSE............................................................. (558) (616) (122)
OTHER INCOME, net............................................................ 2,940 1,153 1,149
FLOOD COST SAVINGS (see Note 6).............................................. 551 -- --
---------- ---------- ----------
Income before provision for income taxes and minority interest........... 20,780 25,280 31,769
PROVISION FOR INCOME TAXES................................................... 8,470 9,875 11,187
MINORITY INTEREST IN INCOME OF SUBSIDIARY.................................... 768 800 1,346
---------- ---------- ----------
Net income............................................................... $ 11,542 $ 14,605 $ 19,236
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE TREASURY STOCK
---------------------- PAID-IN TRANSLATION RETAINED --------------------
SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS SHARES AMOUNT
--------- ----------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993......... 15,287,454 $ 153 $ 5,414 $ 1,258 $ 77,074 1,695,562 $ (17,022)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. 52,602 703
Purchase of treasury stock......... 873,093 (9,186)
Retirement of treasury stock....... (2,528,655) (25) (6,117) (19,634) (2,528,655) 25,776
Repayments of deferred ESOP
contribution.....................
Cash dividend paid--$.335 per
share............................ (4,564)
Change during year................. 1,797
Net income......................... 11,542
Other.............................. 11
--------- ----- --------- ----------- ----------- --------- ---------
BALANCE, December 31, 1994......... 12,811,401 128 -- 3,055 64,429 40,000 (432)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. 18,718 346
Shares issued in connection with
exercise of stock options,
including related tax benefits... 69,100 1 684
Purchase of treasury stock......... 424,227 (5,833)
Repayment of deferred ESOP
contribution.....................
Cash dividend paid--$.33 per
share............................ (4,205)
Change during year................. 1,009
Net income......................... 14,605
Other.............................. (2)
--------- ----- --------- ----------- ----------- --------- ---------
BALANCE, December 31, 1995......... 12,899,219 129 1,030 4,064 74,827 464,227 (6,265)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. 1,602 36
Shares issued in connection with
exercise of stock options,
including related tax benefits... 23,400 254
Purchase of treasury stock......... 313,642 (4,863)
Cash dividend paid--$.40 per
share............................ (4,972)
Change during year................. (1,662)
Net income......................... 19,236
Other.............................. (3)
--------- ----- --------- ----------- ----------- --------- ---------
BALANCE, December 31, 1996......... 12,924,221 $ 129 $ 1,320 $ 2,402 $ 89,088 777,869 $ (11,128)
--------- ----- --------- ----------- ----------- --------- ---------
--------- ----- --------- ----------- ----------- --------- ---------
<CAPTION>
DEFERRED
COMPENSATION
-------------
<S> <C>
BALANCE, December 31, 1993......... $ (1,296)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. (497)
Purchase of treasury stock.........
Retirement of treasury stock.......
Repayments of deferred ESOP
contribution..................... 480
Cash dividend paid--$.335 per
share............................
Change during year.................
Net income.........................
Other..............................
-------------
BALANCE, December 31, 1994......... (1,313)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. (188)
Shares issued in connection with
exercise of stock options,
including related tax benefits...
Purchase of treasury stock.........
Repayment of deferred ESOP
contribution..................... 145
Cash dividend paid--$.33 per
share............................
Change during year.................
Net income.........................
Other..............................
-------------
BALANCE, December 31, 1995......... (1,356)
Net shares issued in connection
with restricted stock plan
including deferred compensation
and amortization................. 138
Shares issued in connection with
exercise of stock options,
including related tax benefits...
Purchase of treasury stock.........
Cash dividend paid--$.40 per
share............................
Change during year.................
Net income.........................
Other..............................
-------------
BALANCE, December 31, 1996......... $ (1,218)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................... $ 11,542 $ 14,605 $ 19,236
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................... 4,612 4,675 5,135
Benefit for flood costs..................................................... (551) -- --
Minority interest in net income of subsidiary............................... 768 800 1,346
Increase in deferred income taxes, net...................................... 800 342 802
Other....................................................................... (429) (437) 371
Changes in assets and liabilities net of effects from product line
acquired--
Increase in accounts receivable........................................... (583) (4,659) (1,043)
(Increase) decrease in inventories........................................ (136) 1,282 (653)
Decrease (increase) in other current assets............................... (2,239) 2,298 2,111
Increase in other noncurrent assets....................................... (971) (368) (459)
Increase (decrease) in accounts payable and other accrued expenses........ 7,963 (3,851) 6,681
Increase (decrease) in deferred income.................................... (977) 3,161 (1,130)
(Decrease) increase in other noncurrent liabilities....................... (5,101) 907 790
--------- --------- ---------
Net cash provided by operating activities................................... 14,698 18,755 33,187
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................ (1,577) (3,327) (2,715)
Proceeds from sale of fixed assets and investments.............................. 497 529 43
Product lines, patent rights and licenses acquired.............................. (635) (700) (4,046)
Other........................................................................... -- (1,080) (1,768)
--------- --------- ---------
Net cash used for investing activities...................................... (1,715) (4,578) (8,486)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term obligations............................................. -- 7 23
Repayments of long-term obligations............................................. (1,563) (646) (693)
Purchase of treasury stock...................................................... (7,706) (5,833) (3,751)
Increase (decrease) in notes payable to banks................................... 641 (1,153) 1,529
Proceeds from exercise of stock options, including tax benefits................. -- 685 254
Dividends paid.................................................................. (4,564) (4,205) (4,972)
--------- --------- ---------
Net cash used for financing activities...................................... (13,192) (11,145) (7,610)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................................... 1,584 534 (1,780)
--------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS......................................... 1,375 3,566 15,311
--------- --------- ---------
CASH AND CASH EQUIVALENTS, beginning of year...................................... 17,574 18,949 22,515
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year............................................ $ 18,949 $ 22,515 $ 37,826
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................................................... $ 521 $ 372 $ 249
--------- --------- ---------
--------- --------- ---------
Income taxes.................................................................. $ 7,543 $ 7,987 $ 5,935
--------- --------- ---------
--------- --------- ---------
NON-CASH FINANCING ACTIVITIES:
Debt issued for the purchase of treasury stock.................................. $ 1,480 $ -- $ 1,112
--------- --------- ---------
--------- --------- ---------
Stock issued under restricted stock plan........................................ $ 711 $ 406 $ 54
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
OPERATIONS--
Packard BioScience Company (formerly known as Canberra Industries, Inc.) and
subsidiaries (the Company) is a worldwide developer, manufacturer and marketer
of analytical instruments and related products and services that have
applications extending into the physics research, environmental monitoring, life
sciences research and health care clinical testing markets. In March 1997, the
Company changed its name from Canberra Industries, Inc. to Packard BioScience
Company.
The Company operates primarily in two industry segments.Through its Packard
Instrument segment, the Company supplies bioanalytical instruments, and the
related biochemical supplies and services, to the drug discovery and molecular
biology markets. The Canberra Nuclear segment manufactures analytical
instruments and systems used to detect, identify and quantify radioactive
materials for the nuclear industry and related markets.
CONSOLIDATION--
The accompanying consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
FOREIGN OPERATIONS--
The Company translates foreign currency financial statements using the
current rate method. Translation gains and losses are recorded as a separate
component of stockholders' equity, cumulative translation adjustment.
The Company purchases various foreign currency forward contracts primarily
for the purpose of hedging firm purchase commitments. As of December 31, 1995
and 1996, the Company had total forward contracts outstanding of approximately
$8,557,000 and $3,649,000 whose settlement prices substantially approximated
yearend exchange rates. Foreign exchange transaction losses (gains), inclusive
of forward contracts settled, were $1,097,000, $1,158,000 and $(592,000) in
1994, 1995 and 1996, respectively, and were included in cost of sales in the
accompanying consolidated statements of income.
CASH AND CASH EQUIVALENTS--
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with an original maturity of three
months or less to be cash equivalents.
INVENTORIES--
Inventories are valued at the lower of cost or market using the first-in,
first-out (FIFO) method. A reserve for potential nonsaleable inventory due to
excess stocks or obsolescence is provided based upon a detailed review of
inventory components, past history, and expected future usage.
PROPERTY, PLANT AND EQUIPMENT--
Property, plant and equipment are recorded at cost. Equipment, furniture and
leasehold improvements are depreciated using the straight-line method over their
estimated useful lives or term of the lease
F-7
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ranging from 2 to 20 years. Buildings and improvements are depreciated over 5 to
40 years using the straight-line method.
GOODWILL, NET OF AMORTIZATION--
The Company estimates the life of goodwill for each individual acquisition.
Goodwill included in the accompanying consolidated balance sheets is being
amortized over ten years. As of December 31, 1995 and 1996, the Company had
accumulated amortization of approximately $1,882,000 and $2,098,000,
respectively. The Company assesses realizability of goodwill based on the
profitability of items acquired. Based on this assessment, the Company believes
there is no impairment of goodwill.
PATENT RIGHTS AND LICENSE ACQUISITIONS--
The Company capitalizes amounts paid for patent rights and licenses acquired
to manufacture certain products. These amounts are amortized over the lives of
the respective agreements or the estimated lives of the products, if shorter.
REVENUE RECOGNITION AND DEFERRED INCOME--
Revenue is recognized when title to a product is transferred or services
have been rendered. Revenues from service contracts are recognized on a
straight-line basis over the contract period. Deferred income results from the
billings of certain field service maintenance contracts and other customer
advances. When maintenance contracts are billed in advance, revenue amounts are
deferred and recognized ratably over the terms of the related contracts.
WARRANTY--
The Company generally provides a warranty for a one year period subsequent
to installation of its product. The Company accrues for the estimated cost of
the warranty at the time of sale of the related product.
INCOME TAXES--
The Company uses an asset and liability approach for financial accounting
and reporting of income taxes. The provision for income taxes includes Federal,
foreign and state income taxes currently payable and those deferred because of
temporary differences between income reported for tax and financial statement
purposes.
The Company has not provided for possible U.S. taxes on undistributed
earnings of foreign subsidiaries that are considered to be reinvested
indefinitely. Undistributed earnings of foreign subsidiaries considered to be
reinvested indefinitely amounted to $10,560,000 and $9,578,000 at December 31,
1995 and 1996, respectively. When earnings are remitted, credit for foreign
taxes already paid on subsidiary earnings and withholdings may offset a portion
of applicable U.S. income taxes.
F-8
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
OTHER INCOME AND EXPENSE--
Other income and expense includes interest income of approximately
$1,179,000, $1,247,000 and $1,149,000 in 1994, 1995 and 1996, respectively, and
certain other non-operating revenues and expenses.
LONG-LIVED ASSETS--
In March, 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of". This statement
requires that long-lived assets, including premises and equipment and
identifiable intangible assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amounts of an asset may not
be recoverable. The adoption of this standard in 1996 did not have any impact on
the Company's consolidated financial position or results of operations.
NEW PRONOUNCEMENTS--
In 1996, the FASB issued SFAS No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS 125").
This statement requires an entity to recognize financial and servicing assets it
controls and derecognize financial assets when control is surrendered and
liabilities are extinguished. This statement is required to be adopted January
1, 1997 although certain provisions of SFAS 125 have been deferred by the FASB
for one year. It is not expected that this statement will have a material impact
on the Company's consolidated financial position or results of operations.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS--
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the reporting
periods. Operating results in the future could vary from the amounts derived
from management's estimates and assumptions.
DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS--
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND CASH EQUIVALENTS--The carrying amount approximates fair value
because of the short maturity of those instruments.
MORTGAGE RECEIVABLE--At December 31, 1996, the Company has a long-term
mortgage receivable with a face amount of $3,300,000, which exceeded the
current carrying value of $1,015,000 included in other assets in the
accompanying consolidated balance sheets. The estimated fair value of this
investment approximates its carrying value of $1,015,000. Fair value was
determined through the use of an independent appraisal.
F-9
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
LONG-TERM OBLIGATIONS AND NOTES PAYABLE--The fair values of the Company's
long-term obligations and notes payable are estimated to approximate
recorded amounts due to the relative short maturity.
FOREIGN CURRENCY CONTRACTS--The fair value of foreign currency contracts
(primarily used for hedging firm commitments) is estimated by obtaining
closing rates and comparing them to the actual contract rates. The total
value of the open contracts approximated the estimated fair value.
RECLASSIFICATIONS--
Certain prior year amounts have been reclassified to conform with the
current year classification.
2. ACCOUNTS RECEIVABLE, NET:
Accounts receivable, net, consisted of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Trade................................................................... $ 39,239 $ 40,018
Other................................................................... 979 1,317
Allowance for doubtful accounts......................................... (421) (475)
--------- ---------
$ 39,797 $ 40,860
--------- ---------
--------- ---------
</TABLE>
3. INVENTORIES:
Inventories consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Raw materials and parts................................................. $ 12,595 $ 13,532
Work in progress........................................................ 698 944
Finished goods.......................................................... 9,499 9,085
--------- ---------
22,792 23,561
Excess and obsolete reserve............................................. (1,647) (1,763)
--------- ---------
$ 21,145 $ 21,798
--------- ---------
--------- ---------
</TABLE>
4. LONG-TERM OBLIGATIONS AND NOTES PAYABLE:
The Company had the following notes payable and long-term debt at December
31, 1996 and on a pro forma (unaudited) basis after giving effect to the new
bank financing and issuance of the Senior
F-10
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
4. LONG-TERM OBLIGATIONS AND NOTES PAYABLE: (CONTINUED)
Subordinated Notes and the application of the proceeds therefrom, subsequent to
year end, as described below (in thousands):
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
INTEREST ----------------------------------- PRO FORMA
RATE MATURITY CURRENT LONG-TERM TOTAL TOTAL
--------------------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Notes payable............................ 3.5% to 7.9% 1997 $ 3,524 $ -- $ 3,524 $ 1,708
Other long-term obligations.............. 5.0% to 6.0% 1997-2013 829 2,037 2,866 --
New bank term loan....................... LIBOR + 2.75% 2003 -- -- -- 40,000
New bank revolving loan.................. LIBOR + 2.375% 2002 -- -- -- --
Senior Subordinated Notes................ 9.375% 2007 -- -- -- 150,000
----------- ----------- --------- -----------
$ 4,353 $ 2,037 $ 6,390 $ 191,708
----------- ----------- --------- -----------
----------- ----------- --------- -----------
</TABLE>
Subsequent to year end, the Company issued $150,000,000 principal amount of
9.375% senior subordinated notes (the "Notes") due March 1, 2007. The proceeds
received from the sale of the Notes, net of initial purchasers' discount of
$4,500,000, were used to repay certain of the outstanding indebtedness under
previous obligations and to repurchase certain of the Company's outstanding
stock (see Note 12).
The Notes are redeemable, at the option of the Company, after March 1, 2002
at rates starting at 104.688% of principal amount reduced annually through March
1, 2004 at which time they become redeemable at 100% of principal amount.
According to the terms of the Notes, if a change of control occurs, as defined,
each holder of Notes will have the right to require the Company to repurchase
such holder's Notes at 101% of the principal amount thereof.
Subsequent to year end, the Company also entered into a senior credit
agreement (the "Agreement" and together with the Notes, the "Financings") with a
group of banks which provides for a $40,000,000 term loan facility and the
availability of up to $75,000,000 in a revolving credit facility with a
sub-limit for letters of credit up to $11,000,000 in the aggregate. The term
loan facility matures in six years and bears interest, at the Company's option,
at the customary base rate (defined as a certain bank's reference rate, or the
federal funds rate plus 0.5%, whichever is higher) plus 1.75%, or at the
customary reserve adjusted Eurodollar rate plus 2.75%. The outstanding revolving
credit facility balance, if any, is due and payable on March 31, 2002. The
revolving credit facility bears interest, at the Company's option, at the
customary base rate plus 1.375%, or at the customary reserve adjusted Eurodollar
rate plus 2.375%. The credit agreement also provides for a commitment fee of
0.5% on any unused portion of the revolving credit facility.
The Agreement contains certain financial covenants including, but not
limited to, a minimum fixed charge coverage test, a minimum interest coverage
test and a maximum leverage test. The Financings contain certain financial and
non-financial covenants including, but not limited to, limitations on capital
expenditures and technology acquisitions. The Company is prohibited by the
Financings from paying any cash dividends and is limited in the amount of
capital stock that it may repurchase, the incurrence of additional indebtedness
and liens or dispositions of assets by the Company or any of its subsidiaries.
F-11
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
4. LONG-TERM OBLIGATIONS AND NOTES PAYABLE: (CONTINUED)
In connection with the Agreement, the Company pledged as collateral
substantially all of the tangible and intangible assets of the Company and its
domestic subsidiaries, and 65% of the capital stock of certain of the Company's
foreign subsidiaries.
As of December 31, 1996, after giving effect to the Financings and the
application of the proceeds therefrom, aggregate principal payments of long-term
obligations required during the next five years ending December 31 and
thereafter are approximately as follows (in thousands):
<TABLE>
<S> <C>
1997.............................................................. $ 1,054
1998.............................................................. 1,254
1999.............................................................. 400
2000.............................................................. 400
2001.............................................................. 400
Thereafter........................................................ 188,200
---------
$ 191,708
---------
---------
</TABLE>
Notes payable existing at December 31, 1995 and 1996 consisted of amounts
outstanding under overseas lines of credit which permitted maximum borrowings of
approximately $10,200,000 and $13,500,000, respectively. Borrowings are due on
demand. At December 31, 1995 and 1996, $1,995,000 and $3,524,000, respectively
were outstanding under these arrangements with interest rates ranging from 3.5%
to 7.9%, respectively. The weighted average interest rates on these borrowing
were 5.8% and 4.4% in 1995 and 1996, respectively. The maximum amount
outstanding during 1996 was $3,524,000.
5. COMMON STOCK AND STOCK OPTIONS:
At December 31, 1996, the Company had authorized common stock of 15,000,000
shares with a par value of $.01 per share. At December 31, 1995 and 1996,
12,899,219 and 12,924,221, respectively, of these shares had been issued. A
1-for-1 dividend of common stock was effected July 20, 1994. The number of
shares and all per share amounts, as presented in the consolidated financial
statements and accompanying notes, have been retroactively restated for the
dividend.
The Company has granted non-qualified stock options to outside directors and
selected employees. The exercise price of the options at the date of grant is
the fair value, based upon an external appraisal, and is approved by the Board
of Directors. These options expire at various dates through the year 2006. A
summary of stock option activity is as follows:
F-12
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
5. COMMON STOCK AND STOCK OPTIONS: (CONTINUED)
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE PRICE
SHARES PER SHARE
---------- -------------
<S> <C> <C>
Outstanding at December 31, 1993................................... 855,550 $ 5.02
Granted.......................................................... 380,500 13.17
---------- ------
Outstanding at December 31, 1994................................... 1,236,050 $ 9.08
Granted.......................................................... 92,000 14.29
Cancelled........................................................ (20,000) 8.56
Exercised........................................................ (69,100) 6.98
---------- ------
Outstanding at December 31, 1995................................... 1,238,950 $ 9.59
Granted.......................................................... 165,000 16.00
Cancelled........................................................ (8,700) 10.81
Exercised........................................................ (23,400) 7.63
---------- ------
Outstanding at December 31, 1996................................... 1,371,850 $ 10.37
---------- ------
---------- ------
</TABLE>
As of December 31, 1996, 479,100 of the 1,371,850 options have exercise
prices between $4.37 and $6.33, with a weighted averaged exercise price of $6.21
and a weighted average remaining contractual life of 2.9 years. All of these
options are exercisable as of December 31, 1996.
Of the total options outstanding, 233,500 have exercise prices between $8.13
and $10.81, with a weighted average price of $8.62 and a weighted average
remaining contractual life of 4.3 years. All of these options are exercisable as
of December 31, 1996.
The remaining 659,250 options have exercise prices between $12.87 and
$16.00, with a weighted average exercise price of $14.02 and a weighted average
remaining contractual life of 2.6 years. Of the 659,250 options, 318,450 are
exercisable as of December 31, 1996 at a weighted average price of $13.56.
If compensation cost for these plans had been determined under the
fair-value based methodology of SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income would have been reduced to $14,504 and
$18,937 on a pro forma basis for the years ended December 31, 1995 and 1996,
respectively. For purposes of this calculation, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-pricing
model (minimum value method) with the following assumptions:
<TABLE>
<S> <C>
Expected dividend yield..................................... 2.5%
Expected stock price volatility............................. 0.0%
Risk-free interest rate..................................... 5.97% - 7.81%
Expected life of options.................................... 10 years
</TABLE>
F-13
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
The Company maintains a restricted stock plan which provides for the
issuance of common stock for no consideration to officers and key employees,
with vesting over an eight-year period. Compensation expense, determined as of
the date of grant, is being recognized ratably in accordance with the vesting
schedule. Compensation expense recognized was $206,000, $158,000 and $173,000 in
1994, 1995 and 1996, respectively. At December 31, 1995 and 1996, $1,356,000 and
$1,218,000 of future compensation expense associated with 127,106 and 104,140
unvested shares, respectively, has been deferred and is included in deferred
compensation in the accompanying consolidated balance sheets.
At December 31, 1996, 579,316 shares of common stock were reserved for
options and various stock plans, in addition to shares reserved for stock
options outstanding.
The Company has granted put rights on its common stock to selected
employees. Generally, exercisable rights occur over a period up to ten years at
the then current appraisal value. As of December 31, 1996, 378,289 shares have
put rights exercisable in 1997, subject to certain restrictions. During 1995 and
1996, 123,702 shares and 139,215 shares were put to the Company, respectively.
6. FLOOD COST SAVINGS AND OTHER CHARGES:
On June 6, 1992, the Company's previous headquarters in Meriden, Connecticut
were flooded. As a result, the Company relocated its headquarters to a new
facility also in Meriden and wrote-off $3,120,000 of unamortized leasehold
improvements during 1992. The new facility, which was purchased in 1992, was
partially funded with a state grant and loan, both of which are secured by the
new facility. The remaining balance on the loan was $899,000 as of December 31,
1996 which is included in long-term obligations. This loan was repaid subsequent
to yearend. During 1993, additional costs were incurred for temporary facilities
and a provision was made for the termination of the remaining lease obligation
of the old headquarters. During 1994, the obligation to the previous landlord
was settled for an amount less than that accrued for as of December 31, 1993.
The effects of these actions have been recorded as flood cost savings in the
accompanying consolidated statements of income.
During 1994, the Company shutdown its Itasca, Illinois facility and
relocated most of the operations to the Meriden facility. The Company recorded a
charge of $3,450,000 to recognize the costs associated with employee
terminations, lease buy-outs and other costs of the closing. These costs have
been recorded in other charges in the accompanying consolidated statements of
income.
During 1996, the Company incurred $837,000 of costs related to the
recapitalization as described in Note 12.
7. INCOME TAXES:
The sources of the Company's income before provision for income taxes and
minority interest were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
United States................................................ $ 9,171 $ 13,116 $ 15,271
Foreign...................................................... 11,609 12,164 16,498
--------- --------- ---------
$ 20,780 $ 25,280 $ 31,769
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-14
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
7. INCOME TAXES: (CONTINUED)
<TABLE>
<S> <C> <C> <C>
The provision for income taxes is as follows (in thousands):
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal.................................................... $ 3,874 $ 4,010 $ 2,697
Foreign.................................................... 4,414 4,536 7,081
State...................................................... 338 356 694
--------- --------- ---------
8,626 8,902 10,472
--------- --------- ---------
Deferred:
Federal.................................................... (78) 1,150 674
Foreign.................................................... 119 (330) (113)
State...................................................... (197) 153 154
--------- --------- ---------
(156) 973 715
--------- --------- ---------
Total.................................................... $ 8,470 $ 9,875 $ 11,187
--------- --------- ---------
--------- --------- ---------
</TABLE>
The effective income tax rate varies from the U.S. Federal statutory rate,
as a percentage of income before provision for income taxes and minority
interest, as follows:
<TABLE>
<CAPTION>
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Anticipated statutory rate................................................................... 35% 35% 35%
Increases (decreases) resulting from:
Net tax effect relating to foreign operations and sales.................................... 9 (2) (3)
Research credits........................................................................... (3) (1) (1)
State income taxes......................................................................... 3 2 3
Other, net................................................................................. (3) 5 1
-- -- --
Effective income tax rate................................................................ 41% 39% 35%
-- -- --
-- -- --
</TABLE>
F-15
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
7. INCOME TAXES: (CONTINUED)
At December 31, 1995 and 1996, deferred tax assets and liabilities were
comprised of the following elements (in thousands):
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
DEFERRED TAX ASSETS:
Inventory related items.................................................. $ 1,214 $ 1,294
Non-deductible accruals.................................................. 1,689 1,786
Foreign and other tax credit carryforwards............................... 2,800 392
Other.................................................................... 912 1,282
--------- ---------
Gross deferred tax assets.............................................. 6,615 4,754
Less: valuation allowance................................................ 1,263 350
--------- ---------
Total deferred tax assets.............................................. 5,352 4,404
--------- ---------
DEFERRED TAX LIABILITIES:
Accelerated depreciation................................................. 505 471
Acquisition related tax liabilities...................................... 589 439
Other.................................................................... 484 567
--------- ---------
Total deferred tax liabilities......................................... 1,578 1,477
--------- ---------
Net deferred tax assets................................................ $ 3,774 $ 2,927
--------- ---------
--------- ---------
</TABLE>
During 1994, the Company recorded a valuation allowance against U.S. foreign
tax and other credit carryforwards due to the significant uncertainty relative
to their use. During 1995, the Company changed its terms on foreign sales,
creating additional foreign source income. Accordingly, the valuation allowance
relating to foreign tax credits was reduced during 1995 and 1996.
8. BENEFIT PLANS:
The Company maintains two primary benefit plans for its employees. The
Company and its domestic subsidiary offer a contributory defined contribution
plan (the Profit Sharing Plan) covering substantially all employees who have
completed at least one year of service, as defined. The Profit Sharing Plan
provides that eligible participants may make a basic contribution from 1% to 3%
of their annual pay, with additional contributions allowed up to an additional
8% of annual pay. The Company makes matching contributions equal to 80% of the
employee's basic contribution which amounted to approximately $696,000, $627,000
and $729,000 for the years ended December 31, 1994, 1995 and 1996, respectively.
The Company also has a noncontributory employee stock ownership plan (the
ESOP) and related trust. Employees of the Company and its domestic subsidiary
who have been employed one full year and have completed 1,000 hours of service,
as defined, are eligible to participate in the ESOP. Each year the Company makes
a contribution from profits, as defined, of an amount determined by its Board of
Directors, but not to exceed 15% of the aggregate compensation of all
participants in the ESOP in any plan year. Contributions under the ESOP for any
individual participant in any year are limited to the lower of $30,000 or 25% of
the participant's compensation. The Company provided for contributions of
$800,000 in 1994, $850,000 in 1995 and $800,000 in 1996, plus interest due by
the ESOP. The trust had used the
F-16
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
8. BENEFIT PLANS: (CONTINUED)
contributions to first service debt incurred, if any, and then to purchase
outstanding shares of the Company's stock. The ESOP will be merged into the
Profit Sharing Plan subsequent to yearend pursuant to the Recapitalization and
Stock Purchase Agreement (see Note 12).
9. COMMITMENTS AND CONTINGENCIES:
The Company conducts certain of its operations from leased facilities. In
addition, the Company leases automobiles and various types of machinery and
equipment under operating leases generally expiring during the next three years.
The following is a schedule of future minimum rental payments under
operating leases (excluding autos) that have initial or remaining noncancelable
lease terms extending beyond December 31, 1997 (in thousands):
<TABLE>
<S> <C>
1997................................................................ $ 514
1998................................................................ 475
1999................................................................ 416
2000................................................................ 356
2001................................................................ 309
Thereafter.......................................................... 1,411
---------
$ 3,481
---------
---------
</TABLE>
Rental expense for the years ended December 31, 1994, 1995 and 1996 was
approximately $3,753,000, $4,028,000 and $4,005,000, respectively.
The Company has entered into various cooperative research and development
agreements in 1996 requiring milestone payments and future royalty payments upon
satisfaction of certain criteria as specified in the agreements.
The Company is subject to litigation, claims and assessments arising in the
ordinary course of business. The Company accrues the cost of these items as they
become known and are reasonably estimable. In the opinion of management, none of
the currently known contingencies are expected to have a material adverse effect
on the Company's results of operations or financial position.
10. RELATED PARTY TRANSACTIONS:
The Company had a trade receivable of approximately $703,000 and $1,061,000
at December 31, 1995 and 1996, respectively, from Cis-bio international, an
affiliate of a significant stockholder. In addition, the accompanying
consolidated statements of income include revenues from Cis-bio international of
approximately $641,000, $99,000 and $1,065,000 for 1994, 1995 and 1996,
respectively, and reimbursements of research and development expenses of
$1,577,000, $2,961,000 and $1,536,000 for 1994, 1995 and 1996, respectively.
F-17
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
11. GEOGRAPHIC INFORMATION AND INDUSTRY SEGMENTS:
The Company operates predominately in three major geographic areas and two
industry segments. Transfers between geographic areas are made at the estimated
market value of the merchandise transferred. The eliminations result from
intercompany or intersegment sales, receivables and profit in inventory.
The following tables summarize the Company's operations by geographic area
and industry segment for 1994, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
GEOGRAPHIC AREAS 1994 1995 1996
- ----------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues
United States.............................................................. $ 68,804 $ 64,511 $ 68,390
Europe..................................................................... 68,540 72,399 73,808
Japan...................................................................... 13,902 14,818 21,741
Other International and Eliminations, net.................................. 14,138 17,386 20,079
---------- ---------- ----------
Total consolidated....................................................... $ 165,384 $ 169,114 $ 184,018
---------- ---------- ----------
---------- ---------- ----------
Operating profit*
United States.............................................................. $ 8,789 $ 13,674 $ 16,165
Europe..................................................................... 6,324 8,855 9,745
Japan...................................................................... 4,117 4,169 6,623
Other International and Eliminations, net.................................. (1,383) (1,955) (1,791)
---------- ---------- ----------
Total consolidated....................................................... $ 17,847 $ 24,743 $ 30,742
---------- ---------- ----------
---------- ---------- ----------
Identifiable assets
United States.............................................................. $ 87,682 $ 89,428 $ 105,495
Europe..................................................................... 42,290 48,275 44,044
Japan...................................................................... 8,998 9,075 12,999
Other International and Eliminations, net.................................. (23,758) (26,495) (24,613)
---------- ---------- ----------
Total consolidated....................................................... $ 115,212 $ 120,283 $ 137,925
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------------------
* Operating profit for 1994 includes a facility closing charge of $3,450
within the United States as described in Note 6. Operating profit for 1996
includes costs of $837 related to transactions as described in Note 12.
F-18
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
11. GEOGRAPHIC INFORMATION AND INDUSTRY SEGMENTS: (CONTINUED)
<TABLE>
<CAPTION>
INDUSTRY SEGMENT 1994 1995 1996
- ----------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues
Packard Instrument......................................................... $ 101,335 $ 107,156 $ 122,676
Canberra Nuclear........................................................... 64,049 61,958 61,342
---------- ---------- ----------
Total consolidated....................................................... $ 165,384 $ 169,114 $ 184,018
---------- ---------- ----------
---------- ---------- ----------
Operating profit
Packard Instrument......................................................... $ 17,844 $ 19,243 $ 25,737
Canberra Nuclear........................................................... 6,684 8,260 8,401
General corporate expenses................................................. (2,861) (2,453) (2,318)
Other Charges.............................................................. (3,450) -- (837)
Eliminations............................................................... (370) (307) (241)
---------- ---------- ----------
Total consolidated....................................................... $ 17,847 $ 24,743 $ 30,742
---------- ---------- ----------
---------- ---------- ----------
Capital expenditures
Packard Instrument......................................................... $ 1,005 $ 1,702 $ 1,513
Canberra Nuclear........................................................... 572 1,625 1,202
---------- ---------- ----------
Total consolidated....................................................... $ 1,577 $ 3,327 $ 2,715
---------- ---------- ----------
---------- ---------- ----------
Depreciation and amortization
Packard Instrument......................................................... $ 2,243 $ 2,427 $ 2,971
Canberra Nuclear........................................................... 2,369 2,248 2,164
---------- ---------- ----------
Total consolidated....................................................... $ 4,612 $ 4,675 $ 5,135
---------- ---------- ----------
---------- ---------- ----------
Identifiable assets
Packard Instrument......................................................... $ 74,785 $ 81,457 $ 98,912
Canberra Nuclear........................................................... 40,427 38,826 39,013
---------- ---------- ----------
Total consolidated....................................................... $ 115,212 $ 120,283 $ 137,925
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
12. RECAPITALIZATION AND STOCK PURCHASE AGREEMENT AND PRO FORMA DISCLOSURE:
On March 4, 1997, pursuant to a Recapitalization and Stock Purchase
Agreement (Recapitalization) between CII Acquisition LLC (CII Acquisition), an
affiliate of Stonington Capital Appreciation 1994 Fund, L.P. (Stonington) and
certain continuing stockholders, CII Acquisition acquired approximately 69% of
the common stock of the Company on a fully diluted basis as a result of the
transactions described below. The transactions include (a) acquisition by CII
Acquisition of $54.0 million of common stock from certain continuing
stockholders, (b) acquisition by CII Acquisition of $17.5 million of common
stock from the Company, (c) a tender offer by the Company to all non-continuing
stockholders for $208.6 million, and (d) cancellation of all stock options held
by the non-continuing stockholders for $3.3 million. The price per share for the
above transactions was $22.25 except for the option redemption where the price
was $22.25 less the exercise price of such stock options. The Company used the
proceeds of the stock offering, $8.3 million from the exercise of certain
options, cash on hand and $190.0 million in proceeds from certain debt
financings to redeem the shares in the tender offer and pay an estimated $20.5
million in transaction fees
F-19
<PAGE>
PACKARD BIOSCIENCE COMPANY AND SUBSIDIARIES
(FORMERLY KNOWN AS CANBERRA INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
12. RECAPITALIZATION AND STOCK PURCHASE AGREEMENT AND PRO FORMA DISCLOSURE:
(CONTINUED)
and expenses of which $2.5 million was a fee paid to Stonington. The transaction
fees and expenses include costs associated with the stock offering, debt
financings and fees and other expenses.
The following unaudited pro forma condensed consolidated balance sheet and
unaudited pro forma condensed consolidated statement of income have been
prepared to give effect to the above transactions and related tax benefits had
they occurred as of December 31, 1996 and January 1, 1996, respectively.
F-20
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................. $ 37,826 $ (21,213)(1) $ 16,613
Accounts receivable, net.............................................. 40,860 -- 40,860
Inventories........................................................... 21,798 -- 21,798
Refundable income taxes............................................... -- 5,511(2) 5,511
Deferred income taxes................................................. 1,689 -- 1,689
Other................................................................. 4,743 -- 4,743
---------- ----------- -----------
Total current assets.............................................. 106,916 (15,702) 91,214
---------- ----------- -----------
Property, plant and equipment, net.................................... 17,587 -- 17,587
Goodwill, net of amortization......................................... 147 -- 147
Deferred income taxes................................................. 1,238 -- 1,238
Deferred financing costs.............................................. -- 11,200(3) 11,200
Other assets.......................................................... 12,037 -- 12,037
---------- ----------- -----------
Total assets...................................................... $ 137,925 $ (4,502) $ 133,423
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable......................................................... $ 3,524 $ (1,816)(1) $ 1,708
Current portion of long-term obligations.............................. 829 (829)(1) 0
Accounts payable...................................................... 11,118 -- 11,118
Accrued liabilities................................................... 15,943 -- 15,943
Income taxes payable.................................................. 6,685 -- 6,685
Deferred income....................................................... 9,601 -- 9,601
---------- ----------- -----------
Total current liabilities......................................... 47,700 (2,645) 45,055
---------- ----------- -----------
Long-term obligations, less current portion........................... 2,037 (2,037)(1) 0
Term loan facility (see Note 4)....................................... -- 40,000(1) 40,000
Senior subordinated notes (see Note 4)................................ -- 150,000(1) 150,000
Other non-current liabilities......................................... 4,875 -- 4,875
Minority interest in equity of subsidiary............................. 2,720 -- 2,720
---------- ----------- -----------
Total liabilities................................................. 57,332 185,318 242,650
---------- ----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY)....................................... 80,593 (189,820)(4) (109,227)
---------- ----------- -----------
Total liabilities and stockholders' equity (deficiency)........... $ 137,925 $ (4,502) $ 133,423
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
F-21
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(1) Represents the adjustments to the Company's cash and debt to account for the
effects of the Recapitalization.
(2) Represents the tax benefit to be derived from the currently deductible
transaction fees and expenses as well as the tax benefit from the exercise
and redemption of stock options calculated at the statutory tax rate.
(3) Represents the deferred financing costs incurred as a result of the
Recapitalization.
(4) Represents the net change in stockholders' equity (deficiency) as a result
of the Recapitalization, including transaction fees and expenses, less
capitalized deferred financing costs and the income tax benefit referred to
in (2) above.
F-22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
REVENUES................................................................... $ 184,018 $ -- $ 184,018
COST OF SALES AND SERVICE EXPENSE.......................................... 85,757 -- 85,757
---------- ----------- -----------
Gross profit........................................................... 98,261 -- 98,261
RESEARCH AND DEVELOPMENT EXPENSES.......................................... 17,852 -- 17,852
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES............................... 48,830 -- 48,830
OTHER CHARGES.............................................................. 837 -- 837
---------- ----------- -----------
Operating profit....................................................... 30,742 -- 30,742
INTEREST EXPENSE........................................................... (122) (17,995) (1) (18,117)
AMORTIZATION OF DEFERRED FINANCING COSTS................................... -- (1,545) (2) (1,545)
OTHER INCOME, net.......................................................... 1,149 -- 1,149
---------- ----------- -----------
Income before provision for income taxes and minority interest......... 31,769 (19,540) 12,229
PROVISION FOR INCOME TAXES................................................. 11,187 (7,816) (3) 3,371
MINORITY INTEREST IN INCOME OF SUBSIDIARY.................................. 1,346 -- 1,346
---------- ----------- -----------
Net income............................................................. $ 19,236 $ (11,724) $ 7,512
---------- ----------- -----------
---------- ----------- -----------
PRO FORMA EARNINGS PER SHARE............................................... $ 1.69(4)
</TABLE>
F-23
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(1) The following represent adjustments to interest expense as a result of the
Recapitalization:
<TABLE>
<S> <C>
Interest expense with respect to the term loan facility..................... $ 3,357
Interest expense with respect to the senior subordinated notes.............. 14,063
Bank and other finance fees................................................. 575
-----------
Net change.................................................................. $ 17,995
-----------
-----------
</TABLE>
The interest rate on the term loan facility and senior subordinated notes
was at a weighted average interest rate of 9.2%. For each 0.25% change in
average interest rate on the term loan facility, annual pro forma interest
expense would change by $100.
(2) Represents amortization expense of deferred financing costs related to the
Recapitalization. Approximately $11,200 has been deferred and will be
amortized over the lives of the related debt securities. The weighted
average amortization period for the deferred financing costs is 7.25 years.
The remainder of the Recapitalization fees and expenses has been charged
against stockholders' equity (deficiency) in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet.
(3) Represents the estimated income tax effects of pre-tax pro forma adjustments
at the Company's statutory rate of 40% for all periods presented.
(4) Pro forma earnings per share was calculated based on shares outstanding of
4,353,506 and 96,539 shares for options calculated under the treasury stock
method, for a combined total of 4,450,045 shares.
F-24
<PAGE>
APPENDIX A
GLOSSARY OF TERMS
ALPHA PARTICLE--A positively charged particle emitted by certain radioactive
materials. Comprised of two neutrons and two protons, it is identical to the
nucleus of a helium atom.
ANALYTE--The substance that is determined and quantified in an analytical
procedure.
ASSAYS--Analytical procedures that measure the amount of a particular
substance (or biological function) in a heterogeneous sample.
AUTORADIOGRAPHY--The process whereby a photographic film is used to locate
radioactivity labeled substances, e.g., radiolabeled DNA bands on a gel. The
specimen is overlayered with a photographic film and left for a length of time
determined by the amount of radioactivity present. When the film is developed, a
two dimensional image is produced that corresponds to the location of the
radioactive sample.
BETA PARTICLE--An elementary particle emitted from the nucleus during
radioactive decay, either negatively charged (electron) or positively charged
(positron).
BIOANALYTICAL INSTRUMENTS--Instruments that are used in life science
research to measure biological activity.
CELLULAR BIOLOGY--The study of live, intact cells.
CHEMILUMINESCENCE--The emission of radiation light, usually visible, caused
by the decay of a chemical reaction product from an electronic excited state to
ground state.
CHROMATOGRAPHY--Generally, several analytical and preparative separation
techniques based on the partitioning of a substance between a mobile and a
stationary phase. Classification of the different techniques can be based on the
nature of the stationary phase (e.g., gel, paper, ion exchange, thin-layer) or
on the type of mobile phase (e.g., gas or liquid).
CLINICAL MARKET--The purchases of specialized instruments, reagents and
consumables by hospital labs, reference labs, and decentralized labs that
conduct IN VITRO diagnostic procedures on human specimens.
COLORIMETRIC--Measurements based on the intensity of color changes.
CONTACT IMAGER--In general, a type of imaging using charge-coupled devices
(CCD) cameras to produce a two dimensional image of radioactive decay, and
fluorescence, or chemiluminescence labels in a sample. The camera comes in
direct contact with the sample, such as a gel, blot, or microplate, in order to
maximize the sensitivity of the image.
CRYPTATE--A stable, "cage-like" molecular structure that can encapsulate
ions and which enables time resolved fluorescence in HTRF assays.
EXCITED STATE--A state of a molecule, atom, or nucleus when it possesses
more than its normal energy. Excess molecular or atomic energy may appear as
light or heat. Excess nuclear energy is often released as a gamma ray.
FLUORESCENCE--A molecular process whereby radiation is emitted from a
substance after stimulation by absorption of radiation (light or radioactivity).
The wavelength emitted can be in the visible or ultraviolet region, but is
always greater than the wavelength absorbed.
A-1
<PAGE>
FLOW SCINTILLATION COUNTER OR FSA--An analytical instrument similar to a
liquid scintillation counter, that can measure radioactivity in liquids using
either scintillation cocktails or solid scintillators. Measurements are made
continuously as samples flow through a small cell, usually at the end of a
separation step.
FUNCTIONAL IN-CELL ASSAYS--The measurement of a reaction within the
environment of a living cell. These in vivo measurements are generally
considered to be more biologically relevant because they measure complete
response than are IN VITRO measurements of single isolated cells.
GAMMA RAYS--High energy, short wavelength electromagnetic radiation
originating in the nucleus of an atom.
GAMMA SCINTILLATION COUNTER--An analytical instrument that measured the
amount of gamma radiation being emitted from a sample. Particularly useful in
radioimmunoassay procedures.
HIGH THROUGHPUT SCREENING--A process in drug discovery in which a large
library of substances with potential therapeutic efficacy are tested against
large numbers of biological targets.
HOMOGENOUS TIME-RESOLVED FLUORESCENCE (HTRF-TM-)--A proprietary non-isotopic
detection technique developed by CIS bio international and marketed by Packard
Instrument for high throughput screening applications. It is appropriate for
many types of assays including immunoassays, protease, kinase, receptor binding,
and nucleic acid interactions. The primary advantages of this chemistry are that
it is homogenous (i.e., it runs entirely in solution with no solid supports or
special vessels required), and it eliminates background problems by using
time-resolved analysis and spectral discrimination.
IMAGER--In life sciences, a general term used to describe all instruments
able to develop a two dimensional image of radioactive decay, and fluorescence
or chemiluminescence labels, including densitometers, storage phosphor imagers,
and Packard Instrument's proprietary products InstantImager (electronic
autoradiography) and Cyclone (filmless autoradiography).
IMMUNOASSAY--An assay technique that uses antibodies for detecting and
quantifying biological molecules or microorganisms. The most common forms based
on the label used are radioimmunoassay (RIA), enzyme-linked immunoabsorbent
assay (ELISA), fluorescence immunoassay (FIA), and enzyme immunoassay (EIA).
IN VITRO--Literally, IN GLASS, pertaining to biological reactions taking
place in an artificial apparatus such as a test tube.
IN VIVO--Literally, IN LIFE, pertaining to a biological reaction that takes
place in a living cell.
ISOTOPE--One of two or more atoms with the same atomic number (the same
chemical element) but with different atomic weights. Isotopes have very nearly
the same chemical properties, but somewhat different physical properties.
LABEL--A distinguishing feature or tag that can enable a particular molecule
or group to be recognized.
LIFE SCIENCES MARKET--The purchase of specialized instrumentation, reagents,
and consumables for the study of life processes, drug discovery, biotechnology,
or environmental testing including separation equipment, sequencers,
bioanalytical spectrometers, microplate readers, imaging systems, and laboratory
robotics.
LIQUID HANDLING ROBOTICS--Devices that are used in laboratories to transfer
liquids from one piece of labware or apparatus to another, add or mix reagents,
perform dilutions, perform washing steps, or otherwise manipulate liquid samples
for analytical procedures.
LIQUID SCINTILLATION COUNTER OR LSC--An analytical instrument which measures
radioactivity (alpha and beta particles, electron capture, or gamma rays) from
the rate of light photons emitted by a liquid sample.
A-2
<PAGE>
LUMINESCENCE--A general term applied to the emission of light by causes
other than high temperature.
MICRO OR MICROVOLUME--Literally, a prefix that divides a basic unit by
1,000,000. Generally, sample or reagent volumes appropriate for microplates and
smaller than usually used in single vials, (i.e., 400 microliters or less).
MICROPLATE--Generally, a small (approximately 3.5" x 5") disposable plastic
tray with rows and columns of wells (24, 96, 384, or more) that are used in
assay procedures.
MICROPLATE READER--A device for quantifying the assay results in a
microplate with one or more types of assay labels, e.g., radioisotopic,
luminescence, fluorescence, or calorimetric.
MOLECULAR BIOLOGY--Generally, this term applies to the study and
manipulation of DNA or RNA in isolated molecules or in living organisms. DNA
sequencing, cloning, restriction mapping, and PCR are all common techniques used
in molecular biology.
NANO OR NANOVOLUME--Literally, a prefix that divides a basic unit by
1,000,000,000. Generally, sample or reagents volumes smaller than "micro"
quantities (i.e., less than 1 microliter).
NANOPLATE--A proprietary name for a plastic tray similar to a microplate but
with much higher density of wells (864, 1,528, 3,456, or higher).
NANOTIP-TM---A proprietary name for a sampling tip on a Packard Instrument
MultiPROBE liquid handling system that can aspirate and/or dispense liquids in
volumes less than 1 microliter.
OPTICAL DENSITY--A measure of the extent to which a beam of radiation,
usually ultraviolet, visible, or infrared, is attenuated by transmission through
an absorbing medium. A term equivalent to "absorbance".
OPTICAL CONTACT IMAGER--A proprietary name for an imaging product being
developed by Packard Instrument that uses an intensified charge-coupled camera
device (ICCD) camera to create a two dimensional image of radioactive decay and
chemiluminescence or fluorescence labels.
PHOSPHORESCENCE--A process similar to fluorescence, in which radiation is
emitted from a molecule after absorption of radiation of a defined wavelength.
Unlike fluorescence, however, phosphorescence continues to be emitted after the
exciting radiation is removed.
RADIOACTIVITY--The property of an unstable nuclide of emitting radiation by
spontaneous disintegration.
RADIOISOTOPIC LABELS--Labeling compounds in assays that emit radiation in
relation to the amount of analyte present in the sample.
SCINTILLATION--A flash of light produced in a scintillator by an ionizing
event. The scintillation is the sum of all photons produced by the decay event.
SCINTILLATION COCKTAIL--A solution in which samples are placed for
measurement in a liquid scintillation counter. The major components are solvents
and scintillators, substances that emit photons when excited by radioactivity.
SPECTROMETER--An analytical instrument that measures some portion of the
electromagnetic spectrum, from very short wavelengths (x-ray) to long
wavelengths (ultraviolet, visible light, and infrared).
STORAGE PHOSPHOR IMAGER--An imaging device that is based on the property of
phosphors in a film-like screen to store energy emitted by the specimen and emit
radiation when excited by laser. It is a "filmless" autoradiography system.
A-3
<PAGE>
- -------------------------------------------------
-------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR BY THE INITIAL PURCHASERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO BUY, THE EXCHANGE
NOTES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information................................. 3
Prospectus Summary.................................... 4
Risk Factors.......................................... 16
The Exchange Offer.................................... 25
Certain Federal Income Tax Consequences of the
Exchange Offer...................................... 33
The Company........................................... 34
The Recapitalization.................................. 35
Use of Proceeds....................................... 36
Capitalization........................................ 37
Unaudited Pro Forma Condensed Consolidated Financial
Statements.......................................... 38
Selected Historical Consolidated
Financial Data...................................... 43
Management's Discussion and Analysis of
Financial Condition and Results
of Operations....................................... 45
Business.............................................. 51
Management............................................ 66
Ownership of Capital Stock............................ 72
Certain Transactions.................................. 74
Description of the New Credit Agreement............... 77
Description of the Exchange Notes..................... 79
Description of Certain Federal Income Tax Consequences
of an Investment in the Exchange Notes.............. 109
Exchange Offer; Registration Rights................... 111
Plan of Distribution.................................. 113
Legal Matters......................................... 113
Experts............................................... 113
Index to Consolidated Financial Statements............ F-1
Glossary of Terms..................................... A-1
</TABLE>
[LOGO]
PACKARD BIOSCIENCE COMPANY
OFFER TO EXCHANGE
$150,000,000
9 3/8% SENIOR SUBORDINATED
NOTES DUE 2007
FOR
9 3/8% SENIOR SUBORDINATED
NOTE DUE 2007, SERIES B
------------------
PROSPECTUS
------------------------
, 1997
- -------------------------------------------------
-------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such person was an officer,
director, employee or agent of another corporation or enterprise. The indemnity
may include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests except that no indemnification is permitted
without judicial approval if the officer or director is adjudged to be liable to
the corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
The Company's Certificate of Incorporation and By-Laws provide for the
indemnification of directors and officers of the Company to the fullest extent
permitted by Section 145.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a corporation to provide in its certificate of incorporation that a
director of the corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duties as a
director, except for liability (i) for any transaction from which the director
derives an improper personal benefit, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for improper payment of dividends or redemptions of shares, or (iv) for
any breach of a director's duty of loyalty to the company or its stockholders.
The Company's Certificate of Incorporation includes such a provision. Expenses
incurred by any officer or director in defending any such action, suit or
proceeding in advance of its final disposition shall be paid by the Company upon
delivery to the Company of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified by the Company.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 --Recapitalization and Stock Purchase Agreement, dated as of November 26, 1996, by and among the
Company, CII Acquisition LLC and the Management Stockholders party thereto.
3.1 --Amended and Restated Certificate of Incorporation of the Company.
3.2 --By-Laws of the Company.
4.1 --Indenture, dated as of March 4, 1997, between the Company and The Bank of New York, as Trustee.
4.2 --Form of 9 3/8% Senior Subordinated Notes due 2007.
4.3 --Form of 9 3/8% Senior Subordinated Notes due 2007, Series B.
4.4 --Credit Agreement, dated as of March 4, 1997, by and among the Company, the Subsidiary Borrowers
from time to time party thereto, the several banks and other financial institutions or entities
from time to time party thereto, Canadian Imperial Bank of Commerce, as documentation agent,
BancAmerica Securities, Inc. and CIBC Wood Gundy Securities Corp., each as a co-arranger and a
co-syndication agent, and Bank of America National Trust and Savings Association, as administrative
agent.
5.1 --Opinion of Day, Berry & Howard.
10.1 --Purchase Agreement, dated as of February 21, 1996, by and among the Company, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, BancAmerica Securities, Inc. and CIBC Wood Gundy Securities Corp.
10.2 --Registration Rights Agreement, dated as of March 4, 1997, by and among the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, BancAmerica Securities, Inc. and CIBC Wood Gundy Securities
Corp.
10.3 --Employment Agreement, dated as of March 4, 1997, by and between the Company and Emery G. Olcott.
10.4 --Employment Agreement, dated as of March 4, 1997, by and between the Company and Richard T.
McKernan.
10.5 --Management Stock Incentive Plan.
10.6 --Stock Option Plan of 1971.
10.7 --Stockholders' Agreement, dated as of March 4, 1997, by and among the Company, Merrill Lynch KECALP
L.P. 1994, KECALP Inc., the Management Investors listed in Schedule 1 thereto, the Non-Management
Investors listed in Schedule 2 thereto and Stonington Capital Appreciation 1994 Fund, L.P.
12.1 --Statements re Computation of Ratios.
21. --List of subsidiaries of the Company.
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Day, Berry & Howard (contained in their opinion filed as Exhibit 5.1)
24. --Powers of Attorney (included in the signature pages in Part II of this Registration Statement).
25. --Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
99.3 --Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
</TABLE>
II-2
<PAGE>
(b) Financial Statement Schedules.
Financial statement schedules are omitted because they are not applicable or
because the required information is presented in the combined financial
statements or the notes thereto.
ITEM 22. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(c) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(d) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Meriden, State of
Connecticut, on March 25, 1997.
<TABLE>
<S> <C> <C>
PACKARD BIOSCIENCE COMPANY
By: /s/ EMERY G. OLCOTT
------------------------------------------
Emery G. Olcott
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>
Each person whose signature appears below constitutes and appoints Emery G.
Olcott and Ben D. Kaplan, his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
Amendments (including post-effective Amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on March 25, 1997 by the following
persons in the capacities indicated:
SIGNATURE TITLE
- ------------------------------ --------------------------
Chairman of the Board,
/s/ EMERY G. OLCOTT Chief Executive Officer
- ------------------------------ and President (Principal
Emery G. Olcott Executive Officer)
Vice President and Chief
/s/ BEN D. KAPLAN Financial Officer
- ------------------------------ (Principal Financial and
Ben D. Kaplan Accounting Officer)
/s/ ROBERT F. END
- ------------------------------ Director
Robert F. End
/s/ BRADLEY J. HOECKER
- ------------------------------ Director
Bradley J. Hoecker
/s/ RICHARD T. MCKERNAN
- ------------------------------ Director
Richard T. McKernan
/s/ STEPHEN M. MCLEAN
- ------------------------------ Director
Stephen M. McLean
/s/ ALEXIS P. MICHAS
- ------------------------------ Director
Alexis P. Michas
/s/ GEORGE SERRANO
- ------------------------------ Director
George Serrano
/s/ PETER P. TONG
- ------------------------------ Director
Peter P. Tong
II-6
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ----------- -------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
2.1 --Recapitalization and Stock Purchase Agreement, dated as of November 26, 1996, by and among the
Company, CII Acquisition LLC and the Management Stockholders party thereto......................
3.1 --Amended and Restated Certificate of Incorporation of the Company................................
3.2 --By-Laws of the Company..........................................................................
4.1 --Indenture, dated as of March 4, 1997, between the Company and The Bank of New York, as
Trustee.........................................................................................
4.2 --Form of 9 3/8% Senior Subordinated Notes due 2007...............................................
4.3 --Form of 9 3/8% Senior Subordinated Notes due 2007, Series B.....................................
4.4 --Credit Agreement, dated as of March 4, 1997, by and among the Company, the Subsidiary Borrowers
from time to time party thereto, the several banks and other financial institutions or entities
from time to time party thereto, Canadian Imperial Bank of Commerce, as documentation agent,
BancAmerica Securities, Inc. and CIBC Wood Gundy Securities Corp., each as a co-arranger and a
co-syndication agent, and Bank of America National Trust and Savings Association, as
administrative agent............................................................................
5.1 --Opinion of Day, Berry & Howard..................................................................
10.1 --Purchase Agreement, dated as of February 21, 1996, by and among the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, BancAmerica Securities, Inc. and CIBC Wood Gundy Securities
Corp............................................................................................
10.2 --Registration Rights Agreement, dated as of March 4, 1997, by and among the Company, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Securities, Inc. and CIBC Wood Gundy
Securities Corp.................................................................................
10.3 --Employment Agreement, dated as of March 4, 1997, by and between the Company and Emery G.
Olcott..........................................................................................
10.4 --Employment Agreement, dated as of March 4, 1997, by and between the Company and Richard T.
McKernan........................................................................................
10.5 --Management Stock Incentive Plan.................................................................
10.6 --Stock Option Plan of 1971.......................................................................
10.7 --Stockholders' Agreement, dated as of March 4, 1997, by and among the Company, Merrill Lynch
KECALP L.P. 1994, KECALP Inc., the Management Investors listed in Schedule 1 thereto, the
Non-Management Investors listed in Schedule 2 thereto and Stonington Capital Appreciation 1994
Fund, L.P.......................................................................................
12.1 --Statements re Computation of Ratios.............................................................
21. --List of subsidiaries of the Company.............................................................
23.1 --Consent of Arthur Andersen LLP..................................................................
23.2 --Consent of Day, Berry & Howard (contained in their opinion filed as Exhibit 5.1)................
24. --Powers of Attorney (included in the signature pages in Part II of this Registration
Statement)......................................................................................
25. --Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New
York............................................................................................
99.1 --Form of Letter of Transmittal...................................................................
99.2 --Form of Notice of Guaranteed Delivery...........................................................
99.3 --Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9...........
</TABLE>
<PAGE>
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of November 26, 1996, by and among
Canberra Industries, Inc.,
CII Acquisition LLC,
and each of
the Management Stockholders
(as defined herein) signatories hereto.
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS......................................................1
1.1 Definitions......................................................1
1.2 Other Defined Terms..............................................4
1.3 Interpretation...................................................6
SECTION 2. THE RECAPITALIZATION AND STOCK PURCHASES.........................6
2.1 Buyer's Purchase of New Shares...................................6
2.2 Company Redemption of Shares.....................................6
2.3 Options..........................................................7
2.4 Buyer's Purchase of Management Shares............................7
SECTION 3. CLOSING..........................................................8
3.1 The Closing......................................................8
3.2 Deliveries.......................................................8
(a) (i) The Company to Buyer.................................8
(ii) Buyer to the Company.................................8
(b) (i) The Company to the Paying Agent......................8
(ii) The Paying Agent to the Company......................8
(c) (i) Buyer to the Management Stockholders.................8
(ii) Management Stockholders and Related Stockholders to
Buyer................................................9
(d) (i) The Company and Buyer to the Optionholders...........9
(ii) Optionholders to the Company.........................9
(e) Withholding Rights.........................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER..........................9
4.1 Organization and Corporate Power.................................9
4.2 Authorization; No Breach.........................................9
4.3 Litigation......................................................10
4.4 Brokerage.......................................................10
4.5 Governmental Consents, etc......................................10
4.6 No Knowledge of Misrepresentations or Omissions.................10
4.7 Investment Intent...............................................11
4.8 Financing Commitment............................................11
4.9 Equity Commitment...............................................11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................11
5.1 Organization and Corporate Power................................11
<PAGE>
5.2 Subsidiaries....................................................12
5.3 Authorization; No Breach........................................12
5.4 Capital Stock...................................................13
5.5 Financial Statements............................................13
5.6 Absence of Certain Developments.................................14
5.7 Title to Properties.............................................15
5.8 Tax Matters.....................................................16
5.9 Contracts and Commitments.......................................17
5.10 Proprietary Rights..............................................18
5.11 Litigation......................................................18
5.12 Brokerage.......................................................19
5.13 Governmental Consents, etc. ....................................19
5.14 Employee Benefit Plans..........................................19
5.15 Insurance.......................................................22
5.16 Compliance with Laws............................................22
5.17 Environmental Compliance and Conditions.........................22
5.18 Banking and Agency Arrangements.................................24
5.19 Fairness Opinion................................................24
5.20 Tender Offer....................................................24
5.21 Stockholder Commitments.........................................25
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT
STOCKHOLDERS..........................................................25
6.1 Authority and Related Matters...................................25
SECTION 7. PRECLOSING COVENANTS............................................26
7.1 Conduct of the Business.........................................26
7.2 Access to Books and Records.....................................26
7.3 Notification....................................................27
7.4 Action..........................................................27
7.5 Exclusive Dealing...............................................28
7.6 Agreement to Merge..............................................28
7.7 Buyer Members...................................................29
SECTION 8. AFFIRMATIVE COVENANTS OF BUYER..................................29
8.1 Action..........................................................29
8.2 Confidentiality.................................................29
SECTION 9. CONDITIONS OF CLOSING...........................................29
9.1 Conditions to Obligations of Buyer..............................29
(a) Representations and Warranties of the Company.............29
(b) Compliance With Agreement.................................29
<PAGE>
(c) No Proceedings............................................29
(d) Approvals.................................................30
(e) Resignations..............................................30
(f) Solvency Opinion..........................................30
(g) Required Consents; HSR Act................................30
(h) Redemption and Stock Purchases............................30
(i) Management Agreements.....................................30
(j) Paying Agency Agreement...................................30
(k) Opinion...................................................31
(l) Organizational Documents..................................31
(m) Recapitalization Accounting...............................31
(n) Financing.................................................31
9.2 Conditions to Obligations of the Company........................31
(a) Representations and Warranties of Buyer...................31
(b) Compliance With Agreement.................................32
(c) No Proceedings............................................32
(d) Solvency Opinion..........................................32
(e) Required Consents; HSR Act................................32
(f) Financing.................................................32
(g) Purchase of New Shares....................................32
(h) Stockholder and Optionholder Deliveries...................32
(i) Purchase of Management Shares.............................32
(j) Opinion...................................................33
(k) Organizational Documents..................................33
(l) Recapitalization Accounting...............................33
9.3 Condition to Obligations of the Management Stockholders.........33
(a) Representations and Warranties of Buyer...................33
(b) Compliance With Agreement.................................33
(c) No Proceedings............................................33
(d) Solvency Opinion..........................................34
(e) Redemptions, Repurchases and Purchases....................34
(f) Purchase of New Shares....................................34
(g) Management Agreements.....................................34
(h) Management Bonus..........................................34
SECTION 10. ADDITIONAL COVENANTS OF THE PARTIES.............................34
10.1 Confidentiality of Information..................................34
10.2 Books and Records...............................................35
10.3 Notification....................................................35
10.4 Director and Officer Liability and Indemnification..............35
10.5 Regulatory Filings..............................................36
10.6 Contact with Customers and Suppliers............................36
<PAGE>
10.7 Solvency Opinion................................................36
10.8 Survival........................................................36
10.9 Paying Agency Agreement.........................................36
10.10 Limitation of Recourse..........................................36
10.11 Disclosure Generally............................................37
10.12 Acknowledgment by Buyer.........................................37
10.13 Transfer and Similar Taxes......................................38
10.14 Further Assurances..............................................38
10.15 Appointment of New Board........................................38
10.16 Waiver of Certain Rights........................................38
10.17 New Option Plan.................................................38
10.18 ESOP............................................................39
10.19 Retirement Plans................................................39
10.20 Prohibition.....................................................39
10.21 Exchange of Shares..............................................39
10.22 Related Stockholder Commitments.................................39
SECTION 11. TERMINATION.....................................................40
11.1 Termination.....................................................40
11.2 Effect of Termination...........................................40
SECTION 12. MISCELLANEOUS...................................................40
12.1 Notices.........................................................40
12.2 Entire Agreement................................................42
12.3 Assignability and Amendments....................................42
12.4 Waiver..........................................................42
12.5 Governing Law...................................................42
12.6 Captions........................................................42
12.7 Press Releases and Communications...............................43
12.8 Counterparts....................................................43
12.9 Expenses........................................................43
12.10 Severability....................................................43
EXHIBITS:
Exhibit A - Form of Support Agreement
Exhibit B - Description of Charter Amendment
Exhibit C - Agreement and Plan of Merger
Exhibit D - Form of Stockholders' Agreement
SCHEDULES:
<PAGE>
Schedule of Rollover Options
Schedule of Other Continuing Stockholders
Recapitalization and Stock Purchase Schedule
Section 2.1 : Buyer's Purchase of New Shares
Section 2.2 : Company Redemption of Shares
Section 2.3 : Company Repurchase of Options
Section 2.4 : Buyer's Purchase of Management Shares
Disclosure Schedule
Section 4.8 : Financing Commitment
Section 4.9 : Equity Commitment
Section 5.1 : Organization and Corporate Power
Section 5.2 : Subsidiaries
Section 5.4 : Capital Stock
Section 5.5 : Financial Statements
Section 5.6 : Absence of Certain Developments
Section 5.7 : Title to Properties
Section 5.8 : Tax Matters
Section 5.9 : Contracts and Commitments
Section 5.10 : Proprietary Rights
Section 5.11 : Litigation
Section 5.13 : Governmental Consents, etc.
Section 5.14 : Employee Benefit Plans
Section 5.15 : Insurance
Section 5.17 : Environmental Compliance and Conditions
Section 5.18 : Banking and Agency Arrangements
Section 6.1 : Authority and Related Matters
Section 9.1(g) : Required Consents; HSR Act
Section 9.2(f) : Required Consents; HSR Act
<PAGE>
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
THIS RECAPITALIZATION AND STOCK PURCHASE AGREEMENT (this
"Agreement") made and entered into as of November 26, 1996, by and among CII
Acquisition LLC, a Delaware limited liability company ("Buyer"), Canberra
Industries, Inc., a Delaware corporation (the "Company"), and each of the
Management Stockholders (as defined below) signatories hereto.
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Company and the Management
Stockholders, and the Company and the Management Stockholders desire to sell to
Buyer, shares of the Company's Common Stock, and the Company desires to
repurchase from the Non-Management Stockholders shares of its Common Stock such
that Buyer shall own, immediately following the closing of the transactions
provided for in this Agreement, between 67.9% and 70.8% of the Fully Diluted, as
hereinafter defined, shares of the Company's Common Stock, and the Management
Stockholders and the Other Continuing Stockholders together shall own between
32.1% and 29.2% of the Fully Diluted shares of the Company's Common Stock; and
WHEREAS, it is intended that the transactions contemplated hereby be
recorded as a recapitalization for financial reporting purposes.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by all of the parties to this
Agreement, the parties to this Agreement agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions. The following terms shall have the following respective
meanings:
"Agreement" shall mean this Recapitalization and Stock Purchase
Agreement, including all schedules and exhibits hereto (each of which is hereby
incorporated as a part of this Agreement) and amendments hereto or thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement between Stonington Partners, Inc. and the Company dated July 25, 1996.
"Foreign Subsidiary Reorganization" shall mean the possible
restructuring of foreign Subsidiaries before Closing in a manner to be agreed
upon between Buyer and the
<PAGE>
Company.
"Fully Diluted", when used with reference to shares of the Common
Stock of the Company, shall mean the number of issued and outstanding shares of
Common Stock (including therein Unvested Shares) plus the number of shares of
Common Stock issuable upon exercise of Options outstanding at the relevant time
(without taking into account new shares issuable pursuant to options under the
New Option Plan).
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"Management Bonus" shall mean the aggregate amount accruing through
the Closing Date and payable to the Management Stockholders pursuant to (i) the
customary executive bonus pool established by the Company in aggregate amount
not more than $1.5 million for U.S. employees and $250,000 for non-U.S.
employees, and (ii) a special bonus pool of not more than $1.2 million.
"Management Stockholder Representatives" shall mean both of Emery G.
Olcott and Richard T. McKernan.
"Management Stockholders" shall mean, collectively, Emery G. Olcott,
Richard T. McKernan, George Serrano, Orren K. Tench, Staf van Cauter, Michael A.
Zebarth, Manfred Boesel, Benjamin Campagnuolo, Michael Catalano, Michael
Charland, Eugene Della Vecchia, Kevin Kuhn, Daniel Meert, Arthur Nacht, and
Charles Wherlock and "Management Stockholder" shall mean each of such Persons,
individually.
"Material Adverse Effect" shall mean, with respect to any event,
matter, condition or circumstance, a material adverse effect upon the financial
condition, operating results, business or prospects of the Company and its
Subsidiaries, or such other relevant entity, taken as a whole, or upon the
ability of any party hereto to consummate the transactions contemplated hereby.
"Non-Management Stockholders" shall mean all record holders of any
outstanding shares of Common Stock, other than the Management Stockholders.
"Other Continuing Stockholders" shall mean, collectively, such
Non-Management Stockholders as shall be determined by the Company and reasonably
approved by Buyer and who shall sign an agreement ("Exchange Agreement"), in
form reasonably satisfactory to the Company and Buyer agreeing to exchange his
Other Continuing Stockholder Retained Shares for shares of New Common Stock if
the charter amendment described in Section 7.6(a) shall become effective;
provided that the number of Other Continuing Stockholder Retained Shares,
together with the number of Management Retained Shares, shall, in the aggregate,
be
<PAGE>
-3-
more than 1,053,303 but less than 1,188,135 (in each case excluding Rollover
Options). The Company shall prepare and submit to Buyer a Schedule of Other
Continuing Stockholders (the "Schedule of Other Continuing Stockholders") at
least 5 days before the Closing identifying each of the Other Continuing
Shareholders and the number of Other Continuing Shareholder Retained Shares to
be retained by each of them. Such Schedule shall be subject to the reasonable
approval of Buyer.
"Paying Agency Agreement" shall mean that certain Paying Agency
Agreement by and among the Company and the Paying Agent, whereby the Paying
Agent will be appointed to perform certain actions on behalf of the Stockholders
and Optionholders in connection with the transactions contemplated hereby.
"Paying Agent" shall mean a paying agent to be agreed upon by the
Company and Buyer, acting pursuant to the terms of the Paying Agency Agreement.
"Person" shall include any individual, corporation, trust, estate,
partnership, joint venture, company, limited liability company, organization or
association (whether incorporated or not), governmental bureau, department or
agency thereof, or other entity of whatsoever kind or nature.
"Rollover Options" shall mean Options for an aggregate of 300,000
shares of Common Stock held by Optionholders listed on the Schedule of Rollover
Options (the "Schedule of Rollover Options"), in the amounts and at the strike
prices enumerated for each Optionholder thereon, such that an average exercise
price of all Rollover Options shall be between $10.00 and $10.50 per share. The
Company shall prepare and submit to Buyer the Schedule of Rollover Options at
least 5 days before the Closing identifying each of the Optionholders to hold
Rollover Options and the number of such Rollover Options. Such Schedule shall be
subject to the reasonable approval of Buyer.
"Security Interest" shall mean any mortgage, pledge, security
interest, encumbrance, adverse claim, charge or other lien, other than (i)
mechanic's, materialmen's and similar liens arising in the ordinary course of
business, (ii) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, provided
that in either case adequate reserves are being maintained in accordance with
GAAP, (iii) liens arising under worker's compensation, unemployment insurance,
social security, retirement and similar legislation, (iv) liens on goods in
transit incurred pursuant to those documentary letters of credit listed on the
Disclosure Schedule and (v) purchase money liens and liens securing rental
payments under those capital lease arrangements listed on the Disclosure
Schedule, if any.
<PAGE>
-4-
"Share Purchase Price" shall mean $22.25 per share.
"Stockholders" shall mean all of the Management Stockholders and the
Non-Management Stockholders collectively.
"Subsidiary" of a Person shall mean a corporation controlled by such
Person, directly or indirectly through one or more intermediaries.
"Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property ad valorem/personal property, stamp,
excise, occupation, sales, use, transfer, value added, alternative minimum,
estimated or other tax, including any interest, penalty or addition thereto,
whether disputed or not.
"Tax Returns" means any return, report, information return or other
document (including schedules or any related or supporting information) filed or
required to be filed with any governmental entity or other authority in
connection with the determination, assessment, payment or collection of any Tax
or the administration of any laws, regulations or administrative requirements
relating to any Tax.
1.2 Other Defined Terms. The capitalized terms set forth below are defined
in the following sections of this Agreement:
Defined Term Section
------------ -------
Agreement..................................................Preface
Buyer......................................................Preface
Buyer Member...................................................4.1
Buyer's Representatives........................................7.2
Cancelled Options...........................................2.3(a)
Closing........................................................3.1
Closing Date...................................................3.1
Common Stock...................................................5.4
Company....................................................Preface
Disclosure Schedule...................................Preface to 5
Environmental Claim...........................................5.17
Environmental Laws............................................5.17
Environmental Permits.........................................5.17
Equity Commitment..............................................4.9
ESOP.........................................................10.18
<PAGE>
-5-
ERISA......................................................5.14(a)
Financing Letters..............................................4.8
Fund...........................................................4.1
Hazardous Materials...........................................5.17
HSR Act........................................................4.5
Latest Balance Sheet...........................................5.5
Leases......................................................5.7(b)
Management Agreements.......................................9.1(i)
Management Option Shares....................................2.3(b)
Management Retained Shares.....................................2.4
Management Shares..............................................2.4
Merger.........................................................7.6
Merger Agreement...............................................7.6
Multiemployer Plan.........................................5.14(f)
Multiple Employer Plan.....................................5.14(f)
New Common Stock............................................7.6(a)
New Option Plan..............................................10.17
New Shares.....................................................2.1
Notices.......................................................12.1
Optionholders..................................................5.4
Options........................................................5.4
Other Continuing Stockholder Retained Shares...................2.2
Owned Property.................................................5.7
Pension Plans..............................................5.14(a)
Permits.......................................................5.13
Permitted Encumbrances.........................................5.7
Plans......................................................5.14(a)
Proprietary Rights............................................5.10
Recapitalization and Stock Purchase Schedule...................2.2
Redemption Shares..............................................2.2
Related Stockholders...........................................2.4
Retirement Plans.............................................10.19
Revised Disclosure Schedule....................................7.3
Rollover Options...............................................2.3
Securities Act.................................................4.6
SERPs.......................................................7.1(b)
Tender Offer...................................................2.2
Tender Offer Documents........................................5.20
Unvested Shares................................................5.4
Welfare Plans..............................................5.14(a)
<PAGE>
-6-
1.3 Interpretation. The following rules shall be used in interpreting this
Agreement:
(a) the language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any Person;
(b) the descriptive headings of this Agreement are inserted for
convenience only and do not constitute a Section of this Agreement;
(c) the use of the word "including" in this Agreement shall be by
way of example rather than by limitation; and
(d) "the Company's knowledge" shall mean the actual knowledge of any
of the Management Stockholders.
SECTION 2. THE RECAPITALIZATION AND STOCK PURCHASES
Subject to the terms and conditions set forth herein (including the
conditions set forth in Sections 9.1 and 9.2):
2.1 Buyer's Purchase of New Shares. At the Closing, (a) the Company shall
issue and sell to Buyer, and Buyer shall purchase from the Company, for a
purchase price per share equal to the Share Purchase Price, an aggregate number
of shares of Common Stock (the "New Shares") equal to 4,634,202, less the sum of
(i) the aggregate number of Management Shares which Buyer is obligated to
purchase pursuant to Section 2.4 below, (ii) the aggregate number of Other
Continuing Stockholder Retained Shares, (iii) the aggregate number of Management
Retained Shares, and (iv) a number of shares equal to the number of shares
issuable upon exercise of the Rollover Options; and (b) the Company shall issue
and deliver to Buyer a certificate or certificates, registered in the name of
Buyer, evidencing such New Shares against payment in full of the purchase price
therefor.
2.2 Company Redemption of Shares. As soon as reasonably practicable after
the date hereof, the Company shall commence a tender offer to purchase from each
Non-Management Stockholder, at a price per share equal to the Share Purchase
Price (the "Tender Offer") all shares of Common Stock and all Options held by
such Non-Management Stockholder other than (i) the aggregate number of shares to
be retained by Other Continuing Stockholders ("Other Continuing Stockholder
Retained Shares") as enumerated for each such Other Continuing Stockholder on
the Schedule of Other Continuing Stockholders, and (ii) all Rollover Options
held by Non-Management Stockholders. At the Closing, the Company shall redeem
<PAGE>
-7-
each share of Common Stock issued and outstanding immediately prior to the
Closing that is tendered pursuant to the Tender Offer (the "Redemption Shares")
at a redemption price per share equal to the Share Purchase Price.
2.3 Options.
(a) At the Closing, the Company shall cancel all Options held by
Non-Management Stockholders other than Rollover Options, (the "Cancelled
Options"), in exchange for a price per share of Common Stock issuable upon
exercise of each such Cancelled Option equal to the Share Purchase Price minus
the exercise price per share of Common Stock for such Repurchased Option.
(b) Immediately prior to Closing, the Management Stockholders shall
exercise all Options other than Rollover Options held by them and the Company
shall issue to such Management Stockholders the shares of Common Stock issuable
upon exercise of such Options ("Management Option Shares").
(c) The Rollover Options shall not be cancelled and shall remain
outstanding after the Closing.
2.4 Buyer's Purchase of Management Shares. At the Closing, the Management
Stockholders shall sell, and shall cause their Related Stockholders (as
hereinafter defined) to sell to Buyer, and Buyer shall purchase from the
Management Stockholders and Related Stockholders, for a per share purchase price
equal to the Share Purchase Price, shares of Common Stock held by such
Management Stockholders (which may include Management Option Shares) and Related
Stockholders (together the "Management Shares") as set forth on the
Recapitalization and Stock Purchase Schedule (the "Recapitalization and Stock
Purchase Schedule"). Management Shares (i) shall include all shares of Common
Stock held by the Management Stockholders other than the aggregate number of
shares to be retained by Management Stockholders and Related Stockholders
(together the "Management Retained Shares") as enumerated for each Management
Stockholder on the Recapitalization and Stock Purchase Schedule, and (ii) may
include the shares of any Persons related to Management Stockholders (including,
without limitation, in a manner specified in Section 318 of the Code) ("Related
Stockholders") to the extent so specified in the Recapitalization and Stock
Purchase Schedule. The Company may from time to time up to 5 days before Closing
revise the information referred to herein on the Recapitalization and Stock
Purchase Schedule by delivering to Buyer a revised Schedule; provided that the
number of Management Retained Shares, together with the number of Other
Continuing Stockholder Retained Shares, shall, in the aggregate, be more than
1,053,303 but less than 1,188,135 (in each case excluding Rollover Options). Any
such revised Schedule shall be subject to Buyer's consent, which shall not be
unreasonably
<PAGE>
-8-
withheld.
SECTION 3. CLOSING
3.1 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Day, Berry & Howard, CityPlace I,
Hartford, Connecticut 06103, or Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York 10019, at 10:00 a.m. on February 15, 1997, or such
other date and place as the parties may agree in writing. The date of the
Closing is referred to herein as the "Closing Date."
3.2 Deliveries. At the Closing, subject to the terms and conditions set
forth herein (including the conditions set forth in Section 9 hereof) each party
hereto shall deliver to the appropriate parties hereto each of the documents,
instruments or evidences of satisfaction of conditions required to be delivered
by such party as a condition to Closing pursuant to Section 9 of this Agreement,
in form and substance reasonably satisfactory to the recipient thereof and its
counsel. In addition, the following deliveries shall be made at the Closing:
(a) (i) The Company to Buyer. The Company shall deliver to Buyer
certificates representing the New Shares to be purchased by Buyer pursuant to
Section 2.1 hereof. All such New Shares shall be free and clear of any and all
Security Interests (as such term is defined, without giving effect to the
exceptions set forth in clauses (i) through (v) thereof).
(ii) Buyer to the Company. Buyer shall deliver to the Company,
by wire transfer of immediately available funds, the aggregate amount set forth
in Section 2.1 hereof as the purchase price for the New Shares.
(b) (i) The Company to the Paying Agent. The Company shall deliver
to the Paying Agent, as agent for the Non-Management Stockholders, the purchase
price for the Redemption Shares of Non-Management Stockholders as set forth in
Section 2.2, by wire transfer of immediately available funds.
(ii) The Paying Agent to the Company. The Paying Agent, on
behalf of each Non-Management Stockholder, shall deliver to the Company for
cancellation all certificates representing Redemption Shares held by such
Non-Management Stockholder immediately prior to the Closing.
(c) (i) Buyer to the Management Stockholders. Buyer shall deliver to
each Management Stockholder and Related Stockholder the purchase price for the
Management Shares as set forth in Section 2.4 to be sold to Buyer by such
Management Stockholder or
<PAGE>
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Related Stockholder, by wire transfer of immediately available funds.
(ii) Management Stockholders and Related Stockholders to
Buyer. Each Management Stockholder shall deliver, and shall cause their Related
Stockholders to deliver, to Buyer the certificate or certificates evidencing the
Management Shares to be sold to Buyer by such Management Stockholder or Related
Stockholder, duly endorsed for transfer or with properly executed stock powers,
together with any and all necessary documentary or transfer tax stamps duly
affixed and cancelled, free and clear of any and all Security Interests (as such
term is defined, without giving effect to the exceptions set forth in clause (i)
through (v) thereof).
(d) (i) The Company and Buyer to the Optionholders. The Company and
Buyer shall deliver to the Optionholders the price being paid in exchange for
the Cancelled Options of the Optionholders as set forth in Section 2.3, by wire
transfer of immediately available funds.
(ii) Optionholders to the Company. Each Optionholder shall
deliver to the Company for cancellation all documents or instruments (if any)
representing all Cancelled Options held by such Optionholder.
(e) Withholding Rights. The Company shall be entitled to deduct and
withhold from the amounts payable pursuant to this Agreement to any Optionholder
such amounts as the Company is required to deduct and withhold with respect to
the making of such payment under applicable tax law. Any amounts so deducted and
withheld pursuant to this Section 3.2(e) shall be paid over to the appropriate
taxing authority when due. To the extent that amounts are so deducted and
withheld by the Company, such amounts shall be treated for all purposes of this
Agreement as having been paid to the relevant Optionholder.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
4.1 Organization and Corporate Power. Buyer is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority and all
authorizations, licenses and permits necessary to own and operate its properties
and to carry on its businesses as now conducted, if any, except where the
failure to hold such authorizations, licenses and permits could not reasonably
be expected to have a Material Adverse Effect. Stonington Capital Appreciation
1994 Fund, L.P., a Delaware limited partnership (the "Fund"), is the sole member
of Buyer ("Buyer Member") and the managing member of Buyer.
<PAGE>
-10-
4.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby have been approved by all necessary action on the part of Buyer and Buyer
Member and do not conflict with or result in any material breach of, or
constitute a material default under, result in a material violation of, result
in the creation of any material Security Interest upon any material assets of
Buyer or the Buyer Member, or, except as provided in Section 4.5, require any
material authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body under, the provisions of Buyer's
limited liability company agreement or any material indenture, mortgage, lease,
loan agreement or other material agreement or instrument to which Buyer or the
Buyer Member is bound, or any material law, statute, rule, regulation, order,
judgment or decree to which Buyer or any Buyer Member is subject. None of the
foregoing items shall be deemed to be "material" unless the failure to meet the
requirements thereof could reasonably be expected to have a Material Adverse
Effect. Assuming that this Agreement is a valid and binding obligation of the
Company and the other parties hereto, this Agreement constitutes a valid and
binding obligation of Buyer, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, similar laws of debtor relief
and general principles of equity.
4.3 Litigation. There are no actions, suits or proceedings pending or, to
Buyer's knowledge, threatened in writing against Buyer or the Buyer Member, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could reasonably be likely to have a Material Adverse
Effect.
4.4 Brokerage. There are no claims against the Company for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated hereby based on any agreement made by or on behalf of
Buyer or the Buyer Member.
4.5 Governmental Consents, etc. Except for the applicable requirements of
(i) the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"),
(ii) the Atomic Energy Act relating to materials licenses, and (iii) the
regulations thereunder, to Buyer's knowledge, no material permit, consent,
approval or authorization of, or declaration to or filing with, any governmental
or regulatory authority is required in connection with any of the execution,
delivery or performance of this Agreement by Buyer or the consummation by Buyer
of any other transaction contemplated hereby.
4.6 No Knowledge of Misrepresentations or Omissions. Except as may be
disclosed to the Company in writing, Buyer has no actual knowledge that any of
the
<PAGE>
-11-
representations and warranties of the Company in this Agreement, the Disclosure
Schedule and the Revised Disclosure Schedule hereto are not true and correct in
all material respects, and Buyer has no actual knowledge of any material errors
in, or material omissions from, the Disclosure Schedule or the Revised
Disclosure Schedule to this Agreement.
4.7 Investment Intent. Buyer is acquiring the Common Stock hereunder for
its own account with the present intention of holding such for investment
purposes and not with a view to or for sale in connection with any public
distribution of the Common Stock in violation of any federal or state securities
laws. Buyer is an "accredited investor" (as such term is defined under
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). A duly authorized officer or director of the Managing Member
of Buyer who is sophisticated in financial matters and is able to evaluate the
risks and benefits of Buyer's investment in the Common Stock has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of the Common Stock, has had full access to such other information
concerning the Company as Buyer has requested and possesses substantial
information about, and familiarity with, the Company as a result of the
information provided. Buyer acknowledges that the Common Stock is being issued
and sold under exemptions from registration provided in the Securities Act and
under applicable state securities laws and, therefore, cannot be sold unless
subsequently registered under the Securities Act or applicable state securities
laws or an exemption from such registration is available, and that the
certificates representing the Common Stock purchased pursuant to this Agreement
will be imprinted with a legend to such effect.
4.8 Financing Commitment. Attached as Section 4.8 of the Disclosure
Schedule are financing letters obtained by Buyer (the "Financing Letters"). The
financing outlined in the Financing Letters is sufficient to fund the purchase
of the Redemption Shares and the Cancelled Options and to consummate the other
transactions contemplated hereby. Upon execution and acceptance thereof by the
parties thereto, such Financing Letters, from Bank of America National Trust and
Savings Association and BA Securities, Inc., and from CIBC Wood Gundy Securities
Corp. and CIBC Inc., shall be binding upon and enforceable against the parties
thereto in accordance with their terms.
4.9 Equity Commitment. Attached hereto as Section 4.9 of the Disclosure
Schedule is an equity commitment letter setting forth, among other things, the
binding commitment of the Buyer Member to provide $71.5 million of equity to
Buyer to consummate the transactions described herein subject to the conditions
set forth therein.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that, except as disclosed on
the Disclosure Schedule attached hereto (the "Disclosure Schedule"):
<PAGE>
-12-
5.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
The Company and each of its Subsidiaries has all requisite corporate power and
authority and all authorizations, licenses and permits necessary to own and
operate its properties and to carry on its businesses as now conducted, except
where the failure to hold such authorizations, licenses and permits could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company is qualified to do business and is in good standing
in each of the jurisdictions listed in Section 5.1 of the Disclosure Schedule.
Those jurisdictions are the only jurisdictions in which the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.2 Subsidiaries. The Disclosure Schedule lists every Subsidiary of the
Company and every stock, partnership, member, joint venture or other equity
interest owned by the Company or any of its Subsidiaries in any other
corporation, partnership, organization or entity or any rights to acquire the
same (excluding any such interest amounting to less than 1% of the equity of the
entity). Each of the Company's Subsidiaries is qualified to do business and is
in good standing in each of the jurisdictions listed in Section 5.2 of the
Disclosure Schedule. Those jurisdictions are the only jurisdictions in which the
ownership or leasing of such Subsidiary's properties or the conduct of such
Subsidiary's business requires such qualification, except where the failure to
be so qualified could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. All of the outstanding capital stock
of each of the Subsidiaries has been validly issued and is fully paid and
non-assessable. Except as disclosed in Section 5.2 of the Disclosure Schedule,
(i) there are no rights, subscriptions, warrants, options, conversion rights or
agreements of any kind outstanding to purchase or otherwise acquire any capital
stock or other securities of any of the Subsidiaries, and (ii) there are no
agreements or other obligations (contingent or otherwise) which require any of
the Subsidiaries to repurchase or otherwise acquire any of such Subsidiary's
capital stock or other securities. The Company or a Subsidiary owns directly the
amount of shares of capital stock of each of the Subsidiaries set forth in
Section 5.2 of the Disclosure Schedule as being owned by them, free of
pre-emptive and any subscription rights and from all Security Interests.
5.3 Authorization; No Breach. Except as set forth in Section 5.13, and
assuming the consents listed in the Disclosure Schedule pursuant to Section
5.09(d) have been obtained, the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby have been approved by all necessary corporate action on the part of the
Company's Board of Directors and do not conflict with or result in any material
<PAGE>
-13-
breach of, or constitute a material default under, result in a material
violation of, result in the creation of any material Security Interest upon any
material assets of the Company or any of its Subsidiaries, or require any
material authorization, consent, approval, exemption or other action by or
notice to any third party or any court or other governmental body under, the
provisions of the Certificate of Incorporation or bylaws or any material
indenture, mortgage, lease, loan agreement or other material agreement or
instrument to which the Company or any Subsidiary is bound, or any material law,
statute, rule, regulation, order, judgment or decree to which the Company or any
Subsidiary is subject. None of the foregoing items shall be deemed to be
"material" unless the failure to meet the requirements thereof, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect. The Board of Directors of the Company, at a meeting duly called and
held, has determined that this Agreement and the transactions contemplated
hereby are fair to and in the best interests of the Stockholders, has approved
this Agreement and the transactions contemplated hereby and has recommended that
the Non-Management Stockholders tender shares of Common Stock held by them
pursuant to the Tender Offer. Assuming that this Agreement is a valid and
binding obligation of Buyer, this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, similar laws of debtor relief
and general principles of equity.
