United States
Securities and Exchange Commission
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Rollins Environmental Services, Inc.
- ------------------------------------------------------------------------
(Name of Issuer)
Common Stock $1.00 Par Value
- ------------------------------------------------------------------------
(Title of Class of Securities)
775709
----------------------------------------
(CUSIP Number)
James M. Plasynski, Westinghouse Electric Corporation,
11 Stanwix Street, Pittsburgh, PA 15222, (412) 642-2591
- ------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1995
----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box _.
Check the following box if a fee is being paid with the statement.X (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five
percent of the class of securities described in Item 1; and (2) has
filed no amendment subsequent thereto reporting beneficial ownership of
five percent or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
<PAGE>2
Schedule 13D
CUSIP No. 775709
-----------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Westinghouse Electric Corporation
25-0877540
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)__
(b)__
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00 (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
__
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated in Pennsylvania
NUMBER OF 7 SOLE VOTING POWER
SHARES None (See amended Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH None
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 10,731,707
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,731,707
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* __
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>3
Item 1. Security and Issuer
This statement relates to the Common Stock, $1.00 par value (the
"Common Stock") of Rollins Environmental Services, Inc., a Delaware
corporation ("Rollins") with its principal executive offices at 2200
Concord Pike, One Rollins Plaza, Wilmington, Delaware 19803.
Item 2. Identity and Background
This statement is being filed by Westinghouse Electric Corporation,
a Pennsylvania corporation ("Westinghouse").
Westinghouse is a diversified, global, technology-based corporation
operating in the principal business arenas of television and radio
broadcasting, advanced electronic systems for the defense industry,
environmental services, management services at government-owned
facilities, services and fuel for the nuclear energy market, services
and equipment for the power generation market, transport temperature
control equipment, land development for luxury communities, and office
furniture systems.
Westinghouse's principal business address is, and its principal
executive office is located at, Westinghouse Building, 11 Stanwix
Street, Pittsburgh, Pennsylvania 15222.
Attached hereto as Schedule I and incorporated herein by reference
is a list of the directors and executive officers of Westinghouse,
setting forth the following information with respect to each such
person: (i) name, (ii) business address and (iii) present principal
occupation or employment and the name and address of any corporation or
other organization in which such employment is conducted. Each person
identified in Schedule I hereto is a United States citizen.
During the last five years, neither Westinghouse nor, to the best
of Westinghouse's knowledge, any person identified in Schedule I hereto
has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or has been subject to a judgment,
decree or final order of a judicial or administrative body of competent
jurisdiction enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
This statement relates to Westinghouse's acquisition on March 31,
1995 of $66,000,000 principal amount of 7.25% Convertible Subordinated
Debentures Due March 31, 2005 (the "Debentures") of Rollins.
The Debentures were acquired by Westinghouse on March 31, 1995
pursuant to the terms of a Stock Purchase Agreement between Westinghouse
and Rollins dated March 7, 1995 (the "Stock Purchase Agreement") and a
Debenture Purchase Agreement between Westinghouse and Rollins dated
March 31, 1995 (the "Debenture Agreement"). The Debentures are subject
to an Indenture dated March 31, 1995 between Rollins and Texas Commerce
Bank National Association (the "Indenture"). The Debentures were
received by Westinghouse as part of the consideration for Westinghouse's
sale of the stock of its wholly owned subsidiary, National Electric,
Inc. ("NEI"), to Rollins.
<PAGE>4
The Debentures are convertible, in whole or in any portion of the
principal amount thereof which equals $1,000 or any integral multiple
thereof, at any time on or before the close of business on March 31,
2005, into shares of Common Stock at the conversion price, determined as
provided in the Indenture (the "Conversion Price"), in effect at the
time of conversion. In the event the Debentures are called for
redemption, such conversion privilege expires at the close of business
on the redemption date, unless Rollins defaults in making the payment
due upon redemption. The Indenture provides that the Conversion Price
shall be $6.15 principal amount per share of Common Stock, subject to
adjustment in certain instances. The number of shares of Common Stock
received will be equal to the principal amount of the Debentures
converted divided by the Conversion Price. At the Conversion Price of
$6.15, the Debentures would be convertible into 10,731,707 shares of
Common Stock.
Item 4. Purpose of Transaction.
The Debentures were acquired by Westinghouse for investment
purposes as part of the consideration for Westinghouse's sale of the
stock of NEI to Rollins. The conversion feature of such Debentures
gives Westinghouse an opportunity to participate in the potential
appreciation of the price of the Common Stock.