5.4 Capital Stock. The authorized number of shares of capital stock of the
Company consist of 15,000,000 shares of common stock, $.01 par value ("Common
Stock"), of which 12,146,352 shares are issued and outstanding on the date
hereof (including therein 104,141 shares that are restricted and subject to
unsatisfied vesting conditions ("Unvested Shares") and 777,869 shares are held
in treasury. Set forth on the Disclosure Schedule is a complete list of the
record holders of the Common Stock as shown on the records of the Company as of
the date hereof, together with the record number of shares held by each such
Stockholder as shown on the records of the Company. All of the outstanding
shares of Common Stock of the Company have been duly authorized and are validly
issued, fully paid (provided that Unvested Shares are subject to vesting
requirements) and nonassessable. The shares of Common Stock of the Company to be
issued pursuant to Section 2.1 hereof have been duly authorized and, when issued
and delivered against payment of the purchase price therefor in the manner set
forth in this Agreement, will be validly issued, fully paid and non-assessable.
The Company does not have any other capital stock, equity securities or
securities containing any equity features authorized, issued or outstanding, and
there are no agreements or other rights or arrangements existing or outstanding
which provide for the sale or issuance of any of the foregoing by the Company.
Except as is set forth in Section 5.4 of the Disclosure Schedule, (i) there are
no voting agreements, stockholder agreements or other similar agreements to
which the Company is a party or of which the Company is aware, (ii) there are no
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire any shares of Common Stock or
other equity securities of the Company of any kind, and (iii) there
<PAGE>
-14-
are no agreements or other obligations (contingent or otherwise) which require
the Company to repurchase or otherwise acquire any shares of the Company's
Common Stock or other equity securities. The Disclosure Schedule sets forth the
amounts, holders and exercise price for all outstanding options to acquire
Common Stock from the Company ("Options") and the Persons who hold such Options
(the "Optionholders").
5.5 Financial Statements. The Company has furnished Buyer with copies of
(i) its unaudited consolidated balance sheet as of September 30, 1996, and the
related consolidated statement of income and consolidated statement of changes
in financial position for the nine-month period then ended (such balance sheet
is referred to herein as the "Latest Balance Sheet"), (ii) its audited
consolidated balance sheet and consolidated statements of income, consolidated
statements of stockholders' equity, and consolidated statements of cash flows,
for the fiscal years ended December 31, 1995 and December 31, 1994, together
with the notes thereto, and (iii) its unaudited consolidating balance sheet and
statement of income as of and for the nine-month period ended September 30,
1996. Such financial statements have been prepared in accordance with GAAP and
present fairly in all material respects the financial condition and results of
operations of the Company and its Subsidiaries as of the times and for the
periods referred to therein, subject in the case of the unaudited financial
statements to (i) the absence of footnote disclosures, (ii) changes resulting
from normal year-end adjustments and accruals, which adjustments and accruals
are consistent with those made or recorded in the prior year and (iii) the
Company does not prepare interim consolidated statements of cash flows. Except
to the extent specifically reserved against or reflected on the Latest Balance
Sheet or set forth in the Disclosure Schedule or otherwise contemplated by this
Agreement, the Company has no liabilities or obligations of any nature, whether
liquidated, unliquidated, absolute, contingent or otherwise which are or could
reasonably be expected to have a Material Adverse Effect.
5.6 Absence of Certain Developments. Except as otherwise contemplated by
this Agreement or as set forth in the Disclosure Schedule, since the date of the
Latest Balance Sheet, neither the Company nor any of its Subsidiaries has:
(a) borrowed any amount or incurred or become subject to any
material liabilities, except liabilities incurred in the ordinary course
of business, liabilities under contracts entered into in the ordinary
course of business and borrowings from banks (or similar financial
institutions) under existing credit facilities necessary to meet ordinary
course working capital requirements;
(b) mortgaged any of its real property, or, except in the ordinary
course of business, pledged or subjected to any Security Interest any
portion of its other assets;
(c) except in the ordinary course of business, sold, assigned or
transferred any
<PAGE>
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portion of its tangible assets;
(d) sold, assigned or transferred any material patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets;
(e) suffered any extraordinary losses or waived any rights of
material value;
(f) issued, sold or transferred any of its capital stock or other
equity securities, securities convertible into its capital stock or other
equity securities or warrants, options or other rights to acquire its
capital stock or other equity securities, or any bonds or debt securities;
(g) declared or paid any dividends or made any distributions on the
Company's capital stock or other equity securities or redeemed or
purchased any shares of the Company's capital stock or other equity
securities;
(h) increased the compensation, benefits or bonuses of any employee,
officer or director other than normal wage or salary increases granted in
the ordinary course of business;
(i) suffered any event, condition or circumstance that could
reasonably be likely to have a Material Adverse Effect;
(j) changed its accounting methods, principles or practices or
reversed any previously established accounting provisions, or realized any
extraordinary or non-recurring gain;
(k) failed to pay any material obligation of the Company or any of
its Subsidiaries, except any such obligation disputed in good faith;
(l) settled any pending or threatened litigation involving the
payment by the Company or any of its Subsidiaries of an amount exceeding
$250,000; or
(m) entered into any agreement, arrangement or understanding, or
otherwise resolved or committed, to do any of the foregoing.
5.7 Title to Properties.
(a) Set forth in Section 5.7 of the Disclosure Schedule is a list of
all fee simple interests in real property and improvements thereon owned by the
Company or any of its
<PAGE>
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Subsidiaries (the "Owned Property"). Except as set forth in Section 5.7 of the
Disclosure Schedule, the Company and its Subsidiaries have good and marketable
record title to their respective Owned Property free and clear of any liens,
mortgages, easements, rights-of-way, licenses, use restrictions, claims,
charges, options, title defects or encumbrances of any nature whatsoever, except
for the Permitted Encumbrances (as defined below). As used herein, the term
"Permitted Encumbrances" means (i) liens for taxes, assessments and user charges
not yet due and payable or which are being contested in good faith and by
appropriate proceedings; (ii) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like liens, choate or inchoate, arising in
the ordinary course of business which are less than $10,000 in amount and which
are being contested in good faith and by appropriate proceedings; or (iii)
easements, rights-of-way, encroachments, restrictions, leases, title defects,
agreements, conditions and other similar encumbrances which, individually or in
the aggregate, (A) are not substantial in character, amount or extent in
relation to the applicable Owned Property and (B) do not materially detract from
the use, utility or value of the applicable Owned Property or otherwise
materially impair the present business operations at such location of the
Company or its Subsidiaries.
(b) The real property demised by the leases described in Section 5.7
of the Disclosure Schedule (the "Leases") constitutes all of the real property
leased by the Company and its Subsidiaries. The Leases are in full force and
effect, and the Company holds a valid and existing leasehold interest under each
of the Leases. The Company has delivered to Buyer complete and accurate copies
of each of the Leases, and none of the Leases have been modified in any material
respect, except to the extent that such modifications are disclosed by the
copies delivered to Buyer. To the Company's knowledge, neither the Company nor
any other party thereto is in default in any material respect under any of such
Leases.
(c) The Company owns valid title to all material items of the
personal property shown on the Latest Balance Sheet, free and clear of all
Security Interests, except (i) such personal property which has been disposed of
in the ordinary course of business since the date of the Latest Balance Sheet,
(ii) the Security Interests listed in the Disclosure Schedule, and (iii) such
other Security Interests and other encumbrances that do not materially interfere
with the use or value of such personal property.
5.8 Tax Matters. The Company has filed all federal and all material
foreign, state, county and local income, excise, property and other Tax Returns
which are required to be filed by it. All Taxes shown as owing by the Company on
all such returns and all other Taxes payable by the Company have been fully paid
or properly accrued in accordance with GAAP. The Company has furnished to the
Buyer complete and accurate copies of all such Tax Returns that are or have been
required to be filed for all taxable periods for which the statute of
limitations has not run, examination reports, and statements of deficiencies
assessed against or agreed to by
<PAGE>
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the Company. All such Tax Returns are true and correct in all material respects;
the provision for taxes on the Latest Balance Sheet is sufficient for all
accrued and unpaid Taxes as of the date thereof; and all material Taxes which
the Company is obligated to withhold (a) from amounts owing to any employee,
creditor or third party or (b) with respect to any of its assets or business
have been paid or properly accrued in accordance with GAAP. In addition, except
as set forth in Section 5.8 of the Disclosure Schedule, (i) no taxing authority
is now asserting or, to the Company's knowledge, threatening to assert against
the Company any deficiency or claim for Taxes, (ii) the Company has not granted
any waiver of any statute of limitations with respect to any Tax, (iii) the
Company is not currently under, or has not received notice of commencement of,
any Tax audit, and is not a party to any judicial proceeding with respect to
Taxes, (iv) there is no contract or agreement under which the Company has, or
may have, an obligation to contribute to the payment of any Tax of any other
Person (or pay any amount computed by reference to any Tax of any other Person),
(v) the Company has not been a member of any consolidated, combined, unitary or
similar group (other than a group of which the Company has been the common
parent) for purposes of filing Tax returns or paying Taxes at any time, (vi) the
Company is not a party to or bound by any tax sharing, tax indemnity, tax
allocation or similar agreement or arrangement, and (vii) the Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code.
5.9 Contracts and Commitments.
(a) Except as set forth in Section 5.9 of the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to any: (i) collective
bargaining agreement or contract with any labor union, (ii) bonus, pension,
profit sharing, severance, change of control, retirement or other form of
deferred compensation or similar agreement or plan, (iii) stock purchase, stock
option or similar plan or agreement, other than as set forth in Section 5.14 of
the Disclosure Schedule, (iv) contract for the employment of any officer,
employee or other person on a full-time or consulting basis, (v) agreement or
indenture relating to the borrowing of money or to mortgaging, pledging or
otherwise placing a lien on any material portion of the Company's or any of the
Subsidiaries' assets, (vi) guaranty of any obligation for borrowed money or
other material guaranty, (vii) lease or agreement under which it is lessee of,
or holds or operates, any personal property owned by any other party, for which
the annual rental exceeds $50,000, (viii) lease or agreement under which it is
lessor of or permits any third party to hold or operate any property, real or
personal, for which the annual rental exceeds $50,000, (ix) written contract or
group of related written contracts (including, without limitation, supply and
license agreements) with the same party or related parties for the purchase of
products or services, under which the undelivered balance of such products and
services has a selling price in excess of $100,000, (x) written contract or
group of related written contracts (including, without limitation, supply and
license agreements) with the same party or related parties for the sale of
products or services
<PAGE>
-18-
under which the undelivered balance of such products or services has a sales
price in excess of $100,000, (xi) contract which prohibits the Company from
freely engaging in business anywhere in the world, (xii) written or oral
contract with any officer, director or stockholder, or (xiii) any material
collaboration or cooperation agreement.
(b) Buyer either has been supplied with, or has been given access
to, a true and correct copy of all written contracts which are referred to on
the Disclosure Schedule, together with all written amendments thereto, and, to
the Company's knowledge, accurate descriptions of all oral contracts and
amendments referred to therein.
(c) Each of the contracts listed in Section 5.9 of the Disclosure
Schedule constitutes a valid and binding obligation of the Company or any
Subsidiary a party thereto and, to the Company's knowledge, constitutes a valid
and binding obligation of the other parties thereto. Neither the Company nor any
Subsidiary is in default and, to the Company's knowledge, no other party thereto
is in default under any contract listed in Section 5.9 of the Disclosure
Schedule, except where such default could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(d) The Disclosure Schedule lists all third party consents to, or
approvals of, the execution, delivery or performance of this Agreement by the
Company required under any material indenture, mortgage, lease, loan agreement,
or other material agreement to which the Company or any Subsidiary of the
Company is a party.
5.10 Proprietary Rights. The Disclosure Schedule sets forth a list of all
patents, patent applications (including docketed patent or invention disclosures
awaiting filing, requests for reexamination, reissues, divisions, continuations,
continuations in part, patents of addition and extensions), trademarks, service
marks, trade names, corporate names, copyright registrations or copyright
applications (collectively, the "Proprietary Rights") necessary to or currently
used in the conduct of the Company's and its Subsidiaries' businesses as now
conducted. The Company and its Subsidiaries own and possess the right to use the
Proprietary Rights, free and clear of any Security Interests, necessary to or
currently used in the conduct of their businesses as now conducted. Except as
described in Section 5.10 to the Disclosure Schedule, during the five-year
period prior to the date of this Agreement, there have been no claims, demands
or notices of any Person pertaining to, or any proceedings which are pending or,
to the Company's knowledge, threatened, which (i) challenge the Company's or its
Subsidiaries' ownership interests in, or rights to use, the Proprietary Rights,
(ii) allege that any product or service of the Company or its Subsidiaries
infringe the intellectual property rights of others, or (iii) state that the
practice or use of any of the Proprietary Rights requires the consent or license
of such Person. To the Company's knowledge, except as set forth in Section 5.10
of the Disclosure Schedule, the Company has not infringed during such five-year
period and is not
<PAGE>
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currently infringing on the Proprietary Rights of any other Person. Section 5.10
of the Disclosure Schedule sets forth all material licenses of Proprietary
Rights to or from the Company and the Subsidiaries. Such licenses are valid and
binding on the Company and the Subsidiaries and, to the Company's knowledge, the
other parties thereto, and neither the Company nor any Subsidiary is in default
and, to the Company's knowledge, no other party thereto is in default under such
licenses, except where such default could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
5.11 Litigation. Section 5.11 of the Disclosure Schedule lists all
actions, suits, administrative, arbitration or other proceedings or governmental
investigations pending or, to the Company's knowledge, threatened in writing
against the Company or any of its Subsidiaries, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
(a) if determined adversely, could, individually or in the aggregate, either (i)
reasonably be expected to have a Material Adverse Effect or (ii) result in
damages in excess of $500,000 or (b) relate to the transactions contemplated
hereby. Except as set forth in Section 5.11 of the Disclosure Schedule, there
are no judgments or outstanding orders, injunctions, decrees, stipulations or
awards (whether rendered by a court or administrative agency, or by arbitration)
against the Company or any of its Subsidiaries or any of their respective
properties or businesses that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.12 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
hereby based on any agreement made by or on behalf of the Company other than the
fees and expenses of Robert W. Baird & Co. Incorporated that have been disclosed
to Buyer (which fees and expenses shall be paid by the Company).
5.13 Governmental Consents, etc. Section 5.13 of the Disclosure Schedule
sets forth a list of all permits, licenses, consents, approvals and
authorization of governmental or regulatory authorities (collectively "Permits")
necessary to or used in the conduct of the Company's and its Subsidiaries'
businesses as now conducted. Each of such Permits is valid, subsisting and in
full force and effect and, to the knowledge of the Company, no suspension or
cancellation of any of them is threatened, except for such suspensions or
cancellations that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in Section 5.13
of the Disclosure Schedule, no written notice of cancellation, of default or of
any dispute concerning any Permit, or of any event, condition or state of facts
which constitutes or, after notice or lapse of time or both, would constitute a
breach or default under any Permit has been received by the Company or any
Subsidiary. To the knowledge of the Company, there are no pending or proposed
changes in permit requirements that would require the Company or any Subsidiary
to make material additional monetary payments in order to obtain, renew or
comply
<PAGE>
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with any Permit. Except for the applicable requirements of (i) the HSR Act, (ii)
the Atomic Energy Act relating to materials licenses, and (iii) the regulations
thereunder, no material permit, license, consent, approval or authorization of,
or declaration to or filing with, any governmental or regulatory authority is
required in connection with any of the execution, delivery or performance of
this Agreement by the Company or the consummation by the Company of any other
transaction contemplated hereby.
5.14 Employee Benefit Plans.
(a) The Disclosure Schedule sets forth a list of all (i)
nonqualified deferred compensation or retirement plans, (ii) qualified defined
contribution retirement plans, (iii) qualified defined benefit pension plans
(the plans described in (ii) and (iii) are collectively referred to as the
"Pension Plans"), (iv) welfare benefit plans (the "Welfare Plans"), and (v)
other employee benefit plans, programs, policies, practices, and other
arrangements providing benefits to any employee or former employee or
beneficiary or dependent thereof, whether or not written, and whether covering
one person or more than one person, sponsored or maintained by the Company or
any Subsidiary of the Company, or to which the Company or any Subsidiary of the
Company is obligated to contribute, on behalf of its employees. The Pension
Plans and the Welfare Plans are collectively referred to as the "Plans." Each of
the Pension Plans has received a favorable determination letter from the
Internal Revenue Service that such Plan is a "qualified plan" under Section
401(a) of the Code, and that the related trusts are exempt from tax under
Section 501(a) of the Code, and the Company is not aware of any facts or
circumstances that would jeopardize the qualification of such Pension Plan or
the related trust. The Plans comply in form and in operation in all material
respects with the requirements of the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). As used in the first sentence of
this Section 5.14(a), the terms "defined contribution plans" and "defined
benefit plans" have the respective meanings set forth in Sections 3(34) and
3(35) of ERISA.
(b) With respect to the Plans, all contributions required to be made
to any Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, for any period through the date hereof have
been timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof, have been fully reflected on the books and
records of the Company. With respect to the Plans, (i) there are no actions,
suits or claims pending, other than routine claims for benefits, (ii) there are
no accumulated funding deficiencies (within the meaning of Section 302 of ERISA
or Section 412 of the Code), (iii) the fair market value of the assets of each
Pension Plan equals or exceeds the actuarial present value of all accrued
benefits under such Plan (whether or not vested), on a termination basis, and
(iv) there have been no prohibited transactions (as that term is defined in
Section 406 of ERISA or Section 4975 of the Code) which could subject the
Company to any material liability under the Code or ERISA.
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(c) With respect to each Plan, the Company has furnished to Buyer a
true, correct and complete copy of: (i) each writing constituting a part of such
Plan, including without limitation all plan documents, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii)
the current summary plan description, if any; (iv) the most recent annual
financial report, if any; and (v) the most recent determination letter from the
Internal Revenue Service, if any. Except as specifically provided in the
foregoing documents furnished to Buyer, there are no amendments to any Plan that
have been adopted or approved nor has the Company undertaken to make any such
amendments.
(d) Neither the Company nor any of its directors, officers,
employees, nor, to the Company's knowledge, any other "fiduciary," as such term
is defined in Section 3 of ERISA, has committed any breach of fiduciary
responsibility imposed by ERISA or any other applicable law with respect to the
Plans which would subject the Company, any of its Subsidiaries, or Buyer, or any
of their respective directors, officers or employees, to any material liability
under ERISA or any applicable law.
(e) The Company has not incurred any material liability for any tax
or civil penalty imposed by Section 4975 of the Code or Section 502 of ERISA.
(f) No Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a "Multiple Employer Plan") or a plan
subject to Title IV of ERISA, nor has the Company or any ERISA Affiliate of the
Company, at any time since September 2, 1974, contributed to or been obligated
to contribute to any Multiemployer Plan or Multiple Employer Plan or a plan
subject to Title IV of ERISA.
(g) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of the
Company following the Closing.
(h) The Company has no liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof,
except for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to the Company.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with
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any other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any employee of the
Company, other than pursuant to the transaction described in Section 10.18.
Without limiting the generality of the foregoing, no amount paid or payable by
the Company in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(j) No labor organization or group of employees of the Company has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed, with the National Labor Relations Board or any other labor relations
tribunal or authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material grievances, or
other material labor disputes pending or threatened against or involving the
Company.
(k) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
the Company to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any multiemployer plan.
(l) For purposes of this Section 5.14, (i) "employee" shall be
considered to include individuals rendering personal services to the Company as
independent contractors; (ii) "Controlled Group Liability" means any and all
liabilities under Title IV of ERISA, Section 302 of ERISA, Sections 412 and 4971
of the Code, the continuation coverage requirements of Section 601 et seq. of
ERISA and Section 4980B of the Code, and corresponding or similar provisions of
foreign laws or regulations, other than such liabilities that arise solely out
of, or relate solely to, the Plans; (iii) "ERISA Affiliate" means, with respect
to any entity, trade or business, any other entity, trade or business that is a
member of a group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or business,
or that is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
5.15 Insurance. Section 5.15 of the Disclosure Schedule sets forth a
summary of the insurance coverage maintained by the Company and its
Subsidiaries. All of such insurance policies are in full force and effect and
the Company is not in material default with respect to its obligations under any
of such insurance policies.
5.16 Compliance with Laws. The Company and each of the Subsidiaries have
<PAGE>
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complied in all material respects with all applicable laws and regulations of
foreign, federal, state and local governments and all agencies thereof, except
where the failure to so comply could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
5.17 Environmental Compliance and Conditions. Except as set forth in
Section 5.17 of the Disclosure Schedule, and except as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(a) each of the Company and its Subsidiaries complies and has complied with all
Environmental Laws applicable to the properties, assets or businesses of the
Company and its Subsidiaries, and possesses and complies with and has possessed
and complied with all Environmental Permits required under such laws except
where any non-compliance or failure to possess any Environmental Permit has not
had or could not reasonably be expected to result in, individually or in the
aggregate, material liability under Environmental Laws; (b) no modification,
revocation, reissuance, alteration, transfer, or amendment of any of the
Environmental Permits, or any review by, or approval of, any third party of any
of the Environmental Permits is required in connection with the execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby or the continuation of the business of the Company and its Subsidiaries
following such consummation; (c) none of the Company and its Subsidiaries has
received any Environmental Claim, and none of the Company and its Subsidiaries
is aware after reasonable inquiry of any threatened Environmental Claim; (d)
none of the Company and its Subsidiaries has assumed, contractually or by
operation of law, any liabilities or obligations under any Environmental Laws;
(e) to the Company's knowledge, there are no past or present events, conditions,
circumstances, practices, plans or legal requirements that could reasonably be
expected to result in material liability to the Company or any of its
Subsidiaries under Environmental Laws, prevent, or reasonably be expected to
materially increase the burden on the Company or any Subsidiary of, complying
with Environmental Laws or of obtaining, renewing, or complying with all
Environmental Permits required under such laws; or (f) to the Company's
knowledge, there are and have been no Hazardous Materials or other conditions at
or from any property owned, operated or otherwise used by the Company or any
Subsidiary now or in the past that could reasonably be expected to give rise to
material liability of the Company or any Subsidiary under any Environmental Law.
For purposes of this Agreement, the following terms shall have the following
meanings:
"Environmental Claim" means any written or oral notice, claim,
demand, action, suit, complaint, proceeding or other communication by any
Person alleging liability or potential liability arising out of, relating
to, based on or resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous Materials at any location,
whether or not owned, leased or operated by the Company or any of its
Subsidiaries, or (ii) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental Permit, or
(iii) otherwise relating to obligations or liabilities under
<PAGE>
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any Environmental Laws.
"Environmental Permits" means all permits, licenses, registrations
and other governmental authorizations required for the Company and the
operations of the Company's and its Subsidiaries' facilities and otherwise
to conduct its business under Environmental Laws.
"Environmental Laws" means all applicable federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law,
as they exist at the date hereof, relating in any manner to contamination,
pollution or protection of human health or the environment, including
without limitation the Comprehensive Environmental Response, Compensation
and Liability Act, the Solid Waste Disposal Act, the Resource Conservation
and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, the
Emergency Planning and Community-Right-to-Know Act, the Safe Drinking
Water Act, all as amended, and similar state laws.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials, substances
and forces, including but not limited to electromagnetic fields, regulated
pursuant to, or that could form the basis of liability under, any
Environmental Law.
5.18 Banking and Agency Arrangements. The Disclosure Schedule sets forth
in Section 5.18 a list of:
(a) each bank, savings and loan or similar financial institution in
which the Company or any of its Subsidiaries has an account or safe deposit box
or other custodial arrangement and the numbers of such accounts or safe deposit
boxes maintained by the Company and any of its Subsidiaries;
(b) the names of all Persons authorized to draw on each such account
or to have access to any such safe deposit box facility; and
(c) each general or special powers of attorney granted by the
Company or any of its Subsidiaries and each other agency arrangement (if any)
between the Company and any of its Subsidiaries and any third parties.
5.19 Fairness Opinion. The Company has received, on or prior to the date
hereof, the
<PAGE>
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opinion, in a form reasonably satisfactory to the Company, of Robert W. Baird &
Co. Incorporated to the effect that the consideration to be received by the
Stockholders for Common Stock in the transactions provided for under Section 2
of this Agreement is fair, from a financial point of view, to such Stockholders.
5.20 Tender Offer. The Company's offer to purchase shares of Common Stock
and Options held by Non-Management Stockholders, the related letter of
transmittal and any other information or documents prepared by the Company in
connection with the Tender Offer (collectively, the "Tender Offer Documents")
shall not, at the time the Tender Offer Documents or any amendments or
supplements thereto are first published, sent or given to Non-Management
Stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Tender Offer
Documents will comply as to form in all material respects with the requirements
of applicable law, except that no representation is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Buyer specifically for inclusion in the
Tender Offer Documents.
5.21 Stockholder Commitments. The Company has received written commitments
from Stockholders owning a majority of the issued and outstanding Common Stock
of the Company to support the transactions provided for herein as set forth in
the support agreement attached hereto as Exhibit A ("Support Agreement").
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
MANAGEMENT STOCKHOLDERS
Each Management Stockholder severally (as to himself or herself and not as
to any other Management Stockholder) represents and warrants to Buyer that:
6.1 Authority and Related Matters.
(a) Such Management Stockholder has all requisite power to execute
and deliver this Agreement and to perform his obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Management Stockholder, and, assuming the due
execution hereof by each of the Company, Buyer and the other Management
Stockholders, this Agreement (but without making any representation or warranty
as to the Management Agreements) constitutes the legal, valid and binding
obligation of such Management Stockholder, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy laws, similar laws
of debtor relief and general principles of equity.
<PAGE>
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(b) Such Management Stockholder is the record and beneficial owner
of the aggregate number of shares of Common Stock held by such Management
Stockholder as set forth on the Recapitalization and Stock Purchase Schedule.
Except for this Agreement and the transactions contemplated hereby, and except
as disclosed in Section 6.1 to the Disclosure Schedule, there are no agreements,
arrangements, warrants, options, puts, calls, rights or other commitments or
understandings of any character to which such Management Stockholder is a party
or by which any of his or her respective assets is bound and relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration, voting
or transfer of any shares of Common Stock or other capital stock of the Company.
Upon consummation of the transactions contemplated hereby, good title to the
shares of Common Stock to be sold by such Management Stockholder will be
delivered to Buyer, free and clear of any Security Interests.
(c) Neither the execution and delivery by such Management
Stockholder of this Agreement nor the consummation by such Management
Stockholder of the transactions contemplated hereby will conflict with, result
in a breach of the terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of acceleration, amendment,
termination or cancellation or a loss of rights under, or result in the creation
or imposition of any Security Interest upon any of such Management Stockholder's
Common Stock or any of the assets or properties of such Management Stockholder
under any note, instrument, agreement, mortgage, lease, license, franchise or
judgment, order, award or decree to which such Management Stockholder is bound,
or any statute, other law or regulatory provision affecting such Management
Stockholder.
SECTION 7. PRECLOSING COVENANTS
7.1 Conduct of the Business.
(a) From the date hereof until the Closing Date, except as
contemplated by this Agreement, the Company shall carry on its businesses in the
ordinary course and substantially in the same manner as heretofore conducted.
(b) Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, except as contemplated by this Agreement or
consented to by Buyer, the Company and its Subsidiaries shall not (i) issue,
sell or deliver any shares of their capital stock or issue or sell any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe for, any shares of their capital stock, (ii) effect any
recapitalization, reclassification, stock dividend, stock split or like change
in their capitalization, (iii) amend their respective Certificates of
Incorporation or bylaws, (iv) make any capital expenditures exceeding $250,000
per expenditure or $1,000,000 in the aggregate, (v) amend, modify or waive any
rights under any confidentiality or non-disclosure agreements, (vi) enter into
any license of material
<PAGE>
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Proprietary Rights (other than in the ordinary course of business and consistent
with past practice), (vii) enter into any contracts that would be required to be
set forth on the Disclosure Schedule pursuant to Section 5.9(d), or (viii) take
any action referred to in Section 5.6 hereof; provided that, notwithstanding
anything to the contrary contained in this Agreement, the Company shall be
permitted, prior to or concurrent with the Closing, (v) to establish a so-called
Rabbi Trust with respect to the existing Supplemental Executive Retirement
Agreements ("SERPs") with Messrs. Olcott, McKernan and Tench and to fund said
trust as contemplated by said SERPs with an aggregate contribution of no more
than $1.9 million, (w) to pay the Management Bonus, (x) to effect the Foreign
Subsidiary Reorganization, (y) to eliminate any vesting requirement in
outstanding Options listed on Section 7.1 of the Disclosure Schedule, and (z) to
repurchase the Cancelled Options and issue the Management Option Shares as
provided in Section 2.3.
7.2 Access to Books and Records. From the date hereof until the Closing
Date, the Company shall afford to Buyer and its authorized representatives (the
"Buyer's Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books and records of the Company
and its Subsidiaries in order for Buyer to have the opportunity to make such
investigation as it shall reasonably desire to make of the affairs of the
Company and its Subsidiaries.
7.3 Notification. From the date hereof until the Closing Date, the Company
shall disclose to Buyer in writing any material variances from the
representations and warranties made by it in Article 5 promptly upon discovery
thereof, and such disclosures shall be deemed to amend and/or supplement the
Disclosure Schedule attached hereto in the form of a "Revised Disclosure
Schedule" delivered to Buyer. The Revised Disclosure Schedule shall cure and
correct for all purposes, other than Section 9.1(a), any breach of any
representation or warranty which would have existed by reason of the Company not
having added such Revised Disclosure Schedule.
7.4 Action.
(a) Subject to the terms and conditions of this Agreement, the
Company shall take, or cause to be taken, all actions, and do or cause to be
done all things necessary, proper or advisable (to the extent commercially
reasonable) under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby as soon as reasonably possible
(including using reasonable efforts to cause the conditions set forth in Section
9.1 to be satisfied).
(b) Promptly following the date of this Agreement, the Company shall
undertake to prepare the Tender Offer Documents, and Buyer shall cooperate with
the Company
<PAGE>
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with respect thereto. All mailings to Stockholders in connection with the Tender
Offer shall be subject to the prior review, comment and reasonable approval of
Buyer. The Company will use its best efforts to cause the Tender Offer Documents
to be mailed to the Stockholders as promptly as practicable following execution
of this Agreement. The Company agrees promptly to correct any information in the
Tender Offer Documents that shall be or have become false or misleading in any
material respect. The Company shall not, without Buyer's prior consent, which
consent shall not be unreasonably withheld, waive any material condition to the
Tender Offer or make any other material changes in the terms and conditions of
the Tender Offer. The Company, at Buyer's reasonable request, shall extend the
Tender Offer, provided that this Agreement has not theretofore been terminated.
Buyer shall not request that the Company make any change to the terms and
conditions of the Tender Offer which decreases the price per share of Common
Stock payable in the Tender Offer, changes the form of consideration payable in
the Tender Offer (other than by adding consideration) or imposes conditions to
the Tender Offer which are, in the judgment of the Company, materially adverse
to the Stockholders.
(c) The Company agrees to provide, and will cause its Subsidiaries
and its and their respective officers, employees and advisors to provide, all
reasonably necessary cooperation in connection with the arrangement of the
financing contemplated by the Commitment Letters.
(d) The Company and Buyer shall cooperate with any reasonable
requests of the other or of the Company's or Buyer's certified public
accountants related to the recording of the transactions contemplated by this
Agreement as a recapitalization for financial reporting purposes. In furtherance
of the foregoing, the Company and Buyer shall each provide to the other for the
prior review of the advisors of such other any description of the transactions
contemplated by this Agreement which is meant to be disseminated.
7.5 Exclusive Dealing. During the period from the date of this Agreement
through the Closing or the earlier termination of this Agreement pursuant to
Section 11.1, neither the Company nor the Management Stockholders shall engage
in discussions or negotiations with any Person (other than Buyer and Buyer's
Representatives) concerning, or enter into any agreement with respect to, any
purchase or sale of the Common Stock or any merger, sale of substantial assets
or similar transaction involving the Company (other than the sale of assets in
the ordinary course of business consistent with past practice) or its
securities, and the Company shall instruct its representatives or agents to
cease all such discussions or negotiations. From and after the date hereof, the
Company or its advisors shall use reasonable efforts to secure the return of
confidential information regarding the Company which has been provided to any
Person (other than Buyer and Buyer's Representatives) in connection with
discussions or negotiations concerning any of the foregoing transactions. The
Company shall notify Buyer as promptly as practicable of all the relevant
details relating to all inquiries or proposals which it or any of its officers,
directors, employees or representatives may receive after the date of this
Agreement
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relating to any such transactions and, if such inquiry or proposal is in
writing, the Company shall deliver to Buyer a copy thereof.
7.6 Agreement to Merge. In the event that less than 100% of the Fully
Diluted shares of Common Stock (other than New Shares, Other Continuing
Stockholder Retained Shares, Management Retained Shares, and Rollover Options)
have been validly tendered by the holders thereof in the Tender Offer and not
withdrawn or are being purchased by Buyer pursuant to Section 2.4, unless
otherwise expressly agreed by the Company, Buyer and the Management Stockholder
Representatives, (a) the charter of the Company shall be duly amended to provide
for a new class of Common Stock ("New Common Stock") as described in Exhibit B
hereto, (b) the Company, Buyer and the Management Stockholders agree that a
merger (the "Merger") pursuant to the agreement and plan of merger attached
hereto as Exhibit C (as the same may be amended from time to time) (the "Merger
Agreement") shall be consummated with the result that, after giving effect
thereto, 100% of the Common Stock held by the Non-Management Stockholders (but
excluding the Other Continuing Stockholder Retained Shares) will be acquired for
an amount of cash per share equal to the Share Purchase Price, and Buyer shall
own between 67.9% and 70.8% of the Fully Diluted capital stock of the Company
and the Management Stockholders and Other Continuing Stockholders shall own
between 32.1% and 29.2% of the Fully Diluted capital stock of the Company, and
(c) prior to the Merger, each Management Stockholder (together with Related
Stockholders and Other Continuing Stockholders as provided in the Merger
Agreement) shall surrender and exchange all Management Shares held by such
Management Stockholder for New Canberra Common Stock as provided in Section 1.1
of the Merger Agreement. In no event shall the Merger include a merger of the
Buyer with the Company.
7.7 Buyer Members. From the date hereof until the Closing Date, the
membership of Buyer shall consist solely of the Fund or of the Fund and a
wholly-owned affiliate of the Fund.
SECTION 8. AFFIRMATIVE COVENANTS OF BUYER
Buyer agrees that, from the date hereof, through and including the
Closing, Buyer shall:
8.1 Action. Subject to the terms and conditions of this Agreement, take,
or cause to be taken, all actions, and do or cause to be done all things
necessary, proper or advisable (to the extent commercially reasonable) under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby (including using reasonable efforts to cause
the conditions set forth in Section 9.2 to be satisfied and to consummate the
transactions contemplated hereby as soon as reasonably possible). Buyer agrees
to use its reasonable best efforts to arrange the financing contemplated by the
Financing Letters, including using its reasonable best efforts (A) to assist the
Company in the negotiation of definitive agreements with respect thereto and (B)
to satisfy all conditions applicable to Buyer in such definitive agreements.
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Subject to the conditions set forth in Section 9.1, Buyer agrees to obtain the
equity committed pursuant to the Equity Commitment.
8.2 Confidentiality. Continue to comply in all respects with the terms of
the Confidentiality Agreement.
SECTION 9. CONDITIONS OF CLOSING
9.1 Conditions to Obligations of Buyer. The obligations of Buyer to effect
the transactions contemplated hereby shall be subject to the satisfaction or
waiver at or immediately prior to the Closing of the following conditions:
(a) Representations and Warranties of the Company. The
representations and warranties made by the Company in Section 5 of this
Agreement shall be true and correct (without giving effect to any knowledge
qualifications contained therein and excluding the effect of materiality
qualifiers or any materiality standard contained therein) at and as of the
Closing Date as though then made, except to the extent that all inaccuracies in
such representations and warranties do not, individually or in the aggregate,
have a Material Adverse Effect.
(b) Compliance With Agreement. Prior to or at the Closing Date, the
Company shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby, cause such transactions to be rescinded or have a Material
Adverse Effect upon Buyer or the Company.
(d) Approvals. Buyer shall have received, in form and substance
reasonably satisfactory to Buyer and its counsel, certified copies of all
documents evidencing action taken by the Company's Board of Directors with
respect to the transactions contemplated hereby.
(e) Resignations. Immediately prior to the Closing, each of the
members of the Company's Board of Directors then in office shall have submitted
to Buyer a written resignation as a Director, effective as of the Closing.
(f) Solvency Opinion. A "solvency opinion" shall have been obtained
in form and substance reasonably satisfactory to Buyer and its counsel.
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(g) Required Consents; HSR Act. All consents that are required as a
result of the transactions contemplated hereunder and the failure of which to
obtain could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect shall have been obtained and all applicable waiting
periods in respect of the transactions contemplated hereby under the HSR Act
shall have been terminated or expired.
(h) Redemption and Stock Purchases. Subject to Section 7.6, the
Company shall have redeemed the Redemption Shares in accordance with Section 2.2
hereof and repurchased the Cancelled Options in accordance with Section 2.3
hereof, the Company shall have issued to Buyer stock certificates representing
the New Shares in accordance with Section 2.1, and the Management Stockholders
shall have delivered to Buyer stock certificates representing the Management
Shares duly endorsed for transfer or with duly executed stock powers in
accordance with Section 2.4.
(i) Management Agreements. The Company shall have (i) established
the New Option Plan, (ii) entered into employment agreements with Messrs. Olcott
and McKernan in substantially the forms heretofore discussed between Buyer and
Messrs. Olcott and McKernan, and (iii) entered into a stockholders' agreement
with each of the Management Stockholder Representatives in substantially the
form attached hereto as Exhibit D (the "Stockholders' Agreement"), but with such
changes as may be agreed to by the Company, the Buyer, and the Management
Stockholder Representatives (the items described in (i), (ii) and (iii) hereof
being collectively referred to as the "Management Agreements").
(j) Paying Agency Agreement. The Company shall have entered into a
Paying Agency Agreement in form and substance reasonably satisfactory to Buyer,
and such agreement shall be in full force and effect.
(k) Opinion. Buyer shall have received the opinion of Day, Berry &
Howard, counsel to the Company, that (i) the execution, delivery and performance
of the Agreement by the Company has been duly authorized and approved by all
required corporate action on the part of the Company, (ii) the Agreement
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms (subject to customary exceptions) and (iii) when
issued, the New Shares shall have been duly authorized, validly issued, fully
paid and nonassessable.
(l) Organizational Documents. The Company shall have delivered to
Buyer each of the following: (i) a certificate of the Company, signed by an
officer of the Company, certifying to such individual's knowledge and on behalf
of the Company the fulfillment of the condition set forth in Section 9.1(a) of
this Agreement (taking into account any disclosures made in the Revised
Disclosure Schedule), (ii) certified copies of the Company's Certificate of
Incorporation, bylaws, and all Board resolutions necessary to consummate the
transactions contemplated hereby; (iii) good standing certificates for the
jurisdiction of incorporation of the
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Company and each of its domestic Subsidiaries and for each jurisdiction in which
the Company or Packard Instrument Company, Inc., a Subsidiary, is qualified to
do business; and (iv) a certificate, signed by the secretary or assistant
secretary of the Company, certifying as to the names of the officers of the
Company authorized to sign this Agreement and the other documents contemplated
hereby and as to specimens of the true signature of such officers.
(m) Recapitalization Accounting. The Company shall have delivered to
Buyer a certificate of the Company, signed by an officer of the Company,
certifying that the Company has been advised by Arthur Andersen LLP that the
transactions contemplated hereby shall be recorded as a recapitalization for
financial reporting purposes.
(n) Financing. The Company shall have obtained the financing as
contemplated by the Financing Letters (or such alternative financing as is
reasonably acceptable to Buyer and the Company).
Buyer may waive any condition specified in this Section 9.1 if Buyer
executes a writing so stating at or prior to the Closing; provided that if the
Closing is consummated, all such conditions shall be deemed to have been
satisfied or waived by Buyer.
9.2 Conditions to Obligations of the Company. The obligations of the
Company to effect the transactions contemplated hereby shall be subject to the
satisfaction or waiver at or immediately prior to the Closing of the following
conditions:
(a) Representations and Warranties of Buyer. The representations and
warranties made by Buyer in or pursuant to this Agreement shall be true and
correct in all material respects (without giving effect to any knowledge
qualifications contained therein and excluding the effect of multiple
materiality qualifiers or any multiple materiality standard) at and as of the
Closing Date as though then made and as though the Closing Date was substituted
for the date of this Agreement at or prior to the Closing.
(b) Compliance With Agreement. Prior to or at the Closing Date,
Buyer shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
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(d) Solvency Opinion. A "solvency opinion" shall have been obtained,
and such opinion, in form and substance reasonably satisfactory to counsel to
the Company, shall have been addressed and delivered to the Company at or prior
to the Closing.
(e) Required Consents; HSR Act. All consents that are required as a
result of the transactions contemplated hereunder and the failure of which to
obtain could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect shall have been obtained and all applicable waiting
periods in respect of the transactions contemplated hereby under the HSR Act
shall have been terminated or expired.
(f) Financing. The Company shall have obtained the financing as
contemplated by the Financing Letters (or such alternative financing as is
reasonably acceptable to the Buyer and Company).
(g) Purchase of New Shares. Subject to Section 7.6, Buyer shall have
paid the full purchase price for and accepted delivery from the Company of the
New Shares in accordance with Section 2.1 hereof.
(h) Stockholder and Optionholder Deliveries. Subject to Section 7.6,
the Stockholders and Optionholders shall have made their respective deliveries
in accordance with Section 3.2 hereof.
(i) Purchase of Management Shares. Subject to Section 7.6, Buyer
shall have paid the full purchase price for and accepted delivery from the
Management Stockholders of the Management Shares in accordance with Section 2.4
hereof.
(j) Opinion. The Company shall have received the opinion of
Wachtell, Lipton, Rosen & Katz, counsel to Buyer, that (i) the execution,
delivery and performance of the Agreement by the Buyer has been duly authorized
and approved by all required corporate action on the part of the Buyer, and (ii)
the Agreement constitutes a valid and binding obligation of the Buyer,
enforceable in accordance with its terms (subject to customary exceptions).
(k) Organizational Documents. Buyer shall have delivered to the
Company each of the following: (i) a certificate of Buyer, signed by the
Managing Member of Buyer, certifying to such individual's knowledge and on
behalf of Buyer, the fulfillment of the conditions set forth in Section 9.2(a)
of this Agreement, (ii) a certificate of Buyer's Managing Member certifying that
all action necessary to authorize the transactions contemplated hereby has been
taken; (iii) a good standing certificate for the jurisdiction of organization of
Buyer; and (iv) a certificate of Buyer, signed by the Managing Member of Buyer,
certifying as to the names of the individuals authorized to sign this Agreement
and the other documents contemplated hereby
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and as to specimens of the true signature of such individuals.
(l) Recapitalization Accounting. Arthur Andersen LLP shall have
advised the Company that the transactions contemplated hereby shall be recorded
as a recapitalization for financial reporting purposes.
The Company may waive any condition specified in this Section 9.2 if the
Company executes a writing so stating at or prior to the Closing; provided that
if the Closing is consummated, all such conditions shall be deemed to have been
satisfied or waived by the Company.
9.3 Condition to Obligations of the Management Stockholders. The
obligations of each Management Stockholder to effect the transactions
contemplated hereby shall be subject to the satisfaction or waiver at or
immediately prior to the Closing of the following conditions:
(a) Representations and Warranties of Buyer. The representations and
warranties made by Buyer in or pursuant to this Agreement shall be true and
correct in all material respects (without giving effect to any knowledge
qualifications contained therein and excluding the effect of multiple
materiality qualifiers or any multiple materiality standard) at and as of the
Closing Date as though then made and as though the Closing Date was substituted
for the date of this Agreement at or prior to the Closing.
(b) Compliance With Agreement. Prior to or at the Closing Date,
Buyer shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
(d) Solvency Opinion. A "solvency opinion" shall have been obtained,
and such opinion, in form and substance reasonably satisfactory to counsel to
the Management Stockholder Representatives, shall have been addressed to the
Management Stockholders and Optionholders and delivered to the Paying Agent and
to the Management Stockholders at or prior to the Closing.
(e) Redemptions, Repurchases and Purchases. Subject to Section 7.6,
the Paying Agent or the Management Stockholders shall have received, in
accordance with Section
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3.2, payment by wire transfer of immediately available funds as set forth on the
Recapitalization and Stock Purchase Schedule of the amounts necessary to redeem,
repurchase or purchase, as the case may be, the Redemption Shares, the Cancelled
Options and the Management Shares in accordance with Section 2.2, 2.3 and 2.4,
respectively, hereof.
(f) Purchase of New Shares. Subject to Section 7.6, Buyer shall have
paid the full purchase price for and accepted delivery from the Company of the
New Shares in accordance with Section 2.1 hereof.
(g) Management Agreements. The Company shall have entered into the
Management Agreements.
(h) Management Bonus. The Company shall have paid to the Management
Stockholders the Management Bonus.
Each Stockholder and Optionholder may waive (as to such Stockholder or
Optionholder alone) any condition specified in this Section 9.3 if such
Stockholder or Optionholder executes a writing so stating at or prior to the
Closing; provided that if the Closing is consummated, all such conditions shall
be deemed to have been satisfied or waived by each Stockholder and Optionholder.
SECTION 10. ADDITIONAL COVENANTS OF THE PARTIES
10.1 Confidentiality of Information. Buyer acknowledges that the terms and
provisions of the Confidentiality Agreement are in full force and effect. In the
event that this Agreement is terminated and the transactions contemplated hereby
are not consummated, the Confidentiality Agreement shall continue to be in full
force and effect in accordance with its terms and shall be binding upon Buyer.
10.2 Books and Records. Unless otherwise consented to in writing by the
Paying Agent, the Company shall not, for a period of seven years following the
Closing Date, destroy or otherwise dispose of any of the books and records of
the Company pertaining to the period prior to the Closing Date without first
offering to surrender to the Paying Agent such books and records or any portion
thereof which the Company may intend to destroy or dispose of.
10.3 Notification. Prior to the Closing, Buyer shall promptly notify the
Company if Buyer obtain actual knowledge that (i) any of the representations and
warranties of the Company in this Agreement and the Disclosure Schedule or the
Revised Disclosure Schedule are not true and correct in all material respects,
or if Buyer obtains actual knowledge of any material errors in, or omissions
from, the Disclosure Schedule or the Revised Disclosure Schedule, or (ii) the
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representations and warranties of Buyer in this Agreement and the Schedules
hereto are not true and correct in all material respects.
10.4 Director and Officer Liability and Indemnification.
(a) For a period of seven years after the Closing, the Company shall
not, and the Buyer shall not permit the Company to, amend, repeal or modify any
provision in the Certificate of Incorporation or bylaws of the Company relating
to the exculpation or indemnification of former officers and directors (unless
required by law) in any manner adverse to such officers or directors, it being
the intent of the parties that the officers and directors of the Company prior
to the Closing shall continue to be entitled to such exculpation and
indemnification to the fullest extent permitted under applicable law.
(b) The Company shall use its reasonable best efforts to bind,
effective as of the Closing Date, from an insurance carrier or carriers
reasonably satisfactory to the Company, directors' and officers' liability
insurance run-off and tail coverage of the lesser of (i) $20,000,000 and (ii)
the coverage that can be purchased for a single premium for six years of
coverage of $450,000, protecting those persons who were directors and officers
of the Company immediately prior to the Closing from liability with respect to
claims made during the six years immediately following the Closing Date as a
result of acts or omissions occurring or alleged to have occurred on or prior to
the Closing Date which were committed or alleged to have been committed by such
officers or directors in their capacity as such. The Company shall pay, at or
prior to Closing, all premiums for said coverage for said period of six years.
(c) If the coverage described in (b) above cannot for any reason be
bound, the Company and Buyer hereby agree to maintain in effect continuously
during the six years immediately following the Closing Date, from an insurance
carrier or carriers reasonably satisfactory to the Management Stockholder
Representatives, directors' and officers' liability insurance coverage of the
lesser of (i) $20,000,000 and (ii) the coverage that can be purchased for an
annual premium of $75,000, protecting those persons who were directors and
officers of the Company immediately prior to the Closing from liability with
respect to claims made during the six years immediately following the Closing
Date as a result of acts or omissions occurring or alleged to have occurred on
or prior to the Closing Date which were committed or alleged to have been
committed by such officers or directors in their capacity as such. The Company
shall maintain such insurance in effect and pay all required premiums for said
period of six years.
10.5 Regulatory Filings. Buyer and the Company shall, as promptly as
practicable after execution of this Agreement, make or cause to be made all
filings and submissions under the HSR Act (including request for early
termination), the Atomic Energy Act with respect to materials licenses, and any
other laws or regulations applicable to Buyer or the Company and as
<PAGE>
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may be required of any of them for the consummation of the transactions
contemplated hereby, and Buyer shall be responsible for all filing fees under
the HSR Act. Buyer and the Company shall coordinate and cooperate with each
other in exchanging such information and assistance as any of them may
reasonably request in connection with all of the foregoing.
10.6 Contact with Customers and Suppliers. Buyer and Buyer's
Representatives shall not contact or communicate with the employees (other than
the Management Stockholders), customers, suppliers and licensors of the Company
or its Subsidiaries in connection with the transactions contemplated hereby
except with the prior written consent of the Company, which consent may be
withheld in the discretion of the Company or conditioned upon an officer of the
Company being present at any such meeting or conference.
10.7 Solvency Opinion. Buyer and the Company shall obtain a "solvency
opinion" and shall cause such opinion to be addressed and delivered to the
Stockholders and Optionholders and the Company at or prior to the Closing.
10.8 Survival. The representations and warranties set forth in this
Agreement and in any certificates delivered at the Closing in connection with
this Agreement shall terminate as of the Closing and shall have no further force
or effect and neither Buyer nor the Company, nor the individuals signing such
certificates, shall have any liability whatsoever on account thereof, except
that the representations and warranties of the Management Stockholders set forth
in the last sentence of Section 6.1(b) shall survive indefinitely.
10.9 Paying Agency Agreement. The Company shall enter into the Paying
Agency Agreement prior to the Closing.
10.10 Limitation of Recourse. Following the Closing, neither the Company,
any Stockholder, any Optionholder, or the Paying Agent shall have any liability
or obligation to indemnify Buyer or the Company or any of their agents,
representatives, successors or assigns for any claim or any loss or liability
arising from or in any way relating to this Agreement or any of the transactions
contemplated hereby or any other transaction or event occurring on or prior to
the Closing (including, without limitation, any misrepresentation or inaccuracy
in, or breach of, any representations or warranties or any breach or failure in
performance prior to Closing of any covenants or agreements (including those
contained in Section 2 and Section 3 of this Agreement) made by the Company in
this Agreement or in any Exhibit or Schedule hereto or any certificate or
instrument delivered hereunder). Following the Closing, no claim based on,
relating to or arising out of any of the foregoing shall be brought or
maintained by Buyer or the Company or their respective successors or permitted
assigns against any officer, director or employee (present or former) of the
Company, the Paying Agent or any Stockholder or Optionholder. Without limiting
the generality of the foregoing, in the absence of fraud, neither
<PAGE>
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Buyer nor its successors or permitted assigns shall be entitled to claim or seek
any rescission of the transactions consummated under this Agreement or other
remedy at law or in equity. Following the Closing, Buyer and the Company shall
have no liability whatsoever with respect to payment of any amount owing
pursuant to Section 2 or Section 3 of this Agreement to any Stockholder,
Optionholder or Management Stockholder so long as the Company and Buyer, as
appropriate, shall have delivered to the Paying Agent or the Management
Stockholders the redemption price, repurchase price or purchase price for the
Redemption Shares, the Cancelled Options, and the Management Shares,
respectively, as set forth in Section 3.2 of this Agreement.
10.11 Disclosure Generally. If and to the extent any information required
to be furnished in the Disclosure Schedule or the Revised Disclosure Schedule is
contained in this Agreement or in the Disclosure Schedule or the Revised
Disclosure Schedule, such information shall be deemed to be included in all
Schedules and all Sections thereof in which the information is required to be
included to the extent that it is reasonably apparent that such disclosure
relates to the affected Schedule or Section. The inclusion of any information in
the Disclosure Schedule or the Revised Disclosure Schedule shall not be deemed
to be an admission or acknowledgment by the Company, in and of itself, that such
information is material to or outside the ordinary course of the business of the
Company or required to be disclosed on the Disclosure Schedule or the Revised
Disclosure Schedule.
10.12 Acknowledgment by Buyer. BUYER HAS CONDUCTED TO ITS SATISFACTION AN
INDEPENDENT INVESTIGATION AND VERIFICATION OF THE FINANCIAL CONDITION, RESULTS
OF OPERATIONS, ASSETS, LIABILITIES, PROPERTIES AND PROJECTED OPERATIONS OF THE
COMPANY. IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, BUYER HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT
INVESTIGATION AND VERIFICATION AND THE REPRESENTATIONS AND WARRANTIES OF THE
COMPANY EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT, INCLUDING THE
SCHEDULES ATTACHED HERETO. SUCH REPRESENTATIONS AND WARRANTIES BY THE COMPANY
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE COMPANY
TO BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND BUYER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED (INCLUDING, BUT NOT
LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION,
RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OR THE PROSPECTS OF THE COMPANY)
ARE SPECIFICALLY DISCLAIMED BY THE COMPANY.
10.13 Transfer and Similar Taxes. All transfer, documentary, stamp,
registration and
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other similar Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by the Company when due, and the
Company shall file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, stamp, registration and other Taxes
and fees.
10.14 Further Assurances. From time to time, as and when requested by any
party hereto, any other party shall execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other party may reasonably deem
necessary or desirable to evidence and effectuate the transactions contemplated
hereby.
10.15 Appointment of New Board. Buyer and each Management Stockholder
agree that, on the Closing Date and immediately prior to Closing, Buyer and each
such Management Stockholder shall take such actions as are necessary and as they
are capable of taking to elect the new Directors of the Company as agreed
between Buyer and the Management Stockholder Representatives or as set forth in
the Management Agreements; provided that, if the Closing shall not occur on the
date of such election, Buyer and each such Management Stockholder shall take
such actions as are necessary and as they are capable of taking to remove (or
cause to be removed) the new Directors and to re-elect (or cause to be
re-elected) each of the members of the Board of Directors of the Company in
office immediately prior to the election of the new Directors.
10.16 Waiver of Certain Rights. The Company hereby waives its right of
first refusal under the Bylaws of the Company with respect to the sale by the
Management Stockholders to Buyer pursuant to Section 2.4 hereof.
10.17 New Option Plan. The Company shall establish, effective as of the
Closing Date, a new stock option plan ("New Option Plan") for employees of the
Company, in a form approved by the Company, Buyer, and the Management
Stockholder Representatives and shall reserve for issuance thereunder a number
of shares equal to thirteen percent (13%) of the outstanding shares of the
Company and Rollover Options immediately following the Closing (not less than
602,446 shares). In addition, Buyer and the Management Stockholder
Representatives shall agree, at least 5 days before the Closing, on initial
grants of options under the New Option Plan to be made effective as of the
Closing Date.
10.18 ESOP. The Company shall authorize and take, on or prior to the
Closing Date, all action required to merge the Company's employee stock
ownership plan ("ESOP") into the Company's 401(k) thrift savings plan, effective
as of the Closing Date.
10.19 Retirement Plans. From and after the Closing, and so long as Buyer
shall own a
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majority of the outstanding shares of Common Stock of the Company, the Company
shall maintain, and shall cause its Subsidiaries to maintain, in existence for
their respective employees pension and retirement plans providing benefits and
contributions substantially comparable in the aggregate to those maintained by
the Company and its Subsidiaries immediately prior to Closing; provided that
such benefits and contributions maintained by the Company and its Subsidiaries
immediately prior to the Closing are consistent with past practice.
10.20 Prohibition. Buyer agrees that it shall not enter into a merger with
the Company without the prior written approval of the Management Stockholder
Representatives. Buyer agrees that it will indemnify and hold the Management
Stockholders harmless from any additional tax liability imposed on such
Stockholders attributable to "dividend" distributions under Section 302 of the
Code, or any successor to said Section, and any related costs and expenses
(including attorneys' and accountants' fees), arising from any breach of this
Section 10.20.
10.21 Exchange of Shares. Each Management Stockholder agrees to surrender
and exchange all Management Shares held by such Management Stockholders for an
equal number of shares of New Common Stock as provided in Section 1.1 of the
Merger Agreement. If any Person listed on the Schedule of Other Continuing
Stockholders shall fail to execute an Exchange Agreement, the Management
Stockholders agree to increase the amount of Management Retained Shares as
required so that the number of Other Continuing Stockholders Retained Shares,
together with the number of Management Retained Shares, shall, in the aggregate
be more than 1,053,303 but less than 1,188,135 (in each case excluding Rollover
Options).
10.22 Related Stockholder Commitments. Each Management Stockholder with
respect to whom a Related Stockholder is listed on the Recapitalization and
Stock Purchase Schedule shall use his reasonable best efforts to obtain from
such Related Stockholder a written commitment, in form reasonably agreed upon by
the Company and Buyer, to sell shares of Common Stock held by such Related
Stockholder to Buyer (and to retain other shares) to the extent set forth on
such Recapitalization and Stock Purchase Schedule.
SECTION 11. TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual consent of Buyer and the Company;
(b) by Buyer, if there has been a material violation or breach by
the Company
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or any Management Stockholder of any covenant, representation or warranty
contained in this Agreement which has prevented or would prevent the
satisfaction of any condition to the obligations of Buyer at the Closing and
such violation or breach has not been waived by Buyer or, in the case of a
covenant breach, cured by the Company within ten days after written notice
thereof from Buyer;
(c) by the Company, if there has been a material violation or breach
by Buyer of any covenant, representation or warranty contained in this Agreement
which has prevented or would prevent the satisfaction of any condition to the
obligations of the Company at the Closing and such violation or breach has not
been waived by the Company or, with respect to a covenant breach, cured by Buyer
within ten days after written notice thereof from the Company; or
(d) by either Buyers or the Company if the transactions contemplated
hereby have not been consummated by March 31, 1997; provided that neither Buyer
nor the Company shall be entitled to terminate this Agreement pursuant to this
Section 11.1(d) if such Person's knowing and willful breach of this Agreement
has prevented the consummation of the transactions contemplated hereby.
11.2 Effect of Termination. In the event of termination of this Agreement
by either Buyer or the Company as provided above, the provisions of this
Agreement shall immediately become void and of no further force and effect
(other than Sections 10.1, this Section 11.2 and Section 12 hereof, which shall
survive the termination of this Agreement), and there shall be no liability on
the part of Buyer, the Company, or any Stockholder or Optionholder to one
another, except for any knowing and willful breaches of this Agreement by any
such party prior to the time of such termination, in which case such breaching
party shall only be severally liable for its knowing and willful breach.
SECTION 12. MISCELLANEOUS
12.1 Notices. All notices, requests, demands and other communications
(collectively, "Notices") given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given or made as follows: (a) if
sent by registered or certified mail in the United States return receipt
requested, postage and fees prepaid, upon receipt; (b) if sent by reputable
private air courier (such as UPS, DHL or Federal Express), two business days
after sending; (c) if sent by facsimile transmission, with a copy mailed on the
same day in the manner provided in (a) or (b) above, when transmitted and
receipt is confirmed by telephone; or (d) if otherwise actually personally
delivered, when delivered. All Notices shall be delivered to the following
addresses:
If to the Company:
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Canberra Industries, Inc.
800 Research Parkway
Meriden, CT 06450
Fax: (203) 235-6089
Attn: President
With a copy to:
Day, Berry & Howard
CityPlace I
Hartford, CT 06103
Fax: (860) 275-0343
Attn: Paul F. McAlenney, Esq.
If to the Non-Management Stockholders, Optionholders or
Management Stockholders:
to such Person at the address as set forth in the
stock transfer books of the Company.
with a copy to Day, Berry & Howard as set forth above.
If to Buyer:
CII Acquisition LLC
c/o Stonington Partners, Inc.
767 Fifth Avenue, 48th Floor
New York, NY 10153
Fax: (212) 339-8585
Attn: Robert F. End
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Fax: (212) 403-2000
Attn: Andrew R. Brownstein, Esq.
Any of the parties to this Agreement may from time to time change its address
for receiving
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Notices by giving written notice thereof in the manner set forth above.
12.2 Entire Agreement. This Agreement and the Schedules and Exhibits and
the other writings and agreements specifically identified herein and the
Confidentiality Agreement contain the entire agreement among the parties with
respect to the transactions contemplated hereby and supersede all previous oral
negotiations, commitments, understandings and agreements.
12.3 Assignability and Amendments. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of Buyer, the
Company, and the Management Stockholders signatories hereto and each of their
respective successors, assigns, estate and heirs, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by Buyer or the Company without the prior written consent of the other
(and, following the Closing, the Paying Agent). This Agreement and the Schedules
and Exhibits hereto cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by Buyer and the Company and, prior to the Closing,
the other parties hereto (and, following the Closing, the Paying Agent), except
that the Disclosure Schedule shall be amended and supplemented by the Revised
Disclosure Schedule, as set forth in Section 7.3 hereof.
12.4 Waiver. No provision of this Agreement may be waived unless in
writing signed by Buyer and the Company (and, following the Closing, the Paying
Agent) and waiver of any one provision of this Agreement shall not be deemed to
be a waiver of any other provision.
12.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
12.6 Captions. The various captions and headings contained in this
Agreement are for reference only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement.
12.7 Press Releases and Communications. No press release or public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued or made without the joint approval of Buyer and the Company,
unless required by law (in the reasonable opinion of counsel) in which case
Buyer and the Company shall have the right to review such press release or
announcement prior to publication.
12.8 Counterparts. This Agreement may be executed in any number of
counterparts,
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each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12.9 Expenses. Whether or not the transactions provided for in this
Agreement shall be effected, all costs and expenses incurred by the Company in
connection with this Agreement and the transactions contemplated hereby,
including without limitation attorneys' fees and the fees of Robert W. Baird &
Co., Incorporated, shall be paid by the Company, and all costs and expenses
incurred by Buyer in connection with this Agreement and the transactions
contemplated hereby shall be paid by Buyer except as set forth below. In
addition, the Company shall pay the fees and expenses of a single counsel for
the Management Stockholders incurred in connection with review of and advice
with respect to the provisions of this Agreement and the transactions
contemplated herein for and on behalf of said Management Stockholders. If the
transactions provided for in this Agreement shall be effected, the Company shall
reimburse Buyer for its expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees of advisors
and experts and a fee to Stonington Partners, Inc. for structuring and arranging
the financing for such transactions, the estimated amounts of which have been
disclosed to the Company in writing on or before the date of execution hereof.
None of the Company, the Management Stockholders, or Buyer shall have any
responsibility for any fees for expenses incurred by or on behalf of any other
Person.
12.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement is interpreted by a court
of competent jurisdiction and found to be invalid or unenforceable with respect
to a specific set of facts, or under a specific set of circumstances, neither
the enforceability nor the validity of such provisions with respect to any other
facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any such provision with respect to a specific
fact or circumstance shall not result in the interpretation of the remainder of
this Agreement, or any Section thereof, in a manner inconsistent with the intent
of the parties as evidenced by the terms of this Agreement, or such Section, as
a whole.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Recapitalization and Stock Purchase Agreement as of the day and year first above
written.
CII ACQUISITION LLC
By: STONINGTON CAPITAL APPRECIATION
1994 FUND, L.P., its Managing Member
By: STONINGTON PARTNERS, L.P.,
its General Partner
By: STONINGTON PARTNERS, INC. II,
its General Partner
By: /s/ Robert F. End
----------------------------------
Name: Robert F. End
Title: Partner
CANBERRA INDUSTRIES, INC.
By: /s/ Emery G. Olcott
----------------------------------
Name: Emery G. Olcott
Title: President
MANAGEMENT STOCKHOLDERS
/s/ Emery G. Olcott
----------------------------------
Emery G. Olcott
/s/ Richard T. McKernan
----------------------------------
Richard T. McKernan
<PAGE>
/s/ George Serrano
----------------------------------
George Serrano
/s/ Orren K. Tench
----------------------------------
Orren K. Tench
/s/ Staf van Cauter
----------------------------------
Staf van Cauter
/s/ Michael A. Zebarth
----------------------------------
Michael A. Zebarth
/s/ Manfred Boesel
----------------------------------
Manfred Boesel
/s/ Benjamin Campagnuolo
----------------------------------
Benjamin Campagnuolo
/s/ Michael Catalano
----------------------------------
Michael Catalano
/s/ Michael Charland
----------------------------------
Michael Charland
<PAGE>
/s/ Eugene Della Vecchia
----------------------------------
Eugene Della Vecchia
/s/ Kevin Kuhn
----------------------------------
Kevin Kuhn
/s/ Daniel Meert
----------------------------------
Daniel Meert
/s/ Arthur Nacht
----------------------------------
Arthur Nacht
/s/ Charles Wherlock
----------------------------------
Charles Wherlock
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PACKARD BIOSCIENCE COMPANY
FIRST: The name of the corporation is Packard BioScience Company.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle;
and the name of the registered agent of the Corporation is the State of Delaware
at such address is Corporation Service Company.
THIRD: A. The nature of the business to be conducted and the purposes to
be promoted by the Corporation are as follows:
1. To engage in the development, manufacture, use, sale, purchase,
and distribution of electronic or mechanical equipment, products, instruments
and machinery.
2. To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.
B. The Corporation shall have all powers granted by law and all
powers granted under the General Corporation Law of the State of Delaware.
FOURTH: A. The total number and classes of shares of stock which the
Corporation shall have authority to issue is (a) Fifteen Million (15,000,000)
shares of Common Stock, all of which are $.01 par value and (b) One Million
(1,000,000) shares of Preferred Stock, all of which are $.01 par value.
B. Shares of Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is hereby authorized to fix the voting
rights, if any, designations, preferences and the relative, participating,
optional or other rights, if any, and the qualifications, limitations or
restrictions thereof, of any unissued shares of Preferred Stock; and to fix the
number of shares constituting such series, and to increase or decrease the
number of shares of any such series (but not the number of shares thereof then
outstanding).
C. There shall be no preemptive rights granted to any stockholder.
D. There shall be no cumulative voting rights granted to any
stockholder.
FIFTH: The Corporation is to have perpetual existence.
<PAGE>
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed by,
or in the manner provided in, the By-Laws. The phrase "whole Board" and the
phrase "total number of directors" shall be deemed to have the same meaning, to
wit, the total number of directors which the Corporation would have if there
were no vacancies. No election of directors need be by written ballot.
2. The original By-Laws of the Corporation shall be adopted by the
incorporator unless the Certificate of Incorporation shall name the initial
Board of Directors therein. Thereafter, the power to make, alter, or repeal the
By-Laws, and to adopt any new By-Law, except a By-Law classifying directors for
election for staggered terms, shall be voted in the Board of Directors.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
Corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the Certificate of Incorporation shall entitle the holder thereof
to the right to vote at any meeting of stockholders except as the provisions of
paragraph (b) (2) of Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to
<PAGE>
vote upon the increase or decrease in the number of authorized shares of said
class.
EIGHTH: 1. The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in another capacity while holding such office, and
shall continue as to a person who had ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
2. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director in his capacity as a director; provided, however, that a director shall
be liable to the extent provided by applicable law (i) for the breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
3. Expenses incurred by an officer or director of the Corporation in
defending a civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such officer or
director to repay such amount if it shall be ultimately determined that such
officer or director is not entitled to be indemnified by the Corporation as
authorized by the Delaware General Corporation Law. Such expenses incurred by
other employees and agents of the Corporation may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
4. No amendment to or repeal of this Article Eighth shall apply to
or have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal, nor shall any such amendment or
repeal have any adverse effect on the right to indemnification or the obligation
of the Corporation to pay in advance expenses incurred by an officer or director
of the Corporation in defending any action, suit or proceeding arising out of or
with respect to any acts or omissions occurring prior to such amendment or
repeal.
NINTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article NINTH.
<PAGE>
AMENDED THROUGH
March 19, 1997
BY-LAWS
of
PACKARD BIOSCIENCE COMPANY
(formerly CANBERRA INDUSTRIES, INC.)
(A DELAWARE CORPORATION)
ARTICLE I.
MEETING OF SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held at the principal office of the Corporation in the City of Meriden, State of
Connecticut, or at such place, either within or without the State of Delaware,
as shall be designated in the notice of meeting, on such date in the months of
April or May or on such other date and at such time as shall be stated in the
notice of meeting. The Secretary shall serve personally, or by mail, a written
notice not less than ten (10) days nor more than sixty (60) days before such
meeting, addressed to each shareholder at his address as it appears on the stock
book; but at any meeting at which all shareholders shall be present, or of which
all not present have waived notice in writing, the giving of notice as above
required may be dispensed with.
Section 2. QUORUM. The presence, in person or by proxy, of the holders of
a majority of the outstanding stock entitled to vote shall be necessary to
constitute a quorum for
<PAGE>
-2-
the transaction of business, but a lesser number may adjourn to some future time
not less than ten (10) nor more than sixty (60) days later, and the Secretary
shall thereupon give at least ten (10) days' notice by mail to each shareholder
entitled to vote who was absent from such meeting.
Section 3. SPECIAL MEETINGS. Special meetings of shareholders other than
those regulated by statute may be called at any time by the President or by a
majority of the Directors. Notice of such meeting stating the purpose for which
it is called shall be served personally, or by mail, not less than ten (10) days
nor more than sixty (60) before the date set for such meeting. If mailed, it
shall be directed to every shareholder at his address as it appears on the stock
book; but at any meeting at which all shareholders shall be present, or of which
shareholders not present have waived notice in writing, the giving of notice as
above described may be dispensed with. The Board of Directors shall also, in
like manner, call a special meeting of shareholders whenever so requested in
writing by one (1) or more shareholders representing not less than one-half
(1/2) of the total number of shares of the issued and outstanding capital stock
of the Corporation. No business other than that specified in the call for the
meeting shall be transacted at any meeting of the shareholders.
Section 4. VOTING. At all meetings of the shareholders all questions, the
manner of deciding which is not specifically regulated by statute, shall be
determined by a majority of the shareholders present in person or by proxy;
provided, however, that any qualified voter may demand a stock vote, in which
case each shareholder present, in person or by proxy, shall be
<PAGE>
-3-
entitled to cast one (1) vote for each share of stock owned or represented by
him. All voting shall be by voice vote except that a written ballot may be used
when so requested by a majority of the holders of outstanding shares present at
the meeting; such stock vote shall be by ballot, each of which shall state the
name of the shareholder voting and the number of shares owned by him, and in
addition, if such ballot be cast by proxy, the name of the proxy shall be
stated. The casting of all votes at special meetings of shareholders shall be
governed by the provisions of the Corporation Laws of this State.
ARTICLE II.
DIRECTORS
Section 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of at least three (3) but not more than twelve (12)
Directors. The number of positions on the Board of Directors shall be the number
fixed by resolution of the shareholders or Board of Directors, or, in the
absence of such resolution, shall be the number of Directors elected at the
preceding annual meeting of shareholders. The Board of Directors may by
resolution increase the number of positions on the Board of Directors at any
time.
Section 2. HOW ELECTED. At the annual meeting of shareholders, the persons
receiving a majority of the votes cast shall be Directors and shall constitute
the Board of Directors for the ensuing year.
<PAGE>
-4-
Section 3. TERM OF OFFICE. The term of office of each of the Directors
shall be one (1) year, and thereafter until his successor has been elected.
Section 4. DUTIES OF DIRECTORS. The Board of Directors shall have the
control and general management of the affairs and business of the Corporation.
Such Directors shall in all cases act as a Board, regularly convened, by a
majority, and they may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation, as they may deem proper, not
inconsistent with these By-Laws and the laws of the State of Delaware.
Section 5. DIRECTORS' MEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the shareholders as
aforesaid, and in the same place as aforesaid meeting of the shareholders, and
at such other times as the Board of Directors may determine. Special meetings of
the Board of Directors may be called by the President or the Secretary at any
time, and shall be called by the President or the Secretary upon the written
request of three (3) Directors.
Section 6. NOTICE OF MEETINGS. Notice of the time, place and general
purpose of each meeting, other than the regular annual meeting, shall be given
to each Director in person or by telephone at least two (2) days before the day
of the meeting, or by mailing such notice to him at his last known post office
address at least three (3) days before the day of the meeting
<PAGE>
-5-
including the day of mailing.
Section 7. QUORUM. At any meeting of the Board of Directors, a majority of
the Board shall constitute a quorum for the transaction of business; but in the
event of a quorum not being present, a less number may adjourn the meeting to
some future time, not more than thirty (30) days later.
Section 8. VOTING. At all meetings of the Board of Directors, each
Director is to have one (1) vote, irrespective of the number of shares of stock
that he may hold.
Section 9. VACANCIES. Vacancies on the Board occurring between annual
meetings, and vacancies created by an increase in the number of directorships,
may be filled for the unexpired portion of the term by a majority of the
Directors then in office. In addition, the Board of Directors may eliminate any
such vacancy by resolution reducing the number of positions on the Board of
Directors.
Section 10. REMOVAL OF DIRECTORS. Any one (1) or more of the Directors may
be removed either with or without cause, at any time by a vote of the
shareholders holding three-fourths (3/4) of the stock, at any special meeting
called for the purpose.
<PAGE>
-6-
Section 11. COMPENSATION COMMITTEE. There shall be a Compensation
Committee of the Board consisting of at least two (2) members who are Directors
of the Corporation. The Compensation Committee shall have full authority to
decide and implement all compensation matters of the Corporation, including
without limitation officers' compensation.
ARTICLE III.
OFFICERS
Section 1. TITLES, ELECTION AND DUTIES. The Directors shall choose from
among their number a President and shall appoint a Secretary and Treasurer and
such other officers as the Directors may from time to time deem appropriate. The
duties of the officers of the Corporation shall be such as are specified below
and such as usually pertain to such offices, as well as such as may be
prescribed from time to time by the Board of Directors.
Section 2. PRESIDENT. The President shall preside at all meetings of the
Directors and shareholders, shall have general charge and direction of the
business of the Corporation and shall perform such other duties as are properly
required of him by the Board of Directors.
Section 3. SECRETARY. The Secretary shall keep the minutes of the meetings
of shareholders and the Board of Directors and shall give notice of all such
meetings as required in these By-Laws. He shall have custody of such minutes,
the seal of the Corporation and the stock
<PAGE>
-7-
certificate records of the Corporation, except to the extent some other person
is authorized to have custody and possession thereof by a resolution of the
Board of Directors.
Section 4. TREASURER. The Treasurer shall keep the fiscal accounts of the
Corporation, including an account of all moneys received or disbursed.
Section 5. VACANCIES, HOW FILLED. All vacancies in any office shall be
filled by the Board of Directors without undue delay at its regular meeting or
at a meeting specially called for that purpose.
Section 6. COMPENSATION OF OFFICERS. The officers shall receive such
salary or compensation as may be determined by the Compensation Committee, or in
the absence of such a committee, by the Board of Directors.
Section 7. REMOVAL. The Board of Directors may remove any officer, by a
vote, at any time, with or without cause.
ARTICLE IV.
SEAL
Section 1. FORM. The seal of the Corporation shall be circular in form and
shall include the name of the Corporation and the state of incorporation.
<PAGE>
-8-
ARTICLE V.
CERTIFICATE OF STOCK
Section 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock
shall be numbered and registered in the order in which they are issued. They
shall be bound in a book and shall be issued in consecutive order therefrom, and
in the margin thereof shall be entered the names of the person owning the shares
therein represented, with the number of shares and the date thereof. Such
certificates shall exhibit the holder's name and the number of shares. They
shall be signed by the President and countersigned by the Secretary and sealed
with the seal of the Corporation.
ARTICLE VI.
DIVIDENDS
Section 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient for
such dividends to be declared.
<PAGE>
-9-
ARTICLE VII.
INDEMNIFICATION OF SHAREHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS AND OTHERS
The Corporation shall to the extent provided by and in accordance with the
General Corporation Law of the State of Delaware, indemnify any person who was
or is a party, or was threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of that fact that he, or the person whose legal
representative he is, is or was a shareholder, director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against judgments, fines, amounts paid
in settlement and expenses, including attorneys' fees, actually and reasonably
incurred by him and the person whose legal representative he is, in connection
with such action, suit or proceeding, or any appeal therein.
ARTICLE VIII.
AMENDMENTS
Section 1. HOW AMENDED. These By-Laws may be altered, amended, repealed or
added to by an affirmative vote of the shareholders representing a majority of
the capital stock entitled to vote thereon at any meeting of shareholders called
for the purpose, or by an affirmative vote of a majority of the full Board of
Directors at any meeting of the Board of
<PAGE>
-10-
Directors called for the purpose.
<PAGE>
PACKARD BIOSCIENCE COMPANY
(F/K/A CANBERRA INDUSTRIES, INC.), as Issuer,
and
THE BANK OF NEW YORK, as Trustee
----------
INDENTURE
Dated as of March 4, 1997
----------
$150,000,000
9 3/8% Senior Subordinated Notes due 2007
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939,
as amended, and Indenture, dated as of March 4, 1997
Trust Indenture Indenture
Act Section Section
----------- -------
ss. 310 (a)(1)..............................................609
(a)(2)................................................609
(b)...................................................607, 610
ss. 311 (a).................................................613
ss. 312 (a).................................................701
(c)...................................................702
ss. 313 (a).................................................703
(c)...................................................703, 704
ss. 314 (a).................................................704
(a)(4)................................................1018
(c)(1)................................................103
(c)(2)................................................103
(e)...................................................103
ss. 315 (a).................................................601(b)
(b)...................................................602
(c)...................................................601(a)
(d)...................................................601(c), 603
(e)...................................................514
ss. 316 (a)(last sentence)..................................101 ("Outstanding")
(a)(1)(A).............................................502, 512
(a)(1)(B).............................................513
(b)...................................................508
(c)...................................................105
ss. 317 (a)(1)..............................................503
(a)(2)................................................504
(b)...................................................1003
ss. 318 (a).................................................108
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
----
PARTIES.......................................................................1
RECITALS......................................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions..................................................1
"Acquired Indebtedness"......................................2
"Affiliate"..................................................2
"Asset Sale".................................................2
"Average Life to Stated Maturity"............................3
"Bank Credit Facility".......................................3
"Bankruptcy Law".............................................3
"Banks"......................................................3
"Board of Directors".........................................3
"Board Resolution"...........................................3
"Book-Entry Security"........................................4
"Business Day"...............................................4
"Capital Lease Obligation"...................................4
"Capital Stock"..............................................4
"Cash Equivalents"...........................................4
"Change of Control"..........................................4
"Code".......................................................5
"Commission".................................................5
"Commodity Price Protection Agreement".......................5
"Common Stock"...............................................5
"Company"....................................................6
"Company Request" or "Company Order".........................6
"Consolidated Fixed Charge Coverage Ratio"...................6
"Consolidated Income Tax Expense"............................7
"Consolidated Interest Expense"..............................7
"Consolidated Net Income (Loss)".............................7
"Consolidated Non-cash Charges"..............................8
"Consolidation"..............................................8
"Corporate Trust Office".....................................8
"Currency Hedging Arrangements"..............................8
"Default"....................................................8
(i)
<PAGE>
PAGE
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"Depositary".................................................8
"Designated Senior Indebtedness".............................9
"Disinterested Director".....................................9
"Event of Default"...........................................9
"Exchange Act"...............................................9
"Exchange Offer".............................................9
"Exchange Offer Registration Statement"......................9
"Fair Market Value"..........................................9
"Generally Accepted Accounting Principles" or "GAAP".........9
"Global Securities"..........................................9
"Guarantee".................................................10
"Guaranteed Debt"...........................................10
"Guarantor".................................................10
"Holder"....................................................10
"Indebtedness"..............................................10
"Indenture".................................................11
"Indenture Obligations".....................................11
"Initial Securities"........................................11
"Initial Purchasers"........................................11
"Interest Payment Date".....................................12
"Interest Rate Agreements"..................................12
"Investment"................................................12
"Issue Date"................................................12
"Lien"......................................................12
"Maturity"..................................................12
"Moody's"...................................................12
"Net Cash Proceeds".........................................12
"Non-U.S. Person"...........................................13
"Non-U.S. Subsidiaries".....................................13
"Officers' Certificate".....................................13
"Opinion of Counsel"........................................13
"Opinion of Independent Counsel"............................14
"Outstanding"...............................................14
"Pari Passu Indebtedness"...................................15
"Paying Agent"..............................................15
"Permitted Holders".........................................15
"Permitted Indebtedness"....................................15
"Permitted Investment"......................................17
"Permitted Joint Venture"...................................18
"Person"....................................................18
"Predecessor Security"......................................18
(ii)
<PAGE>
PAGE
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"Preferred Stock"...........................................18
"Prospectus"................................................18
"Public Equity Offering"....................................18
"Purchase Money Obligation".................................19
"QIB".......................................................19
"Qualified Capital Stock"...................................19
"Recapitalization"..........................................19
"Recapitalization Agreement"................................19
"Redeemable Capital Stock"..................................19
"Redemption Date"...........................................20
"Redemption Price"..........................................20
"Registration Rights Agreement".............................20
"Registration Statement"....................................20
"Regular Record Date".......................................20
"Responsible Officer".......................................20
"Sale and Leaseback Transaction"............................20
"S&P".......................................................21
"Securities Act"............................................21
"Senior Guarantor Indebtedness".............................21
"Senior Indebtedness".......................................21
"Senior Representative".....................................21
"Shelf Registration Statement"..............................22
"Significant Subsidiary"....................................22
"Special Record Date".......................................22
"Stated Maturity"...........................................22
"Stockholders Agreement"....................................22
"Subordinated Indebtedness".................................22
"Subsidiary"................................................22
"Temporary Cash Investments"................................22
"Trustee"...................................................23
"Trust Indenture Act".......................................23
"Unrestricted Subsidiary"...................................23
"Unrestricted Subsidiary Indebtedness"......................24
"Voting Stock"..............................................24
"Wholly Owned Subsidiary"...................................25
Section 102. Other Definitions...........................................25
Section 103. Compliance Certificates and Opinions........................26
Section 104. Form of Documents Delivered to Trustee......................27
Section 105. Acts of Holders.............................................28
Section 106. Notices, etc., to the Trustee, the Company and any
Guarantor................................................29
Section 107. Notice to Holders; Waiver...................................30
(iii)
<PAGE>
PAGE
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Section 108. Conflict with Trust Indenture Act...........................30
Section 109. Effect of Headings and Table of Contents....................30
Section 110. Successors and Assigns......................................31
Section 111. Separability Clause.........................................31
Section 112. Benefits of Indenture.......................................31
Section 113. GOVERNING LAW...............................................31
Section 114. Legal Holidays..............................................31
Section 115. Independence of Covenants...................................31
Section 116. Schedules and Exhibits......................................32
Section 117. Counterparts................................................32
Section 118. No Personal Liability of Directors, Officers,
Incorporators, Employees and Stockholders................32
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.............................................32
Section 202. Form of Face of Security....................................33
Section 203. Form of Reverse of Securities...............................46
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.............................................55
Section 302. Denominations...............................................56
Section 303. Execution, Authentication, Delivery and Dating..............56
Section 304. Temporary Securities........................................57
Section 305. Registration, Registration of Transfer and Exchange.........58
Section 306. Book-Entry Provisions for U.S. Global Security..............60
Section 307. Special Transfer Provisions.................................62
Section 308. Mutilated, Destroyed, Lost and Stolen Securities............66
Section 309. Payment of Interest; Interest Rights Preserved..............67
Section 310. CUSIP Numbers...............................................68
Section 311. Persons Deemed Owners.......................................68
Section 312. Cancellation................................................69
Section 313. Computation of Interest.....................................69
(iv)
<PAGE>
PAGE
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ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance...............................................69
Section 402. Defeasance and Discharge....................................69
Section 403. Covenant Defeasance.........................................70
Section 404. Conditions to Defeasance or Covenant Defeasance.............71
Section 405. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.........73
Section 406. Reinstatement...............................................74
ARTICLE FIVE
REMEDIES
Section 501. Events of Default...........................................74
Section 502. Acceleration of Maturity; Rescission and Annulment..........76
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee...............................................78
Section 504. Trustee May File Proofs of Claim............................79
Section 505. Trustee May Enforce Claims without Possession of
Securities...............................................80
Section 506. Application of Money Collected..............................80
Section 507. Limitation on Suits.........................................80
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.....................................81
Section 509. Restoration of Rights and Remedies..........................81
Section 510. Rights and Remedies Cumulative..............................82
Section 511. Delay or Omission Not Waiver................................82
Section 512. Control by Holders..........................................82
Section 513. Waiver of Past Defaults.....................................83
Section 514. Undertaking for Costs.......................................83
Section 515. Waiver of Stay, Extension or Usury Laws.....................83
Section 516. Remedies Subject to Applicable Law..........................84
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee...........................................84
Section 602. Notice of Defaults..........................................85
(v)
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Section 603. Certain Rights of Trustee...................................86
Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof............87
Section 605. Trustee and Agents May Hold Securities; Collections; etc....88
Section 606. Money Held in Trust.........................................88
Section 607. Compensation and Indemnification of Trustee and Its
Prior Claim..............................................88
Section 608. Conflicting Interests.......................................89
Section 609. Trustee Eligibility.........................................89
Section 610. Resignation and Removal; Appointment of Successor
Trustee..................................................89
Section 611. Acceptance of Appointment by Successor......................91
Section 612. Merger, Conversion, Consolidation or Succession to
Business.................................................92
Section 613. Preferential Collection of Claims Against Company...........92
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Holders..................................................93
Section 702. Disclosure of Names and Addresses of Holders................93
Section 703. Reports by Trustee..........................................93
Section 704. Reports by Company..........................................94
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company and Guarantors May Consolidate, etc., Only
on Certain Terms.........................................95
Section 802. Successor Substituted.......................................97
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent
of Holders...............................................98
Section 902. Supplemental Indentures and Agreements with Consent
of Holders...............................................99
(vi)
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Section 903. Execution of Supplemental Indentures and Agreements........100
Section 904. Effect of Supplemental Indentures..........................101
Section 905. Conformity with Trust Indenture Act........................101
Section 906. Reference in Securities to Supplemental Indentures.........101
Section 907. Notice of Supplemental Indentures..........................101
Section 908. Modification of Indenture with Consent of Holders of
Senior Indebtedness.....................................102
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.................102
Section 1002. Maintenance of Office or Agency............................102
Section 1003. Money for Security Payments to Be Held in Trust............103
Section 1004. Corporate Existence........................................104
Section 1005. Payment of Taxes and Other Claims..........................104
Section 1006. Maintenance of Properties..................................105
Section 1007. Insurance..................................................105
Section 1008. Limitation on Indebtedness.................................106
Section 1009. Limitation on Restricted Payments..........................106
Section 1010. Limitation on Transactions with Affiliates.................111
Section 1011. Limitation on Senior Subordinated Indebtedness.............111
Section 1012. Limitation on Liens........................................112
Section 1013. Limitation on Sale of Assets...............................112
Section 1014. Limitation on Issuances of Guarantees of Indebtedness......117
Section 1015. Purchase of Securities upon a Change of Control............118
Section 1016. Limitation on Preferred Stock of Subsidiaries..............121
Section 1017. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries..................................122
Section 1018. Limitation on Unrestricted Subsidiaries....................122
Section 1019. Provision of Financial Statements..........................123
Section 1020. Statement by Officers as to Default........................123
Section 1021. Waiver of Certain Covenants................................124
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.......................................124
Section 1102. Applicability of Article...................................125
Section 1103. Election to Redeem; Notice to Trustee......................125
(vii)
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Section 1104. Selection by Trustee of Securities to Be Redeemed..........125
Section 1105. Notice of Redemption.......................................126
Section 1106. Deposit of Redemption Price................................127
Section 1107. Securities Payable on Redemption Date......................127
Section 1108. Securities Redeemed or Purchased in Part...................128
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture....................128
Section 1202. Application of Trust Money.................................129
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior Indebtedness..............130
Section 1302. Payment Over of Proceeds Upon Dissolution, etc.............130
Section 1303. Suspension of Payment When Designated Senior
Indebtedness in Default.................................132
Section 1304. Payment Permitted if No Default............................133
Section 1305. Subrogation to Rights of Holders of Senior
Indebtedness............................................134
Section 1306. Provisions Solely to Define Relative Rights................134
Section 1307. Trustee to Effectuate Subordination........................135
Section 1308. No Waiver of Subordination Provisions......................135
Section 1309. Notice to Trustee..........................................136
Section 1310. Reliance on Judicial Orders or Certificates................137
Section 1311. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights........................137
Section 1312. Article Applicable to Paying Agents........................137
Section 1313. No Suspension of Remedies..................................138
Section 1314. Trustee's Relation to Senior Indebtedness..................138
TESTIMONIUM
SIGNATURES AND SEALS........................................................139
ACKNOWLEDGMENTS
SCHEDULE I Existing Indebtedness
(viii)
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SCHEDULE II Existing Dividend Restrictions
EXHIBIT A Form of Certificate to be Delivered upon Termination of
Restricted Period
EXHIBIT B Form of Certificate to be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
EXHIBIT C Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S
APPENDIX I Form of Transferee Certificate for Series A Securities
APPENDIX II Form of Transferee Certificate for Series B Securities
(ix)
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INDENTURE, dated as of March 4, 1997, between Packard BioScience
Company (f/k/a Canberra Industries, Inc.), a Delaware corporation (the
"Company"), and The Bank of New York, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 9 3/8%
Senior Subordinated Notes due 2007, Series A (the "Series A Securities" or the
"Initial Securities"), and an issue of 9 3/8% Senior Subordinated Notes due
2007, Series B (the "Series B Securities" and, together with the Series A
Securities, the "Securities"), of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Company has duly authorized the execution
and delivery of this Indenture and the Securities;
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make the Securities,
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company and this Indenture a valid
agreement of the Company and each of the Guarantors in accordance with the terms
of this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
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(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d)the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America; and
(f) all references herein to particular Sections or Articles refer
to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined in
Article Four.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing
at the time such Person becomes a Subsidiary or (ii) assumed in connection with
the acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition, as the case may be. Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Subsidiary, as the case may be.