Westinghouse may, however, dispose of the Debentures or any Common
Stock acquired upon conversion of the Debentures at any time or from
time to time in private transactions, in sales pursuant to a
registration statement or in sales otherwise in compliance with
applicable securities laws, subject to the transfer restrictions in
Section 4.1 of the Debenture Agreement attached hereto as Exhibit 2,
which section is incorporated herein by reference. The Debenture
Agreement grants Westinghouse certain registration rights with respect
to the Debentures. It also provides that Westinghouse will not, without
the prior written consent of Rollins, sell, transfer or otherwise
dispose of Common Stock or a principal amount of the Debentures equal to
more than .843793% of the outstanding Common Stock on a fully diluted
basis (including shares issuable upon redemption or conversation
pursuant to the Indenture) to any individual purchaser or its affiliates
in a private transaction.
Westinghouse has no current intention to acquire any additional
securities of Rollins. Furthermore, Westinghouse has agreed pursuant to
Section 5.2 of the Debenture Agreement, which section is incorporated
herein by reference, that, so long as no default or event of default has
occurred and is continuing, and no event has occurred and is continuing
which with the lapse of time or the giving of notice, or both, would
constitute an event of default, under either the Indenture or the
Indenture between Rollins and First Fidelity Bank, N.A., dated March 31,
1995 (the "Senior Indenture"), with respect to $16,800,000 principal
amount of 7.75% Senior Unsecured Series Securities of Rollins due 2005
(the "Senior Debentures") acquired by Westinghouse from Rollins as part
of the consideration for its sale of the stock of NEI to Rollins,
neither Westinghouse nor its affiliates will, except within the terms of
a specific request from Rollins, take certain actions with respect to
Rollins as specified in Section 5.2 of the Debenture Agreement,
including, but not limited to, the acquisition of any securities
entitled to be voted generally in the election of directors of Rollins,
entering into business combinations with respect to Rollins, and taking
<PAGE>5
action to seek or to offer to control or influence the management, Board
of Directors or policies of Rollins.
Although the foregoing reflects the current intentions of
Westinghouse, such intentions are subject to change at any time. Except
as set forth above, neither Westinghouse nor, to the best of
Westinghouse's knowledge, any person identified in Schedule I hereto,
has any present plans or proposals which relate to or would result in
any of the actions listed in Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
Westinghouse has the right to acquire 10,731,707 shares of Common
Stock upon conversion of the Debentures pursuant to the terms of the
Indenture. In the event Westinghouse converted the Debentures into
Common Stock, it would own 15.1% of the then issued and outstanding
shares of Common Stock (i.e., 60,375,811 shares issued and outstanding
at December 31, 1994 as set forth in Rollins' Report on Form 10-Q for
the quarterly period ended December 31, 1994, plus the 10,731,707 shares
which Westinghouse has the right to acquire).
Westinghouse has sole investment power over the Debentures, and
would have sole investment power over 10,731,707 shares of Common Stock
in the event it converted the Debentures. Westinghouse has agreed
pursuant to Section 5.3 of the Debenture Agreement, which section is
incorporated herein by reference, that, in the event it owns shares of
Common Stock pursuant to conversion of the Debentures, it will deliver
proxies to Rollins to vote all such shares of Common Stock in the same
proportion as all other shares of Common Stock are voted, so long as no
default or event of default has occurred and is continuing, and no event
has occurred and is continuing which with the lapse of time or the
giving of notice or both, would constitute an event of default, under
either the Indenture or the Senior Indenture.
Except as described above and in Item 3, (i) neither Westinghouse
nor, to the best of Westinghouse's knowledge, any person identified in
Schedule I hereto beneficially owns any shares of the Common Stock, and
(ii) no transactions in such shares have been effected during the past
60 days by Westinghouse or, to the best of Westinghouse's knowledge, any
person identified on Schedule I hereto.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The information contained in Items 3, 4 and 5 above is hereby
incorporated by reference in response to this Item 6. In connection
with its sale of the stock of NEI to Rollins, Westinghouse received the
Senior Debentures, Rollins assumed all of Westinghouse's obligations and
duties under certain industrial development bonds (the "IDBs") ,
Westinghouse and Rollins entered into certain agreements regarding the
remarketing of the IDBs, and Rollins agreed if necessary to amend
Rollins' Rights Agreement dated as of June 14, 1989 to ensure that the
issuance of the Debentures does not cause a "Triggering Event" under
such Rights Agreement, all as set forth in Sections 2.1, 7.7 and 7.8 of
the Stock Purchase Agreement attached hereto as Exhibit 1, which
sections are incorporated herein by reference. Other than the
arrangements set forth in this Item 6, neither Westinghouse nor, to the
best of Westinghouse's knowledge, any person identified in Schedule I
<PAGE>6
hereto, has any contracts, arrangements, understandings or relationships
with any person with respect to any securities of Rollins.
Item 7. Material to be Filed as Exhibits.
Exhibit 1. Stock Purchase Agreement dated March 7, 1995.
Exhibit 2. Debenture Purchase Agreement dated March 31,
1995.
Exhibit 3. Indenture dated March 31, 1995.
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth herein is true,
complete and correct.
WESTINGHOUSE ELECTRIC CORPORATION
Dated: April 10, 1995
By: /s/ Fredric G. Reynolds
Name: Fredric G. Reynolds
Title: Executive Vice President and
Chief Financial Officer
Schedule I
Name, business address, and present
principal occupation or employment of
the directors and executive officers of
Westinghouse Electric Corporation:
Directors
Present Principal Occupation
Name, Business Address and Address of Employment
Frank C. Carlucci Chairman
The Carlyle Group The Carlyle Group
1001 Pennsylvania Avenue, N.W. 1001 Pennsylvania Avenue, N.W.
Washington, DC 20004-2505 Washington, DC 20004-2505
Gary M. Clark President
Westinghouse Electric Corporation Westinghouse Electric Corporation
Westinghouse Building Westinghouse Building
11 Stanwix Street 11 Stanwix Street
Pittsburgh, PA 15222 Pittsburgh, PA 15222
George H. Conrades President and CEO
Bolt Beranek & Newman Inc. Bolt Beranek & Newman Inc.
150 Cambridge Park Drive 150 Cambridge Park Drive
Cambridge, MA 02140 Cambridge, MA 02140
<PAGE>7
William H. Gray III President and Chief Executive
United Negro College Fund, Inc. Officer
8260 Willow Oaks Corporate Drive United Negro College Fund, Inc.
P.O. Box 10444 8260 Willow Oaks Corporate Drive
Fairfax, VA 22031 P. O. Box 10444
Fairfax, VA 22031
Michael H. Jordan Chairman and Chief Executive
Westinghouse Electric Corporation Officer
Westinghouse Building Westinghouse Electric Corporation
11 Stanwix Street Westinghouse Building
Pittsburgh, PA 15222 11 Stanwix Street
Pittsburgh, PA 15222
David T. McLaughlin Chairman and Chief Executive
The Aspen Institute Officer
Carmichael Road The Aspen Institute
Queenstown, MD 21658 Carmichael Road
Queenstown, MD 21658
Rene C. McPherson Retired Chairman
#1 Pumpkin Key Lane Dana Corporation
Ocean Reef Club
N. Key Largo, FL 33037-3769
Richard M. Morrow Retired Chairman and
AMOCO Corporation Chief Executive Officer
200 E. Randolph Drive AMOCO Corporation
Chicago, IL 60601-7125 200 E. Randolph Drive
Chicago, IL 60601
Richard R. Pivirotto President
Richard R. Pivirotto Co., Inc. Richard R. Pivirotto Co., Inc.
111 Clapboard Ridge Road 111 Clapboard Ridge Road
Greenwich, CT 06830 Greenwich, CT 06830
Paula Stern President
The Stern Group, Inc. The Stern Group, Inc.
3314 Ross Place, N.W. 3314 Ross Place, N.W.
Washington, DC 20008 Washington, DC 20008
Robert D. Walter Chairman and CEO
Cardinal Health, Inc. Cardinal Health, Inc.