"Affiliate" means, with respect to any specified Person: (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 5% or more of such specified Person's Capital
Stock or any officer or director of any such specified Person or other Person
or, with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption not more remote than first cousin; or
(iii) any other Person 5% or more of the Voting Stock of which is beneficially
owned or held directly or indirectly by such specified Person. For the purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction) (collectively, a "transfer"),
directly or indirectly, in one or a
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series of related transactions, of: (i) any Capital Stock of any Subsidiary;
(ii) all or substantially all of the properties and assets of any division or
line of business of the Company or its Subsidiaries; or (iii) any other
properties or assets of the Company or any Subsidiary other than in the ordinary
course of business. For the purposes of this definition, the term "Asset Sale"
shall not include any transfer of properties and assets (A) that is governed by
Article Eight, (B) that is by the Company to any Guarantor or to any Subsidiary
that after the date hereof becomes a Guarantor, or by any Subsidiary to the
Company or any Wholly Owned Subsidiary in accordance with the terms of this
Indenture, (C) that is of obsolete equipment or other obsolete assets in the
ordinary course of business, (D) that represents an Investment in a Permitted
Joint Venture in the form of contributions of assets; or (E) the Fair Market
Value of which in the aggregate does not exceed $500,000 in any transaction or
series of related transactions.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Facility" means the Credit Agreement, dated as of the
date hereof, among Bank of America National Trust and Savings Association,
BancAmerica Securities, Inc., Canadian Imperial Bank of Commerce, CIBC Wood
Gundy Securities Corp., the other Banks, the Company and certain of its
Subsidiaries, as such agreement, in whole or in part, may be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplementations or other modifications of the foregoing).
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Banks" means the lenders under the Bank Credit Facility.
"Board of Directors" means the board of directors of the Company or
any Guarantor, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Guarantor, as the case
may be, to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
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"Book-Entry Security" means any Securities bearing the legend
specified in Section 202 evidencing all or part of a series of Securities,
authenticated and delivered to the Depositary for such series or its nominee,
and registered in the name of such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions or trust companies in
The City of New York or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law, regulation or executive
order to close.
"Capital Lease Obligation" of any Person means any obligation of
such Person and its Subsidiaries on a Consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been recorded
as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock or other equity interests whether now outstanding or issued after
the date hereof.
"Cash Equivalents" means (A) any security, maturing not more than
one year after the date of acquisition, issued by the United States of America,
or an instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America, (B) any
certificate of deposit, time deposit, money market account or bankers'
acceptance, maturing not more than six months after the date of acquisition,
issued by any commercial banking institution that is a member of the Federal
Reserve System and that has combined capital and surplus and undivided profits
of not less than $500,000,000 or (C) commercial paper, maturing not more than
six months after the date of acquisition, issued by any corporation (other than
an Affiliate or Subsidiary of the Company) with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to Moody's,
or "A-1" (or higher) according to S&P, or carrying an equivalent rating by a
nationally-recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper generally.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than a majority of the total outstanding Voting Stock of the Company; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together
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with any new directors whose election to such board or whose nomination for
election by the stockholders of the Company was approved by the Permitted
Holders or by a vote of 66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved), cease for any reason to constitute a
majority of such Board of Directors then in office; (iii) the Company
consolidates with or merges with or into any Person or conveys, transfers or
leases all or substantially all of its assets to any Person, or any corporation
consolidates with or merges into or with the Company in any such event pursuant
to a transaction in which the outstanding Voting Stock of the Company is changed
into or exchanged for cash, securities or other property, other than any such
transaction where the outstanding Voting Stock of the Company is not changed or
exchanged at all (except to the extent necessary to reflect a change in the
jurisdiction of incorporation of the Company or where (A) the outstanding Voting
Stock of the Company is changed into or exchanged for (x) Voting Stock of the
surviving corporation which is not Redeemable Capital Stock or (y) cash,
securities and other property (other than Capital Stock of the surviving
corporation) in an amount which could be paid by the Company as a Restricted
Payment as described in Section 1009 (and such amount shall be treated as a
Restricted Payment subject to the provisions in the Indenture described in
Section 1009) and (B) no "person" or "group," other than Permitted Holders, owns
immediately after such transaction, directly or indirectly, more than a majority
of the total outstanding Voting Stock of the surviving corporation; or (iv) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under Article Eight
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act then the
body performing such duties at such time.
"Commodity Price Protection Agreement" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value which is dependent upon, fluctuations in
commodity prices.
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
"Company" means Packard BioScience Company (f/k/a Canberra
Industries, Inc.), a corporation incorporated under the laws of Delaware, until
a successor Person shall have become such pursuant to the applicable provisions
of this Indenture,
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and thereafter "Company" shall mean such successor Person. To the extent
necessary to comply with the requirements of the provisions of the Trust
Indenture Act Sections 310 through 317 as they are applicable to the Company,
the term "Company" shall include any other obligor with respect to the
Securities for purposes of complying with such provisions.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the Board,
its President, its Chief Executive Officer, its Chief Financial Officer or a
Vice President (regardless of Vice Presidential designation), and by any one of
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for
any period, the ratio of (a) the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated
Non-cash Charges deducted in computing Consolidated Net Income (Loss) in each
case, for such period, of such Person and its Subsidiaries on a Consolidated
basis, all determined in accordance with GAAP to (b) the sum of Consolidated
Interest Expense for such period and cash dividends paid on any Preferred Stock
or Redeemable Capital Stock of such Person or any subsidiary of such Person
during such period, in each case after giving pro forma effect to (i) the
incurrence of the Indebtedness giving rise to the need to make such calculation
and (if applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, on the first day of such period; (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Subsidiaries since the first day of such period as if such Indebtedness was
incurred, repaid or retired at the beginning of such period (except that, in
making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such
Indebtedness during such period); (iii) in the case of Acquired Indebtedness or
any acquisition occurring at the time of the incurrence of such Indebtedness,
the related acquisition, assuming such acquisition had been consummated on the
first day of such period; and (iv) any acquisition or disposition by the Company
and its Subsidiaries of any company or any business or any assets out of the
ordinary course of business, whether by merger, stock purchase or sale or asset
purchase or sale, or any related repayment of Indebtedness, in each case since
the first day of such applicable period, assuming such acquisition or
disposition had been consummated on the first day of such period; provided that
(i) in making such computation, the Consolidated Interest Expense attributable
to interest on any Indebtedness computed on a pro forma basis and (A) bearing a
floating interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears,
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at the option of such Person, a fixed or floating rate of interest,
shall be computed by applying at the option of such Person either the fixed or
floating rate and (ii) in making such computation, the Consolidated Interest
Expense of such Person attributable to interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be computed based
upon the average daily balance of such Indebtedness during the applicable
period.
"Consolidated Income Tax Expense" of any Person means, for any
period, the provision for federal, state, local and foreign income taxes of such
Person and its Consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of (a) the interest expense of such Person
and its Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net costs
associated with Interest Rate Agreements, Currency Hedging Arrangements and
Commodity Price Protection Agreements (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation and (iv) accrued
interest, plus (b) (i) the interest component of the Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period and (ii) all capitalized interest of such Person
and its Subsidiaries plus (c) the interest expense under any Guaranteed Debt of
such Person and any Subsidiary to the extent not included under clause (a)(iv)
above, in each case as determined on a Consolidated basis in accordance with
GAAP, provided that noncash interest accrued but not paid on any Management
Notes issued pursuant to clause (b)(vii) of Section 1009 and amortization of
deferred financing fees previously paid shall be excluded from Consolidated
Interest Expense.
"Consolidated Net Income (Loss)" of any Person means, for any
period, the Consolidated net income (or loss) of such Person and its
Subsidiaries for such period on a Consolidated basis as determined in accordance
with GAAP, adjusted, to the extent included in calculating such net income (or
loss), by excluding, without duplication, (i) all extraordinary gains or losses
(less all fees and expenses relating thereto), (ii) the portion of net income
(or loss) of such Person and its Subsidiaries on a Consolidated basis allocable
to minority interests in unconsolidated Persons to the extent that cash
dividends or distributions have not actually been received by such Person or one
of its Consolidated Subsidiaries, (iii) net income (or loss) of any Person
combined with such Person or any of its Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination, (iv) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains (or losses) (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, (vi) the net income of any Subsidiary to the extent that the
declaration of
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dividends or similar distributions by that Subsidiary of that income is not at
the time permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (vii)
any restoration to income of any contingency reserve, except to the extent
provision for such reserve was made out of income accrued at any time following
the date hereof, (viii) any gain arising from the acquisition of any securities,
or the extinguishment, under GAAP, of any Indebtedness of such Person or (ix)
transaction costs charged during the first quarter of fiscal 1997 in connection
with the Recapitalization.
"Consolidated Non-cash Charges" of any Person means, for any period,
the aggregate depreciation, amortization and other non-cash charges of such
Person and its subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding any non-cash charge which requires
an accrual or reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation
of the accounts of such Person and each of its subsidiaries if and to the extent
the accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at 101
Barclay Street, Floor 21 West, New York, New York 10286.
"Currency Hedging Arrangements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar agreements
or arrangements designed to protect against the fluctuations in currency values.
"Default" means any event which is, or after notice or passage of
any time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in the
form of one or more Book-Entry Securities, The Depository Trust Company ("DTC"),
its nominees and successors, or another Person designated as Depositary by the
Company, which must be a clearing agency registered under the Exchange Act.
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"Designated Senior Indebtedness" means (i) all Senior Indebtedness
under, or in respect of, the Bank Credit Facility, and (ii) any other Senior
Indebtedness which at the time of determination, has an aggregate principal
amount outstanding of at least $15,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness or the agreement under which such
Senior Indebtedness arises as "Designated Senior Indebtedness" by the Company.
"Disinterested Director" means, with respect to any transaction or
series of related transactions, a member of the Board of Directors of the
Company who does not have any material direct or indirect financial interest in
or with respect to such transaction or series of related transactions.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Exchange Offer" means the exchange offer by the Company of Series B
Securities for Series A Securities to be effected pursuant to Section 2.1 of the
Registration Rights Agreement.
"Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 2.1 of the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be determined
by the Board of Directors of the Company acting in good faith and shall be
evidenced by a resolution of the Board of Directors.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date hereof.
"Global Securities" means a security evidencing all or a part of the
Securities to be issued as Book-Entry Securities issued to the Depositary in
accordance with Section 306.
"Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations.
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"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
below guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to, or in
any other manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received or such
services be rendered), (iv) to maintain working capital or equity capital of the
debtor, or otherwise to maintain the net worth, solvency or other financial
condition of the debtor or (v) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.
"Guarantor" means any Subsidiary which becomes a guarantor of the
Securities, including any Person that is required after the date hereof to
execute a guarantee of the Securities pursuant to Section 1012 or Section 1014
until a successor replaces such party pursuant to the applicable provisions of
the Indenture and, thereafter, shall mean such successor.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit issued under
letter of credit facilities, acceptance facilities or other similar facilities
and in connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Capital Stock of such Person, or any warrants,
rights or options to acquire such Capital Stock, now or hereafter outstanding,
(ii) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations under Interest Rate Agreements, Currency
Hedging Arrangements or Commodity Price Protection Agreements of such Person,
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(v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred
to in clauses (i) through (v) above of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock issued by
such Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends, and (ix) any amendment,
supplement, modification, deferral, renewal, extension, refunding or refinancing
of any liability which constitutes Indebtedness of the types referred to in
clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value to be determined
in good faith by the Board of Directors of the issuer of such Redeemable Capital
Stock.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules thereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities including any
Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection with
this Indenture, the Securities and the performance of all other obligations to
the Trustee and the holders under this Indenture and the Securities, according
to the respective terms thereof.
"Initial Securities" has the meaning stated in the first recital of
this Indenture.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, BancAmerica Securities, Inc. and CIBC Wood Gundy Securities Corp.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
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"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned by
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date on which the Securities are originally
issued under this Indenture.
"Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or otherwise), privilege, security interest, assignment, deposit,
arrangement, easement, hypothecation, claim, preference, priority or other
encumbrance upon or with respect to any property of any kind (including any
conditional sale, capital lease or other title retention agreement, any leases
in the nature thereof, and any agreement to give any security interest), real or
personal, movable or immovable, now owned or hereafter acquired.
"Maturity" means, when used with respect to the Securities, the date
on which the principal of the Securities becomes due and payable as therein
provided or as provided in this Indenture, whether at Stated Maturity, the Offer
Date or the Redemption Date and whether by declaration of acceleration, Offer in
respect of Excess Proceeds, Change of Control Offer in respect of a Change of
Control, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor
rating agency.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof (without duplication in respect of all Asset Sales)
in the form of cash or Temporary Cash Investments including payments in respect
of deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Temporary Cash Investments (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Subsidiary) net of (i) brokerage commissions and other reasonable fees
and expenses (including fees and expenses of
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counsel and investment bankers) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) payments made to retire
Indebtedness where payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (iv) amounts required to be paid to
any Person (other than the Company or any Subsidiary) owning a beneficial
interest in the assets subject to the Asset Sale and (v) appropriate amounts to
be provided by the Company or any Subsidiary, as the case may be, as a reserve,
in accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as reflected in an Officers' Certificate delivered to the Trustee and
(b) with respect to any issuance or sale of Capital Stock or options, warrants
or rights to purchase Capital Stock, or debt securities or Capital Stock that
have been converted into or exchanged for Capital Stock as referred to in
Section 1009, the proceeds of such issuance or sale in the form of cash or
Temporary Cash Investments including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
of for, cash or Temporary Cash Investments (except to the extent that such
obligations are financed or sold with recourse to the Company or any
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-U.S. Person" means a Person that is not a "U.S. person" as
defined in Regulation S under the Securities Act.
"Non-U.S. Subsidiaries" means Subsidiaries organized under the laws
of jurisdictions other than the United States and the states and territories
thereof.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President, the Chief Executive Officer, the Chief Financial
Officer or a Vice President (regardless of Vice Presidential designation), and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company or any Guarantor, as the case may be, and delivered to
the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, any Guarantor or the Trustee, unless an Opinion of
Independent Counsel is required pursuant to the terms of this Indenture, and who
shall be acceptable to the Trustee.
"Opinion of Independent Counsel" means a written opinion of counsel,
who may be regular outside counsel for the Company, but which is issued by a
Person who is
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not an employee or consultant (other than non-employee legal counsel) of the
Company, or any Guarantor and who shall be reasonably acceptable to the Trustee.
"Outstanding" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee has been
made;
(c) Securities, except to the extent provided in Sections 402 and
403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee and the Company proof reasonably satisfactory to each of them that such
Securities are held by a bona fide purchaser in whose hands the Securities are
valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company,
any Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor.
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"Pari Passu Indebtedness" means (a) any Indebtedness of the Company
that is pari passu in right of payment to the Securities and (b) with respect to
any Guarantee, Indebtedness which ranks pari passu in right of payment to such
Guarantee.
"Paying Agent" means any Person (including the Company) authorized
by the Company to pay the principal of, premium, if any, or interest on, any
Securities on behalf of the Company.
"Permitted Holders" means Stonington Partners, Inc., Stonington
Capital Appreciation 1994 Fund, L.P. and their respective Affiliates.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company and Non-U.S. Subsidiaries (and
guarantees of such Indebtedness of the Company by Subsidiaries) under the Bank
Credit Facility in an aggregate principal amount at any one time outstanding not
to exceed $115,000,000, minus all principal payments made in respect of any term
loans thereunder and minus the amount by which any commitments under any
revolving credit facility thereunder are permanently reduced;
(ii) Indebtedness of the Company pursuant to the Securities and
Indebtedness of any Guarantor pursuant to a Guarantee of the Securities;
(iii) Indebtedness of the Company or any Subsidiary outstanding on
the date of this Indenture and listed on Schedule I hereto;
(iv) Indebtedness of the Company owing to a Subsidiary; provided
that any Indebtedness of the Company owing to a Subsidiary is subordinated in
right of payment to the Securities to the same extent that the Securities are
subordinated to Senior Indebtedness and, upon an Event of Default, such
Indebtedness shall not be due and payable until such Event of Default is cured,
waived or rescinded; provided, further, that any disposition, pledge or transfer
of any such Indebtedness to a Person (other than a disposition, pledge or
transfer to a Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the Company not permitted by this clause (iv);
(v) Indebtedness of a Wholly Owned Subsidiary owing to the Company
or another Wholly Owned Subsidiary; provided that all amounts owing pursuant to
any such Indebtedness is immediately due and payable upon an Event of Default
and until such Event of Default is cured, waived or rescinded; provided,
further, that (a) any disposition, pledge or transfer of any such Indebtedness
to a Person (other than the Company or a Wholly Owned Subsidiary) shall be
deemed to be an incurrence of such Indebtedness by the obligor not permitted by
this clause (v), and (b) any transaction
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pursuant to which any Wholly Owned Subsidiary, which has Indebtedness owing to
the Company or any other Wholly Owned Subsidiary, ceases to be a Wholly Owned
Subsidiary shall be deemed to be the incurrence of Indebtedness by such Wholly
Owned Subsidiary that is not permitted by this clause (v);
(vi) guarantees of any Subsidiary made in accordance with the
provisions of Section 1014;
(vii) obligations of the Company entered into in the ordinary course
of business (a) pursuant to Interest Rate Agreements designed to protect the
Company or any Subsidiary against fluctuations in interest rates in respect of
Indebtedness of the Company or any Subsidiary as long as such obligations do not
exceed the aggregate principal amount of such Indebtedness then outstanding, (b)
under any Currency Hedging Arrangements, which if related to Indebtedness do not
increase the amount of such Indebtedness other than as a result of foreign
exchange fluctuations, or (c) under any Commodity Price Protection Agreements,
which if related to Indebtedness do not increase the amount of such Indebtedness
other than as a result of foreign exchange fluctuations;
(viii) Indebtedness of the Company and its Subsidiaries represented
by Capital Lease Obligations or Purchase Money Obligations or other Indebtedness
incurred or assumed in connection with the acquisition, improvement or
development of real or personal, movable or immovable, property in each case
incurred for the purpose of financing or refinancing all or any part of the
purchase price or cost of construction or improvement of property used in the
business of the Company and any refinancings of such Indebtedness made in
accordance with subclauses (a), (b) and (c) of clause (x) below, in an aggregate
principal amount pursuant to this clause (viii) not to exceed $5,000,000
outstanding at any time; provided that the principal amount of any Indebtedness
permitted under this clause (viii) did not in each case at the time of
incurrence exceed the Fair Market Value, as determined by the Company in good
faith, of the acquired or constructed asset or improvement so financed;
(ix) Indebtedness of the Company or any Subsidiary in respect of
performance bonds, bankers' acceptances, letters of credit of the Company or any
Subsidiary and surety bonds provided by the Company or any Subsidiary in the
ordinary course of business, not to exceed at any given time $5,000,000
outstanding in the aggregate;
(x) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (ii) and (iii) of this definition of "Permitted
Indebtedness," including any successive refinancings (a) so long as the borrower
under such refinancing is the Company or, if not the Company, the same as the
borrower of the Indebtedness being refinanced, (b) the
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aggregate principal amount of Indebtedness represented thereby is not increased
by such refinancing by an amount greater than the lesser of (I) the stated
amount of any premium or other payment required to be paid in connection with
such a refinancing pursuant to the terms of the Indebtedness being refinanced or
(II) the amount of premium or other payment actually paid at such time to
refinance the Indebtedness, plus, in either case, the amount of expenses of the
Company incurred in connection with such refinancing and (c) (A) in the case of
any refinancing of Indebtedness that is Subordinated Indebtedness, such new
Indebtedness is made subordinated to the Securities at least to the same extent
as the Indebtedness being refinanced and (B) in the case of Pari Passu
Indebtedness or Subordinated Indebtedness, as the case may be, such refinancing
does not reduce the Average Life to Stated Maturity or the Stated Maturity of
such Indebtedness;
(xi) Indebtedness of the Company and its Subsidiaries in an
aggregate principal amount not to exceed $7,500,000, the proceeds of which is
used to purchase the 40% equity interest in Packard Japan KK not presently owned
by the Company and its Subsidiaries;
(xii) Management Notes issued pursuant to clause (b)(vii) of Section
1009; and
(xiii) Indebtedness of the Company and its Subsidiaries (including
Acquired Indebtedness) in addition to that described in clauses (i) through
(xii) above, and any renewals, extensions, substitutions, refinancings or
replacements of such Indebtedness, so long as the aggregate principal amount of
all such Indebtedness shall not exceed $20,000,000 outstanding at any one time
in the aggregate.
"Permitted Investment" means (i) Investments in any Subsidiary or
any Person which, as a result of such Investment, (a) becomes a Subsidiary or
(b) is merged or consolidated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or any
Subsidiary; (ii) Indebtedness of the Company or a Subsidiary described under
clauses (iv), (v) and (vi) of the definition of "Permitted Indebtedness"; (iii)
Investments in any of the Securities; (iv) Temporary Cash Investments; (v)
Investments acquired by the Company or any Subsidiary in connection with an
Asset Sale permitted under Section 1013 to the extent such Investments are
non-cash proceeds as permitted under such Section; (v) Investments in existence
on the date of this Indenture; (vi) guarantees of Indebtedness of a Wholly Owned
Subsidiary given by the Company or another Wholly Owned Subsidiary and
guarantees of Indebtedness of the Company given by any Subsidiary, in each case,
in accordance with the terms of this Indenture; (vii) Investments in any
Permitted Joint Venture in the aggregate amount of $20,000,000 at any one time
outstanding; and (viii) any other Investments in the aggregate amount of
$5,000,000 at any one time outstanding. In connection with any
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assets or property contributed or transferred to any Person as an Investment,
such property and assets shall be equal to the Fair Market Value (as determined
by the Company's Board of Directors) at the time of Investment.
"Permitted Joint Venture" means any joint venture in which the
Company or any Subsidiary holds Voting Stock and which develops, manufactures,
sells or licenses instrumentation, biochemicals, consumables or other related
products in connection with the biotechnological and drug discovery segments of
the life sciences industry or the nuclear instrumentation industry.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 308 in exchange for a
mutilated Security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, with respect to any Person, any Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class in such Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Redeemable Capital Stock) pursuant to a registration
statement that has been declared effective by the Commission (other than a
registration statement on Form S-8 or any successor form or otherwise relating
to equity securities issuable under any employee benefit plan of the Company).
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"Purchase Money Obligation" means any Indebtedness secured by a Lien
on assets related to the business of the Company and its Subsidiaries and any
additions and accessions thereto, which are purchased at any time after the
Securities are issued; provided that (i) the security agreement or conditional
sales or other title retention contract pursuant to which the Lien on such
assets is created (collectively a "Purchase Money Security Agreement") shall be
entered into within 180 days after the purchase or substantial completion of the
construction of such assets and shall at all times be confined solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accession thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to the Company and its Subsidiaries of the
assets subject thereto or (B) the Indebtedness secured thereby shall be with
recourse solely to the assets so purchased or acquired, any additions and
accessions thereto and any proceeds therefrom.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A under
the Securities Act.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"Recapitalization" means the transactions defined as the
"Recapitalization" in the Company's Offering Memorandum, dated as of February
21, 1997, with respect to the Securities.
"Recapitalization Agreement" means the Recapitalization and Stock
Purchase Agreement, dated as of November 26, 1996, among Canberra Industries,
Inc., the Management Stockholders signatory thereto, and CII Acquisition LLC, as
in effect on the date hereof.
"Redeemable Capital Stock" means any Capital Stock that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to any Stated Maturity of the
principal of the Securities or is redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof, provided that the term "Redeemable Capital
Stock" shall not include shares of Capital Stock which would not be
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Redeemable Capital Stock but for the provisions of Section 3.1 of the
Stockholders' Agreement.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the price at which it
is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 4, 1997, among Packard BioScience Company (f/k/a
Canberra Industries, Inc.) and the Initial Purchasers.
"Registration Statement" means any registration statement of the
Company which covers any of the Series A Securities or Series B Securities
pursuant to the provisions of the Registration Rights Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the February 15 or August 15 (whether or not a Business Day)
next preceding such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee means
any officer assigned to the Corporate Trust Office or any agent of the Trustee
appointed hereunder, including any vice president, assistant vice president,
assistant secretary, or any other officer or assistant officer of the Trustee or
any agent of the Trustee appointed hereunder to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity with the
particular subject.
"Sale and Leaseback Transaction" means any transaction or series of
related transactions pursuant to which the Company or a Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"S&P" means Standard & Poor's Rating Group, a division of McGraw
Hill, Inc. or any successor rating agency.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
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"Senior Guarantor Indebtedness" means Indebtedness of a Guarantor
which secures or guarantees any Senior Indebtedness.
"Senior Indebtedness" means the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) and all other monetary obligations on
any Indebtedness of the Company (other than as otherwise provided in this
definition), whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, and whether at any time owing, actually or
contingently, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceedings under any state, federal or foreign bankruptcy laws whether or
not allowable as a claim in such proceeding), and all other monetary obligations
of every kind and nature of the Company from time to time owed to the lenders
under the Bank Credit Facility; provided, however, that any Indebtedness under
any refinancing, refunding or replacement of the Bank Credit Facility shall not
constitute Senior Indebtedness to the extent the Indebtedness thereunder is by
its express terms subordinate to any other Indebtedness of the Company.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Securities, (ii) Indebtedness that is by its terms
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
any liability for foreign, federal, state, local or other tax owed or owing by
the Company to the extent such liability constitutes Indebtedness, (vi)
Indebtedness of the Company to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's subsidiaries and (vii) that portion of any
Indebtedness which at the time of issuance is issued in violation of this
Indenture.
"Senior Representative" means the agent, indenture trustee or other
trustee or representative for any Senior Indebtedness.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to Section 2.2 of the of the Registration
Rights Agreement, which covers all of the Registrable Securities (as defined in
the Registration Rights Agreement) on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the Commission,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the
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Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" means, when used with respect to any Indebtedness
or any installment of interest thereon, the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest, as the case may be, is due and payable.
"Stockholders' Agreement" means the Stockholders' Agreement, dated
the date hereof, among the Company, certain management investors listed in
Schedule I thereto, certain non-management investors listed in Schedule II
thereto, Stonington Capital Appreciation 1994 Fund, L.P. and other parties
thereto, as in effect on the date hereof.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor subordinated in right of payment to the Securities or the Guarantee of
such Guarantor, as the case may be.
"Subsidiary" means any Person, a majority of the equity ownership or
the Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries; provided that any Unrestricted Subsidiary shall not be
deemed a Subsidiary under the Securities.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit (or, with respect to non-U.S.
banking institutions, similar instruments) maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution that is a member of the Federal Reserve System or a commercial
banking institution organized and located in a country recognized by the United
States of America, in each case, that has combined capital and surplus and
undivided profits of not less than $500,000,000 (or the foreign currency
equivalent thereof), whose debt has a rating, at the time as of which any
investment therein is made,
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of "P-1" (or higher) according to Moody's or any successor rating agency or
"A-1" (or higher) according to S&P or any successor rating agency, (iii)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate or Subsidiary of the Company)
organized and existing under the laws of the United States of America with a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P and (iv) any
money market deposit accounts or demand deposit accounts issued or offered by a
domestic commercial bank or a commercial banking institution organized and
located in a country recognized by the United States of America, in each case
having capital and surplus in excess of $500,000,000 (or the foreign currency
equivalent thereof); provided that the short term debt of such commercial bank
has a rating, at the time of Investment, of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P.
"Trustee" means, except as set forth in Section 405, the Person
named as the "Trustee" in the first paragraph of this Indenture, until a
successor trustee shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter "Trustee" shall mean such successor trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, or any successor statute.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all of
the following conditions apply: (a) neither the Company nor any of its
Subsidiaries provides credit support for Indebtedness of such Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness), (b) such Unrestricted Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, (c) any Investment in such Unrestricted Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate the provisions of Section 1018 and such Unrestricted Subsidiary is not
party to any agreement, contract, arrangement or understanding at such time with
the Company or any other Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such other Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Company or, in the event such
condition is not satisfied, the value of such agreement, contract, arrangement
or understanding to such Unrestricted Subsidiary shall be deemed an Investment;
and
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(d) such Unrestricted Subsidiary does not own any Capital Stock in any
Subsidiary of the Company which is not simultaneously being designated an
Unrestricted Subsidiary. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing conditions and
shall be deemed a Restricted Payment on the date of designation in an amount
equal to the greater of (1) the net book value of such Investment or (2) the
Fair Market Value of such Investment as determined in good faith by the
Company's Board of Directors. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Subsidiary; provided that (i)
immediately after giving effect to such designation, the Company could incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 1008 and (ii) all Indebtedness of such Subsidiary shall be deemed to be
incurred on the date such Unrestricted Subsidiary becomes a Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which
neither the Company nor any Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Subsidiary being the primary obligor on,
guarantor of, or otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any Affiliate, in which case
(unless the incurrence of such Guaranteed Debt resulted in a Restricted Payment
at the time of incurrence) the Company shall be deemed to have made a Restricted
Payment equal to the principal amount of any such Indebtedness to the extent
guaranteed at the time such Affiliate is designated an Unrestricted Subsidiary
and (ii) which, upon the occurrence of a default with respect thereto, does not
result in, or permit any holder of any Indebtedness of the Company or any
Subsidiary to declare, a default on such Indebtedness of the Company or any
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Voting Stock" means Capital Stock of the class or classes pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of a corporation (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock
of which is owned by the Company or another Wholly Owned Subsidiary.
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Section 102. Other Definitions.
Term Defined in Section
---- ------------------
"Act" 105
"Agent Members" 306
"Change of Control Offer" 1015
"Change of Control Purchase Date" 1015
"Change of Control Purchase Notice" 1015
"Change of Control Purchase Price" 1015
"covenant defeasance" 403
"Defaulted Interest" 309
"defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
"Excess Proceeds" 1013
"incur" 1008
"Initial Period" 1303
"Non-payment Default" 1303
"Offer" 1013
"Offer Date" 1013
"Offered Price" 1013
"Offshore Securities Exchange Date" 201
"Pari Passu Debt Amount" 1013
"Pari Passu Offer" 1013
"Payment Blockage Period" 1303
"Payment Default" 1303
"Permanent Offshore Physical Securities" 201
"Permitted Junior Securities" 1302
"Permitted Payment" 1009
"Private Placement Legend" 202
"Purchase Money Security Agreement" 101
"refinancing" 1009
"Required Filing Date" 1019
"Restricted Payments" 1009
"Rule 144A" 201
"Securities" Recitals
"Security Amount" 1013
"Security Register" 305
"Security Registrar" 305
"Series A Securities" Recitals
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"Series B Securities" Recitals
"Special Payment Date" 309
"Surviving Entity" 801
"Surviving Guarantor Entity" 801
"Temporary Offshore Physical Securities" 201
"U.S. Global Security" 201
"U.S. Government Obligations" 404
"U.S. Physical Securities" 201
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company and any
Guarantor (if applicable) and any other obligor on the Securities (if
applicable) shall furnish to the Trustee an Officers' Certificate in a form and
substance reasonably acceptable to the Trustee stating that all conditions
precedent, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) relating to the
proposed action have been complied with, and an Opinion of Counsel in a form and
substance reasonably acceptable to the Trustee stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such certificates or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
individual or firm signing such opinion has read such covenant or condition and
the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary to
enable him or it to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it relates
to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Company, any Guarantor or other obligor on the Securities stating that
the information with respect to such factual matters is in the possession of the
Company, any Guarantor or other obligor on the Securities, unless such officer
or counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Opinions of Counsel required to be delivered to the Trustee may have
qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it relates
to accounting matters, upon a certificate or opinion of, or representations by,
an accountant or firm of accountants in the employ of the Company, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent with respect
to the Company.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 105.
(b) The ownership of Securities shall be proved by the Security
Register.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future Holder
of the same Security or the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent or the Company,
any Guarantor or any other obligor of the Securities in reliance thereon,
whether or not notation of such action is made upon such Security.
(d) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the
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determination of such Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. Notwithstanding Trust Indenture Act Section
316(c), any such record date shall be the record date specified in or pursuant
to such Board Resolution, which shall be a date not more than 30 days prior to
the first solicitation of Holders generally in connection therewith and no later
than the date such first solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for purposes of determining
whether Holders of the requisite proportion of Securities then Outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the
Securities then Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after such record date.
Section 106. Notices, etc., to the Trustee, the Company and any Guarantor.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor or
any other obligor on the Securities shall be sufficient for every purpose
(except as provided in Section 501(c)) hereunder if in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier, to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Holders or the Company, any Guarantor or any other obligor on the Securities by
the Trustee; or
(b) the Company or any Guarantor by the Trustee or any Holder shall
be sufficient for every purpose (except as provided in Section 501(c)) hereunder
if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to the Company or such Guarantor addressed to it
c/o Packard BioScience Company, 800 Research Parkway, Meriden, Connecticut
06450, Attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Company or such Guarantor.
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Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be reasonably satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
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Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
the Guarantors shall bind their respective successors and assigns, whether so
expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent, the Holders, the holders of Senior Indebtedness and
the holders of Senior Guarantor Indebtedness) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 113. GOVERNING LAW.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.
Section 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants,
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the fact that it would be permitted by an exception to, or be otherwise within
the limitations of, another covenant shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or condition exists.
Section 116. Schedules and Exhibits.
All schedules and exhibits attached hereto are by this reference
made a part hereof with the same effect as if herein set forth in full.
Section 117. Counterparts.
This Indenture may be executed in any number of counterparts, each
of which shall be deemed an original; but all such counterparts shall together
constitute but one and the same instrument.
Section 118. No Personal Liability of Directors, Officers, Incorporators,
Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company or of any Guarantor shall have any liability for any obligation of the
Company or any Guarantor under the Securities, this Indenture, any Guarantee or
for any claim based on, in respect of, or by reason of, any such obligation or
the creation of any such obligation. Each Holder by accepting a Security waives
and releases such Persons from all such liability and such waiver and release is
part of the consideration for the issuance of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
thereon shall be in substantially the forms set forth in this Article Two, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted hereby and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
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The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Initial Securities offered and sold in reliance on Rule 144A under
the Securities Act ("Rule 144A") shall be issued initially in the form of one or
more permanent global Securities substantially in the form set forth in Section
202 (the "U.S. Global Security") deposited with the Trustee, as custodian for
the Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the U.S. Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Securities offered and sold inside the United States to an
institutional investor within the meaning of subparagraphs (a)(1), (a)(2),
(a)(3) or (a)(7) of Rule 501 under the Securities Act shall be issued in
certificated form substantially in the form set forth in Section 202 (the "U.S.
Physical Securities").
Initial Securities offered and sold in reliance on Regulation S
under the Securities Act shall be issued initially in the form of temporary
certificated Securities in registered form substantially in the form set forth
in Section 202 (the "Temporary Offshore Physical Securities"). The Temporary
Offshore Physical Securities will be registered in the name of, and held by, a
temporary certificate holder designated by the Initial Purchasers until the
later of the completion of the distribution of the Initial Securities and the
termination of the "restricted period" (as defined in Regulation S) with respect
to the offer and sale of the Initial Securities (the "Offshore Securities
Exchange Date"). At any time following the Offshore Securities Exchange Date,
upon receipt by the Trustee and the Company of a certificate substantially in
the form of Exhibit A hereto, the Company shall execute, and the Trustee shall
authenticate and deliver, one or more permanent certificated Securities in
registered form substantially in the form set forth in Section 202 (the
"Permanent Offshore Physical Securities"), in exchange for the surrender of
Temporary Offshore Physical Securities of like tenor and amount.
Section 202. Form of Face of Security.
(a) The form of the face of any Series A Securities authenticated
and delivered hereunder shall be substantially as follows:
Unless and until (i) an Initial Security is sold under an effective
Registration Statement or (ii) an Initial Security is exchanged for a Series B
Security in connection
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with an effective Registration Statement, in each case pursuant to the
Registration Rights Agreement, then (A) the U.S. Global Security and each U.S.
Physical Security shall bear the legend set forth below (the "Private Placement
Legend") on the face thereof and (B) the Temporary Offshore Physical Securities
shall bear the Private Placement Legend on the face thereof until at least 41
days after the Issue Date and receipt by the Company and the Trustee of a
certificate substantially in the form as set forth in Exhibit B:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE
UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
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THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED STATES
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE
TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1), (A)(2), (A)(3)
OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE
TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
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DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307
OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT AND ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
36
<PAGE>
PACKARD BIOSCIENCE COMPANY
------------------
9 3/8% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A
CUSIP NO. ______________
No. __________ $_______________________
Packard BioScience Company, a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to or
registered assigns, the principal sum of United States dollars on March 1, 2007,
at the office or agency of the Company referred to below, and to pay interest
thereon from March 4, 1997, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semiannually on March 1 and
September 1 in each year, commencing September 1, 1997 at the rate of 9 3/8% per
annum, subject to adjustments as described in the second following paragraph, in
United States dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
The Holder of this Series A Security is entitled to the benefits of
the Registration Rights Agreement among the Company and the Initial Purchasers,
dated March 4, 1997, pursuant to which, subject to the terms and conditions
thereof, the Company is obligated to consummate the Exchange Offer pursuant to
which the Holder of this Security shall have the right to exchange this Security
for 9 3/8% Senior Subordinated Notes due 2007, Series B (herein called the
"Series B Securities") in like principal amount as provided therein. The Series
A Securities and the Series B Securities are together referred to as the
"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
In the event that (a) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 45th calendar day following the
date of original issue of the Series A Securities, (b) the Exchange Offer
Registration Statement has not been declared effective on or prior to the 105th
calendar day following the date of original issue of the Series A Securities or
(c) the Exchange Offer is not consummated on or prior to the 135th calendar day
following the date of original issue of the Series A Securities or a Shelf
Registration Statement is not declared effective on or prior to the 135th
calendar day following the date of original issue of the Series A Securities
(or, if a Shelf Registration Statement is required to be filed because of the
request by any Initial
37
<PAGE>
Purchaser, 30 days following the request by any such Initial Purchaser that the
Company file the Shelf Registration Statement) (each such event referred to in
clauses (a) through (c) above, a "Registration Default"), the interest rate
borne by the Series A Securities (except in the case of clause (c), in which
case only the Series A Securities which have not been exchanged in the Exchange
Offer) shall be increased by one-quarter of one percent per annum upon the
occurrence of any Registration Default, which rate (as increased as aforesaid)
will increase by an additional one quarter of one percent each 90-day period
that such additional interest continues to accrue under any such circumstance,
with an aggregate maximum increase in the interest rate equal to one percent
(1%) per annum. Following the cure of all Registration Defaults the accrual of
additional interest will cease and the interest rate will revert to the original
rate.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the February 15 or August 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the interest rate borne by the Series A Securities, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Security (or any
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or transfer of the Security, will be made at the office
or agency of the Company in The City of New York maintained for that purpose
(which initially will be the Corporate Trust Office of the Trustee), or at such
other office or agency as may be maintained for such purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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<PAGE>
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
PACKARD BIOSCIENCE COMPANY
[Seal] By:_________________________
Title:______________________
Attest:
____________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/8% Senior Subordinated Notes due 2007, Series
A referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:__________________________
Authorized Signer
Dated:
39
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 1013 or Section 1015, as applicable, of the Indenture, check the Box:
[_].
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1013 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$________________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
(b)The form of the face of any Series B Securities authenticated and
delivered hereunder shall be substantially as follows:
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE
40
<PAGE>
& CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 306 AND 307 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT AND ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
41
<PAGE>
PACKARD BIOSCIENCE COMPANY
------------------
9 3/8% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
CUSIP NO. ______________
No. __________ $_______________________
Packard BioScience Company, a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________or registered assigns, the principal sum of United States dollars on
March 1, 2007, at the office or agency of the Company referred to below, and to
pay interest thereon from March 4, 1997, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semiannually
on March 1 and September 1 in each year, commencing September 1, 1997 at the
rate of 9 3/8% per annum, in United States dollars, until the principal hereof
is paid or duly provided for; provided that to the extent interest has not been
paid or duly provided for with respect to the Series A Security exchanged for
this Series B Security, interest on this Series B Security shall accrue from
the most recent Interest Payment Date to which interest on the Series A
Security which was exchanged for this Series B Security has been paid or duly
provided for. Interest shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
This Series B Security was issued pursuant to the Exchange Offer
pursuant to which the 9 3/8% Senior Subordinated Notes due 2007, Series A
(herein called the "Series A Securities") in like principal amount were
exchanged for the Series B Securities. The Series B Securities rank pari passu
in right of payment with the Series A Securities.
In addition, for any period in which the Series A Security
exchanged for this Series B Security was outstanding, in the event that (a) the
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 45th calendar day following the date of original issue of the
Series A Security, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 105th calendar day following the date of
original issue of the Series A Security or (c) the Exchange Offer is not
consummated on or prior to the 135th calendar day following the date of
original issue of the Series A Security or a Shelf Registration Statement is
not declared effective on or prior to the 135th calendar day following the date
of original issue of the Series A Security (or, if a Shelf Registration
Statement is required to be filed because of
42
<PAGE>
the request by any Initial Purchaser, 30 days following the request by any such
Initial Purchaser that the Company file the Shelf Registration Statement) (each
such event referred to in clauses (a) through (c) above, a "Registration
Default"), the interest rate borne by the Series A Securities (except in the
case of clause (c), in which case only the Series A Securities which have not
been exchanged in the Exchange Offer) shall be increased by one-quarter of one
percent per annum upon the occurrence of any Registration Default, which rate
(as increased as aforesaid) will increase by an additional one quarter of one
percent each 90-day period that such additional interest continues to accrue
under any such circumstance, with an aggregate maximum increase in the interest
rate equal to one percent (1%) per annum. Following the cure of all Registration
Defaults the accrual of additional interest will cease and the interest rate
will revert to the original rate; provided that, to the extent interest at such
increased interest rate has been paid or duly provided for with respect to the
Series A Security, interest at such increased interest rate, if any, on this
Series B Security shall accrue from the most recent Interest Payment Date to
which such interest on the Series A Security has been paid or duly provided for;
provided, however, that, if after any such reduction in interest rate, a
different event specified in clause (a), (b) or (c) above occurs, the interest
rate shall again be increased pursuant to the foregoing provisions.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the February 15 or August 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the interest rate borne by the Series B Securities, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Security (or any
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or transfer of the Security, will be made at the office
or agency of the Company in The City of New York maintained for such purpose
(which initially will be the Corporate Trust Office of the Trustee), or at such
other office or agency as may be maintained for such purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
43
<PAGE>
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
PACKARD BIOSCIENCE COMPANY
[Seal] By:_____________________________________
Title:__________________________________
Attest:
____________________________
Authorized Officer
44
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/8% Senior Subordinated Notes due 2007, Series
B referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:_______________________________
Authorized Signer
Dated:
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 1013 or Section 1015, as applicable, of the Indenture, check the Box:
[_].
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1013 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$ _______________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved
45
<PAGE>
guarantee medallion program pursuant to Securities and Exchange Commission Rule
17Ad-15]
Section 203. Form of Reverse of Securities.
(a) The form of the reverse of the Series A Securities shall be
substantially as follows:
PACKARD BIOSCIENCE COMPANY
9 3/8% Senior Subordinated Note due 2007, Series A
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9 3/8% Senior Subordinated Notes due 2007, Series A
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of March 4, 1997, between the Company and The Bank of New
York, as trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance with
certain conditions set forth therein.
The Securities are subject to redemption at any time on or after
March 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning March 1 of the years indicated
below:
46
<PAGE>
Redemption
Year Price
---- -----------
2002......................... 104.688%
2003......................... 103.125%
2004......................... 101.563%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase, pursuant to a Change of Control Offer in accordance with the
procedures set forth in the Indenture.
In addition, at any time on or prior to March 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity Offerings
to redeem up to an aggregate of 30% of the aggregate principal amount of
Securities originally issued under the Indenture at a redemption price equal to
109.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$105,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior Indebtedness or invested in properties or other assets that replace
the properties and assets that were the subject of the Asset Sale or which will
be used in the businesses of the Company or its Subsidiaries existing on the
date of the Indenture or in businesses reasonably related thereto, exceeds a
specified amount the Company will be required to apply such proceeds to the
repayment of the Securities and certain Indebtedness ranking pari passu in right
of payment to the Securities.
47
<PAGE>
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of a specified percentage in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and the Securities and the
Guarantees and certain past Defaults under the Indenture and the Securities and
the Guarantees and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.
The Series A Securities are, to the extent and manner provided in
Article Thirteen of the Indenture, subordinated and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on, this Security at the
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<PAGE>
times, place, and rate, and in the coin or currency, herein prescribed, subject
to the subordination provisions of the Indenture.
If this Series A Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable on the Security Register of the
Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York or at such other office or agency of the Company as may be maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
If this Series A Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
Holder, provided it is a Qualified Institutional Buyer, may exchange this Series
A Security for a Book-Entry Security by instructing the Trustee (by completing
the Transferee Certificate in the form in Appendix I) to arrange for such Series
A Security to be represented by a beneficial interest in a Global Security in
accordance with the customary procedures of the Depository, unless the Company
has elected not to issue a Global Security.
If this Series A Security is a U.S. Global Security, it is
exchangeable for a Series A Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be transferred to all
beneficial holders in exchange for their beneficial interests in the U.S. Global
Securities if (x) the Depository notifies the Company that it is unwilling or
unable to continue as depository for the U.S. Global Security and a successor
depositary is not appointed by the Company within 90 days or (y) there shall
have occurred and be continuing an Event of Default and the Security Registrar
has received a request from the Depositary. Upon any such issuance, the Trustee
is required to register such certificated Series A Securities in the name of,
and cause the same to be delivered to, such Person or Persons (or the nominee of
any thereof). All such certificated Series A Securities would be required to
include the Private Placement Legend.
Series A Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series A Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
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<PAGE>
At any time when the Company is not subject to Sections 13 or 15(d)
of the Exchange Act, upon the written request of a Holder of a Series A
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) to such Holder or to a prospective
purchaser of such Series A Security who such Holder informs the Company is
reasonably believed to be a "Qualified Institutional Buyer" within the meaning
of Rule 144A under the Securities Act, as the case may be, in order to permit
compliance by such Holder with Rule 144A under the Securities Act.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
[The Transferee Certificate, in the form of Appendix I hereto, will
be attached to the Series A Security.]
(b) The form of the reverse of the Series B Securities shall be
substantially as follows:
PACKARD BIOSCIENCE COMPANY
9 3/8% Senior Subordinated Note due 2007, Series B
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9 3/8% Senior Subordinated Notes due 2007, Series B
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
issued under and subject to the terms of an
50
<PAGE>
indenture (herein called the "Indenture") dated as of March 4, 1997, between the
Company and The Bank of New York, as trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Guarantors, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance with
certain conditions set forth therein.
The Securities are subject to redemption at any time on or after
March 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning March 1 the years indicated below:
Redemption
Year Price
---- -----------
2002......................... 104.688%
2003......................... 103.125%
2004......................... 101.563%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase, pursuant to Change of Control Offer and in accordance with the
procedures set forth in the Indenture.
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In addition, at any time on or prior to March 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity Offerings
to redeem up to an aggregate of 30% of the aggregate principal amount of
Securities originally issued under the Indenture at a redemption price equal to
109.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$115,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior Indebtedness or invested in properties or other assets that replace
the properties and assets that were the subject of the Asset Sale or which will
be used in the businesses of the Company or its Subsidiaries existing on the
date of the Indenture or in businesses reasonably related thereto, exceeds a
specified amount the Company will be required to apply such proceeds to the
repayment of the Securities and certain Indebtedness ranking pari passu in right
of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of a specified percentage in aggregate principal
amount of the Securities at the
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time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company and the Guarantors with certain provisions of the
Indenture and the Securities and the Guarantees and certain past Defaults under
the Indenture and the Securities and the Guarantees and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Security.
The Series B Securities are, to the extent and manner provided in
Article Thirteen of the Indenture, subordinated and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed, subject to the subordination
provisions of the Indenture.
If this Series B Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Series B Security is registrable on the Security Register of
the Company, upon surrender of this Series B Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York or at such other office or agency of the Company as may be
maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or its attorney duly authorized in
writing, and thereupon one or more new Series B Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Series B Security is a U.S. Global Security, it is
exchangeable for a Series B Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be transferred to all
beneficial holders in exchange for their beneficial interests in the U.S. Global
Security if (x) the Depository notifies the Company that it is unwilling or
unable to continue as depository for the U.S. Global Security and a successor
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depositary is not appointed by the Company within 90 days or (y) there shall
have occurred and be continuing an Event of Default and the Security Registrar
has received a request from the Depositary. Upon any such issuance, the Trustee
is required to register such certificated Series B Securities in the name of,
and cause the same to be delivered to, such Person or Persons (or the nominee of
any thereof).
Series B Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series B Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
[The Transferee Certificate, in the form of Appendix II hereto, will
be attached to the Series B Security.]
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ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $150,000,000 in
principal amount of Securities, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1013,
1015 or 1108.
The Securities shall be known and designated as the "9 3/8% Senior
Subordinated Notes due 2007" of the Company. The Stated Maturity of the
Securities shall be March 1, 2007, and the Securities shall each bear interest
at the rate of 9 3/8% per annum, as such interest rate may be adjusted as set
forth in the Securities, from March 4, 1997, or from the most recent Interest
Payment Date to which interest has been paid, payable semiannually on March 1
and September 1 in each year, commencing September 1, 1997, until the principal
thereof is paid or duly provided for. Interest on any overdue principal,
interest (to the extent lawful) or premium, if any, shall be payable on demand.
The principal of, premium, if any, and interest on, the Securities
shall be payable and the Securities will be exchangeable and transferable at an
office or agency of the Company in The City of New York maintained for such
purposes (which initially will be the Corporate Trust Office of the Trustee);
provided, however, that payment of interest may be made at the option of the
Company by check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register.
For all purposes hereunder, the Series A Securities and the Series B
Securities will be treated as one class and are together referred to as the
"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer as provided in Section 1013.
Holders shall have the right to require the Company to purchase
their Securities, in whole or in part, in the event of a Change of Control
pursuant to Section 1015.
The Securities shall be redeemable as provided in Article Eleven and
in the Securities.
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The Indebtedness evidenced by the Securities shall be subordinated
in right of payment to Senior Indebtedness as provided in Article Thirteen.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
Section 302. Denominations.
The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by one of
its Chairman of the Board, its President, its Chief Executive Officer, its Chief
Financial Officer or one of its Vice Presidents under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signatures of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee (with or without Guarantees endorsed thereon) for authentication,
together with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order shall
authenticate and make available for delivery such Securities as provided in this
Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security or Guarantee endorsed thereon shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein duly executed by the Trustee by manual signature of
an authorized officer, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.
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In case the Company or any Guarantor, pursuant to Article Eight,
shall, in a single transaction or through a series of related transactions, be
consolidated or merged with or into any other Person or shall sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets to any Person, and the successor Person resulting from
such consolidation or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the successor Person which shall have
participated in the sale, assignment, conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities authenticated
or delivered prior to such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section 303 in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities on behalf of the Trustee. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates such Security such Security shall
be valid nevertheless.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten or otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
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If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and make available for delivery in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause the Trustee to keep, so long as it is the
Security Registrar, at the Corporate Trust Office of the Trustee, or such other
office as the Trustee may designate, a register (the register maintained in such
office or in any other office or agency designated pursuant to Section 1002
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as the Security Registrar may prescribe, the
Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee shall initially be the "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided. The Company may change the Security Registrar or appoint one or more
co-Security Registrars without notice.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, in the name of the designated transferee or transferees, one or more
new Securities of the same series of any authorized denomination or
denominations, of a like aggregate principal amount.
Furthermore, any Holder of the U.S. Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interests
in such Global Security may be effected only through a book-entry system
maintained by the Holder of such Global Security (or its agent), and that
ownership of a beneficial interest in a Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, Securities of the same series which the Holder making the exchange is
entitled to receive; provided that no
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exchange of Series A Securities for Series B Securities shall occur until an
Exchange Offer Registration Statement shall have been declared effective by the
Commission and that the Series A Securities exchanged for the Series B
Securities shall be canceled.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer, or for exchange, repurchase or redemption, shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any registration of
transfer, exchange or redemption of Securities, except for any tax or other
governmental charge that may be imposed in connection therewith, other than
exchanges pursuant to Sections 303, 304, 305, 906, 1013, 1015 or 1108 not
involving any transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of the Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.
Every Security shall be subject to the restrictions on transfer
provided in the legend required to be set forth on the face of each Security
pursuant to Section 202, and the restrictions set forth in this Section 305, and
the Holder of each Security, by such Holder's acceptance thereof (or interest
therein), agrees to be bound by such restrictions on transfer.
The restrictions imposed by this Section 305 upon the
transferability of any particular Security shall cease and terminate on (a) the
later of March 4, 1999 or two years after the last date on which the Company or
any Affiliate of the Company was the owner of such Security (or any predecessor
of such Security) or (b) (if earlier) if and when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred pursuant to Rule 144 or Rule 904 under the Securities Act (or any
successor provision), unless the Holder thereof is an affiliate of the Company
within the meaning of Rule 144 (or such successor provisions). Any Security as
to which such restrictions on transfer shall have expired in accordance with
their terms or shall
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have terminated may, upon surrender of such Security for exchange to the
Security Registrar in accordance with the provision of this Section 305
(accompanied, in the event that such restrictions on transfer have terminated
pursuant to Rule 144 or Rule 904 (or any successor provision), by an Opinion of
Counsel satisfactory to the Company and the Trustee, to the effect that the
transfer of such Security has been made in compliance with Rule 144 or Rule 904
(or any such successor provision)), be exchanged for a new Security, of like
tenor and aggregate principal amount, which shall not bear the Private Placement
Legend. The Company shall inform the Trustee of the effective date of any
Registration Statement registering the Securities under the Securities Act no
later than two Business Days after such effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any U.S. Global Security, whether pursuant to this Section
305, Section 304, 308, 906 or 1108 or otherwise, shall also be a U.S. Global
Security and bear the legend specified in Section 202.
Section 306. Book-Entry Provisions for U.S. Global Security.
(a) The U.S. Global Security initially shall (i) be registered in
the name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Section 202.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under the U.S. Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
(b) Transfers of the U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in the U.S. Global Security may be transferred in accordance with the
rules and procedures of the Depositary and the provisions of Section 307.
Beneficial owners may obtain U.S. Physical Securities in exchange for their
beneficial interests in the U.S. Global Security upon request in accordance with
the Depositary's and the Security Registrar's procedures. In connection
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with the execution, authentication and delivery of such Physical Securities, the
Security Registrar shall reflect on its books and records a decrease in the
principal amount of the relevant Global Security equal to the principal amount
of such Physical Securities and the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Securities having an equal
aggregate principal amount. In addition, U.S. Physical Securities and Offshore
Physical Securities shall be issued to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Security or the Offshore Global
Security, respectively if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Security or
the Offshore Global Security and a successor Depositary is not appointed by the
Company within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Security Registrar has received a request from the
Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in the U.S. Global Security pursuant to subsection (b) of this Section
to beneficial owners who are required to hold U.S. Physical Securities, the
Security Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the U.S. Global Security in an amount equal
to the principal amount of the beneficial interest in the U.S. Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like tenor and
amount.
(d) In connection with the transfer of the entire U.S. Global
Security or Offshore Global Security to beneficial owners pursuant to subsection
(b) of this Section, the U.S. Global Security or Offshore Global Security, as
the case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the U.S. Global Security or Offshore Global
Security, as the case may be, an equal aggregate principal amount of U.S.
Physical Securities or Offshore Physical Securities, as the case may be, of
authorized denominations.
(e) Any U.S. Physical Security delivered in exchange for an interest
in U.S. Global Securities pursuant to subsection (c) or subsection (d) of this
Section shall, except as otherwise provided by paragraph (a)(i)(x) and paragraph
(f) of Section 307, bear the Private Placement Legend.
(f) The registered holder of the U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
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Section 307. Special Transfer Provisions.
Unless and until (i) an Initial Security is sold under an effective
Registration Statement, or (ii) an Initial Security is exchanged for a Series B
Security in connection with the Exchange Offer, in each case pursuant to the
Registration Rights Agreement, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act) which is not a QIB (excluding Non-U.S. Persons):
(i) The Security Registrar shall register the transfer of any
Initial Security whether or not such Initial Security bears the
Private Placement Legend, if (x) the requested transfer is at least
two years after the Issue Date of the Initial Securities or (y) the
proposed transferee has delivered to the Security Registrar a
certificate substantially in the form of Exhibit B hereto.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Security Registrar's procedures therefor, the
Security Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Security
in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Security transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one
or more U.S. Physical Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities or
Permanent Offshore Physical Securities, the Security Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of
Initial Security
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stating, or has otherwise advised the Company and the Security
Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to the transferee who has signed the
certification provided for on the form of Initial Security stating,
or has otherwise advised the Company and the Security Registrar in
writing, that it is purchasing the Initial Security for its own
account or an account with respect to which it exercises sole
investment discretion and that it, or the person on whose behalf it
is acting with respect to any such account, is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made
in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and the
Initial Security to be transferred consists of U.S. Physical
Securities, Temporary Offshore Physical Securities or Permanent
Offshore Physical Securities, upon receipt by the Security Registrar
of instructions given in accordance with the Depositary's and the
Security Registrar's procedures therefor, the Security Registrar
shall reflect on its books and records the date and an increase in
the principal amount of the U.S. Global Security in an amount equal
to the principal amount of the U.S. Physical Securities, Temporary
Offshore Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the Trustee
shall cancel the Physical Security so transferred.
(c) Transfers by Non-U.S. Persons on or Prior to April 14, 1997. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Security by a Non-U.S. Person on or prior to April 14,
1997:
(i) The Security Registrar shall register the transfer of any
Initial Security (x) if the proposed transferee is a Non-U.S. Person
and the proposed transferor has delivered to the Security Registrar
a certificate substantially in the form of Exhibit C hereto or (y)
if the proposed transferee is a QIB and the proposed transferor has
checked the box provided for on the form of Initial Security
stating, or has otherwise advised the Company and the Security
Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Security stating,
or has otherwise advised the Company and the Security Registrar in
writing, that it is purchasing Initial Security for its own account
or an account with respect to which it exercises sole investment
discretion and that it, or the person on whose behalf it is acting
with respect to any such
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account, is a QIB within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A. Unless
clause (ii) below is applicable, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Temporary
Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member, upon
receipt by the Security Registrar of instructions given in
accordance with the Depositary's and the Security Registrar's
procedures therefor, the Security Registrar shall reflect on its
books and records the date and an increase in the principal amount
at maturity of the U.S. Global Security in an amount equal to the
principal amount of the Temporary Offshore Physical Security to be
transferred, and the Trustee shall cancel the Temporary Offshore
Physical Security, if any, so transferred.
(d) Transfers by Non-U.S. Persons on or After April 14, 1997. The
following provisions shall apply with respect to any transfer of an Initial
Security by a Non-U.S. Person on or after April 14, 1997:
(i)(x) If the Initial Security to be transferred is a
Permanent Offshore Physical Security, the Security Registrar shall
register such transfer, (y) if the Initial Security to be
transferred is a Temporary Offshore Physical Security, upon receipt
of a certificate substantially in the form of Exhibit A from the
proposed transferor, the Security Registrar shall register such
transfer and (z) in the case of either clause (x) or (y), unless
clause (ii) below is applicable, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Permanent
Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member, upon
receipt by the Security Registrar of instructions given in
accordance with the Depositary's and the Security Registrar's
procedures therefor, the Security Registrar shall reflect on its
books and records the date and an increase in the principal amount
of the U.S. Global Security in an amount equal to the principal
amount of the Temporary Offshore Physical Security or Permanent
Offshore Physical Security to be transferred, and the Trustee shall
cancel the Physical Security so transferred.
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(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Security to a
Non-U.S. Person:
(i) Prior to April 14, 1997, the Security Registrar shall
register any proposed transfer of an Initial Security to a Non-U.S.
Person upon receipt of a certificate substantially in the form of
Exhibit C hereto from the proposed transferor and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Temporary Offshore Physical Securities of like tenor and amount.
(ii) On and after April 14, 1997, the Security Registrar shall
register any proposed transfer to any Non-U.S. Person (w) if the
Initial Security to be transferred is a Permanent Offshore Physical
Security, (x) if the Initial Security to be transferred is a
Temporary Offshore Physical Security, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor,
(y) if the Initial Security to be transferred is a U.S. Physical
Security or an interest in the U.S. Global Security, upon receipt of
a certificate substantially in the form of Exhibit C from the
proposed transferor and (z) in the case of any of clause (w), (x) or
(y), the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Permanent Offshore Physical Securities of
like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Security Registrar of (x) the document, if any, required by
paragraph (i), and (y) instructions in accordance with the
Depositary's and the Security Registrar's procedures therefor, the
Security Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Security
in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Security to be transferred and the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more Permanent Offshore Physical Securities of like
tenor and amount.
(f) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Security Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the registration of transfer, exchange or replacement of
Securities bearing the Private Placement Legend, the Security Registrar shall
deliver only Securities that bear the Private Placement Legend unless either (i)
the circumstances contemplated by paragraphs (a)(i)(x), (d)(i) or (e)(ii) of
this Section 307 exist or (ii) there is delivered to
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the Security Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Security Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 306 or this
Section 307. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Security Registrar.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, any Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon a Company Request the Trustee shall authenticate and make available for
delivery, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a replacement Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this Section,
the Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and any Guarantor, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of
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this Indenture equally and proportionately with any and all other Securities
duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on the Stated Maturity of such interest shall be paid to the
Person in whose name the Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest payment.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on the Stated Maturity of such interest, and interest
on such defaulted interest at the then applicable interest rate borne by the
Securities, to the extent lawful (such defaulted interest and interest thereon
herein collectively called "Defaulted Interest"), shall forthwith cease to be
payable to the Holder on the Regular Record Date; and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in
Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or any relevant
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date (not less than 30
days after such notice) of the proposed payment (the "Special
Payment Date"), and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior
to the Special Payment Date, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Subsection provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior
to the date of the Special Payment Date and not less than 10 days
after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company in writing of
such Special Record Date. In the name and at the expense of the
Company, the Trustee shall cause notice of the proposed
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payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder
at its address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date and
Special Payment Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities
are registered on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after written
notice given by the Company to the Trustee of the proposed payment
pursuant to this Subsection, such payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 309, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 310. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and the Company, or the Trustee on behalf of the
Company, shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice shall state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other identification
numbers printed on the Securities; and provided further, however, that failure
to use CUSIP numbers in any notice of redemption or exchange shall not affect
the validity or sufficiency of such notice.
Section 311. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, any Guarantor, the Trustee and any agent of the Company, any
Guarantor or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 309) interest on, such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither the Company, any Guarantor, the
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Trustee nor any agent of the Company, any Guarantor or the Trustee shall be
affected by notice to the contrary.
Section 312. Cancellation.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 312, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be returned to the Company. The
Trustee shall provide the Company a list of all Securities that have been
canceled from time to time as requested by the Company.
Section 313. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either Section 402 or Section 403
be applied to all of the Outstanding Securities (the "Defeased Securities"),
upon compliance with the conditions set forth below in this Article Four.
Section 402. Defeasance and Discharge.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each Guarantor and any other
obligor upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company, each
Guarantor and any other obligor upon the Securities shall be deemed to have paid
and discharged the entire Indebtedness represented by the Defeased Securities,
which
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shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 405 and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Securities and
this Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company and upon Company Request, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Defeased Securities to receive, solely from the trust fund described
in Section 404 and as more fully set forth in such Section, payments in respect
of the principal of, premium, if any, and interest on, such Securities, when
such payments are due, (b) the Company's obligations with respect to such
Defeased Securities under Sections 304, 305, 308, 1002 and 1003, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, including,
without limitation, the Trustee's rights under Section 607, and (d) this Article
Four. Subject to compliance with this Article Four, the Company may exercise its
option under this Section 402 notwithstanding the prior exercise of its option
under Section 403 with respect to the Securities.
Section 403. Covenant Defeasance.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be released
from its obligations under any covenant or provision contained or referred to in
Sections 1005 through 1020, inclusive, the provisions of clauses (iii) and (v)
of Section 801(a) and Article Thirteen, with respect to the Defeased Securities
on and after the date the conditions set forth in Section 404 below are
satisfied (hereinafter, "covenant defeasance"), and the Defeased Securities
shall thereafter be deemed to be not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to the Defeased
Securities, the Company and each Guarantor may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such Section or Article, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or Article or by reason of any
reference in any such Section or Article to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Sections 501(c), (d) or (e), but, except as specified
above, the remainder of this Indenture and such Defeased Securities shall be
unaffected thereby. In the event covenant defeasance occurs, the Events of
Default specified in Sections 501(e) and (g) will no longer constitute Events of
Default with respect to the Securities.
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Section 404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) United States dollars in
an amount, (b) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms and
with no further reinvestment will provide, not later than one day before the due
date of any payment, money in an amount, or (c) a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants or a nationally recognized investment banking
firm expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee to pay and
discharge, the principal of, premium, if any, and interest on, the Defeased
Securities, on the Stated Maturity of such principal or interest (or on any date
after March 1, 2002 (such date being referred to as the "Defeasance Redemption
Date") if at or prior to electing to exercise either its option applicable to
Section 402 or its option applicable to Section 403, the Company has delivered
to the Trustee an irrevocable notice to redeem all of the Outstanding Securities
on the Defeasance Redemption Date). For this purpose, "U.S. Government
Obligations" means securities that are (i) direct obligations of the United
States of America for the timely payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
of or interest on the U.S. Government Obligation evidenced by such depository
receipt;
(2) In the case of an election under Section 402, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the United
States stating that (A) the Company has received from, or there has been
published by, the Internal
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Revenue Service a ruling or (B) since the date hereof, there has been a change
in the applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Independent Counsel in the United States shall
confirm that, the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred;
(3) In the case of an election under Section 403, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the United
States to the effect that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;
(4) No Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
shall have occurred and be continuing on the date of such deposit or insofar as
Section 501(h) or (i) is concerned, at any time during the period ending on the
91st day after the date of deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(5) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest for purposes of the
Trust Indenture Act with respect to any other securities of the Company or any
Guarantor;
(6) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Subsidiary is a party or by which it is bound;
(7) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder;
(8) The Company shall have delivered to the Trustee an Opinion of
Independent Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
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(9) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the holders of the Securities or any Guarantee over the other
creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others;
(10) No event or condition shall exist that would prevent the
Company from making payments of the principal of, premium, if any, and interest
on the Securities on the date of such deposit or at any time ending on the 91st
day after the date of such deposit; and
(11) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with.
Opinions of Counsel or Opinions of Independent Counsel required to
be delivered under this Section shall be in form and substance reasonably
satisfactory to the Trustee may have qualifications customary for opinions of
the type required and counsel delivering such opinions may rely on certificates
of the Company or government or other officials customary for opinions of the
type required, which certificates shall be limited as to matters of fact,
including that various financial covenants have been complied with.
Section 405. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 404 in respect of the
Defeased Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (excluding the Company or
any of its Affiliates acting as Paying Agent), as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law. Money so held
in trust shall not be subject to the provisions of Article Thirteen.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
imposed, assessed or for the account of the Holders of the Defeased Securities.
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Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect defeasance or covenant defeasance.
Section 406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 402 or 403, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities and any
Guarantor's obligations under any Guarantee shall be revived and reinstated,
with present and prospective effect, as though no deposit had occurred pursuant
to Section 402 or 403, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such United States dollars or U.S.
Government Obligations in accordance with Section 402 or 403, as the case may
be; provided, however, that if the Company makes any payment to the Trustee or
Paying Agent of principal of, premium, if any, or interest on any Security
following the reinstatement of its obligations, the Trustee or Paying Agent
shall promptly pay any such amount to the Holders of the Securities and the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the United States dollars and U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) :
(a) there shall be a default in the payment of any interest on any
Security when it becomes due and payable, and such default shall continue for a
period of 30 days;
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(b) there shall be a default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity (upon acceleration, optional
or mandatory redemption, required repurchase or otherwise) ;
(c) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under this Indenture or
any Guarantee (other than a default in the performance, or breach, of a covenant
or agreement which is specifically dealt with in clauses (a) , (b) or (d) of
this Section 501) and such default or breach shall continue for a period of 30
days after written notice has been given, by certified mail, (x) to the Company
by the Trustee or (y) to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Securities, which notice
shall specify that it is a "notice of default" and shall demand that such a
default be remedied;
(d) (i) there shall be a default in the performance or breach of the
provisions of Article Eight; (ii) the Company shall have failed to make or
consummate an Offer required in accordance with the provisions of Section 1013;
or (iii) the Company shall have failed to make or consummate a Change of Control
Offer required in accordance with the provisions of Section 1015;
(e) one or more defaults shall have occurred under any of the
agreements, indentures or instruments under which the Company, any Guarantor or
any Subsidiary then has outstanding Indebtedness in excess of $7,500,000,
individually or in the aggregate, and either (a) such default results from the
failure to pay such Indebtedness at its stated final maturity or (b) such
default or defaults have resulted in the acceleration of the maturity of such
Indebtedness;
(f) any Guarantee shall for any reason cease to be, or shall for any
reason be asserted in writing by any Guarantor or the Company not to be, in full
force and effect and enforceable in accordance with its terms except to the
extent contemplated by this Indenture and any such Guarantee;
(g) one or more judgments, orders or decrees for the payment of
money in excess of $7,500,000, either individually or in the aggregate, shall be
rendered against the Company, any Guarantor or any Subsidiary or any of their
respective properties and shall not be discharged and either (a) any creditor
shall have commenced an enforcement proceeding upon such judgment, order or
decree or (b) there shall have been a period of 60 consecutive days during which
a stay of enforcement of such judgment, order or decree, by reason of an appeal
or otherwise, shall not be in effect, provided that the amount of such money
judgment, order or decree shall be calculated net of any insurance coverage that
the Company has determined in good faith is available in whole or in part with
respect to such money judgment, order or decree;
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(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company, any
Guarantor or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging the
Company, any Guarantor or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company, any Guarantor or any Significant Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company, any Guarantor
or any Significant Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their respective
affairs, and any such decree or order for relief shall continue to be in effect,
or any such other decree or order shall be unstayed and in effect, for a period
of 60 consecutive days; or
(i) (1) the Company, any Guarantor or any Significant Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to be adjudicated bankrupt or insolvent, (2) the
Company, any Guarantor or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company, such Guarantor or such
Significant Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, (3) the Company, any Guarantor or any Significant
Subsidiary files a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, (4) the Company, any Guarantor
or any Significant Subsidiary (A) consents to the filing of such petition or the
appointment of, or taking possession by, a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company, any
Guarantor or such Significant Subsidiary or of any substantial part of their
respective properties, (B) makes an assignment for the benefit of creditors or
(C) admits in writing its inability to pay its debts generally as they become
due, or (5) the Company, any Guarantor or any Significant Subsidiary takes any
corporate action in furtherance of any such actions in this paragraph (i).
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Sections 501(h) and (i) with respect to the Company) shall occur and be
continuing with respect to this Indenture, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Securities then Outstanding
may, and the Trustee at the request of such Holders shall, declare all unpaid
principal of, premium, if any, and accrued interest on all Securities to be due
and payable, by a notice in writing to the Company (and to the Trustee if given
by the Holders of the Securities) and upon any such declaration, such
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principal, premium, if any, and interest shall become due and payable
immediately. If an Event of Default specified in clause (h) or (i) of Section
501 occurs with respect to the Company and is continuing, then all the
Securities shall ipso facto become and be due and payable immediately in an
amount equal to the principal amount of the Securities, together with accrued
and unpaid interest, if any, to the date the Securities become due and payable,
without any declaration or other act on the part of the Trustee or any Holder.
Thereupon, the Trustee may, at its discretion, proceed to protect and enforce
the rights of the Holders of the Securities by appropriate judicial proceedings.
After such declaration of acceleration with respect to the
Securities, but before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in aggregate principal amount of the Securities
Outstanding, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel,
(ii) all overdue interest on all Outstanding Securities,
(iii) the principal of and premium, if any, on any Outstanding
Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at a rate borne by the
Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
and
(b) all Events of Default, other than the non-payment of principal
of the Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513. No such
rescission shall affect any subsequent Default or impair any right consequent
thereon.
If payment of the Securities is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the agent under the
Bank Credit Agreement of the acceleration. If any indebtedness under the Bank
Credit Agreement is outstanding, the Company may not pay the Securities until
five Business Days after the agent under the Bank Credit Agreement receives
notice of such acceleration, and,
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thereafter, may pay the Securities only if this Indenture otherwise permits
payments at that time.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company and each Guarantor covenant that if
(a) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of, premium, if
any, on any Security at the Stated Maturity thereof,
the Company and such Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for princifpal and premium, if any, and interest,
with interest upon the overdue principal and premium, if any, and, to the
extent that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company or any Guarantor, as the case may be, fails to pay
such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor or any other obligor upon the Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or any Guarantee by such appropriate private or
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce such rights, including seeking recourse against any Guarantor pursuant
to the terms of any Guarantee, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy, including,
without limitation, seeking recourse against any Guarantor pursuant to the terms
of a Guarantee, or to enforce any other proper remedy, subject however to
Section 512. No recovery of any such judgment upon any property of the Company
or any
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Guarantor shall affect or impair any rights, powers or remedies of the Trustee
or the Holders.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon the Securities or the property of the Company or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of principal, and
premium, if any, and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of Securities.
All rights of action and claims under this Indenture, the Securities
or the Guarantees may be prosecuted and enforced by the Trustee without the
possession of any
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of the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: Subject to Article Thirteen hereof, to the payment of the
amounts then due and unpaid upon the Securities for principal, premium, if any,
and interest, in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal, premium, if
any, and interest; and
THIRD: Subject to Article Thirteen hereof, the balance, if any, to
the Person or Persons entitled thereto, including the Company, provided that all
sums due and owing to the Holders and the Trustee have been paid in full as
required by this Indenture.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee an indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 15 days after its receipt of such notice,
request and offer (and if requested, provision) of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 15-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or any Guarantee to affect, disturb or prejudice
the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Security or any Guarantee, except in the manner provided in this Indenture
and for the equal and ratable benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right based on the terms stated herein, which is
absolute and unconditional, to receive payment of the principal of, premium, if
any, and (subject to Section 309) interest on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption or
repurchase, on the Redemption Date or the repurchase date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder; provided that the rights of the Holders to
receive payments on their securities are subject to the provisions of Article
Thirteen of this Indenture.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, any Guarantor, any other obligor on the Securities, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
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Section 510. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512. Control by Holders.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture (including, without limitation, Section 507) or any
Guarantee, expose the Trustee to personal liability, or be unduly prejudicial to
Holders not joining therein; and
(b) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all
Outstanding Securities waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of, premium, if any, or interest
on any Security; or
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(b) in respect of a covenant or a provision hereof which under this
Indenture cannot be modified or amended without the consent of the Holder of
each Security Outstanding affected by such modification or amendment.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on, any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or which may affect
the covenants or the performance of this Indenture; and each of the Company and
the Guarantors (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 516. Remedies Subject to Applicable Law.
All rights, remedies and powers provided by this Article Five may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Indenture invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee.
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d) :
(a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs;
(b) except during the continuance of a Default or an Event of
Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to
the Trustee; and
(2) in the absence of bad faith or willful misconduct on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture;
(c) the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(1) this Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith, in accordance with a
direction of the Holders of a majority in principal amount of
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power confirmed upon the Trustee under
this Indenture;
(d) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it;
(e) whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to Subsections
(a) , (b) , (c) and (d) of this Section 601; and
(f) the Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree with the Company. Assets
held in trust by the Trustee need not be segregated from other assets except to
the extent required by law.
Section 602. Notice of Defaults.
Within 90 days after a Responsible Officer of the Trustee receives
notice of the occurrence of any Default, the Trustee shall transmit by mail to
all Holders and any other Persons entitled to receive reports pursuant to
Section 313(c) of the Trust Indenture Act, as their names and addresses appear
in the Security Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; provided, however, that,
except in the case of a Default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders.
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Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601 hereof and Trust Indenture
Act Sections 315(a) through 315(d) :
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of Indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred therein or thereby
in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence, bad faith or willful misconduct of
the Trustee;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then Outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such investigation
so requested by the Holders of not less than 25% in
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aggregate principal amount of the Securities Outstanding shall be paid by the
Company or, if paid by the Trustee or any predecessor Trustee, shall be repaid
by the Company upon demand; provided, further, the Trustee in its discretion may
make such further inquiry or investigation into such facts or matters as it may
deem fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate; and
(h) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in any Statement of Eligibility and Qualification on Form T-1 supplied to the
Company are true and accurate subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof nor shall the Trustee be responsible for
any statement in any registration statement for the Securities under the
Securities Act or responsible for the determination as to which beneficial
owners are entitled to receive notices hereunder.
Section 605. Trustee and Agents May Hold Securities; Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, with the same rights it would have if it were not the
Trustee, Paying Agent, Security Registrar or such other agent and, subject to
Sections 608 and 613 hereof and Trust Indenture Act Sections 310 and 311, may
otherwise deal with the Company and
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receive, collect, hold and retain collections from the Company with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Except for funds or securities deposited with the
Trustee pursuant to Article Four, the Trustee shall be required to invest all
moneys received by the Trustee, until used or applied as herein provided, in
Temporary Cash Investments in accordance with the directions of the Company. The
Trustee shall be under no liability to the Company for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
Section 607. Compensation and Indemnification of Trustee and Its Prior
Claim.
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as the parties
shall agree in writing from time to time for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) and the Company
covenants and agrees to pay or reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence, bad faith or willful misconduct. The Company also
covenants and agrees to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any claim, loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including enforcement of this Section 607 and also including
any liability which the Trustee may incur as a result of failure to withhold,
pay or report any tax, assessment or other governmental charge, and the costs
and expenses of defending itself against or investigating any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligations of the Company under this Section 607 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for reasonable
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expenses, disbursements and advances shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee and each predecessor Trustee.
Section 608. Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of
the Trust Indenture Act.
Section 609. Trustee Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) (5) and
which shall have a combined capital and surplus of at least $100,000,000, to the
extent there is an institution eligible and willing to serve. If the Trustee
does not have a Corporate Trust Office in The City of New York, the Trustee may
appoint an agent in The City of New York reasonably acceptable to the Company to
conduct any activities which the Trustee may be required under this Indenture to
conduct in The City of New York. If such Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section 609, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
609, the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor trustee under Section 611.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice thereof to the Company. Upon
receiving such notice or resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of
Directors of the Company, a copy of which shall be delivered to the resigning
Trustee and a copy to the successor trustee. If an instrument of acceptance by a
successor trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may, or
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor trustee. Such court
may
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thereupon, after such notice, if any, as it may deem proper, appoint and
prescribe a successor trustee.
(c) The Trustee may be removed at any time for any cause or for no
cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
Trust Indenture Act Section 310(b) after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months,
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor trustee and
shall comply with the applicable requirements of Section 611. If, within 60 days
after such resignation, removal or incapability, or the occurrence of such
vacancy, the Company has not appointed a successor Trustee, a successor trustee
shall be appointed by the Act of the Holders of a majority in principal amount
of the Outstanding Securities delivered to the Company and the retiring Trustee.
Such successor trustee so appointed shall forthwith upon its acceptance of such
appointment become the successor trustee and supersede the successor
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trustee appointed by the Company. If no successor trustee shall have been so
appointed by the Company or the Holders of the Securities and accepted
appointment in the manner hereinafter provided, the Trustee or the Holder of any
Security who has been a bona fide Holder for at least six months may, subject to
Section 514, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.
Section 611. Acceptance of Appointment by Successor.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
No successor trustee with respect to the Securities shall accept
appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $100,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609.
Upon acceptance of appointment by any successor trustee as provided
in this Section 611, the Company shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the appointment, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
610. If the Company fails to give such
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notice within 10 days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be given at the expense of the
Company.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including the trust created by this Indenture) shall be
the successor of the Trustee hereunder, provided that such corporation shall be
eligible under Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $100,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided that the right to adopt
the certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or other obligor under the Securities) , the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). A Trustee who has resigned or been
removed shall be subject to Trust Indenture Act Section 311(a) to the extent
indicated therein.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a list
of similar form and content to that in subsection (a) hereof as of a date not
more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
Holders may communicate pursuant to Trust Indenture Act Section
312(b) with other Holders with respect to their rights under this Indenture or
the Securities, and the Trustee shall comply with Trust Indenture Act Section
312(b). The Company, the Trustee, the Security Registrar and any other Person
shall have the protection of Trust Indenture Act Section 312(c). Further, every
Holder of Securities, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee or any agent of either
of them shall be held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with Trust Indenture
Act Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the
first May 15 after the issuance of Securities, the Trustee, if so required under
the Trust Indenture Act, shall transmit by mail to all Holders, in the manner
and to the extent provided in Trust Indenture Act Section 313(c) , a brief
report dated as of such May 15 in accordance with and with respect to the
matters required by Trust Indenture Act Section 313(a). The Trustee shall also
transmit by mail to all Holders, in the manner and
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to the extent provided in Trust Indenture Act Section 313(c), a brief report in
accordance with and with respect to the matters required by Trust Indenture Act
Section 313(b) (2).
(b) A copy of each report transmitted to Holders pursuant to this
Section 703 shall, at the time of such transmission, be mailed to the Company
and filed with each stock exchange, if any, upon which the Securities are listed
and also with the Commission. The Company will notify the Trustee promptly if
the Securities are listed on any stock exchange.
Section 704. Reports by Company.
The Company and any Guarantor, as the case may be, shall:
(a) file with the Trustee, within 15 days after the Company or any
Guarantor, as the case may be, is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company or any
Guarantor may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company or any Guarantor, as the
case may be, is not required to file information, documents or reports pursuant
to either of said Sections, then it shall (i) deliver to the Trustee annual
audited financial statements of the Company and its Subsidiaries, prepared on a
Consolidated basis in conformity with GAAP, within 120 days after the end of
each fiscal year of the Company, and (ii) file with the Trustee and, to the
extent permitted by law, the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company or any Guarantor, as the case may be, with the conditions and covenants
of this Indenture as are required from time to time by such rules and
regulations (including such information, documents and reports referred to in
Trust Indenture Act Section 314(a)); and
(c) within 15 days after the filing thereof with the Trustee,
transmit by mail to all Holders in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information,
documents and reports required to be filed by the Company or any Guarantor, as
the case may be, pursuant to Section 1019
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hereunder and subsections (a) and (b) of this Section as are required by rules
and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company and Guarantors May Consolidate, etc., Only on Certain
Terms.
(a) The Company will not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, or permit any of its Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company and its Subsidiaries on a Consolidated
basis to any other Person or group of affiliated Persons, unless at the time and
after giving effect thereto:
(i) either (a) the Company will be the continuing corporation
or (b) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person
which acquires by sale, assignment, conveyance, transfer, lease or
disposition all or substantially all of the properties and assets of
the Company and its Subsidiaries on a Consolidated basis (the
"Surviving Entity") will be a corporation duly organized and validly
existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person expressly
assumes, by a supplemental indenture, in a form satisfactory to the
Trustee, all the obligations of the Company under the Securities and
hereunder, and the Securities and this Indenture, as the case may
be, will remain in full force and effect as so supplemented;
(ii) immediately before and immediately after giving effect to
such transaction on a pro forma basis (and treating any Indebtedness
not previously an obligation of the Company or any of its
Subsidiaries which becomes the obligation of the Company or any of
its Subsidiaries as a result of such transaction as having been
incurred at the time of such transaction) , no Default or Event of
Default will have occurred and be continuing;
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(iii) immediately before and immediately after giving effect
to such transaction on a pro forma basis (on the assumption that the
transaction occurred on the first day of the four-quarter period for
which financial statements are available ending immediately prior to
the consummation of such transaction with the appropriate
adjustments with respect to the transaction being included in such
pro forma calculation) , the Company (or the Surviving Entity if the
Company is not the continuing obligor hereunder) could incur $1.00
of additional Indebtedness (other than Permitted Indebtedness) under
Section 1008;
(iv) at the time of the transaction, each Guarantor, if any,
unless it is the other party to the transactions described above,
will have by supplemental indenture confirmed that its Guarantees
shall apply to such Person's obligations hereunder and under the
Securities;
(v) at the time of the transaction if any of the property or
assets of the Company or any of its Subsidiaries would thereupon
become subject to any Lien, the provisions of Section 1012 are
complied with; and
(vi) at the time of the transaction the Company or the
Surviving Entity will have delivered, or caused to be delivered, to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each to
the effect that such consolidation, merger, transfer, sale,
assignment, conveyance, transfer, lease or other transaction and the
supplemental indenture in respect thereof comply with this Indenture
and that all conditions precedent herein provided for relating to
such transaction have been complied with.
(b) Each Guarantor shall not, and the Company will not permit a
Guarantor to, in a single transaction or through a series of related
transactions, consolidate with or merge with or into any other Person (other
than the Company or any Guarantor) or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets on a
Consolidated basis to any Person or group of affiliated Persons (other than the
Company or any Guarantor) , or permit any of its Subsidiaries to enter into any
such transaction or series of related transactions if such transaction or series
of related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Guarantor and its Subsidiaries on a Consolidated
basis to any other Person or group of affiliated Persons (other than the Company
or any Guarantor) , unless at the time and after giving effect thereto:
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(i) either (1) the Guarantor will be the continuing
corporation or (2) the Person (if other than the Guarantor) formed
by such consolidation or into which such Guarantor is merged or the
Person which acquires by sale, assignment, conveyance, transfer,
lease or disposition all or substantially all of the properties and
assets of the Guarantor and its Subsidiaries on a Consolidated basis
(the "Surviving Guarantor Entity") will be a corporation duly
organized and validly existing under the laws of the United States
of America, any state thereof or the District of Columbia and such
Person expressly assumes, by a supplemental indenture, in a form
satisfactory to the Trustee, all the obligations of such Guarantor
under its Guarantee of the Securities and this Indenture, and such
Guarantee will remain in full force and effect;
(ii) immediately before and immediately after giving effect to
such transaction, on a pro forma basis no Default or Event of
Default shall have occurred and be continuing; and
(iii) at the time of the transaction such Guarantor or the
Surviving Guarantor Entity will have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion
of Counsel, each to the effect that such consolidation, merger,
transfer, sale, assignment, conveyance, lease or other transaction
and the supplemental indenture in respect thereof comply with this
Indenture and that all conditions precedent therein provided for
relating to such transaction have been complied with.
(c) Notwithstanding the foregoing, the provisions of Section
801(b) shall not apply to any sale, exchange or transfer, to any
Person not an Affiliate of the Company, of all of the Company's
Capital Stock in, or all or substantially all the assets of, a
Guarantor in accordance with Section 1014(b) herein.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company or any Guarantor, if any, in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company or such Guarantor, as the case may be, is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be,
under this Indenture, in the Securities and/or the Guarantee, as the case may
be, with the same effect as if such successor had been named as the Company or
such Guarantor, as
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the case may be, herein, in the Securities and/or in the Guarantee, as the case
may be. When a successor (other than a successor that is an Affiliate of the
Company) assumes all the obligations of its predecessor under this Indenture,
the Securities or a Guarantee, as the case may be, the predecessor shall be
released from those obligations and covenants hereof and the Securities;
provided that in the case of a transfer by lease, the predecessor shall not be
released from the payment of principal and interest on the Securities or a
Guarantee, as the case may be.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent of
Holders.