655 Metro Place South 655 Metro Place South
Suite 925 Suite 925
Dublin, OH 43017 Dublin, OH 43017
<PAGE>8
Executive Officers
Present Principal Occupation
Name, Business Address and Address of Employment
Michael H. Jordan Chairman and Chief Executive
Westinghouse Electric Corporation Officer
Westinghouse Building Westinghouse Electric Corporation
11 Stanwix Street Westinghouse Building
Pittsburgh, PA 15222 11 Stanwix Street
Pittsburgh, PA 15222
Gary M. Clark President
Westinghouse Electric Corporation Westinghouse Electric Corporation
Westinghouse Building Westinghouse Building
11 Stanwix Street 11 Stanwix Street
Pittsburgh, PA 15222 Pittsburgh, PA 15222
Frank R. Bakos President - Power Generation
Westinghouse Electric Corporation Westinghouse Electric Corporation
The Quadrangle The Quadrangle
4400 Alafaya Trail 4400 Alafaya Trail
Orlando, FL 32826-2399 Orlando, FL 32826-2399
Louis J. Briskman Senior Vice President and General
Westinghouse Electric Corporation Counsel
Westinghouse Building Westinghouse Electric Corporation
11 Stanwix Street Westinghouse Building
Pittsburgh, PA 15222 11 Stanwix Street
Pittsburgh, PA 15222
Francis J. Harvey President - Electronic Systems
Westinghouse Electric Corporation Westinghouse Electric Corporation
P.O. Box 1693, M.S. A500 P.O. Box 1693, M.S. A500
Baltimore, MD 21203 Baltimore, MD 21203
W. C. Bill Korn Chairman and Chief Executive
Westinghouse Broadcasting Company Officer - Westinghouse
200 Park Avenue Broadcasting Company
New York, NY 10166 Westinghouse Broadcasting Company
200 Park Avenue
New York, NY 10166
Richard A. Linder Chairman - Electronic Systems
Westinghouse Electric Corporation Westinghouse Electric Corporation
P. O. Box 1693, Mail Stop A500 P. O. Box 1693, Mail Stop A500
Baltimore, MD 21203 Baltimore, MD 21203
James S. Moore President - Westinghouse
Westinghouse Electric Corporation Government & Environmental
11 Stanwix Street Services Co.
Pittsburgh, PA 15222 Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222
<PAGE>9
Fredric G. Reynolds Executive Vice President
Westinghouse Electric Corporation and Chief Financial Officer
Westinghouse Building Westinghouse Electric Corporation
11 Stanwix Street Westinghouse Building
Pittsburgh, PA 15222 11 Stanwix Street
Pittsburgh, PA 15222
Louis J. Valerio Vice President and Controller
Westinghouse Electric Corporation Westinghouse Electric Corporation
Westinghouse Building Westinghouse Building
11 Stanwix Street 11 Stanwix Street
Pittsburgh, PA 15222 Pittsburgh, PA 15222
James F. Watson, Jr. President - Thermo King
Thermo King Corporation Thermo King Corporation
314 W. 90th Street 314 W. 90th Street
Minneapolis, MN 55420 Minneapolis, MN 55420
Nathaniel D. Woodson President - Energy Systems
Westinghouse Electric Corporation Westinghouse Electric Corporation
Energy Center Energy Center
4350 Northern Pike 4350 Northern Pike
Monroeville, PA 15146 Monroeville, PA 15146
<PAGE>10
EXHIBIT INDEX
Page No.
Exhibit 1 Stock Purchase Agreement dated March 7, 1995. 11
Exhibit 2 Debenture Purchase Agreement dated March 31, 1995. 83
Exhibit 3 Indenture dated March 31, 1995. 102
<PAGE>11
EXHIBIT 1
FINAL EXECUTION COPY
STOCK PURCHASE AGREEMENT
between
WESTINGHOUSE ELECTRIC CORPORATION
(Seller)
and
ROLLINS ENVIRONMENTAL SERVICES, INC.
(Buyer)
for
NATIONAL ELECTRIC, INC.
A MINNESOTA CORPORATION
Dated as of this 7th day of March, 1995
ARTICLE 1
SALEOF APTUS 1
1.1 The Sale 1
1.1.1 The Sale of the Shares 1
ARTICLE 2
PRICE 1
2.1 Purchase Price 2
2.2 Payment of Purchase Price 2
2.2.1 Closing Date Payment 2
2.2.2 Issuance of Securities 2
2.2.3 Assumption of IDB Loan Agreement 2
2.3 Purchase Price Adjustment 3
2.3.1 Post Closing Adjustment of Purchase Price 3
2.3.2 Adjustments Procedure 3
2.4 Interest Payment on Cash 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER 4
3.1 Organization; Power and Authority 4
3.2 Authorization, Execution and Validity of Agreement 4
3.3 Capitalization 4
<PAGE>12
3.3.1 NEI 4
3.3.2 Aptus 5
3.4 Organizational Records 5
3.5 Financial Statements 5
3.6 Absence of Undisclosed Liabilities 5
3.7 Absence of Certain Changes 6
3.8 No Conflict; Seller Consents 7
3.9 Real Property 7
3.9.1 Owned Real Property 7
3.9.2 Leased Real Property 8
3.10 Personal Property 8
3.10.1 Owned Personal Property 8
3.10.2 Leased Personal Property 8
3.10.3 Computer and Telecommunications Equipment and
Software 8
3.10.3.1 Equipment 9
3.10.3.2 Software 9
3.10.4 NEI Property 9
3.11 Condition of Assets 9
3.12 Insurance 9
3.13 Contracts 10
3.14 Inventory 11
3.15 Accounts Receivable 11
3.16 Litigation 11
3.17 Laws and Permits 12
3.17.1 Compliance with Laws 12
3.17.2 Permits and Licenses 12
3.18 Environmental Matters 12
3.19 Patents, Trademarks and Similar Rights 13
3.19.1 Intellectual Property. 13
3.19.2 Licenses; Infringement. 13
3.20 Employees 14
3.20.1 Employees 14
3.20.2 Unions. 14
3.20.3 Employee and Consulting Contracts 14
3.20.4 NLRB 14
3.21 Employee Benefits 14
3.21.1 Plans. 15
3.21.2 Records. 15
3.21.3 Actions. 15
3.21.4 Funding. 15
3.21.5 Multiemployer Plans 16
3.21.6 Acceleration of Benefits 16
3.22 Taxes 16
3.22.1 Returns 16
3.22.2 Extensions. 16
3.22.3 Affiliated Groups. 17
3.22.4 Audits. 17
3.23 Brokers 17
3.24 No Subsidiaries or Investments 17
3.25 Sufficiency of Assets 17
3.26 Bank Accounts 17
3.27 Certain Relationships 17
3.28 Full Disclosure 17
3.29 Sophisticated Seller 18
3.30 Schedule References 18
ARTICLE 4
<PAGE>13
REPRESENTATIONS AND WARRANTIES OF BUYER 18
4.1 Organization; Power and Authority 18
4.2 Authorization, Execution and Validity 18
4.3 No Conflict; Buyer Consents 18
4.4 Brokers 18
4.5 Purchase for Investment 19
ARTICLE 5
COVENANTS OF SELLER 19
5.1 Cooperation by Seller 19
5.2 Pre-Closing Access to Information 19
5.3 Conduct of Business 20
5.3.1 Business in Ordinary Course 20
5.3.2 Buyer's Consent 21
5.3.3 Representations and Warranties 21
5.4 Further Assurances 21
5.4.1 Additional Documents 21
5.4.2 Certain Consents 21
5.5 Supplements to Schedules 22
5.6 Certain Financial Covenants 22
5.7 Exclusive Dealing 23
5.8 Closure and Post Closure Costs and Financial Assurances 23
5.8.1 Closing Date Closure and Post-Closure
Costs Defined 23
5.8.2 Financial Assurances Defined 23
5.8.3 Increases in Costs or Required Assurances 23
5.8.4 Insurance Premium Payments 23
5.8.5 Letters of Credit 23
5.9 Right to Seller Business Post Closing 25
5.10 Right to Seller Intellectual Property Post Closing 25
5.11 MIS and Telecommunications Services Post Closing 25
5.12 Intercompany Accounts 26
5.13 Preparation of Financial Statements 26
5.14 26
5.15 Leased Real Property 26
5.16 Certain Environmental Clean-ups 26
ARTICLE 6
COVENANTS OF BUYER 27
6.1 Cooperation by Buyer 27
6.2 Due Diligence Activities 27
6.3 Further Assurances 27
6.4 HSR Act Compliance 27
6.5 Release from Guarantees 27
6.6 Due Diligence - Post-Signing 28
6.7 Repayment of Working Capital Advance 28
ARTICLE 7
MUTUAL COVENANTS 28
7.1 Employee Matters 28
7.1.1 Employment 28
7.1.2 Union Representation 29
7.1.3 Termination of Coverage Under Seller's
Employee Benefit Plans and Coverage Under
Buyer's Employee Benefit Plans 30
<PAGE>14
7.1.4 Pension Plans 30
7.1.5 Savings Program 30
7.1.6 Welfare and Fringe Benefits 31
7.2 Tax Covenants 31
7.2.1 Apportionment of Income Taxes Between Pre-Closing
and Post-Closing Periods 31
7.2.2 Payment of Income Taxes 31
7.2.3 Preparation and Filing of Income Tax Returns 32
7.2.4 Cooperation 32
7.2.5 Refund Claims 33
7.2.6 Tax Sharing Agreements 33
7.2.7 Notice of Audit 33
7.2.8 Audits Controlled by Seller 33
7.2.9 Audits Controlled by Buyer 33
7.2.10 338(h)(10) Election 33
7.2.11 Net Operating Loss 34
7.2.12 Carrybacks 34
7.3 Books and Records 34
7.3.1 Access. 34
7.3.2 Destruction 34
7.3.3 Confidentiality 34
7.3.4 Assistance 34
7.4 Non-Competition 35
7.5 Access to Information 38
7.6 Non-Solicitation of Employees 38
7.7 Rights Agreement 38
7.8 Remarketing of IDBs and Cost Sharing 38
7.8.1 Initial Remarketing 38
7.8.2 Remarketing of IDBs 38
7.8.3 Effective Conversion Date 39
7.8.3.1 Option of Buyer 39
7.8.3.2 Option of Seller 39
7.8.4 IDB Cost Sharing 40
7.8.4.1 Calculation and Payment 40
7.8.5 Cooperation 40
7.8.5.1 Remarketing Agent 41
7.8.5.2 Interest Rate Cap 41
7.8.6 Underwriting Costs 41
7.8.7 Conversion 41
7.8.8 Rebate Obligation 41
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING 41
8.1 Conditions Precedent to Buyer's Obligations 41