Without the consent of any Holders, the Company, the Guarantors, if
any, and any other obligor upon the Securities when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto or agreements or other instruments
with respect to any Guarantee, in form and substance satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company, any
Guarantor or any other obligor upon the Securities, and the assumption by any
such successor of the covenants of the Company or such Guarantor or obligor
herein and in the Securities and in any Guarantee in accordance with Article
Eight;
(b) to add to the covenants of the Company, any Guarantor or any
other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power conferred upon the Company or any Guarantor or any
other obligor upon the Securities, as applicable, herein, in the Securities or
in any Guarantee;
(c) to cure any ambiguity, or to correct or supplement any provision
herein or in any supplemental indenture, the Securities or any Guarantee which
may be defective or inconsistent with any other provision herein or in the
Securities or any Guarantee or to make any other provisions with respect to
matters or questions arising under this Indenture, the Securities or any
Guarantee; provided that, in each case, such provisions shall not adversely
affect the interest of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by Section 905 or otherwise;
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(e) to add a Guarantor pursuant to the requirements of Section 1014;
(f) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder; or
(g) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the Holders as additional security for
the payment and performance of the Company's or any Guarantor's Indenture
Obligations, in any property, or assets, including any of which are required to
be mortgaged, pledged or hypothecated, or in which a security interest is
required to be granted to the Trustee pursuant to this Indenture or otherwise.
Section 902. Supplemental Indentures and Agreements with Consent of
Holders.
Except as permitted by Section 901, with the consent of the Holders
of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company, each Guarantor, if
any, and the Trustee, the Company and each Guarantor (if a party thereto) when
authorized by Board Resolutions, and the Trustee may (i) enter into an indenture
or indentures supplemental hereto or agreements or other instruments with
respect to any Guarantee in form and substance satisfactory to the Trustee, for
the purpose of adding any provisions to or amending, modifying or changing in
any manner or eliminating any of the provisions of this Indenture, the
Securities or any Guarantee (including but not limited to, for the purpose of
modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee) or (ii) waive compliance with any provision in this
Indenture, the Securities or any Guarantee (other than waivers of past Defaults
covered by Section 513 and waivers of covenants which are covered by Section
1021) ; provided, however, that no such supplemental indenture, agreement or
instrument shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date any redemption date of,
or waive a default in the payment of the principal or interest on, any such
Security or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change the coin or
currency in which the principal of any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date) ;
(b) amend, change or modify the obligation of the Company to make
and consummate an Offer with respect to any Asset Sale or Asset Sales in
accordance with Section 1013 or the obligation of the Company to make and
consummate a Change
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of Control Offer in the event of a Change of Control in accordance with Section
1015, including, in each case, amending, changing or modifying any definitions
relating thereto;
(c) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver or
compliance with certain provisions of this Indenture;
(d) modify any of the provisions of this Section 902 or Section 513
or 1021, except to increase the percentage of such Outstanding Securities
required for any such actions or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each such Security affected thereby;
(e) except as otherwise permitted under Article Eight, consent to
the assignment or transfer by the Company or any Guarantor of any of its rights
and obligations hereunder; or
(f) amend or modify any of the provisions of this Indenture relating
to the subordination of the Securities or any Guarantee in any manner adverse to
the Holders or the holders of any Guarantee.
Upon the written request of the Company and each Guarantor, if any,
accompanied by a copy of Board Resolutions authorizing the execution of any such
supplemental indenture or Guarantee, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall join with the
Company and each Guarantor in the execution of such supplemental indenture or
Guarantee.
It shall not be necessary for any Act of Holders under this Section
902 to approve the particular form of any proposed supplemental indenture or
Guarantee or agreement or instrument relating to any Guarantee, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 602 hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate stating that the execution of such supplemental indenture, agreement
or instrument is authorized or permitted by this Indenture. The Trustee may,
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but shall not be obligated to, enter into any such supplemental indenture,
agreement or instrument which affects the Trustee's own rights, duties or
immunities under this Indenture, any Guarantee or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Nine may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and each Guarantor and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
Section 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company, any Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of Section 902,
the Company shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 908. Modification of Indenture with Consent of Holders of Senior
Indebtedness.
No amendment, supplement or other modification may be made to any
provision of this Indenture (including any definition included in Article One or
elsewhere herein) that adversely affects the rights under Article Thirteen or
any holder of
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Designated Senior Indebtedness unless the holders of Designated Senior
Indebtedness expressly consent in writing thereto.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of, premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may
be presented or surrendered for payment. The Company also will maintain in The
City of New York an office or agency where Securities may be surrendered for
registration of transfer, redemption or exchange and where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The office of the Trustee, at its Corporate Trust Office, will be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of the location and any change in the
location of any such offices or agencies. If at any time the Company shall fail
to maintain any such required offices or agencies or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the office of the Trustee and the Company
hereby appoints the Trustee such agent as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.
The Trustee shall initially act as Paying Agent for the Securities.
Section 1003. Money for Security Payments to Be Held in Trust.
If the Company or any of its Affiliates shall at any time act as
Paying Agent, it will, on or before each due date of the principal of, premium,
if any, or interest
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on any of the Securities, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal, premium, if any,
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
If the Company or any of its Affiliates is not acting as Paying
Agent, the Company will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal, premium, if any,
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on the Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and disabilities of
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
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Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), and mail to each such Holder, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such notification,
publication and mailing, any unclaimed balance of such money then remaining will
promptly be repaid to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence and related rights and franchises (charter and statutory) of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise or the corporate existence of
any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer necessary or desirable in the conduct
of the business of the Company and its Subsidiaries as a whole; and provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Subsidiary or any of its assets in compliance with the terms of
this Indenture.
Section 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Subsidiaries shown to be due on any return of the Company or any
of its Subsidiaries or otherwise assessed or upon the income, profits or
property of the Company or any of its Subsidiaries if failure to pay or
discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Company or any Guarantor to perform its obligations
hereunder and (b) all lawful claims for labor, materials and supplies, which, if
unpaid, would by law become a Lien upon the property of the Company or any of
its Subsidiaries, except for any Lien permitted to be incurred under Section
1012, if failure to pay or
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discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Company or any Guarantor to perform its obligations
hereunder; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings properly instituted and diligently conducted and in
respect of which appropriate reserves (in the good faith judgment of management
of the Company) are being maintained in accordance with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the Company
or any of its Subsidiaries or used or held for use in the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the reasonable judgment of the Company may be consistent with sound business
practice and necessary so that the business carried on in connection therewith
may be properly conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the maintenance of any of
such properties if such discontinuance is, in the reasonable judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries; and provided, further, however, that the foregoing shall not
prohibit a sale, transfer or conveyance of a Subsidiary or any of its properties
or assets in compliance with the terms of this Indenture.
Section 1007. Insurance.
The Company shall at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company in good faith to be financially sound and responsible, against loss
or damage to the extent that property of similar character is usually so insured
by corporations similarly situated and owning like properties in the same
general geographic areas in which the Company and its Subsidiaries operate,
except where the failure to do so could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), earnings,
business affairs or prospects of the Company and its Subsidiaries, taken as a
whole.
Section 1008. Limitation on Indebtedness.
The Company will not, and will not permit any of its Subsidiaries
to, create, issue, incur, assume, guarantee or otherwise in any manner become
directly or indirectly
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liable for the payment of or otherwise incur (collectively, "incur"), any
Indebtedness (including any Acquired Indebtedness but excluding Permitted
Indebtedness), unless such Indebtedness is incurred by the Company or
constitutes Acquired Indebtedness of a Subsidiary and, in each case, the
Company's Consolidated Fixed Charge Coverage Ratio for the four full fiscal
quarters for which financial statements are available immediately preceding the
incurrence of such Indebtedness taken as one period is at least equal to or
greater than 2.0.
Section 1009. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any Subsidiary to, directly
or indirectly:
(i) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Company's Capital Stock (other
than dividends or distributions payable solely in shares of
its Qualified Capital Stock or in options, warrants or other
rights to acquire shares of such Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, the Company's Capital Stock or any
Capital Stock of any Affiliate of the Company (other than
Capital Stock of any Wholly Owned Subsidiary of the Company)
or options, warrants or other rights to acquire such Capital
Stock;
(iii) prior to any scheduled principal payment, sinking fund payment
or maturity of any Subordinated Indebtedness, make any
principal payment on, or repurchase, redeem, defease, retire
or otherwise acquire for value, such Subordinated Indebtedness
(other than any such Indebtedness owed to the Company or a
Wholly Owned Subsidiary);
(iv) declare or pay any dividend or distribution on any Capital
Stock of any Subsidiary to any Person (other than (a) to the
Company or any of its Wholly Owned Subsidiaries or (b) to all
holders of Capital Stock of such Subsidiary on a pro rata
basis); or
(v) make any Investment in any Person (other than any Permitted
Investments)
(any of the foregoing actions described in clauses (i) through (v), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted
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Payments") (the amount of any such Restricted Payment, if other than cash, as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a Board Resolution), unless (1) immediately
before and immediately after giving effect to such proposed Restricted Payment
on a pro forma basis, no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or after
notice or lapse of time or both, would be, an "event of default" under the terms
of any Indebtedness of the Company or its Subsidiaries; (2) immediately before
and immediately after giving effect to such Restricted Payment on a pro forma
basis, the Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the provisions described in Section 1008; and (3)
after giving effect to the proposed Restricted Payment, the aggregate amount of
all such Restricted Payments declared or made after the date hereof plus the
Permitted Payments made under clause (b) (vii) of this Section 1009, do not
exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of the Company accrued
on a cumulative basis during the period beginning on the first day
of the fiscal quarter beginning after the date hereof and ending on
the last day of the Company's last fiscal quarter ending prior to
the date of the Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after the date hereof by
the Company either (x) as capital contributions in the form of
common equity to the Company or (y) from the issuance or sale (other
than to any of its Subsidiaries) of Qualified Capital Stock of the
Company or any options, warrants or rights to purchase such
Qualified Capital Stock of the Company (except, in each case, to the
extent such proceeds are used to purchase, redeem or otherwise
retire Capital Stock or Subordinated Indebtedness as set forth below
in clause (ii) or (iii) of paragraph (b) below), in each case,
other than Net Cash Proceeds received from the issuance or sale of
Qualified Capital Stock or options, warrants or rights to purchase
Qualified Capital Stock in the Recapitalization;
(C) the aggregate Net Cash Proceeds received after the date hereof by
the Company (other than from any of its Subsidiaries) upon the
exercise of any options, warrants or rights to purchase Qualified
Capital Stock of the Company;
(D) the aggregate Net Cash Proceeds received after the date hereof by
the Company from the conversion or exchange, if any, of debt
securities or Redeemable Capital Stock of the Company or its
Subsidiaries into or for
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Qualified Capital Stock of the Company plus, to the extent such debt
securities or Redeemable Capital Stock were issued after the date
hereof, the aggregate of Net Cash Proceeds from their original
issuance; and
(E) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after the date hereof, an
amount equal to the lesser of the return of capital with respect to
such Investment and the initial amount of such Investment, in either
case, less the cost of the disposition of such Investment.
(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(vii) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following actions (each of clauses
(i) through (vii) being referred to as a "Permitted Payment"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such
payment was permitted by the provisions of paragraph (a) of
this Section and such payment shall have been deemed to have
been paid on such date of declaration and shall not have been
deemed a "Permitted Payment" for purposes of the calculation
required by paragraph (a) of this Section 1009;
(ii) the repurchase, redemption, or other acquisition or retirement
for value of any shares of any class of Capital Stock of the
Company in exchange for (including any such exchange pursuant
to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds
of a substantially concurrent issue and sale for cash (other
than to a Subsidiary) of, other shares of Qualified Capital
Stock of the Company; provided that the Net Cash Proceeds from
the issuance of such shares of Qualified Capital Stock are, to
the extent so used, excluded from clause (3) (B) of paragraph
(a) of this Section 1009;
(iii) the repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any
Subordinated Indebtedness or Redeemable Capital Stock in
exchange for, or in an amount not in excess of the Net Cash
Proceeds of, a substantially concurrent issuance and sale for
cash (other than to any Subsidiary) of any Qualified Capital
Stock of the Company, provided that the Net Cash Proceeds from
the issuance of such shares of Qualified Capital Stock
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are, to the extent so used, excluded from clause (3) (B) of
paragraph (a) of this Section 1009;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of
any Subordinated Indebtedness (other than Redeemable Capital
Stock) (a "refinancing") through the substantially concurrent
issuance of new Subordinated Indebtedness of the Company,
provided that any such new Subordinated Indebtedness (1) shall
be in a principal amount that does not exceed the principal
amount so refinanced (or, if such Subordinated Indebtedness
provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration
thereof, then such lesser amount as of the date of
determination), plus the lesser of (I) the stated amount of
any premium or other payment required to be paid in connection
with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or
other payment actually paid at such time to refinance the
Indebtedness, plus, in either case, the amount of expenses of
the Company incurred in connection with such refinancing; (2)
has an Average Life to Stated Maturity greater than the
remaining Average Life to Stated Maturity of the Securities;
(3) has a Stated Maturity for its final scheduled principal
payment later than the Stated Maturity for the final scheduled
principal payment of the Securities; and (4) is expressly
subordinated in right of payment to the Securities at least to
the same extent as the Subordinated Indebtedness to be
refinanced;
(v) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of any
Redeemable Capital Stock through the substantially concurrent
issuance of new Redeemable Capital Stock of the Company,
provided that any such new Redeemable Capital Stock (1) shall
have an aggregate liquidation preference that does not exceed
the aggregate liquidation preference of the amount so
refinanced; (2) has an Average Life to Stated Maturity greater
than the remaining Average Life to Stated Maturity of the
Securities; and (3) has a Stated Maturity later than the
Stated Maturity for the final scheduled principal payment of
the Securities;
(vi) the repurchase, redemption, or other acquisition or retirement
for value of any shares of Capital Stock of the Company (i)
upon the closing of the Recapitalization or (ii) which were
owned
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immediately prior to the closing of the Recapitalization by
Non-Management Stockholders (as defined in the
Recapitalization Agreement) and which the Company made an
offer to repurchase pursuant to Section 2.2 of the
Recapitalization Agreement but which were not tendered to the
Company, provided that the purchase price per share for such
shares of Capital Stock of the Company shall not exceed $22.25
per share and any such shares of Capital Stock are purchased
within 90 days of the closing of the Recapitalization; and
(vii) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from
employees, former employees, directors or former directors of
the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or
former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments
thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to
purchase or sell, shares of such common stock; provided,
however, that the aggregate amount of such repurchases in any
calendar year shall not exceed $2,000,000 in cash or
subordinated notes of the Company issued pursuant to Section
3.1 of the Stockholders' Agreement (plus any such amount in
cash or such subordinated notes not utilized in prior years)
provided that the aggregate amount of all such repurchases in
any calendar year shall not exceed $5,000,000 in cash or such
subordinated notes of the Company, provided, further, that
such subordinated notes (the "Management Notes") (1) have an
Average Life to Stated Maturity greater than the remaining
Average Life to Stated Maturity of the Securities, (2) have a
Stated Maturity for its final scheduled principal payment
later than the Stated Maturity for the final scheduled
principal payment of the Securities, and (3) are expressly
subordinated in right of payment to the Securities.
Section 1010. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with or for the benefit of any Affiliate
of the Company (other than the Company or a Subsidiary) unless such transaction
or series of related transactions is entered into in good faith and (a) such
transaction or series of related transactions is on terms that are no
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less favorable to the Company or such Subsidiary, as the case may be, than those
that would be available in a comparable transaction in arm's-length dealings
with an unrelated third party, (b) with respect to any transaction or series of
related transactions involving aggregate value in excess of $2,500,000, the
Company delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (a) above,
and (c) with respect to any transaction or series of related transactions
involving aggregate value in excess of $5,000,000, either (A) such transaction
or series of related transactions has been approved by a majority of the
Disinterested Directors of the Company, or in the event there is only one
Disinterested Director, by such Disinterested Director, or (B) the Company
delivers to the Trustee a written opinion of an investment banking firm of
national standing or other recognized independent expert with experience
appraising the terms and conditions of the type of transaction or series of
related transactions for which an opinion is required stating that the
transactions or series of related transactions are fair to the Company or such
Subsidiary from a financial point of view; provided, however, that this
provision shall not apply to (i) any transaction with an employee or director of
the Company or any of its Subsidiaries entered into in the ordinary course of
business (including compensation and employee benefit arrangements with any
officer, director or employee of the Company or any Subsidiary, including under
any stock option or stock incentive plans), (ii) the payment of a one-time fee
to Stonington Partners, Inc. in connection with the Recapitalization in an
aggregate amount not to exceed $2,500,000 plus reasonable expenses and (iii)
Restricted Payments made in accordance with Section 1009 or Permitted Payments.
Section 1011. Limitation on Senior Subordinated Indebtedness.
The Company will not, and will not permit any Guarantor to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise in any
manner become directly or indirectly liable for or with respect to or otherwise
permit to exist any Indebtedness that is subordinate in right of payment to any
Indebtedness of the Company or such Guarantor, as the case may be, unless such
Indebtedness is also pari passu with the Securities or the Guarantee of such
Guarantor or subordinate in right of payment to the Securities or such Guarantee
at least to the same extent as the Securities or such Guarantee are subordinate
in right of payment to Senior Indebtedness or Senior Indebtedness of such
Guarantor, as the case may be.
Section 1012. Limitation on Liens.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or incur any Lien of any kind securing any Pari
Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Subsidiary) upon any
property or assets (including any
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intercompany notes) of the Company or any Subsidiary owned on the date hereof or
acquired after the date hereof, or any income or profits therefrom, unless the
Securities are directly secured equally and ratably with (or, in the case of
Subordinated Indebtedness, prior or senior thereto, with the same relative
priority as the Securities shall have with respect to such Subordinated
Indebtedness) the obligation or liability secured by such Lien except for Liens
(A) securing any Indebtedness which became Indebtedness pursuant to a
transaction permitted under Article Eight hereof or securing Acquired
Indebtedness which, in each case, were created prior to (and not created in
connection with, or in contemplation of) the incurrence of such Pari Passu
Indebtedness or Subordinated Indebtedness (including any assumption, guarantee
or other liability with respect thereto by any Subsidiary) and which
Indebtedness is permitted under the provisions of Section 1008 or (B) securing
any Indebtedness incurred in connection with any refinancing, renewal,
substitutions or replacements of any such Indebtedness described in clause (A),
so long as the aggregate principal amount of Indebtedness represented thereby is
not increased by such refinancing by an amount greater than the lesser of (i)
the stated amount of any premium or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the Indebtedness
being refinanced or (ii) the amount of premium or other payment actually paid at
such time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing, provided,
however, that in the case of clauses (A) and (B), any such Lien only extends to
the assets that were subject to such Lien securing such Indebtedness prior to
the related acquisition by the Company or its Subsidiaries.
Section 1013. Limitation on Sale of Assets.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) at
least 75% of the consideration from such Asset Sale is received in cash or Cash
Equivalents and (ii) the Company or such Subsidiary receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
shares or assets subject to such Asset Sale (as determined by the Board of
Directors of the Company and evidenced in a Board Resolution). For the purposes
of this covenant, "Cash Equivalents" means (x) the assumption of Indebtedness of
the Company or any Subsidiary and the release of the Company or such Subsidiary
from all liability on such Indebtedness in connection with such Asset Sale, (y)
Temporary Cash Investments, and (z) securities received by the Company or any
Subsidiary from the transferee that are promptly converted by the Company or
such Subsidiary into cash.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale
are not required to be applied to repay permanently any Senior Indebtedness then
outstanding as
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required by the terms thereof, or the Company determines not to apply such Net
Cash Proceeds to the permanent prepayment of such Senior Indebtedness, or if no
such Senior Indebtedness is then outstanding, then the Company or a Subsidiary
may, within 360 days of the Asset Sale invest the Net Cash Proceeds in
properties and other assets that (as determined by the Board of Directors of the
Company) replace the properties and assets that were the subject of the Asset
Sale or in properties and assets that will be used in the businesses of the
Company or its Subsidiaries existing on the date hereof or in businesses
reasonably related thereto. The amount of such Net Cash Proceeds not applied to
repay Senior Indebtedness or used or invested within 360 days of the Asset Sale
as set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds
$10,000,000, the Company will apply the Excess Proceeds to the repayment of the
Securities and any other Pari Passu Indebtedness outstanding with provisions
requiring the Company to make an offer to purchase or to purchase or redeem such
Indebtedness with the proceeds from any Asset Sale as follows: (A) the Company
will make an offer to purchase (an "Offer") from all holders of the Securities
in accordance with the procedures set forth herein in the maximum principal
amount (expressed as a multiple of $1,000) of Securities that may be purchased
out of an amount (the "Security Amount") equal to the product of such Excess
Proceeds multiplied by a fraction, the numerator of which is the outstanding
principal amount of the Securities, and the denominator of which is the sum of
the outstanding principal amount of the Securities and such Pari Passu
Indebtedness (subject to proration in the event such amount is less than the
aggregate Offered Price (as defined herein) of all Securities tendered) and (B)
to the extent required by such Pari Passu Indebtedness to permanently reduce the
principal amount of such Pari Passu Indebtedness, the Company will make an offer
to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of
the Excess Proceeds over the Security Amount; provided that in no event will the
Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount
exceeding the principal amount of such Pari Passu Indebtedness plus the amount
of any premium required to be paid to repurchase such Pari Passu Indebtedness.
The offer price for the Securities will be payable in cash in an amount equal to
100% of the principal amount of the Securities plus accrued and unpaid interest,
if any, to the date (the "Offer Date") such Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth herein. To the extent that
the aggregate Offered Price of the Securities tendered pursuant to the Offer is
less than the Security Amount relating thereto or the aggregate amount of Pari
Passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari
Passu Debt Amount, the Company will use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Securities and
Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Securities to be purchased on
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a pro rata basis. Upon the completion of the purchase of all the Securities
tendered pursuant to an Offer and the completion of a Pari Passu Offer, the
amount of Excess Proceeds, if any, shall be reset at zero.
(d) If the Company becomes obligated to make an Offer pursuant to
clause (c) above, the Securities and the Pari Passu Indebtedness shall be
purchased by the Company, at the option of the holders thereof, in whole or in
part in integral multiples of $1,000, on a date that is not earlier than 30 days
and not later than 60 days from the date the notice of the Offer is given to
holders, or such later date as may be necessary for the Company to comply with
the requirements under the Exchange Act.
(e) The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Offer.
(f) Subject to paragraph (e) above, within 30 days after the date on
which the amount of Excess Proceeds equals or exceeds $10,000,000, the Company
shall send or cause to be sent by first-class mail, postage prepaid, to the
Trustee and to each Holder, at his address appearing in the Security Register, a
notice stating or including:
(1) that the Holder has the right to require the Company to
repurchase, subject to proration, such Holder's Securities at the
Offered Price;
(2) the Offer Date;
(3) the instructions a Holder must follow in order to have his
Securities purchased in accordance with paragraph (c) of this
Section;
(4) (i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on
Form 10-Q, as applicable, and any Current Report on Form 8-K of the
Company filed subsequent to such Quarterly Report, other than
Current Reports describing Asset Sales otherwise described in the
offering materials (or corresponding successor reports) (or in the
event the Company is not required to prepare any of the foregoing
Forms, the comparable information required pursuant to Section
1019), (ii) a description of material developments, if any, in the
Company's business subsequent to the date of the latest of such
reports, (iii) if material, appropriate pro forma financial
information, and (iv) such other information, if any, concerning
the business of the Company which
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the Company in good faith believes will enable such Holders to make
an informed investment decision regarding the Offer;
(5) the Offered Price;
(6) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002;
(7) that Securities must be surrendered prior to the Offer
Date to the Paying Agent at the office of the Paying Agent or to an
office or agency referred to in Section 1002 to collect payment;
(8) that any Securities not tendered will continue to accrue
interest and that unless the Company defaults in the payment of the
Offered Price, any Security accepted for payment pursuant to the
Offer shall cease to accrue interest on and after the Offer Date;
(9) the procedures for withdrawing a tender; and
(10) that the Offered Price for any Security which has been
properly tendered and not withdrawn and which has been accepted for
payment pursuant to the Offer will be paid promptly following the
Offered Date.
(g) Holders electing to have Securities purchased hereunder will be
required to surrender such Securities at the address specified in the notice
prior to the Offer Date. Holders will be entitled to withdraw their election to
have their Securities purchased pursuant to this Section 1013 if the Company
receives, not later than one Business Day prior to the Offer Date, a telegram,
telex, facsimile transmission or letter setting forth (1) the name of the
Holder, (2) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted, (3) the principal amount of the
Security (which shall be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which his election is to be withdrawn, (4) a
statement that such Holder is withdrawing his election to have such principal
amount of such Security purchased, and (5) the principal amount, if any, of such
Security (which shall be $1,000 or an integral multiple thereof) that remains
subject to the original notice of the Offer and that has been or will be
delivered for purchase by the Company.
(h) The Company shall (i) not later than the Offer Date, accept for
payment Securities or portions thereof tendered pursuant to the Offer, (ii) not
later than 10:00 a.m. (New York time) on the Offer Date, deposit with the
Trustee or with a Paying Agent an amount of money in same day funds (or New York
Clearing House funds if
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such deposit is made prior to the Offer Date) sufficient to pay the aggregate
Offered Price of all the Securities or portions thereof which are to be
purchased on that date and (iii) not later than 10:00 a.m. (New York time) on
the Offer Date, deliver to the Paying Agent an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the Offered Price of the Securities purchased from
each such Holder, and the Company shall execute and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Paying
Agent at the Company's expense to the Holder thereof. For purposes of this
Section 1013, the Company shall choose a Paying Agent which shall not be the
Company.
Subject to applicable escheat laws, the Trustee and the Paying Agent
shall return to the Company any cash that remains unclaimed, together with
interest, if any, thereon, held by them for the payment of the Offered Price;
provided, however, that (x) to the extent that the aggregate amount of cash
deposited by the Company with the Trustee in respect of an Offer exceeds the
aggregate Offered Price of the Securities or portions thereof to be purchased,
then the Trustee shall hold such excess for the Company and (y) unless otherwise
directed by the Company in writing, promptly after the Business Day following
the Offer Date the Trustee shall return any such excess to the Company together
with interest or dividends, if any, thereon.
(i) Securities to be purchased shall, on the Offer Date, become due
and payable at the Offered Price and from and after such date (unless the
Company shall default in the payment of the Offered Price) such Securities shall
cease to bear interest. Such Offered Price shall be paid to such Holder promptly
following the later of the Offer Date and the time of delivery of such Security
to the relevant Paying Agent at the office of such Paying Agent by the Holder
thereof in the manner required. Upon surrender of any such Security for purchase
in accordance with the foregoing provisions, such Security shall be paid by the
Company at the Offered Price; provided, however, that installments of interest
whose Stated Maturity is on or prior to the Offer Date shall be payable to the
Person in whose name the Securities (or any Predecessor Securities) is
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 309; provided, further, that Securities to be
purchased are subject to proration in the event the Excess Proceeds are less
than the aggregate Offered Price of all Securities tendered for purchase, with
such adjustments as may be appropriate by the Trustee so that only Securities in
denominations of $1,000 or integral multiples thereof, shall be purchased. If
any Security tendered for purchase shall not be so paid upon surrender thereof
by deposit of funds with the Trustee or a Paying Agent in accordance with
paragraph (h) above, the principal thereof (and premium, if any, thereon) shall,
until paid, bear interest from the
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Offer Date at the rate borne by such Security. Any Security that is to be
purchased only in part shall be surrendered to a Paying Agent at the office of
such Paying Agent (with, if the Company, the Security Registrar or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Security Registrar or the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, one or more new
Securities of any authorized denomination as requested by such Holder in an
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased. The
Company shall publicly announce the results of the Offer on or as soon as
practicable after the Offer Date.
Section 1014. Limitation on Issuances of Guarantees of Indebtedness.
(a) The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable with
respect to any Pari Passu Indebtedness or Subordinated Indebtedness of the
Company unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Guarantee of the
Securities on the same terms as the guarantee of such Indebtedness except that
(A) such guarantee need not be secured unless required pursuant to Section 1012
hereof and (B) if such Indebtedness is by its terms expressly subordinated to
the Securities, any such assumption, guarantee or other liability of such
Subsidiary with respect to such Indebtedness shall be subordinated to such
Subsidiary's Guarantee of the Securities at least to the same extent as such
Indebtedness is subordinated to the Securities.
(b) Notwithstanding the foregoing, any Guarantee by a Subsidiary of
the Securities shall provide by its terms that it (and all Liens securing the
same) shall be automatically and unconditionally released and discharged upon
any sale, exchange or transfer, to any Person not an Affiliate of the Company,
of all of the Company's Capital Stock in, or all or substantially all the assets
of, such Subsidiary, which transaction is in compliance with the terms of this
Indenture and such Subsidiary is released from its guarantees of other
Indebtedness of the Company or any Subsidiaries.
Section 1015. Purchase of Securities upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each Holder
shall have the right to require that the Company purchase such Holder's
Securities in whole or in part in integral multiples of $1,000, at a purchase
price (the "Change of Control Purchase Price") in cash in an amount equal to
101% of the principal amount of such Securities, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), pursuant to the offer described below in this Section
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1015 (the "Change of Control Offer") and in accordance with the other procedures
set forth in subsections (b), (c) , (d) and (e) of this Section 1015.
(b) Within 30 days following any Change of Control, the Company
shall notify the Trustee thereof and give written notice (a "Change of Control
Purchase Notice") of such Change of Control to each Holder by first-class mail,
postage prepaid, at his address appearing in the Security Register, stating
among other things:
(1) that a Change of Control has occurred, the date of such
event, and that such Holder has the right to require the Company to
repurchase such Holder's Securities at the Change of Control
Purchase Price;
(2) the circumstances and relevant facts regarding such Change
of Control (including but not limited to information with respect to
pro forma historical income, cash flow and capitalization after
giving effect to such Change of Control) ;
(3) (i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form
10-Q, as applicable, and any Current Report on Form 8-K of the
Company filed subsequent to such Quarterly Report (or in the event
the Company is not required to prepare any of the foregoing Forms,
the comparable information required to be prepared by the Company
and any Guarantor pursuant to Section 1019) , (ii) a description of
material developments, if any, in the Company's business subsequent
to the date of the latest of such reports and (iii) such other
information, if any, concerning the business of the Company which
the Company in good faith believes will enable such Holders to make
an informed investment decision regarding the Change of Control
Offer;
(4) that the Change of Control Offer is being made pursuant to
this Section 1015 and that all Securities properly tendered pursuant
to the Change of Control Offer will be accepted for payment at the
Change of Control Purchase Price;
(5) the Change of Control Purchase Date, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the
date such notice is mailed, or such later date as is necessary to
comply with requirements under the Exchange Act;
(6) the Change of Control Purchase Price;
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(7) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002;
(8) that Securities must be surrendered on or prior to the
Change of Control Purchase Date to the Paying Agent at the office of
the Paying Agent or to an office or agency referred to in Section
1002 to collect payment;
(9) that the Change of Control Purchase Price for any Security
which has been properly tendered and not withdrawn will be paid
promptly following the Change of Control Offer Purchase Date;
(10) the procedures that a Holder must follow to accept a
Change of Control Offer or to withdraw such acceptance;
(11) that any Security not tendered will continue to accrue
interest; and
(12) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Securities accepted for
payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date.
(c) Upon receipt by the Company of the proper tender of Securities,
the Holder of the Security in respect of which such proper tender was made shall
(unless the tender of such Security is properly withdrawn) thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to
such Security. Upon surrender of any such Security for purchase in accordance
with the foregoing provisions, such Security shall be paid by the Company at the
Change of Control Purchase Price; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Change of Control Purchase
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 309. If any Security
tendered for purchase in accordance with the provisions of this Section 1015
shall not be so paid upon surrender thereof, the principal thereof (and premium,
if any, thereon) shall, until paid, bear interest from the Change of Control
Purchase Date at the rate borne by such Security. Holders electing to have
Securities purchased will be required to surrender such Securities to the Paying
Agent at the address specified in the Change of Control Purchase Notice at least
one Business Day prior to the Change of Control Purchase Date. Any Security that
is to be purchased only in part shall be surrendered to a Paying Agent at the
office of such Paying Agent (with, if the Company, the Security Registrar or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to
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the Company and the Security Registrar or the Trustee, as the case may be, duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing) , and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, one or more new
Securities of any authorized denomination as requested by such Holder in an
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased.
(d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 10:00 a.m. (New
York time) on the Change of Control Purchase Date, deposit with the Trustee or
with a Paying Agent an amount of money in same day funds (or New York Clearing
House funds if such deposit is made prior to the Change of Control Purchase
Date) sufficient to pay the aggregate Change of Control Purchase Price of all
the Securities or portions thereof which are to be purchased as of the Change of
Control Purchase Date and (iii) not later than 10:00 a.m. (New York time) on the
Change of Control Purchase Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Change of Control
Purchase Price of the Securities purchased from each such Holder, and the
Company shall execute and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Paying Agent at the Company's
expense to the Holder thereof. The Company will publicly announce the results of
the Change of Control Offer on the Change of Control Purchase Date. For purposes
of this Section 1015, the Company shall choose a Paying Agent which shall not be
the Company.
(e) A tender made in response to a Change of Control Purchase Notice
may be withdrawn if the Company receives, not later than one Business Day prior
to the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter, specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in respect of which
such notice of withdrawal is being submitted;
(3) the principal amount of the Security (which shall be
$1,000 or an integral multiple thereof) delivered for purchase by
the Holder as to which such notice of withdrawal is being submitted;
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(4) a statement that such Holder is withdrawing his election
to have such principal amount of such Security purchased; and
(5) the principal amount, if any, of such Security (which
shall be $1,000 or an integral multiple thereof) that remains
subject to the original Change of Control Purchase Notice and that
has been or will be delivered for purchase by the Company.
(f) Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together with
interest or dividends, if any, thereon, held by them for the payment of the
Change of Control Purchase Price; provided, however, that, (x) to the extent
that the aggregate amount of cash deposited by the Company pursuant to clause
(ii) of paragraph (d) above exceeds the aggregate Change of Control Purchase
Price of the Securities or portions thereof to be purchased, then the Trustee
shall hold such excess for the Company and (y) unless otherwise directed by the
Company in writing, promptly after the Business Day following the Change of
Control Purchase Date the Trustee shall return any such excess to the Company
together with interest, if any, thereon.
(g) The Company shall comply, to the extent applicable, with the
applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and
any other applicable securities laws or regulations in connection with a Change
of Control Offer.
Section 1016. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit (a) any Subsidiary of the Company to
issue any Preferred Stock, except for (i) Preferred Stock issued to the Company
or a Wholly Owned Subsidiary, and (ii) Preferred Stock issued by a Person prior
to the time (A) such Person becomes a Subsidiary, (B) such Person merges with or
into a Subsidiary or (C) a Subsidiary merges with or into such Person; provided
that such Preferred Stock was not issued or incurred by such Person in
anticipation of the type of transaction contemplated by subclause (A) , (B) or
(C) or (b) any Person (other than the Company or a Wholly Owned Subsidiary) to
acquire Preferred Stock of any Subsidiary from the Company or any Subsidiary,
except, in the case of clause (a) or (b) , upon the acquisition of all the
outstanding Capital Stock of such Subsidiary in accordance with the terms
hereof.
Section 1017. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create any consensual encumbrance or restriction on
the ability of any Subsidiary to (i) pay dividends or make any other
distribution on its Capital Stock,
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(ii) pay any Indebtedness owed to the Company or any other Subsidiary, (iii)
make any Investment in the Company or any other Subsidiary or (iv) transfer any
of its properties or assets to the Company or any other Subsidiary, except for:
(a) any encumbrance or restriction pursuant to any agreement in effect on the
date hereof and listed on Schedule II hereto; (b) any encumbrance or
restriction, with respect to a Subsidiary that is not a Subsidiary of the
Company on the date hereof, in existence at the time such Person becomes a
Subsidiary of the Company and not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary; (c) customary
non-assignment or subletting provisions of any lease, license or other contract;
(d) any restriction entered into in the ordinary course of business contained in
any lease of any Subsidiary or any security agreement or mortgage securing
Indebtedness of any Subsidiary to the extent such restriction restricts the
transfer of property subject to such security agreement, mortgage or lease; (e)
any encumbrance or restriction existing under any agreement that extends,
renews, refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (a) , (b) , (c) or (d) , or in this clause
(e) , provided that the terms and conditions of any such encumbrances or
restrictions are no more restrictive in any material respect than those under or
pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced; or (f) restrictions arising under any applicable law,
rule, regulation or order.
Section 1018. Limitations on Unrestricted Subsidiaries.
The Company will not make, and will not permit its Subsidiaries to
make, any Investment in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the amount of Restricted
Payments then permitted to be made pursuant to Section 1009. Any Investments in
Unrestricted Subsidiaries permitted to be made pursuant to this covenant (i)
will be treated as a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or property.
Section 1019. Provision of Financial Statements.
After the earlier to occur of the consummation of the Exchange Offer
and the 150th calendar day following the date of original issue of the
Securities, whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, the Company will, to the extent permitted under the Exchange
Act, file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to Sections 13(a) or 15(d) of the Exchange Act if the Company were so
subject, such documents to be filed with the Commission on or prior to the date
(a "Required Filing Date") by which the Company would have been required so to
file such documents if the Company were so subject. The Company will
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also in any event (x) within 15 days of each Required Filing Date occurring
after the issuance of the Securities (i) transmit by mail to all Holders, as
their names and addresses appear in the Security Register, without cost to such
holders and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to Sections 13(a) or 15(d) of the Exchange Act if
the Company were subject to either of such Sections and (y) if filing such
documents by the Company with the Commission is not permitted under the Exchange
Act, promptly upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of such documents to any prospective
Holder at the Company's cost. If any Guarantor's financial statements would be
required to be included in the financial statements filed or delivered pursuant
hereto if the Company were subject to Section 13(a) or 15(d) of the Exchange
Act, the Company shall include such Guarantor's financial statements in any
filing or delivery pursuant hereto. So long as any of the Securities remain
outstanding, the Company will make available to any prospective purchaser of
Securities or beneficial owner of Securities in connection with any sale thereof
the information required by Rule 144A(d) (4) under the Securities Act, until
such time as the Company has either exchanged the Securities for securities
identical in all material respects which have been registered under the
Securities Act or until such time as the Holders thereof have disposed of such
Securities pursuant to an effective registration statement under the Securities
Act.
Section 1020. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, on or before a date not
more than 120 days after the end of each fiscal year of the Company ending after
the date hereof, a written statement signed by two executive officers of the
Company, one of whom shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company, as to
compliance herewith, including whether or not, after a review of the activities
of the Company during such year and of the Company's and each Guarantor's
performance under this Indenture, to the best knowledge, based on such review,
of the signers thereof, the Company and each Guarantor have fulfilled all of
their respective obligations and are in compliance with all conditions and
covenants under this Indenture throughout such year and, if there has been a
Default specifying each Default and the nature and status thereof and any
actions being taken by the Company with respect thereto.
(b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default the Company
shall deliver to the Trustee by registered or certified mail or facsimile
transmission followed by hard copy an Officers'
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Certificate specifying such Default, Event of Default, notice or other action,
the status thereof and what actions the Company is taking or proposes to take
with respect thereto, within ten Business Days of becoming aware of its
occurrence.
Section 1021. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1006 through 1012, 1014 and 1016
through 1020, if, before or after the time for such compliance, the Holders of
not less than a majority in aggregate principal amount of the Securities at the
time Outstanding shall, by Act of such Holders, waive such compliance in such
instance with such covenant or provision, but no such waiver shall extend to or
affect such covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or condition shall remain
in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
(a) The Securities are subject to redemption at any time on or after
March 1, 2002, at the option of the Company, in whole or in part, subject to the
conditions, and at the Redemption Prices, specified in the form of Security,
together with accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on relevant Regular Record Dates and
Special Record Dates to receive interest due on relevant Interest Payment Dates
and Special Payment Dates).
(b) In addition, at any time on or prior to March 1, 2000, the
Company may, at its option, use the net proceeds of one or more Public Equity
Offerings to redeem up to an aggregate of 30% of the aggregate principal amount
of Securities originally issued under this Indenture at a redemption price equal
to 109.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$105,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
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Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article Eleven.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Company Order and an Officers' Certificate.
In case of any redemption at the election of the Company, the Company shall, not
less than 45 nor more than 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 30
days prior to the Redemption Date. The Trustee shall select the Securities or
portions thereof to be redeemed pro rata, by lot or by any other method the
Trustee shall deem fair and reasonable. The amounts to be redeemed shall be
equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
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(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the principal
amount of such Security to be redeemed and that after the Redemption Date upon
surrender of such Security, new Security or Securities in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof to be redeemed, and that
(unless the Company shall default in payment of the Redemption Price) interest
thereon shall cease to accrue on and after said date;
(g) the names and addresses of the Paying Agent and the offices or
agencies referred to in Section 1002 where such Securities are to be surrendered
for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Securities; and
(i) the procedures that a Holder must follow to surrender the
Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company. If the Company
elects to give notice of redemption, it shall provide the Trustee with a
certificate stating that such notice has been given in compliance with the
requirements of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company or any of its Affiliates
is acting as
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Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money in same day funds sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date or Special
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date. The Paying Agent shall promptly mail or deliver
to Holders of Securities so redeemed payment in an amount equal to the
Redemption Price of the Securities purchased from each such Holder. All money,
if any, earned on funds held in trust by the Trustee or any Paying Agent shall
be remitted to the Company. For purposes of this Section 1106, the Company shall
choose a Paying Agent which shall not be the Company.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Holders will be required
to surrender the Securities to be redeemed to the Paying Agent at the address
specified in the notice of redemption at least one Business Day prior to the
Redemption Date. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such on the relevant
Regular Record Dates and Special Record Dates according to the terms and the
provisions of Section 309.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.
Section 1108. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part shall
be surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 1002 (with, if the Company, the Security Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company, the Security Registrar or the
Trustee, as the case may be, duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing) , and the Company shall execute,
and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in
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exchange for, the unredeemed portion of the principal of the Security so
surrendered that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and shall cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Securities as expressly provided for herein) as to all Outstanding Securities
hereunder, and the Trustee, upon Company Request and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(1) all the Securities theretofore authenticated and delivered
(other than (i) lost, stolen or destroyed Securities which have been
replaced or paid as provided in Section 308 or (ii) all Securities
for whose payment United States dollars have theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust
as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(2) all such Securities not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at their Stated Maturity within one year or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company; and the Company or any Guarantor has irrevocably deposited
or caused to be deposited with the Trustee as trust funds in trust
an amount in United States dollars sufficient to pay and discharge
the entire Indebtedness on the Securities not theretofore delivered
to the Trustee for cancellation, including the principal of,
premium, if any, and accrued interest on, such Securities at such
Maturity, Stated Maturity or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company and any Guarantor; and
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(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, in form and substance
reasonably satisfactory to the Trustee, each stating that (i) all conditions
precedent herein relating to the satisfaction and discharge hereof have been
complied with and (ii) such satisfaction and discharge will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Subsidiary is a party or by which the Company, any Guarantor or any
Subsidiary is bound.
Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 606 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee under
Section 1202 and the last paragraph of Section 1003 shall survive.
Section 1202. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars deposited with the Trustee pursuant to Section 1201 shall
be held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on, the Securities for whose payment such United
States dollars have been deposited with the Trustee.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on, the Securities are hereby expressly made subordinate and
subject in right of payment as provided in this Article to the prior payment in
full, in cash or Cash Equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner, of the Senior Indebtedness.
This Article Thirteen shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue to
hold Senior
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Indebtedness; and such provisions are made for the benefit of the holders of
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
Section 1302. Payment Over of Proceeds Upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary, or whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of the Company, then and in any
such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents or, as acceptable to the holders of
Senior Indebtedness, in any other manner, of all amounts due on or in respect of
Senior Indebtedness before the Holders of the Securities are entitled to receive
any payment or distribution of any kind or character (excluding securities of
the Company or any other corporation that are equity securities or are
subordinated in right of payment to all Senior Indebtedness, that may be
outstanding, to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article ("Permitted
Junior Securities")) on account of the principal of, premium, if any, or
interest on the Securities or on account of the purchase, redemption, defeasance
or other acquisition of, or in respect of, the Securities (other than amounts
previously set aside with the Trustee, or payments previously made, in either
case, pursuant to the provisions of Sections 402 and 403 of this Indenture);
and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities), by set-off or otherwise, to which the Holders or the
Trustee would be entitled but for the provisions of this Article shall be paid
by the liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash or Cash Equivalents or, as
acceptable to the holders of Senior Indebtedness, in any other manner, of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
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(3) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (excluding Permitted Junior
Securities), in respect of principal, premium, if any, and interest on the
Securities before all Senior Indebtedness is paid in full, in cash or Cash
Equivalents or, as acceptable to the holders of Senior Indebtedness, in any
other manner, then and in such event such payment or distribution (excluding
Permitted Junior Securities) shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payments or distributions of assets of the Company
for application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full in cash or Cash
Equivalents or, as acceptable to the holders of Senior Indebtedness, in any
other manner, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
with or into, another Person or the liquidation or dissolution of the Company
following the sale, assignment, conveyance, transfer, lease or other disposal of
its properties and assets substantially as an entirety to another Person upon
the terms and conditions set forth in Article Eight shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshaling of assets and liabilities of the Company for the
purposes of this Section if the Person formed by such consolidation or the
surviving entity of such merger or the Person which acquires by sale,
assignment, conveyance, transfer, lease or other disposal of such properties and
assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, sale, assignment, conveyance, transfer, lease or
other disposal, comply with the conditions set forth in Article Eight.
Section 1303. Suspension of Payment When Designated Senior Indebtedness in
Default.
(a) Unless Section 1302 shall be applicable, upon the occurrence and
during the continuance of any default in the payment of any Designated Senior
Indebtedness beyond any applicable grace period (a "Payment Default") and after
the receipt by the Trustee from a Senior Representative of any Designated Senior
Indebtedness of written notice of such default, no payment (other than amounts
previously set aside with the Trustee or payments previously made, in either
case, pursuant to Section 402 or 403 in this Indenture) or distribution of any
assets of the Company or any Subsidiary of any kind or character (excluding
Permitted Junior Securities) may be made by the Company on account of the
principal of, premium, if any, or interest on, the Securities, or on account of
the purchase, redemption, defeasance or
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other acquisition of or in respect of, the Securities unless and until such
Payment Default shall have been cured or waived or shall have ceased to exist or
the Designated Senior Indebtedness shall have been discharged or paid in full,
in cash or Cash Equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner, after which the Company shall (subject to the
other provisions of this Article Thirteen) resume making any and all required
payments in respect of the Securities, including any missed payments.
(b) Unless Section 1302 shall be applicable, (1) upon the occurrence
and during the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may then
be accelerated immediately (a "Non-payment Default") and (2) after the receipt
by the Trustee and the Company from a Senior Representative of any Designated
Senior Indebtedness of written notice of such Non-payment Default, no payment
(other than any amounts previously set aside with the Trustee, or payments
previously made, in either case, pursuant to the provisions of Sections 402 or
403 in this Indenture) or distribution of any assets of the Company of any kind
or character (excluding Permitted Junior Securities) may be made by the Company
or any Subsidiary on account of the principal of, premium, if any, or interest
on, the Securities, or on account of the purchase, redemption, defeasance or
other acquisition of, or in respect of, the Securities for the period specified
below ("Payment Blockage Period").
(c) The Payment Blockage Period shall commence upon the receipt of
notice of the Non-payment Default by the Trustee and the Company from a Senior
Representative and shall end on the earliest of (i) the 179th day after such
commencement, (ii) the date on which such Non-payment Default (and all
Non-payment Defaults as to which notice is given after such Payment Blockage
Period is initiated) is cured, waived or ceases to exist or on which such
Designated Senior Indebtedness is discharged or paid in full, in cash or Cash
Equivalents or, as acceptable to the holders of Senior Indebtedness, in any
other manner, or (iii) the date on which such Payment Blockage Period (and all
Non-payment Defaults as to which notice is given after such Payment Blockage
Period is initiated) shall have been terminated by written notice to the Company
or the Trustee from the Senior Representative initiating such Payment Blockage
Period, after which, in the case of clauses (i), (ii) and (iii), the Company
shall promptly resume making any and all required payments in respect of the
Securities, including any missed payments. In no event will a Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Company and
the Trustee of the notice initiating such Payment Blockage Period (such 179-day
period referred to as the "Initial Period"). Any number of notices of
Non-payment Defaults may be given during the Initial Period; provided that
during any period of 365 consecutive days only one Payment Blockage Period,
during which payment of principal of, premium, if any, or
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interest on, the Securities may not be made, may commence and the duration of
such period may not exceed 179 days. No Non-payment Default with respect to any
Designated Senior Indebtedness that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the basis
for the commencement of a second Payment Blockage Period, whether or not within
a period of 365 consecutive days, unless such default has been cured or waived
for a period of not less than 90 consecutive days. The Company shall deliver a
notice to the Trustee promptly after the date on which any Non-payment Default
is cured or waived or ceases to exist or on which the Designated Senior
Indebtedness related thereto is discharged or paid in full, in cash or Cash
Equivalents or, as acceptable to the holders of Senior Indebtedness, in any
other manner, and the Trustee is authorized to act in reliance on such notice.
(d) In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security prohibited
by the foregoing provisions of this Section, then and in such event such payment
shall be paid over and delivered forthwith to a Senior Representative of the
holders of the Designated Senior Indebtedness or as a court of competent
jurisdiction shall direct.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article, elsewhere in this Indenture or in
any of the Securities shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding-up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1302 or under the conditions
described in Section 1303, from making payments at any time of principal of,
premium, if any, or interest on the Securities.
Section 1305. Subrogation to Rights of Holders of Senior Indebtedness.
After the payment in full, in cash or Cash Equivalents or, as
acceptable to the holders of Senior Indebtedness, in any other manner, of all
Senior Indebtedness, the Holders of the Securities shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, premium, if any, and interest on, the
Securities shall be paid in full, in cash or Cash Equivalents or, as acceptable
to the holders of Securities, in any other manner. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Securities or
the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among
the Company, its creditors other than holders of Senior Indebtedness, and
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the Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
Section 1306. Provisions Solely to Define Relative Rights.
The provisions of this Article are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on, the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company or the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness (1) in any case, proceeding, dissolution, liquidation or
other winding up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of the Company referred to in Section 1302, to receive,
pursuant to and in accordance with such Section, cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment prohibited by such
Section or enforce their rights pursuant to Section 1303(d).
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file such a claim prior to 30 days before the expiration of the time to
file such a claim, the holders of Senior Indebtedness, or any Senior
Representative, may file such a claim on behalf of the Holders of the
Securities.
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Section 1308. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (1) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (2) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person; provided, however, that in no
event shall any such actions limit the right of the Holders of the Securities to
take any action to accelerate the maturity of the Securities pursuant to Article
Five of this Indenture or to pursue any rights or remedies hereunder or under
applicable laws if the taking of such action does not otherwise violate the
terms of this Article.
(c) The provisions of this Article Thirteen shall be reinstated if
at any time any payment of any of the Senior Indebtedness is recinded or must
otherwise be returned by any holder of Senior Indebtedness upon the insolvency,
bankruptcy or reorganization of the Company or otherwise.
Section 1309. Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from a Senior Representative or
any trustee, fiduciary or agent therefor; and, prior to the receipt
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of any such written notice, the Trustee shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section by Noon, Eastern Time,
on the Business Day prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of, premium, if any, or interest on any Security), then,
anything herein contained to the contrary notwithstanding but without limiting
the rights and remedies of the holders of Senior Indebtedness, a Senior
Representative or any trustee, fiduciary or agent thereof, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it after such date; nor shall
the Trustee be charged with knowledge of the curing of any such default or the
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice to the Trustee and the Company by a Person representing himself
to be a Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor); provided, however, that failure to give such
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 1310. Reliance on Judicial Orders or Certificates.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other person
making such payment or distribution, or a certificate of a Senior
Representative, delivered to the Trustee or to the Holders of Securities for the
purpose of ascertaining the
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Persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been fully apprised of the provisions of this
Article.
Section 1311. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
Section 1312. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting under this Indenture, the
term "Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1311 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 1313. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Five of this Indenture or to
pursue any rights or remedies hereunder or under applicable law, subject to the
rights, if any, under this Article of the holders, from time to time, of Senior
Indebtedness to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.
Section 1314. Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Article against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and the
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Trustee shall not be liable to any holder of Senior Indebtedness if it shall in
good faith mistakenly (absent negligence or willful misconduct) pay over or
deliver to Holders, the Company or any other Person moneys or assets to which
any holder of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
PACKARD BIOSCIENCE COMPANY
(f/k/a Canberra Industries, Inc.)
By: /s/ Emery G. Olcott
------------------------------------
Name: Emery G. Olcott
Title: Chairman, President and Chief
Executive Officer
Attest: /s/ George Serrano
--------------------------
Name: George Serrano
Title: Vice President and Secretary
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THE BANK OF NEW YORK
By: /s/ Mary LaGumina
-----------------------------
Name: Mary LaGumina
Title: Assistant Vice President
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STATE OF NEW YORK )
------------------
) ss.:
COUNTY OF NEW YORK )
------------------
On the 4th day of March, 1997, before me personally came Emery G.
Olcott, to me known, who, being by me duly sworn, did depose and say that he
resides at Gold Street, Hartford, Connecticut; that he is President and Chief
Executive Officer of Packard BioScience Company (f/k/a Canberra Industries,
Inc.), a corporation described in and which executed the foregoing instrument;
and that he signed his name thereto pursuant to authority of the Board of
Directors of such corporation.
(NOTARIAL
SEAL)
____________
<PAGE>
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE
144A")) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED STATES, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED STATES PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1),
(A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT
<PAGE>
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "UNITED STATES,"
"OFFSHORE TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY
2
<PAGE>
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
3
<PAGE>
PACKARD BIOSCIENCE COMPANY
------------------
9 3/8% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A
CUSIP NO. _________
No. _________________ $___________
Packard BioScience Company, a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of $_____________ United States
dollars on March 1, 2007, at the office or agency of the Company referred to
below, and to pay interest thereon from March 4, 1997, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semiannually on March 1 and September 1 in each year, commencing September 1,
1997 at the rate of 9 3/8% per annum, subject to adjustments as described in the
second following paragraph, in United States dollars, until the principal hereof
is paid or duly provided for. Interest shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
The Holder of this Series A Security is entitled to the benefits of
the Registration Rights Agreement among the Company and the Initial Purchasers,
dated March 4, 1997, pursuant to which, subject to the terms and conditions
thereof, the Company is obligated to consummate the Exchange Offer pursuant to
which the Holder of this Security shall have the right to exchange this Security
for 9 3/8% Senior Subordinated Notes due 2007, Series B (herein called the
"Series B Securities") in like principal amount as provided therein. The Series
A Securities and the Series B Securities are together referred to as the
"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
In the event that (a) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 45th calendar day following the
date of original issue of the Series A Securities, (b) the Exchange Offer
Registration Statement has not been declared effective on or prior to the 105th
calendar day following the date of original issue of the Series A Securities or
(c) the Exchange Offer is not consummated on or prior to the 135th calendar day
following the date of original issue of the Series A Securities or a Shelf
Registration Statement is not declared effective on or prior to the 135th
calendar day following the date of original issue of the Series A Securities
(or, if a Shelf Registration Statement is required to be filed because of the
request by any Initial Purchaser, 30 days following the request by any such
Initial Purchaser that the Company file the Shelf Registration Statement) (each
such event referred to in clauses (a) through (c) above, a "Registration
Default"), the interest rate borne by the Series A Securities (except in the
case
4
<PAGE>
of clause (c), in which case only the Series A Securities which have not been
exchanged in the Exchange Offer) shall be increased by one-quarter of one
percent per annum upon the occurrence of any Registration Default, which rate
(as increased as aforesaid) will increase by an additional one quarter of one
percent each 90-day period that such additional interest continues to accrue
under any such circumstance, with an aggregate maximum increase in the interest
rate equal to one percent (1%) per annum. Following the cure of all Registration
Defaults the accrual of additional interest will cease and the interest rate
will revert to the original rate.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the February 15 or August 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the interest rate borne by the Series A Securities, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Security (or any
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or transfer of the Security, will be made at the office
or agency of the Company in The City of New York maintained for that purpose
(which initially will be the Corporate Trust Office of the Trustee), or at such
other office or agency as may be maintained for such purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
PACKARD BIOSCIENCE COMPANY
By:________________________________
Title:_____________________________
Attest:
_____________________________
Authorized Officer
6
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/8% Senior Subordinated Notes due 2007, Series
A referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________________
Authorized Signer
Dated:
7
<PAGE>
PACKARD BIOSCIENCE COMPANY
9 3/8% Senior Subordinated Note due 2007, Series A
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9 3/8% Senior Subordinated Notes due 2007, Series A
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of March 4, 1997, between the Company and The Bank of New
York, as trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance with
certain conditions set forth therein.
The Securities are subject to redemption at any time on or after
March 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning March 1 of the years indicated
below:
Redemption
Year Price
---- ----------
2002......................... 104.688%
2003......................... 103.125%
2004......................... 101.563%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount thereof,
8
<PAGE>
plus accrued and unpaid interest, if any, to the date of purchase, pursuant to a
Change of Control Offer in accordance with the procedures set forth in the
Indenture.
In addition, at any time on or prior to March 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity Offerings
to redeem up to an aggregate of 30% of the aggregate principal amount of
Securities originally issued under the Indenture at a redemption price equal to
109.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$105,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior Indebtedness or invested in properties or other assets that replace
the properties and assets that were the subject of the Asset Sale or which will
be used in the businesses of the Company or its Subsidiaries existing on the
date of the Indenture or in businesses reasonably related thereto, exceeds a
specified amount the Company will be required to apply such proceeds to the
repayment of the Securities and certain Indebtedness ranking pari passu in right
of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of a specified percentage in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also
9
<PAGE>
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and the Securities and the
Guarantees and certain past Defaults under the Indenture and the Securities and
the Guarantees and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.
The Series A Securities are, to the extent and manner provided in
Article Thirteen of the Indenture, subordinated and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed, subject to the subordination
provisions of the Indenture.
If this Series A Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable on the Security Register of the
Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York or at such other office or agency of the Company as may be maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
If this Series A Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
Holder, provided it is a Qualified Institutional Buyer, may exchange this Series
A Security for a Book-Entry Security by instructing the Trustee (by completing
the Transferee Certificate in the form in Appendix I) to arrange for such Series
A Security to be represented by a beneficial interest in a Global Security in
accordance with the customary procedures of the Depository, unless the Company
has elected not to issue a Global Security.
If this Series A Security is a U.S. Global Security, it is
exchangeable for a Series A Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be
10
<PAGE>
transferred to all beneficial holders in exchange for their beneficial interests
in the U.S. Global Securities if (x) the Depository notifies the Company that it
is unwilling or unable to continue as depository for the U.S. Global Security
and a successor depositary is not appointed by the Company within 90 days or (y)
there shall have occurred and be continuing an Event of Default and the Security
Registrar has received a request from the Depositary. Upon any such issuance,
the Trustee is required to register such certificated Series A Securities in the
name of, and cause the same to be delivered to, such Person or Persons (or the
nominee of any thereof). All such certificated Series A Securities would be
required to include the Private Placement Legend.
Series A Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series A Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
At any time when the Company is not subject to Sections 13 or 15(d)
of the Exchange Act, upon the written request of a Holder of a Series A
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) to such Holder or to a prospective
purchaser of such Series A Security who such Holder informs the Company is
reasonably believed to be a "Qualified Institutional Buyer" within the meaning
of Rule 144A under the Securities Act, as the case may be, in order to permit
compliance by such Holder with Rule 144A under the Securities Act.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 1013 or Section 1015, as applicable, of the Indenture, check the Box:
[ ].
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1013 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$ _______________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
12
<PAGE>
TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
___________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
attorney to transfer such Security on the books of the Company with full power
of substitution in the premises.
In connection with any transfer of this Security occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
March 4, 1999, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Security and the
Indenture.
13
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 307 of the Indenture
shall have been satisfied.
Date: _______________________
_________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
Signature Guarantee: _____________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:__________________ _________________________________________________
NOTICE: To be executed by an authorized signatory
14
<PAGE>
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
PACKARD BIOSCIENCE COMPANY
______________________
9 3/8% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
CUSIP NO. ______________
No. __________ $_______________________
Packard BioScience Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________ or registered assigns, the principal sum of ___________ United States
dollars on March 1, 2007, at the office or agency of the Company referred to
below, and to pay interest thereon from March 4, 1997, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semiannually on March 1 and September 1 in each year, commencing September 1,
1997 at the rate of 9 3/8% per annum, in United States dollars, until the
principal hereof is paid or duly provided for; provided that to the extent
interest has not been paid or duly provided for with respect to the Series A
Security exchanged for this Series B Security, interest on this Series B
Security shall accrue from the most recent Interest Payment Date to which
interest on the Series A Security which was exchanged for this Series B Security
has been paid or duly provided for. Interest shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
This Series B Security was issued pursuant to the Exchange Offer
pursuant to which the 9 3/8% Senior Subordinated Notes due 2007, Series A
(herein called the "Series A Securities") in like principal amount were
exchanged for the Series B Securities. The Series B Securities rank pari passu
in right of payment with the Series A Securities.
In addition, for any period in which the Series A Security exchanged
for this Series B Security was outstanding, in the event that (a) the Exchange
Offer Registration Statement is not filed with the Commission on or prior to the
45th calendar day following the date of original issue of the Series A Security,
(b) the Exchange Offer Registration Statement has not been declared effective on
or prior to the 105th calendar day following the date of original issue of the
Series A Security or (c) the Exchange Offer is not consummated on or prior to
the 135th calendar day following the date of original issue of the Series A
Security or a Shelf Registration Statement is not declared effective on or prior
to the 135th calendar day following the date of original issue of the Series A
Security (or, if a Shelf Registration Statement is required to be filed because
of the request by any Initial Purchaser, 30 days following the request by any
such Initial Purchaser that the Company file the Shelf
I-2
<PAGE>
Registration Statement) (each such event referred to in clauses (a) through (c)
above, a "Registration Default"), the interest rate borne by the Series A
Securities (except in the case of clause (c), in which case only the Series A
Securities which have not been exchanged in the Exchange Offer) shall be
increased by one-quarter of one percent per annum upon the occurrence of any
Registration Default, which rate (as increased as aforesaid) will increase by an
additional one quarter of one percent each 90-day period that such additional
interest continues to accrue under any such circumstance, with an aggregate
maximum increase in the interest rate equal to one percent (1%) per annum.
Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate;
provided that, to the extent interest at such increased interest rate has been
paid or duly provided for with respect to the Series A Security, interest at
such increased interest rate, if any, on this Series B Security shall accrue
from the most recent Interest Payment Date to which such interest on the Series
A Security has been paid or duly provided for; provided, however, that, if after
any such reduction in interest rate, a different event specified in clause (a),
(b) or (c) above occurs, the interest rate shall again be increased pursuant to
the foregoing provisions.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the February 15 or August 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the interest rate borne by the Series B Securities, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Security (or any
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or transfer of the Security, will be made at the office
or agency of the Company in The City of New York maintained for such purpose
(which initially will be the Corporate Trust Office of the Trustee), or at such
other office or agency as may be maintained for such purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register.
I-3
<PAGE>
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
PACKARD BIOSCIENCE COMPANY
[Seal] By:____________________________________
Title:_________________________________
Attest:
____________________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/8% Senior Subordinated Notes due 2007,
Series B referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________________
Authorized Signer
Dated:
I-4
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 1013 or Section 1015, as applicable, of the Indenture, check the Box:
/_/.
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1013 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$ ________________________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
I-5
<PAGE>
PACKARD BIOSCIENCE COMPANY
9 3/8% Senior Subordinated Note due 2007, Series B
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9 3/8% Senior Subordinated Notes due 2007, Series B
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of March 4, 1997, between the Company and The Bank of New
York, as trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance with
certain conditions set forth therein.
The Securities are subject to redemption at any time on or after
March 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning March 1 the years indicated below:
Redemption
Year Price
____ __________
2002...................................... 104.688%
2003...................................... 103.125%
2004...................................... 101.563%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
I-6
<PAGE>
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase, pursuant to Change of Control Offer and in accordance with the
procedures set forth in the Indenture.
In addition, at any time on or prior to March 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity Offerings
to redeem up to an aggregate of 30% of the aggregate principal amount of
Securities originally issued under the Indenture at a redemption price equal to
109.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$115,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior Indebtedness or invested in properties or other assets that replace
the properties and assets that were the subject of the Asset Sale or which will
be used in the businesses of the Company or its Subsidiaries existing on the
date of the Indenture or in businesses reasonably related thereto, exceeds a
specified amount the Company will be required to apply such proceeds to the
repayment of the Securities and certain Indebtedness ranking pari passu in right
of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and
I-7
<PAGE>
the modification of the rights and obligations of the Company and the Guarantors
and the rights of the Holders under the Indenture and the Securities and the
Guarantees at any time by the Company and the Trustee with the consent of the
Holders of a specified percentage in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantors with certain
provisions of the Indenture and the Securities and the Guarantees and certain
past Defaults under the Indenture and the Securities and the Guarantees and
their consequences. Any such consent or waiver by or on behalf of the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Security.
The Series B Securities are, to the extent and manner provided in
Article Thirteen of the Indenture, subordinated and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed, subject to the subordination
provisions of the Indenture.
If this Series B Security is in certificated form, then as provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Series B Security is registrable on the Security Register of
the Company, upon surrender of this Series B Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York or at such other office or agency of the Company as may be
maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or its attorney duly authorized in
writing, and thereupon one or more new Series B Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Series B Security is a U.S. Global Security, it is
exchangeable for a Series B Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be transferred to all
beneficial holders in exchange for their beneficial interests in the U.S. Global
Security if (x) the Depository notifies the Company that it is unwilling or
unable to continue as
I-8
<PAGE>
depository for the U.S. Global Security and a successor depositary is not
appointed by the Company within 90 days or (y) there shall have occurred and be
continuing an Event of Default and the Security Registrar has received a request
from the Depositary. Upon any such issuance, the Trustee is required to register
such certificated Series B Securities in the name of, and cause the same to be
delivered to, such Person or Persons (or the nominee of any thereof).
Series B Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series B Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
I-9
<PAGE>
FORM OF TRANSFEREE CERTIFICATE
I or we assign and transfer this Security to:
_____________________________________________
Please insert social security or other identifying number of assignee
_____________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Print or type name, address and zip code of assignee and irrevocably
appoint________________________________________________________________
[Agent], to transfer this Security on the books of the Company. The Agent may
substitute another to act for him.
Dated ____________________ Signed ________________________________
(Sign exactly as name appears on the other side of this Security)
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17 Ad-15]
I-10
<PAGE>
================================================================================
PACKARD BIOSCIENCE COMPANY and
THE SUBSIDIARY BORROWERS
FROM TIME TO TIME PARTIES HERETO
- --------------------------------------------------------------------------------
$115,000,000
CREDIT AGREEMENT
Dated as of March 4, 1997
- --------------------------------------------------------------------------------
BANCAMERICA SECURITIES, INC.
and
CIBC WOOD GUNDY SECURITIES CORP.,
AS CO-ARRANGERS
and
CO-SYNDICATION AGENTS
CANADIAN IMPERIAL BANK OF COMMERCE,
AS DOCUMENTATION AGENT
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 23
SECTION 2. AMOUNT AND TERMS OF TERM LOAN AND
REVOLVING CREDIT LOAN COMMITMENTS................... 23
2.1 Term Loan Commitments........................................... 23
2.2 Procedure for Term Loan Borrowing............................... 23
2.3 Repayment of Term Loans......................................... 24
2.4 Revolving Credit Commitments.................................... 24
2.5 Procedure for Revolving Credit Borrowing........................ 25
SECTION 3. LETTERS OF CREDIT.............................................. 25
3.1 L/C Commitment.................................................. 25
3.2 Procedure for Issuance of Letter of Credit...................... 26
3.3 Commissions, Fees and Other Charges............................. 26
3.4 L/C Participations.............................................. 27
3.5 Reimbursement Obligation of Packard............................. 28
3.6 Obligations Absolute............................................ 28
3.7 Letter of Credit Payments....................................... 28
3.8 Applications.................................................... 29
SECTION 4. AMOUNT AND TERMS OF FRONTED OFFSHORE REVOLVING CREDIT
LOANS................................................................ 29
4.1 Fronted Offshore Revolving Credit Subfacility................... 29
4.2 Procedure for Fronted Offshore Revolving Credit Loan Borrowings. 29
4.3 Fronted Offshore Revolving Credit Loans Fees, Commissions and
Other Charges................................................. 30
4.4 Participations.................................................. 30
4.5 Offshore Currency Spot Rate..................................... 31
4.6 Repayment of Fronted Offshore Revolving Credit Loans............ 32
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF
CREDIT............................................................... 32
5.1 Commitment Fees, etc. .......................................... 32
5.2 Termination or Reduction of Revolving Credit Commitments........ 32
5.3 Optional Prepayments............................................ 33
5.4 Mandatory Term Loan Prepayments................................. 33
5.5 Conversion and Continuation Options............................. 35
5.6 Minimum Amounts and Maximum Number of Eurodollar and Offshore
Currency Tranches............................................. 36
5.7 Interest Rates and Payment Dates................................ 36
5.8 Computation of Interest and Fees................................ 37
5.9 Inability to Determine Interest Rate............................ 37
5.10 Pro Rata Treatment and Payments................................ 38
5.11 Requirements of Law............................................ 39
5.12 Taxes.......................................................... 40
<PAGE>
Page
----
5.13 Indemnity...................................................... 42
5.14 Change of Lending Office....................................... 42
5.15 Subsidiary Borrowers........................................... 42
5.16 Replacement of Lenders under Certain Circumstances............. 43
SECTION 6. REPRESENTATIONS AND WARRANTIES................................. 43
6.1 Financial Condition............................................. 43
6.2 No Change....................................................... 44
6.3 Corporate Existence; Compliance with Law........................ 44
6.4 Corporate Power; Authorization; Enforceable Obligations......... 44
6.5 No Legal Bar.................................................... 44
6.6 No Material Litigation.......................................... 45
6.7 No Default...................................................... 45
6.8 Ownership of Property; Liens.................................... 45
6.9 Intellectual Property........................................... 45
6.10 Taxes.......................................................... 45
6.11 Federal Regulations............................................ 45
6.12 Labor Matters.................................................. 45
6.13 ERISA.......................................................... 46
6.14 Investment Company Act; Other Regulations...................... 46
6.15 Subsidiaries................................................... 46
6.16 Restrictions on Distributions.................................. 46
6.17 Use of Proceeds................................................ 46
6.18 Environmental Matters.......................................... 47
6.19 Accuracy of Information, etc................................... 47
6.20 Security Documents............................................. 48
6.21 Solvency....................................................... 48
6.22 Senior Indebtedness............................................ 48
6.23 Regulation H................................................... 48
6.24 Inactive Subsidiaries.......................................... 49
SECTION 7. CONDITIONS PRECEDENT........................................... 49
7.1 Conditions to Initial Extension of Credit....................... 49
7.2 Conditions to Each Extension of Credit.......................... 53
7.3 Each Subsidiary Borrower Credit Event........................... 53
SECTION 8. AFFIRMATIVE COVENANTS.......................................... 54
8.1 Financial Statements............................................ 54
8.2 Certificates; Other Information................................. 55
8.3 Payment of Obligations.......................................... 56
8.4 Conduct of Business and Maintenance of Existence, etc. ......... 57
8.5 Maintenance of Property; Insurance.............................. 57
8.6 Inspection of Property; Books and Records; Discussions.......... 57
8.7 Notices......................................................... 57
8.8 Environmental Laws.............................................. 58
8.9 Additional Collateral, etc...................................... 58
8.10 Employment Agreements.......................................... 59
- ii -
<PAGE>
Page
----
SECTION 9. NEGATIVE COVENANTS............................................. 59
9.1 Financial Condition Covenants................................... 60
9.2 Limitation on Indebtedness...................................... 61
9.3 Limitation on Liens............................................. 62
9.4 Limitation on Fundamental Changes............................... 63
9.5 Limitation on Sale of Assets.................................... 63
9.6 Limitation on Dividends......................................... 64
9.7 Limitation on Capital Expenditures.............................. 64
9.8 Limitation on Investments, Loans and Advances................... 65
9.9 Limitation on Payments and Modifications of Debt Instruments,
etc.......................................................... 66
9.10 Limitation on Transactions with Affiliates..................... 66
9.11 Limitation on Sales and Leasebacks............................. 66
9.12 Limitation on Changes in Fiscal Periods........................ 66
9.13 Limitation on Negative Pledge Clauses.......................... 66
9.14 Limitation on Restrictions on Subsidiary Distributions......... 66
9.15 Limitation on Lines of Business................................ 67
9.16 Limitation on Amendments to Recapitalization Documents......... 67
9.17 Inactive Subsidiaries.......................................... 67
.............................................................. 67
SECTION 10. EVENTS OF DEFAULT............................................. 67
SECTION 11. THE AGENTS.................................................... 71
11.1 Appointment.................................................... 71
11.2 Delegation of Duties........................................... 71
11.3 Exculpatory Provisions......................................... 71
11.4 Reliance by Administrative Agent............................... 72
11.5 Notice of Default.............................................. 72
11.6 Non-Reliance on Administrative Agent and Other Lenders......... 72
11.7 Indemnification................................................ 73
11.8 Agent in Its Individual Capacity............................... 73
11.9 Successor Administrative Agent................................. 74
11.10 Authorization to Release Liens................................ 74
11.11 Documentation Agent, Co-Syndication Agents and Co-Arrangers... 74
SECTION 12. GUARANTEE..................................................... 74
12.1 Guarantee...................................................... 74
12.2 No Subrogation, Contribution, Reimbursement or Indemnity....... 75
12.3 Amendments, etc. with respect to the Subsidiary Borrower
Obligations.................................................. 75
12.4 Guarantee Absolute and Unconditional........................... 76
12.5 Reinstatement.................................................. 76
12.6 Payments....................................................... 77
SECTION 13. MISCELLANEOUS................................................. 77
13.1 Amendments and Waivers......................................... 77
13.2 Notices........................................................ 77
13.3 No Waiver; Cumulative Remedies................................. 78
13.4 Survival of Representations and Warranties..................... 78
- iii -
<PAGE>
Page
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13.5 Payment of Expenses and Taxes.................................. 79
13.6 Successors and Assigns; Participations and Assignments......... 79
13.7 Adjustments; Set-off........................................... 81
13.8 Counterparts................................................... 82
13.9 Severability................................................... 82
13.10 Integration................................................... 82
13.11 GOVERNING LAW................................................. 82
13.12 Submission To Jurisdiction; Waivers........................... 82
13.13 Acknowledgements.............................................. 83
13.14 WAIVERS OF JURY TRIAL......................................... 83
13.15 Conversion of Currencies...................................... 83
13.16 Confidentiality............................................... 84
- iv -
<PAGE>
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
1.1C Offshore Currencies
6.4 Consents, Authorizations, Filings and Notices
6.9 Intellectual Property
6.15 Subsidiaries
6.16 Subsidiary Restrictions
6.18 Environmental Matters
6.20(a) UCC Filing Jurisdictions
6.20(b) Mortgage Filing Jurisdictions
6.24 Inactive Subsidiaries
9.2(j) Existing Indebtedness
9.3(f) Existing Liens
EXHIBITS:
A-1 Form of Term Loan Borrowing Notice
A-2 Form of Revolving Credit Loan Borrowing Notice
A-3 Form of Fronted Offshore Revolving Credit Loan Borrowing Notice
A-4 Form of Conversion/Continuation Notice
B Form of Borrowing Subsidiary Agreement
C Form of Borrowing Subsidiary Termination
D Form of Compliance Certificate
E Form of Fronting Lender Addendum
F Form of Guarantee and Collateral Agreement
G-1 Form of Mortgage (Illinois)
G-2 Form of Mortgage (Connecticut)
H Form of Prepayment Option Notice
I Form of Closing Certificate
J Form of Legal Opinion of Day, Berry & Howard
K Form of Legal Opinion of Rudnick & Wolfe
L Form of Legal Opinion of Amster, Rothstein & Ebenstein
M Form of Legal Opinion of Counsel to Subsidiary Borrowers
N Form of Assignment and Assumption
O-1 Form of Term Loan Note
O-2 Form of Revolving Credit Loan Note
O-3 Form of Fronted Offshore Revolving Credit Loan Note
P Form of Subordination Language for the Management Notes
Q Form of Subordinated Intercompany Note
- v -
<PAGE>
CREDIT AGREEMENT, dated as of March 4, 1997, among PACKARD
BIOSCIENCE COMPANY, a Delaware corporation ("Packard"), the Subsidiary Borrowers
(as hereinafter defined) from time to time parties to this Agreement, the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), CANADIAN IMPERIAL BANK OF COMMERCE, a
bank organized under the laws of Canada, as documentation agent (in such
capacity, the "Documentation Agent"), BANCAMERICA SECURITIES, INC. and CIBC WOOD
GUNDY SECURITIES CORP., each as a co-arranger and a co-syndication Agent (in
such capacities, the "Co-Arrangers" and the "Co-Syndication Agents",
respectively), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, as Administrative Agent.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acquired Indebtedness": as defined in Section 9.2(h).
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": BofA, together with its affiliates, as the
administrative agent for the Lenders under this Agreement and the other
Loan Documents, together with any of its successors.
"Administrative Agent's Payment Office": the address for payments
set forth in Section 13.2 or such other address as the Administrative
Agent may from time to time specify in accordance with Section 13.2.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 5% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Administrative Agent, the
Co-Syndication Agents, the Co-Arrangers and the Documentation Agent.
"Agent-Related Persons": BofA and any successor agent pursuant to
Section 11.9, together with their respective Affiliates (including, in the
case of BofA, BancAmerica Securities, Inc., as Co-Arranger and
Co-Syndication Agent), and the officers, directors, employees, agents,
advisors and attorneys-in-fact of such Persons and Affiliates.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Agreement Currency": as defined in Section 13.15(b).
<PAGE>
2
"Applicable Creditor": as defined in Section 13.15(b).
"Applicable Margin": for each Type of Loan (other than Fronted
Offshore Revolving Credit Loans), the rate per annum set forth under the
relevant column heading below:
Base Rate Loans Eurodollar Loans
--------------- ----------------
Revolving Credit Loans 1-3/8% 2-3/8%
Term Loans 1-3/4% 2-3/4%
; provided, that on and after the first Adjustment Date occurring after
the completion of four full fiscal quarters of Packard after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans will be
determined pursuant to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Asset Sale": any Disposition of Property (including, without
limitation, any issuance or sale of Capital Stock of any Subsidiary),
other than (a) any Disposition of Property permitted by clause (a), (b),
(c), (d), (e) or (f) of Section 9.5, (b) any issuance or sale of Capital
Stock of Packard and (c) any Disposition of Property that, together with
any related Dispositions of Property, yields aggregate Net Cash Proceeds
of less than $25,000.
"Assignee": as defined in Section 13.6(c).
"Assignor": as defined in Section 13.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment at such time over (b) such Lender's
Utilized Commitment at such time.
"Banking Day": (a) with respect to any borrowings, disbursements and
payments in respect of and calculations and interest rates pertaining to
Base Rate Loans, any Business Day, (b) with respect to any borrowings,
disbursements and payments in respect of and calculations, interest rates
and Interest Periods pertaining to Eurodollar Loans, any Business Day
which is also a day on which dealings are carried on in the London
interbank market and (c) with respect to any borrowings, disbursements and
payments in and calculations, interest rates and Interest Periods
pertaining to any Fronted Offshore Revolving Credit Loan, any Business Day
which is also a day on which commercial banks are open for business in,
and on which dealings in the relevant Fronted Offshore Currency are
carried on in, the location of the relevant Fronting Lender's Payment
Office. Any reference to "Banking Day" herein, to the extent not
applicable to the matters described above, shall be deemed to be a
reference to "Business Day".
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the greater of (a) the
Reference Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason,
<PAGE>
3
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Base Rate
shall be determined without regard to clause (b) of the first sentence of
this definition until the circumstances giving rise to such inability no
longer exist. Any change in the Base Rate due to a change in the Reference
Rate or the Federal Funds Effective Rate shall be effective on the
effective day of such change in the Reference Rate or the Federal Funds
Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BofA": as applicable, Bank of America National Trust and Savings
Association, Bank of America Illinois and their respective subsidiaries.
"Borrowers": the collective reference to Packard and the Subsidiary
Borrowers.
"Borrowing Date": any Banking Day specified by a Borrower in a
notice pursuant to Section 2.2, 2.5, 3.2 or 4.2 as a date on which such
Borrower requests the relevant Lenders to make Loans hereunder.
"Borrowing Notice": the written notice to be given by Packard to the
Administrative Agent pursuant to Section 2.2, 2.5 or 4.2, substantially in
the form of Exhibit A-1 with respect to Term Loans, Exhibit A-2 with
respect to Revolving Credit Loans and Exhibit A-3 with respect to Fronted
Offshore Revolving Credit Loans.
"Borrowing Subsidiary Agreement": a Borrowing Subsidiary Agreement,
substantially in the form of Exhibit B.
"Borrowing Subsidiary Termination": a Borrowing Subsidiary
Termination, substantially in the form of Exhibit C.
"Business": as defined in Section 6.18(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City, San Francisco or Chicago are
authorized or required by law to close.
"Calculation Date": two Banking Days prior to the last Banking Day
of each March, June, September and December; provided that the second
Banking Day preceding each Borrowing Date with respect to any Fronted
Offshore Revolving Credit Loans in an Offshore Currency shall also be a
"Calculation Date" with respect to such Offshore Currency; provided
further that the second Banking Day preceding each date on which any
Fronted Offshore Revolving Credit Loan in an Offshore Currency is extended
or rolled-over shall also be a "Calculation Date" with respect to such
Offshore Currency.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to
<PAGE>
4
a capital lease) of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and improvements during such
period) which should be capitalized under GAAP on a consolidated balance
sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America
or any state thereof having combined capital and surplus of not less than
$500,000,000; and (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Ratings Services or P-1 by Moody's Investors Service,
Inc., or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings
of commercial paper issuers generally, and maturing within six months from
the date of acquisition.
"CII Acquisition": CII Acquisition LLC, a Delaware limited liability
company, a Wholly Owned Subsidiary of a Control Investment Affiliate of
Stonington.
"Closing Date": the date on which the conditions precedent set forth
in Section 7.1 shall have been satisfied, which date is March 4, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Loan Commitment
and the Revolving Credit Commitment of such Lender; collectively as to all
Lenders, the "Commitments".
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on and
after the first Adjustment Date occurring after the completion of four
full fiscal quarters of Packard after the Closing Date, the Commitment Fee
Rate will be determined pursuant to the Pricing Grid.
<PAGE>
5
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with Packard within the
meaning of Section 4001 of ERISA or is part of a group which includes
Packard and which is treated as a single employer under Section 414 of the
Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit D.
"Confidential Information Memorandum": the Confidential Information
Memorandum of Packard dated January 1997 and furnished to the Lenders.
"Consolidated Current Assets": at a particular date, all amounts
(other than cash and Cash Equivalents) which would, in conformity with
GAAP, be set forth opposite the caption "total current assets" (or any
like caption) on a consolidated balance sheet of Packard and its
Subsidiaries at such date.
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be set forth opposite the
caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of Packard and its Subsidiaries at such date,
but excluding (a) the current portion of any Funded Debt of Packard and
its Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Credit Loans to the extent otherwise
included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) total income tax expense (including withholding taxes), (b)
interest expense, amortization or writeoff of debt discount and debt
issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary
expenses (including expenses incurred in connection with the
Recapitalization) or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, losses on sales of assets outside of the ordinary
course of business) and (f) any other non-cash charges (including, without
limitation, minority interest expense), and minus, to the extent included
in the statement of such Consolidated Net Income for such period, the sum
of (a) interest income, (b) any extraordinary income or gains (including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income for such period, gains on the sales of assets
outside of the ordinary course of business) and (c) any other non-cash
income, all as determined on a consolidated basis.
"Consolidated Fixed Charge Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b) net
current provision for cash income taxes (less any tax benefits recorded
through shareholders' equity which reduce such cash income taxes payable)
made by Packard or any of its Subsidiaries on a consolidated basis in
respect of such period, (c) scheduled payments made during such period on
account of principal of
<PAGE>
6
Indebtedness of Packard or any of its Subsidiaries (including the Term
Loans) and (d) the aggregate amount actually paid by Packard and its
Subsidiaries in cash during such period on account of Capital Expenditures
(excluding the principal amount of Indebtedness incurred in connection
with such expenditures).
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of
Packard and its Subsidiaries for such period with respect to all
outstanding Indebtedness of Packard and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements to the extent such
net costs are allocable to such period in accordance with GAAP).
"Consolidated Leverage Ratio": as at the last day of any period, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters ending on such
day.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of Packard and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such calculation (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of Packard or is merged
into or consolidated with Packard or any of its Subsidiaries, (b) the
income (or deficit) of any Person (other than a Subsidiary of Packard) in
which Packard or any of its Subsidiaries has an ownership interest, except
to the extent that any such income is actually received by Packard or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of Packard to the extent that the
declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law
(other than satisfaction of corporate formalities within the control of
the relevant Subsidiary) applicable to such Subsidiary (other than, in the
case of Packard Japan KK, for any period ending on or prior to December
31, 1997, such amounts as can be made as a subordinated loan to Packard).
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of Packard and its Subsidiaries at such date
(other than the principal amount of the Japan Debt to the extent Packard
Japan KK has an equivalent amount of cash on hand on such date),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Continuing Directors": the directors of Packard on the Closing
Date, after giving effect to the Recapitalization and the other
transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of
directors of Packard is recommended by at least 66-2/3% of the then
Continuing Directors or such other
<PAGE>
7
director receives the vote of Stonington or any of its Control Investment
Affiliates in his or her election by the shareholders of Packard.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Investment Affiliate": as to any Person, any other Person
which (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such
Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by
contract or otherwise.
"Conversion/Continuation Notice": the written notice of the
conversion or continuation of a Loan to be given by Packard to the
Administrative Agent pursuant to Section 5.5, substantially in the form of
Exhibit A-4.
"Cost of Funds": with respect to any Offshore Currency, the rate of
interest determined by the Administrative Agent or the relevant Fronting
Lender, as the case may be, in respect thereof (which determination shall
be conclusive absent manifest error) to be the cost to the Administrative
Agent or such Fronting Lender, as the case may be, of obtaining funds
denominated in such Offshore Currency for the period or, if applicable,
the relevant Interest Period during which any relevant amount in such
Offshore Currency is outstanding; provided that, "Cost of Funds", with
respect to any eurocurrency, shall be the rate of interest per annum
(rounded upwards to the nearest 1/32 of 1%) determined by the
Administrative Agent or such Fronting Lender, as the case may be, as the
rate at which deposits in the applicable Offshore Currency in the
approximate amount of relevant Fronted Offshore Revolving Credit Loan for
such Interest Period would be offered by its applicable lending office to
major banks in the London interbank market at their request at
approximately 11:00 A.M. (London time) two Banking Days prior to the
commencement of such Interest Period.
"Default": any of the events specified in Section 10, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollar Equivalent": at any time as to any amount denominated in an
Offshore Currency, the equivalent amount in Dollars as determined by the
Administrative Agent at such time on the basis of the Spot Rate for the
purchase of Dollars with such Offshore Currency on the most recent
Calculation Date for such Offshore Currency.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Domestic Subsidiary": any Subsidiary of Packard organized under the
laws of any jurisdiction within the United States of America.
<PAGE>
8
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction, rounded upwards to the nearest 1/100 of
1%) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
(rounded upwards to the nearest 1/32 of 1%) equal to the rate at which
BofA is offered Dollar deposits at or about 8:00 A.M., San Francisco time,
two Banking Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount
of its Eurodollar Loans to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
The Eurodollar Rate shall be adjusted automatically as to all Eurodollar
Loans then outstanding as of the effective date of any change in the
Eurocurrency Reserve Requirements.
"Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 10,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excess Amount": as defined in Section 5.4(d).