8.1.1 Accuracy of Representations and Warranties 41
8.1.2 Litigation 42
8.1.3 Covenants 42
8.1.4 Deliveries 42
8.1.5 Consents 42
8.1.6 Customers 42
8.1.7 No Material Adverse Effect 42
8.2 Conditions Precedent to Seller's Obligations 42
8.2.1 Truth of Representations and Warranties 42
8.2.2 Litigation 42
8.2.3 Covenants 42
8.2.4 Deliveries 42
8.2.5 [Intentionally Left Blank] 42
<PAGE>15
8.2.6 Permits 43
ARTICLE 9
CLOSING 43
9.1 Time and Place 43
9.2 Deliveries by Seller 43
9.3 Deliveries by Buyer 44
ARTICLE 10
TERMINATION PRIOR TO CLOSING DATE 45
10.1 Termination 45
10.2 Effect of Termination 46
10.2.1 General 46
ARTICLE 11
INDEMNIFICATION AND PROCEDURES 46
11.1 Indemnification by Seller 46
11.2 Indemnification by Buyer 47
11.3 Notice and Resolution of Claim 48
11.3.1 Notice 48
11.3.2 Right to Assume Defense 48
11.3.3 Failure to Assume Defense. 48
11.4 Limits on Indemnification 48
11.5 Survival 49
11.6 Exclusive Remedy 49
11.7 No Mitigation 49
11.8 Indemnity Payments 50
11.9 Buyer's Cooperation 50
11.10 Payment and Assignment of Claims 50
11.10.1 Payment 50
11.10.2 Assignment 50
11.11 Other Beneficiaries 50
11.12 Consequential Damages; Other Limitations 50
ARTICLE 12
CERTAIN ENVIRONMENTAL MATTERS 51
12.1 Seller's Environmental Responsibility 51
12.1.1 Seller Indemnity 51
12.2 Buyer Environmental Responsibility 51
12.3 Identified Environmental Concerns 52
12.4 Off-Site Disposal 52
12.5 Environmental Violations 52
12.6 Third Party Environmental Claim 52
12.7 Government Remediation Claim 53
12.8 Limitations and Deductibles 53
12.9 Miscellaneous 54
12.10 Certain Remediation Activities 54
12.10.1 Coffeyville Contamination 54
12.10.1.1 Responsibility of Seller 54
12.10.1.2 TCE Cost Sharing 55
12.10.1.3 Survival 55
12.10.2 Control 55
12.10.3 Access 55
12.10.4 Cooperation 56
<PAGE>16
12.10.5 Monitoring and Sampling 56
12.10.6 Conduct 56
ARTICLE 13
DEFINITIONS 57
ARTICLE 14
MISCELLANEOUS 65
14.1 Severability 65
14.2 Successors and Assigns 65
14.3 Counterparts 65
14.4 Headings 65
14.5 Waiver 65
14.6 No Third-Party Beneficiaries 65
14.7 Sales and Transfer Taxes 66
14.8 Other Expenses 66
14.9 Notices 66
14.10 Governing Law; Interpretation 67
14.11 Public Announcements 67
14.12 Arbitration 67
14.13 Financial Projections 68
14.14 Confidentiality 68
14.15 Entire Agreement; Amendment 69
14.16 Further Assurances 69
14.17 Exclusive Jurisdiction and Consent to
Service of Process 69
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of this
7th day of March, 1995 by and between WESTINGHOUSE ELECTRIC CORPORATION,
a Pennsylvania corporation ("Seller"), and ROLLINS ENVIRONMENTAL
SERVICES, INC., a Delaware corporation ("Buyer").
R E C I T A L S
A. Seller through Aptus, Inc., a Delaware Corporation
("Aptus") is engaged in the sale of services related to the
transportation, storage, laboratory analysis and incineration of certain
types of hazardous waste. Seller's transportation, storage, laboratory
analysis, incineration and certain of its sales functions are conducted
through Aptus. The major facilities are located in Aragonite, Utah;
Coffeyville, Kansas; Denver, Colorado; Houston, Texas; and Lakeville,
Minnesota. Seller also conducts certain related sales functions and
provides related administrative support and information technology
through facilities owned or leased directly by the Seller which are
located in Pittsburgh, Pennsylvania. The foregoing business and
operations shall collectively be referred to as "the Business."
B. Aptus is a wholly owned subsidiary of National Electric,
Inc., a Minnesota corporation ("NEI"), which is a wholly owned
subsidiary of Seller.
C. Buyer wishes to acquire from the Seller, and Seller wishes
<PAGE>17
to sell to the Buyer all of the issued and outstanding shares of capital
stock of NEI in the manner, for the consideration, and subject to the
terms and conditions set forth herein;
NOW, THEREFORE, Buyer and Seller, intending to be legally
bound, hereby agree as follows:
ARTICLE 1
SALE OF APTUS
1.1 The Sale.
1.1.1 The Sale of the Shares. On the terms and
subject to the conditions of this Agreement, on the Closing, Seller
shall sell and assign to Buyer and Buyer shall purchase and acquire all
of the Shares.
ARTICLE 2
PRICE
2.1 Purchase Price. The total consideration for the purchase
of the Business as set forth in Article 1 hereof shall be One Hundred
Thirty-Five Million Dollars ($135,000,000) ("Purchase Price"). The
Purchase Price shall be composed of:
(a) Six Million, Five Hundred Thousand Dollars
($6,500,000) (the "Cash"); plus
(b) The assumption by Buyer of all of Seller's obligations
and duties under that certain Loan Agreement, dated as of June 1, 1990,
between Tooele County, Utah (the "Issuer") and the Seller (the "IDB Loan
Agreement") entered into in connection with the issuance by the Issuer
of in the aggregate Forty-Five Million Seven Hundred Thousand Dollars
($45,700,000) principal amount of its Variable Rate Hazardous Waste
Treatment Revenue Bonds (Westinghouse Electric Corporation Project),
Series A (the "IDBs"); plus
(c) The issuance by Buyer to Seller of Senior Unsecured
Debentures (the "Senior Unsecured Debentures") having an aggregate
principal amount of Sixteen Million Eight Hundred Thousand Dollars
($16,800,000) and having terms and conditions set forth in the form of
indenture on Exhibit 2.1 (c), as the same may be adjusted by an
amendment to such indenture pursuant to Section 2.4; plus
(d) The issuance by Buyer to Seller of Subordinated
Convertible Debentures (the "Subordinated Debentures") having an
aggregate principal amount of Sixty-Six Million Dollars ($66,000,000)
and having terms and conditions set forth in the form of indenture on
Exhibit 2.1 (d).
2.2 Payment of Purchase Price.
2.2.1 Closing Date Payment. At the Closing, Buyer
<PAGE>18
shall pay the Cash to Seller by wire transfer in immediately available
funds.
Payment shall be made to a bank designated by Seller in
writing not less than one business day prior to the Closing.
2.2.2 Issuance of Securities. At the Closing, Buyer
shall issue to Seller the Senior Unsecured Debentures and the
Subordinated Convertible Debentures (collectively the "Securities")
pursuant to the Debenture Purchase Agreement in the form attached as
Exhibit 2.2.2.
2.2.3 Assumption of IDB Loan Agreement. At the
Closing, Buyer shall assume all of the obligations and duties of Seller
under the IDB Loan Agreement and will deliver the Assignment and
Assumption Agreement in the form attached as Exhibit 2.2.3.
2.3 Purchase Price Adjustment. The Purchase Price will be
adjusted based on changes in the amount of Net Worth between the date of
the December 1994 Balance Sheet and the Closing Date as follows:
2.3.1 Post Closing Adjustment of Purchase Price. As
soon as practicable, but not later than sixty (60) days after the
Closing Date, Seller shall deliver to Buyer (i) the balance sheet of
Aptus and NEI for the Date of Closing and related statements of income
and cash flows for the period from December 31, 1994 to the Date of
Closing, prepared in accordance with GAAP applied on a basis consistent
with that used by Price Waterhouse in the preparation of the FYE 1993
and 1994 Financial Statements, (ii) the Financial Statements required by
Section 3.5 but not available at the execution hereof, and (iii)
Seller's calculation of net worth which shall be calculated as of
December 31, 1994 and adjusted in accordance with Schedule 2.3.1 (the
"December 1994 Adjusted Net Worth") and at the Closing Date, also
adjusted in accordance with Schedule 2.3.1 (the "Final Adjusted Net
Worth"). Within thirty (30) days after receipt of the aforementioned
items, Buyer shall either inform Seller in writing that the calculation
of Final Adjusted Net Worth is acceptable or object to the calculation
of Final Adjusted Net Worth in writing setting forth in reasonable
detail Buyer's objections and the basis for those objections. If Buyer
so objects and the Parties do not resolve such objections on a mutually
agreeable basis within thirty (30) days after Seller's receipt thereof,
the disagreement shall be resolved within an additional sixty (60) day
period by a "Big 6" accounting firm jointly selected by the Parties (the
"Independent Firm"). The decision of the Independent Firm shall be
final and binding upon the Parties. Upon the agreement of the Parties
or the decision of the Independent Firm, or if Buyer fails to deliver an
objection to Seller within the thirty (30) day period provided above,
the calculation of Final Adjusted Net Worth shall be deemed final. Each
Party shall bear the fees, costs and expenses of its own accountants and
shall share equally the fees, costs and expenses of the Independent
Firm.
2.3.2 Adjustments Procedure. If Final Adjusted Net
Worth is equal to the December 1994 Adjusted Net Worth, no adjustment
shall be made to the amount of outstanding Senior Unsecured Debentures.