<PAGE>
9
"Excess Cash Flow": for any period, the excess, if any, of (a) the
sum, without duplication, of (i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all non-cash charges deducted in
arriving at such Consolidated Net Income, (iii) decreases in Consolidated
Working Capital for such period, and (iv) an amount equal to the aggregate
net non-cash loss on the Disposition of Property by Packard and its
Subsidiaries during such period (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income over (b) the sum, without duplication, of (i) an
amount equal to the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by
Packard and its Subsidiaries in cash during such period on account of
Capital Expenditures, Technology Acquisitions, investments made pursuant
to Section 9.8(g) and the Japan Acquisition (in each case, with respect to
this clause (ii), excluding the principal amount of any Indebtedness
incurred in connection therewith and any such payments financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount
of all prepayments of Revolving Credit Loans during such period to the
extent accompanying permanent optional reductions of the Revolving Credit
Commitments and all optional prepayments of the Term Loans during such
period, (iv) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Term Loans) of
Packard and its Subsidiaries made during such period (other than (x) in
respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder and (y) any
amounts paid in respect of Management Notes), (v) increases in
Consolidated Working Capital for such period, and (vi) an amount equal to
the aggregate net non-cash gain on the Disposition of Property by Packard
and its Subsidiaries during such period (other than sales of inventory in
the ordinary course of business), to the extent included in arriving at
such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section 5.4(d).
"Excess Cash Flow Percentage": as of the last day of any fiscal year
of Packard, the percentage set forth below opposite the Consolidated
Leverage Ratio as of such day:
Consolidated Leverage Ratio Excess Cash Flow Percentage
--------------------------- ---------------------------
Greater than or equal to 4.0:1.0 50%
Less than 4.0:1.0 0%
"Exchange Act": the Securities Exchange Act of 1934, as amended.
"Facility": each of (a) the Term Loan Commitments and the Term Loans
made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
Commitments and the Revolving Extensions of Credit made thereunder (the
"Revolving Credit Facility").
"Fee Payment Date": the last Banking Day of each March, June,
September and December.
"Federal Funds Effective Rate": for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)", or, if such rate is not so
published for any such preceding Business Day, the arithmetic mean as
determined by the
<PAGE>
10
Administrative Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 A.M. (New York City time) on that day
by each of three leading brokers of Federal funds transactions in New York
City selected by the Administrative Agent.
"Foreign Currency Protection Agreements": as to any Person, all
foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements entered into in the ordinary course of business
(and not for speculative purposes) designed to protect such Person against
fluctuations in currency values.
"Foreign Subsidiary": any Subsidiary of Packard that is not a
Domestic Subsidiary.
"Fronted Offshore Currency": with respect to each Fronting Lender,
the Offshore Currency or Currencies specified in the applicable Fronting
Lender Addendum.
"Fronted Offshore Currency Sublimit": with respect to each Fronting
Lender and any Fronted Offshore Currency, the amount specified by such
Fronting Lender for such Fronted Offshore Currency in the applicable
Fronting Lender Addendum.
"Fronted Offshore Revolving Credit Commitment": as to any Fronting
Lender, the obligation of such Fronting Lender, if any, to make Fronted
Offshore Revolving Credit Loans to the relevant Subsidiary Borrower
hereunder in a principal amount not to exceed the amount set forth in the
relevant Fronting Lender Addendum.
"Fronted Offshore Revolving Credit Loan": as defined in Section 4.1.
"Fronted Offshore Revolving Credit Loan Sublimit": at any time, as
to all Fronted Offshore Revolving Credit Loans, the lesser of (a)
$35,000,000 and (b) the aggregate Revolving Credit Commitments then in
effect.
"Fronted Offshore Revolving Credit Subfacility": the lending
facility described in Section 4.1.
"Fronted Revolving Credit Loan Participants": with respect to each
Fronted Offshore Revolving Credit Loan, the collective reference to all
Revolving Credit Lenders.
"Fronting Lender": with respect to a particular Fronted Offshore
Currency, each Revolving Credit Lender (or an Affiliate thereof) which
executes and delivers a Fronting Lender Addendum with respect to such
Fronted Offshore Currency, provided that, unless the Administrative Agent
otherwise agrees, there shall be no more than one Fronting Lender for any
Fronted Offshore Currency.
"Fronting Lender Addendum": a Fronting Lender Addendum,
substantially in the form of Exhibit D.
"Fronting Lender's Payment Office": with respect to any Fronting
Lender, in the case of payments in a Fronted Offshore Currency, such
address as such Fronting Lender may from time to time specify for such
purpose pursuant to the applicable Fronting Lender Addendum.
<PAGE>
11
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all current maturities and
current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation and,
in the case of Packard, Indebtedness in respect of the Loans.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the Securities and Exchange Commission, or in such
other statements by such other entity as may be in general use by
significant segments of the United States accounting profession, which are
applicable to the circumstances of Packard as of the date of
determination, except that for purposes of Section 9 (including the
accounting terms used therein), GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements of Packard in
respect of the fiscal year ended December 31, 1995 delivered pursuant to
Section 6.1(b). In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then Packard and the Administrative Agent agree to enter into negotiations
in order to amend such provisions of this Agreement so as to equitably
reflect such Accounting Changes with the desired result that the criteria
for evaluating Packard's financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. Until
such time as such an amendment shall have been executed and delivered by
Packard, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required
or permitted by the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Packard and each Subsidiary
Guarantor, substantially in the form of Exhibit F, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary
<PAGE>
12
obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee Obligation is
made and (b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation shall
be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by Packard in good faith.
"Hedging Agreement": any Foreign Currency Protection Agreement or
Interest Rate Protection Agreement.
"Inactive Subsidiary": each Domestic Subsidiary listed as an
Inactive Subsidiary on Schedule 6.24, which Domestic Subsidiaries (a)
individually and in the aggregate have no material net assets and (b) do
not engage in any operating activity; collectively, "Inactive
Subsidiaries".
"Incur": as defined in Section 9.2; and the term "Incurrence" shall
have a correlative meaning.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other
than (i) current trade payables incurred in the ordinary course of such
Person's business and (ii) contingent and other similar payment
arrangements entered into in the ordinary course of business relating to
licensing or other acquisitions of technology), (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations
of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party under acceptance, letter of credit or
similar facilities, (g) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
Capital Stock (other than common stock) of such Person, (h) all Guarantee
Obligations of such Person in respect of obligations of the kind referred
to in clauses (a) through (g) above, (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise,
to be secured by) any Lien on
<PAGE>
13
property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation and (j) for the purposes of
Section 10(e) only, all obligations of such Person in respect of Hedging
Agreements.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in Section 6.9.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
Banking Day in each of March, June, September and December to occur while
such Loan is outstanding, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period, (c)
as to any Eurodollar Loan having an Interest Period longer than three
months, each day which is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Fronted Offshore Revolving Credit Loan, the date
or dates specified in the applicable Fronting Lender Addendum.
"Interest Period": (a) as to any Eurodollar Loan, (i) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months or (if available to all Lenders under the relevant Facility) nine
or twelve months thereafter, as selected by Packard in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months or (if available to all Lenders under
the relevant Facility) nine or twelve months thereafter, as selected by
Packard by irrevocable notice to the Administrative Agent not less than
three Banking Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that
is not a Banking Day, such Interest Period shall be extended to the
next succeeding Banking Day unless the result of such extension
would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately
preceding Banking Day;
(2) any Interest Period for Eurodollar Loans under the
applicable Facility that would otherwise extend beyond the Revolving
Credit Termination Date or beyond the date final payment is due on
the Term Loans, as the case may be, shall end on the Revolving
Credit Termination Date or such due date, as applicable;
(3) any Interest Period that begins on the last Banking Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Banking Day of a calendar month; and
<PAGE>
14
(4) Packard shall select Interest Periods so as not to require
a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan; and
(b) as to any Fronted Offshore Revolving Credit Loan, the interest
periods (if any) specified in the applicable Fronting Lender Addendum.
"Interest Rate Protection Agreements": as to any Person, all
interest rate swaps, caps or collar agreements or similar arrangements
entered into by such Person in the ordinary course of business (and not
for speculative purposes) providing for protection against fluctuations in
interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Issuance Date": any Banking Day specified in a notice pursuant to
Section 3.4 as a date on which the Issuing Lender is requested to issue a
Letter of Credit hereunder.
"Issuing Lender": BofA, in its capacity as issuer of any Letter of
Credit.
"Japan Acquisition": the repurchase by Packard Japan KK, a
Subsidiary of Packard, of the outstanding 40% minority interest in its
Capital Stock from the Person holding such Capital Stock for aggregate
consideration of approximately $7,500,000 (subject to currency
fluctuations).
"Japan Debt": the note, in a principal amount not to exceed
$7,500,000 (subject to currency fluctuations), issued by Packard Japan KK
as payment in part for the Japan Acquisition.
"Judgment Currency": as defined in Section 13.15(b).
"L/C Commitment": at any time, the lesser of (a) $11,000,000 and (b)
the Revolving Credit Commitments then in effect.
"L/C Fee Payment Date": the last Banking Day of each March, June,
September and December and the last day of the Revolving Credit Commitment
Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"Lender": as defined in the preamble to this Agreement, provided
that, (a) to the extent applicable (including, without limitation, for
purposes of Sections 5.11, 5.12, 5.14, 7.1, 7.2 and 7.3), all Fronting
Lenders and the Issuing Lender shall be deemed to be "Lenders" and (b)
unless the context otherwise requires, each Affiliate of a Lender that has
entered into a Hedging Agreement with any Borrower shall be deemed to be a
"Lender" for the purposes of Section 12.
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15
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"Loan": any loan made by any Lender (including any Fronting Lender)
pursuant to this Agreement.
"Loan Documents": this Agreement, the Applications, the Security
Documents, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary
Termination, each Fronting Lender Addendum and the Notes.
"Loan Parties": Packard, each Subsidiary Borrower and each other
Subsidiary of Packard which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans or the Total Revolving Extensions of Credit, as the case may
be, outstanding under such Facility (or, in the case of the Revolving
Credit Facility, prior to any termination of the Revolving Credit
Commitments, the holders of more than 50% of the aggregate Revolving
Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Management Notes": the subordinated notes issued by Packard to
employees, former employees, directors or former directors of Packard or
any of its Subsidiaries, in consideration for the repurchase of shares of,
or options to purchase shares of, common stock of Packard pursuant to the
terms of the agreements or plans approved by the Board of Directors of
Packard which notes (a) have no scheduled amortization or scheduled
maturities earlier than March 31, 2004 and (b) include subordination
provisions substantially in the form set forth on Exhibit P.
"Management Note Payment": as defined in Section 9.9(b).
"Management Stock Payments": as defined in Section 9.6.
"Management Stockholders": the collective reference to (a) Emery G.
Olcott, Richard T. McKernan, George Serrano, Orren K. Tench, Staf van
Cauter, Michael A. Zebarth, Manfred Boesel, Benjamin Campagnuolo, Michael
Catalano, Michael Charland, Eugene Della Vecchia, Kevin Kuhn, Daniel
Meert, Arthur Nacht and Charles Wherlock, (b) any other officer of Packard
or any of its Subsidiaries and (c) their respective estates and family
members and any trusts established for the benefit of any of the
foregoing.
"Material Adverse Effect": a material adverse effect on (a) the
Recapitalization, (b) the business, assets, property, condition (financial
or otherwise) or prospects of Packard and its
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16
Subsidiaries taken as a whole or (c) the validity or enforceability of
this Agreement or any of the other Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Mortgaged Properties": the real properties listed on Schedule 1.1B,
as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent
for the benefit of the Lenders, substantially in the form of Exhibit G-1
or Exhibit G-2, as applicable (with such changes thereto as shall be
advisable under the law of the jurisdiction in which such mortgage or deed
of trust is to be recorded), as the same may be amended, supplemented or
otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance
or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses reasonably expected to be incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 5.12(a).
"Non-Facility Loans Dollar Equivalent": an amount, determined in
good faith by Packard on each date on which a Borrowing Notice or a
Conversion/Continuation Notice is delivered with respect to any Revolving
Credit Loan or Fronted Offshore Revolving Credit Loan, equal to the Dollar
equivalent of the aggregate then outstanding Non-Facility Offshore
Currency Loans (determined, in the case of any Borrowing Notice, after
giving effect to any repayment thereof on the relevant Borrowing Date) and
set forth in such Borrowing Notice or Conversion/Continuation Notice, as
the case may be, based on the exchange rate for such currency published in
The Wall Street Journal under the caption "World Value of the Dollar"
<PAGE>
17
on the Business Day immediately preceding the day that the relevant
Borrowing Notice or Conversion/Continuation Notice, as the case may be, is
given. The Non-Facility Loans Dollar Equivalent set forth in any notice
referred to above shall remain in effect until the next such notice is
delivered pursuant to this Agreement.
"Non-Facility Offshore Currency Loans": as defined in Section
9.2(e).
"Non-U.S. Lender": as defined in Section 5.12(b).
"Notes": the collective reference to any promissory note of the
relevant Borrower evidencing Loans made to such Borrower.
"Offshore Currency": a currency that is listed on Schedule 1.1C
hereto or such other currency (other than Dollars) that is freely
tradeable or exchangeable into Dollars and has been approved as an
"Offshore Currency" for the purpose of this Agreement by the
Administrative Agent and the relevant Fronting Lender.
"Offshore Currency Equivalent": at any time as to any amount
denominated in Dollars, the equivalent amount in the relevant Offshore
Currency or Currencies as determined by the Administrative Agent at such
time on the basis of the Spot Rate for the purchase of such Offshore
Currency or Currencies with Dollars on the date of determination thereof.
"Offshore Tranche": the collective reference to Fronted Offshore
Revolving Credit Loans of the same currency the then current Interest
Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been made
on the same day).
"Packard": as defined in the preamble to this Agreement.
"Participant": as defined in Section 13.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which Packard or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Principal Business": each of (a) the business of supplying
bioanalytical instruments, and related biochemical supplies and services,
to the drug discovery and molecular biology markets and (b) the business
of manufacturing analytical instruments and systems used to detect,
identify and quantify radioactive materials for the nuclear industry and
related markets.
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18
"Pro Forma Balance Sheet": as defined in Section 6.1(a).
"Projections": as defined in Section 8.2(c).
"Properties": as defined in Section 6.18(a).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Qualified Foreign Subsidiary": (a) any Foreign Subsidiary listed on
Schedule 6.15 and (b) any other Foreign Subsidiary the designation of
which as a Subsidiary Borrower is accompanied by any amendments,
supplements or other modifications to the Security Documents (including,
without limitation, the Mortgages) deemed necessary or appropriate by the
Administrative Agent in connection with such designation.
"Recapitalization": the collective reference to the transactions
described in Section 7.1(b).
"Recapitalization and Stock Purchase Agreement": the
Recapitalization and Stock Purchase Agreement dated as of November 26,
1996 by and among Packard, CII Acquisition and the Management Stockholders
(as defined therein).
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of Packard or any of its Subsidiaries.
"Reference Rate": the rate of interest in effect for such day as
publicly announced from time to time by BofA in San Francisco, California,
as its "reference rate". The "reference rate" is a rate set by BofA based
upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate. Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of Packard to reimburse
the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters
of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Packard or any of its
Subsidiaries in connection therewith which are not applied to prepay the
Term Loans pursuant to Section 5.4(c) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which Packard has delivered a Reinvestment Notice.
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19
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing
and that Packard (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its business
(including to repair or restore any asset of Packard or any of its
Subsidiaries following casualty or condemnation).
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in Packard's business (including to repair or restore any
asset of Packard or any of its Subsidiaries following casualty or
condemnation).
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring nine months after such
Reinvestment Event and (b) the date on which Packard shall have determined
not to, or shall have otherwise ceased to, acquire assets useful in
Packard's business (including to repair or restore any asset of Packard or
any of its Subsidiaries following casualty or condemnation) with all or
any portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty-day notice period
has been waived by the PBGC under PBGC Reg. ss. 4043 (or any successor).
"Required Lenders": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the aggregate
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, president or
chief financial officer of Packard, but in any event, with respect to
financial matters, the chief financial officer of Packard or any other
officer of Packard responsible for financial matters who is designated as
a "Responsible Officer" by the chief financial officer of Packard in a
written notice to the Administrative Agent.
"Restricted Payments": as defined in Section 9.6.
<PAGE>
20
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans, participate in
Letters of Credit and participate in Fronted Offshore Revolving Credit
Loans, in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Credit Commitment" opposite
such Lender's name on Schedule 1.1A, as the same may be changed from time
to time pursuant to the terms hereof. The original aggregate amount of the
Revolving Credit Commitments is $75,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the aggregate Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of the
Revolving Extensions of Credit of such Lender then outstanding constitutes
of the Total Revolving Extensions of Credit then outstanding).
"Revolving Credit Termination Date": the earliest of (a) the
Scheduled Revolving Credit Termination Date and (b) the date on which the
Revolving Credit Commitments are terminated pursuant to Section 10.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of (i) the L/C
Obligations and (ii) the Dollar Equivalent of the aggregate outstanding
principal amount of Fronted Offshore Revolving Credit Loans.
"Scheduled Revolving Credit Termination Date": March 31, 2002 or, if
such day is not a Banking Day, the next preceding Banking Day.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present
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21
fair saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such
Person will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, and (d) such Person will be
able to pay its debts as they mature. For purposes of this definition, (i)
"debt" means liability on a "claim", and (ii) "claim" means any (x) right
to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" as defined in
the Subordinated Note Indenture.
"Spot Rate": as to any Fronted Offshore Currency, the rate quoted by
the relevant Fronting Lender as the spot rate for the purchase by such
Fronting Lender of Dollars with such Fronted Offshore Currency or the
purchase by such Fronting Lender of such Fronted Offshore Currency with
Dollars, as the case may be, at the time specified in such Fronting
Lender's Fronting Lender Addendum and on such date as of which the foreign
exchange computation is made for delivery two Banking Days later.
"Stockholders Agreement": the Stockholders Agreement dated the
Closing Date among Packard, Stonington Capital Appreciation 1994 Fund,
L.P., the Management Stockholders, Merrill Lynch KECALP L.P. 1994, KECALP
Inc. and certain other stockholders of Packard.
"Stonington": Stonington Partners Inc., a Delaware corporation.
"Subordinated Note Indenture": the Indenture entered into by Packard
and The Bank of New York, as trustee, in connection with the issuance of
the Subordinated Notes, together with all instruments and other agreements
entered into by Packard or any of its Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with Section 9.9.
"Subordinated Notes": the senior subordinated notes due 2007 of
Packard issued on the Closing Date.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of Packard.
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22
"Subsidiary Borrower": at any time, any Qualified Foreign Subsidiary
of Packard designated as a Subsidiary Borrower by Packard pursuant to
Section 5.15 that has not ceased to be a Subsidiary Borrower pursuant to
such Section or Section 12.
"Subsidiary Borrower Obligations": the unpaid principal of and
interest on (including, without limitation, interest accruing after the
maturity of the Loans and Reimbursement Obligations and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the relevant
Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of any Subsidiary Borrower to the Administrative Agent or to
any Lender (or, in the case of any Hedging Agreements, any affiliate of
any Lender (including any Fronting Lender)), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedging
Agreement entered into with any Lender or any affiliate of any Lender or
any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by any
Subsidiary Borrower pursuant hereto) or otherwise.
"Subsidiary Guarantor": each Subsidiary of Packard other than any
Foreign Subsidiary and any Inactive Subsidiary.
"Subsidiary Restrictions": as defined in Section 9.14.
"Technology Acquisition": to the extent not included in Capital
Expenditures, any expenditure by Packard or any of its Subsidiaries in
connection with the acquisition of licenses, trademarks, patents or
technology.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to Packard hereunder in a principal
amount not to exceed the amount set forth under the heading "Term Loan
Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Term Loan Commitments is $40,000,000.
"Term Loan Lender": each Lender which has a Term Loan Commitment or
which has made a Term Loan.
"Term Loan Percentage": as to any Lender at any time, the percentage
which such Lender's Term Loan Commitment then constitutes of the aggregate
Term Loan Commitments (or, at any time after the Closing Date, the
percentage which the aggregate principal amount of such Lender's Term
Loans then outstanding constitutes of the aggregate principal amount of
the Term Loans then outstanding).
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
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23
"Total Utilized Commitments": at any time, the aggregate amount of
the Utilized Commitments of the Revolving Credit Lenders at such time.
"Transferee": as defined in Section 13.16.
"Type": as to any Loan, its nature as a Base Rate Loan, a Eurodollar
Loan or a Fronted Offshore Revolving Credit Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Utilized Commitment": as to any Revolving Credit Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Revolving Credit Percentage of (i) the L/C Obligations, (ii)
the Dollar Equivalent of the aggregate outstanding principal amount of
Fronted Offshore Revolving Credit Loans and (iii) the Non-Facility Loans
Dollar Equivalent.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of Packard.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Packard and its Subsidiaries not defined in Section
1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN AND
REVOLVING CREDIT LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make a term loan denominated
in Dollars (a "Term Loan") to Packard on the Closing Date in an amount not to
exceed the amount of the Term Loan Commitment
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24
of such Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by Packard and notified to the Administrative Agent in
accordance with Sections 2.2 and 5.5.
2.2 Procedure for Term Loan Borrowing. Packard shall give the
Administrative Agent irrevocable telephonic notice (promptly confirmed in
writing in a Borrowing Notice), which notice must be received by the
Administrative Agent prior to 8:30 A.M., San Francisco time, one Banking Day
prior to the anticipated Closing Date, requesting that the Term Loan Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. The Term Loans made on the Closing Date shall initially be Base Rate
Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Loan Lender thereof. Not later than 10:00 A.M., San Francisco
time, on the Closing Date, each Term Loan Lender shall make available to the
Administrative Agent at the Administrative Agent's Payment Office an amount in
Dollars and in immediately available funds equal to the Term Loan to be made by
such Lender. The Administrative Agent shall credit the account of Packard on the
books of such office of the Administrative Agent with the aggregate of the
amounts made available to the Administrative Agent by the Term Loan Lenders in
immediately available funds (or, in the event that Packard specifies in the
relevant Borrowing Notice a different account to which such amounts should be
transferred, the Administrative Agent shall transfer, by wire transfer, to such
account the aggregate amount made available to the Administrative Agent by the
Term Loan Lenders in immediately available funds).
2.3 Repayment of Term Loans. The Term Loan of each Term Loan Lender
shall mature in 23 consecutive quarterly installments, commencing on September
30, 1997, each of which shall be in an amount equal to such Lender's Term Loan
Percentage multiplied by the amount set forth below opposite such installment:
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25
Installment Principal Amount
----------- ----------------
September 30, 1997 $100,000
December 31, 1997 100,000
March 31, 1998 100,000
June 30, 1998 100,000
September 30, 1998 100,000
December 31, 1998 100,000
March 31, 1999 100,000
June 30, 1999 100,000
September 30, 1999 100,000
December 31, 1999 100,000
March 31, 2000 100,000
June 30, 2000 100,000
September 30, 2000 100,000
December 31, 2000 100,000
March 31, 2001 100,000
June 30, 2001 100,000
September 30, 2001 100,000
December 31, 2001 100,000
March 31, 2002 100,000
June 30, 2002 100,000
September 30, 2002 9,500,000
December 31, 2002 9,500,000
March 31, 2003 19,000,000
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans denominated in Dollars (each, a "Revolving Credit Loan")
to Packard from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding which, when added to such
Lender's Revolving Credit Percentage of the sum of (i) the L/C Obligations then
outstanding, (ii) the Dollar Equivalent of the then outstanding principal amount
of Fronted Offshore Revolving Credit Loans (after giving effect to the use of
proceeds of such Revolving Credit Loans) and (iii) the Non-Facility Loans Dollar
Equivalent, does not exceed the amount of such Revolving Credit Lender's
Revolving Credit Commitment. During the Revolving Credit Commitment Period,
Packard may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Credit Loans may from time
to time be Eurodollar Loans or Base Rate Loans, as determined by Packard and
notified to the Administrative Agent in accordance with Sections 2.5 and 5.5,
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Scheduled Revolving Credit Termination
Date.
(b) Packard hereby unconditionally promises to pay to the
Administrative Agent for the account of each Revolving Credit Lender the then
unpaid principal amount of each Revolving Credit Loan of such Lender on the
Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. Packard may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Banking Day, provided that Packard shall give the Administrative
Agent irrevocable telephonic notice (promptly
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confirmed in writing in a Borrowing Notice) (which notice must be received by
the Administrative Agent prior to 8:30 A.M., San Francisco time, (a) three
Banking Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Banking Day prior to the requested Borrowing Date, in the case
of Base Rate Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date, (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor and (iv) the
Non-Facility Loans Dollar Equivalent. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of Base Rate Loans,
$1,000,000 or a whole multiple of $500,000 in excess thereof (or, if the then
aggregate Available Revolving Credit Commitments are less than $1,000,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from
Packard, the Administrative Agent shall promptly notify each Revolving Credit
Lender thereof. Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of Packard at the Administrative Agent's Payment Office prior to 11:00
A.M., San Francisco time, on the Borrowing Date requested by Packard in Dollars
and in funds immediately available to the Administrative Agent. Such borrowing
will then be made available to Packard by the Administrative Agent crediting the
account of Packard on the books of such office with the aggregate of the amount
made available to the Administrative Agent by the Revolving Credit Lenders and
in like funds as received by the Administrative Agent (or, in the event that
Packard specifies in the relevant Borrowing Notice a different account into
which such amounts should be transferred, the Administrative Agent shall
transfer to such account the aggregate amount made available to the
Administrative Agent by the Revolving Credit Lenders in like funds as received
by the Administrative Agent).
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
of Credit") for the account of Packard on any Banking Day during the Revolving
Credit Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if (i) after giving effect to such issuance, (A) the
L/C Obligations would exceed the L/C Commitment or (B) the aggregate amount of
the Available Revolving Credit Commitments would be less than zero or (ii) it
has not received notice from the Administrative Agent that the issuance of such
Letter of Credit will not violate clause (i) above. Each Letter of Credit shall
(i) be denominated in Dollars and (ii) expire no later than the earlier of (x)
the first anniversary of its date of issuance and (y) the date which is 30
Business Days prior to the Scheduled Revolving Credit Termination Date, provided
that any Letter of Credit with a one-year term may provide for the renewal
thereof for additional one-year periods (which shall in no event extend beyond
the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
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27
3.2 Procedure for Issuance of Letter of Credit. Packard may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering concurrently to each of the Administrative Agent and the Issuing
Lender at its address for notices specified herein an Application therefor
(including a written notice specifying the Non-Facility Loans Dollar
Equivalent), completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request. Upon receipt of any Application and the approval of the
Administrative Agent as evidenced by the notice referred to in Section 3.1(a)
(ii), the Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing Lender
be required to issue any Letter of Credit earlier than three Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed to by the Issuing Lender and Packard. The Issuing Lender shall furnish
a copy of each Letter of Credit to Packard and the Administrative Agent promptly
following the issuance thereof. The Administrative Agent shall promptly furnish
to the Revolving Credit Lenders notice of the issuance of each Letter of Credit.
3.3 Commissions, Fees and Other Charges. (a) Packard will pay to the
Administrative Agent, for the account of the Revolving Credit Lenders, a letter
of credit commission with respect to each Letter of Credit, computed for the
period from and including the date of issuance of such Letter of Credit to the
date such Letter of Credit is no longer outstanding, computed at a rate per
annum equal to the Applicable Margin from time to time applicable to Eurodollar
Loans under the Revolving Credit Facility on the average aggregate daily amount
available to be drawn under such Letter of Credit for the period as to which
payment of such commission is made, payable quarterly in arrears on each L/C Fee
Payment Date to occur while such Letter of Credit remains outstanding and on the
date such Letter of Credit expires or is cancelled. In addition, Packard shall
pay to the Issuing Lender for its own account a fronting fee of 1/2 of 1% per
annum on the average aggregate amount available to be drawn under Letters of
Credit outstanding during the period for which such fee is calculated, payable
quarterly in arrears on each L/C Fee Payment Date to occur while such Letter of
Credit remains outstanding and on the date such Letter of Credit expires or is
cancelled.
(b) In addition to the foregoing fees and commissions, Packard shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by Packard in accordance with the terms of this Agreement,
such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing
Lender's address for notices specified herein an amount equal to such L/C
Participant's Revolving Credit Percentage of the amount of such draft, or any
part thereof, which is not so
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reimbursed. Each L/C Participant's obligation to make the payment referred to in
the immediately preceding sentence shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such L/C
Participant or any Borrower may have against the Issuing Lender, any Borrower or
any other Person for any reason whatsoever, (ii) the occurrence or continuance
of a Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of any Borrower, (iv) any breach of this Agreement by
any Loan Party or any other Lender or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is not paid
to the Issuing Lender when due but is paid within three Business Days after the
date such payment is due, such L/C Participant shall pay to the Issuing Lender
(through the Administrative Agent) on demand (i) an amount equal to the product
of (x) such amount, times (y) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(z) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360 and (ii) a customary
administrative fee with respect thereto. If any such amount required to be paid
by any L/C Participant pursuant to Section 3.4(a) is not made available to the
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Lender shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans under the
Revolving Credit Facility. A certificate of the Issuing Lender submitted to any
L/C Participant (with a copy to be provided promptly to the Administrative
Agent) with respect to any amounts owing under this Section shall be conclusive
in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from
Packard or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of Packard. If any draft shall be
presented for payment under any Letter of Credit issued by the Issuing Lender,
the Issuing Lender shall promptly notify Packard of the date and amount thereof.
If the Issuing Lender notifies Packard prior to 8:30 A.M., San Francisco time,
on any Business Day, of any drawing under any Letter of Credit issued by it,
Packard shall reimburse the Issuing Lender with respect to such drawing on such
Business Day. If the Issuing Lender notifies Packard after 8:30 A.M., San
Francisco time, on any Business Day of any drawing under any Letter of Credit
issued by it, Packard shall reimburse the Issuing Lender with respect to such
drawing on the next succeeding Business Day and interest shall be payable on the
amount of such drawing for such period at the rate then applicable to Base Rate
Loans under the Revolving Credit Facility. In addition, Packard agrees to
reimburse the Issuing Lender for any taxes, fees, charges or other costs or
expenses incurred by the Issuing Lender in connection with any payment under any
Letter of Credit. Each payment by Packard pursuant to this Section 3.5 shall be
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made to the Issuing Lender at its address for notices specified herein in
Dollars and in immediately available funds.
3.6 Obligations Absolute. Packard's obligations under this Section 3
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which Packard may
have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. Packard also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and Packard's Reimbursement
Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among Packard and any beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or any claims
whatsoever of Packard against any beneficiary of such Letter of Credit or any
such transferee. The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Issuing Lender. Packard agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards or care specified in
the Uniform Commercial Code of the State of New York, shall be binding on
Packard and shall not result in any liability of the Issuing Lender to Packard.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify
Packard of the date and amount thereof. The responsibility of the Issuing Lender
to Packard in connection with any draft presented for payment under any Letter
of Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3 or any other terms of this Agreement or any other Loan
Document, the provisions of this Section 3 or such other terms shall apply.
SECTION 4. AMOUNT AND TERMS OF FRONTED OFFSHORE REVOLVING CREDIT LOANS
4.1 Fronted Offshore Revolving Credit Subfacility. Subject to the
terms and conditions hereof, each Fronting Lender severally agrees to make
revolving credit loans (each, a "Fronted Offshore Revolving Credit Loan") to the
relevant Subsidiary Borrowers from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
the Dollar Equivalent of which shall not exceed, with respect to each Fronted
Offshore Currency, the related Fronted Offshore Currency Sublimit of such
Fronting Revolving Credit Lender, provided that, (a) after giving effect to any
such Fronted Offshore Revolving Credit Loan, the aggregate amount of the
Available Revolving Credit Commitments at such time would not be less than zero,
(b) after giving effect to such Fronted Offshore Revolving Credit Loan and the
use of proceeds thereof, the Dollar Equivalent of the aggregate outstanding
principal amount of Fronted Offshore
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Revolving Credit Loans does not exceed the Fronted Offshore Revolving Credit
Loan Sublimit for all Fronted Offshore Revolving Credit Loans and (c) no
Fronting Lender shall make any Fronted Offshore Revolving Credit Loan unless it
shall have received notice from the Administrative Agent that the making of such
Fronted Offshore Revolving Credit Loan will not violate clause (a) or (b) above.
During the Revolving Credit Commitment Period, the Subsidiary Borrowers may use
the Fronted Offshore Revolving Credit Subfacility by borrowing, prepaying
Fronted Offshore Revolving Credit Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.
4.2 Procedure for Fronted Offshore Revolving Credit Loan Borrowings.
Any Subsidiary Borrower may borrow under the Fronted Offshore Revolving Credit
Subfacility during the Revolving Credit Commitment Period on any Banking Day,
provided that Packard or its authorized designee shall give the relevant
Fronting Lender and the Administrative Agent irrevocable written notice in the
form of a Borrowing Notice (which Borrowing Notice must be received by the
Fronting Lender and the Administrative Agent prior to the applicable time
specified therefor in such Fronting Lender's Fronting Lender Addendum)
specifying (a) the amount to be borrowed and the Fronted Offshore Currency with
respect thereto, (b) the requested Borrowing Date, (c) the Subsidiary Borrower
to which such Fronted Offshore Revolving Credit Loan is to be made, (d) the
Non-Facility Loans Dollar Equivalent and (e) the initial Interest Periods (if
any) with respect thereto; provided, further, that, notwithstanding anything to
the contrary in any Fronting Lender Addendum, no Fronting Lender shall make a
Fronted Offshore Revolving Credit Loan until it shall have received the notice
described in clause (c) of the proviso to the first sentence of Section 4.1,
upon receipt of which such Fronting Lender shall make the relevant Fronted
Offshore Revolving Credit Loan in accordance with the terms of the applicable
Fronting Lender Addendum or as soon thereafter as practicable. Each borrowing
under the Fronted Offshore Revolving Credit Subfacility from a Fronting Lender
shall be in such minimum amounts as shall be specified in the applicable
Fronting Lender's Fronting Lender Addendum. The proceeds of each Fronted
Offshore Revolving Credit Loan will be made available by the Fronting Lender in
respect thereof to the relevant Subsidiary Borrower at such Lender's Fronting
Lender's Payment Office at such time on the Borrowing Date and in such funds as
are specified in such Fronting Lender's Fronting Lender Addendum.
4.3 Fronted Offshore Revolving Credit Loans Fees, Commissions and
Other Charges. (a) Each Subsidiary Borrower shall pay to the relevant Fronting
Lender with respect to each Fronted Offshore Revolving Credit Loan made to it by
such Fronting Lender, for the account of such Fronting Lender, a fronting fee
with respect to the period from and including the date of such Fronted Offshore
Revolving Credit Loan to but excluding the date of repayment thereof computed at
a rate of 3/8% per annum on the average daily principal amount of such Fronted
Offshore Revolving Credit Loan outstanding during the period for which such fee
is calculated. Such fronting fee shall be payable in arrears on each Fee Payment
Date to occur after the making of such Fronted Offshore Revolving Credit Loan
and on the final maturity date in respect of such Fronted Offshore Revolving
Credit Loan (or on such earlier date as such Fronted Offshore Revolving Credit
Loan shall become due and payable as provided herein) and shall be
nonrefundable.
(b) Each Subsidiary Borrower shall pay to the relevant Fronting
Lender, for the account of the Fronted Revolving Credit Loan Participants, a
participation fee with respect to each Fronted Offshore Revolving Credit Loan
made by such Fronting Lender to such Subsidiary Borrower, with respect to the
period from and including the date of such Loan to but excluding the date of
repayment thereof, computed at a rate per annum equal to the Applicable Margin
in respect of Eurodollar Loans that are Revolving Credit Loans from time to time
in effect on the average daily principal amount of such Fronted Offshore
Revolving Credit Loan outstanding during the period for
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which such fee is calculated. Each such participation fee shall be shared
ratably among the relevant Fronted Revolving Credit Loan Participants in
accordance with their respective Revolving Credit Commitment Percentages. Each
such participation fee shall be payable in arrears on each Fee Payment Date to
occur after the making of the relevant Fronted Offshore Revolving Credit Loan
and on the final maturity date in respect of such Fronted Offshore Revolving
Credit Loan (or on such earlier date as such Fronted Offshore Revolving Credit
Loan shall become due and payable as provided herein) and shall be
nonrefundable. Upon receipt of any payment pursuant to this paragraph, each
Fronting Lender shall promptly convert such payment to Dollars at the Spot Rate
determined by the Fronting Lender to be in effect on the date of such conversion
and shall promptly forward such amount in Dollars to the Administrative Agent at
the Administrative Agent's Payment Office.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the relevant Fronted Revolving Credit Loan Participants
all fees received by the Administrative Agent for their respective accounts
pursuant to Section 4.3(b).
4.4 Participations. (a) Each Fronting Lender irrevocably agrees to
grant and hereby grants to each Fronted Revolving Credit Loan Participant (other
than such Fronting Lender), and, to induce such Fronting Lender to make Fronted
Offshore Revolving Credit Loans hereunder, each such Fronted Revolving Credit
Loan Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from such Fronting Lender, on the terms and conditions hereinafter
stated, for such Fronted Revolving Credit Loan Participant's own account and
risk an undivided interest equal to such Fronted Revolving Credit Loan
Participant's Revolving Credit Commitment Percentage in such Fronting Lender's
obligations and rights in respect of each Fronted Offshore Revolving Credit Loan
made by such Fronting Lender hereunder. Each such Fronted Revolving Credit Loan
Participant unconditionally and irrevocably agrees with each Fronting Revolving
Credit Lender that, if any amount in respect of the principal, interest or fees
owing to such Fronting Lender in respect of a Fronted Offshore Revolving Credit
Loan is not paid when due in accordance with the terms of this Agreement, such
Fronted Revolving Credit Loan Participant shall pay to the Fronting Lender
(through the Administrative Agent) upon demand an amount in the relevant
Offshore Currency equal to such Fronted Revolving Credit Loan Participant's
Revolving Credit Commitment Percentage of such unpaid amount.
(b) Each Fronted Revolving Credit Loan Participant's obligation to
make the payment referred to in Section 4.4(a) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which any Fronted Revolving Credit Loan Participant or any Subsidiary Borrower
may have against any Fronting Lender, any Subsidiary Borrower or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of any Borrower, (iv) any breach of this Agreement or
any other Loan Document by any Loan Party or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(c) If any amount required to be paid by any Fronted Revolving
Credit Loan Participant to any Fronting Lender pursuant to Section 4.4(a) is not
paid to such Fronting Lender when due but is paid within three Banking Days
after the date such payment is due, such Fronted Revolving Credit Loan
Participant shall pay to such Fronting Lender on demand an amount equal to the
product of (i) such amount, times (ii) the Cost of Funds in respect of the
related Offshore Currency determined by such Fronting Lender during the period
from and including the date such payment is required to the date on which such
payment is immediately available to such Fronting Lender, times (iii) a fraction
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the numerator of which is the number of days that elapse during such period and
the denominator of which is 360. If any such amount required to be paid by any
Fronted Revolving Credit Loan Participant pursuant to Section 4.4(a) is not in
fact made available to any Fronting Lender by such Fronted Revolving Credit Loan
Participant within three Banking Days after the date such payment is due, such
Fronting Lender shall be entitled to recover from such Fronted Revolving Credit
Loan Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum equal to the rate applicable thereto in
accordance with the preceding sentence plus the Applicable Margin in respect of
Eurodollar Loans that are Revolving Credit Loans. A certificate of any Fronting
Lender submitted to any Fronted Revolving Credit Loan Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of
manifest error.
(d) Whenever, at any time after any Fronting Lender has received
from any Fronted Revolving Credit Loan Participant the full amount owing by such
Fronted Revolving Credit Loan Participant pursuant to and in accordance with
Section 4.4(a) in respect of any Fronted Offshore Revolving Credit Loan, such
Fronting Lender receives any payment related to such Fronted Offshore Revolving
Credit Loan (whether directly from the relevant Subsidiary Borrower or
otherwise, including proceeds of collateral applied thereto by such Fronting
Lender), or any payment of interest on account thereof, such Fronting Lender
will promptly distribute to such Fronted Revolving Credit Loan Participant its
pro rata share thereof.
(e) If any payment received by any Fronting Lender pursuant to
Section 4.4(c) with respect to any Fronted Offshore Revolving Credit Loan made
by it shall be required to be returned by such Fronting Lender, each Fronted
Revolving Credit Loan Participant shall pay to such Fronting Lender its pro rata
share thereof.
4.5 Offshore Currency Spot Rate. (a) (i) No later than the time
specified in the applicable Fronting Lender Addendum, on each Calculation Date
with respect to a Fronted Offshore Currency, the relevant Fronting Lender shall
determine the Spot Rate as of such Calculation Date with respect to such Fronted
Offshore Currency and shall promptly notify the Administrative Agent thereof,
provided that, upon receipt of a Borrowing Notice pursuant to Section 4.2 or a
Conversion/Continuation Notice pursuant to Section 5.5 with respect to the
continuation of a Fronted Offshore Revolving Credit Loan, the relevant Fronting
Lender shall determine the Spot Rate with respect to the relevant Fronted
Offshore Currency in accordance with the Fronting Lender Addendum and shall
promptly notify the Administrative Agent thereof (it being acknowledged and
agreed that the Administrative Agent shall use such Spot Rate for the purposes
of determining compliance with Section 4.1 with respect to such borrowing
request and issuing the notice described in clause (c) of the proviso to the
first sentence of Section 4.1). The Spot Rates so determined shall become
effective on the relevant Calculation Date and shall remain effective until the
next succeeding Calculation Date.
(b) The Administrative Agent shall promptly notify Packard of each
determination of a Spot Rate hereunder.
4.6 Repayment of Fronted Offshore Revolving Credit Loans. Each
Subsidiary Borrower hereby unconditionally promises to pay to the relevant
Fronting Revolving Credit Lender the then unpaid principal amount of each
Fronted Offshore Revolving Credit Loan made by such Fronting Lender to such
Subsidiary Borrower, in each case on the Revolving Credit Termination Date (or
such earlier date on which the Fronted Revolving Credit Loans become due and
payable pursuant to Section 10 or as may be specified in the Fronting Bank
Addendum of such Fronting Bank).
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SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
5.1 Commitment Fees, etc. (a) Packard agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
Banking Day of the Revolving Credit Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Revolving
Credit Commitment (calculated without taking into account any outstanding
Non-Facility Offshore Currency Loans) of such Lender during the period for which
payment is made, payable quarterly in arrears on the last Banking Day of each
March, June, September and December and on the Revolving Credit Termination
Date, commencing on the first of such dates to occur after the date hereof.
(b) Packard agrees to pay to the Administrative Agent the fees in
the amounts and on the dates previously agreed to in writing by Packard and the
Administrative Agent.
5.2 Termination or Reduction of Revolving Credit Commitments.
Packard shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and/or the Fronted Offshore Revolving Credit Loans made
on the effective date thereof, the Total Utilized Commitments would exceed the
Revolving Credit Commitments then in effect. Any such reduction shall be in an
amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect.
5.3 Optional Prepayments. (a) Packard may at any time and from time
to time prepay the Base Rate Loans and the Eurodollar Loans, in whole or in
part, without premium or penalty except as specified in Section 5.13, upon
irrevocable notice delivered to the Administrative Agent (which notice must be
received by the Administrative Agent prior to 8:30 A.M., San Francisco time) at
least three Banking Days prior thereto in the case of Eurodollar Loans and at
least one Banking Day prior thereto in the case of Base Rate Loans, which notice
shall specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, Packard shall also pay any amounts owing pursuant to Section 5.13. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Credit Loans which are Base Rate Loans)
accrued interest to such date on the amount prepaid. Partial prepayments of Term
Loans and Revolving Credit Loans shall be in an aggregate principal amount equal
to (i) in the case of Base Rate Loans, $1,000,000 or a whole multiple of
$500,000 in excess thereof and (ii) in the case of Eurodollar Loans, $1,000,000
or a whole multiple thereof.
(b) Each Subsidiary Borrower may at any time and from time to time
prepay Fronted Offshore Revolving Credit Loans, in whole or in part, without
premium or penalty except as specified in Section 5.13, upon at least four
Banking Days' irrevocable notice (or such other number of days as may be
specified in the Fronting Bank Addendum of such Fronting Lender in its
discretion) to the relevant Fronting Lender and the Administrative Agent,
specifying the date and amount of prepayment. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to Section 5.13 and accrued
interest to such date on the amount prepaid. Partial prepayments of Fronted
Offshore Revolving Credit Loans
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34
shall be in such minimum amounts as shall be specified in the Fronting Bank
Addendum of the relevant Fronting Lender.
(c) Prepayments made pursuant to this Section 5.3 shall be made in
accordance with Section 5.10.
5.4 Mandatory Term Loan Prepayments. (a) Unless the Required
Prepayment Lenders shall otherwise agree, if after the Closing Date any Capital
Stock of Packard shall be sold or issued by Packard (other than in connection
with any sale or issuance of Capital Stock of Packard, or options exercisable
for the purchase of such Capital Stock, made to the officers, employees or
directors of Packard or any of its Subsidiaries, to the extent the aggregate Net
Cash Proceeds thereof do not exceed $2,000,000 in any fiscal year of Packard),
an amount equal to 50% of the Net Cash Proceeds thereof shall be applied on the
date of such sale or issuance toward the prepayment of the Term Loans as set
forth in Section 5.4(e).
(b) Unless the Required Prepayment Lenders shall otherwise agree,
after the Closing Date if any Indebtedness shall be issued or Incurred by
Packard or any of its Subsidiaries (excluding any Indebtedness Incurred in
accordance with Section 9.2), an amount equal to 100% of the Net Cash Proceeds
thereof shall be applied on the date of such issuance or Incurrence toward the
prepayment of the Term Loans as set forth in Section 5.4(e).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date Packard or any of its Subsidiaries shall receive Net Cash Proceeds
from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall
be delivered in respect thereof, an amount equal to 100% of such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term Loans
as set forth in Section 5.4(e); provided, that, notwithstanding the foregoing,
(i) the aggregate Net Cash Proceeds of Asset Sales that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$5,000,000 in any fiscal year of Packard and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans as set forth in Section 5.4(e). Notwithstanding the
foregoing, Packard may in each fiscal year exclude up to $200,000 of Net Cash
Proceeds of Asset Sales or Recovery Events from the requirements of this
paragraph (c).
(d) Unless the Required Prepayment Lenders shall otherwise agree, if
(i) for the period of three fiscal quarters of Packard ending December 31, 1997
or (ii) for any fiscal year of Packard commencing with the fiscal year ending
December 31, 1998, there shall be Excess Cash Flow, Packard shall, on the
relevant Excess Cash Flow Application Date, apply the Excess Cash Flow
Percentage of such Excess Cash Flow toward the prepayment of the Term Loans as
set forth in Section 5.4(e). Each such prepayment shall be made on a date (an
"Excess Cash Flow Application Date") no later than five days after the earlier
of (x) the date on which the financial statements of Packard referred to in
Section 8.1(a)(i), for the fiscal year with respect to which such prepayment is
made (or, in the case of clause (i) above, the 1997 fiscal year), are required
to be delivered to the Lenders and (y) the date such financial statements are
actually delivered.
(e) (i) The application of any prepayment pursuant to Section 5.4
shall be made first to Base Rate Loans and second to Eurodollar Loans. Each
prepayment of the Loans under Section 5.4 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid. Prepayments made
pursuant to this Section 5.4 shall be made in accordance with Section 5.10.
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35
(ii) Notwithstanding the foregoing, in the event the amount of any
prepayment required to be made pursuant to Section 5.4(d) shall exceed the
aggregate principal amount of the Base Rate Loans outstanding under the
Facilities required to be prepaid (the amount of any such excess being called
the "Excess Amount"), Packard shall have right, in lieu of making such
prepayment in full, to prepay all the outstanding applicable Base Rate Loans and
to deposit an amount equal to the Excess Amount in a cash collateral account
maintained by and in the sole dominion and control of the Administrative Agent.
Any amounts so deposited shall be held by the Administrative Agent as collateral
for the repayment obligations of Packard under Section 5.4(d) and applied to the
prepayment of the applicable Eurodollar Loans at the end of the current Interest
Periods applicable thereto. On any Banking Day on which (x) collected amounts
remain on deposit in or to the credit of such cash collateral account after
giving effect to the payments made on such day pursuant to this paragraph
(e)(ii) and (y) Packard shall have delivered to the Administrative Agent a
written request or a telephonic request (which shall be promptly confirmed in
writing) that such remaining collected amounts be invested in Cash Equivalents
specified in such request, the Administrative Agent shall use its reasonable
efforts to invest such remaining collected amounts in such Cash Equivalents;
provided, however, that the Administrative Agent shall have continuous dominion
and full control over any such investments (and over any interest that accrues
thereon) to the same extent that it has dominion and control over such cash
collateral account and no Cash Equivalents shall mature after the end of the
Interest Period for which it is to be applied. Packard shall have the right to
withdraw any remaining amounts from such cash collateral account (including any
interest that accrues thereon) once the applicable Eurodollar Loans and accrued
interest thereon are paid in full, so long as no Default or Event of Default
then exists or would result therefrom.
(f) Notwithstanding anything to the contrary in Section 5.4(e) or
5.10, with respect to the amount of any mandatory prepayment described in
Section 5.4 (such amount, the "Term Loan Prepayment Amount"), Packard will, in
lieu of applying such amount to the prepayment of Term Loans as provided in
paragraph (e) above, on the date specified in Section 5.4 for such prepayment,
give the Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Term Loan
Lender a notice (each, a "Prepayment Option Notice") as described below. As
promptly as practicable after receiving such notice from Packard, the
Administrative Agent will send to each Term Loan Lender a Prepayment Option
Notice, which shall be in the form of Exhibit H, and shall include an offer by
Packard to prepay on the date (each a "Mandatory Prepayment Date") that is 10
Business Days after the date of the Prepayment Option Notice, the Term Loans of
such Lender by an amount equal to the portion of the Prepayment Amount indicated
in such Lender's Prepayment Option Notice as being applicable to such Lender's
Term Loans. On the Mandatory Prepayment Date, (A) Packard shall pay to the
Administrative Agent the aggregate amount necessary to prepay that portion of
the outstanding Term Loans in respect of which Term Loan Lenders have accepted
prepayment as described above (such Lenders, the "Accepting Lenders"), and such
amount shall be applied to reduce the Term Loan Prepayment Amount with respect
to each Accepting Lender and (B) Packard shall be entitled to retain the portion
of the Term Loan Prepayment Amount not accepted by the Accepting Lenders.
(g) If, (i) on the last Banking Day of each March, June, September
and December, the Dollar Equivalent of the aggregate outstanding principal
amount of Fronted Offshore Revolving Credit Loans exceeds an amount equal to
103% of the Fronted Offshore Revolving Credit Loan Sublimit for all Fronted
Offshore Revolving Credit Loans or (ii) on any day, the Total Utilized
Commitments exceeds the aggregate Revolving Credit Commitments on such date,
Packard shall, without notice or demand, immediately repay (or cause the
relevant Subsidiary Borrower to repay) such of the outstanding Loans in an
aggregate principal amount such that, after giving effect thereto, (x) the
Dollar
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36
Equivalent of the aggregate outstanding principal amount of Fronted Offshore
Revolving Credit Loans does not exceed the Fronted Offshore Revolving Credit
Loan Sublimit for all Fronted Offshore Revolving Credit Loans and (y) the Total
Utilized Commitments does not exceed the aggregate Revolving Credit Commitments,
together with interest accrued to the date of such payment or prepayment on the
principal so prepaid and any amounts payable under Section 5.13 in connection
therewith. Any prepayment of Fronted Revolving Credit Loans pursuant to the
immediately preceding sentence shall be applied to prepay such Fronted Offshore
Revolving Credit Loans as Packard may determine.
5.5 Conversion and Continuation Options. (a) Packard may elect from
time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least one Banking Day's prior irrevocable telephonic
notice (promptly confirmed in writing in a Conversion/Continuation Notice) of
such election (which notice must be received by the Administrative Agent prior
to 8:30 A.M., San Francisco time), provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. Packard may elect from time to time to convert Base Rate Loans
to Eurodollar Loans by giving the Administrative Agent at least three Banking
Days' prior irrevocable notice of such election specifying the length of the
initial Interest Period therefor (which notice must be received by the
Administrative Agent prior to 8:30 A.M., San Francisco time), provided that no
Base Rate Loan under a particular Facility may be converted into a Eurodollar
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurodollar Loan or Fronted Offshore Revolving Credit Loan
may be continued as such upon the expiration of the then current Interest Period
with respect thereto by Packard or the relevant Borrower giving irrevocable
telephonic notice (promptly confirmed in writing in a Conversion/Continuation
Notice) to the Administrative Agent and, in the case of a Fronted Offshore
Revolving Credit Loan, to the relevant Fronting Offshore Lender, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that (x) in the case of Eurodollar Loans, if the relevant Borrower shall fail to
give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall
be automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period and (y) in the case of Fronted Offshore Revolving
Credit Loans, if the relevant Borrower shall fail to give such notice of
continuation of a Fronted Offshore Revolving Credit Loan, such Loan shall be
automatically continued for an Interest Period of one month. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(c) In no event shall a Eurodollar Loan or Fronted Offshore
Revolving Credit Loan be continued pursuant to Section 5.5(b) to the extent that
on the date of such continuation the Total Utilized Commitments then outstanding
exceed the aggregate Revolving Credit Commitments.
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37
5.6 Minimum Amounts and Maximum Number of Eurodollar and Offshore
Currency Tranches. Notwithstanding anything to the contrary in this Agreement,
all borrowings, conversions, continuations and optional prepayments of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than eight Eurodollar
Tranches shall be outstanding at any one time. In addition, in no event shall
there be more than two Offshore Tranches in any single Fronted Offshore Currency
outstanding at any time.
5.7 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) Each Fronted Offshore Revolving Credit Loan shall bear interest
for each day during each Interest Period with respect thereto (or, if there is
no Interest Period with respect thereto, for each day such Loan is outstanding)
at a rate per annum equal to the applicable Cost of Funds determined for such
day.
(d) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of principal of Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 5.7 plus 2% or (y) in the case of Reimbursement Obligations, the rate
applicable to Base Rate Loans under the Revolving Credit Facility plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee, participation fee, or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to (x) in the case of amounts denominated in Dollars, the rate
applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the
case of any such other amounts that do not relate to a particular Facility, the
Base Rate plus 3-3/4%) and (y) in the case of amounts denominated in an Offshore
Currency, the Cost of Funds determined by the Administrative Agent in respect of
such Offshore Currency plus the Applicable Margin applicable to Loans under the
Revolving Credit Facility plus 2%, in each case, with respect to clauses (i) and
(ii) above, from the date of such non-payment until such amount is paid in full
(as well after as before judgment).
(e) Interest shall be payable by the relevant Borrower in arrears on
each Interest Payment Date and on the Revolving Credit Termination Date (in the
case of the Revolving Credit Loans and the Fronted Offshore Revolving Credit
Loans) and the date of the final installment of principal of the Term Loans,
provided that interest accruing pursuant to paragraph (d) of this Section 5.7
shall be payable from time to time on demand.
5.8 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Reference
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case
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38
may be) day year for the actual days elapsed. The Administrative Agent shall as
soon as practicable notify Packard and the relevant Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify Packard and the relevant Lenders of the effective date and
the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent or a Fronting Lender pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers and the Lenders in the absence of
manifest error.
5.9 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period,
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period, or
(c) a Fronting Lender shall have determined (which determination
shall be conclusive and binding upon the Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means
do not exist for ascertaining the Cost of Funds for such Interest Period
in respect of any Fronted Offshore Currency (any such currency shall also
be an "affected Offshore Currency"),
the Administrative Agent (or the relevant Fronting Lender, in the case of clause
(c) above) shall give telecopy or telephonic notice thereof to the relevant
Borrower and the relevant Lenders (and, in the case of any notice by a Fronting
Lender, the Administrative Agent) as soon as practicable thereafter. If such
notice is given as provided in clause (a) or (b) above, (i) any Eurodollar Loans
under the relevant Facility requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (ii) any Loans under the
relevant Facility that were to have been converted on the first day of such
Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and
(iii) any outstanding Eurodollar Loans under the relevant Facility shall be
converted to Base Rate Loans on the last day of the Interest Period applicable
thereto. If such notice is given as provided in clause (c) above, (i) any
Foreign Offshore Loans in an affected Offshore Currency requested to be made on
the first day of such Interest Period shall not be made and (ii) any outstanding
Foreign Offshore Loans in an affected Offshore Currency shall be due and payable
on the first day of such Interest Period. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans or Fronted Offshore
Revolving Credit Loans in an affected Offshore Currency, as the case may be,
under the relevant Facility shall be made or continued as such, nor, in the case
of clause (a) or (b) above, shall the Borrower have the right to convert Loans
under the relevant Facility to Eurodollar Loans.
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39
5.10 Pro Rata Treatment and Payments. (a) Each borrowing by Packard
from the Lenders hereunder (other than of Fronted Offshore Revolving Credit
Loans), each payment by Packard on account of any commitment fee and any
reduction of the Commitments of the Lenders shall be made, with regard to the
applicable Facility, pro rata according to the respective Term Loan Percentages
or Revolving Credit Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by Packard on account
of principal of and interest on the Term Loans shall be made pro rata according
to the respective outstanding principal amounts of the Term Loans then held by
the Term Loan Lenders (except as otherwise provided in Section 5.4(f)). The
amount of each principal payment of the Term Loans shall be applied to reduce
the then remaining installments of the Term Loans pro rata based upon the then
remaining outstanding principal amount of such installments.
(c) Each payment (including each prepayment) by Packard on account
of principal of and interest on the Revolving Credit Loans shall be made pro
rata according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by Packard
hereunder, in respect of Letters of Credit and Loans, whether on account of
principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 11:00 A.M., San Francisco time, on the
due date thereof to the Administrative Agent, for the account of the Lenders, at
the Administrative Agent's Payment Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Banking Day, such payment shall be extended to the next
succeeding Banking Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Banking Day, the maturity thereof shall be
extended to the next succeeding Banking Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Banking Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(e) All payments (including prepayments) to be made by a Subsidiary
Borrower hereunder in respect of Fronted Offshore Revolving Credit Loans, on
account of principal and interest thereon and fronting fees and participation
fees in respect thereof, shall be made without set off or counterclaim and shall
be made prior to 11:00 A.M., local time, on the due date thereof to the relevant
Fronting Lender, at the Fronting Lender's Payment Office in the currency in
which such Loans are denominated and in immediately available funds in such
currency. If any payment of principal or interest on a Fronted Offshore
Revolving Credit Loan becomes due and payable on a day other than a Banking Day,
such payment shall be extended to the next succeeding Banking Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to Packard a
corresponding amount. If such
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40
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section 5.10(f) shall be conclusive in the absence of manifest error.
If such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Banking Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans under
the relevant Facility, on demand, from Packard. This paragraph shall not apply
to Loans made to Subsidiary Borrowers.
5.11 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application, any
Eurodollar Loan or any Fronted Offshore Revolving Credit Loan made by it,
or change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by Section 5.12 and changes
in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate or the Cost of Funds hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or Fronted Offshore Revolving Credit
Loans or issuing or participating in Letters of Credit or Fronted Offshore
Revolving Credit Loans, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the relevant Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section 5.11,
it shall promptly notify Packard (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be
<PAGE>
41
material, then from time to time, after submission by such Lender to Packard
(with a copy to the Administrative Agent) of a written request therefor, Packard
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section 5.11 submitted by any Lender to the relevant Borrower (with a copy
to the Administrative Agent) shall be conclusive in the absence of manifest
error. The obligations of the Borrowers pursuant to this Section 5.11 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
5.12 Taxes. (a) All payments made by the Borrowers under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document), provided that
all payments to be made by the Fronting Lenders pursuant to Section 4.3(b)
shall, for purposes of this Section 5.12, be deemed to be a payment by the
relevant Borrower. If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to
be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Borrowers shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section. Whenever any
Non-Excluded Taxes are payable by any Borrower, as promptly as possible
thereafter such Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by such Borrower showing payment
thereof. If the relevant Borrower fails to pay any Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, Packard
shall indemnify the Administrative Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Administrative Agent
or any Lender as a result of any such failure. Packard shall make any payments
required pursuant to the immediately preceding sentence within 15 days after
receipt of written demand therefor from the Administration Agent or any Lender
as the case may be. The agreements in this Section 5.12 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder. Notwithstanding anything in this Section 5.12(a) to the
contrary, the Borrowers shall not be required to increase any such amounts
payable to a Non-U.S. Lender that becomes a Lender after the Closing Date or
Participant to the extent of any United States withholding taxes applicable at
the time such Non-U.S. Lender becomes a Lender (or in the case of any
Participant, at the time such Participant purchases the related participation)
to amounts payable to such Non-U.S. Lender or Participant, except to the extent
that such Non-U.S. Lender's assignor (or in the case of any Participant, the
Lender from which such Participant purchased the related participation) was
entitled, at
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42
the time of assignment or participation to receive additional amounts from the
Borrower with respect to such withholding taxes pursuant to this Section
5.12(a).
(b) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
deliver to Packard and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an
annual certificate representing that such Non-U.S. Lender is not a "bank" for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of Packard and is not a
controlled foreign corporation related to Packard (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrowers under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrowers
at any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 5.12(b), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 5.12(b) that
such Non-U.S. Lender is not legally able to deliver.
5.13 Indemnity. Each Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by a Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans or Fronted Offshore
Revolving Credit Loans after such Borrower or Packard has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by a Borrower in making any prepayment after such Borrower or Packard
has given a notice thereof in accordance with the provisions of this Agreement
or (c) the making of a prepayment of Eurodollar Loans or Fronted Offshore
Revolving Credit Loans on a day which is not the last day of an Interest Period
with respect thereto. Such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market or, in the case of Fronted Offshore
Revolving Credit Loans, the relevant interbank eurocurrency market. A
certificate as to any amounts payable pursuant to this Section 5.13 submitted to
the relevant Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
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43
5.14 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 5.11 or 5.12(a)
with respect to such Lender, it will, if requested by Packard, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its
lending office(s) to suffer no economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section 5.14 shall affect or postpone
any of the obligations of any Borrower or the rights of any Lender pursuant to
Section 5.11 or 5.12(a).
5.15 Subsidiary Borrowers. Packard may designate any Foreign
Subsidiary of Packard as a Subsidiary Borrower by delivery to the Administrative
Agent of a Borrowing Subsidiary Agreement executed by such Subsidiary and
Packard and upon such delivery such Subsidiary shall for all purposes of this
Agreement be a Subsidiary Borrower and a party to this Agreement until Packard
shall have executed and delivered to the Administrative Agent a Borrowing
Subsidiary Termination with respect to such Subsidiary, whereupon such
Subsidiary shall cease to be a Subsidiary Borrower and a party to this
Agreement. Notwithstanding the preceding sentence, no Borrowing Subsidiary
Termination will become effective as to any Subsidiary Borrower at a time when
any principal of or interest on any Loan to such Subsidiary Borrower shall be
outstanding hereunder, provided that such Borrowing Subsidiary Termination shall
be effective to terminate such Subsidiary Borrower's right to make further
borrowings under this Agreement.
5.16 Replacement of Lenders under Certain Circumstances. Packard
shall be permitted to replace any Lender which (a) requests reimbursement for
amounts owing pursuant to Section 5.11 or 5.12 or (b) defaults in its obligation
to make Loans hereunder, with a replacement financial institution; provided that
(i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 5.14 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 5.11 or 5.12, (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the relevant
Borrowers shall be liable to such replaced Lender under Section 5.13 if any
Eurodollar Loan or Fronted Offshore Revolving Credit Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 13.6 (provided that Packard shall be obligated to pay
the registration and processing fee referred to therein), (viii) until such time
as such replacement shall be consummated, the relevant Borrowers shall pay all
additional amounts (if any) required pursuant to Section 5.11 or 5.12, as the
case may be, and (ix) in the case of clause (b) above, any such replacement
shall not be deemed to be a waiver of any rights which any Borrower, the
Administrative Agent or any other Lender shall have against the replaced Lender.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make, issue or participate in the Loans and the Letters of
Credit, each of Packard and each Subsidiary Borrower (to the extent applicable
to such Subsidiary Borrower) hereby represents and warrants to the
Administrative Agent and each Lender that:
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44
6.1 Financial Condition. (a) The unaudited pro forma condensed
consolidated balance sheet of Packard and its consolidated Subsidiaries as at
September 30, 1996 (including the notes thereto) (the "Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to (i) the
consummation of the Recapitalization, (ii) the Loans to be made and the
Subordinated Notes to be issued on the Closing Date and the use of proceeds
thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to Packard as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated condensed consolidated
financial position of Packard and its consolidated Subsidiaries as at September
30, 1996 assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of Packard as at
December 31, 1993, December 31, 1994 and December 31, 1995, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Arthur Andersen LLP, present fairly the consolidated financial condition of
Packard as at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. All such
financial statements, including the related notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the relevant firm of accountants and disclosed therein).
Packard does not have any material Guarantee Obligations, contingent liabilities
and liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, which are not reflected in the most recent financial statements,
including the related notes thereto, referred to in this paragraph (b). During
the period from December 31, 1995 to and including the date hereof there has
been no Disposition by Packard or any of its Subsidiaries of any material part
of its business or Property.
6.2 No Change. Since December 31, 1995 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
6.3 Corporate Existence; Compliance with Law. Each of Packard and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except where the failure to be so qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrowers, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrowers, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is
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45
required in connection with the Recapitalization and the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents, except (i) consents, authorizations,
filings and notices described in Schedule 6.4, which consents, authorizations,
filings and notices have been obtained or made and are in full force and effect
and (ii) the filings referred to in Section 6.20. Each Loan Document has been
duly executed and delivered on behalf of each Loan Party party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of Packard or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to Packard or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
6.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Packard or such Subsidiary Borrower, threatened by or
against Packard or any of its Subsidiaries or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.
6.7 No Default. None of Packard and its Subsidiaries is in default
under or with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens. Each of Packard and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other material property, and none of such property is subject to any Lien except
as permitted by Section 9.3.
6.9 Intellectual Property. Each of Packard and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes ("Intellectual Property") necessary for the conduct of
its business as currently conducted. Except as set forth on Schedule 6.9, no
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does such party know of any
valid basis for any such claim. The use of Intellectual Property by Packard and
its Subsidiaries does not, to the best knowledge of Packard, infringe on the
rights of any Person in any material respect.
6.10 Taxes. Each of Packard and its Subsidiaries has filed or caused
to be filed all Federal, Connecticut, Delaware, Illinois and other material tax
returns which are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made
<PAGE>
46
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Packard or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Packard and each
Subsidiary Borrower, no claim is being asserted, with respect to any such tax,
fee or other charge.
6.11 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of the Board.
6.12 Labor Matters. There are no strikes or other labor disputes
against Packard or any of its Subsidiaries pending or, to the knowledge of
Packard or any Subsidiary Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. Hours
worked by and payment made to employees of Packard and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from Packard or any of its Subsidiaries on account of employee
health and welfare insurance that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect if not paid have been
paid or accrued as a liability on the books of Packard or the relevant
Subsidiary.
6.13 ERISA. Except where a breach of the following, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, (i) neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code; (ii) no termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period;
(iii) the present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits by a material amount; (iv) neither Packard nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither Packard nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
Packard or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made; and (v) no such
Multiemployer Plan is in Reorganization or Insolvent.
6.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
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47
6.15 Subsidiaries. The Subsidiaries listed on Schedule 6.15
constitute all the Subsidiaries of Packard at the date hereof.
6.16 Restrictions on Distributions. On the date hereof, no
Subsidiary is subject to any Subsidiary Restrictions, except (a) Subsidiary
Restrictions contained in the Loan Documents and (b) Subsidiary Restrictions
described on Schedule 6.16.
6.17 Use of Proceeds. The proceeds of the Term Loans shall be used
to finance a portion of the Recapitalization and to pay related fees and
expenses. The proceeds of the Revolving Credit Loans shall be used to finance a
portion of the Recapitalization, the ongoing working capital needs of Packard
and its Subsidiaries in the ordinary course of business and acquisitions
permitted by Section 9.8(g). The proceeds of the Fronted Offshore Revolving
Credit Loans shall be used to finance a portion of the Recapitalization and fees
and expenses related thereto and to finance ongoing working capital needs of
Packard and its Subsidiaries. Notwithstanding anything herein to the contrary,
the sum of the aggregate principal amount of the Revolving Credit Loans and the
Dollar Equivalent of any Fronted Offshore Revolving Credit Loans borrowed on the
Closing Date shall not exceed $1,500,000.
6.18 Environmental Matters. Except as set forth on Schedule 6.18 or
as could not reasonably be expected to have a Material Adverse Effect:
(a) The facilities and properties owned, leased or operated by
Packard or any of its Subsidiaries (the "Properties") do not contain, and
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under circumstances which constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by Packard or any of its
Subsidiaries (the "Business") which could interfere with the continued
operation of the Properties or impair the fair saleable value thereof.
None of Packard and its Subsidiaries has assumed any liability of any
other Person under Environmental Laws.
(c) None of Packard and its Subsidiaries has received or is aware of
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does Packard or any Subsidiary Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or, to the
best knowledge of Packard and the Subsidiary Borrowers, to a location
which could give rise to liability under, any Environmental Law, nor have
any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Packard and the Subsidiary Borrowers,
threatened, under any Environmental
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48
Law to which Packard or any Subsidiary is or will be named as a party with
respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations of Packard or any Subsidiary in connection with
the Properties or, to the best knowledge of Packard and the Subsidiary
Borrowers, otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws.
6.19 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the Closing Date), any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein not misleading. The
projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of such Loan Party to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. As of the date hereof,
the representations and warranties of Packard and, to the best knowledge of
Packard, the Management Stockholders in the Recapitalization and Stock Purchase
Agreement are true and correct in all material respects. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
6.20 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock and
Pledged Notes described in the Guarantee and Collateral Agreement, when stock
certificates or instruments representing such Pledged Stock or Pledged Notes,
respectively, are delivered to the Administrative Agent, and in the case of the
other Collateral described in the Guarantee and Collateral Agreement in which a
security interest can be perfected by the filing of a financing statement, when
financing statements in appropriate form are filed in the offices specified on
Schedule 6.20(a), the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
6.20(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest
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49
in, all right, title and interest of the Loan Parties in the Mortgaged
Properties and the proceeds thereof, as security for the Obligations (as defined
in the relevant Mortgage), in each case prior and superior in right to any other
Person, except as disclosed on Schedule 9.3(f).
6.21 Solvency. Each Loan Party is, and after giving effect to the
Recapitalization and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
6.22 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of Packard under and as defined in the Subordinated Note
Indenture. The obligations of each Subsidiary Guarantor under the Guarantee and
Collateral Agreement constitute "Senior Guarantor Indebtedness" of such
Subsidiary Guarantor under and as defined in the Subordinated Note Indenture.
6.23 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
6.24 Inactive Subsidiaries. Each of the Domestic Subsidiaries listed
on Schedule 6.24 has no material net assets and does not engage in any operating
activity; and such Domestic Subsidiaries in the aggregate have no material net
assets.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of
Packard, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of Packard and each Subsidiary
Guarantor (together with executed acknowledgements from each Foreign
Subsidiary), (iii) each of the Mortgages, executed and delivered by a duly
authorized officer of each party thereto, and (iv) for the account of each
relevant Lender, Notes conforming to the requirements hereof and executed
and delivered by a duly authorized officer of Packard.
(b) Recapitalization, Subordinated Notes, etc. (i) Packard shall
have consummated the recapitalization transaction contemplated by the
Recapitalization and Stock Purchase Agreement and Stonington or a Control
Investment Affiliate thereof shall own or control approximately 70% of the
common stock of Packard and the Management Stockholders and certain other
continuing stockholders of Packard shall own approximately 30% of such
common stock; in connection therewith, not more than $268,000,000 plus net
cash of Packard on hand (after repayment of Indebtedness) in an amount not
to exceed $25,000,000 shall have been expended to repurchase shares of
Packard's common stock from existing holders thereof and to pay fees and
expenses incurred in connection with the Recapitalization; Stonington or a
Control Investment Affiliate thereof shall have expended at least
$69,000,000 for the purchase of common stock of Packard; Packard shall
have received at least $150,000,000 in gross cash
<PAGE>
50
proceeds from the issuance of the Subordinated Notes; and the fair market
value of the equity in Packard held by Management Stockholders and certain
other continuing stockholders (valued at a price per share of $22.25)
shall be at least $30,000,000.
(ii) The capital and legal structure of each Loan Party (including
the identity of the Management Stockholders and the respective amounts of
their ownership interests) after the Recapitalization shall be
satisfactory in all respects.
(iii) The Recapitalization and Stock Purchase Agreement shall not
have been waived, amended, supplemented or otherwise modified in any
material respect.
(iv) The aggregate amount of change of control bonuses and other
payments to the Supplemental Employee Retirement Program in connection
with the Recapitalization shall not exceed $3,900,000.
(v) The Administrative Agent shall have received satisfactory
evidence that the fees and expenses to be incurred in connection with the
Recapitalization and the financing thereof (including the closing costs of
the Management Stockholders and certain other continuing stockholders in
connection with the Recapitalization) shall not exceed $18,900,000
(excluding the costs described in the preceding clause).
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of Packard for the 1993, 1994 and 1995 fiscal years
and (iii) unaudited condensed consolidated financial statements of Packard
for the nine months ended September 30, 1996.
(d) Approvals. All governmental and material third party approvals
(including landlords' and other consents) necessary or advisable in
connection with the Recapitalization, the continuing operations of Packard
and its Subsidiaries and the transactions contemplated hereby shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Recapitalization or the financing thereof or any
other financing contemplated hereby.
(e) Business Plan. The Lenders shall have received a business plan
for Packard and its Subsidiaries for the 1997 fiscal year and a written
analysis of the business and prospects of Packard and its Subsidiaries for
the period from the Closing Date through the final maturity of the Term
Loans.
(f) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions in the United
States where assets of the Loan Parties are located, and such search shall
reveal no liens on any of the assets of Packard or its Subsidiaries except
for liens permitted by Section 9.3 or liens discharged on or prior to the
Closing Date pursuant to documentation satisfactory to the Administrative
Agent and the Co-Arrangers.
(g) Environmental Audit. The Administrative Agent shall have
received an environmental audit from IA Consulting with respect to the
real property of Packard and its Subsidiaries specified by the
Administrative Agent.
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51
(h) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit H,
with appropriate insertions and attachments.
(i) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Day, Berry & Howard, counsel to
Packard and its Subsidiaries, substantially in the form of Exhibit
J;
(ii) the legal opinion of Rudnick & Wolfe, special Illinois
counsel to Packard and its Subsidiaries, substantially in the form
of Exhibit K;
(iii) the legal opinion of Amster, Rothstein & Ebenstein,
special intellectual property counsel to Packard and its
Subsidiaries, substantially in the form of Exhibit L;
(iv) to the extent consented to by such counsel, each legal
opinion, if any, delivered in connection with the Recapitalization
and Stock Purchase Agreement, accompanied by a reliance letter in
favor of the Lenders; and
(v) the legal opinion of local counsel in each foreign
jurisdiction where any Subsidiary (if any) that is a Subsidiary
Borrower on the Closing Date is incorporated.
Each such legal opinion shall cover such matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(j) Pledged Stock; Stock Powers. The Administrative Agent shall have
received the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof.
(k) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 9.3), shall be in proper form for filing,
registration or recordation.
(l) Mortgages, etc. (i) The Administrative Agent shall have received
a Mortgage with respect to each Mortgaged Property, executed and delivered
by a duly authorized officer of each party thereto.
(ii) To the extent available, the Administrative Agent shall have
received, and the title insurance company issuing the policy referred to
in Section 7.1(l)(iii) (the "Title Insurance Company") shall have
received, maps or plats of an as-built survey of the sites of the
Mortgaged Properties certified to the Administrative Agent and the Title
Insurance Company
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52
in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (A) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the
sites; (D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the sites; (F) if
the site is described as being on a filed map, a legend relating the
survey to said map; and (G) the flood zone designations, if any, in which
the Mortgaged Properties are located; provided, that in the event that any
of the foregoing items are not delivered on the Closing Date, such items
shall be delivered within 45 days thereafter with, if necessary,
appropriate endorsements to the title insurance policies referred to in
clause (iii) below.
(iii) The Administrative Agent shall have received in respect of
each Mortgaged Property a mortgagee's title insurance policy (or policies)
or marked up unconditional binder for such insurance. Each such policy
shall (A) be in an amount specified in Schedule 1.1B; (B) be issued at
ordinary rates; (C) insure that the Mortgage insured thereby creates a
valid first Lien on such Mortgaged Property (or, in the case of the
Connecticut Mortgage, a Lien subject to the relevant Liens described on
Schedule 9.3(f)) free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of
the Lenders as the insured thereunder; (E) be in the form of ALTA Loan
Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies);
(F) contain such endorsements and affirmative coverage as the
Administrative Agent may reasonably request and (G) be issued by Chicago
Title Insurance Company. The Administrative Agent shall have received
evidence satisfactory to it that all premiums in respect of each such
policy, all charges for mortgage recording tax, and all related expenses,
if any, have been paid.
(iv) For any property located in a designated flood zone, the
Administrative Agent shall have received (A) a policy of flood insurance
which (1) covers any parcel of improved real property which is encumbered
by any Mortgage (2) is written in an amount not less than the outstanding
principal amount of the Indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3)
has a term ending not later than the maturity of the Indebtedness secured
by such Mortgage and (B) confirmation that the mortgager under the
Mortgage has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in Section 7.1(l)(iii) and a copy of
all other material documents affecting the Mortgaged Properties.
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53
(vi) Notwithstanding anything to the contrary in this Section 7.1,
in the event that Packard shall be unable to deliver any item described in
this Section 7.1 with respect to the Connecticut Mortgaged Property solely
as a result of its inability to obtain any requisite consent of any
Connecticut Governmental Authority, such items shall not be required to be
delivered on the Closing Date, provided, that, in each case, such items
(including, with respect to the Connecticut Mortgage, a legal opinion)
shall be delivered no later than 90 days after the Closing Date.
(m) Fees. Each of the Agents shall have received the fees required
to be paid to it and the Lenders on or prior to the Closing Date and any
invoices for expenses payable hereunder presented to Packard shall have
been paid by Packard.
(n) Material Licenses and Contracts. The Administrative Agent shall
have received evidence satisfactory to it that any material licenses and
other material contracts of Packard and its Subsidiaries having "change of
control" or similar provisions will remain in place and effect on
satisfactory terms after giving effect to the Recapitalization.
(o) Employment Agreements. Emery G. Olcott and Richard T. McKernan
shall have entered into employment agreements with Packard.
(p) Solvency Opinion. The Administrative Agent shall have received a
solvency opinion from Houlihan, Lokey, Howard & Zukin.
(q) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of the Guarantee and
Collateral Agreement and the Mortgages.
7.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit (including the issuance of any Letter of
Credit) requested to be made by it on any date (including, without limitation,
its initial extension of credit) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by any Borrower hereunder and the issuance of each Letter of
Credit issued hereunder shall constitute a representation and warranty by
Packard that the conditions contained in this Section 7.2 have been satisfied.
In addition, each borrowing by a Subsidiary Borrower hereunder shall
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54
constitute a representation and warranty by such Subsidiary Borrower (insofar as
such conditions relate to representations and warranties or covenants or
agreements of such Subsidiary Borrower) as of the date thereof that the
conditions contained in this Section 7.2 have been satisfied.
7.3 Each Subsidiary Borrower Credit Event. The agreement of each
Lender to make the initial extension of credit requested to be made by it to any
Subsidiary Borrower on any date is subject to the satisfaction of the following
conditions precedent:
(a) Borrowing Subsidiary Agreement. The Administrative Agent shall
have received the Borrowing Subsidiary Agreement for such Subsidiary
Borrower executed and delivered by Packard and such Subsidiary Borrower.
(b) Opinions. The Administrative Agent shall have received a
satisfactory written opinion of reputable counsel for such Subsidiary
Borrower, substantially in the form of Exhibit M, and covering such other
matters (including matters of the type described in Sections 5.11 and
5.12) relating to such Subsidiary Borrower or its Borrowing Subsidiary
Agreement as the Administrative Agent shall reasonably request.
(c) Other Documents. The Administrative Agent shall have received
such documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of such Subsidiary Borrower, the authorization of the
transactions contemplated hereby relating to such Subsidiary Borrower and
any other legal matters relating to such Subsidiary Borrower, its
Borrowing Subsidiary Agreement or such transactions, all in form and
substance satisfactory to the Administrative Agent.
SECTION 8. AFFIRMATIVE COVENANTS
Packard hereby agrees, and each Subsidiary Borrower severally agrees
(to the extent specifically applicable to such Subsidiary Borrower) that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each such party shall, and shall cause each of
its Subsidiaries to:
8.1 Financial Statements. Furnish, or cause to be furnished, to the
Administrative Agent and each Lender:
(a) (i) as soon as available, but in any event within 90 days after
the end of each fiscal year of Packard, commencing with the fiscal year
ending December 31, 1996, either (x) a copy of the audited consolidated
balance sheet of Packard and its consolidated Subsidiaries as at the end
of such year and the related audited consolidated statements of income and
of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year or (y) in the event that Packard is
subject to Section 13 or 15(b) of the Exchange Act, Packard's annual
report on Form 10-K, in each case reported on without a "going concern" or
like qualification or exception, or qualification arising out of the scope
of the audit, by Arthur Andersen LLP or other independent certified public
accountants of nationally recognized standing; and (ii) within 45 days
after the Closing Date, a copy of the audited pro forma condensed
consolidated balance sheet of Packard and its consolidated
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55
Subsidiaries as at December 31, 1996, prepared in the same manner as the
Pro Forma Balance Sheet and reported on by Arthur Andersen LLP;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of Packard, commencing with the fiscal quarter ending March 31, 1997,
either (i) the unaudited condensed consolidated balance sheet of Packard
and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited condensed consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the
figures for the previous year (or, in the case of the balance sheet, the
audited consolidated balance sheet of Packard and its consolidated
Subsidiaries as at the end of the prior fiscal year) or (ii) in the event
that Packard is subject to Sections 13 or 15 of the Exchange Act,
Packard's quarterly report on Form 10-Q, in each case certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
(c) (i) as soon as available, but in any event not later than 30
days after the end of each of April, May, July and August in 1997, (A) the
unaudited condensed combined balance sheet of Packard and its Domestic
Subsidiaries as at the end of such month and the related unaudited
condensed combined statement of income and of cash flows for such month
and the portion of the fiscal year through the end of such month, setting
forth, in the case of the balance sheet, in comparative form the audited
consolidated balance sheet of Packard and its Subsidiaries as at the end
of the prior fiscal year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and (B) for each Foreign Subsidiary, a statement containing
(1) the amount of Consolidated EBITDA attributable to such Foreign
Subsidiary (on a stand-alone basis) for such month and the portion of the
fiscal year through the end of such month, (2) Capital Expenditures,
Technology Acquisitions and acquisitions (other than Technology
Acquisitions) permitted by Section 9.8(g) (each such category of
expenditures to be a separate line item) made by such Foreign Subsidiary
during such month, (3) the cash on hand of such Foreign Subsidiary as at
the end of such month and as at the end of the prior fiscal year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
(ii) as soon as available, but in any event not later than 30 days
after the end of each month (or 45 days in the case of the first and
second such month) occurring during each fiscal year of Packard (other
than the third, sixth, ninth and twelfth such month), commencing with
October 1997, the unaudited condensed consolidated balance sheet of
Packard and its Subsidiaries as at the end of such month and the related
unaudited condensed consolidated statement of income and of cash flows for
such month and the portion of the fiscal year through the end of such
month, setting forth in each case in comparative form the figures for the
previous year (or, in the case of the balance sheet, the audited
consolidated balance sheet of Packard and its consolidated Subsidiaries as
at the end of the prior fiscal year), certified by a Responsible Officer
as being fairly stated in all material respects (subject to normal
year-end audit adjustments); provided that, notwithstanding the foregoing,
Packard shall not be required to provide comparative figures with respect
to such unaudited condensed consolidated statements of income and of cash
flows delivered with respect to any month prior to October 31, 1998; and
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56
(d) together with the delivery of any financial statements pursuant
to Section 8.1(a)(i), Section 8.1(b) (commencing with the fiscal quarter
ending September 30, 1997) or Section 8.1(c)(ii), unaudited condensed
consolidated statements of income for each Principal Business for the
relevant period and (except in the case of annual financial statements)
the portion of the fiscal year through the end of such period, setting
forth in each case (except in the case of statements delivered pursuant to
Section 8.1(c)(ii) with respect to each month prior to October 1998) in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject (except in the case of annual financial statements) to normal
year-end audit adjustments).
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
8.2 Certificates; Other Information. Furnish, or cause to be
furnished, to the Administrative Agent and each Lender:
(a) concurrently with the delivery of the annual financial
statements referred to in Section 8.1(a)(i) commencing with the delivery
of such financial statements for the fiscal year ending December 31, 1997,
a certificate of the independent certified public accountants reporting on
such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 8.1(a)(i), 8.1(b) and 8.1(c) commencing with the
delivery of such financial statements for the fiscal quarter ending June
30, 1997, (i) a certificate of a Responsible Officer stating that, to the
best of each such Responsible Officer's knowledge, each Loan Party during
such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and
the other Loan Documents to which it is a party to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) in the case of quarterly or annual financial
statements, (x) a Compliance Certificate containing all information
necessary for determining compliance by Packard and its Subsidiaries with
the provisions of this Agreement referred to therein as of the last day of
the fiscal quarter or fiscal year of Packard, as the case may be and (y)
to the extent not previously disclosed to the Administrative Agent, a
listing of any state within the United States where any Loan Party keeps
inventory or equipment (other than immaterial inventory or equipment and
inventory in transit in the ordinary course of business) and of any
Intellectual Property arising under the laws of the United States (or any
jurisdiction therein) acquired by any Loan Party since the date of the
most recent list delivered pursuant to this clause (y) (or, in the case of
the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of Packard, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of Packard and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of
projected cash flow and projected income), and, as soon as available,
significant revisions, if any, of such budget and
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57
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions and that such
Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of Packard,
a narrative discussion and analysis of the financial condition and results
of operations of Packard and its Subsidiaries for such fiscal quarter and
for the period from the beginning of the then current fiscal year to the
end of such fiscal quarter, as compared to the portion of the Projections
(or, if applicable, projections delivered prior to the Closing Date)
covering such periods and to the comparable periods of the previous year;
(e) within five days after the same are sent, copies of all
financial statements and reports which Packard sends to the holders of any
class of its debt securities or all of the holders of any class of public
equity securities and within five days after the same are filed, copies of
all financial statements and reports which Packard may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
8.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Packard or its Subsidiaries, as the case may be.
8.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Continue to engage in business of the same general type as now conducted by it,
(ii) preserve, renew and keep in full force and effect its corporate existence
and (iii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise expressly permitted by Section 9.4; and (b) comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
8.5 Maintenance of Property; Insurance. (a) Keep all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.
8.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of the Administrative Agent or any Lender (coordinated through
the Administrative Agent) to visit and inspect any of its properties and examine
and make
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58
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired and to discuss the business, operations, properties
and financial and other condition of Packard and its Subsidiaries with officers
and employees of Packard and its Subsidiaries and with its independent certified
public accountants.
8.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Packard or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between Packard or
any of its Subsidiaries and any Governmental Authority and which has a
reasonable likelihood of being adversely determined, which in either case,
if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any non-frivolous litigation or proceeding affecting Packard or
any of its Subsidiaries in which the amount involved is $1,000,000 or more
and not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after any Responsible Officer knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation
of any Lien on the assets of Packard or any Commonly Controlled Entity in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC
or Packard or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan, provided, however, that no notice shall be
necessary with respect to any of the foregoing events if the aggregate
liability of Packard and its Subsidiaries with respect to such events
could not exceed $1,000,000; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 8.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Packard or the relevant Subsidiary proposes to
take with respect thereto.
8.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, except to the extent that any such actions are being contested in good
faith by
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59
appropriate proceedings and the outcome of such proceedings, if adversely
determined, could not reasonably be expected to have a Material Adverse Effect.
8.9 Additional Collateral, etc. (a) With respect to any Property
acquired after the Closing Date by Packard or any of its Domestic Subsidiaries
(other than (x) any Property described in paragraph (b), (c) or (d) below and
(y) any Property subject to a Lien expressly permitted by Section 9.3(g)) as to
which the Administrative Agent, for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative Agent
such amendments to the Guarantee and Collateral Agreement or such other
documents as the Administrative Agent deems necessary or advisable in order to
grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such Property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such Property, including without limitation,
the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Guarantee and Collateral Agreement or by law or as may
be requested by the Administrative Agent.
(b) With respect to any fee interest in any real estate having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by Packard or any of its Domestic Subsidiaries (other than any
such real estate subject to a Lien expressly permitted by Section 9.3(g)),
promptly (i) execute and deliver a first priority mortgage or deed of trust, as
the case may be, in favor of the Administrative Agent, for the benefit of the
Lenders, covering such real estate, in form and substance reasonably
satisfactory to the Administrative Agent, (ii) if requested by the
Administrative Agent, provide the Lenders with (x) title and extended coverage
insurance covering such real estate in an amount at least equal to the purchase
price of such real estate (or such other amount as shall be reasonably specified
by the Administrative Agent) as well as a current ALTA survey thereof, together
with a surveyor's certificate and (y) any consents or estoppels reasonably
deemed necessary or advisable by the Administrative Agent in connection with
such mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any new Domestic Subsidiary created or acquired
after the Closing Date by Packard or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems necessary or
advisable in order to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by Packard or any of its Domestic
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of Packard or such
Subsidiary, as the case may be, (iii) cause such new Domestic Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Lenders a perfected first priority security interest in the
Collateral described in the Guarantee and Collateral Agreement with respect to
such new Domestic Subsidiary, including, without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent, and (iv) deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
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(d) With respect to any new Foreign Subsidiary created or acquired
after the Closing Date by Packard or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems necessary or
advisable in order to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by Packard or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding Capital
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Packard or such Subsidiary, as the case may be and (iii)
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
8.10 Employment Agreements. Within 60 days after the Closing Date,
cause appropriate senior management of Packard, as determined by Stonington, to
enter into employment contracts, similar to those entered into on the Closing
Date by Emery G. Olcott and Richard T. McKernan.
SECTION 9. NEGATIVE COVENANTS
Packard agrees, and each Subsidiary Borrower severally agrees (to
the extent specifically applicable to such Subsidiary Borrower) that, so long as
the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or the Administrative Agent
hereunder, each such party shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
9.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any fiscal quarter of Packard ending during any
period set forth below to exceed the ratio set forth below opposite such period:
Consolidated
Period Leverage Ratio
------ --------------
September 30, 1997 - December 30, 1997 5.85:1.00
December 31, 1997 - December 30, 1998 5.75:1.00
December 31, 1998 - December 30, 1999 5.50:1.00
December 31, 1999 - December 30, 2000 5.00:1.00
December 31, 2000 - December 30, 2001 4.50:1.00
December 31, 2001 - December 30, 2002 4.00:1.00
December 31, 2002 and thereafter 3.50:1.00
; provided, that if, during any period as at the end of which the Consolidated
Leverage Ratio is determined pursuant to this Section 9.1(a), Packard or any of
its Subsidiaries shall have made any investment pursuant to Section 9.8(g),
Consolidated EBITDA for such period shall be calculated on a pro forma basis
giving effect to such investment as if it had been made on the first day of such
period.
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(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
Packard ending during any period set forth below to be less than the ratio set
forth below opposite such period:
Consolidated Interest
Period Coverage Ratio
------ --------------
June 30, 1997 - December 30, 1998 1.50:1.00
December 31, 1998 - December 30, 1999 1.75:1.00
December 31, 1999 - December 30, 2000 2.00:1.00
December 31, 2000 and thereafter 2.25:1.00
; provided, that for the purposes of determining the ratio described above as at
the end of any fiscal quarter of Packard ending June 30, 1997, September 30,
1997 and December 31, 1997, Consolidated Interest Expense for the relevant
period shall be deemed to equal Consolidated Interest Expense for such fiscal
quarter (and, in the case of the latter two such determinations, each previous
fiscal quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3,
respectively.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of Packard ending during any period set forth below to be less
than the ratio set forth below opposite such period:
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
June 30, 1997 - March 30, 2000 1.00:1.00
March 31, 2000 and thereafter 1.05:1.00
; provided, that for the purposes of determining the ratio described above as at
the end of any fiscal quarter of Packard ending June 30, 1997, September 30,
1997 and December 31, 1997, Consolidated Fixed Charges for the relevant period
shall be deemed to equal Consolidated Fixed Charges for such fiscal quarter
(and, in the case of the latter two such determinations, each previous fiscal
quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3,
respectively.
9.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist (in each case, to "Incur") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of Packard to any Wholly Owned Subsidiary Guarantor
and of any Wholly Owned Subsidiary Guarantor to Packard or any other
Wholly Owned Subsidiary Guarantor;
(c) Indebtedness of Packard to any Wholly Owned Foreign Subsidiary,
provided that at all times such Indebtedness is evidenced by a note which
includes subordination terms substantially in the form set forth on
Exhibit Q;
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(d) Indebtedness of any Wholly Owned Foreign Subsidiary to Packard
or any Wholly Owned Subsidiary Guarantor in an aggregate amount not to
exceed $5,000,000 at any one time outstanding, provided that such
Indebtedness is evidenced by a note that is pledged as collateral under
the Guarantee and Collateral Agreement;
(e) (i) Indebtedness of Foreign Subsidiaries consisting of working
capital loans or overadvances ("Non-Facility Offshore Currency Loans") in
Dollars or currencies freely tradeable or exchangeable into Dollars so
long as the Non-Facility Loans Dollar Equivalent shall not exceed
$10,000,000 at any one time outstanding and (ii) any guarantees of such
Indebtedness issued by Packard;
(f) Indebtedness of Packard Japan KK in an aggregate amount not to
exceed $7,500,000, the proceeds of which are used to finance the Japan
Acquisition;
(g) Management Notes;
(h) Indebtedness of an entity (i) existing at the time such entity
becomes a Subsidiary of Packard or (ii) assumed in connection with the
acquisition of assets from such entity, in each case other than
Indebtedness incurred in connection with, or in contemplation of, such
entity becoming a Subsidiary or such acquisition (any such Indebtedness,
"Acquired Indebtedness"); provided, that the aggregate amount of Acquired
Indebtedness incurred pursuant to this paragraph (h) shall not exceed
$10,000,000 at any one time outstanding.
(i) Indebtedness secured by Liens permitted by Section 9.3(g),
Capital Lease Obligations and Acquired Indebtedness not otherwise
permitted by Section 9.2(h); provided, that the aggregate amount of all
Indebtedness incurred pursuant to this paragraph (i) shall not exceed
$5,000,000 at any one time outstanding;
(j) Indebtedness outstanding on the date hereof and listed on
Schedule 9.2(j) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof);
(k) guarantees made in the ordinary course of business by Packard or
any of its Subsidiaries of obligations of any Wholly Owned Subsidiary
Guarantor;
(l) (i) Indebtedness of Packard in respect of the Subordinated Notes
in an aggregate principal amount not to exceed $150,000,000 and (ii)
subordinated Guarantee Obligations of any Subsidiary Guarantor in respect
of such Indebtedness; and
(m) additional Indebtedness of Packard or any of its Subsidiaries in
an aggregate principal amount (for Packard and all Subsidiaries) not to
exceed $10,000,000 at any one time outstanding.
Notwithstanding anything to the contrary in this Section 9.2, the aggregate
principal amount of Indebtedness incurred pursuant to paragraphs (h), (i) and
(m) above shall not exceed $20,000,000 at any one time outstanding.
9.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
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(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Packard or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of Packard
or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 9.3(f),
securing Indebtedness permitted by Section 9.2(j), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
provided, further, that all such Liens listed on part one of Schedule
9.3(f) (UCC-1 Filings) shall be released within 10 days of the Closing
Date;
(g) Liens securing Indebtedness of Packard or any other Subsidiary
incurred pursuant to Section 9.2(i) to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other
than the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens securing any Indebtedness permitted to exist or be
acquired pursuant to Section 9.2(h), which were created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by Packard or any of its Subsidiaries, so long as such Liens
do not at any time encumber any Property other than the Property
encumbered by such Liens at the time such Indebtedness was incurred;
(i) Liens created pursuant to the Security Documents; and
(j) any interest or title of a lessor under any lease entered into
by Packard or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased.
9.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except
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64
to the extent necessary to effect any Disposition or acquisition of a Subsidiary
expressly permitted by this Agreement and except:
(a) any Subsidiary of Packard may be merged or consolidated with or
into Packard (provided that Packard shall be the continuing or surviving
corporation) or with or into any Wholly Owned Subsidiary Guarantor
(provided that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation); and
(b) any Subsidiary of Packard may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to Packard or any Wholly Owned Subsidiary Guarantor.
9.5 Limitation on Sale of Assets. Dispose of any of its property,
business or assets (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property (including,
without limitation, obsolete general intangibles having a fair market
value of less than $100,000) in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 9.4(b);
(d) the sale or issuance of the Capital Stock of any Subsidiary to
Packard or any Wholly Owned Subsidiary Guarantor;
(e) the sale or issuance of the Capital Stock of any Foreign
Subsidiary to any Wholly Owned Subsidiary of Packard; and
(f) the sale of other assets having a fair market value not to
exceed $5,000,000 in the aggregate in any fiscal year of Packard;
provided, that (x) at least 75% of the consideration from any such asset
sale is received in cash or Acceptable Consideration, (y) Packard or the
relevant Subsidiary receives consideration at the time of such asset sale
at least equal to the fair market value of the shares or assets subject of
such asset sale (as determined by the board of directors of Packard and
evidenced in a board resolution in the case of any sale or series of
related sales resulting in Net Cash Proceeds in excess of $500,000) and
(z) the aggregate fair market value of assets sold pursuant to this
Section 9.5(f) shall not exceed $15,000,000 during the term of this
Agreement. For the purposes of this paragraph (f), "Acceptable
Consideration" means (1) the assumption of Indebtedness of Packard or any
Subsidiary and the release of Packard or such Subsidiary from all
liability on such Indebtedness in connection with the relevant asset sale,
(2) Cash Equivalents and (3) securities received by Packard or any
Subsidiary from the transferee that are promptly converted by Packard or
such Subsidiary into cash.
9.6 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption,
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65
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock of Packard or any Subsidiary or any warrants or options to
purchase any such Capital Stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Packard or any Subsidiary
(collectively, "Restricted Payments"), except that (i) any Subsidiary may make
Restricted Payments to Packard or any Wholly Owned Subsidiary Guarantor; (ii)
any Foreign Subsidiary may make Restricted Payments to any other Subsidiary; and
(iii) so long as no Default or Event of Default has occurred and is continuing,
Packard and any of its Subsidiaries may (A) repurchase shares of its Capital
Stock from employees, former employees, directors or former directors of Packard
or any of its Subsidiaries pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by the Board of
Directors of Packard under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital Stock, provided
that the aggregate amount of such repurchases in any calendar year (excluding
any such repurchases made through the issuance of Management Notes)
(collectively, "Management Stock Payments"), when added to the amount of any
Management Note Payments made during such calendar year, shall not exceed
$2,000,000; and (B) repurchase, redeem or acquire or retire for value any shares
of Capital Stock of Packard which were owned immediately prior to the closing of
the Recapitalization by Non-Management Stockholders (as defined in the
Recapitalization Agreement) and which Packard made an offer to repurchase
pursuant to Section 2.2 of the Recapitalization Agreement but which were not
tendered to Packard, provided that the purchase price per share for such shares
of Capital Stock of Packard shall not exceed $22.25 per share and any such
shares of Capital Stock are purchased within 90 days of the Closing Date.
9.7 Limitation on Capital Expenditures and Technology Acquisitions.
Make or commit to make (by way of the acquisition of securities of a Person or
otherwise) any Capital Expenditure or Technology Acquisition, except Capital
Expenditures or Technology Acquisitions made by Packard and its Subsidiaries in
the ordinary course of business not exceeding $10,000,000 in any fiscal year of
Packard; provided, that (a) up to $3,000,000 of any such amount referred to
above, if not so expended in the fiscal year for which it is permitted, may be
carried over to make Capital Expenditures in the next succeeding fiscal year and
(b) Capital Expenditures made pursuant to this Section during any fiscal year
shall be deemed made, first, in respect of amounts carried over from the prior
fiscal year pursuant to clause (a) above and, second, in respect of amounts
permitted for such fiscal year as provided above.
9.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a significant part of a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) (i) investments in Cash Equivalents and (ii) investments
referred to in clause (3) of Section 9.5(f);
(c) Guarantee Obligations expressly permitted by Section 9.2;
(d) loans and advances to employees of Packard or its Subsidiaries
in the ordinary course of business (including, without limitation, for
travel, entertainment and relocation expenses) in an aggregate amount for
Packard and its Subsidiaries not to exceed $1,000,000 at any one time
outstanding;
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(e) the Recapitalization;
(f) investments by Packard or any of its Subsidiaries in Packard or
any Person that, prior to such investment, is a Wholly Owned Subsidiary
Guarantor; and
(g) in addition to investments otherwise expressly permitted by this
Section 9.8, investments by Packard or any of its Subsidiaries, in an
amount (valued at cost) not to exceed $20,000,000 (or, on a one-time basis
during the term of this Agreement, $40,000,000) in any single transaction
or series of related transactions; provided that (i) the aggregate amount
(valued at cost) of all such investments does not exceed $70,000,000
during the term of this Agreement, (ii) not more than $20,000,000 of such
investments shall be made during the term of this Agreement in Foreign
Subsidiaries or assets owned by Foreign Subsidiaries and (iii) the amount
of any Indebtedness acquired or assumed by Packard or any of its
Subsidiaries in connection with any such investment shall be included in
determining the cost of such investment, in each case so long as, after
giving pro forma effect thereto (as certified to the Administrative Agent
by a Responsible Officer prior to consummation of such investment), (1) no
Default or Event of Default shall have occurred and be continuing
(including, without limitation, pursuant to Section 9.1, with compliance
with Section 9.1 being determined on a pro forma basis as if such
investment (including the incurrence or assumption of any Indebtedness in
connection therewith) had been made on the first day of the most recent
period of four consecutive fiscal quarters for which the relevant
financial information is available) and (2) the sum of cash on hand held
by Packard and the aggregate Available Revolving Credit Commitments
exceeds $10,000,000.
9.9 Limitation on Payments and Modifications of Debt Instruments,
etc. (a) (i) Make or offer to make any payment, prepayment, repurchase or
redemption of or otherwise defease or segregate funds with respect to the
principal of Subordinated Notes, (ii) amend, modify, waive or otherwise change,
or consent or agree to any amendment, modification, waiver or other change to,
any of the terms of the Subordinated Notes (other than any such amendment,
modification, waiver or other change which (A) would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce the
rate or extend the date for payment of interest thereon and (B) does not involve
the payment of a consent fee), or (iii) designate any Indebtedness as
"Designated Senior Indebtedness" for the purposes of the Subordinated Note
Indenture.
(b) Make any payment, prepayment, repurchase or redemption of the
Management Notes (collectively, "Management Note Payments") other than
Management Note Payments in any fiscal year in an amount that, when added to the
amount of any Management Stock Payments made during such fiscal year, does not
exceed $2,000,000.
9.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service, or the payment of any
management, advisory or similar fees (other than a one-time structuring fee of
$2,500,000 payable to Stonington in connection with the Recapitalization), with
any Affiliate (other than Packard or any Wholly Owned Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of Packard or such Subsidiary, as the case may
be, and (c) upon fair and reasonable terms no less favorable to Packard or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
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9.11 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by Packard or any Subsidiary of real
or personal property which has been or is to be sold or transferred by Packard
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of Packard or such Subsidiary.
9.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year
of Packard to end on a day other than December 31 or change Packard's method of
determining fiscal quarters.
9.13 Limitation on Negative Pledge Clauses. Enter into with any
Person, or suffer to exist, any agreement, other than (a) this Agreement and the
other Loan Documents, (b) the Subordinated Note Indenture and (c) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case any prohibition or limitation shall only be
effective against the assets financed thereby), which prohibits or limits the
ability of Packard or any of its Subsidiaries to create, incur, assume or suffer
to exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired.
9.14 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction (collectively, "Subsidiary Restrictions") on the ability of any
Subsidiary of Packard to (a) pay dividends or make any other distributions in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, Packard or any other Subsidiary of Packard, (b) make loans or advances
to Packard or any other Subsidiary of Packard or (c) transfer any of its assets
to Packard or any other Subsidiary of Packard (excluding, in the case of this
clause (c), any such encumbrances or restrictions created by any agreements
governing any purchase money liens or Capital Lease Obligations otherwise
permitted hereby, in which case any encumbrance or limitation shall only be
effective against the assets financed thereby), except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents or the Subordinated Note Indenture or any other agreements in
effect on the date hereof and listed on Schedule 6.16, (ii) any restrictions
with respect to a Subsidiary imposed pursuant to an agreement which has been
entered into in connection with the sale or disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary, or (iii) any restrictions
existing under any agreement that amends, refinances or replaces any agreement
containing the restrictions referred to in clause (i) or (ii) above, provided
that the terms and conditions of any such agreement are no less favorable to the
Lenders than those under the agreement so amended, refinanced or replaced.
9.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
Packard and its Subsidiaries are engaged on the date of this Agreement or which
are reasonably related thereto.
9.16 Limitation on Amendments to Recapitalization Documents. (a)
Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the
terms and conditions of the indemnities furnished by the Management Stockholders
to Packard or any of its Subsidiaries pursuant to the Recapitalization and Stock
Purchase Agreement or any other document delivered by the Selling Shareholders
or any of their affiliates in connection therewith such that after giving effect
thereto such indemnities shall be materially less favorable to the interests of
the Loan Parties or the Lenders with respect thereto or (b) otherwise amend,
supplement or otherwise modify the terms and conditions of the Recapitalization
and Stock Purchase Agreement or any such other documents except to the extent
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that any such amendment, supplement or modification could not reasonably be
expected to have a Material Adverse Effect.
9.17 Inactive Subsidiaries. Permit any Inactive Subsidiary, at any
time, to fail to satisfy any of the criteria set forth in the definition of
Inactive Subsidiary in Section 1.1.
SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
any Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
8.4(a) (with respect to Packard only), Section 8.7(a) or Section 9 of this
Agreement or Section 5.6 or 5.8(b) of the Guarantee and Collateral
Agreement or (ii) an "Event of Default" under and as defined in any
Mortgage shall have occurred and be continuing; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days after
the earlier of (i) the date upon which written notice thereof is given to
Packard by the Administrative Agent or the Required Lenders or (ii) the
date upon which a Responsible Officer becomes aware of such default; or
(e) Packard or any of its Subsidiaries shall (i) default in making
any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting
a Guarantee Obligation) to become payable; provided, that a default, event
or condition described in clause (i), (ii) or (iii) of this paragraph
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(e) shall not at any time constitute an Event of Default under this
Agreement unless, at such time, one or more defaults, events or conditions
of the type described in clauses (i), (ii) and (iii) of this paragraph (e)
shall have occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate $2,500,000;
or
(f) (i) Packard or any of its Subsidiaries that is a Subsidiary
Borrower or that has assets (valued at book value) in excess of $500,000
(collectively, "Significant Subsidiaries") shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Packard or any of its Significant
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Packard or any of its
Significant Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against Packard or any of its Significant
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged,
or stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) Packard or any of its Significant Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Packard or any of its Significant Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of
Packard or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) Packard or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi)
any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be
expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Packard or any of its Subsidiaries involving in the aggregate a liability
(not paid or to the extent not fully covered
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by insurance which Packard has determined in good faith to be available in
whole or in part with respect to such judgment or decree) of $2,500,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the entry
thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) The guarantee contained in Section 12 hereof or in Section 2 of
the Guarantee and Collateral Agreement shall cease, for any reason, to be
in full force and effect or any Loan Party or any Affiliate of any Loan
Party shall so assert; or
(k) (i) Stonington shall cease to have the power, directly or
indirectly, to vote or direct the voting of securities having a majority
of the ordinary voting power for the election of directors of Packard
(determined on a fully diluted basis); (ii) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding Stonington, any Control Investment Affiliate of Stonington and
any officer, employee or director of Packard or any of its Subsidiaries,
shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of more than
30% of the outstanding common stock of Packard; (iii) the board of
directors of Packard shall cease to consist of a majority of Continuing
Directors; or (iv) a Specified Change of Control shall occur; or
(l) The Subordinated Notes or the guarantees thereof shall cease,
for any reason, to be validly subordinated to the obligations of Packard
or the Subsidiary Guarantors, as the case may be, under the Loan
Documents, as provided in the Subordinated Note Indenture, or any Loan
Party or any Affiliate of any Loan Party shall so assert;
then, and in any such event, (A)(1) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to Packard,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (2) if such event is
an Event of Default specified in clause (i) or (ii) of paragraph (f) above with
respect to a Subsidiary Borrower, (i) the eligibility of such Subsidiary
Borrower to borrow shall thereupon terminate and (ii) the Loans of such
Subsidiary Borrower shall become immediately due and payable, together with
accrued interest thereon and all fees and other obligations of such Subsidiary
Borrower in respect thereof and (B) if such event is an Event of Default other
than an Event of Default described in clause (A)(1) above, either or both of the
following actions may be taken: (i) with the consent of the Majority Revolving
Credit Facility Lenders, the Administrative Agent may, or upon the request of
the Majority Revolving Credit Facility Lenders, the Administrative Agent shall,
by notice to Packard declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to Packard, declare the Loans hereunder (with accrued interest
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thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph (other than pursuant to clause (A)(2)
thereof), Packard shall at such time deposit in a cash collateral account opened
by the Administrative Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. Packard hereby grants to the
Administrative Agent, for the benefit of the Issuing Lender and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of the Borrowers under this Agreement and the other Loan Documents.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrowers hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrowers hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the relevant Borrowers (or such other Person as may be lawfully entitled
thereto). Except as otherwise expressly provided above in this Section 10, the
Borrowers waive presentment, demand, protest or other notice of any kind.
SECTION 11. THE AGENTS
11.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the foregoing, the use of the term
"agent" with respect to the Administrative Agent is used as a matter of market
custom and is intended to create or reflect only an administrative relationship
between independent contracting parties.
The Issuing Lender and the Fronting Lenders shall act on behalf of
the Lenders with respect to Letters of Credit and Fronted Offshore Revolving
Credit Loans, respectively, issued or made under this Agreement and the
documents associated therewith. It is understood and agreed that the Issuing
Lender and the Fronting Lenders (a) shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Section 11 with
respect to acts taken or omissions suffered by the Issuing Lender or any
Fronting Lender in connection with Letters of Credit and Fronted Offshore
Revolving Credit Loans issued or made under this Agreement and the documents
associated therewith as fully as if the term "Administrative Agent", as used in
this Section 11, included such Issuing Lender
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and the Fronting Lenders with respect to such acts or omissions and (ii) as
additionally provided in this Agreement and (b) shall, with respect to the
Revolving Credit Lenders, have all of the benefits of the provisions of Section
11.7 as fully as if the term "Administrative Agent", as used in Section 11.7,
included the Issuing Lender and the Fronting Lenders.
11.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
11.3 Exculpatory Provisions. None of the Agent-Related Persons shall
be (i) liable for any action lawfully taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by any Loan
Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by any Agent-Related Person under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. The Administrative Agent shall maintain a
record of the principal amount of the Loans and L/C Obligations from time to
time outstanding and the respective amounts thereof owing to each Lender. Any
records maintained by any Agent-Related Person setting forth the names and
addresses of the Lenders and the Commitments of, and the principal amount of the
Loans owing to, each Lender from time to time shall be conclusive, in the
absence of manifest error.
11.4 Reliance by Administrative Agent. (a) The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or telephone message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
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Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
(b) For purposes of determining compliance with the conditions
specified in Section 7.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent or Packard to
such Lender prior to the Closing Date, or required thereunder to be consented to
or approved by or acceptable or satisfactory to such Lender.
11.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
Packard referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
11.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that none of the Agent-Related Persons has made
any representations or warranties to it and that no act by any Agent-Related
Person hereafter taken, including any review of the affairs of a Loan Party or
any affiliate of a Loan Party, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and all
applicable bank regulatory laws relating to the transactions contemplated hereby
and made its own decision to enter into this Agreement and to extend credit to
the Borrowers hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent-Related Person shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of any of the Agent-Related
Persons.
11.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders agree to indemnify the Administrative Agent
and its officers, directors, trustees, professional advisors, employees,
affiliates, agents and controlling persons (each, a "Section 11.7 indemnitee")
(to the extent not reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so), ratably according to their respective
Revolving Credit Percentages and
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Term Loan Percentages in effect on the date on which indemnification is sought
under this Section 11.7 (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against such Section 11.7 indemnitee in any way relating to or arising out of,
the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Section
11.7 indemnittee under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements which are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the relevant Section
11.7 indemnitee's gross negligence or willful misconduct. The agreements in this
Section 11.7 shall survive the payment of the Loans and all other amounts
payable hereunder.
11.8 Agent in Its Individual Capacity. The Administrative Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrowers as though the Administrative Agent were
not the Administrative Agent hereunder and under the other Loan Documents and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, the Administrative Agent and its Affiliates may
receive information regarding the Borrowers or their Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrowers or their Affiliates) and acknowledge that neither the Administrative
Agent nor its Affiliates shall be under an obligation to provide such
information to them. With respect to its Loans made or renewed by it and with
respect to any Letter of Credit issued or participated in by it, each Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
11.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by Packard (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent hereunder. If no successor agent is appointed
prior to the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrowers, a successor agent from among the Lenders. Effective upon such
appointment by the Required Lenders or by the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents. If no successor agent has accepted appointment as
Administrative Agent by the date which is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall
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assume and perform all of the duties of the Administrative Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
11.10 Authorization to Release Liens. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Packard or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 13.1.
11.11 Documentation Agent, Co-Syndication Agents and Co-Arrangers.
None of the Documentation Agent, the Co-Syndication Agents and the Co-Arrangers
shall have any duties or responsibilities hereunder in its capacity as such.
SECTION 12. GUARANTEE
12.1 Guarantee. In order to induce the Administrative Agent and the
Lenders to execute and deliver this Agreement and to make or maintain the Loans
to the Subsidiary Borrowers hereunder, and in consideration thereof, Packard
hereby unconditionally and irrevocably guarantees to the Administrative Agent,
for the ratable benefit of the Lenders, the prompt and complete payment and
performance by the Subsidiary Borrowers when due (whether at stated maturity, by
acceleration or otherwise) of the Subsidiary Borrower Obligations, and Packard
further agrees to pay any and all expenses (including, without limitation, all
reasonable fees, charges and disbursements of counsel) which may be paid or
incurred by the Administrative Agent or by the Lenders in enforcing, or
obtaining advice of counsel in respect of, any of their rights under the
guarantee contained in this Section 12. The guarantee contained in this Section
12, subject to Section 12.5, shall remain in full force and effect until the
Subsidiary Borrower Obligations are paid in full, the Commitments are terminated
and no Letters of Credit are outstanding, notwithstanding that from time to time
prior thereto the Subsidiary Borrowers may be free from any Obligations.
Packard agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on account of
its liability under this Section 12, it will notify the Administrative Agent and
such Lender in writing that such payment is made under the guarantee contained
in this Section 12 for such purpose. No payment or payments made by the
Subsidiary Borrowers or any other Person or received or collected by the
Administrative Agent or any Lender from the Subsidiary Borrowers or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Subsidiary Borrower Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of Packard under this Section 12 which,
notwithstanding any such payment or payments, shall remain liable for the
Subsidiary Borrower Obligations until, subject to Section 12.5, the Obligations
are paid in full, the Commitments are terminated and no Letters of Credit are
outstanding.
12.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 12, Packard hereby
irrevocably waives all rights which may have arisen in connection with the
guarantee contained in this Section 12 to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code (or similar action
under any successor law or under any comparable law), including Section 509
thereof, under common law or otherwise) of the Administrative Agent or any
Lender against the Subsidiary Borrowers or against the Administrative Agent or
any Lender for the payment of the Subsidiary Borrower Obligations, until all
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such Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have been terminated. Packard hereby
further irrevocably waives all contractual, common law, statutory and other
rights of reimbursement, contribution, exoneration or indemnity (or any similar
right) from or against the Subsidiary Borrowers or any other Person which may
have arisen in connection with the guarantee contained in this Section 12, until
the Subsidiary Borrower Obligations shall have been paid in full, no Letters of
Credit shall be outstanding and the Commitments shall have been terminated. So
long as the Subsidiary Borrower Obligations remain outstanding, if any amount
shall be paid by or on behalf of the Subsidiary Borrowers to Packard on account
of any of the rights waived in this Section 12.2, such amount shall be held by
Packard in trust, segregated from other funds of Packard, and shall, forthwith
upon receipt by Packard, be turned over to the Administrative Agent in the exact
form received by Packard (duly indorsed by Packard to the Administrative Agent,
if required), to be applied against the Subsidiary Borrower Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
The provisions of this Section 12.2 shall survive the term of the guarantee
contained in this Section 12 and the payment in full of the Subsidiary Borrower
Obligations and the termination of the Commitments.
12.3 Amendments, etc. with respect to the Subsidiary Borrower
Obligations. Packard shall remain obligated under this Section 12
notwithstanding that, without any reservation of rights against Packard, and
without notice to or further assent by Packard, any demand for payment of or
reduction in the principal amount of any of the Subsidiary Borrower Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of such Obligations continued, and
such Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and this Agreement, any
other Loan Document, and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Lenders (or the Required Lenders, as the case may be)
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any Lender for
the payment of the Subsidiary Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Subsidiary Borrower Obligations or for the
guarantee contained in this Section 12 or any property subject thereto.
12.4 Guarantee Absolute and Unconditional. Packard waives any and
all notice of the creation, renewal, extension or accrual of any of the
Subsidiary Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
12 or acceptance of the guarantee contained in this Section 12; the Subsidiary
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 12; and all dealings
between the Subsidiary Borrowers or Packard, on the one hand, and the
Administrative Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 12. Packard waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Subsidiary Borrowers or Packard with respect to the Subsidiary Borrower
Obligations. The guarantee contained in this Section 12 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of this Agreement or any other Loan Document,
any of the Subsidiary Borrower Obligations or any collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time to
time held by the
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Administrative Agent or any Lender, (b) any defense, setoff or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrowers against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of the Subsidiary Borrowers or Packard) which constitutes, or might
be construed to constitute, an equitable or legal discharge of the Subsidiary
Borrowers for the Subsidiary Borrower Obligations, or of Packard under the
guarantee contained in this Section 12, in bankruptcy or in any other instance.
When the Administrative Agent or any Lender is pursuing its rights and remedies
under this Section 12 against Packard, the Administrative Agent or any Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Subsidiary Borrowers or any other Person or against any
collateral security or guarantee for the Subsidiary Borrowers Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to pursue such other rights or remedies or to collect any
payments from the Subsidiary Borrowers or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any Subsidiary Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
Packard of any liability under this Section 12, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent and the Lenders against Packard.
12.5 Reinstatement. The guarantee contained in this Section 12 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Subsidiary Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Subsidiary Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Subsidiary Borrower or any substantial part of its property, or
otherwise, all as though such payments had not been made.
12.6 Payments. Packard hereby agrees that any payments in respect of
the Subsidiary Borrower Obligations pursuant to this Section 12 will be paid to
the Administrative Agent without setoff or counterclaim in Dollars or the
relevant Offshore Currency, as applicable, at the office of the Administrative
Agent specified in Section 13.6.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 13.1. The
Required Lenders and each Loan Party party to the relevant Loan Documents may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan or Reimbursement Obligation (or, in
each case, any portion thereof), extend the scheduled date of any amortization
payment in respect of any Term Loan, reduce
<PAGE>
78
the stated rate of any interest, fee or letter of credit commission payable
hereunder or extend the scheduled date of any payment thereof, amend, modify or
waive any provision of Section 5.10(a), (b) or (c), or increase the amount or
extend the expiration date of any Lender's Revolving Credit Commitment, in each
case without the consent of each Lender (including, in the case of Fronted
Offshore Revolving Credit Loans, each relevant Fronted Revolving Credit Loan
Participant) directly affected thereby; (ii) amend, modify or waive any
provision of this Section 13.1 or reduce any percentage specified in the
definition of Required Lenders or Required Prepayment Lenders, consent to the
assignment or transfer by Packard of any of its rights and obligations under
this Agreement and the other Loan Documents, release the guarantee of Packard
contained in Section 12, release all or substantially all of the Collateral or
release all or substantially all of the Subsidiary Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all Lenders; (iii) reduce the percentage specified in the
definition of Majority Facility Lenders without the written consent of all
Lenders under each affected Facility; (iv) amend, modify or waive any provision
of Section 11 without the written consent of the Administrative Agent; or (v)
amend, modify or waive any provision of Section 3 without the written consent of
the Issuing Lender. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Banking Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrowers and the
Administrative Agent, as set forth in an administrative questionnaire delivered
to the Administrative Agent in the case of the Lenders and, as set forth in
Schedule 1.1A or in the relevant Borrowing Subsidiary Agreement in the case of
the Subsidiary Borrowers, or to such other address as may be hereafter notified
by the respective parties hereto:
The Borrowers: Packard BioScience Company
800 Research Parkway
Meriden, CT 06450
Attention: Chief Financial Officer
Fax: (203) 235-6089
The Administrative Agent: For notices of borrowing, payments and other
administrative matters:
Bank of America National Trust & Savings Association
ABA No.: 1210-0035-8
Bancontrol No.: 12335-15380
Ref: Packard BioScience Company
Agency Administrative Services #5596
1455 Market Street, 13th Floor
<PAGE>
79
San Francisco, CA 94103
For all other notices (including with respect to
amendments and waivers):
Bank of America National Trust and Savings
Association
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management #10831
Fax: (415) 436-3425
Tel: (415) 436-2769
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
13.5 Payment of Expenses and Taxes. Packard agrees (and each
Subsidiary Borrower severally agrees, to the extent applicable to actions or
omissions by it under the Loan Documents or related documents to which it is a
party) (a) to pay or reimburse the Administrative Agent for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, trustees,
professional advisors, employees, affiliates, agents and controlling persons
(each, an "indemnitee") harmless from and against any and all
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80
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of Packard any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that neither Packard nor
any Subsidiary Borrower shall have any obligation hereunder to any indemnitee
with respect to indemnified liabilities to the extent such indemnified
liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such indemnitee. The agreements in this Section 13.5 shall survive
repayment of the Loans and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Lenders, the Issuing Lender, the Fronting Lenders, the Administrative Agent,
all future holders of the Loans and their respective successors and assigns,
except that Packard may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrowers, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Loans, in each case to the extent subject to such participation. Each Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 13.7(a) as
fully as if it were a Lender hereunder. Each Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 5.11, 5.12 and 5.13
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it was a Lender; provided that, in the case of Section
5.12, such Participant shall have complied with the requirements of said Section
and provided, further, that no Participant shall be entitled to receive any
greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
<PAGE>
81
(c) Any Lender (an "Assignor") may, in accordance with applicable
law, at any time and from time to time assign to any Lender or any affiliate
thereof or, with the consent of Packard and the Administrative Agent (and in the
case of assignments of Revolving Credit Commitments, each Fronting Lender and
the Issuing Lender), which consent in each case will not be unreasonably
withheld or delayed, to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit N executed by such Assignee and such Assignor (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof, by Packard and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance; provided that no such assignment to an Assignee (other than any
Lender or any affiliate thereof) shall be in an aggregate principal amount of
less than $5,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement), unless otherwise agreed by Packard and
the Administrative Agent. Any such assignment need not be ratable as among the
Facilities. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this Section 13.6, the consent
of Packard shall not be required, and, unless requested by the Assignee and/or
the Assignor, new Notes shall not be required to be executed and delivered by
the Borrowers, for any assignment which occurs at any time when any of the
events described in Section 10(f) shall have occurred and be continuing with
respect to Packard.
(d) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in the case of an Assignee that is not then a
Lender or an affiliate thereof, by Packard and the Administrative Agent)
together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall promptly accept such
Assignment and Acceptance.
(e) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing Indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation or any error in such recordation shall not
affect any Borrower's obligations hereunder or under any Note. At the request of
the Administrative Agent, each Fronting Lender will provide to the
Administrative Agent a copy of its records maintained pursuant to this Section.
(f) The Loans made by each Lender shall be evidenced by a Note
issued by the relevant Borrower, substantially in the form of Exhibit O-1, O-2
or O-3, as the case may be, payable to the order of such Lender. Each Lender is
hereby authorized to record, on the schedule annexed to and constituting a part
of the relevant Note, information regarding the relevant Loans made by such
Lender, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure to make any
such recordation or any error in such recordation shall not affect any
Borrower's obligations hereunder or under any Note. On or prior to the effective
date of an Assignment and Acceptance, each relevant Borrower, at its own
expense, shall execute and deliver to the Administrative Agent, in exchange for
the relevant Notes, new Notes to the
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82
order of the Assignee and, if applicable, the Assignor. Such new Notes shall be
dated the Closing Date and shall otherwise be in the form of the Notes replaced
thereby.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 13.6 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
13.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 10(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan and/or of the Reimbursement
Obligations owing to each such other Lender, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrowers,
any such notice being expressly waived by each of the Borrowers to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrowers hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrowers. Each Lender agrees
promptly to notify the Borrowers and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
13.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with Packard and the Administrative
Agent.
13.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>
83
13.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
13.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.12 Submission To Jurisdiction; Waivers. Each of the Borrowers
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Packard
at its address set forth in Section 13.2 or at such other address of which
the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 13.12 any special, exemplary, punitive or consequential
damages.
13.13 Acknowledgements. Each of the Borrowers hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to such Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
such Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
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84
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrowers and the Lenders.
13.14 WAIVERS OF JURY TRIAL. THE BORROWERS, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.15 Conversion of Currencies. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder in one
currency into another currency, each party hereto (including any Subsidiary
Borrower) agrees, to the fullest extent that it may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures in the relevant jurisdiction the first currency could be purchased
with such other currency on the Banking Day immediately preceding the day on
which final judgment is given.
(b) The obligations of each Borrower in respect of any sum due to
any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent that,
on the Banking Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 13.15 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
13.16 Confidentiality. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Participant or Assignee (each, a "Transferee") or prospective Transferee
which agrees to comply with the provisions of this Section 13.16, (c) to the
employees, directors, agents, attorneys, accountants and other professional
advisors of the Administrative Agent or such Lender or their respective
affiliates, (d) upon the request or demand of any Governmental Authority having
jurisdiction over the Administrative Agent or such Lender, (e) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required to do
so in connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 13.16, (h) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender or (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document.
<PAGE>
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PACKARD BIOSCIENCE COMPANY
By: /s/ Emery G. Olcott
-----------------------------------------
Name: Emery G. Olcott
Title: President and Chief Executive
Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By: /s/ Dietmar Schiel
-----------------------------------------
Name: Dietmar Schiel
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE, as
Documentation Agent and as a Lender
By: /s/ William J. Koslo, Jr.
-----------------------------------------
Name: William J. Koslo, Jr.
Title: Authorized Signatory
BANCAMERICA SECURITIES, INC., as a Co-
Arranger and a Co-Syndication Agent
By: /s/ Frank E. Brittan
-----------------------------------------
Name: Frank E. Brittan
Title: Managing Director
CIBC WOOD GUNDY SECURITIES CORP., as a
Co-Arranger and a Co-Syndication Agent
By: /s/ Dean T. Criares
-----------------------------------------
Name: Dean T. Criares
Title: Director
<PAGE>
86
BANK OF AMERICA ILLINOIS, as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Name:
Title:
ABN AMRO BANK N.V., as a Lender
By: /s/ Frances O. Logan
-----------------------------------------
Name: Frances O. Logan
Title: Group Vice President
By: /s/ Nancy W. Lanzoni
-----------------------------------------
Name: Nancy W. Lanzoni
Title: Group Vice President
BANK OF BOSTON CONNECTICUT, as a Lender
By: /s/ Christina P. Clark
-----------------------------------------
Name: Christina P. Clark
Title: Vice President
BANK OF SCOTLAND, as a Lender
By: /s/ Catherine M. Oniffrey
-----------------------------------------
Name: Catherine M. Oniffrey
Title: Vice President
THE BANK OF TOKYO MITSUBISHI TRUST
COMPANY, as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Name:
Title:
FLEET NATIONAL BANK, as a Lender
By: /s/ Stephen L. Festa
-----------------------------------------
Name: Stephen L. Festa
Title: Vice President
<PAGE>
87
IBJ SCHRODER BANK & TRUST COMPANY, as a
Lender
By: /s/ Kieth A. Murray
-----------------------------------------
Name: Kieth A. Murray
Title: Director
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, as a Lender
By: /s/ Shuichi Tajima
-----------------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
THE NIPPON CREDIT BANK, LTD., as a Lender
By: /s/ Barry Fein
-----------------------------------------
Name: Barry Fein
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY,
as a Lender
By: /s/ Karen F. Booth
-----------------------------------------
Name: Karen F. Booth
Title: Vice President
ALLSTATE LIFE INSURANCE COMPANY, as a
Lender
By: /s/ {ILLEGIBLE]
-----------------------------------------
Name:
Title:
By: /s/ {ILLEGIBLE]
-----------------------------------------
Name:
Title:
<PAGE>
88
THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P., as a Lender
By: /s/ Michael D. Hatley
-----------------------------------------
Name: Michael D. Hatley
Title: Vice President & Portfolio
Manager
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC., as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, as a Lender
By: /s/ Richard A. Strait
-----------------------------------------
Name: Richard A. Strait
Title: Vice President
PILGRIM AMERICAN PRIME RATE TRUST, as a
Lender
By: /s/ Daniel A. Norman
-----------------------------------------
Name: Daniel A. Norman
Title: Senior Vice President
<PAGE>
EXHIBIT 5.1
March , 1997
Packard BioScience Company
800 Research Parkway
Meriden, Connecticut 06540
Re: Registration Statement on Form S-4 (333- )
Ladies and Gentlemen:
We have acted as counsel for Packard BioScience Company, a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission of a Registration
Statement on Form S-4 (No. 333- ), as amended (the "Registration Statement")
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), with
respect to up to $150,000,000 aggregate principal amount of the Company's 9 3/8%
Senior Subordinated Notes due 2007, Series B (the "Exchange Notes") to be issued
in exchange for the Company's issued and outstanding 9 3/8% Senior Subordinated
Notes due 2007 (the "144A Notes"), all as described in the Registration
Statement.
In rendering this opinion, we have examined and relied upon originals or
copies, certified or otherwise identified to our satisfaction of such records,
documents, certificates and other instruments including, but not limited to, (i)
the Amended and Restated Certificate of Incorporation of the Company, (ii) the
Bylaws of the Company, (iii) certain minutes of the corporate proceedings of the
Board of Directors and shareholders of the Company, and (iv) the Indenture
entered into by the Company and the Bank of New York and dated as of March 4,
1997 (the "Indenture"), and have made such investigation of law as in our
judgment is necessary or appropriate to enable us to render the opinions
expressed below.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents submitted to us as
copies.
The opinions set forth below are based on, and limited to, the General
Corporation Law of the State of Delaware and no opinion is expressed as to the
laws of any other jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
Exchange Notes, when issued, authenticated and delivered in accordance with the
terms of the Indenture and as contemplated by the Registration Statement, will
be the legally valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability to general principles of equity including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and
<PAGE>
except to the extent that a waiver of rights under any usury law may be
unenforceable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the Prospectus included therein. In giving such consent, we do not
hereby admit that we are within the category of persons whose consent is
required by Section 7 of the Securities Act. This opinion is not to be used,
circulated, quoted or otherwise referred to for any other purpose without our
express written consent.
Very truly yours,
DAY, BERRY & HOWARD
<PAGE>
================================================================================
CANBERRA INDUSTRIES, INC.
(to be renamed Packard BioScience Company
upon consummation of the Recapitalization)
(a Delaware corporation)
$150,000,000
9 3/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
Dated: February 21, 1997
================================================================================
<PAGE>
PURCHASE AGREEMENT...........................................................1
SECTION 1. Representations and Warranties..........................4
(a) Representations and Warranties by the Company...........4
(i) Similar Offerings..............................4
(ii) Offering Memorandum............................4
(iii) Independent Accountants........................4
(iv) Financial Statements...........................5
(v) No Material Adverse Change in Business.........5
(vi) Good Standing of the Company...................6
(vii) Good Standing of Subsidiaries..................6
(viii) Capitalization.................................6
(ix) Authorization of Agreements....................7
(x) Authorization of the Indenture.................7
(xi) Authorization of the Securities................7
(xii) Authorization of the New Credit Agreement......8
(xiii) Authorization of the Recapitalization..........8
(xiv) Description of the Securities, the Indenture
and the Transaction..........................9
(xv) Absence of Defaults and Conflicts..............9
(xvi) Absence of Labor Dispute.......................10
(xvii) Absence of Proceedings.........................10
(xviii) Possession of Intellectual Property............11
(xix) License Agreements.............................11
(xx) Absence of Further Requirements................12
(xxi) Possession of Licenses and Permits.............12
(xxii) Title to Property..............................13
(xxiii) Tax Returns....................................13
(xxiv) Insurance......................................14
(xxv) Solvency.......................................14
(xxvi) Stabilization or Manipulation..................14
(xxvii) Environmental Laws.............................15
(xxviii) Registration Rights............................15
(xxix) Accounting Controls............................16
(xxx) Compliance With Cuba Act.......................16
(xxxi) Investment Company Act.........................16
(xxxii) Rule 144A Eligibility..........................16
(xxxiii) No General Solicitation........................16
(xxxiv) No Registration Required.......................17
<PAGE>
(xxxv) No Directed Selling Efforts....................17
(b) Officer's Certificates..................................17
SECTION 2. Sale and Delivery to Initial Purchasers; Closing........17
(a) Securities..............................................17
(b) Payment.................................................18
(c) Qualified Institutional Buyer...........................18
(d) Denominations; Registration.............................19
SECTION 3. Covenants of the Company................................19
(a) Offering Memorandum.....................................19
(b) Notice and Effect of Material Events....................19
(c) Amendment to Offering Memorandum and Supplements........19
(d) Termination of Provisions...............................20
(e) Qualification of Securities for Offer and Sale..........20
(f) Integration.............................................20
(g) Rule 144A Information...................................20
(h) Restriction on Resales..................................21
(i) Use of Proceeds.........................................21
(j) Restriction on Sale of Securities.......................21
(k) DTC Clearance...........................................21
(l) Legends.................................................21
(m) Interim Financial Statements............................21
(n) Periodic Reports........................................21
(o) Recapitalization Documents..............................21
SECTION 4. Payment of Expenses.....................................22
(a) Expenses................................................22
(b) Termination of Agreement................................22
SECTION 5. Conditions of Initial Purchasers' Obligations...........22
(a) Opinions of Counsel for Company.........................23
(b) Opinion of Counsel for Initial Purchasers...............23
(c) Officers' Certificate...................................23
(d) Accountant's Comfort Letter and Consent.................23
(e) Bring-down Comfort Letter...............................24
(f) Maintenance of Rating...................................24
(g) PORTAL..................................................24
(h) Registration Rights Agreement...........................24
(i) Credit Agreement........................................24
(j) Recapitalization........................................24
(k) Recapitalization Opinions...............................25
(l) Additional Documents....................................25
(m) Termination of Agreement................................25
SECTION 6. Indemnification.........................................25
<PAGE>
(a) Indemnification of Initial Purchasers...................25
(b) Indemnification of Company and Directors................27
(c) Actions against Parties; Notification...................27
(d) Settlement without Consent if Failure to Reimburse......28
SECTION 7. Contribution............................................28
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery................................................29
SECTION 9. Termination of Agreement................................30
(a) Termination; General....................................30
(b) Liabilities.............................................30
SECTION 10. Default by One or More of the Initial Purchasers........30
SECTION 11. Notices.................................................31
SECTION 12. Parties.................................................31
SECTION 13. GOVERNING LAW AND TIME..................................32
SECTION 14. Effect of Headings......................................32
<PAGE>
$150,000,000
CANBERRA INDUSTRIES, INC.
(to be renamed Packard BioScience Company
upon consummation of the Recapitalization)
(a Delaware corporation)
PURCHASE AGREEMENT
February 21, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BancAmerica Securities, Inc.
CIBC Wood Gundy Securities Corp.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Canberra Industries, Inc., a Delaware corporation (to be renamed Packard
BioScience Company upon consummation of the Recapitalization (as defined below)
(the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
Initial Purchasers named in Schedule A hereto (collectively, the "Initial
Purchasers", which term shall also include any initial purchaser substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch is acting as
representative (in such capacity, the "Representative"), with respect to the
issue and sale by the Company and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in said
Schedule A of $150,000,000 aggregate principal amount of the Company's 9 3/8%
Senior Subordinated Notes due 2007 (the "Securities"). The Securities are to be
issued pursuant to an indenture to be dated as of March 4, 1997 (the
"Indenture") between the
1
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Company and The Bank of New York, as trustee (the "Trustee"). Securities issued
in book-entry form will be issued to Cede & Co. as nominee of The Depository
Trust Company ("DTC") pursuant to a letter agreement, to be dated as of the
Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among the
Company, the Trustee and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the Indenture,
investors that acquire Securities may only resell or otherwise transfer such
Securities if such Securities are hereafter registered under the 1933 Act or if
an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act by
the Securities and Exchange Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated February 5, 1997 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated February 21, 1997 (the "Final Offering Memorandum"),
each to be used by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
The holders of the Securities will be entitled to the benefits of the
registration rights agreement to be dated as of the Closing Time (the
"Registration Rights Agreement"), among the Company and the Initial Purchasers,
pursuant to which the Company will agree to file, as soon as practicable after
the Closing Time but in any event within 45 days of the Closing Time, a
registration statement with the Commission registering the Exchange Securities
(as defined in the Registration Rights Agreement) under the 1933 Act.
2
<PAGE>
As described in the Offering Memorandum, the Company has entered into a
Recapitalization and Stock Purchase Agreement (the "Recapitalization
Agreement"), dated as of November 26, 1996, by and among the Company, CII
Acquisition LLC ("CII") and each of the management stockholders party thereto,
to effect a recapitalization of the Company (the "Recapitalization"). Pursuant
to the Recapitalization Agreement, the Company has conducted a tender offer (the
"Tender Offer") pursuant to an offer to purchase (the "Offer to Purchase"),
dated as of January 29, 1997, to repurchase for $22.25 per share certain shares
of the Company's common stock, par value $.01 per share (the "Common Stock")
held by all stockholders of the Company other than certain management
stockholders (the "Non-Management Stockholders"). Certain other continuing
stockholders will retain certain of their shares of Common Stock in the
Recapitalization. The Company will also cancel all options to purchase shares of
Common Stock held by the Non-Management Stockholders in exchange for $22.25 per
option less the exercise price thereof. In addition, CII will acquire shares of
Common Stock from the Company and certain shares of Common Stock held by the
management stockholders for an aggregate of approximately $71.5 million and the
management stockholders and the continuing stockholders will retain certain
shares of Common Stock and certain existing options to purchase shares of Common
Stock such that, upon consummation of the Recapitalization, CII will own
approximately 70% of the outstanding Common Stock and the management
stockholders and the continuing stockholders collectively will own approximately
30% of the outstanding Common Stock. The Tender Offer will be closed, and the
Common Stock validly tendered and not withdrawn by Non-Management Stockholders,
will be purchased by the Company, concurrently with the acquisition of Common
Stock by CII. Simultaneously with the closing of the Recapitalization,
Stonington Capital Appreciation 1994 Fund, L.P. will make a capital contribution
of approximately $71.5 million to CII to fund CII's obligations under the
Recapitalization Agreement.
Simultaneously with the closing of the Recapitalization, the Company will
enter into a credit agreement (the "New Credit Agreement") with Bank of America
National Trust and Savings Association, as administrative agent, Canadian
Imperial Bank of Commerce, as documentation agent, BancAmerica Securities, Inc.
and CIBC Wood Gundy Securities Corp., as co-arrangers and co-syndication agents,
and the lenders named therein. The New Credit Agreement will provide for a
six-year term loan facility in the amount of $40 million and a revolving credit
facility aggregating $75 million.
In the event that less than all of the Common Stock held by Non-Management
Stockholders are validly tendered and not withdrawn in the Tender Offer, the
Recapitalization Agreement provides that the parties may effect a merger (the
"Merger") of a merger subsidiary organized by CII with and into the Company
3
<PAGE>
simultaneously with the Recapitalization, pursuant to which Common Stock held by
such non-tendering Non-Management Stockholders would be exchanged for cash at a
price per share equivalent to that being offered in the Tender Offer. It is
expected that the closing of the Merger would occur simultaneously with the
closing of the Tender Offer and the Recapitalization. The Company and the merger
subsidiary organized by CII have entered into a merger agreement (the "Merger
Agreement") providing for the Merger and holders of more than 50% of the
outstanding shares of Common Stock have executed support agreements ("Support
Agreements") consenting to, and agreeing to vote in favor of, the Merger.
The Recapitalization, the Tender Offer, the Offer to Purchase, the New
Credit Agreement, the offering, sale and issuance of the Securities, and the
transactions and ancillary agreements related to each of the foregoing, and, if
the Merger is effected, the Merger, the Merger Agreement and the Support
Agreements, are collectively referred to herein as the "Transactions."
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Initial Purchaser as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each Initial
Purchaser as follows:
(i) Similar Offerings. The Company has not, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, in the United
States or to any United States citizen or resident, any security which is
or would be integrated with the sale of the Securities in a manner that
would require the Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and at
the Closing Time will not, include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, that this representation, warranty and agreement
shall not apply to statements in or omissions from the Offering Memorandum
made in reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through Merrill Lynch
expressly for use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent certified public accountants with respect to
4
<PAGE>
the Company and its Subsidiaries (as defined herein) within the meaning of
Regulation S-X under the 1933 Act.
(iv) Financial Statements. The financial statements, together with
the related schedules and notes, included in the Offering Memorandum
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statements of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have
been prepared in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be stated therein or in the notes
thereto). The selected financial data and the summary financial
information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Memorandum. The pro forma financial statements of the Company and its
Subsidiaries and the related notes thereto and the other pro forma
financial information included in the Offering Memorandum present fairly
the information shown therein, have been prepared in all material respects
in accordance with the Commission's rules and guidelines with respect to
pro forma financial statements included in a registration statement under
the 1933 Act and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. To the
Company's knowledge, the Recapitalization may be accounted for as a
"recapitalization" for financial reporting purposes.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein or contemplated thereby (including in
connection with the Transactions), (A) there has been no material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its Subsidiaries, other
than those in the ordinary course of business, which are material with
respect to the Company and its Subsidiaries considered as one enterprise,
and (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
5
<PAGE>
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Indenture, the Securities, the Exchange Securities, and the DTC Agreement
and to enter into and consummate the Transactions as described in the
Offering Memorandum; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
reasonably be expected to result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of the Company
(each a "Subsidiary" and collectively the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified as
a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or to be in good standing would not
reasonably be expected to result in a Material Adverse Effect; except as
otherwise disclosed in the Offering Memorandum, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of the Subsidiaries was issued in
violation of any preemptive or similar rights arising by operation of law,
or under the charter or by-laws of any Subsidiary or under any agreement
to which the Company or any Subsidiary is a party.
(viii) Capitalization. All of the shares of outstanding capital
stock of the Company have been, and upon consummation of the
Recapitalization will be, duly authorized and validly issued and fully
paid and non-assessable; no person has an enforceable right to have shares
of capital stock issued to them as a result of preemptive or other similar
rights of any securityholder of the Company arising by operation of law,
under the
6
<PAGE>
charter or bylaws of the Company, under any agreement to which the Company
or any of its Subsidiaries is a party or otherwise.
(ix) Authorization of Agreements. This Agreement has been and, as of
the Closing Time, each of the Registration Rights Agreement and the DTC
Agreement will have been, duly authorized, executed and delivered by the
Company. Upon the execution thereof by the Company (and assuming the due
authorization, execution and delivery by the other parties thereto), each
of the Registration Rights Agreement and the DTC Agreement will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as rights to
indemnification and contribution may be limited under applicable law and
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(x) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and (assuming the due authorization,
execution and delivery of the Indenture by the Trustee) will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xi) Authorization of the Securities. The Securities have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated and issued in the manner provided for in
the Indenture and delivered against payment of the purchase price therefor
(and assuming the due authorization, execution and delivery of the
Indenture by the Trustee), will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be in the form contemplated by,
and entitled to
7
<PAGE>
the benefits of, the Indenture. The Exchange Securities have been duly
authorized and, when executed and authenticated and issued and delivered
by the Company in exchange for the Securities pursuant to the Exchange
Offer (as defined in the Registration Rights Agreement), will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xii) Authorization of the New Credit Agreement. The New Credit
Agreement has been duly authorized by the Company and the Subsidiaries
party thereto and, at the Closing Time, will have been duly executed and
delivered by the Company and such Subsidiaries and (assuming due
authorization, execution and delivery by the other parties thereto) will
constitute a valid and binding agreement of the Company and such
Subsidiaries, enforceable against the Company and such Subsidiaries in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xiii) Authorization of the Recapitalization. The Recapitalization
Agreement has been duly authorized, executed and delivered by the Company
and (assuming due authorization, execution and delivery by the other
parties thereto) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law). The Merger Agreement has been duly authorized, executed
and delivered by the Company and (assuming due authorization, execution
and delivery by the other parties thereto), constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). The Tender
Offer, the Offer
8
<PAGE>
to Purchase, each of the other Transactions and the related transactions
and agreements described in the Offering Memorandum have been duly
authorized by the Company.
(xiv) Description of the Securities, the Indenture and the
Transactions. The Securities, the Indenture, the Registration Rights
Agreement, the Recapitalization Agreement, the Merger Agreement, the Offer
to Purchase, the New Credit Agreement and the Support Agreements conform
or upon the consummation of the Recapitalization will conform in all
material respects to the respective statements relating thereto contained
in the Offering Memorandum and are or upon the consummation of the
Recapitalization will be in substantially the respective forms previously
delivered to the Initial Purchasers. The Exchange Securities will conform
in all material respects to the statements relating thereto contained in
the Offering Memorandum and the Registration Statement (as defined in the
Registration Rights Agreement) at the time it becomes effective.
(xv) Absence of Defaults and Conflicts. Neither the Company nor any
of its Subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or
by which or any of them may be bound, or to which any of the property or
assets of the Company or any of its Subsidiaries is subject (collectively,
"Agreements and Instruments") or has violated or is in violation of any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries
or any of their assets or properties, except in each case for such
defaults or violations that would not reasonably be expected to result in
a Material Adverse Effect; and the execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Indenture, the DTC
Agreement, the Securities, the Exchange Securities, the Recapitalization
Agreement, the Offer to Purchase, the Merger Agreement (if the Merger is
consummated), the New Credit Agreement and any other agreement or
instrument entered into or issued or to be entered into or issued by the
Company in connection with the transactions contemplated hereby or thereby
or in the Offering Memorandum or in connection with the Transactions and
the consummation of the transactions contemplated herein and in the
Offering Memorandum (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in
the Offering
9
<PAGE>
Memorandum under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and in connection with the
Transactions do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or a Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant to,
the Agreements and Instruments, except with regard to liens, charges and
encumbrances as disclosed in the Offering Memorandum in connection with
the New Credit Agreement, nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any of its
Subsidiaries or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of
its Subsidiaries or any of their assets or properties. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any of its Subsidiaries.
(xvi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its Subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of the Company's or any
of the Company's Subsidiaries' principal suppliers, manufacturers,
customers or contractors, which, in either case, would reasonably be
expected to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. Except as disclosed in the Offering
Memorandum, there is no action, suit, proceeding, inquiry or
investigation, in each case before or by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any Subsidiary
thereof which, singly or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect, or which, singly or in the aggregate,
would reasonably be expected to materially and adversely affect the
consummation of this Agreement or the performance by the Company of its
obligations hereunder or under the Securities or Exchange Securities or
the consummation of any of the Transactions or any portion thereof.
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<PAGE>
(xviii) Possession of Intellectual Property. The Company and its
Subsidiaries own, possess or license, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them or as contemplated to be operated upon consummation
of the Recapitalization, and, except as disclosed in the Offering
Memorandum, neither the Company nor any of its Subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property
(including Intellectual Property which is licensed) or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
Subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect.
(xix) License Agreements. All of the agreements pursuant to which
the Company or any of its Subsidiaries license Intellectual Property from
third parties (the "License Agreements") have been duly authorized,
executed and delivered by the Company or such Subsidiary and (assuming due
authorization, execution and delivery by the other parties thereto)
constitute valid and binding agreements of the Company or such Subsidiary,
enforceable against the Company or such Subsidiary in accordance with
their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). Neither the Company nor
any of its Subsidiaries is in violation or in default in the performance
or observance of any obligation, agreement, covenant or condition
contained in any such License Agreement, nor has the Company or any of its
Subsidiaries received notice from any third party that the Company or any
of its Subsidiaries is in violation or in default in the performance or
observance of any obligation, agreement, covenant or condition contained
in any such License Agreement, except for any violation or default which,
singly or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
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(xx) Absence of Further Requirements. Except as disclosed in the
Offering Memorandum, and other than (i) any approvals of the Nuclear
Regulatory Commission and similar state agencies, which have been
received, (ii) customary filings pursuant to the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, (iii) registration under the 1933 Act
of the Exchange Securities (including filings with the NASD), (iv)
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, upon consummation of the Exchange Offer, and (v) registration or
qualification under state securities or "blue sky" laws in connection with
the offer and sale of the Securities or the Exchange Securities, and
subject to compliance by the Initial Purchasers with the representations,
warranties and agreements set forth in Section 2, no filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions
contemplated by or for the due execution, delivery or performance of this
Agreement, the Registration Rights Agreement, the Indenture, the DTC
Agreement, the Securities, the Exchange Securities, the Recapitalization
Agreement, the New Credit Agreement and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company or
any of its Subsidiaries in connection with the Transactions and the
consummation of the transactions contemplated herein and in the Offering
Memorandum (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds").
(xxi) Possession of Licenses and Permits. The Company and its
Subsidiaries possess all governmental permits, licenses, approvals,
consents, certificates and other authorizations (including, without
limitation, all licenses and permits required by the Nuclear Regulatory
Commission and state, local and foreign agencies or other governmental
authorities or bodies charged with supervising the Company's or its
Subsidiaries' nuclear activities) (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by them
respectively or as contemplated to be conducted upon consummation of the
Recapitalization in the manner described in the Offering Memorandum,
except where the failure to possess such Governmental Licenses would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; the Company and its subsidiaries are in compliance with
the terms and
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conditions of all such Governmental Licenses and with the rules and
regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, except where the failure so to comply
would not, singly or in the aggregate, reasonably be expected to result in
a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not reasonably be expected to result in a Material
Adverse Effect; and neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses, nor are there, to the
knowledge of the Company, pending or threatened actions, suits, claims or
proceedings against the Company or any Subsidiary before any court,
governmental agency or body or otherwise that, if successful, would limit,
revoke, cancel, suspend or cause not to be renewed any Governmental
License, in each case, which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Effect.
(xxii) Title to Property. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or any of its Subsidiaries; and all of the leases and
subleases material to the business of the Company and its Subsidiaries,
considered as one enterprise, and under which the Company or any of its
Subsidiaries holds properties described in the Offering Memorandum, are in
full force and effect, and neither the Company nor any of its Subsidiaries
has any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any of its Subsidiaries
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any Subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xxiii) Tax Returns. The Company and its Subsidiaries have filed all
federal, state, local and foreign tax returns that are required to have
been filed by them pursuant to applicable foreign, federal, state, local
or other law or have duly requested extensions thereof, except insofar as
the
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failure to file such returns or request such extensions would not
reasonably be expected to result in a Material Adverse Effect, and has
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its subsidiaries, except for such taxes or
assessments, if any, as are being contested in good faith and as to which
adequate reserves have been provided or where the failure to pay would
not reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company in respect of
any income and corporation tax liability of the Company and each
Subsidiary for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
reasonably be expected to result in a Material Adverse Effect.
(xxiv) Insurance. The Company and its subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such
risks as is generally maintained by companies of established repute
engaged in the same or similar business, and all such insurance is in full
force and effect.
(xxv) Solvency. The Company is, and immediately after the Closing
Time and the consummation of the Recapitalization will be, Solvent. As
used herein, the term "Solvent" means, with respect to the Company on a
particular date, that on such date (A) the fair market value of the assets
of the Company is greater than the total amount of liabilities (including
contingent liabilities) of the Company, (B) the present fair salable value
of the assets of the Company is greater than the amount that will be
required to pay the probable liabilities of the Company on its debts as
they become absolute and matured, (C) the Company is able to realize upon
its assets and pay its debts and other liabilities, including contingent
obligations, as they mature, and (D) the Company does not have
unreasonably small capital.
(xxvi) Stabilization or Manipulation. Neither Company nor any of its
officers, directors or controlling persons has taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities. The Company has not
distributed and, prior to the later to occur of (i) the Closing Time and
(ii) completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities
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other than the Offering Memorandum or other materials, if any, permitted
by the 1933 Act and approved by the Representative.
(xxvii) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect,
(A) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products or nuclear or radioactive material
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its Subsidiaries have all permits, licenses, authorizations and
approvals currently required for their respective businesses and for the
businesses contemplated to be conducted upon consummation of the
Recapitalization in the manner described in the Offering Memorandum under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its Subsidiaries and (D) there are no
events, facts or circumstances of which the Company is aware that might
reasonably be expected to form the basis of any liability or obligation of
the Company or any of its Subsidiaries, including, without limitation, any
order, decree, plan or agreement requiring clean-up or remediation, or any
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its Subsidiaries
relating to any Hazardous Materials or Environmental Laws.
(xxviii) Registration Rights. There are no holders of securities
(debt or equity) of the Company, or holders of rights (including, without
limitation, preemptive rights), warrants or options to obtain securities
of the Company, who in connection with the issuance, sale and delivery of
the
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Securities and the Exchange Securities, if any, and the execution,
delivery and performance of this Agreement and the Registration Rights
Agreement, have the right to request the Company to register securities
held by them under the 1933 Act.
(xxix) Accounting Controls. The Company and its consolidated
Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xxx) Compliance with Cuba Act. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xxxi) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxxii) Rule 144A Eligibility. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted in a U.S. automated
interdealer quotation system. The Company has been advised by the National
Association of Securities Dealers, Inc. PORTAL Market that the Securities
will be designated PORTAL eligible securities in accordance with the rules
and regulations of the National Association of Securities Dealers, Inc.
(xxxiii) No General Solicitation. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchasers and their respective Affiliates, as to whom
the
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Company makes no representation, warranty or agreement) has engaged or
will engage, in connection with the offering of the Securities, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
(xxxiv) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2, and assuming that the representations and warranties contained
in the Transferee Letters of Representation (substantially in the form of
Appendix A to the Offering Memorandum) completed by Accredited Investors
purchasing Securities are true and correct as of the Closing Time, and
assuming compliance by such Accredited Investors with the agreements in
such Transferee Letters of Representation, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxv) No Directed Selling Efforts. With respect to those Securities
sold in reliance on Regulation S, (A) none of the Company, its Affiliates
or any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation, warranty or
agreement) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S and (B) each of the Company and its
Affiliates and any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation,
warranty or agreement) has complied and will comply with the offering
restrictions requirement of Regulation S.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite
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the name of such Initial Purchaser, plus any additional principal amount of
Securities which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of Wachtell,
Lipton, Rosen & Katz, or at such other place as shall be agreed upon by the
Representative and the Company, at 9:00 A.M. on the seventh business day after
the date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the Representative and the Company (such time and date
of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the respective accounts of the Initial Purchasers of certificates for the
Securities to be purchased by them. It is understood that each Initial Purchaser
has authorized the Representative, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Securities which it
has agreed to purchase. Merrill Lynch, individually and not as representative of
the Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser whose
funds have not been received by the Closing Time, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder. The certificates
representing the Securities shall be registered in the name of Cede & Co.
pursuant to the DTC Agreement and shall be made available for examination and
packaging by the Initial Purchasers in The City of New York not later than 9:00
A.M. on the last business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it (i)
is a "qualified institutional buyer" within the meaning of Rule 144A under the
1933 Act (a "Qualified Institutional Buyer") and an "accredited investor" within
the meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor"); (ii)
has not and will not solicit offers for, or offer or sell, Securities by means
of any general solicitation or general advertising within the meaning of Rule
502(c) under Regulation D under the 1933 Act; (iii) will offer and sell the
Securities only to (A) institutional investors that are reasonably believed by
it to qualify as Accredited Investors, (B) institutional investors that are
reasonably believed by it to qualify as Qualified Institutional Buyers or (C)
non-U.S. persons in offshore transactions in reliance upon Regulation S under
the 1933 Act; and (iv) will otherwise act in accordance with the terms and
conditions set forth in this Agreement and in the Offering Memorandum in
connection with the placement of the Securities contemplated hereby.
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(d) Denominations; Registration. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples thereof) and registered in
such names as the Representative may request in writing at least one full
business day before the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto as such Initial Purchaser may reasonably
request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and its subsidiaries which (i) make any statement in the Offering Memorandum
false or misleading or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur or condition shall exist
as a result of which it is necessary, in the reasonable opinion of the Company,
its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to
amend or supplement the Final Offering Memorandum in order that the Final
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Final Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Final Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers (which consent will not be unreasonably
withheld).
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Neither the consent of the Initial Purchasers to, nor the Initial Purchaser's
delivery of, any such amendment or supplement, shall constitute a waiver of any
of the conditions set forth in Section 5 hereof.
(d) Termination of Provisions. Notwithstanding any provision of paragraph
(b) or (c) to the contrary, however, the Company's obligations under paragraphs
(b) and (c) shall terminate on the earliest to occur of (i) consummation of the
Exchange Offer pursuant to the Registration Rights Agreement, (ii) the effective
date of a shelf registration statement with respect to the Securities filed
pursuant to the Registration Rights Agreement and (iii) the date upon which no
Initial Purchaser nor any of their respective affiliates continues to hold
Securities acquired as part of their initial distribution.
(e) Qualification of Securities for Offer and Sale. The Company will use
its best efforts to register or qualify the Securities for offering and sale
under the applicable securities laws of such jurisdictions as the Representative
may reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable each Initial Purchaser to consummate
the disposition in each such jurisdiction of such Securities; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(f) Integration. The Company agrees that it will not and will cause its
affiliates not to make any offer or sale of securities of the Company of any
class if, as a result of the doctrine of "integration" referred to in Rule 502
under the 1933 Act, such offer or sale could be deemed to render invalid (for
the purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of the
1933 Act provided by Section 4(2) thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
(g) Rule 144A Information. The Company agrees that, in order to render the
Securities eligible for resale pursuant to Rule 144A under the 1933 Act, while
any of the Securities remain outstanding, it will make available, upon request,
to any holder of Securities or prospective purchasers of Securities the
information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act
(such information, whether made available to holders or prospective purchasers
or furnished to the Commission, is hereinafter referred to as "Additional
Information").
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(h) Restriction on Resales. Until the expiration of three years after the
original issuance of the Securities, the Company will not, and will cause its
"affiliates" (as such term is defined in Rule 144(a)(1) under the 1933 Act) not
to, resell any Securities which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by
any of them and shall immediately upon any purchase of any such Securities
submit such Securities to the Trustee for cancellation.
(i) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, issue, sell, offer to
sell, grant any option for the sale of, or otherwise dispose of, any debt
securities of the Company (other than the Exchange Securities).
(k) DTC Clearance. The Company will use all reasonable efforts in
cooperation with the Initial Purchasers to permit the Securities to be eligible
for clearance and settlement through DTC.
(l) Legends. Each certificate for a Security will bear the legend
contained in "Notices to Investors" in the Offering Memorandum for the time
period and upon the other terms stated in the Offering Memorandum.
(m) Interim Financial Statements. Prior to the Closing Time, the Company
shall furnish to the Initial Purchasers copies of any unaudited interim
financial statements of the Company, promptly after they have been completed,
for any periods subsequent to the periods covered by the financial statements
appearing in the Offering Memorandum.
(n) Periodic Reports. For a period of five years after the Closing Time,
the Company will furnish to the Initial Purchasers copies of all annual reports,
quarterly reports and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company generally to the holders of the Securities or to
security holders of its publicly issued securities generally.
(o) Recapitalization Documents. The Company will provide the Initial
Purchasers with a complete set of closing documents and opinions in connection
with the Recapitalization, the Transactions, the New Credit Agreement, and the
Merger, if
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any, and will provide the Initial Purchasers with drafts of such documents in
substantially final form prior to the Closing Time.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum and the
Registration Statement (including financial statements and any schedules or
exhibits) and of each amendment or supplement thereto, including the preliminary
prospectuses and the prospectus to be contained in the Registration Statement,
(ii) the preparation, printing and delivery to the Initial Purchasers of this
Agreement, the Registration Rights Agreement, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale and
delivery of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers, including any charges
of DTC in connection therewith, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Initial Purchasers in connection therewith and in connection with the
preparation of the blue sky survey, any supplement thereto and any legal
investment survey, (vi) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities, (vii) any fees payable in connection with the rating of the
Securities and the listing of the Securities with the Private Offerings, Resales
and Trading Through Automated Linkages ("PORTAL") market, and (viii) any filing
fees incident to, and any reasonable fees and disbursements of counsel to the
Initial Purchasers in connection with, the review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities. Except as
provided in this Section 4(a) and Section 4(b) below, the Initial Purchasers
shall pay all of their own costs and expenses, including the fees of their
counsel and transfer taxes on the sale of securities by them.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)(i)
or 9(a)(ii) hereof, the Company shall reimburse the Initial Purchasers for all
of their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its Subsidiaries
delivered pursuant to
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the provisions hereof, to the performance by the Company of its covenants and
other obligations hereunder, and to the following further conditions:
(a) Opinions of Counsel for the Company. At the Closing Time, the Initial
Purchasers shall have received the favorable opinions, dated as of the Closing
Time, of Day, Berry & Howard, counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchasers, together with signed or
reproduced copies of such letters for each of the other Initial Purchasers to
the effect set forth in Exhibit A hereto and to such further effect as counsel
to the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for the Initial Purchasers. At the Closing Time,
the Initial Purchasers shall have received the favorable opinion, dated as of
the Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
Initial Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers, with respect to certain matters set forth
in (i), (ii), (vi), (vii), (viii), (xi), (xii), (xiii), (xviii) and the
penultimate paragraph of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of New York and the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representative. Such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) Officers' Certificate. At the Closing Time, (i) there shall not have
been, since the respective dates as of which information is given in the
Offering Memorandum, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business; (ii) the Company shall have complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time; and (iii) the representations and warranties of
the Company in Section 1 shall be accurate and true and correct as though
expressly made at and as of the Closing Time. At the Closing Time, the Initial
Purchasers shall have received a certificate of the Chief Executive Officer of
the Company and the chief financial or accounting officer of the Company, dated
as of the Closing Time, to such effect.
(d) Accountant's Comfort Letter and Consent. At the time of the execution
of this Agreement, the Initial Purchasers shall have received from Arthur
Andersen LLP a letter dated such date, in form and substance satisfactory to the
Representative or to counsel for the Initial Purchasers, together with signed or
reproduced copies of such letter for each of the other Initial Purchasers,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to Initial Purchasers with respect to
23
<PAGE>
the financial statements and certain financial information contained in the
Offering Memorandum and in the form of Exhibit B attached hereto. Arthur
Andersen LLP shall include either in such letter or in a separate writing a
consent to the inclusion of its report in the Offering Memorandum and to the
reference to it under the caption "Experts" in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial Purchasers
shall have received from Arthur Andersen LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall be
rated at least B3 by Moody's Investors Service, Inc. ("Moody's") and B- by
Standard & Poor's Corporation ("S&P"), and the Company shall have delivered to
the Representative a letter dated the Closing Time, from each such rating
agency, or other evidence satisfactory to the Representative, confirming that
the Securities have such ratings; and since the date of this Agreement, there
shall not have occurred a downgrading in the rating assigned to the Securities
or any of the Company's other debt securities by any nationally recognized
securities rating agency, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt securities.
(g) PORTAL. At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
(h) Registration Rights Agreement and Indenture. The Company shall have
duly authorized, executed and delivered the Registration Rights Agreement and
the Indenture, in each case in a form and substance satisfactory to the
Representative and counsel to the Initial Purchasers.
(i) Credit Agreement. The Company and the parties to the New Credit
Agreement shall have duly authorized, executed and delivered the New Credit
Agreement in substantially the form previously delivered to the Initial
Purchasers and as outlined in the Offering Memorandum under the caption
"Description of the New Credit Agreement" and all conditions necessary for the
effectiveness of the New Credit Agreement shall have been satisfied.
(j) Recapitalization. The Company shall have consummated the Tender Offer
and the other Transactions in all material respects, in each case as described
in the Offering Memorandum. The Company shall have received all necessary
governmental and contractual consents and approvals outlined in the schedules to
the Recapitalization Agreement, including without limitation the consent of the
Nuclear Regulatory
24
<PAGE>
Commission to the change of control of the Company, except to the extent that
the failure to obtain any such consent or approval would not reasonably be
expected to have a Material Adverse Effect. The Company shall have entered into
a stockholders agreement, and shall have entered into employment agreements with
certain of its executive officers, in each case as described in the Offering
Memorandum.
(k) Recapitalization Opinions. At the Closing Time, all legal opinions
delivered by counsel to the Company pursuant to the New Credit Agreement and the
Recapitalization Agreement shall also be addressed to and delivered to the
Initial Purchasers or, alternatively, shall state that the Initial Purchasers
may rely on such legal opinions as if they were directly addressed to the
Initial Purchasers. At the Closing Time, the Solvency Opinion delivered by the
Company to CII Acquisition LCC pursuant to the Recapitalization Agreement shall
also be addressed to and delivered to the Initial Purchasers or, alternatively,
shall state that the Initial Purchasers may rely on such Solvency Opinion as if
it was directly addressed to the Initial Purchasers.
(l) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Initial Purchasers and counsel for the Initial Purchasers.
(m) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6 and 7 shall survive any such termination and remain in
full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to indemnify
and hold harmless each Initial Purchaser and each person, if any, who controls
any Initial Purchaser within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum or
the Final Offering Memorandum (or any amendment or supplement thereto), or the
25
<PAGE>
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by Merrill Lynch except to the extent
otherwise expressly provided in Section 6(c) hereof), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Initial Purchaser through Merrill Lynch expressly for use in any
Preliminary Offering Memorandum or Final Offering Memorandum (or any amendment
or supplement thereto); provided, further, that such indemnify with respect to
the Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser (or any persons controlling such Initial Purchaser) from whom
the person asserting such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person did not receive a copy
of the Final Offering Memorandum (or the Final Offering Memorandum as amended or
supplemented) at or prior to the confirmation of the sale of such Securities to
such person in any case where the Company complied with its obligations under
Sections 3(a) and 3(c) hereof and any such untrue statement or omission or
alleged untrue statement or omission of a material fact contained in such
Preliminary Offering Memorandum (or any amendment or supplement thereto) was
corrected in the Final Offering Memorandum (or the Final Offering Memorandum as
amended or supplemented).
(b) Indemnification of Company and Directors. Each Initial Purchaser
severally agrees to indemnify and hold harmless the Company and its directors,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933
26
<PAGE>
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in any Preliminary
Offering Memorandum or Final Offering Memorandum (or amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Initial Purchaser through Merrill Lynch expressly for use
in such Preliminary Offering Memorandum or Final Offering Memorandum (or
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld),
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party
27
<PAGE>
from all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
28
<PAGE>
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer of the Company who
would be required to sign a registration statement on Form S-1 and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Initial Purchasers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
29
<PAGE>
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its Subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Initial Purchaser or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Initial Purchasers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement,
by notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Offering Memorandum,
any material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there shall have occurred a downgrading in the rating
assigned to the Securities or any of the Company's other debt securities by any
nationally recognized securities rating agency, or if such securities rating
agency shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of the Securities or any of the
Company's other debt securities, or (iii) if there has occurred any material
adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iv) if trading in any
securities of the Company has been suspended or limited by the Commission, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the NASDAQ National Market System has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (v) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6
and 7 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities
30
<PAGE>
which it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, but not the obligation,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other Initial Purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Initial Purchasers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representative at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Bennett Rosenthal,
with a copy to Fried, Frank, Harris, Shriver & Jacobson, 1 New York Plaza, New
York, New York 10004, attention of Valerie Ford Jacob; notices to the Company
shall be directed to it at 800 Research Parkway, Meriden, Connecticut 06450,
attention of Emery Olcott, with copies to Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York 10019, attention of Andrew Brownstein, and
Day, Berry & Howard, City Place I, 185 Asylum Street, Hartford, Connecticut
06103-3499, attention of Paul F. McAlenney.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Initial Purchasers and the Company and their respective
successors.
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<PAGE>
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Initial
Purchasers and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Initial Purchasers and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
32
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart, hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
CANBERRA INDUSTRIES, INC.
By /s/ Emery G. Olcott
----------------------------
Name: Emery G. Olcott
Title: President
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BancAmerica Securities, Inc.
CIBC Wood Gundy Securities Corp.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Christopher G. Turner
-------------------------------------
Authorized Signatory
For itself and the other Initial Purchasers
named in Schedule A hereto.
33
<PAGE>
SCHEDULE A
Principal
Amount of
Name of Initial Purchaser Securities
------------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... $105,000,000
BancAmerica Securities, Inc.................................... 22,500,000
CIBC Wood Gundy Securities Corp................................ 22,500,000
------------
Total $150,000,000
============
Sch A - 1
<PAGE>
SCHEDULE B
CANBERRA INDUSTRIES, INC.
(to be renamed Packard BioScience Company
upon consummation of the Recapitalization)
$150,000,000 Senior Subordinated Notes due 2007
1 The initial offering price of the Securities in the private placement
shall be 100% of the principal amount thereof, plus accrued interest, if any,
from the date of issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97% of the principal amount thereof.
3. The interest rate on the Securities shall be 9 3/8% per annum.
4. The interest payment dates of the Securities shall be March 1 and
September 1 of each year, commencing September 1, 1997.
5. The Securities will be subject to redemption at any time on or after
March 1, 2002, at the option of the Company, at the following redemption prices
(expressed as percentages of the principal amount), if redeemed during the
12-month period beginning March 1 of the years indicated below:
Redemption
Year Price
---- ----------
2002 104.688%
2003 103.125%
2004 101.563%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
Sch B - 1
<PAGE>
6. At any time on or prior to March 1, 2000, the Company may, at its
option, use the net proceeds of one or more Public Equity Offerings (as defined
in the Indenture) to redeem up to an aggregate of 30% of the aggregate principal
amount of Securities originally issued under the Indenture at a redemption price
equal to 109.375% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the redemption date; provided that at least
$105 million aggregate principal amount of Notes remains outstanding immediately
after the occurrence of such redemption.
Sch B - 2
<PAGE>
-----------------------------------
Registration Rights Agreement
Dated As of March 4, 1997
among
Packard BioScience Company
(f/k/a Canberra Industries, Inc.)
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
BancAmerica Securities, Inc.
and
CIBC Wood Gundy Securities Corp.
-----------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 4th day of March, 1997, among Packard BioScience Company
(f/k/a Canberra Industries, Inc.), a Delaware corporation (the "Company"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Securities, Inc.
and CIBC Wood Gundy Securities Corp. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
February 21, 1997, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for, among other things, the sale by the Company to
the Initial Purchasers of an aggregate of $150 million principal amount of the
Company's 9 3/8% Senior Subordinated Notes due 2007, Series A (the
"Securities"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in
this Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of l934, as
amended from time to time.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Company, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the City
of New York.
<PAGE>
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits
thereto and all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2.1
hereof.
"Exchange Securities" shall mean the 9 3/8% Senior Subordinated
Notes due 2007, Series B issued by the Company under the Indenture
containing terms identical to the Securities in all material respects
(except for references to certain interest rate provisions, restrictions
on transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the Exchange
Offer.
"Holder" shall mean an Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities,
dated as of March 4, 1997, between the Company and The Bank of New York,
as trustee, as the same may be amended, supplemented, waived or otherwise
modified from time to time in accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the meaning
set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors
on the Securities or any Affiliate (as defined in the Indenture) of the
Company shall be disregarded in
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determining whether such consent or approval was given by the Holders of
such required percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, BancAmerica Securities, Inc. and CIBC
Wood Gundy Securities Corp. and any other broker-dealer which makes a
market in the Securities and exchanges Registrable Securities in the
Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or limited),
corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including any
such prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when (i)
a Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities
have been sold to the public pursuant to Rule l44 (or any similar
provision then in force, but not Rule 144A) under the 1933 Act, (iii) such
Securities shall have ceased to be outstanding or (iv) the Exchange Offer
is consummated (except in the case of Securities purchased from the
Company and continued to be held by the Initial Purchasers).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the customary fees and expenses of any
"qualified independent underwriter" (and its counsel) that is required to
be retained by any holder of Registrable Securities in accordance with the
rules and regulations of the NASD,
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(ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws and compliance with the rules of the
NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any
of the Exchange Securities or Registrable Securities and any filings with
the NASD), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv)
all fees and expenses incurred in connection with the listing, if any, of
any of the Registrable Securities on any securities exchange or exchanges,
(v) all rating agency fees, (vi) the fees and disbursements of counsel for
the Company and of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, (vii) the fees
and expenses of the Trustee, and any escrow agent or custodian, (viii) the
reasonable fees and disbursements of Fried, Frank, Harris, Shriver &
Jacobson, special counsel representing the Holders of Registrable
Securities and (ix) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and
the reasonable fees and expenses of any special experts retained by the
Company in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2.2 hereof.
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"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2.2 of this
Agreement which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
2. Registration Under the 1933 Act.
2.1 Exchange Offer. The Company shall (A) prepare and, as soon as
practicable but not later than 45 days following the Closing Date, file with the
SEC an Exchange Offer Registration Statement on an appropriate form under the
1933 Act with respect to a proposed Exchange Offer and the issuance and delivery
to the Holders, in exchange for the Registrable Securities, a like principal
amount of Exchange Securities, (B) use its best efforts to cause the Exchange
Offer Registration Statement to be declared effective under the 1933 Act within
105 days of the Closing Date, (C) use its best efforts to keep the Exchange
Offer Registration Statement effective until the closing of the Exchange Offer
and (D) use its best efforts to cause the Exchange Offer to be consummated not
later than 135 days following the Closing Date. The Exchange Securities will be
issued under the Indenture. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer to enable each Holder eligible and
electing to exchange Registrable Securities for Exchange Securities (assuming
that such Holder (a) is not an affiliate of the Company within the meaning of
Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable
Securities acquired directly from the Company for its own account, (c) acquired
the Exchange Securities in the ordinary course of such Holder's business and (d)
has no arrangements or understandings with any person to participate in the
Exchange Offer for the purpose of distributing the Exchange Securities) to
transfer such Exchange Securities from and after their receipt without any
limitations or restrictions under the 1933 Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States.
In connection with the Exchange Offer, the Company shall:
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(a) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period
of not less than 30 calendar days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
(c) utilize the services of the Depositary for the Exchange
Offer;
(d) permit Holders to withdraw tendered Registrable Securities
at any time prior to 5:00 p.m. (Eastern Standard Time), on the last business day
of the Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for exchange,
and a statement that such Holder is withdrawing his election to have such
Securities exchanged;
(e) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but will not
retain any rights under this Agreement (except in the case of the Initial
Purchasers and Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange all Registrable Securities duly
tendered and not validly withdrawn pursuant to the Exchange Offer in
accordance with the terms of the Exchange Offer Registration
Statement and the letter of transmittal which shall be an exhibit
thereto;
(ii) deliver to the Trustee for cancellation all Registrable
Securities so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Securities to each Holder of Registrable Securities so
accepted for exchange in a principal amount equal to the principal
amount of the Registrable Securities of such Holder so accepted for
exchange.
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Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of original issuance. The Exchange Offer shall not be subject to any
conditions, other than (i) that the Exchange Offer, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer, (iii) that each Holder of
Registrable Securities exchanged in the Exchange Offer shall have represented
that all Exchange Securities to be received by it shall be acquired in the
ordinary course of its business and that at the time of the consummation of the
Exchange Offer it shall have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Securities and shall have made such other representations as may be
reasonably necessary under applicable SEC rules, regulations or interpretations
to render the use of Form S-4 or other appropriate form under the 1933 Act
available and (iv) that no action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency with respect to
the Exchange Offer which, in the Company's judgment, would reasonably be
expected to impair the ability of the Company to proceed with the Exchange
Offer. The Company shall inform the Initial Purchasers of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Registrable Securities in the Exchange Offer.
2.2 Shelf Registration. (i) If, because of any changes in law, SEC
rules or regulations or applicable interpretations thereof by the staff of the
SEC, the Company is not permitted to effect the Exchange Offer as contemplated
by Section 2.1 hereof, (ii) if for any other reason the Exchange Offer
Registration Statement is not declared effective within 105 days following the
original issue of the Registrable Securities or the Exchange Offer is not
consummated within 135 days after the original issue of the Registrable
Securities, (iii) upon the request of any of the Initial Purchasers or (iv) if a
Holder is not permitted by applicable law to participate in the Exchange Offer
based upon written advice of counsel to the effect that such Holder may not be
legally able to participate in the Exchange Offer or does not receive fully
tradeable Exchange Securities pursuant to the Exchange Offer, then in case of
each of clauses (i) through (iv) the Company shall, at its cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use its best efforts to cause to be declared
effective as promptly as practicable but no later than 135 days
after the original issue of the Registrable Securities (or, in the
case of a request by any Initial Purchaser,
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within 30 days of such request), a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the
Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders participating in the
Shelf Registration and set forth in such Shelf Registration
Statement.
(b) Use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two
years (or one year in the case of a request solely by an Initial
Purchaser) from the date the Shelf Registration Statement is
declared effective by the SEC, or for such shorter period that will
terminate when all Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding or otherwise to be
Registrable Securities.
(c) Notwithstanding any other provisions hereof, use its best
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933
Act and the rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii)
any Prospectus forming part of any Shelf Registration Statement, and
any supplement to such Prospectus (as amended or supplemented from
time to time), does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements, in light of the circumstances under which they were
made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement, as required by Section 3(b) below, and to furnish
to the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
The Company shall not be required to include any Registrable
Securities of a Holder in any Shelf Registration Statement pursuant to this
Agreement unless such Holder furnishes to the Company, within 20 business days
after receipt by such Holder of a request therefor, such information as the
Company may reasonably request for use in connection with such Shelf
Registration Statement.
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2.3 Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2.1 or 2.2. Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
2.4. Effectiveness. (a) The Company will be deemed not to have used
its best efforts to cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to remain, effective
during the requisite period if the Company voluntarily takes any affirmative
action that would, or omits to take any action which omission would, result in
any such Registration Statement not being declared effective or in the holders
of Registrable Securities covered thereby not being able to exchange or offer
and sell such Registrable Securities during that period as and to the extent
contemplated hereby, unless such action is required by applicable law.
(b) An Exchange Offer Registration Statement pursuant to Section 2.1
hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not
be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume.
2.5 Interest. The Indenture executed in connection with the
Securities will provide that in the event that (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 45th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 105th calendar day following the date of original issue of the
Securities or (c) the Exchange Offer is not consummated on or prior to the 135th
calendar day following the date of original issue of the Securities or a Shelf
Registration Statement is not declared effective on or prior to the 135th
calendar day following the date of original issue of the Securities (or, if a
Shelf Registration Statement is required to be filed because of the request of
any Initial Purchaser, 30 days following the request by any such Initial
Purchaser that the Company file the Shelf Registration Statement) (each such
event referred to in clauses (a) through (c) above, a "Registration Default"),
the interest rate borne by the Securities (except in the case of clause (c), in
which case only the Securities which have not been exchanged in the Exchange
Offer) shall be increased by one-quarter of one percent per annum upon the
occurrence of any
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Registration Default, which rate (as increased as aforesaid) will increase by an
additional one quarter of one percent each 90-day period that such additional
interest continues to accrue under any such circumstance, with an aggregate
maximum increase in the interest rate equal to one percent (1%) per annum.
Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate.
3. Registration Procedures.
In connection with the obligations of the Company with respect to
Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement, within
the relevant time period specified in Section 2, on the appropriate form under
the 1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof, (iii) shall comply as to form in all
material respects with the requirements of the applicable form and include or
incorporate by reference all financial statements required by the SEC to be
filed therewith or incorporated by reference therein, and (iv) shall comply in
all respects with the requirements of Regulation S-T under the Securities Act,
and use its best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period; and
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act and
comply with the provisions of the 1933 Act applicable to them with respect to
the disposition of all securities covered by each Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof described in this Agreement;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
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supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) hereby consent to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), or (ii) take any action which would subject
it to general service of process or taxation in any such jurisdiction where it
is not then so subject;
(e) notify promptly each Holder of Registrable Securities under a
Shelf Registration or any Participating Broker-Dealer who has notified the
Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) in the case of a Shelf Registration, if,
between the effective date of a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to the offering
cease to be true and correct in all material respects, (v) of the happening of
any event or the discovery of any facts during the period a Shelf Registration
Statement is effective which makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or which
requires the making of any changes
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in such Registration Statement or Prospectus in order to make the statements
therein not misleading and (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities or the Exchange Securities, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(f) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to the Initial
Purchasers, and which shall contain a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that holds Registrable Securities
acquired for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies have
been publicly disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of the Initial Purchasers and its counsel,
represent the prevailing views of the staff of the SEC, including a statement
that any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such Participating
Broker-Dealer may reasonably request, (iii) hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the 1933 Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer;" and
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(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration Statement,
the Company agrees to deliver to the Initial Purchasers on behalf of the
Participating Broker-Dealers upon the effectiveness of the Exchange Offer
Registration Statement (i) an opinion of Day, Berry & Howard substantially in
the form attached hereto as Exhibit A, (ii) an officers' certificate
substantially in the form customarily delivered in a public offering of debt
securities and (iii) a comfort letter or comfort letters in customary form if
permitted by Statement on Auditing Standards No. 72 of the American Institute of
Certified Public Accountants (or if such a comfort letter is not permitted, an
agreed upon procedures letter in customary form) at least as broad in scope and
coverage as the comfort letter or comfort letters delivered to the Initial
Purchasers in connection with the initial sale of the Securities to the Initial
Purchasers;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any comment letters received
from the SEC or any other request by the SEC or any state securities authority
for amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, and each underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least two business days prior to the closing of any sale
of Registrable Securities;
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(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections 3(e)(ii),
3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, use its best efforts to prepare a
supplement or post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities or Participating Broker-Dealers, such Prospectus will
not contain at the time of such delivery any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or will
remain so qualified;
(l) in the case of a Shelf Registration, a reasonable time prior to
the filing of any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement, provide a
reasonable number of copies of such document to the Initial Purchasers on behalf
of such Holders; and make representatives of the Company as shall be reasonably
requested by the Holders of Registrable Securities, or the Initial Purchasers on
behalf of such Holders, available for discussion of such document;
(m) obtain a CUSIP number for all Exchange Securities not later than
the effective date of a Registration Statement, and provide the Trustee with
printed certificates for the Exchange Securities in a form eligible for deposit
with the Depositary;
(n) (i) cause the Indenture to be qualified under the Trust
Indenture Act of 1939 (the "TIA") in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, (ii)
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and (iii) execute, and use its best efforts to cause
the Trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;
(o) in the case of a Shelf Registration, enter into agreements
(including customary underwriting agreements) and take all other customary and
appropriate actions in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration:
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(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if
any, and the holders of a majority in principal amount of the
Registrable Securities being sold) addressed to each selling Holder
and the underwriters, if any, covering the matters customarily
covered in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably requested by
such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to
the underwriters, if any, and use reasonable efforts to have such
letter addressed to the selling Holders of Registrable Securities
(to the extent consistent with Statement on Auditing Standards No.
72 of the American Institute of Certified Public Accounts), such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Securities, which agreement
shall be in form, substance and scope customary for similar
offerings;
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to
said Section or, at the request of any underwriters, in the form
customarily provided to such underwriters in similar types of
transactions; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if
any.
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The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder;
(p) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable Securities and
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such Holders or
underwriters, all pertinent financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and cause the respective officers, directors, employees, and any other
agents of the Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Company available
for discussion of such documents as shall be reasonably requested by the Initial
Purchasers;
(q) (i) in the case of an Exchange Offer Registration Statement, a
reasonable time prior to the filing of any Exchange Offer Registration
Statement, any Prospectus forming a part thereof, any amendment to an Exchange
Offer Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Initial Purchasers and make such changes
in any such document prior to the filing thereof as the Initial Purchasers may
reasonably request, and make the representatives of the Company available for
discussion of such documents as shall be reasonably requested by the Initial
Purchasers; and
(ii) in the case of a Shelf Registration, a reasonable time
prior to filing any Shelf Registration Statement, any Prospectus forming a part
thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the Holders of
Registrable Securities, to the Initial Purchasers, to counsel on behalf of the
Holders and to the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any, make such changes in any such document prior to
the filing thereof as the Initial Purchasers, the counsel to the Holders or the
underwriter or underwriters reasonably request and make the representatives of
the Company available for discussion of such document as shall be reasonably
requested by the Holders of Registrable Securities, the Initial Purchasers on
behalf of such Holders, or any underwriter.
(r) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if requested
by the Majority Holders, or
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<PAGE>
if requested by the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any;
(s) in the case of a Shelf Registration, use its best efforts to
cause the Registrable Securities to be rerated by the appropriate rating
agencies, if so requested by the Majority Holders, or if requested by the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;
(t) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder;
(u) cooperate and assist in any filings required to be made with the
NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(v) upon consummation of an Exchange Offer, obtain a customary
opinion of counsel to the Company addressed to the Trustee for the benefit of
all Holders of Registrable Securities participating in the Exchange Offer, and
which includes an opinion that (i) the Company has duly authorized, executed and
delivered the Exchange Securities and the related indenture, and (ii) each of
the Exchange Securities and related indenture constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms (with customary exceptions).
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Sections 3(e)(ii),
3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all
17
<PAGE>
copies in such Holder's possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable Securities pursuant to a
Shelf Registration Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Sections 3(e)(ii),
3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, the Company shall be deemed to have used
its best efforts to keep the Shelf Registration Statement effective during such
period of suspension provided that the Company shall use its best efforts to
file and have declared effective (if an amendment) as soon as practicable an
amendment or supplement to the Shelf Registration Statement and shall extend the
period during which the Shelf Registration Statement shall be maintained
effective pursuant to this Agreement by the number of days during the period
from and including the date of the giving of such notice to and including the
date when the Holders shall have received copies of the supplemented or amended
Prospectus necessary to resume such dispositions.
In the event that the Company fails to effect the Exchange Offer or
file any Shelf Registration Statement and maintain the effectiveness of any
Shelf Registration Statement as provided herein, the Company shall not file any
Registration Statement with respect to any securities (within the meaning of
Section 2(1) of the 1933 Act) of the Company other than Registrable Securities.
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
4. Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each Holder, each Participating Broker-Dealer, each Person who
participates as an underwriter (any such Person being an "Underwriter") and each
Person, if any, who controls any Holder or Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
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(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto)
pursuant to which Exchange Securities or Registrable Securities were
registered under the 1933 Act, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 4(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any
indemnified party, except to the extent otherwise expressly provided
in Section 4(c) hereof), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers, such Holder or Underwriter expressly for use in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto); provided, further, that such indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Initial Purchaser, Holder or Underwriter (or any persons controlling such
Initial Purchaser, Holder or Underwriter) from whom the person asserting such
loss, claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the final Prospectus (or the
final Prospectus as amended or
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<PAGE>
supplemented) at or prior to the confirmation of the sale of such Securities to
such person in any case where the Company complied with its obligations under
Sections 3(c) and 3(f)(A)(ii) hereof and any such untrue statement or omission
or alleged untrue statement or omission of a material fact contained in such
preliminary prospectus (or any amendment or supplement thereto) was corrected in
the final Prospectus (or the final Prospectus as amended or supplemented).
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Initial Purchasers, each Underwriter and the
other selling Holders, and each of their respective directors and officers, and
each Person, if any, who controls the Company, the Initial Purchasers, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any Prospectus included therein (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder shall be liable for
any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. Notwithstanding the foregoing, if it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the indemnified
parties defendant in such action (which approval shall not be unreasonably
withheld), unless such indemnified parties reasonably object to such assumption
on the ground that there may be legal defenses available to them which are
different from or in addition to those available to such indemnifying party. If
an indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses of counsel for the
20
<PAGE>
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand, the
Holders on another hand, and the Initial Purchasers on another hand, from the
offering of the Securities, the Exchange Securities and the Registrable
Securities (taken together) included in such offering or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, the
Holders on another hand and the Initial Purchasers on another hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
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The relative benefits received by the Company from the offering of the
Securities, the Exchange Securities and the Registrable Securities (taken
together) included in such offering shall in each case be deemed to include the
proceeds received by the Company in connection with the offering of the
Securities pursuant to the Purchase Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the Purchase Agreement shall not be deemed to be a
benefit received by the Initial Purchasers in connection with the offering of
the Exchange Securities or Registrable Securities included in such offering.
The relative fault of the Company on the one hand, the Holders on another
hand, and the Initial Purchasers on another hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Holders or the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Holders and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company, each officer of
the Company who signed the
22
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Registration Statement and each Person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A to the Purchase Agreement and not joint.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company
covenants that it will file the reports required to be filed by it under the
1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act, (b) deliver such information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and it will take such
further action as any Holder of Registrable Securities may reasonably request,
and (c) take such further action that is reasonable in the circumstances, in
each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the 1933 Act within
the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
5.2 No Inconsistent Agreements. The Company has not entered into and
the Company will not after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with the
rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.
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5.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth in the Purchase
Agreement with respect to the Initial Purchasers; and (b) if to the Company,
initially at the Company's address set forth in the Purchase Agreement, and
thereafter at such other address of which notice is given in accordance with the
provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such person shall be entitled to receive the benefits
hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
Initial Purchasers are not Holders of Registrable Securities) shall be third
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder. Each Holder of Registrable Securities shall be a
24
<PAGE>
third party beneficiary to the agreements made hereunder between the Company, on
the one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder.
5.7 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.10 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
25
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PACKARD BIOSCIENCE COMPANY (f/k/a
Canberra Industries, Inc.)
By: /s/ Richard T. McKernan
-----------------------------
Name: Richard T. McKernan
Title: Senior Vice President
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANCAMERICA SECURITIES, INC.
CIBC WOOD GUNDY SECURITIES CORP.
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Christopher G. Turner
-------------------------------
Name: Christopher G. Turner
Title: Vice President
26
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EMPLOYMENT AGREEMENT
AGREEMENT by and between Packard BioScience Company (f/k/a Canberra
Industries, Inc.), a Delaware corporation with its principal office and place of
business in Meriden, Connecticut (the "Company"), and Emery G. Olcott (the
"Executive"), dated as of the 4th day of March, 1997.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to employ the Executive as Chairman of the Board of Directors, President and
Chief Executive Officer of the Company, and the Executive desires to serve in
those capacities;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and
the Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for the period commencing on the date hereof and ending on the
third anniversary of the date hereof (the "Employment Period"); provided,
however, that commencing on the date two years after the date hereof (the
"Initial Renewal Date"), and on the first day of each calendar month following
the calendar month in which falls the Initial Renewal Date (each such date and
the Initial Renewal Date shall be hereinafter referred to as
<PAGE>
the "Renewal Date"), unless previously terminated, the Employment Period shall
be automatically extended so as to terminate thirteen calendar months from such
Renewal Date, unless at least 60 days prior to the Renewal Date, the Company
shall give notice to the Executive that the Employment Period shall not be so
extended.
2. Position and Duties. (a) During the Employment Period, the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned as of the date hereof. During the Employment Period, the
Executive will serve as a director of the Company.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to (A) serve on corporate, civic
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<PAGE>
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(c) The Executive's services shall be performed primarily at
the Company's headquarters in Meriden, Connecticut.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") at least
equal to twelve times the monthly base salary paid or payable to the Executive
immediately prior to the date hereof. During the Employment Period, the Annual
Base Salary shall be reviewed for increase at least annually and shall be
increased pursuant to each such review by a percentage no less than the
percentage increase in the United States Consumer Price Index -- All Urban
Consumers, as published by the Bureau of Labor Statistics of the U.S. Department
of Labor, for the calendar year immediately preceding such review. Any increase
in the Annual Base Salary shall not limit or reduce any other obligation of the
Company under this Agreement. The Annual Base Salary shall not be reduced after
any such increase, and the term
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<PAGE>
"Annual Base Salary" shall thereafter refer to the Annual Base Salary as so
increased.
(b) Annual Bonus. In addition to the Annual Base Salary, the
Executive shall be eligible to be awarded, for each fiscal year or portion of a
fiscal year ending during the Employment Period, an annual bonus (the "Annual
Bonus"), in accordance with the Company's annual incentive plans then in effect.
Each Annual Bonus shall be paid in a single cash lump sum no later than 90 days
after the end of the fiscal year or portion thereof for which the Annual Bonus
is awarded, unless the Executive elects in writing, before the beginning of the
fiscal year for which the Annual Bonus is to be awarded, to defer receipt of the
Annual Bonus.
(c) Other Benefits. During the Employment Period: (i) the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company and its
affiliated companies in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in effect for
the Executive as of the date hereof or, if more favorable to the Executive, to
the same extent as peer executives; and (ii) the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in,
and shall receive all benefits under, all
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<PAGE>
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life insurance,
group life insurance, accidental death and travel accident insurance plans and
programs, and key employee insurance) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive as of the date hereof or, if more
favorable to the Executive, to the same extent as peer executives. For purposes
of this Agreement, the term "affiliated companies" means all companies
controlled by, controlling or under common control with the Company.
(d) Retirement. Executive's Retirement age, for purposes of
the definition of "Retirement" contained in the Stockholders' Agreement, dated
as of March 4, 1997 (the "Stockholders Agreement"), by and among the Company,
certain management investors, certain other stockholders, Merrill Lynch KECALP
L.P. 1994, KECALP Inc. and Stonington Capital Appreciation 1994 Fund, L.P., a
Delaware limited partnership, shall be 64, provided that Executive's Retirement
age shall be 62 if and only if the Board determines, in its good faith judgment,
that (i) the Executive has provided for "successful succession planning" for the
senior management of the Company or (ii) bona fide personal hardship
circumstances exist.
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(e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in carrying out the Executive's duties under this
Agreement, provided that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts, or
similar documentation of such expenses.
(f) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive as of the date hereof or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(g) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other
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assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies as of the date hereof
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(h) Vacation. During the Employment Period, the Executive
shall be entitled to six weeks of paid vacation annually in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive as of the date hereof or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(i) Put Rights. Notwithstanding anything to the contrary
contained in the Stockholders Agreement, if, during the Employment Period, the
Company terminates the Executive's employment other than for Cause or the
Executive terminates employment for Good Reason, the Executive shall be entitled
to exercise his Put Right (as defined in the Stockholders Agreement) on the
terms and conditions set forth in the Stockholders Agreement.
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4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. The Company shall be entitled to terminate the
Executive's employment because of the Executive's Disability during the
Employment Period. "Disability" means that the Executive has been unable, for a
period of 180 consecutive business days, to perform the Executive's duties under
this Agreement, as a result of physical or mental illness or injury. A
termination of the Executive's employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), unless the Executive returns to full-time performance of the
Executive's duties before the Disability Effective Date.
(b) By the Company. (i) The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. "Cause"
means:
A. the Executive's willful and material breach of any of
his obligations under this Agreement that causes material loss or
detriment to the Company, if the Executive shall not have made a
good faith effort to cure the acts or behavior constituting any such
breach within thirty (30) days after receipt from the Company of
written notice (signed by at least a majority of the Directors) of
the alleged breach specifying in detail (i) the acts or behavior
alleged to constitute the breach and (ii) the proposed cure
therefor; or
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B. the commission by the Executive of a felony or the
perpetration by the Executive of a common law fraud upon the
Company.
(c) Good Reason. (i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means:
A. the assignment to the Executive of duties significantly
inconsistent with paragraph (a) of Section 2 of this Agreement, or
any other action by the Company that results in a significant
diminution in the Executive's position, authority, duties or
responsibilities, other than an isolated and inadvertent action that
is not taken in bad faith and is remedied by the Company promptly
after receipt of written notice thereof from the Executive;
B. any material failure by the Company to comply with any
provision of Section 3 of this Agreement, other than an isolated and
inadvertent failure that is not taken in bad faith and is remedied
by the Company promptly after receipt of written notice thereof from
the Executive;
C. any requirement by the Company that the Executive's
services be rendered primarily at a location or locations at a
distance of more than 50 miles from the location provided for in
paragraph (c) of Section 2 of this Agreement without the
Executive's consent;
D. any purported termination of the Executive's employment by
the Company for a reason or in a manner not permitted by this
Agreement;
E. any failure by the Company to comply with paragraph (c) of
Section 11 of this Agreement; or
F. the giving of notice by the Company to the Executive
pursuant to Section 1 of this Agreement that the Employment Period
shall not be automatically extended as described in Section 1.
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(ii) A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be effective on
the fifth business day following the date when the Notice of Termination for
Good Reason is given, unless the notice sets forth a later date (which date
shall in no event be later than 30 days after the notice is given). In the event
of a termination of employment by the Executive for Good Reason pursuant to
clause (F) of Section 4(c)(i) of this Agreement, the Notice of Termination for
Good Reason must be given within 90 days of the event constituting Good Reason.
(iii) A termination of the Executive's employment by the Executive
without Good Reason shall be effected by giving the Company written notice of
the termination. If such a notice is given at any time on or after the date that
is 60 days prior to the third anniversary of the date hereof, then the
Noncompetition Period (as defined in Section 8(c) below) shall be deemed to be
the period beginning on the Date of Termination and ending on the first
anniversary thereof, notwithstanding the definition set forth in Section 8(c).
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(d) No Waiver. The failure to set forth any fact or circumstance in
a Notice of Termination for Cause or a Notice of Termination for Good Reason
shall not constitute a waiver of the right to assert, and shall not preclude the
party giving notice from asserting, such fact or circumstance in an attempt to
enforce any right under or provision of this Agreement.
(e) Date of Termination. The "Date of Termination" means the date
of the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or by the
Executive for Good Reason is effective, or the date that is 60 days after the
date on which the Executive gives the Company notice of a termination of
employment without Good Reason, as the case may be.
5. Obligations of the Company upon Termination. (a) Other Than for
Cause, Death or Disability; Good Reason. If, during the Employment Period, the
Company terminates the Executive's employment, other than for Cause, Death or
Disability, or the Executive terminates employment for Good Reason, the Company
shall pay the amounts described in subparagraph (i) below to the Executive in a
lump sum in cash within 30 days after the Date of Termination and shall continue
the benefits described in subparagraph (ii) below until at least the third
anniversary of the Date of
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Termination. The payments provided pursuant to this paragraph (a) of Section 5
are intended as liquidated damages for a termination of the Executive's
employment by the Company other than for Cause, Death or Disability or for the
actions of the Company leading to a termination of the Executive's employment by
the Executive for Good Reason, and shall be the sole and exclusive remedy
therefor, but shall in no way affect the Executive's rights under the agreements
set forth on Schedule A, attached hereto.
(i) The amounts to be paid in a lump sum as described above are:
A. The Executive's accrued but unpaid cash compensation (the
"Accrued Obligations"), which shall equal the sum of (1) any portion
of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid, (2) an amount (the "Accrued
Bonus Amount") equal to the product of (x) the target Annual Bonus
for the year of termination (the "Annual Bonus Amount") and (y) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the
denominator of which is 365; (3) any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon) that has not yet been paid; and (4) any accrued
but unpaid Annual Bonuses and vacation pay;
B. Severance pay equal to the product of (x) the sum of (1)
the Annual Base Salary and (2) the Annual Bonus Amount and (y) a
fraction, the numerator of which is the number of days remaining
from the Date of Termination until the end of the Employment Period,
and the denominator of which is 365;
C. An amount equal to the aggregate amounts that Company would
have contributed on behalf of Executive under the Thrift Savings
Plan of Company,
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if said plan shall be in effect, for three years after the Date of
Termination (plus estimated earnings thereon) as if Executive
continued in the employ of Company for such period and made
contributions under said plan at a rate, as a percentage of salary,
equal to the average rate at which Executive had made contributions
to said plan in the three (3) fiscal years of Company preceding the
Date of Termination;
D. To the extent that any form of compensation previously
granted to Executive, such as, by way of example only, restricted
stock, stock options or performance share awards, shall not be
fully vested or shall require additional service as an employee at
the time of the termination of Executive's employment, Executive
shall be credited with additional service through the period ending
three years after the Date of Termination;
E. For three years after the Date of Termination (but not
beyond the time when Executive becomes eligible for comparable
insurance coverage offered on comparable terms by any subsequent
employer), Executive shall also continue to participate in all life,
health, disability and similar insurance plans and programs of
Company to the extent that such continued participation is possible
under the general terms and provisions of such plans and programs,
with Company and Executive paying the same portion of the cost of
each such plan or program as existed at the time of Executive's
termination. In the event that Executive's continued participation
in any group plans and programs is not permitted, then in lieu
thereof, Company shall acquire, with the same cost sharing,
individual insurance policies providing comparable coverage for
Executive; provided that Company shall not be obligated to pay for
any such individual coverage more than three (3) times Company's
cost of such group coverage; and provided further, if any such
individual coverage is unavailable, then Company shall pay to
Executive annually for three years following the Date of Termination
an amount equal to the sum of the average annual contributions,
payments, credits, or allocations made by Company for such insurance
on Executive's behalf over the three (3) fiscal years of Company
preceding the Date of Termination, which amount shall be pro rated
for any fraction of a year; and
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F. Executive shall continue to receive for three years
following the Date of Termination such perquisites as he was
receiving at the time of the termination of his employment.
(ii) The benefits to be continued as described above are benefits to
the Executive and/or the Executive's family at least as favorable as those that
would have been provided to them under clause (ii) of paragraph (c) of Section 3
of this Agreement if the Executive's employment had continued until the third
anniversary of the Date of Termination; provided, however, that during any
period when the Executive is eligible to receive such benefits under another
employer-provided plan, the benefits provided by the Company under this
subparagraph may be made secondary to those provided under such other plan. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits under this subparagraph, the
Executive shall be deemed to have continued employment with the Company until
the third anniversary of the Date of Termination.
(b) Death or Disability. If the employment of Executive shall
terminate during the Employment Period by reason of the permanent disability or
death of Executive, all payments that would have been due to Executive under
this Agreement had he remained in the employ of Company until the end of the
Employment Period shall continue to be made to him
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(or his legal representative). If Executive shall die following a termination of
his employment other than pursuant to subsection (c), below, of this Section 5,
or following a termination during the Employment Period by reason of Disability,
all payments that otherwise would have been due to Executive under this
Agreement had he not so died shall be made instead to such beneficiary as
Executive shall have designated in writing. To the extent that neither Executive
nor his designee shall live until all such payments have been made, after the
death of the second of them to die, said payments shall be made to the estate of
such person. If Executive shall die without a beneficiary designation in effect,
said payments shall be made to Executive's estate.
(c) Cause; Other than for Good Reason. If the Executive's employment
is terminated by the Company for Cause during the Employment Period, the Company
shall pay the Executive the Annual Base Salary through the Date of Termination
and the amount of any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), in each case to the
extent not yet paid, and the Company shall have no further obligations under
this Agreement. If the Executive voluntarily terminates employment during the
Employment Period, other than for Good Reason, the Company shall pay the Accrued
Obligations other than the Accrued Bonus Amount to the Executive in a lump sum
in
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cash within 30 days of the Date of Termination, and the Company shall have no
further obligations under this Agreement.
6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies for which the Executive may qualify, nor, subject to paragraph (f) of
Section 12, shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company or any of
its affiliated companies on or after the Date of Termination shall be payable in
accordance with such plan, policy, practice, program, contract or agreement, as
the case may be, except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the
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Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, but if the
Executive secures other employment, any fringe benefits (such as medical
insurance) the Company is required to provide to the Executive following
termination of the Executive's employment shall be secondary to those provided
by another employer (if any).
8. Confidential Information; Noncompetition. (a) Executive
understands that in the course of his employment by Company, Executive will
receive confidential information concerning the business or purposes of Company,
and which Company desires to protect. Executive agrees that he will not at any
time during or after the Employment Period reveal to anyone outside Company or
use for his own benefit any such information that has been designated as
confidential by Company or reasonably should be understood by Executive to be
confidential without specific written authorization by Company. Executive
further agrees not to use any such confidential information or trade secrets in
competing with Company at any time during or after his employment by Company.
(b) The Executive agrees that the Executive will not, at any time
during the Noncompetition Period, without
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the prior written consent of the Company, directly or indirectly employ, or
solicit the employment of (whether as an employee, officer, director, agent,
consultant or independent contractor), any person who was or is at any time
during the previous twelve (12) months an employee, representative, officer or
director of the Company or any of its affiliated companies (except for such
employment by the Company or any of its affiliated companies.
(c) During the Noncompetition Period, the Executive shall not,
without the prior written consent of the Board, engage in or become associated
with a Competitive Activity. For purposes of this paragraph (c) of Section 8:
(i) the "Noncompetition Period" means (except as otherwise set forth in Section
4(c)(iii)) (A) the period during which the Executive is employed by the Company,
plus (B) if the Executive's employment is terminated other than by reason of
death or Disability, the period ending on the first anniversary of the later of
(x) the date that would have been the last day of the Employment Period if (I)
the Executive's employment had not been previously terminated and (II) the
Company had given notice to the Executive that the Employment Period would not
be extended at least 60 days prior to the last Renewal Date preceding the Date
of Termination and (y) the date on which the Executive's employment with the
Company and its affiliated companies terminates; (ii) a "Competitive
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Activity" means any competitor identified by the Company from time to time prior
to the termination of Executive's employment or any other person or entity that
manufactures or sells products that compete with products manufactured or sold
by the Company or any of its affiliates in such jurisdiction at any time or from
time to time during the Noncompetition Period; (iii) the Executive shall be
considered to have become "associated with a Competitive Activity" if the
Executive becomes directly or indirectly involved as an owner, principal,
employee, officer, director, independent contractor, representative,
stockholder, financial backer, agent, partner, advisor, lender, or in any other
individual or representative capacity with any individual, partnership,
corporation or other organization that is engaged in a Competitive Activity.
Notwithstanding the foregoing, the Executive may make and retain investments
during the Noncompetition Period in less than one percent of the equity of any
entity engaged in a Competitive Activity, if such equity is listed on a national
securities exchange or regularly traded in an over-the-counter market.
(d) In consideration for the Executive's agreement to be bound by
the noncompetition covenant of Section 8(c), the Company shall pay to the
Executive an aggregate amount equal to the sum of (1) the Annual Base Salary and
(2) the Annual Bonus Amount (the "Noncompetition Consideration") in
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cash, in equal monthly installments (the "Installments") during the portion of
the Noncompetition Period, if any, following the date on which the Executive's
employment with the Company and its affiliated companies terminates; provided,
that if the Executive breaches the noncompetition covenant of Section 8(c), then
the Company shall have no further obligation to pay any unpaid Installment, and
the Executive shall be required to return to the Company all Installments that
had previously been paid, together with interest thereon at the applicable
federal rate as defined in Section 1274(d) of the Internal Revenue Code of 1986,
as amended, from the date the Installment was paid to the Executive through the
date the Executive repays it to the Company. No Noncompetition Consideration
shall be payable to the Executive if the Executive's employment terminates by
reason of death or Disability. The Noncompetition Consideration shall be in
addition to, and not in lieu of, any amounts otherwise payable to Executive
under this Agreement.
(e) All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by the Executive, whether alone or jointly with
others, from the date of the Executive's initial employment by the Company and
continuing until the end of the Employment Period and any subsequent period when
the Executive is employed by the Company or its affiliated companies, relating
or pertaining in
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any way to the Executive's employment with or the business of the Company or any
of its affiliated companies, shall be promptly disclosed in writing to the Board
of Directors of the Company and are hereby transferred to and shall redound to
the benefit of the Company, and shall become and remain its sole and exclusive
property. The Executive agrees to execute any assignments to the Company or its
nominee, of the Executive's entire right, title and interest in and to any such
discoveries and improvements and to execute any other instruments and documents
requisite or desirable in applying for and obtaining patents or copyrights, at
the expense of the Company, with respect thereto in the United States and in all
foreign countries, that may be required by the Company. The Executive further
agrees, during and after the Employment Period, to cooperate to the extent and
in the manner required by the Company, in the prosecution or defense of any
patent or copyright claims or any litigation, or other proceeding involving any
trade secrets, processes, discoveries or improvements covered by this Agreement,
but all necessary expenses thereof shall be paid by the Company.
(f) The Executive acknowledges and agrees that: (i) the purpose of
the foregoing covenants, including without limitation the noncompetition
covenant of Section 8(c), is to protect the goodwill, trade secrets and other
Confidential Information of the Company; (ii) because of the nature of the
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business in which Company and its affiliated companies are engaged and because
of the nature of the confidential information to which the Executive has access,
it would be impractical and excessively difficult to determine the actual
damages of Company and its affiliates in the event the Executive breached any of
the covenants of this Section 8; and (iii) remedies at law (such as monetary
damages) for any breach of the Executive's obligations under this Section 8
would be inadequate. The Executive therefore agrees and consents that if the
Executive commits any breach of a covenant under this Section 8 or threatens to
commit any such breach, the Company shall have the right (in addition to, and
not in lieu of, any other right or remedy that may be available to it) to
temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage. With respect to any provision of this
Agreement finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it is
enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court's determination. If any of the covenants of this Agreement
are determined to be wholly or partially unenforceable in any jurisdiction, such
determination shall
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not be a bar to or in any way diminish the Company's right to enforce any such
covenant in any other jurisdiction.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing
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provisions of this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $30,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Arthur
Andersen LLP or such other certified public accounting firm as may be designated
by the Executive (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall
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be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive
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shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a
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result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the
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contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
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10. Arbitration. (a) Claims Subject to Arbitration. Company and
Executive mutually consent to the resolution by arbitration in Hartford,
Connecticut of all claims or controversies ("Claims"), whether or not arising
out of Executive's employment (or its termination), that Company may have
against Executive or that Executive may have against the Company or against its
officers, directors, shareholders, employees or agents in their capacity as
such. Any such arbitration shall be conducted in accordance with the employment
dispute resolution rules and procedures of the American Arbitration Association.
The claims covered by this Agreement include, but are not limited to, claims for
wages or other compensation due; claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age, marital status, or
medical condition, handicap or disability); claims for benefits (except where an
employee benefit or pension plan specifies that its claims procedure shall
culminate in an arbitration procedure different from this one), and claims for
violation of any federal, state, or other governmental law, statute, regulation,
or ordinance, except claims excluded in the following Subparagraph.
(b) Claims Not Subject to Arbitration. Claims Executive may have for
workers' compensation or unemployment
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compensation benefits are not covered under this Section 10. Also not covered
are claims by the Company for injunctive and/or other equitable relief for
breach of the Executive's covenant not to compete, for unfair competition or for
the use or unauthorized disclosure of trade secrets or confidential information,
as to which Executive understands and agrees that the Company may seek and
obtain relief from a court of competent jurisdiction, without any obligation on
the part of the Company to submit any related issue to arbitration before
seeking such relief.
11. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the
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same extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Connecticut, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
Subject to the provisions of Section 10 of this Agreement, the
courts of record of the State of Connecticut or the Courts of the United States
located in the State of Connecticut shall have exclusive jurisdiction over any
suit, action or other proceeding arising out of this Agreement and, in the event
that it is brought, any such suit, action or other proceeding arising out of
this Agreement shall be filed in the Hartford Superior Court of the State of
Connecticut or the United States District Court in Hartford, Connecticut.
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The parties hereto hereby irrevocably consent to the jurisdiction of each such
court in any such suit, action or proceeding.
(b) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Emery G. Olcott
1 Gold Street
Hartford, Connecticut 06103
If to the Company:
Packard BioScience Company
800 Research Parkway
Meriden, Connecticut 06450
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 12. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision,
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together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of Section 4 of this
Agreement) shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof, including, without limitation, the Employment Agreement by and between
the Company and the Executive dated as of August 1, 1996, except that the
agreements set forth on Schedule A, attached hereto, shall not be superseded.
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(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Emery G. Olcott
------------------------------
Emery G. Olcott
PACKARD BIOSCIENCE COMPANY
By: /s/ Richard T. McKernan
------------------------------
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EMPLOYMENT AGREEMENT
AGREEMENT by and between Packard BioScience Company (f/k/a/ Canberra
Industries, Inc.), a Delaware corporation with its principal office and place of
business in Meriden, Connecticut (the "Company"), and Richard T. McKernan (the
"Executive"), dated as of the 4th day of March, 1997.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to employ the Executive as Senior Vice President of the Company and President of
Packard Instrument Company, Inc., the Company's wholly-owned subsidiary and for
the Executive to serve as a member of the Board, and the Executive desires to
serve in those capacities;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and
the Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for the period commencing on the date hereof and ending on the
third anniversary of the date hereof (the "Employment Period"); provided,
however, that commencing on the date two years after the date hereof (the
"Initial Renewal Date"), and on the first day of each calendar month following
the calendar month in which falls the Initial Renewal Date (each such date and
<PAGE>
the Initial Renewal Date shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Employment Period shall be
automatically extended so as to terminate thirteen calendar months from such
Renewal Date, unless at least 60 days prior to the Renewal Date, the Company
shall give notice to the Executive that the Employment Period shall not be so
extended.
2. Position and Duties. (a) During the Employment Period, the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned as of the date hereof.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures,
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fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
(c) The Executive's services shall be performed primarily at
the Company's headquarters in Meriden, Connecticut.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") at least
equal to twelve times the monthly base salary paid or payable to the Executive
immediately prior to the date hereof. During the Employment Period, the Annual
Base Salary shall be reviewed for increase at least annually and shall be
increased pursuant to each such review by a percentage no less than the
percentage increase in the United States Consumer Price Index -- All Urban
Consumers, as published by the Bureau of Labor Statistics of the U.S. Department
of Labor, for the calendar year immediately preceding such review. Any increase
in the Annual Base Salary shall not limit or reduce any other obligation of the
Company under this Agreement. The Annual Base Salary shall not be reduced after
any such increase, and the term
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"Annual Base Salary" shall thereafter refer to the Annual Base Salary as so
increased.
(b) Annual Bonus. In addition to the Annual Base Salary, the
Executive shall be eligible to be awarded, for each fiscal year or portion of a
fiscal year ending during the Employment Period, an annual bonus (the "Annual
Bonus"), in accordance with the Company's annual incentive plans then in effect.
Each Annual Bonus shall be paid in a single cash lump sum no later than 90 days
after the end of the fiscal year or portion thereof for which the Annual Bonus
is awarded, unless the Executive elects in writing, before the beginning of the
fiscal year for which the Annual Bonus is to be awarded, to defer receipt of the
Annual Bonus.
(c) Other Benefits. During the Employment Period: (i) the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company and its
affiliated companies in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in effect for
the Executive as of the date hereof or, if more favorable to the Executive, to
the same extent as peer executives; and (ii) the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in,
and shall receive all benefits under, all
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welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life insurance,
group life insurance, accidental death and travel accident insurance plans and
programs, and key employee insurance) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive as of the date hereof or, if more
favorable to the Executive, to the same extent as peer executives. For purposes
of this Agreement, the term "affiliated companies" means all companies
controlled by, controlling or under common control with the Company.
(d) Retirement. Executive's Retirement age, for purposes of
the definition of "Retirement" contained in the Stockholders' Agreement, dated
as of March 4, 1997 (the "Stockholders Agreement"), by and among the Company,
certain management investors, certain other stockholders, Merrill Lynch KECALP
L.P. 1994, KECALP Inc. and Stonington Capital Appreciation 1994 Fund, L.P., a
Delaware limited partnership, shall be 64, provided that Executive's Retirement
age shall be 62 if and only if (i) the Chief Executive Officer of the Company
determines that the Executive has provided for "successful succession planning"
for the senior management of the Company, and the Board consents to such
determination, which
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consent shall not be unreasonably withheld or (ii) the Board determines, in its
good faith judgment, that bona fide personal hardship circumstances exist.
(e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in carrying out the Executive's duties under this
Agreement, provided that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts, or
similar documentation of such expenses.
(f) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive as of the date hereof or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
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(g) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies as of the date
hereof or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(h) Vacation. During the Employment Period, the Executive
shall be entitled to six weeks of paid vacation annually in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive as of the date hereof or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(i) Put Rights. Notwithstanding anything to the contrary
contained in the Stockholders Agreement, if, during the Employment Period, the
Company terminates the Executive's employment other than for Cause or the
Executive terminates employment for Good Reason, the Executive shall be
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entitled to exercise his Put Right (as defined in the Stockholders Agreement) on
the terms and conditions set forth in the Stockholders Agreement.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. The Company shall be entitled to terminate the
Executive's employment because of the Executive's Disability during the
Employment Period. "Disability" means that the Executive has been unable, for a
period of 180 consecutive business days, to perform the Executive's duties under
this Agreement, as a result of physical or mental illness or injury. A
termination of the Executive's employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), unless the Executive returns to full-time performance of the
Executive's duties before the Disability Effective Date.
(b) By the Company. (i) The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. "Cause"
means:
A. the Executive's willful and material breach of any of
his obligations under this Agreement that causes material loss or
detriment to the
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Company, if the Executive shall not have made a good faith effort to
cure the acts or behavior constituting any such breach within thirty
(30) days after receipt from the Company of written notice (signed
by at least a majority of the Directors) of the alleged breach
specifying in detail (i) the acts or behavior alleged to constitute
the breach and (ii) the proposed cure therefor; or
B. the commission by the Executive of a felony or the
perpetration by the Executive of a common law fraud upon Company.
(c) Good Reason. (i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means:
A. the assignment to the Executive of duties significantly
inconsistent with paragraph (a) of Section 2 of this Agreement, or
any other action by the Company that results in a significant
diminution in the Executive's position, authority, duties or
responsibilities, other than an isolated and inadvertent action that
is not taken in bad faith and is remedied by the Company promptly
after receipt of written notice thereof from the Executive;
B. any material failure by the Company to comply with any
provision of Section 3 of this Agreement, other than an isolated and
inadvertent failure that is not taken in bad faith and is remedied
by the Company promptly after receipt of written notice thereof from
the Executive;
C. any requirement by the Company that the Executive's
services be rendered primarily at a location or locations at a
distance of more than 50 miles from the location provided for in
paragraph (c) of Section 2 of this Agreement without the
Executive's consent;
D. any purported termination of the Executive's employment by
the Company for a reason or in a manner not permitted by this
Agreement;
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E. any failure by the Company to comply with paragraph (c) of
Section 11 of this Agreement; or
F. the giving of notice by the Company to the Executive
pursuant to Section 1 of this Agreement that the Employment Period
shall not be automatically extended as described in Section 1.
(ii) A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be effective on
the fifth business day following the date when the Notice of Termination for
Good Reason is given, unless the notice sets forth a later date (which date
shall in no event be later than 30 days after the notice is given). In the event
of a termination of employment by the Executive for Good Reason pursuant to
clause (F) of Section 4(c)(i) of this Agreement, the Notice of Termination for
Good Reason must be given within 90 days of the event constituting Good Reason.
(iii) A termination of the Executive's employment by the Executive
without Good Reason shall be effected by giving the Company written notice of
the termination. If such a notice is given at any time on or after the date that
is 60
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days prior to the third anniversary of the date hereof, then the Noncompetition
Period (as defined in Section 8(c) below) shall be deemed to be the period
beginning on the Date of Termination and ending on the first anniversary
thereof, notwithstanding the definition set forth in Section 8(c).
(d) No Waiver. The failure to set forth any fact or circumstance in
a Notice of Termination for Cause or a Notice of Termination for Good Reason
shall not constitute a waiver of the right to assert, and shall not preclude the
party giving notice from asserting, such fact or circumstance in an attempt to
enforce any right under or provision of this Agreement.
(e) Date of Termination. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or by the
Executive for Good Reason is effective, or the date that is 60 days after the
date on which the Executive gives the Company notice of a termination of
employment without Good Reason, as the case may be.
5. Obligations of the Company upon Termination. (a) Other Than for
Cause, Death or Disability; Good Reason. If, during the Employment Period, the
Company terminates the Executive's
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employment, other than for Cause, Death or Disability, or the Executive
terminates employment for Good Reason, the Company shall pay the amounts
described in subparagraph (i) below to the Executive in a lump sum in cash
within 30 days after the Date of Termination and shall continue the benefits
described in subparagraph (ii) below until at least the third anniversary of the
Date of Termination. The payments provided pursuant to this paragraph (a) of
Section 5 are intended as liquidated damages for a termination of the
Executive's employment by the Company other than for Cause, Death or Disability
or for the actions of the Company leading to a termination of the Executive's
employment by the Executive for Good Reason, and shall be the sole and exclusive
remedy therefor, but shall in no way affect the Executive's rights under the
agreements set forth on Schedule A, attached hereto.
(i) The amounts to be paid in a lump sum as described above are:
A. The Executive's accrued but unpaid cash compensation (the
"Accrued Obligations"), which shall equal the sum of (1) any portion
of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid, (2) an amount (the "Accrued
Bonus Amount") equal to the product of (x) the target Annual Bonus
for the year of termination (the "Annual Bonus Amount") and (y) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the
denominator of which is 365; (3) any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon) that has not yet been paid; and (4) any accrued
but unpaid Annual Bonuses and vacation pay;
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B. Severance pay equal to the product of (x) the sum of (1)
the Annual Base Salary and (2) the Annual Bonus Amount and (y) a
fraction, the numerator of which is the number of days remaining
from the Date of Termination until the end of the Employment Period,
and the denominator of which is 365;
C. An amount equal to the aggregate amounts that Company would
have contributed on behalf of Executive under the Thrift Savings
Plan of Company, if said plan shall be in effect, for three years
after the Date of Termination (plus estimated earnings thereon) as
if Executive continued in the employ of Company for such period and
made contributions under said plan at a rate, as a percentage of
salary, equal to the average rate at which Executive had made
contributions to said plan in the three (3) fiscal years of Company
preceding the Date of Termination;
D. To the extent that any form of compensation previously
granted to Executive, such as, by way of example only, restricted
stock, stock options or performance share awards, shall not be fully
vested or shall require additional service as an employee at the
time of the termination of Executive's employment, Executive shall
be credited with additional service through the period ending three
years after the Date of Termination;
E. For three years after the Date of Termination (but not
beyond the time when Executive becomes eligible for comparable
insurance coverage offered on comparable terms by any subsequent
employer), Executive shall also continue to participate in all life,
health, disability and similar insurance plans and programs of
Company to the extent that such continued participation is possible
under the general terms and provisions of such plans and programs,
with Company and Executive paying the same portion of the cost of
each such plan or program as existed at the time of Executive's
termination. In the event that Executive's continued participation
in any group plans and programs is not permitted, then in lieu
thereof, Company shall acquire, with the same cost sharing,
individual insurance policies providing comparable coverage for
Executive; provided that Company shall not be obligated to pay for
any such individual
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coverage more than three (3) times Company's cost of such group
coverage; and provided further, if any such individual coverage is
unavailable, then Company shall pay to Executive annually for three
years following the Date of Termination an amount equal to the sum
of the average annual contributions, payments, credits, or
allocations made by Company for such insurance on Executive's behalf
over the three (3) fiscal years of Company preceding the Date of
Termination, which amount shall be pro rated for any fraction of a
year; and
F. Executive shall continue to receive for three years
following the Date of Termination such perquisites as he was
receiving at the time of the termination of his employment.
(ii) The benefits to be continued as described above are benefits to
the Executive and/or the Executive's family at least as favorable as those that
would have been provided to them under clause (ii) of paragraph (c) of Section 3
of this Agreement if the Executive's employment had continued until the third
anniversary of the Date of Termination; provided, however, that during any
period when the Executive is eligible to receive such benefits under another
employer-provided plan, the benefits provided by the Company under this
subparagraph may be made secondary to those provided under such other plan. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits under this subparagraph, the
Executive shall be deemed to have continued employment with the Company until
the third anniversary of the Date of Termination.
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(b) Death or Disability. If the employment of Executive shall
terminate during the Employment Period by reason of the permanent disability or
death of Executive, all payments that would have been due to Executive under
this Agreement had he remained in the employ of Company until the end of the
Employment Period shall continue to be made to him (or his legal
representative). If Executive shall die following a termination of his
employment other than pursuant to subsection (c), below, of this Section 5, or
following a termination during the Employment Period by reason of Disability,
all payments that otherwise would have been due to Executive under this
Agreement had he not so died shall be made instead to such beneficiary as
Executive shall have designated in writing. To the extent that neither Executive
nor his designee shall live until all such payments have been made, after the
death of the second of them to die, said payments shall be made to the estate of
such person. If Executive shall die without a beneficiary designation in effect,
said payments shall be made to Executive's estate.
(c) Cause; Other than for Good Reason. If the Executive's employment
is terminated by the Company for Cause during the Employment Period, the Company
shall pay the Executive the Annual Base Salary through the Date of Termination
and the amount of any compensation previously deferred
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by the Executive (together with any accrued interest or earnings thereon), in
each case to the extent not yet paid, and the Company shall have no further
obligations under this Agreement. If the Executive voluntarily terminates
employment during the Employment Period, other than for Good Reason, the Company
shall pay the Accrued Obligations other than the Accrued Bonus Amount to the
Executive in a lump sum in cash within 30 days of the Date of Termination, and
the Company shall have no further obligations under this Agreement.
6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies for which the Executive may qualify, nor, subject to paragraph (f) of
Section 12, shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company or any of
its affiliated companies on or after the Date of Termination shall be payable in
accordance with such plan, policy, practice, program, contract or agreement, as
the case may be, except as explicitly modified by this Agreement.
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7. Full Settlement. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement, but if the Executive
secures other employment, any fringe benefits (such as medical insurance) the
Company is required to provide to the Executive following termination of the
Executive's employment shall be secondary to those provided by another employer
(if any).
8. Confidential Information; Noncompetition. (a) Executive
understands that in the course of his employment by Company, Executive will
receive confidential information concerning the business or purposes of Company,
and which Company desires to protect. Executive agrees that he will not at any
time during or after the Employment Period reveal to anyone outside Company or
use for his own benefit any such information that has been designated as
confidential by Company or reasonably should be understood by Executive to be
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confidential without specific written authorization by Company. Executive
further agrees not to use any such confidential information or trade secrets in
competing with Company at any time during or after his employment by Company.
(b) The Executive agrees that the Executive will not, at any time
during the Noncompetition Period, without the prior written consent of the
Company, directly or indirectly employ, or solicit the employment of (whether as
an employee, officer, director, agent, consultant or independent contractor),
any person who was or is at any time during the previous twelve (12) months an
employee, representative, officer or director of the Company or any of its
affiliated companies (except for such employment by the Company or any of its
affiliated companies.
(c) During the Noncompetition Period, the Executive shall not,
without the prior written consent of the Board, engage in or become associated
with a Competitive Activity. For purposes of this paragraph (c) of Section 8:
(i) the "Noncompetition Period" means (except as otherwise set forth in Section
4(c)(iii)) (A) the period during which the Executive is employed by the Company,
plus (B) if the Executive's employment is terminated other than by reason of
death or Disability, the period ending on the first anniversary of the later of
(x) the date that would have been
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the last day of the Employment Period if (I) the Executive's employment had not
been previously terminated and (II) the Company had given notice to the
Executive that the Employment Period would not be extended at least 60 days
prior to the last Renewal Date preceding the Date of Termination and (y) the
date on which the Executive's employment with the Company and its affiliated
companies terminates; (ii) a "Competitive Activity" means any competitor
identified by the Company from time to time prior to the termination of
Executive's employment or any other person or entity that manufactures or sell
products that compete with products manufactured or sold by the Company or any
of its affiliates in such jurisdiction at any time or from time to time during
the Noncompetition Period; (iii) the Executive shall be considered to have
become "associated with a Competitive Activity" if the Executive becomes
directly or indirectly involved as an owner, principal, employee, officer,
director, independent contractor, representative, stockholder, financial backer,
agent, partner, advisor, lender, or in any other individual or representative
capacity with any individual, partnership, corporation or other organization
that is engaged in a Competitive Activity. Notwithstanding the foregoing, the
Executive may make and retain investments during the Noncompetition Period in
less than one percent of the equity of any entity engaged in
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a Competitive Activity, if such equity is listed on a national securities
exchange or regularly traded in an over-the-counter market.
(d) In consideration for the Executive's agreement to be bound by
the noncompetition covenant of Section 8(c), the Company shall pay to the
Executive an aggregate amount equal to the sum of (1) the Annual Base Salary and
(2) the Annual Bonus Amount (the "Noncompetition Consideration") in cash, in
equal monthly installments (the "Installments") during the portion of the
Noncompetition Period, if any, following the date on which the Executive's
employment with the Company and its affiliated companies terminates; provided,
that if the Executive breaches the noncompetition covenant of Section 8(c), then
the Company shall have no further obligation to pay any unpaid Installment, and
the Executive shall be required to return to the Company all Installments that
had previously been paid, together with interest thereon at the applicable
federal rate as defined in Section 1274(d) of the Internal Revenue Code of 1986,
as amended, from the date the Installment was paid to the Executive through the
date the Executive repays it to the Company. No Noncompetition Consideration
shall be payable to the Executive if the
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Executive's employment terminates by reason of death or Disability. The
Noncompetition Consideration shall be in addition to, and not in lieu of, any
amounts otherwise payable to Executive under this Agreement.
(e) All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by the Executive, whether alone or jointly with
others, from the date of the Executive's initial employment by the Company and
continuing until the end of the Employment Period and any subsequent period when
the Executive is employed by the Company or its affiliated companies, relating
or pertaining in any way to the Executive's employment with or the business of
the Company or any of its affiliated companies, shall be promptly disclosed in
writing to the Board of Directors of the Company and are hereby transferred to
and shall redound to the benefit of the Company, and shall become and remain its
sole and exclusive property. The Executive agrees to execute any assignments to
the Company or its nominee, of the Executive's entire right, title and interest
in and to any such discoveries and improvements and to execute any other
instruments and documents requisite or desirable in applying for and obtaining
patents or copyrights, at the expense of the Company, with respect thereto in
the United States and in all foreign countries, that may be required by the
Company. The Executive further agrees, during and after the Employment
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Period, to cooperate to the extent and in the manner required by the Company, in
the prosecution or defense of any patent or copyright claims or any litigation,
or other proceeding involving any trade secrets, processes, discoveries or
improvements covered by this Agreement, but all necessary expenses thereof shall
be paid by the Company.
(f) The Executive acknowledges and agrees that: (i) the purpose of
the foregoing covenants, including without limitation the noncompetition
covenant of Section 8(c), is to protect the goodwill, trade secrets and other
Confidential Information of the Company; (ii) because of the nature of the
business in which Company and its affiliated companies are engaged and because
of the nature of the confidential information to which the Executive has access,
it would be impractical and excessively difficult to determine the actual
damages of Company and its affiliates in the event the Executive breached any of
the covenants of this Section 8; and (iii) remedies at law (such as monetary
damages) for any breach of the Executive's obligations under this Section 8
would be inadequate. The Executive therefore agrees and consents that if the
Executive commits any breach of a covenant under this Section 8 or threatens to
commit any such breach, the Company shall have the right (in addition to, and
not in lieu of, any other right or remedy that may be available to it) to
temporary and permanent injunctive relief from a court
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<PAGE>
of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage. With respect to any provision
of this Agreement finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it is
enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court's determination. If any of the covenants of this Agreement
are determined to be wholly or partially unenforceable in any jurisdiction, such
determination shall not be a bar to or in any way diminish the Company's right
to enforce any such covenant in any other jurisdiction.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties are incurred by the Executive with respect
to such excise tax (such
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<PAGE>
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Executive, after taking into account the Payments and the Gross-Up
Payment, would not receive a net after-tax benefit of at least $30,000 (taking
into account both income taxes and any Excise Tax) as compared to the net
after-tax proceeds to the Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give rise to
any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount.
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(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Arthur
Andersen LLP or such other certified public accounting firm as may be designated
by the Executive (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a
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<PAGE>
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to
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<PAGE>
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the
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<PAGE>
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an
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<PAGE>
amount advanced by the Company pursuant to Section 9(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. Arbitration. (a) Claims Subject to Arbitration. Company and
Executive mutually consent to the resolution by arbitration in Hartford,
Connecticut of all claims or controversies ("Claims"), whether or not arising
out of Executive's employment (or its termination), that Company may have
against Executive or that Executive may have against the Company or against its
officers, directors, shareholders, employees or agents in their capacity as
such. Any such arbitration shall be conducted in accordance with the employment
dispute resolution rules and procedures of the American Arbitration Association.
The claims covered by this Agreement include, but are not limited to, claims for
wages or other compensation due; claims for breach of any contract or
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<PAGE>
covenant (express or implied); tort claims; claims for discrimination
(including, but not limited to, race, sex, religion, national origin, age,
marital status, or medical condition, handicap or disability); claims for
benefits (except where an employee benefit or pension plan specifies that its
claims procedure shall culminate in an arbitration procedure different from this
one), and claims for violation of any federal, state, or other governmental law,
statute, regulation, or ordinance, except claims excluded in the following
Subparagraph.
(b) Claims Not Subject to Arbitration. Claims Executive may have for
workers' compensation or unemployment compensation benefits are not covered
under this Section 10. Also not covered are claims by the Company for injunctive
and/or other equitable relief for breach of the Executive's covenant not to
compete, for unfair competition or for the use or unauthorized disclosure of
trade secrets or confidential information, as to which Executive understands and
agrees that the Company may seek and obtain relief from a court of competent
jurisdiction, without any obligation on the part of the Company to submit any
related issue to arbitration before seeking such relief.
11. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of
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<PAGE>
the Company, shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Connecticut, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except
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by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
Subject to the provisions of Section 10 of this Agreement, the
courts of record of the State of Connecticut or the Courts of the United States
located in the State of Connecticut shall have exclusive jurisdiction over any
suit, action or other proceeding arising out of this Agreement and, in the event
that it is brought, any such suit, action or other proceeding arising out of
this Agreement shall be filed in the Hartford Superior Court of the State of
Connecticut or the United States District Court in Hartford, Connecticut. The
parties hereto hereby irrevocably consent to the jurisdiction of each such court
in any such suit, action or proceeding.
(b) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Richard T. McKernan
11 Salisbury Way
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<PAGE>
Farmington, Connecticut 06032
If to the Company:
Packard BioScience Company
800 Research Parkway
Meriden, Connecticut 06450
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 12. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to
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assert any right under, this Agreement (including, without limitation, the right
of the Executive to terminate employment for Good Reason pursuant to paragraph
(c) of Section 4 of this Agreement) shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof, including, without limitation, the Employment Agreement by and between
the Company and the Executive dated as of August 1, 1996, except that the
agreements set forth on Schedule A, attached hereto, shall not be superseded.
(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Richard T. McKernan
------------------------------
Richard T. McKernan
PACKARD BIOSCIENCE COMPANY
By: /s/ Emery G. Olcott
------------------------------
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PACKARD BIOSCIENCE COMPANY
MANAGEMENT STOCK INCENTIVE PLAN
(Effective March 4, 1997)
1. Purpose. The purpose of this Plan is to further the best
interests of Packard BioScience Company (including any successor thereto, the
"Corporation") and its subsidiaries by encouraging its key employees, as is more
fully set forth in Sections 5 and 6 of this Plan, to continue association with
the Corporation and by providing additional incentive for unusual industry and
efficiency through offering an opportunity to acquire a proprietary stake in the
Corporation and its future growth. The Corporation believes that this goal may
best be achieved by granting stock options to Participants (as defined in
Section 6 hereof).
2. Tax Status of Options. The stock options to be granted pursuant
to this Plan (hereinafter called "Options") will not be Incentive Stock Options
as provided for in Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
3. Option Shares; Classes of Options. The maximum number of shares
of the Corporation's common stock, par value $.01 per share (the "Shares") that
may be issued pursuant to options granted under this Plan shall be 612,446
subject to adjustment as provided in Section 15 hereof. Three (3) classes
<PAGE>
of Options may be granted under this Plan: Incentive Options, Performance
Options and Discretionary Options.
4. Effective Date of Plan. This Plan has been adopted by the Board
of Directors to be effective as of the date written on the first page hereof
(the "Effective Date"), which is the date of the Closing (as that term is
defined in the Recapitalization and Stock Purchase Agreement (the
"Recapitalization Agreement") dated as of November 26, 1996, by and between the
Corporation and certain other entities and individuals.
5. Administration of Plan. The Plan shall be administered by the
Board of Directors of the Corporation (the "Board of Directors") or by a
committee designated by the Board of Directors to administer the Plan (herein
called the "Compensation Committee"). The Board of Directors may authorize the
Compensation Committee to exercise any and all of the powers and functions of
the Board of Directors pursuant to the Plan. The interpretation and construction
by the Compensation Committee or the Board of Directors of any provisions of the
Plan or of any Options granted under it shall be final and conclusive. No member
of the Compensation Committee or of the Board of Directors shall be liable for
any action or determination made with respect to the Plan or any Options granted
under it. No
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<PAGE>
shareholder of the Corporation nor any Participant, former Participant, or any
beneficiary, shall have any claim or cause of action against the Corporation or
any member of the Board of Directors or the Compensation Committee on account
of, or by reason of, or arising out of the exercise of such discretionary power.
6. Eligibility. The persons eligible to participate in the Plan as
recipients of Options shall be all eligible key employees, consultants and
directors of the Corporation and its subsidiaries ("Participants").
7. Grant of Options. (a) Incentive Options: Options to purchase an
aggregate of 473,420 Shares (the "Incentive Options"), subject to adjustment as
provided for in Section 15 hereof, shall be granted immediately upon or
subsequent to the Effective Date to the Participants and in the amounts as
determined by the Board of Directors or the Compensation Committee, pursuant to
Incentive Option Agreements substantially in the form attached hereto as Exhibit
A. The Incentive Options shall vest upon the terms set forth in such Incentive
Option Agreements.
(b) Performance Options: Options to purchase an aggregate of
139,026 Shares (the "Performance Options"), subject to adjustment as provided
for in Section 15 hereof, shall be granted immediately upon the Effective Date
to the
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Participants and in the amounts as determined by the Board of Directors or the
Compensation Committee, pursuant to Performance Option Agreements substantially
in the form attached hereto as Exhibit B.
(c) Discretionary Options: Additional Options (the
"Discretionary Options") may be granted from time to time in the discretion of
the Board of Directors or the Compensation Committee on terms and conditions set
forth in agreements entered into in connection with such grants (the
"Discretionary Option Agreements"). Such terms and conditions may (but shall not
be required to) be identical to the terms and conditions of Incentive Option
and/or Performance Options.
(d) Each grant of an Option pursuant to this Plan shall be
made in writing and upon such terms and conditions as may be determined by the
Board of Directors or by the Compensation Committee at the time of grant,
subject to the provisions and limitations set forth in this Plan, including
without limitation the requirement that as a condition of a grant of an Option,
the proposed recipient execute a counterpart of the Stockholders' Agreement (the
"Stockholders' Agreement") dated as of the Effective Date, as it may be amended
from time to time, by and among the Corporation, certain other stockholders of
the Corporation and the "Management Investors" (as such term is defined in the
Stockholders' Agreement and
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<PAGE>
which term includes each Participant participating in this Plan in such
Participant's capacity as an optionholder), and agree to be bound thereby as a
"Management Investor." The Incentive Option Agreement, Performance Option
Agreement or Discretionary Option Agreement (collectively, the "Option
Agreements") for each Option shall be executed by the Chief Executive Officer,
except that, in the event that the Chief Executive Officer is the recipient of
any Option(s), the Option Agreement for such Option(s) shall be executed by the
Secretary of the Corporation.
8. Option Price. The purchase price for each Share covered by any
Incentive Option shall be $22.25, subject to adjustment as provided in Section
15 hereof. The purchase price for each Share covered by any Performance Option
shall be $27.25, subject to adjustment as provided in Section 15 hereof. The
purchase price for each Share covered by a Discretionary Option shall be as set
forth in the related Discretionary Option Agreement, subject to adjustment as
provided in Section 15 hereof. The purchase price of an Option, as set forth in
this Paragraph 8, shall be called the "Option Price."
9. Duration of Options. (a) Each Option shall remain in effect from
the date of the grant of the Option until it is terminated according to its
terms or as hereinafter provided, but in no event beyond the tenth anniversary
of the date
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of grant of the Option (the period when an Option is in effect is hereinafter
referred to as the "Option Period").
(b) Except as otherwise set forth in the Option Agreement,
subject to the Put Rights and Call Rights contained in the Stockholders'
Agreement, and subject to Section 9(c) hereof, the Option Period of an Option
shall terminate upon the date upon which the Participant holding such Option
ceases to be an employee, consultant or director of the Corporation or its
subsidiaries for any reason including, but not limited to, Retirement (as
defined in the Stockholders' Agreement), death, Disability (as defined in the
Stockholders' Agreement), Involuntary Termination (as defined in the
Stockholders' Agreement) or termination for Cause (as defined in the
Stockholders' Agreement).
(c) The expiration of a consulting arrangement without the
prior termination thereof shall not be deemed a termination of such arrangement
(or cessation of being a consultant) for purposes of this Plan. The employment,
consultancy or directorship of a Participant who has been granted Options shall
not be deemed to have terminated if the Participant is absent from such
employment, consultancy or directorship by reason of an approved leave of
absence (in accordance with the applicable policy of the Corporation or the
applicable subsidiary) or is transferred to and becomes an employee, consultant
or director of a subsidiary of the Corporation or the Corporation. If a
subsidiary of the Corporation ceases to be such a subsidiary, the employment,
consultancy or directorship, as applicable, of each employee, consultant and
director of such subsidiary who is not an employee, consultant
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<PAGE>
or director of the Corporation or of another (remaining) subsidiary of the
Corporation immediately thereafter shall be deemed to have ceased on the date
such subsidiary ceases to be a subsidiary of the Corporation.
(d) The termination of the Option Period of an Option shall
not affect the Put Rights and Call Rights set forth in the Stockholders'
Agreement with respect to such Option or any Shares purchased pursuant to such
Options.
10. Exercisability of Options. Each Option shall be exercisable
during the period of time from the date it vests (which in the case of
Performance Options shall be at the time of grant) until the end of the Option
Period and shall be exercised in accordance with the terms of this Plan and the
applicable Option Agreement and the Stockholders' Agreement. In the event of a
conflict, the terms of the Stockholders' Agreement shall govern.
11. Procedure for Exercise and Payment for Shares. (a) A Participant
shall exercise an Option by giving notice to the Corporation in the form
attached hereto as Schedule I.
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<PAGE>
Such notice shall be deemed sufficient for this purpose only if delivered to the
Corporation at its principal office and only if it states (i) the number of
Shares with respect to which the Option is being exercised, and (ii) the date,
not more than ninety (90) days after the date of such notice, upon which the
Shares shall be purchased and payment therefor shall be made (the "Exercise
Date"). The exercise of an Option shall be effective only if, on or before the
Exercise Date, the Participant pays the aggregate Option Price for the Shares
being purchased in cash or by certified or bank cashier's check, delivered to
the principal office of the Corporation. The Corporation shall, as soon as
practicable after the Exercise Date, deliver or cause to be delivered to the
Participant a certificate or certificates for the number of Shares with respect
to which the Option is so exercised and payment is so made, registered in the
name of the exercising Participant. Until such certificates have been issued,
the exercising Participant shall not have any of the rights of a shareholder of
the Corporation including, without limitation, the right to vote with respect to
the underlying Shares.
(b) Notwithstanding the foregoing, if as of the Exercise Date
for an Option (i) the Corporation may not issue Shares with respect to such
Option by reason of any law or contract or (ii) any law or any regulation of any
commission or agency having jurisdiction shall require the Corporation or the
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<PAGE>
exercising Participant to take any action with respect to the Shares acquired by
the exercise of an Option, then the date upon which the Corporation shall issue
or cause to be issued the certificate or certificates for the Shares shall be
postponed until such issuance is permitted or full compliance has been made with
all such requirements of law or regulation, as applicable; provided, that the
Corporation shall use its reasonable efforts to take all necessary action to
comply with such requirements of law or regulation. Further, if requested by the
Corporation, at or before the time of the issuance of the Shares with respect to
which exercise of an Option has been made, the exercising Participant shall
deliver to the Corporation his or her written statements satisfactory in form
and content to the Corporation, that he or she intends to hold the Shares so
acquired by him or her on exercise of his or her Option, for investment purposes
only and not with a view to resale or other distribution thereof to the public
in violation of the Securities Act of 1933, as amended (the "Securities Act").
Moreover, in the event that the Corporation shall determine that, in compliance
with the Securities Act or other applicable statutes or regulations, it is
necessary to register any of the Shares with respect to which an exercise of an
Option has been made, or to qualify any such Shares for exemption from any of
the requirements of the Securities Act or any other applicable statute or
regulation, no Options may be exercised
-9-
<PAGE>
and no Shares shall be issued to the exercising Participant until the required
action has been completed; provided, that the Corporation shall use its
reasonable efforts to take all necessary action to comply with such requirements
of law or regulation. Notwithstanding anything to the contrary contained herein,
neither the Board of Directors nor the members of the Compensation Committee
owes a fiduciary duty to any Participant in his or her capacity as such.
12. Cash-Out of Certain Options. Without limiting any rights of the
Corporation under the Stockholders' Agreement, the Compensation Committee or the
Board of Directors may cancel any outstanding Options in exchange for a cash
payment, or in the discretion of the Compensation Committee or the Board of
Directors payment of other property, to the Participant equal to the excess of
(x) the fair market value (as determined in good faith by the Board of Directors
of the Corporation) of the consideration received per Stonington Share (as such
term is defined in the Stockholders' Agreement) by Stonington (as such term is
defined in the Stockholders' Agreement) in any sale (by merger, stock purchase
or otherwise) to a person which is not an affiliate of the Corporation or
Stonington of all the then issued and outstanding Stonington Shares (a "Transfer
Event"), over (y) the Option Price for such Options, multiplied by the number of
Shares subject to such cancelled Options, in
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<PAGE>
each case effective upon the consummation of the Transfer Event.
13. Transferability. Options may not be transferred by the
Participant except that certain contract rights under the Stockholders'
Agreement (as provided therein) with respect to such Options may be transferred
to the estate of a deceased Participant. Options may be exercised during the
lifetime of the Participant only by such Participant.
14. Termination of the Plan. This Plan shall terminate upon the
close of business on March 4, 2007 (other than with respect to Options that
have not by their terms terminated at such time with respect to which this Plan
shall continue through the end of the Option Period thereof) unless it shall
have sooner terminated by there having been granted and fully exercised Options
covering the entire 602,446 Shares (subject to adjustment as provided for in
Section 15 hereof) subject to this Plan.
15. Adjustments. In the event of the declaration of any stock
dividend on the Shares of the Corporation or in the event of any reorganization,
merger, consolidation, acquisition, separation, recapitalization, spin-off,
split-up, extraordinary dividend, combination or exchange of the Shares or like
adjustment, the number and
-11-
<PAGE>
type of securities or other property available pursuant to this Plan and the
number and type of securities or other property subject to any Option granted or
to be granted pursuant to this Plan, and the Option Prices, shall be adjusted by
appropriate changes in this Plan and in any outstanding Options (including the
substitution of cash or other property for Shares). Any such adjustment to the
Plan or to Options or Option Prices shall be made by action of the Board of
Directors or the Compensation Committee, whose determination shall be
conclusive.
16. Amendment or Discontinuance of the Plan. The Board of Directors
or the Compensation Committee may amend or terminate this Plan and may amend any
Option granted pursuant to this Plan at any time; provided that no amendment or
termination may adversely affect a Participant's rights to or interest in any
Option previously granted under this Plan unless such Participant shall have
agreed thereto in writing.
17. Initial Public Offerings. Notwithstanding anything contained
herein to the contrary, if the Corporation proposes to effect an Initial Public
Offering and if the appropriate securities regulatory authority or stock
exchange determines that in order for the Initial Public Offering to proceed, it
would be necessary to reduce the number of issued options or the term of such
issued options, then the Board of Directors or the Compensation Committee may:
(i) require the holders of Options to either exercise Options or agree to the
cancellation
-12-
<PAGE>
of such Options so that after such exercise or cancellation the number of issued
Options is no more than the maximum number permitted by such appropriate
regulatory authorities or stock exchange; or (ii) shorten the Option Period of
any Option to the extent necessary to comply with applicable law or stock
exchange requirements, as the case may be. For the purposes of effecting such
amendment, the Options to be affected and the order that they shall be affected
shall be as follows: first, Discretionary Options granted to Participants who
have been granted Incentive Options or Performance Options; second, Incentive
Options; third, Performance Options; and fourth, Discretionary Options not
covered in first above. To the extent that any such Options shall be required to
be exercised or cancelled, the determination as to whether to exercise or cancel
such Options shall be made by the holder thereof in his or her sole discretion.
In addition, the allocation of Options that are required to be exercised or
cancelled among the holders of each category of Options shall be pro rata among
such holders, except to the extent a holder agrees in writing to the exercise or
cancellation of a disproportionately large number of his or her Options in that
category.
18. Repurchased Options and Repurchased Shares Attributable Thereto.
Options, and the Shares attributable to such Options, which have been
repurchased by the Corporation pursuant to the Put Rights and Call Rights
contained in the
-13-
<PAGE>
Stockholders' Agreement on account of the termination of employment, consultancy
or directorship of Participants shall again be available for issuance under this
Plan and subject to the terms of the Stockholders' Agreement as Discretionary
Options (thereby increasing the aggregate number of Discretionary Options
available for grant pursuant to Section 3 hereof).
19. Withholding. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for federal income tax
purposes with respect to any Option hereunder, such Participant shall pay to the
Corporation, or make arrangements satisfactory to the Corporation regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. The obligations of the
Corporation hereunder shall be conditional on such payment or arrangements, and
the Corporation shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due the Participant.
-14-
<PAGE>
SCHEDULE I
Date:____________
Attention: Secretary
Re: Exercise of Stock Option
To Whom It May Concern:
Pursuant to the terms of the Option Agreement between us dated
__________, in which you have granted to me a _______________ [insert Incentive
Option, Performance Option, or Discretionary Option, as the case may be] to
purchase a certain number of the shares of Common Stock, par value $.01 per
share (the "Shares"), of Canberra Industries, Inc., a Delaware corporation (the
"Corporation"), on certain terms and conditions, I hereby give notice that I
elect to exercise such options to the extent of ______ Shares at $______ [Insert
purchase price of Options as adjusted at the time of exercise] per Share (the
"Purchased Shares"). In full payment of the option price for the Purchased
Shares provided in the Option Agreement, I agree to deliver on ___________ (the
"Closing Date") [not to exceed 90 days from the date of this notice] a certified
or bank cashier's check to the order of the Corporation or cash in the amount of
$________ for such exercise. I also agree to pay on the Closing Date an
additional amount equal to any withholding obligation the Corporation may have
as a result of this exercise or with respect to the Purchased Shares.
I hereby covenant and agree that I am acquiring the Purchased Shares
for investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "Securities Act"). I further covenant and agree that I shall not dispose of
any of the Purchased Shares in any transaction or transactions which, in the
opinion of counsel to the Corporation, may violate the Securities Act, or the
rules and regulations thereunder or any applicable state securities, or "blue
sky," laws.
I further covenant and agree that, if any of the Purchased Shares
are registered under the Securities Act, no public offering (otherwise than on a
national securities exchange,
<PAGE>
as defined in the Securities Exchange Act of 1934, as amended) of any of the
Purchased Shares will be made by me or by any successor under such circumstances
that I or such successor may be deemed an underwriter, as defined in the
Securities Act.
I agree with respect to the Purchased Shares I receive as a result
of this exercise to continue to be bound by all the terms, to the extent
applicable at the Closing (as defined in the Stockholders' Agreement (the
"Stockholders' Agreement") dated as of ________ ___, 1997 by and among the
Corporation, certain other stockholders of the Corporation and the Management
Investors (as such term is defined in the Stockholders' Agreement)), of the
Stockholders' Agreement.
I understand that the Corporation may endorse upon the certificate
or certificates representing the Purchased Shares such legends referring to the
foregoing restrictions, or any other applicable restrictions, as it may deem
appropriate.
Very truly yours,
___________________________________
(Signature)
___________________________________
(Print Name)
___________________________________
(Address)
I-2
<PAGE>
AMENDMENT TO
CANBERRA INDUSTRIES, INC.
STOCK OPTION PLAN OF 1971
Effective as of June 15, 1995
1. Paragraph 8(b) of the Plan is hereby amended in its entirety to read
as follows:
(b) Exercise Limitations. As option granted under the Plan may
be exercised with respect to up to 20% of the number of shares
subject to the option in the first year following the date on
which the option is granted, and in any year thereafter up to
the same number of shares of the shares remaining subject to
option; provided that if in any year less than that number of
shares is exercised, the remainder thereof may also be
exercised in any following year. No option shall be
exercisable for a fraction of a share. Any other provision of
this Plan to the contrary notwithstanding, no option may be
exercised unless the Optionee has been employed continuously
by the Company or any subsidiary thereof for two years prior
to the date of exercise.
2. Paragraph 12 of the Plan is hereby amended in its entirety to read
as follows:
12. Amendment of Plan. The Board of Directors may at any time
amend the Plan, provided that without the approval of
stockholders there shall be, except by the operation of the
provision of Paragraph 7 above, no increase in the total
number of shares covered by the Plan and no extension of the
latest date upon which options may be exercised, and provided
that no amendment that effects a reduction in benefits shall
in any manner affect any grant theretofore made without the
consent of the Participant or the transferee of the
Participant, unless necessary to comply with applicable law.
3. In all other respects, the Plan is hereby ratified and confirmed.
Adopted by Board of Directors on June 15, 1995.
<PAGE>
CANBERRA INDUSTRIES, INC.
STOCK OPTION PLAN OF 1971
AS AMENDED AND RESTATED
ON NOVEMBER 15, 1990
1. Establishment. This Stock Option Plan of 1971 (the "Plan") as
established in 1971, is hereby amended and restated for the benefit of Canberra
Industries, Inc. (the "Company"), its shareholders, and selected employees of
the Company or of any subsidiary thereof.
2. Purpose. The purpose of the Plan is to promote the interests of the
Company and its shareholders by permitting the Company to grant options to
purchase shares of its stock in order to retain and attract personnel for
positions of responsibility with the Company or any subsidiary thereof and to
provide additional incentive to such personnel by offering them a greater
interest in the continued success of the Company through stock ownership.
3. Stock Subject to Option. Subject to the provisions of Paragraph 7
hereof, the total number of shares of stock which may be optioned under the Plan
on and after November 15, 1990 is the number of shares remaining available under
the Plan immediately prior to November 15, 1990 plus an additional Three Hundred
Thousand (300,000) shares of $.01 par value Common Stock of the Company which
shall be either authorized and unissued stock or reacquired stock. If any
options granted under the Plan prior to November 15, 1990 shall expire without
exercise, the shares subject to option thereunder shall not again become
available for option under the Plan.
4. Administration of Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee"). All questions of interpretation and application of the Plan and of
any options issued under it shall be determined by a majority of the Committee,
and the determination of such majority shall be final and binding upon all
persons.
5. Participants. Participants will be selected by the Committee from
among the executive, supervisory and administrative employees of the Company or
any subsidiary thereof, including those who may be Directors, in a manner to
accomplish the purpose of the Plan.
6. Award of Options. The Committee may from time to time in its discretion
grant options under the Plan. Except as provided in Paragraph 3 hereof, the
shares involved in the unexercised portions of any terminated or expired options
may again be subject to options under the Plan.
7. Changes in Capital Structure. In the event that the outstanding shares
of the $.01 par value Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividend payable in capital stock,
<PAGE>
-2-
appropriate adjustment shall be made by the Committee in the number and kind of
shares for the purchase of which options may be granted under the Plan. In
addition, the Committee shall make appropriate adjustment in the number and kind
of shares as to which outstanding options, or portions thereof then unexercised,
shall be exercisable to the end that the Optionee's proportionate interest shall
be maintained as before the occurrence of such event; such adjustment in
outstanding options shall be made without change in the total price applicable
to the unexercised portion of the option and with a corresponding adjustment in
the option price per share. Any determinations of the Committee hereunder shall
be conclusive.
8. Terms and Conditions of Options. Each option granted under the Plan
shall be evidenced by a Stock Option Agreement (substantially in the form
attached hereto as Exhibit A). Each such option shall be subject to the
following terms and conditions:
(a) Option Price. The option price shall be a fixed price, not less
than One ($1.00) Dollar per share, to be determined in each case by the
Committee and stated in the Stock Option Agreement.
(b) Exercise Limitations. An option granted under the Plan on or
after November 15, 1990, may be exercised no earlier than one year following the
date of grant. For options granted on or after November 15, 1990, such option
may be exercised with respect to up to 20% of the number of shares subject to
the option in the second year following the date on which the option is granted,
and in any year thereafter up to the same number of shares of the shares
remaining subject to option; provided that, if in any year less than that number
of shares is exercised, the remainder thereof may also be exercised in any
following year. For options granted before November 15, 1990, such options may
be exercised with respect to up to 20% of the number of shares subject to the
option in the first year following the date on which the option is granted, and
in any year thereafter up to the same number of shares of the shares remaining
subject to option; provided that if in any year less than that number of shares
is exercised, the remainder thereof may also be exercised in any following year.
No option shall be exercisable for a fraction of a share. Any other provision of
this Plan to the contrary notwithstanding, no option may be exercised unless the
Optionee has been employed continuously by the Company or any subsidiary thereof
for two years prior to the date of exercise.
(c) Option Term. No option will be exercisable after the expiration
of ten years from the date the option is granted.
(d) Method of Exercise. Stock purchased under options shall at the
time of purchase be paid for in full. To the extent that the right to purchase
shares has accrued thereunder, options may be exercised from time to time by
written notice to the Company stating the number of shares to be purchased, and
the time of delivery thereof, which time shall be at least fifteen days after
the giving of such notice unless an earlier date shall have been mutually agreed
upon. At the time specified in such notice, the Company shall, without transfer
or issue tax deliver to the Optionee (or other person entitled to exercise the
option), at the main office of
<PAGE>
-3-
the Company, or such other place as shall be mutually acceptable, a certificate
or certificates for such shares out of theretofore authorized but unissued
shares or reacquired shares of its Common Stock, as the Company may elect,
against payment of the option price in full for the number of shares to be
delivered; provided, however, that the time of such delivery may be postponed by
the Company for such period as may be required for it with reasonable diligence
to comply with any applicable listing requirements of any national securities
exchange. The option price shall be paid in full either (i) in cash or by
certified or bank cashier's check, or (ii) with the approval of the Committee,
in shares of Common Stock of the Company having a fair market value equal to
such option price or in a combination of cash and such shares. For purposes
hereof, the fair market value of the Company's Common Stock shall be: (i) so
long as the shares are not traded on a national securities exchange or in the
over-the-counter market, its appraised value as of the latest appraisal for
purposes of the Company's Employee Stock Ownership Plan unless, in any case
where the exercise of the option occurs more than nine months after the latest
appraisal date, the Committee shall confirm the application of the latest
appraisal or establish a different fair market value; or (ii) if the shares are
traded on a national securities exchange, the closing price of the shares; or
(iii) if the shares are traded in the over-the-counter market, the average of
the closing bid and asked prices for the shares on such date (or if no such
quotation occurred on that date, on the next preceding date on which there was
such a quotation), as made available for publication by the National Association
of Securities Dealers Automated Quotation System. If the Optionee (or other
person entitled to exercise the option) fails to accept delivery of and pay for
all or any part of the number of shares specified in such notice upon tender of
delivery thereof his right to exercise the option with respect to such
undelivered shares may be terminated.
(e) Non-assignability of Option Rights. No option shall be
assignable or transferable by the Optionee except by will or the laws of descent
and distribution. During the life of an Optionee, the option shall be
exercisable only by him.
(f) Effect of Termination of Employment or Death. In the event an
Optionee during his life ceases to be an employee of the Company or any
subsidiary thereof for any reason, including retirement, any option or
unexercised portion thereof granted to him which is otherwise exercisable shall
terminate unless exercised within one month of the date on which he ceases to be
an employee. In the event of the death of the Optionee while he is an employee
of the Company or any subsidiary thereof or within not more than one month after
the date on which he ceases to be such an employee, any option or unexercised
portion thereof granted to him, if otherwise exercisable by the Optionee at the
date of death, may be exercised by his personal representatives, heirs, or
legatees at any time prior to the expiration of six months from the date of
death of the Optionee, but in any event no later than the date of expiration of
the option period.
(g) Other Restrictions. The Committee may include in Option
Agreements hereunder such other restrictions as the Committee may determine,
including requirements that
<PAGE>
-4-
Optionees resell stock purchased pursuant to said Option Agreements to the
Company under such conditions as may be specified in the Option Agreement.
(h) Non-Competitive Covenant. Options granted under the Plan may be
subject to non-competitive restrictions as determined by the Committee and made
a part of the Option Agreement.
9. Effective Date and Termination of Plan. This Plan was originally
adopted by the Board of Directors on July 14, 1971, and approved by the
stockholders of the Company on September 15, 1971. The Plan was first amended by
the Board of Directors in June, 1983, was subsequently amended by the Board of
Directors on June 19, 1985, and approved by the stockholders on July 30, 1985,
and was subsequently amended by the Board of Directors on March 3, 1988. This
amended and restated Plan, which has been adopted by the Board of Directors on
November 15, 1990, shall be subject to approval by the stockholders of the
Company at the next annual meeting of such stockholders or at any other meeting
of such stockholders held before November 15, 1991. The Board of Directors may
terminate this Plan at any time. Termination of the Plan will not affect rights
and obligations theretofore granted and then in effect.
10. Rights as Shareholder. An optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the issuance
of a stock certificate to him as a result of the completed exercise of such
option with respect to those shares. An Optionee entitled to shares as a result
of the exercise of an option shall not be deemed for any purpose to be, or have
rights as, a shareholder of the Company by virtue of such exercise, except to
the extent a stock certificate is issued therefor and then only from the date
such certificate is issued. No adjustments, other than those required under
Section 7 hereof, shall be made for dividends or distributions or other rights
for which the record date is prior to the date such stock certificate is issued.
11. Compliance with Applicable Law. Notwithstanding anything herein to
the contrary, the Company shall not be obligated to cause to be issued or
delivered any certificates evidencing shares to be delivered pursuant to the
exercise of an option, unless and until the Company is advised by its counsel
that the issuance and delivery of such certificates is in compliance with all
applicable laws and regulations of governmental authority. The Company shall in
no event be obligated to register any securities pursuant to the Securities Act
of 1933 (as now in effect or as hereafter amended) or to take any other action
in order to cause the issuance and delivery of such certificates to comply with
any such law or regulation. The Committee may require, as a condition of the
issuance and delivery of such certificates and in order to ensure compliance
with such laws and regulations, that the Optionee make such covenants,
agreements and representations as the Committee, in its sole discretion, deems
necessary or desirable.
12. Amendment of Plan. The Board of Directors may at any time amend the
Plan,
<PAGE>
-5-
provided that without the approval of stockholders there shall be, except by the
operation of the provisions of Paragraph 7 above, no increase in the total
number of shares covered by the Plan and no extension of the latest date upon
which options may be exercised, and provided that no amendment may affect any
then outstanding options or any unexercised portions thereof.
13. Use of Proceeds. The proceeds from the sale of stock pursuant to
options granted under the Plan shall constitute general funds of the Company and
may be used in the discretion of the Board of Directors for the Company's
general corporate purposes.
<PAGE>
EXHIBIT A
---------
STOCK OPTION AGREEMENT
STOCK OPTION PLAN OF 1971
-------------------------
CANBERRA INDUSTRIES, INC.
1. CANBERRA INDUSTRIES, INC., a corporation of the State of Delaware
having its principal place of business at Meriden, Connecticut ("Canberra")
hereby grants to (the "Optionee") an option to purchase shares of Canberra's
$.01 par value common stock at a price of $ per share, exercisable from time
to time for a period of ten years from the date of this Agreement (the "Option")
2. Subject to the terms hereof and the terms of the Plan, the Option
may be exercised in whole or in part during its term, but in no event earlier
than one year from the date of grant. Any other provision of this Agreement to
the contrary notwithstanding, the Option may not be exercised unless the
Optionee has been employed continuously by Canberra or any subsidiary thereof
for two years prior to the date of exercise. The Option shall not be exercisable
for a fraction of a share.
3. The Optionee hereby represents to Canberra that in the event of his
exercise of the foregoing Option, in whole or in part, his intention will be to
acquire such Shares for investment and not with a view to their disposition.
4. This Agreement shall be nontransferable and exercisable only by the
Optionee during his lifetime and while in the employment of Canberra or any
subsidiary thereof or within one month following the termination of his
employment with Canberra or any subsidiary thereof. Notwithstanding the
foregoing, in the event of the death of the Optionee, the Option shall be
exercisable by the legal representative of the Optionee for a period of six
months following the Optionee's death.
5. This Agreement is subject to the provisions of the Stock Option Plan
of 1971 of Canberra adopted by the Board of Directors on July 14, 1971, as
amended to date (the "Plan"). It is expressly agreed and understood that in case
of any inconsistency between the provisions of this Agreement and said Plan the
provisions of said Plan shall control. A copy of said Plan is attached hereto
and made a part hereof.
<PAGE>
-2-
IN WITNESS WHEREOF, Canberra Industries, Inc., acting herein by a
Committee of its Board of Directors hereunto duly authorized, has caused this
Agreement to be executed, and the Optionee has hereunto set his hand and seal at
Meriden, Connecticut, as of the day of , 1997.
CANBERRA INDUSTRIES, INC.
BY_______________________________
Member of the Compensation Committee
____________________________ L.S.
Optionee
<PAGE>
STOCKHOLDERS' AGREEMENT
By and among
PACKARD BIOSCIENCE COMPANY,
THE MANAGEMENT INVESTORS LISTED IN SCHEDULE 1,
THE NON-MANAGEMENT INVESTORS LISTED IN SCHEDULE 2,
MERRILL LYNCH KECALP L.P. 1994,
KECALP INC.
And
STONINGTON CAPITAL APPRECIATION 1994 FUND, L.P.
Dated as of March 4, 1997
<PAGE>
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS........................................................... 2
ARTICLE II
TRANSFER RESTRICTIONS................................................. 11
Section 2.1. General Restrictions on Transfer................. 11
Section 2.2. Certain Permitted Transfers...................... 11
Section 2.3. Rights of First Refusal.......................... 13
Section 2.4. Termination of Rights of First Refusal
and Restrictions on Transfer................... 16
Section 2.5. Sale of Shares to a Third Party.................. 16
Section 2.6. Legend on Certificates........................... 17
Section 2.7. Limitation on Institutional Investors............ 18
ARTICLE III
PUT AND CALL RIGHTS................................................... 19
Section 3.1. Put Rights....................................... 19
Section 3.2. Call Rights...................................... 21
Section 3.3. Reallocation Right............................... 23
Section 3.4. Termination of Put and Call Rights............... 24
ARTICLE IV
CORPORATE GOVERNANCE.................................................. 24
Section 4.1. Directors........................................ 24
Section 4.2. Voting........................................... 24
ARTICLE V
REGISTRATION RIGHTS................................................... 25
Section 5.1. Registration..................................... 25
Section 5.2. Registration Procedures.......................... 27
Section 5.3. Indemnification.................................. 30
Section 5.4. Holdback Agreement............................... 34
(i)
<PAGE>
PAGE
ARTICLE VI
MISCELLANEOUS ....................................................... 35
Section 6.1. Binding Effect................................... 35
Section 6.2. No Right of Employment; Expiration
of Consulting Arrangements..................... 35
Section 6.3. Recapitalizations, Exchanges, Etc.
Affecting Shares............................... 35
Section 6.4. Waiver and Amendment............................. 35
Section 6.5. Tax Withholding and Other Tax Matters............ 36
Section 6.6. Notices.......................................... 37
Section 6.7. Applicable Law and Time of Essence............... 38
Section 6.8. Integration...................................... 38
Section 6.9. Descriptive Headings, Etc........................ 38
Section 6.10. Counterparts..................................... 38
Section 6.11. Successors, Assigns and Transferees.............. 38
Section 6.12. Severability..................................... 39
Section 6.13. Termination...................................... 39
Section 6.14. Community Property States........................ 39
Schedule 1. List of Management Investors
Schedule 2. List of Non-Management Investors
(ii)
<PAGE>
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement"), dated as of March
4, 1997, by and among Packard BioScience Company, a Delaware corporation
formerly known as Canberra Industries, Inc. ("Packard"), the employee
stockholders and the holders of Existing Shares, Existing Options (each as
defined below) or options under the Management Stock Incentive Plan (the
"Management Stock Incentive Plan") listed in Schedule 1 hereto, as such Schedule
1 may be amended from time to time (collectively, the "Management Investors,"
and each individually, a "Management Investor"), certain other stockholders
listed in Schedule 2 hereto, as such Schedule 2 may be amended from time to time
(collectively, the "Non-Management Investors," and each individually, a "Non-
Management Investor," and together with the Management Investors, the "Packard
Investors"), KECALP Inc., Merrill Lynch KECALP L.P. 1994 (together with KECALP
Inc., the "Institutional Investors"), and Stonington Capital Appreciation 1994
Fund, L.P., a Delaware limited partnership ("Stonington").
W I T N E S S E T H:
WHEREAS, pursuant to a Recapitalization and Stock Purchase
Agreement, dated as of November 26, 1996 (the "Recapitalization Agreement"),
by and among Packard, the Management Investors and Stonington, simultaneously
with the execution and delivery of this Agreement, Packard is being
recapitalized (the "Recapitalization");
WHEREAS, the Institutional Investors and Stonington are acquiring
Shares (as defined below) and certain of the Packard Investors (i) will be
retaining Existing Shares and/or Existing Options and/or (ii) will be granted
Performance Options and/or Incentive Options (each as defined below) to purchase
additional Shares pursuant to the terms of the Management Stock Incentive Plan;
and
WHEREAS, Packard and the Stockholders (as defined below) wish to
enter into this Agreement to provide certain rights and obligations among them.
NOW, THEREFORE, in consideration of the premises and mutual
agreements, covenants and provisions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Agreement" shall have the meaning specified in the preamble hereto.
"Board of Directors" shall mean the board of directors of Packard.
"Call Event" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Notice" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Notice Period" shall have the meaning specified in Section
3.2(a) hereof.
"Call Options" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Right" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Shares" shall have the meaning specified in Section 3.2(a)
hereof.
"Cause" used in connection with a termination of employment (or, in
the case of a director or consultant, the termination of such person's retention
or appointment as a director or consultant) of a Management Investor by Packard
and its subsidiaries shall mean (unless otherwise defined in an employment (or
consulting or similar) agreement between such Management Investor and Packard or
any of its subsidiaries, in which case the term "Cause" as used herein with
respect to such Management Investor shall have the meaning ascribed to it
therein), (i) the Management Investor's willful failure to perform the duties of
his or her employment (or director or consulting relationship, as the case may
be) in any material respect after notice from Packard and failure to cure within
ten business days after delivery of such notice, (ii) malfeasance or gross
negligence in the performance of a Management Investor's duties of employment
(or director or consulting relationship, as the case may be), (iii) the
Management Investor's commission of a felony under the laws of the United States
or any state thereof (whether or not in connection with
-2-
<PAGE>
his or her employment (or director or consulting relationship, as the case may
be)), (iv) the Management Investor's disclosure of confidential information
respecting Packard's or any of its subsidiaries' business to any individual or
entity which is not in the performance of the duties of his or her employment
(or director or consulting relationship, as the case may be) and which is
harmful to Packard, or (v) any other act or omission by the Management Investor
(other than an act or omission resulting from the exercise by the Management
Investor of good faith business judgment) which is materially injurious to the
financial condition or the business reputation of Packard or any of its
affiliates.
"Closing" shall have the meaning specified in Section 3.1 of the
Recapitalization Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Compensation Committee" shall have the meaning specified in Section
5 of the Management Stock Incentive Plan.
"Credit Agreement" shall mean the Credit Agreement, dated as of the
date hereof, among Packard, the lenders who are parties thereto and Bank of
America National Trust and Savings Association, as Administrative Agent.
"Disability" with respect to a Management Investor shall mean
(unless otherwise defined in an employment (or consulting or similar) agreement
between such Management Investor and Packard or any of its subsidiaries, in
which case the term "Disability" as used herein with respect to such Management
Investor shall have the meaning ascribed to it therein), the inability of such
Management Investor to perform substantially such Management Investor's duties
and responsibilities to Packard or any of its subsidiaries as an employee,
consultant or director, as the case may be, by reason of a physical or mental
disability or infirmity (i) for a continuous period of six months or (ii) at
such earlier time as such Management Investor submits medical evidence of such
disability satisfactory to the Compensation Committee acting reasonably that
such Management Investor has a physical or mental disability or infirmity that
will likely prevent such Management Investor from substantially performing such
Management Investor's duties and responsibilities for six months or longer. The
date of such Disability shall be on the last day of such six-month period or the
day on which the Compensation Committee determines that the Management Investor
has a physical or mental disability or infirmity as provided in clause (ii)
herein.
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"Drag-Along Right" shall have the meaning specified in Section 2.5
hereof.
"Duly Endorsed" shall mean duly endorsed in blank by the person or
persons in whose name a Share is registered or accompanied by a duly executed
stock or security assignment or stock transfer power separate from the Share
with the signature(s) thereon guaranteed by a commercial bank or trust company
or a member of a national securities exchange or the National Association of
Securities Dealers, Inc. or such other executed stock or security assignment as
the Compensation Committee may in its sole discretion deem acceptable.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of such similar federal statute.
"Existing Options" and "Existing Shares" shall mean Shares and
options to purchase Shares held by Packard Investors prior to the Closing and
retained by such Packard Investors in the Recapitalization.
"Fair Value Price" shall mean, with respect to each Share, and
option to purchase Shares then exercisable in accordance with its terms as the
case may be, as of any date of determination an amount equal to the average of
the last reported sale price for the 20 consecutive trading days ended
immediately preceding the date of determination for a Share on the principal
national securities exchange registered under the Exchange Act on which Shares
are listed or admitted to trading, or, if not listed on any such exchange, the
average of the closing sale prices per Share during the 20 consecutive trading
days ended immediately preceding the date of determination on NASDAQ or, if not
quoted on NASDAQ, the average of the highest reported bid and lowest reported
asked quotation on NASDAQ during the 20 consecutive trading days immediately
preceding the date of determination; provided that if such sales prices or
quotations are not available, the Fair Value Price as of any date of
determination shall be an amount equal to the quotient obtained by dividing (1)
the difference between (a) the product of (i) Packard's consolidated earnings
from continuing operations before interest, taxes and depreciation or
amortization, excluding extraordinary items, for the four full fiscal quarters
ending immediately preceding the date of determination and (ii) 7.0, and (b)
Packard's average outstanding consolidated indebtedness and preferred stock
(valued, with respect to each series thereof, at the greater of its liquidation
preference and its call or redemption price then in effect, if any) based
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upon such amounts outstanding at the end of each of the four fiscal quarters
ending immediately preceding the date of determination (net of any cash and cash
equivalents) by (2) the number of Shares then outstanding determined on a fully
diluted basis (using the "treasury stock method" in accordance with generally
accepted accounting principles), except that, if any date of determination
occurs during the first full fiscal quarter immediately following the Closing,
the Fair Value Price, in lieu of the result of the formula set forth in this
proviso, shall be the Original Purchase Price (as defined below), and if any
date of determination occurs during the second, third or fourth full fiscal
quarters immediately following the Closing, the Fair Value Price shall be
calculated in accordance with the formula set forth in this proviso based on
actual results of Packard during the period since the Closing extrapolated on an
annualized basis; provided, further, that if there has been a disposition of
assets, an acquisition, recapitalization or reclassification of securities or
any other extraordinary transaction in the preceding four quarters, then the
Fair Value Price as determined by the formula set forth in the immediately
preceding proviso may (but shall not be required to) be adjusted as determined
by the Board of Directors acting reasonably.
"Hart-Scott Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Incentive Option Agreements" shall mean each Incentive Option
Agreement dated as of the date hereof or a date after the date hereof between
Packard and the employee, director or consultant named therein.
"Incentive Options" shall mean Incentive Options granted pursuant to
the Management Stock Incentive Plan.
"Initial Public Offering" shall have the meaning specified in
Section 2.1 hereof.
"Institutional Investors" shall have the meaning specified in the
preamble hereto.
"Institutional Shares" shall mean the Shares (from time to time)
beneficially owned by the Institutional Investors.
"Involuntary Termination" shall mean, with respect to a Management
Investor, (a) the termination of his or her employment (or director or
consulting relationship, as the case may be) with Packard or its subsidiaries by
Packard or its subsidiaries, or successors or assigns which termination is not
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for Cause or the result of the Management Investor's Retirement, death or
Disability, or (b) the sale or transfer (other than to Packard or another of its
subsidiaries) by Packard or any of its subsidiaries of substantially all of the
capital stock of Packard or of the subsidiary of Packard which employs such
Management Investor or a sale (other than to Packard or another of its
subsidiaries) of all or substantially all of the assets of the business unit of
Packard which employs such Management Investor, provided that as a result
thereof the Management Investor is no longer an employee (or director or
consultant, as the case may be) of Packard or one of its subsidiaries.
"Management Investors" shall have the meaning specified in the
preamble hereto. Unless the context otherwise requires, when used in this
Agreement the term "Management Investors" shall include any employee, director
or consultant of Packard or any of its subsidiaries who has been granted an
option pursuant to the Management Stock Incentive Plan.
"Management Investor's Estate" shall mean a Management Investor's
executors, administrators or testamentary trustees.
"Management Shares" shall mean the Shares (from time to time)
beneficially owned by the Management Investors or their Permitted Transferees,
including Shares issued upon the exercise of an option granted under the
Management Stock Incentive Plan or any other benefit plan.
"Management Stock Incentive Plan" shall mean the Management Stock
Incentive Plan adopted by the Board of Directors as of the Closing.
"Non-Management Investors" shall have the meaning specified in the
preamble hereto.
"Option Call Price" shall have the meaning specified in Section
3.2(a) hereof.
"Option Put Price" shall have the meaning specified in Section
3.1(a) hereof.
"Original Purchase Price" shall mean, with respect to Shares, the
actual purchase price per Share (including the exercise price for Shares
purchased pursuant to options or similar securities), except that, with respect
to Existing Shares, the Original Purchase Price shall mean the Share Purchase
Price (as such term is defined in the Recapitalization Agreement).
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"Packard" shall have the meaning specified in the preamble hereto.
"Packard Default Offerees" shall have the meaning specified in
Section 2.3(e) hereof.
"Packard Investors" shall have the meaning specified in the preamble
hereto.
"Packard Note" shall have the meaning specified in Section 3.1(b)
"Packard Offerees" shall have the meaning specified in Section
2.3(b) hereof.
"Packard Proposal" shall have the meaning specified in Section
2.3(a) hereof.
"Packard Purchaser" shall have the meaning specified in Section
2.3(a) hereof.
"Packard Shares" shall mean the Management Shares and the Shares
(from time to time) beneficially owned by the Non-Management Investors or their
Permitted Transferees.
"Packard Transfer Default Shares" shall have the meaning specified
in Section 2.3(e) hereof.
"Packard Transfer Notice" shall have the meaning specified in
Section 2.3(a) hereof.
"Packard Transfer Offerees" shall have the meaning specified in
Section 2.3(b) hereof.
"Packard Transfer Shares" shall have the meaning specified in
Section 2.3(a) hereof.
"Performance Option Agreements" shall mean each Performance Option
Agreement, dated as of the date hereof or a date after the date hereof, between
Packard and the employee, director or consultant named therein.
"Performance Options" shall mean Performance Options granted
pursuant to the Management Stock Incentive Plan.
"Permitted Transferee" shall have the meaning specified in Section
2.2(d) hereof.
"Permitted Transfers" shall have the meaning specified in Section
2.2 hereof.
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"Person" shall mean an individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof.
"Put Notice" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Notice Period" shall have the meaning specified in Section
3.1(a) hereof.
"Put Options" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Right" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Shares" shall have the meaning specified in Section 3.1(a)
hereof.
"Recapitalization" shall have the meaning specified in the first
WHEREAS clause hereto.
"Recapitalization Agreement" shall have the meaning specified in the
first WHEREAS clause hereto.
"Registrable Securities" shall mean the Packard Shares, the
Institutional Shares and the Stonington Shares, collectively; provided, however,
as to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) such securities shall have been sold
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) such securities shall have been otherwise transferred and new certificates
for such securities not bearing a legend restricting further transfer shall have
been delivered by Packard, (iv) such securities shall have ceased to be
outstanding (in the case of Shares underlying options granted under the
Management Stock Incentive Plan, such Shares cease to be outstanding after such
options have been exercised), or (v) in the case of Shares held by a Packard
Investor, such securities shall have been transferred to any Person other than a
Packard Investor or a Permitted Transferee.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with Article V of this Agreement, including without
limitation, (i) all SEC
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and stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses of complying with
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with "blue sky" qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
(iv) the fees and disbursements of counsel for Packard and of Packard's
independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, (v) the reasonable fees and disbursements of one counsel retained by
each of Stonington and the Packard Investors as a group in connection with each
such registration, (vi) any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities and the reasonable fees and expenses of
any special experts retained in connection with the requested registration,
including any fee payable to a qualified independent underwriter within the
meaning of the rules of the National Association of Securities Dealers, Inc.,
but excluding underwriting discounts and commissions and transfer taxes, if any,
(vii) internal expenses of Packard or any of its subsidiaries (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties) and (viii) securities acts liability
insurance (if Packard elects to obtain such insurance).
"Remaining Packard Transfer Shares" shall have the meaning specified
in Section 2.3(b) hereof.
"Repurchase Period" shall have the meaning specified in Section 3.3
hereof.
"Repurchased Equity" shall have the meaning specified in Section 3.3
hereof.
"Resale Notice" shall have the meaning specified in Section 3.3.
"Retirement" shall mean with respect to any Management Investor
(unless otherwise defined in an employment (or consulting or similar) agreement
between such Management Investor and Packard or any of its subsidiaries, in
which case the term "Retirement" as used herein with respect to such Management
Investor shall have the meaning ascribed to it therein) his termination of
employment after attainment of age 65 or such other retirement policy as may be
in force from time to time or as may otherwise be approved by the Compensation
Committee.
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"Retirement Put Event" shall have the meaning specified in Section
3.1(a) hereof.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"Section 5.1 Notice" shall have the meaning specified in Subsection
5.1(a) hereof.
"Section 5.1 Sale Number" shall have the meaning specified in
Subsection 5.1(c) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"Share Call Price" shall have the meaning specified in Section
3.2(a) hereof.
"Share Put Price" shall have the meaning specified in Section 3.1(a)
hereof.
"Shares" shall mean the shares of common stock, par value $.01 per
share, of Packard.
"Stockholders" shall mean the beneficial owners of the Packard
Shares (including holders of options granted to employees, directors and
consultants of Packard or any of its subsidiaries under the Management Stock
Incentive Plan), the Institutional Shares and the Stonington Shares
collectively, and each such individual holder shall be referred to as a
"Stockholder."
"Stonington" shall have the meaning specified in the preamble
hereto.
"Stonington Shares" shall mean the Shares from time to time
beneficially owned by Stonington.
"Tag-Along Right" shall have the meaning specified in Section 2.5
hereof.
"Termination Put Event" shall have the meaning specified in Section
3.1(a) hereof.
"Third Party" shall have the meaning specified in Section 2.5
hereof.
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"Transferring Packard Investor" shall have the meaning specified in
Section 2.3(a) hereof.
"Voluntary Resignation" shall mean (unless otherwise defined in an
employment (or consulting or similar) agreement between a Management Investor
and Packard or any of its subsidiaries, in which case the term "Voluntary
Resignation" as used herein with respect to such Management Investor shall have
the meaning ascribed to it therein) the termination of a Management Investor's
employment (or director or consultant relationship) with Packard or any of its
subsidiaries by such Management Investor, other than for Retirement, death or
Disability.
"Withdrawal Election" shall have the meaning specified in Subsection
5.1(c) hereof.
ARTICLE II
TRANSFER RESTRICTIONS
Section 2.1 General Restrictions on Transfer. Prior to the earlier
of (a) the fifth anniversary of the Closing or (b) the completion of a sale of
Shares pursuant to an effective registration statement under the Securities Act
(other than a registration statement relating to Shares issuable upon exercise
of employee stock options or in connection with any employee benefit plan of
Packard or any of its subsidiaries and other than a registration statement
relating to the public offering of Shares representing (when taken together
with all Shares sold under previous registration statements which were not in
connection with employee stock options or employee benefit plans) less than 10%
of the then outstanding Shares) (an "Initial Public Offering"), the Packard
Investors shall not, without the prior written consent of Packard, directly or
indirectly sell, offer, transfer, assign, pledge, hypothecate or otherwise
dispose of any Packard Shares, except for transfers made in accordance with the
provisions of Sections 2.2 and 2.5 and Articles III and V hereof and which are
made in compliance with the federal securities laws and all applicable state
securities, or "blue sky," laws. No transfer of Packard Shares in violation of
this Agreement shall be made or recorded on the books of Packard and any such
transfer shall be void and of no effect.
Section 2.2 Certain Permitted Transfers. Each of the Stockholders
and Packard acknowledges and agrees that any of the following transfers of
Shares (collectively, the "Permitted Transfers") are deemed to be permitted
transfers of such securities:
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(a) a transfer made to Packard pursuant to the provisions of
Sections 2.3, 2.5, and Article III hereof ;
(b) a transfer made with the prior written consent of Packard;
(c) if a Packard Investor is an individual, a transfer of Packard
Shares upon the death of such Packard Investor to his executors, administrators
and testamentary trustees; and
(d) a transfer of Management Shares made in compliance with the
federal and all applicable state securities laws to the Management Investor's
spouse, parents, children or grandchildren or to a trust or similar entity, the
beneficiaries of which, or to a corporation or partnership, the stockholders or
limited and general partners of which, include only the Management Investor and
such Management Investor's spouse, parents, children or grandchildren;
provided that no transfers pursuant to Section 2.2(c) or (d) shall be permitted
(and any such transfer shall be void and of no effect) unless and until the
applicable transferee shall agree in writing, in form and substance reasonably
satisfactory to Packard, to become bound, and becomes bound, by all the terms of
this Agreement to the same extent as a Packard Investor is so bound. Each Person
to whom Packard Shares may be transferred or pledged pursuant to Sections 2.2(c)
and (d) is hereinafter sometimes referred to as a "Permitted Transferee." Any
Permitted Transferee may further transfer any Packard Shares hereafter acquired
by such Permitted Transferee to any other Permitted Transferee of the Packard
Investor (including the Packard Investor); provided that no such transfer shall
be made to a Permitted Transferee (or the Packard Investor) hereunder (whether
by a Packard Investor or another Permitted Transferee) unless and until such
Permitted Transferee (or, in the event of transfers to the Packard Investor, the
Packard Investor) shall agree in writing, in form and substance reasonably
satisfactory to Packard, to become bound, and becomes bound, by all the terms of
this Agreement to the same extent as a Packard Investor is so bound.
Notwithstanding anything to the contrary contained herein, no transfer to or
from the Packard Investor or any Permitted Transferee shall be made if, as a
result thereof, Packard would be required to register any Shares under the
Securities Act, the Exchange Act and any applicable state securities, or "blue
sky," laws; and
(e) transfers made in connection with an Initial Public Offering or
pursuant to Article V hereof.
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Section 2.3 Rights of First Refusal. (a) On or after the fifth
anniversary of the Closing and prior to the tenth anniversary of the Closing,
provided that an Initial Public Offering has not occurred, the Packard Investors
and their Permitted Transferees may not, directly or indirectly sell, offer,
transfer, assign, pledge, hypothecate or otherwise dispose of (except for
transfers made in accordance with the provisions of Sections 2.2 and 2.5 and
Articles III and V hereof and which are made in compliance with the federal
securities laws and all applicable state securities, or "blue sky," laws) any or
all of the Packard Shares then owned by such Packard Investor or such Packard
Investor's Permitted Transferees unless (i) such Packard Investor or his or her
Permitted Transferee (either of the foregoing a "Transferring Packard Investor")
shall have received a written offer (the "Packard Proposal") from a bona fide
proposed purchaser of the Packard Shares (the "Packard Purchaser"), which
Packard Proposal shall remain open and available for acceptance for a period of
at least 40 calendar days and provide for the sale of a designated number of
Packard Shares (the "Packard Transfer Shares") to the Packard Purchaser (subject
only to the rights of Packard and the other Packard Investors under this Section
2.3) at a sales price consisting solely of cash in United States currency at
closing and containing the written agreement of the Packard Purchaser to be
bound by the terms and conditions of this Agreement, as amended from time to
time, and (ii) such Transferring Packard Investor shall have first given a
written notice (the "Packard Transfer Notice") to Packard containing an
irrevocable offer (open to acceptance for a period of 20 calendar days after the
date such Packard Transfer Notice is given) to sell such Packard Transfer Shares
to the Packard Transfer Offerees (as defined below) at the price and on terms no
less favorable than those specified in the Packard Proposal.
(b) The Packard Transfer Notice shall give Packard the right to
purchase all the Packard Transfer Shares. If Packard elects to purchase less
than all of the Packard Transfer Shares, Packard shall communicate, at least 10
calendar days prior to expiration of the 20-day period under the Packard
Transfer Notice, to all the Packard Investors (other than the selling Packard
Investor) listed in Schedule 1 or Schedule 2 hereto who then hold of record any
Shares ("Packard Offerees" and, together with Packard, the "Packard Transfer
Offerees") the Packard Transfer Notice and the number of Packard Transfer Shares
Packard intends to elect not to purchase ("Remaining Packard Transfer Shares").
A Packard Offeree who wishes to purchase Remaining Packard Transfer Shares shall
provide Packard with written notice specifying the number of Remaining Packard
Transfer Shares as to which such Packard Offeree desires to accept the offer
within 7 calendar days of the giving
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of such notice by Packard. If the aggregate number of Remaining Packard Transfer
Shares as to which notice of acceptance is provided by all Packard Offerees
exceeds the number of Remaining Packard Transfer Shares, then the right to
purchase Remaining Packard Transfer Shares shall be allocated among the Packard
Offerees on a pro rata basis (with rounding to avoid fractional Shares) based on
the percentage of Remaining Packard Transfer Shares corresponding to the
relationship of the aggregate number of Remaining Packard Transfer Shares sought
by each accepting Packard Offeree to the aggregate number of Remaining Packard
Transfer Shares sought by all accepting Packard Offerees. If the aggregate
number of Remaining Packard Transfer Shares as to which notice of acceptance is
provided by all Packard Offerees is less than the number of Remaining Packard
Transfer Shares, Packard shall have the right, but not the obligation, to
purchase the remainder of such Remaining Packard Transfer Shares.
(c) Packard, on behalf of itself, if it elects to purchase Packard
Transfer Shares, or its designee, and/or on behalf of all purchasing Packard
Offerees, if any, may accept such offer as to all, but not less than all, of the
Packard Transfer Shares by providing the Transferring Packard Investor with
written notice (specifying the number of Packard Transfer Shares as to which
each Packard Transfer Offeree is accepting the offer) within 20 calendar days
after the date the Packard Transfer Notice is given to Packard.
(d) The closing of the purchase by the Packard Transfer Offerees of
the Packard Transfer Shares shall take place at the principal office of Packard
on the later of (x) the 10th business day after the expiration of the 20-day
period after the giving of the Packard Transfer Notice and (y) the second
business day after the receipt of any required governmental approval or the
expiration or termination of any waiting period, including any waiting period
pursuant to the Hart-Scott Act. At such closing, such Packard Transfer Offerees
shall deliver a certified check or checks in the appropriate amount to the
Transferring Packard Investor against delivery of Duly Endorsed certificates
representing the Packard Transfer Shares so purchased.
(e) If any Packard Transfer Shares allocated to a Packard Offeree
are not purchased by such Packard Offeree (the "Packard Transfer Default
Shares"), such Packard Transfer Default Shares may be purchased by the other
Packard Offerees purchasing Packard Transfer Shares (the "Packard Default Of-
ferees"), allocated among such Packard Default Offerees (with rounding to avoid
fractional Shares) in proportion to the number of Packard Transfer Shares
otherwise being purchased by
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those of such Packard Default Offerees who agree to purchase Packard Transfer
Default Shares, allocated among those electing to purchase in a manner
consistent with the allocation provisions of Section 2.3(b). If the Packard
Default Offerees do not purchase all of the Packard Transfer Default Shares,
Packard may purchase the remaining Packard Transfer Default Shares. Nothing
contained herein shall prejudice Packard's right to maintain any cause of action
or pursue any other remedies available to it as a result of such default.
(f) If at the end of the 20-day period after the giving of the
Packard Transfer Notice, Packard has not accepted, on behalf of itself (if it
elects to purchase Packard Transfer Shares) or its designee and/or any
purchasing Packard Offerees, the offer contained in such Packard Transfer Notice
as to all of the Packard Transfer Shares covered thereby, then the Transferring
Packard Investor shall have 20 calendar days in which to complete the sale of
the Packard Transfer Shares to the Packard Purchaser in accordance with the
Packard Proposal, except where failure to consummate such sale is not caused, in
whole or in part, by the Transferring Packard Investor (provided that any
extension beyond such 20-calendar day period may not extend beyond the period
referred to in the next to last sentence of this Subsection 2(f)). Promptly
after any sale to a Packard Purchaser pursuant to this Section 2.3, the
Transferring Packard Investor shall notify Packard of the consummation thereof
and shall furnish such evidence of the completion and time of completion of such
sale and of the terms thereof as Packard may request. If the sale of the Packard
Transfer Shares to a Packard Purchaser is not completed within 40 calendar days
after the first to occur of (i) the expiration of the 20-day period referred to
in Subsection 2.3(d) above or (ii) receipt from the Packard Transfer Offerees of
written notice declining the offer contained in the Packard Transfer Notice, the
Transferring Packard Investor shall no longer be permitted to sell such Packard
Transfer Shares pursuant to this Section 2.3 without again complying with this
Section 2.3 and all of the transfer restrictions contained in this Agreement
shall again be in effect with respect to all of such Transferring Packard
Investor's Packard Shares, including the Packard Transfer Shares. In no event
shall any sale of Packard Shares by a Packard Investor pursuant to this Section
2.3 be permitted to a Packard Purchaser that is a competitor, potential
competitor, customer or supplier of Packard or any of its subsidiaries or any
other Person that the Board of Directors determines, in its good faith judgment,
would be injurious to Packard or any of its subsidiaries.
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Section 2.4 Termination of Rights of First Refusal and Restrictions
on Transfer. Upon the termination of the restrictions on transfer set forth in
Sections 2.1 and 2.3, transfers of the Packard Shares beneficially owned by the
Packard Investors or their Permitted Transferees shall be permitted subject to
all applicable federal and state securities, or "blue sky," laws.
Section 2.5 Sale of Shares to a Third Party. (a) If at any time
prior to an Initial Public Offering Stonington proposes to sell, for its own
account, in one or more transactions, shares which, in the aggregate, represent
40% or more of the capital stock of Packard on a fully diluted basis to a third
party in one or more private transactions which is not, and following such sale
will not be, affiliated with Stonington (a "Third Party"), the Management
Investors (other than a Management Investor whose employment, consultancy or
directorship has been terminated for Cause), the Non-Management Investors and/or
each of their Permitted Transferees, shall have the right to participate (a
"Tag-Along Right") in such sale with respect to any Shares (including Shares
obtainable upon exercise of options) held by them on a pro rata basis (based on
the percentage of Packard Shares corresponding to the relationship of the
aggregate number of Shares to be sold by Stonington to the aggregate number of
Stonington Shares) for the same consideration per Share and otherwise on the
same terms as Stonington sells its Shares. If circumstances occur which give
rise to the Tag-Along Right, then Stonington shall give written notice to the
Packard Investors providing a summary of the terms of the proposed sale to the
Third Party and advising such Packard Investors of their Tag-Along Rights. Each
Packard Investor may exercise his or her Tag-Along Right by written notice to
Packard stating the number of Shares that he or she wishes to sell, up to the
maximum number permitted (being his or her pro rata amount referred to above and
as disclosed in the notice to be given to him or her). If a Packard Investor
gives written notice indicating that he or she wishes to sell, he or she shall
be obligated to sell that number of Shares specified in his or her written
acceptance notice upon the same terms and conditions as Stonington is selling to
the Third Party conditional upon and contemporaneous with completion of the
transaction of purchase and sale with the Third Party.
(b) If at any time prior to an Initial Public Offering Stonington
proposes to sell for its own account, in one or more transactions, Shares which,
in the aggregate, represent more than 40% of the capital stock of Packard on a
fully diluted basis to a Third Party in one or more private transactions,
Stonington shall, upon written request, have the right to require the Management
Investors (regardless of whether such
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Management Investor is then an employee, director or consultant of Packard or
any of its subsidiaries and regardless of any termination of employment,
consultancy or directorship), the Non-Management Investors and/or each of their
Permitted Transferees, to participate (a "Drag-Along Right") in such sale with
respect to any Shares (including Shares obtainable upon exercise of options)
held by them on a pro rata basis (based on the percentage of Packard Shares
corresponding to the relationship of the aggregate number of Shares to be sold
by Stonington to the aggregate number of Stonington Shares) for the same
consideration per Share and otherwise on the same terms as Stonington sells its
Shares. For purposes of Sections 2.5(a) and 2.5(b), to the extent that Shares
issuable upon exercise of an option granted under the Management Stock Incentive
Plan are to be sold pursuant to the exercise of a Tag-Along Right or Drag-Along
Right, the holders of such options shall not be required to exercise their
options until all conditions to the commitment by the Third Party to purchase
the Shares into which such options are exercisable pursuant to the exercise of a
Tag-Along Right or Drag-Along Right have been satisfied or waived.
(c) Tag-Along Rights and Drag-Along Rights pursuant to this Section
2.5 shall be exercisable upon 15 calendar days' prior written notice.
Section 2.6 Legend on Certificates. Without limiting the provisions
of Section 2.1 or 2.2 hereof, no Stockholder shall make any transfer of any
shares of capital stock of Packard (or interest therein) if such action would
constitute a violation of any federal or state securities or blue sky laws, or
if (other than in the case of a transfer by Stonington) such transfer would
subject Packard to any reporting obligations under the Exchange Act. No
transfer of any shares of capital stock of Packard shall be effective (other
than in connection with transfers pursuant to Article V hereof) unless Packard,
upon its request, has been furnished with an opinion of counsel for the
Stockholder, which opinion and counsel shall be reasonably satisfactory to
Packard, to the effect that such transfer is exempt from the registration
provisions of Section 5 of the Securities Act and the rules and regulations in
effect thereunder and such transfer can be effected without similar
registration under applicable state securities or "blue sky" laws. Any such
opinion may be delivered by counsel to Packard, and, in the case of any
transfer pursuant to a Drag-Along Right, shall be delivered by counsel to
Packard. Any attempt to transfer any Shares (or interest therein) not in
accordance with this Agreement shall be null and void and neither Packard nor
any transfer agent of such securities shall transfer upon the books of Packard
any shares of capital stock of Packard to any Person unless such transfer or
attempted transfer is permitted by this
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Agreement. Each certificate representing Shares shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF MARCH __, 1997
(A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF PACKARD BIOSCIENCE
COMPANY AND WILL BE MAILED TO A STOCKHOLDER WITHOUT CHARGE WITHIN
FIVE DAYS AFTER RECEIPT BY PACKARD BIOSCIENCE COMPANY OF A WRITTEN
REQUEST THEREFOR FROM SUCH STOCKHOLDER). NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
AS OTHERWISE PROVIDED IN SUCH STOCKHOLDERS' AGREEMENT AND (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND ANY APPLICABLE STATE SECURITIES, OR
"BLUE SKY," LAWS, OR (B) IF PACKARD BIOSCIENCE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION
AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO PACKARD BIOSCIENCE
COMPANY, TO THE EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND SUCH STATE SECURITIES, OR "BLUE SKY," LAWS.
In addition, each such certificate shall bear such other legends as Packard may
deem necessary or appropriate. At the Closing, the Packard Investors shall
submit to Packard certificates representing Existing Shares so that the above
legend can be imprinted upon them.
Section 2.7 Limitation on Institutional Investors. Notwithstanding
anything contained herein to the contrary, the Institutional Investors may not,
without the prior written consent of Stonington, sell or otherwise dispose of
their Institutional Shares prior to the sale or other disposition by Stonington
of a like proportion of its Stonington Shares and then only on the same terms
and conditions as Stonington's sale or other disposition, provided that, if
Merrill Lynch KECALP L.P. 1997 agrees in writing, in form and substance
reasonably satisfactory to Stonington and Packard, to become bound, and becomes
bound, by all the terms of this Agreement to the same extent as the
Institutional Investors are so bound, KECALP Inc. may
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transfer all, but not less than all, of its Institutional Shares to Merrill
Lynch KECALP L.P. 1997.
ARTICLE III
PUT AND CALL RIGHTS
Section 3.1 Put Rights. (a) Upon termination of a Management
Investor's employment, consultancy or directorship with Packard or any of its
subsidiaries due to death, Disability, Retirement of the Management Investor or
due to the circumstances described in clause (b) of the definition of
Involuntary Termination with respect to such Management Investor (any of the
foregoing, a "Put Event") in each case prior to the earlier of an Initial
Public Offering and the tenth anniversary of the Closing, such Management
Investor and his Permitted Transferees shall have the right (the "Put Right"),
exercisable by delivery of a written notice (the "Put Notice") to Packard
within a period of 180 calendar days after the date of occurrence of the Put
Event (subject to extension for up to three months in the event that Packard is
legally prohibited or contractually prohibited, by virtue of its, or any of its
subsidiaries', debt or other contractual obligations, from honoring a Put
Right) (the "Put Notice Period"), to require Packard to purchase all, but not
less than all, of the Management Shares owned by such Management Investor or
his or her Permitted Transferees (the "Put Shares") and all vested options to
purchase Shares held by such Management Investor or Management Investor's
Permitted Transferees (the "Put Options") on the date of the occurrence of the
Put Event at a price per Put Share or Put Option equal to the Share Put Price
(as defined below) or Option Put Price (as defined below), respectively, and
upon receipt of such notice Packard shall purchase such Put Shares and Put
Options, subject to the terms hereof. For purposes of this Section 3.1, the
term "Share Put Price" shall mean the Fair Value Price of the Put Shares on the
date of occurrence of such Put Event, all calculations described in this
sentence to be made on a per Share basis. For purposes of this Section 3.1, the
term "Option Put Price" of any Put Options sold pursuant to the exercise of the
Put Right shall mean the product of the number of Shares issuable upon exercise
of a Management Investor's then-vested Put Options times the difference, if
positive (if negative such price shall be equal to zero), between (i) the Share
Put Price and (ii) the exercise price of each Put Option.
(b) The Put Notice shall specify the number of Put Shares and/or Put
Options to be sold and shall contain an irrevocable offer to sell such Put
Shares and/or Put Options to
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Packard in the manner set forth below at the applicable Share Put Price or
Option Put Price, respectively. The closing of the purchase by Packard of Put
Shares and/or Put Options shall take place at the principal office of Packard on
the tenth business day after the date of the Put Notice. At such closing,
Packard shall deliver to the Management Investor or his or her Permitted
Transferees against delivery of Duly Endorsed certificates representing such Put
Shares or Put Options, a certified check or checks in the amount of the
applicable Share Put Price and/or Option Put Price. Notwithstanding anything to
the contrary contained in this Section 3.1(b), to the extent that the payment
for Put Shares and/or Put Options with cash would, at the time of payment or
issuance thereof, constitute or cause a breach or default (immediately or with
notice or the lapse of time or both) under any agreement or instrument to which
Packard, or any of its subsidiaries, is a party or by which Packard, or any of
its subsidiaries, or any of their assets are bound or violate any law, statute,
order, writ, injunction, decree, judgment, rule, regulation, policy or guideline
promulgated, or judgment entered, by any federal, state, local or foreign court
or governmental authority applicable to Packard or any of its subsidiaries,
Packard shall be permitted to pay for the Put Shares and/or Put Options with a
subordinated note of Packard payable in three equal annual installments
commencing on the first anniversary of the issuance thereof, bearing interest
payable annually at 8% and containing subordination terms which are reasonably
satisfactory to the relevant senior lenders to Packard, or any of its
subsidiaries, (a "Packard Note") with an original principal amount equal to the
balance of the applicable Share Put Price and/or Option Put Price (provided,
that such notes may have maturities of longer than three years and may provide
for interest to accrue or be payable in kind rather than cash if necessary to
avoid a potential breach or default of any such agreement or instrument,
provided that such maturities and interest shall be adjusted only to the minimum
extent reasonably necessary to avoid such potential breach or default) and as
would not cause such a breach or default or violate any law, statute, order,
writ, injunction, decree, judgment, rule, regulation, policy or guideline
promulgated, or judgment entered, by any federal, state, local or foreign court
or governmental authority applicable to Packard or any of its subsidiaries.
(c) Notwithstanding anything to the contrary contained in this
Section 3.1, Packard shall not be obligated to acquire any Put Shares or Put
Options pursuant to Section 3.1(a) hereof to the extent that the acquisition
thereof would (i) violate any law, statute, order, writ, injunction, decree,
judgment, rule, regulation, policy or guideline promulgated, or judgment
entered, by any federal, state, local or foreign court
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or governmental authority applicable to Packard or any of its subsidiaries, or
(ii) constitute or cause a breach or default (immediately or with notice or
lapse of time or both) of any agreement or instrument to which Packard, or any
of its subsidiaries, is a party or by which Packard, or any of its subsidiaries,
or any of their assets are bound.
(d) To the extent that the provisions of Section 3.1(c) limit but do
not preclude Packard from acquiring any Put Shares or Put Options, Packard shall
acquire such Put Shares and/or Put Options on the date specified in Section
3.1(b) to the extent permitted pro rata from each Management Investor or
Permitted Transferee who or which has exercised such Management Investor's or
Management Investor's Estate's right pursuant to Section 3.1(a) in accordance
with the number of such Put Shares and/or Put Options Packard is required to
purchase from each such Management Investor or Permitted Transferee.
(e) To the extent that Put Shares and/or Put Options as to which Put
Rights have been exercised are not purchased by Packard in accordance with
Sections 3.1(c) and (d) hereof, Packard shall acquire such Put Shares and/or Put
Options on the tenth business day after such date as Packard learns that it is
no longer restricted under Section 3.1(c) hereof from acquiring all such Put
Shares and/or Put Options. The price to be paid to acquire such Put Shares
and/or Put Options shall be the amount that would have been paid pursuant to
Section 3.1(a) hereof if such acquisition had not been delayed plus interest
calculated from such date at 8%.
(f) Notwithstanding anything to the contrary contained in this
Section 3.1, Packard may, in its sole discretion, at any time prior to the
consummation of the purchase of the Put Shares and/or Put Options pursuant to
this Section 3.1, cause its designee or designees (which may include Stonington
or any of its affiliates) to consummate such purchase pursuant to the terms and
conditions of this Section 3.1.
Section 3.2 Call Rights. (a) Upon termination of a Management
Investor's employment, consultancy or directorship with Packard or any of its
subsidiaries for any reason (a "Call Event") in each case prior to the earlier
of an Initial Public Offering and the tenth anniversary of the Closing, Packard
shall have the right (the "Call Right"), exercisable by delivery of a written
notice (the "Call Notice") to such Management Investor or Permitted Transferee
within a period of 190 days after the date of occurrence of the Call Event
(subject to extension for up to three months in the event Packard is legally
prohibited or contractually prohibited, by virtue of its or any of its
subsidiary's debt or other obligations, from exercising
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its Call Rights) (the "Call Notice Period"), to require such Management Investor
or such Management Investor's Permitted Transferees to sell all, or any portion,
of the Management Shares owned by such Management Investor or his or her
Permitted Transferees (the "Call Shares") and any then vested options to
purchase Shares held by such Management Investor or such Management Investor's
Permitted Transferee (the "Call Options") on the date of occurrence of the Call
Event at a price per Call Share or Call Option equal to the Share Call Price (as
defined below) or Option Call Price (as defined below), respectively, and upon
receipt of such notice the Management Investor who receives such notice shall
sell such Call Shares and Call Options, subject to the terms hereof. For
purposes of this Section 3.2, the term "Share Call Price" shall mean, as
determined on the date of the applicable Call Notice, (i) in the event of a
termination of employment, consultancy or directorship for Cause (provided that
for purposes of this Section 3.2(a) with respect to Existing Shares or Existing
Options "Cause" shall be limited to the commission of a felony or perpetration
of a fraud upon Packard), the lower of the Original Purchase Price and the Fair
Value Price of the Call Shares; and (ii) in the event of termination of
employment for any other reason, the Fair Value Price of such Shares, such
calculations to be made on a per Share basis. For purposes of this Section 3.2,
the term "Option Call Price" of any Call Options to be purchased pursuant to the
exercise of the Call Right shall mean the product of the number of Shares
issuable upon exercise of the Management Investor's then-vested Call Options
times the difference, if positive (if negative such price shall be equal to
zero), between (i) the Share Call Price and (ii) the exercise price of each Call
Option.
(b) The Call Notice shall specify the number of Call Shares and/or
Call Options to be purchased and shall contain an offer to purchase the Call
Shares and/or Call Options at the applicable Share Call Price or Option Call
Price, respectively. The closing of the acquisition by Packard of Call Shares
and/or Call Options shall take place at the principal office of Packard as soon
as practicable after the date of the Call Notice. At such closing, Packard shall
deliver to the Management Investor or such Management Investor's Permitted
Transferees, against delivery of Duly Endorsed certificates representing such
Call Shares or Call Options, a certified check or checks in the amount of the
applicable Share Call Price and/or Option Call Price. Notwithstanding anything
to the contrary contained in this Section 3.2(b), in the case of termination of
employment, consultancy, or directorship of a Management Investor for Cause,
Packard may acquire Call Shares and/or Call Options in any proportion of cash
and Packard Notes such that the sum of the amount of cash plus the aggregate
principal amount of the
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Packard Notes is equal to the product of (x) the applicable Share Call Price
and/or Option Call Price and (y) the number of Call Shares and/or Call Options
to be purchased, as the case may be.
(c) In the event Packard is not permitted to or elects not to
exercise its Call Rights (in whole or in part) for any reason, then,
notwithstanding anything to the contrary contained in this Section 3.2, Packard
may, in its sole discretion, at any time prior to the consummation of the
purchase of the Call Shares and/or Call Options pursuant to this Section 3.2,
cause its designee or designees (which may include Stonington or any of its
affiliates) to consummate such purchase pursuant to the terms and conditions of
this Section 3.2.
(d) In the event that a Management Investor's employment with
Packard is terminated due to Voluntary Resignation or Involuntary Termination
(but not if such Management Investor is terminated by Packard for Cause), and
Packard (or its designee or designees pursuant to paragraph (c) of this Section
3.2) does not exercise its Call Rights with respect to any of such Management
Investor's Existing Options, Packard agrees that the term of such Existing
Options shall be extended for a period of five years from the date of the
termination of such Management Investor's employment with Packard, provided that
such Existing Options shall remain subject to the terms of this Agreement during
such period, and provided, further, that such Existing Options shall expire and
be cancelled on the thirtieth day following an Initial Public Offering.
Section 3.3 Reallocation Right. In the event Packard purchases Call
Shares, Call Options, Put Shares or Put Options (collectively, the "Repurchased
Equity") and desires to resell any or all Repurchased Equity, then Packard shall
have the obligation to first offer such Repurchased Equity for sale to the
Management Investors by delivery of a written notice (the "Resale Notice")
setting forth the price per share or price per option and other terms on which
Packard is willing to sell such Repurchased Equity. A Management Investor who
wishes to purchase such Repurchased Equity shall provide Packard with written
notice specifying the amount of such Repurchased Equity as to which such
Management Investor desires to accept the offer within 20 calendar days after
the Resale Notice is given (the "Repurchase Period"). If the aggregate amount of
Repurchased Equity as to which notice of acceptance is provided by all
Management Investors exceeds the amount of Repurchased Equity as to which the
Resale Notice is given, the right to purchase such Repurchased Equity shall be
allocated among the Management Investors on a pro rata basis (with rounding to
avoid fractional Shares or options, as the case may be) based on the
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percentage of Repurchased Equity corresponding to the relationship of the
aggregate amount of Repurchased Equity sought by each accepting Management
Investor to the aggregate amount of Repurchased Equity sought by all accepting
Management Investors. If at the end of the Repurchase Period, Management
Investors have not accepted the offer contained in the Resale Notice as to all
of the Repurchased Equity covered thereby, then Packard may sell such
Repurchased Equity to any party at the price and on terms no less favorable than
those specified in the Resale Notice for a period of 180 calendar days following
the end of the Repurchase Period. If the sale of such Repurchased Equity is not
completed within such 180-day period, Packard shall no longer be permitted to
sell such Repurchased Equity without again complying with this Section 3.3.
Section 3.4 Termination of Put and Call Rights. Notwithstanding
anything to the contrary contained herein, no Put Right or Call Right shall be
exercisable after an Initial Public Offering.
ARTICLE IV
CORPORATE GOVERNANCE
Section 4.1 Directors. (a) As of the Closing, the Board of Directors
of Packard will consist of nine directors: three Management Investors, four
designees of Stonington and two independent directors mutually agreed upon
between Stonington and the chief executive officer of Packard. Subject to the
forgoing the Stockholders agree and acknowledge that Stonington has the right to
nominate all directors of Packard and that, prior to the date hereof, Stonington
has appointed to the board of directors of Packard all the individuals who are
directors of Packard as of the date hereof. The Stockholders further agree that
Stonington shall be entitled to reduce or expand the size of the board of
directors and to nominate successors to all directors of Packard. Subject to
applicable law, if Stonington proposes to remove any director, the Stockholders
agree to cooperate in such removal (including voting as Stockholders, if
necessary) and any resulting vacancy shall be filled in accordance with the
preceding sentence.
(b) The Board of Directors will have an audit committee and a
compensation committee and such other committees as the Board of Directors
designates.
Section 4.2 Voting. The Institutional Investors hereby agree to vote
their Institutional Shares as directed by Stonington.
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ARTICLE V
REGISTRATION RIGHTS
Section 5.1 Registration.
(a) Right to Include Registrable Securities. If Packard at any time
proposes to register under the Securities Act any of its equity securities
beneficially owned by Stonington (other than a registration on Form S-4 or Form
S-8, or any successor or similar forms), in a manner that would permit
registration of Registrable Securities for sale to the public under the
Securities Act and in an underwritten offering, it will each such time promptly
give written notice to all Stockholders who beneficially own any Registrable
Securities of its intention to do so, of the registration form of the SEC that
has been selected by Packard and of such holders' rights under this Section 5.1
(the "Section 5.1 Notice"); provided that, if, at the time of such proposed
registration, any Packard Investors (or their Permitted Transferees) are able to
sell Registrable Securities owned by them pursuant to Rule 144 under the
Securities Act, Packard shall not be required to give a Section 5.1 Notice to
such Packard Investors (or their Permitted Transferees), and such Packard
Investors (or their Permitted Transferees) shall not be entitled to any rights
under this Section 5.1(a). Packard will use its reasonable best efforts to
include in the proposed registration all Registrable Securities that Packard is
requested in writing, within 15 calendar days after the Section 5.1 Notice is
given, to register by the Stockholders thereof; provided, however, that (i) if,
at any time after giving written notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, Packard shall determine for any reason not
to register such equity securities, Packard may, at its election, give written
notice of such determination to all Stockholders who beneficially own any
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such abandoned
registration, and (ii) in case of a determination by Packard to delay
registration of its equity securities, Packard shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay in
registering such other equity securities.
(b) Registration Rights Upon Request. (i) If Packard at any time
proposes to register under the Securities Act any of its equity securities, it
will each such time promptly give written notice to Stonington. In addition,
Packard, upon the request of Stonington (which must hold at least 10% of the
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outstanding equity securities of Packard at the time of such request), shall,
from time to time, register any reasonable portion of such securities held by
Stonington (including in an underwritten offering) and bear all expenses in
connection with such offering in a manner consistent with paragraph (c) below
and shall enter into such other agreements in furtherance thereof (including
with underwriters reasonably acceptable to Packard), and Packard shall provide
customary indemnifications in such instances (in a manner consistent with the
indemnification provisions of this Article V) to Stonington and any such
underwriters.
(ii) After an Initial Public Offering, Packard, upon the request of
the holders (other than Stonington) of at least 20% of the Registrable
Securities, shall register such number of Registrable Securities as such holders
request (including in an underwritten offering), provided that such holders
request that Packard register at least 10% of the Registrable Securities, and
bear all expenses in connection with such offering in a manner consistent with
paragraph (c) below and shall enter into such other agreements in furtherance
thereof (including with underwriters reasonably acceptable to Packard), and
Packard shall provide customary indemnifications in such instances (in a manner
consistent with the indemnification provisions of this Article V) to the sellers
of Registrable Securities and any such underwriters; provided that, for so long
as any holders of Registrable Securities (or their Permitted Transferees) are
able to sell Registrable Securities owned by them pursuant to Rule 144 under the
Securities Act, such holders shall not be entitled to any rights under this
Section 5.1(b)(ii). Packard shall not be required to effect more than one
registration pursuant to this Section 5.1(b)(ii).
(c) Expenses. Packard shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 5.1; provided, however, that each Stockholder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Stockholder's Registrable Securities pursuant to
a registration statement effected pursuant to this Section 5.1.
(d) Priority in Incidental Registrations. If the managing
underwriter for a registration pursuant to this Section 5.1 shall advise Packard
in writing that, in its opinion, the number of securities requested to be
included in such registration exceeds the number (the "Section 5.1 Sale Number")
that can be sold in an orderly manner in such offering within a price range
acceptable to Stonington, Packard shall include in
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such offering (i) first, all the securities that Packard proposes to register
for its own sale, and (ii) second, to the extent that the securities Packard
proposes to register are less than the Section 5.1 Sale Number, all Registrable
Securities requested to be included by all Stockholders, provided, however, that
if the number of such Registrable Securities exceeds the Section 5.1 Sale Number
less the number of securities included pursuant to clause (i) hereof, then the
number of such Registrable Securities included in such registration shall be
allocated pro rata among all requesting Stockholders, on the basis of the
relative number of shares of such Registrable Securities each such Stockholder
has requested to be included in such registration. If, as a result of the
proration provisions of this Subsection (d), any Stockholder shall not be
entitled to include all Registrable Securities in a registration pursuant to
this Section 5.1 that such Stockholder has requested be included, such
Stockholder may elect to withdraw his request to include Registrable Securities
in such registration (a "Withdrawal Election"); provided, however, that such
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Stockholder shall no longer have any right to include Registrable
Securities in the registration as to which such Withdrawal Election was made.
Section 5.2 Registration Procedures. If and whenever Packard is
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Article V,
Packard will, as soon as practicable:
(a) prepare and file with the SEC the requisite registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become and remain
effective; provided, however, that Packard may discontinue or delay any
registration of securities that is being effected pursuant to Section 5.1
at any time prior to the effective date of the registration statement
relating thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for such period as Packard shall deem appropriate and to comply
with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
during such period;
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(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents as such seller may reasonably request;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities representing more than 15% of the total number of
securities covered by such registration statement or any managing
underwriter shall reasonably request, and do any and all other acts and
things that may be necessary or advisable to enable such seller and each
managing underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such seller;
provided, however, that neither Packard nor any of its subsidiaries shall
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this clause (d) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;
(e) notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of Packard's
becoming aware that the prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
and at the request of any such seller promptly prepare and furnish to such
seller a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
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(f) use its best efforts to cause all such Registrable Securities
covered by such registration statement to be listed on the principal
securities exchange on which similar equity securities issued by Packard
are then listed or eligible for listing, if the listing of such securities
is then permitted under the rules of such exchange;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first day of its first calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(h) enter into an underwriting agreement with the underwriter of
such offering in the form customary for such underwriter for similar
offerings, including such representations and warranties by Packard,
provisions regarding the delivery of opinions of counsel for Packard and
accountants' letters, provisions regarding indemnification and
contribution, and such other terms and conditions as are at the time
customarily contained in such underwriter's underwriting agreements for
similar offerings (the sellers of Registrable Securities which are to be
distributed by such underwriter(s) may, at their option, require that any
or all of the representations and warranties by, and the other agreements
on the part of, Packard to and for the benefit of such underwriter(s)
shall also be made to and for the benefit of such sellers of Registrable
Securities);
(i) provide a transfer agent and registrar for all such Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(j) upon receipt of such confidentiality agreements as Packard may
reasonably request, make available for inspection by any seller of such
Registrable Securities covered by such registration statement and by any
attorney, accountant or other agent retained by any such seller, all
pertinent financial and other records, pertinent corporate documents and
properties of Packard and its subsidiaries, and cause all of Packard's and
its subsidiaries' officers,
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<PAGE>
directors and employees to supply all information reasonably requested by
any such seller, attorney, accountant or agent in connection with such
registration statement; and
(k) permit any beneficial owner of Registrable Securities who, in
the sole judgment, exercised in good faith, of such holder, might be
deemed to be a controlling person of Packard, to participate in the
preparation of such registration or comparable statement and to require
the insertion therein of material, furnished to Packard in writing, that
in the judgment of such holder, as aforesaid, should be included.
Packard may require each seller of Registrable Securities as to
which any registration is being effected to furnish Packard such information
regarding such seller and the distribution of such securities as Packard may
from time to time reasonably request in writing. Packard shall not be required
to register or qualify any Registrable Securities covered by such registration
statement under any state securities, or "blue sky," laws of such jurisdictions
other than as it deems necessary in connection with its chosen method of
distribution or to take any other actions or do any other things other than
those it deems necessary or advisable to consummate such distribution, and
Packard shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction.
Each beneficial owner of Registrable Securities agrees that upon
receipt of any notice from Packard of the happening of any event of the kind
described in clause (d) of this Section 5.2, such beneficial owner will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
beneficial owner's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (d) of this Section 5.2, and, if so directed
by Packard, such beneficial owner will deliver to Packard (at Packard's expense)
all copies, other than permanent file copies then in such beneficial owner's
possession, of the prospectus covering such Registrable Securities that was in
effect prior to such amendment or supplement.
Section 5.3 Indemnification.
(a) Indemnification by Packard. In the event of any registration of
any securities of Packard under the Securities
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<PAGE>
Act pursuant to Section 5.1, Packard will, and hereby does, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, its directors and officers or
general and limited partners (and the directors and officers thereof), and each
other Person, if any, who controls such seller within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with Packard's consent, which consent shall not be unreasonably
withheld) to which such seller, any such director or officer or general or
limited partner or any such controlling Person may become subject under the
Securities Act, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) any violation by
Packard of any federal, state or common law rule or regulation applicable to
Packard and relating to action required of or inaction by Packard in connection
with any such registration, and Packard will reimburse such seller and each such
director, officer, general or limited partner, and controlling Person for any
legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, that Packard shall not be liable to any such seller or any
such director, officer, general or limited partner, or controlling Person in any
such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment thereof or supplement thereto
or in any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to Packard by or on behalf of any
such seller or any such director, officer, general or limited partner, or
controlling Person, specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any director, officer,
general or limited partner or controlling Person and shall survive the transfer
of such securities by such seller.
(b) Indemnification by the Sellers. Packard may require, as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section
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<PAGE>
5.1, that Packard shall have received an undertaking reasonably satisfactory to
it from the prospective seller of such Registrable Securities to indemnify and
hold harmless (in the same manner and to the same extent as set forth in
Subsection (a)) Packard and its directors and officers and each Person
controlling Packard within the meaning of the Securities Act and all other
prospective sellers and their directors, officers, general and limited partners
and respective controlling Persons with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Packard or its representatives by or on behalf of such seller
specifically stating that it is for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Packard or any of the prospective sellers
or any of their respective directors, officers, general or limited partners or
controlling Persons and shall survive the transfer of such securities by such
seller. Packard shall use its best efforts to provide that the indemnification
obligation of any Stockholder does not exceed the net proceeds to the
Stockholder in such underwritten offering.
(c) Notices of Claims, Etc. As soon as possible after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5.3, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 5.3, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party; provided that the indemnifying party
shall not be entitled to so participate or so assume the defense if, in the
indemnified party's reasonable judgment, a conflict of interest between the
indemnified party and the indemnifying party exists in respect of such claim.
After notice from the indemnifying
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<PAGE>
party to such indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 5.3 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof; and
provided further that the sellers and their respective officers, directors,
general and limited partners and controlling Persons or Packard and its
officers, directors and controlling Persons, as the case may be, shall have the
right to employ one counsel to represent such indemnified parties if, in such
indemnified parties' reasonable judgment, a conflict of interest between the
indemnified parties and the indemnifying parties exists in respect of such
claim, and in that event the fees and expenses of such separate counsel (not to
exceed one such firm and local counsel, if necessary) shall be paid by the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 5.3 is unavailable or insufficient to hold harmless an indemnified party
under Subsection (a) or (b), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in Subsection (a) or (b) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other hand in connection
with statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue or alleged untrue statements or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this Subsection
(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this Subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
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<PAGE>
shall be limited as provided in Subsection (c) if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Subsection (d). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this Subsection (d) of notice of the commencement of any
action against such party in respect of which a claim for contribution may be
made against an indemnifying party under this Subsection (d), such indemnified
party shall notify the indemnifying party in writing of the commencement thereof
if the notice specified in Subsection (c) has not been given with respect to
such action; provided that the omission so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
any indemnified party otherwise under this Subsection (d), except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. Notwithstanding anything in this Subsection (d) to the contrary, no
indemnifying party (other than Packard) shall be required pursuant to this
Subsection (d) to contribute any amount in excess of the proceeds received by
such indemnifying party from the sale of Registrable Securities in the offering
to which the losses, claims, damages or liabilities of the indemnified parties
relate.
Section 5.4 Holdback Agreement. If requested in writing by Packard
or the underwriter, if any, of any offering affording Stockholders registration
rights pursuant to Section 5.1, each Stockholder beneficially owning securities
of Packard representing or convertible into or exchangeable or exercisable for,
in the aggregate, more than .5% of the common equity of Packard then outstanding
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144, of any Registrable Securities or any other equity security
of Packard or of any security convertible into or exchangeable or exercisable
for any equity security of Packard (in each case, other than as part of such
underwritten public offering) within 14 days before or 180 days after the
effective date of a registration statement affording Stockholders registration
rights pursuant to Section 5.1, and Packard hereby also so agrees and agrees to
use its reasonable efforts to cause other holders of any equity security, or of
any security convertible into or exchangeable or exercisable for any equity
security, of Packard purchased from Packard (at any time other than in a public
offering) to so agree.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1 Binding Effect. The provisions of this Agreement shall
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
Section 6.2 No Right of Employment; Expiration of Consulting
Arrangements. Neither this Agreement nor any purchase or sale of Packard Shares
pursuant hereto shall create, or be construed or deemed to create, any right of
employment in favor of any person by Packard or any of its subsidiaries.
Expiration of a consulting arrangement without the prior termination thereof
shall not be deemed a termination of such arrangement for purposes of this
Agreement.
Section 6.3 Recapitalizations, Exchanges, Etc. Affecting Shares. The
provisions of this Agreement regarding Shares shall apply to any and all shares
of capital stock of Packard or any successor or assign of Packard (whether by
merger, consolidation, sale of assets, reorganization or otherwise) which may be
issued in respect of, in exchange for, or in substitution of the Shares by
reason of any stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation, or
otherwise. The provisions of this Agreement regarding Shares shall also apply to
any and all shares of any subsidiary of Packard which are distributed to the
stockholders of Packard pursuant to a plan to spin-off such subsidiary. Upon the
occurrence of any of such events, amounts hereunder shall be appropriately
adjusted. Subject only to the provisions of the preceding sentence, nothing
contained in this Agreement shall prohibit or restrict Packard from taking any
corporate action, including, without limitation, declaring any dividend (whether
in cash or stock) or engaging in any corporate transaction of any kind,
including, without limitation, any merger, consolidation, liquidation or sale of
assets.
Section 6.4 Waiver and Amendment. (a) Any party hereto may waive its
rights under this Agreement at any time, and Packard may waive its rights under
this Agreement with respect to any Stockholder or group of Stockholders at any
time, and no such waiver shall operate to waive Packard's rights under this
Agreement with respect to any other Stockholder or group of Stockholders. Any
agreement on the part of any such party to any such waiver shall be valid only
if set forth in an instrument in writing signed by such party. This Agreement
may be amended only by a written instrument signed by (i) Packard,
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<PAGE>
(ii) Stonington and (iii) Packard Investors beneficially owning a majority of
the then outstanding Packard Shares; provided that any amendment that adversely
affects the rights of the Institutional Investors shall be of no force or effect
unless the Institutional Investors shall have consented in writing thereto;
provided further that Schedule 1 and Schedule 2 may be amended by Packard
(without any additional consent or agreement of any other party hereto) to add
parties who become holders of stock, options or other securities of Packard
(including Packard Purchasers purchasing Shares in accordance with Section 2.3)
and such persons or entities may thereby become signatories hereto. Stockholders
shall be bound from and after the date of the receipt of a written notice from
Packard setting forth such amendment or waiver by any consent authorized by this
Section 6.4, whether or not Shares shall have been marked to indicate such
consent.
(b) Each Packard Investor hereby releases and discharges Packard and
its successors and assigns from any and all claims whatsoever that such Packard
Investor now has arising out of, or related to, Shares owned by such Packard
Investor on or prior to the date hereof, including, without limitation, claims
relating to (i) the issuance of 4,000 Shares in March 1989 to Sowa Trading Co.,
Inc. and the issuance of 16,500 Shares in March 1988 and 6,000 Shares in March
1987 to Daniel Meert, and (ii) any other preemptive rights as set forth in
Article Tenth of Packard's Certificate of Incorporation (as in effect from time
to time and immediately prior to the date hereof).
Section 6.5 Tax Withholding and Other Tax Matters. (a) No later than
the date as of which an amount first becomes includible in the gross income of a
Management Investor for federal income tax purposes with respect to any
Management Shares (or any options to acquire Management Shares), such Management
Investor shall pay to Packard, or make arrangements satisfactory to Packard
regarding the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
Packard hereunder shall be conditional on such payment or arrangements, and
Packard shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment otherwise due to the Management Investor.
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<PAGE>
(b) Packard shall indemnify and hold the Management Investors who
are party to the Recapitalization Agreement harmless against any additional tax
liability imposed on such Management Investors as a result of the "puts" and
"calls" pursuant to Section 3.1 or Section 3.2 hereof resulting in "dividend"
distributions pursuant to Section 302 of the Internal Revenue Code.
Section 6.6 Notices. All notices and other communications provided
for herein shall be dated and in writing and shall be deemed to have been duly
given when delivered, if delivered personally, or when deposited in the mail if
sent by registered or certified mail, return receipt requested, postage prepaid
and when received if delivered otherwise, to the party to whom it is directed:
(a) If to Packard, to:
Packard BioScience Company
800 Research Parkway
Meriden, CT 06450
Attn: President
Telecopy No.: (203) 235-6089
(b) If to any of the Packard Investors, to the ad-
dress of such Packard Investor as shown in the
stock record book of Packard
(c) If to Stonington, to the address of Stonington
as shown in the stock record book of Packard
(d) If to the Institutional Investors, to the address of such
Institutional Investor as shown in the stock record book of
Packard or as from time to time designated by such
Institutional Investors in writing to Packard
with copies to:
Stonington Partners, Inc.
767 Fifth Avenue
48th Floor
New York, New York 10153
Attn: Stephen M. McLean
Telecopy No.: (212) 339-8585
or at such other address as the parties hereto shall have specified by notice in
writing to the other parties.
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<PAGE>
Section 6.7 Applicable Law and Time of Essence. The laws of the
State of Delaware shall govern the interpretation, validity and performance of
the terms of this Agreement, without regard to the application of principles of
conflicts of law. Time shall be of the essence of this Agreement and of every
part thereof.
Section 6.8 Integration. This Agreement and the documents referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein and in the Management Stock Incentive Plan, the
Incentive Option Agreements and the Performance Option Agreements. It is
understood that each employee of Packard who is granted an option pursuant to
the Management Stock Incentive Plan shall be deemed a Management Investor
hereunder. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter other than such
agreements and understandings set forth in the Management Stock Incentive Plan,
the Incentive Option Agreements, the Performance Option Agreements and any
employment agreements between a Management Investor and Packard or any of its
subsidiaries.
Section 6.9 Descriptive Headings, Etc. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this
Agreement otherwise requires, (i) words of any gender shall be deemed to include
each other gender; (ii) words using the singular or plural number shall also
include the plural or singular number, respectively; and (iii) references to
"hereof," "herein," "hereby" and similar terms shall refer to this entire
Agreement.
Section 6.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
Section 6.11 Successors, Assigns and Transferees. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns and transferees except to the extent that
the terms of this Agreement limit or otherwise restrict the transferability of
any rights or obligations hereunder.
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<PAGE>
Section 6.12 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 6.13 Termination. This Agreement shall terminate, and
thereby become null and void, on the tenth anniversary of the date hereof;
provided, however, that the provisions of Section 5.3 hereof shall survive the
termination of this Agreement.
Section 6.14 Community Property States. Each Packard Investor who is
a natural person and whose Packard Shares or options or rights under this
Agreement would be subject to the community property laws of any state hereby
represents that such Packard Investor's spouse has duly executed the Consent of
Spouse attached hereto and such Consent was delivered to Packard along with such
Packard Investor's signature page hereto.
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<PAGE>
Stockholders Agreement
Signature page
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first above written.
PACKARD BIOSCIENCE COMPANY
By: /s/ Emery G. Olcott
----------------------------------
Name: Emery G. Olcott
Title: President
STONINGTON CAPITAL APPRECIATION
1994 FUND, L.P.
By: Stonington Partners, L.P.,
its general partner
By: Stonington Partners, Inc. II,
its general partner
By: /s/ Bradley J. Hoecker
----------------------------------
Name: Bradley J. Hoecker
Title: Authorized Signatory
MERRILL LYNCH KECALP L.P. 1994
By: KECALP Inc., its general
partner
By: /s/ James V. Caruso
----------------------------------
Name: James V. Caruso
Title: Vice President
KECALP INC.
By: /s/ James V. Caruso
----------------------------------
Title: Vice President
By: /s/ [Packard Investors]
----------------------------------
[Packard Investors]
<PAGE>
Stockholders Agreement
Signature page
Consent of Spouse
The undersigned is a spouse of one of the Stockholders and hereby
acknowledges that he/she has read the foregoing Agreement and knows its
contents. The undersigned is aware that by its provisions, his/her spouse agrees
to sell all of his/her Shares, Incentive Options and Performance Options in
Packard, including his/her community property interest therein, if any, on the
occurrence of certain events. The undersigned hereby consents to the sale,
approves the provisions of the Agreement, and agrees that those securities and
his/her interest in them, if any, are subject to the provisions of the Agreement
and that he/she will take no action at any time to hinder operation of the
Agreement on those securities or his/her interest, if any, in them, and, to the
extent required, will take any further actions necessary to effectuate the
provisions of the Agreement.
______________________________
______________________________
[Print name]
______________________________
[Print name of spouse]
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12.1
PACKARD BIOSCIENCE COMPANY
STATEMENTS RE: COMPUTATION OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31, 1992 - 1996
(IN THOUSANDS EXCEPT RATIOS)
Proforma
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/96
-------- -------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Cash interest expense $ 447 $ 175 $ 558 $ 616 $ 122 $18,117
Interest element of rentals 1,403 1,227 1,251 1,343 1,335 1,335
Amortization of financing costs -- -- -- -- -- 1,545
-----------------------------------------------------------------------------------------------
1,850 1,402 1,809 1,959 1,457 20,997
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
EARNINGS:
Income before taxes and
minority interest 10,892 14,245 20,780 25,280 31,769 12,229
Fixed charges 1,850 1,402 1,809 1,959 1,457 20,997
-----------------------------------------------------------------------------------------------
$ 12,742 $ 15,647 $ 22,589 $ 27,239 $ 33,226 $ 33,226
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED
CHARGES 6.9x 11.2x 12.5x 13.9x 22.8x 1.6x
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE COMPANY PLACE OF INCORPORATION
Amplitudes, Incorporated Connecticut
Canberra Corporation Delaware
Canberra-Packard International, Inc. Barbados
Packard Instrument Company, Inc. Delaware
Canberra-Packard Inc. Delaware
Canberra-Packard Pty. Ltd. Australia
Canberra-Packard Ges. m.b.h. Austria
Canberra-Packard Benelux NV SA Belgium
Canberra Semiconductor NV Belgium
Packard Instrument S.A. France
Canberra Electronique S.A. France
Canberra-Packard GmbH Germany
Canberra-Packard Ltd. Great Britain
Canberra-Packard s.r.l. Italy
Packard Instrument BV The Netherlands
Canberra-Packard Trading Corporation Russia
Canberra-Packard AG Switzerland
PIISA Panama
Packard Japan KK Japan
<PAGE>
[Letterhead of Arthur Andersen LLP]
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation in
this Registration Statement of our report dated March 10, 1997 on the
consolidated financial statements of Packard BioScience Company and subsidiaries
as of December 31, 1995 and 1996 and for the three years in the period ended
December 31, 1996 and to all references to our firm included in this
Registration Statement.
Arthur Andersen LLP
Hartford, Connecticut
March 21, 1997
<PAGE>
EXHIBIT 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
PACKARD BIOSCIENCE COMPANY
(Exact name of obligor as specified in its charter)
Delaware 06-0676652
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
800 Research Parkway
Meriden, Connecticut 06450
(Address of principal executive offices) (Zip code)
______________________
9 3/8% Senior Subordinated Notes due 2007, Series B
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 25th day of March, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
--------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
-----------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................ $ 4,404,522
Interest-bearing balances .......... 732,833
Securities:
Held-to-maturity securities ........ 789,964
Available-for-sale securities ...... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ..................28,728,602
LESS: Allowance for loan and
lease losses ...............584,525
LESS: Allocated transfer risk
reserve.........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts ...... 1,004,242
Premises and fixed assets (including
capitalized leases) ................ 605,668
Other real estate owned .............. 41,238
Investments in unconsolidated
subsidiaries and associated
companies .......................... 205,031
Customers' liability to this bank on
acceptances outstanding ............ 949,154
Intangible assets .................... 490,524
Other assets ......................... 1,305,839
-----------
Total assets ......................... $44,043,010
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ................ $20,441,318
Noninterest-bearing ........8,158,472
Interest-bearing ..........12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,710,903
Noninterest-bearing ...........46,182
Interest-bearing ..........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ............ 1,565,288
Demand notes issued to the U.S.
Treasury ........................... 293,186
Trading liabilities .................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................... 2,103,443
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 951,116
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,522,884
-----------
Total liabilities .................... 40,456,160
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 2,073)
Cumulative foreign currency transla-
tion adjustments .................. ( 8,403)
-----------
Total equity capital ................ 3,586,850
-----------
Total liabilities and equity capital $44,043,010
-----------
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
\
J. Carter Bacot |
Thomas A. Renyi > Directors
Alan R. Griffith |
/
- -------------------------------------------------------------------------------
<PAGE>
LETTER OF TRANSMITTAL
PACKARD BIOSCIENCE COMPANY
OFFER TO EXCHANGE
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR ANY AND ALL OF THE OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS THE OFFER IS EXTENDED
The Bank of New York
(the "Exchange Agent")
<TABLE>
<S> <C> <C>
BY HAND OR OVERNIGHT DELIVERY: FACSIMILE TRANSMISSIONS: BY REGISTERED OR CERTIFIED MAIL:
(ELIGIBLE INSTITUTIONS ONLY)
The Bank of New York The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization
Attention: Reorganization TO CONFIRM BY TELEPHONE Section,
Section, OR FOR INFORMATION CALL: Arwen Gibbons
Arwen Gibbons
(212) 815-6333
</TABLE>
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the ones listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of Packard BioScience Company (the
"Company") and this Letter of Transmittal, which together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 9 3/8% Senior Subordinated Notes due 2007, Series B (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for each $1,000 principal amount of its outstanding 9 3/8% Senior
Subordinated Notes due 2007 (the "144A Notes"), respectively. The term
"Expiration Date" shall mean 5:00 p.m., New York City time, on , 1997,
unless the Exchange Offer is extended, in which case the term "Expiration Date"
means the latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the 144A Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate or Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SENIOR SUBORDINATED NOTES TENDERED HEREBY
<CAPTION>
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF CERTIFICATE OR AMOUNT PRINCIPAL
REGISTERED OWNER(S) REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY 144A NOTES TENDERED**
<S> <C> <C> <C>
TOTAL
</TABLE>
* Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by such 144A Notes. All
tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used (i) if certificates of 144A Notes
are to be forwarded herewith, (ii) if delivery of 144A Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository" or "DTC"), pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering" in the
Prospectus or (iii) if tender of the 144A Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name 144A Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their 144A Notes
must complete this letter in its entirety.
/ / CHECK HERE IF TENDERED 144A NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
Holders whose 144A Notes are not immediately available or who cannot
deliver their 144A Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their 144A Notes
according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 2.
/ / CHECK HERE IF TENDERED 144A NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) _____________________________________________
Name of Eligible Institution that Guaranteed Delivery ____________________
_________________________________________________________________________
If delivery by book-entry transfer:
Account Number __________________________________________________
Transaction Code Number _________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name _____________________________________________________________________
Address __________________________________________________________________
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the 144A Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such 144A Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such 144A Notes as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Company in connection with the
Exchange Offer) to cause the 144A Notes to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the 144A Notes and to acquire
Exchange Notes issuable upon the exchange of such tendered 144A Notes, and that
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered 144A Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned; (ii) neither the undersigned nor any such other
person has an arrangement or understanding with any person to participate in a
distribution of such Exchange Notes; and (iii) the undersigned and any such
other person acknowledge that, if they are participating in the Exchange Offer
for the purpose of distributing the Exchange Notes, (a) they cannot rely on the
position of the staff of the Securities and Exchange Commission enunciated in
EXXON CAPITAL HOLDINGS CORPORATION (available April 13, 1989), MORGAN STANLEY &
CO., INC. (available June 5, 1991) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (b) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the Exchange Notes
covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company, the undersigned represents to the Company that
the undersigned understands and acknowledges that such Exchange Notes may not be
offered for resale, resold or otherwise transferred by the undersigned or such
other person without registration under the Securities Act or an exemption
therefrom. If the exchange offeree is a broker-dealer holding 144A Notes
acquired for its own account as a result of market-making activities or other
trading activities, it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of Exchange Notes received in
respect of such 144A Notes pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered 144A Notes or transfer ownership of such 144A Notes on the account
books maintained by a book-entry transfer facility. The undersigned further
agrees that acceptance of any tendered 144A Notes by the Company and the
issuance of Exchange Notes in exchange therefor shall constitute performance in
full by the Company of its obligations under the Registration Rights Agreement
and that the Company shall have no further obligations or liabilities thereunder
for the registration of the 144A Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the 144A Notes tendered
hereby and, in such event, the 144A Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered 144A Notes may be withdrawn at any time
prior to the Expiration Date.
3
<PAGE>
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instruction" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered 144A Notes, and any 144A Notes delivered herewith but not exchanged,
will be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If 144A Notes are surrendered by Holder(s) that
have completed either the box entitled "Special Registration Instructions" or
the box entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (as defined in Instruction 2).
<TABLE>
<S> <C>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange To be completed ONLY if the Exchange
Notes are to be issued in the name of someone Notes are to be sent to someone other
other than the undersigned. than the undersigned, or to the undersigned
at an address other than that shown under
"Description of Senior Subordinated Notes
Tendered Hereby."
Name: Name:
Address: Address:
Book-Entry Transfer Facility Account:
Employer Identification or Social Security
Number:
(PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
</TABLE>
4
<PAGE>
REGISTERED HOLDER(S) OF 144A NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ______________________________________________________________________________
X ______________________________________________________________________________
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
144A Notes or on a security position listing as the owner of the 144A Notes or
by person(s) authorized to become registered holder(s) by properly completed
bond powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(PLEASE PRINT OR TYPE):
Name and Capacity (full title): ________________________________________________
Address (including zip code): __________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number: ________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
Dated: _______________________________
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTION 4)
Authorized Signature: __________________________________________________________
(SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR)
Name and Title: ________________________________________________________________
Name of Plan: __________________________________________________________________
Area Code and Telephone Number: ________________________________________________
(PLEASE PRINT OR TYPE)
Dated: _______________________________
5
<PAGE>
PAYOR'S NAME: PACKARD BIOSCIENCE COMPANY
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION
NUMBER ON THE FOLLOWING SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING.
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT <*> </*>
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. SOCIAL SECURITY
DEPARTMENT OF THE PART 2--CHECK THE BOX IF YOU ARE NOT SUBJECT TO NUMBER OR EMPLOYER
TREASURY BACKUP WITHHOLDING UNDER THE PROVISIONS OF SECTION IDENTIFICATION
INTERNAL REVENUE SERVICE 3406(A)(1)(C) OF THE INTERNAL REVENUE CODE BECAUSE NUMBER
PAYOR'S REQUEST (1) YOU ARE EXEMPT FROM BACKUP WITHHOLDING, (2) PART 3-
FOR TAXPAYER YOU HAVE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO AWAITING TIN [ ]
IDENTIFICATION BACKUP WITHHOLDING AS A RESULT OF FAILURE TO
NUMBER ("TIN") REPORT ALL INTEREST OR DIVIDENDS OR (3) THE
INTERNAL REVENUE SERVICE HAS NOTIFIED YOU THAT YOU
ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. [ ]
CERTIFICATION: UNDER PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM
IS TRUE, CORRECT, AND COMPLETE.
SIGNATURE:<*> </*> DATE:<*> </*>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS
IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME,
AND EITHER (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE
APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B) I INTEND TO
MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER
IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD,
UNTIL I PROVIDE A NUMBER.
<*> </*> <*> </*>
SIGNATURE DATE
</TABLE>
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered 144A Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at a book-entry transfer facility of
144A Notes tendered by book-entry transfer, as well as a properly completed and
duly executed copy of this Letter of Transmittal or facsimile thereof, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date. The method of delivery of this Letter of Transmittal, the 144A
Notes and all other required documents is at the election and risk of the
Holder. Instead of delivery by mail, it is recommended that Holders use an
overnight or hand delivery service. Except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the 144A Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their 144A Notes, and (i) whose Notes are not
immediately available, or (ii) who cannot deliver their 144A Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of the 144A Notes, the
certificate or registration number(s) of such 144A Notes and the
principal amount of 144A Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five (5) business days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the 144A Notes to be
tendered in proper form for transfer (or a confirmation of book-entry
transfer of such 144A Notes into the Exchange Agent's account at the
Depository) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or facsimile
thereof), as well as all tendered 144A Notes in proper form for transfer
(or a confirmation of book-entry transfer of such 144A Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five business days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their 144A Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender 144A Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
144A Notes prior to the Expiration Date. Failure to complete the guaranteed
delivery procedures outlined above will not, of itself, affect the validity or
effect a revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery procedures.
7
<PAGE>
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of 144A Notes evidenced by a
submitted certificate is tendered, the tendering Holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Senior Subordinated Notes Tendered Hereby." A
newly issued 144A Note for the principal amount of 144A Notes submitted but not
tendered will be sent to such Holder as soon as practicable after the Expiration
Date. All 144A Notes delivered to the Exchange Agent will be deemed to have been
tendered in full unless otherwise indicated.
Any 144A Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date, after which tenders of 144A Notes are
irrevocable. To withdraw a tender of 144A Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent by 5:00 p.m., New York City time, on the Expiration Date. Any such notice
of withdrawal must (i) specify the name of the person having deposited the 144A
Notes to be withdrawn (the "Depositor"), (ii) identify the 144A Notes to be
withdrawn (including the certificate or registration number(s) and principal
amount of such 144A Notes, or, in the case of 144A Notes transferred by
book-entry transfer, the name and number of the account at the DTC to be
credited), (iii) be signed by the Depositor in the same manner as the original
signature on this Letter of Transmittal (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the 144A Notes register the transfer of such 144A Notes
into the name of the Depositor withdrawing the tender, (iv) specify the name in
which any such 144A Notes are to be registered, if different from that of the
Depositor and (v) include a statement that such holder is withdrawing his
election to have such 144A Notes exchanged. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any 144A Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the 144A Notes so withdrawn are validly retendered.
Any 144A Notes which have been tendered but which are not accepted for exchange,
will be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of Exchange
Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered Holder(s) of the
144A Notes tendered hereby, the signature must correspond with the name(s) as
written on the face of the certificates without alteration or enlargement or any
change whatsoever. If this Letter of Transmittal is signed by a participant in
the Depository, the signature must correspond with the name as it appears on the
security position listing as the owner of the 144A Notes.
If any of the 144A Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of 144A Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of 144A Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the 144A Notes
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of 144A Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the 144A Notes) listed and tendered hereby, no endorsements of the
tendered 144A Notes or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the 144A Notes or transmit properly completed bond
powers with this Letter of Transmittal (in either case, executed exactly as the
name(s) of the registered Holder(s) appear(s) on the 144A Notes, and, with
respect to a participant in the Depository whose name appears on a security
position listing as the owner of 144A Notes, exactly as the name of the
participant appears on such security position listing), with the signature on
the 144A Notes or bond power guaranteed by an Eligible Institution (except where
the 144A Notes are tendered for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
8
<PAGE>
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Depository) in which the Exchange Notes or substitute
144A Notes for principal amounts not tendered or not accepted for exchange are
to be issued (or deposited), if different from the names and addresses or
accounts of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the employer identification number or social
security number of the person named must also be indicated and the tendering
Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any 144A Notes not
tendered or not accepted) will be issued in the name of and sent to the acting
Holder of the 144A Notes or deposited at such Holder's account at the
Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the exchange
of 144A Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or 144A Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered Holder of the 144A Notes
tendered, or if tendered 144A Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of 144A Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the 144A Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to waive, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose 144A Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address and telephone number set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to Ben D. Kaplan, PACKARD BIOSCIENCE COMPANY,
800 Research Parkway, Meriden, Connecticut 06450, telephone (203) 238-2351.
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered 144A Notes and withdrawal of tendered 144A
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all 144A Notes not properly tendered or any 144A Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular 144A Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of 144A Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of 144A Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of 144A Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any 144A Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering Holders of 144A Notes, unless
otherwise provided herein, as soon as practicable following the Expiration Date.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering 144A Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered 144A Notes may be subject to backup
withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9, should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to 144A Notes tendered for exchange, the Holder is required to notify
the Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) such Holder is exempt, (ii) such Holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the 144A
Notes. If 144A Notes are in more than one name or are not in the name of the
actual Holder, consult the instructions on Internal Revenue Service Form W-9,
which may be obtained from the Exchange Agent, for additional guidance on which
number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN or Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
144A NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
PACKARD BIOSCIENCE COMPANY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Packard BioScience Company (the "Company") made pursuant to
the Prospectus, dated , 1997 (the "Prospectus"), if certificates for
the outstanding 9 3/8% Senior Subordinated Notes Due 2007 of the Company (the
"144A Notes") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York
time, on the Expiration Date of the Exchange Offer. Such form may be delivered
or transmitted by telegram, telex, facsimile transmission, mail or hand delivery
to The Bank of New York (the "Exchange Agent") as set forth below. In addition,
in order to utilize the guaranteed delivery procedure to tender 144A Notes
pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSIONS:
BY HAND OR OVERNIGHT DELIVERY: (ELIGIBLE INSTITUTIONS ONLY) BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Attention: Reorganization
Ground Level TO CONFIRM BY TELEPHONE Section,
Attention: Reorganization
Section, OR FOR INFORMATION CALL: Arwen Gibbons
Arwen Gibbons
(212) 815-6333
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of 144A Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of 144A Notes Tendered:*
$
- ---------------------------------
Certificate No(s). (if available):
- ------------------------------------
Total Principal Amount Represented by Certificate(s):
$
- ---------------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
X
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
- ----------------------------
Must be signed by the holder(s) of 144A Notes as their name(s) appear(s) on
certificates for 144A Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If 144A Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
<TABLE>
<S> <C>
Please print name(s) and address(es)
Name(s):
Capacity:
Address(es):
Account Number:
</TABLE>
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the 144A Notes being tendered hereby or confirmation of book-entry
transfer of such 144A Notes into the Exchange Agent's account at The Depository
Trust Company, in proper form for transfer, together with any other documents
required by the Letter of Transmittal within three New York Stock Exchange
trading days after the Expiration Date.
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
__________________________________________________________________________
Area Code & Telephone No. ______________________________________________________
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
(Please Type or Print)
Title __________________________________________________________________________
Date ___________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES OF 144A NOTES WITH THIS FORM. CERTIFICATES OF
144A NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED
LETTER OF TRANSMITTAL.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
<C> <S> <C> <C>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF:
<CAPTION>
- -------------------------------------------------------
- -------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF:
- -------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
5. Sole proprietorship account The owner(3)
6. A valid trust, estate, or pension The legal entity
trust
(Do not furnish the
identifying number of
the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(4)
7. Corporate account The corporation
8. Partnership account held in the The partnership
name of the business
9. Association, club or other tax- The organization
exempt organization
10. A broker or registered nominee The broker or nominee
11. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
</TABLE>
<TABLE>
<C> <S> <C> <C>
- -------------------------------------------------------
- -------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. The name of the business or the "doing business
as" name may also be entered. Either the social security number or the
employer identification number may be used.
(4) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for A Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. COMPLETE THE SUBSTITUTE FORM W-9 AS FOLLOWS:
ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ACROSS THE FACE OF THE
FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER. Certain payments, other than
interest, dividends and patronage dividends, that are not subject to information
reporting are also not subject to backup withholding. For details, see the
sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A and 6050N and the
regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of tax returns. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your current taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure which is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS.--If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