If Final Adjusted Net Worth is greater than the December 1994 Adjusted
Net Worth, the amount of then outstanding Senior Unsecured Debentures
shall be increased on a dollar-for-dollar basis to reflect such increase
<PAGE>19
in the Final Adjusted Net Worth in excess of December 1994 Adjusted Net
Worth. If Final Adjusted Net Worth is less than the December 1994
Adjusted Net Worth, the amount of the then outstanding Senior Unsecured
Debentures shall be decreased on a dollar-for-dollar basis to reflect
such decrease in the Final Adjusted Net Worth below the December 1994
Adjusted Net Worth.
2.4 Interest Payment on Cash. At Closing, Buyer shall make
an additional payment to Seller of Sixteen Thousand Dollars ($16,000.00)
representing accrued interest on the Cash. This payment is to be made
since no down payment was made in connection with this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to
Buyer:
3.1 Organization; Power and Authority.
3.1.1 NEI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota.
Aptus is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The jurisdictions in
which NEI and Aptus are qualified to conduct business as foreign
corporations are set forth in Schedule 3.1.1, listed separately for each
company. NEI and Aptus are duly qualified to transact business in each
jurisdiction in which such qualification is required by Law, except
where failure to be qualified would not have a Material Adverse Effect.
NEI and Aptus have all corporate power needed to own or lease their
respective assets and to carry on their respective business as they are
now being conducted.
3.1.2 The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Pennsylvania. The Seller has all corporate power needed to execute,
deliver and perform its obligations under this Agreement and to
consummate the sale of the Shares.
3.1.3 Schedule 3.1.3 sets forth a brief description
of the corporate history and ownership of Aptus and NEI, identifying all
corporate or partnership predecessors of NEI and Aptus, all Persons
merged into NEI or Aptus, and all Persons whose liabilities were assumed
by NEI or Aptus as a result of an acquisition, divestiture or
reorganization, whether by operation of law or contract.
3.2 Authorization, Execution and Validity of Agreement. The
execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the sale of the Shares of Aptus and the
Transferred Assets have been duly authorized by all necessary corporate
action. This Agreement has been duly and validly executed by Seller,
constitutes its valid and binding obligation and is enforceable against
Seller in accordance with its terms.
3.3 Capitalization.
<PAGE>20
3.3.1 NEI. The authorized capital stock of NEI
consists of the Shares, all of which are issued and outstanding. All of
the Shares have been duly authorized and validly issued and are fully-
paid and non-assessable. Seller is the beneficial and record owner of
all of the Shares. The Shares are not subject to Liens or restrictions
on transfer, other than restrictions imposed by applicable securities
Laws. There is no authorized or outstanding option, subscription,
warrant, call, right, commitment or other agreement obligating NEI to
issue or transfer any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
3.3.2 Aptus. The authorized capital stock of Aptus
consists of the Aptus Shares, all of which are issued and outstanding.
All of the Shares have been duly authorized and validly issued and are
fully-paid and non-assessable. NEI is the beneficial and record owner
of all of the Aptus Shares. The Aptus Shares are not subject to Liens
or restrictions on transfer, other than restrictions imposed by
applicable securities Laws. There is no authorized or outstanding
option, subscription, warrant, call, right, commitment or other
agreement obligating NEI to issue or transfer any shares of its capital
stock or any securities convertible into or exercisable for any shares
of its capital stock.
3.4 Organizational Records. Neither NEI or Aptus has
violated its articles of incorporation or its by-laws. Copies of the
articles of incorporation of Aptus and all amendments thereto, and of
the by-laws of NEI and Aptus and all amendments thereto, certified to be
complete and correct are attached as Schedule 3.4 hereto.
3.5 Financial Statements.
3.5.1 Schedule 3.5 hereto includes all of the
Financial Statements. The Financial Statements have been prepared in
connection with the sale of the Business and are prepared in accordance
with GAAP applied on a basis consistent with that used by Price
Waterhouse in connection with preparation of the FYE 1993 and 1994
Financial Statements. The Financial Statements are correct and complete
and in accordance with the books and records of NEI and Aptus. The
balance sheets included in the Financial Statements in each case fairly
present in all material respects and in reasonable detail the financial
condition, assets and liabilities of NEI and Aptus as at the respective
dates specified therein, and the related statements of income and cash
flows, for each of the periods then ended, fairly present in all
material respects the results of the operations for the periods then
ended.
3.5.2 "Financial Statements" shall mean the "Audited
Financial Statements" and the "Unaudited Financial Statements."
"Audited Financial Statements" shall mean the following: (i) audited
balance sheets of Aptus and NEI as of December 31, 1993 and December 31,
1994; and (ii) audited statements of income and cash flows of Aptus and
NEI for the periods ended December 31, 1993 and December 31, 1994. The
Audited Financial Statements shall be prepared by Price Waterhouse.
"Unaudited Financial Statements" shall mean the unaudited balance sheet
of Aptus and NEI as of March 31, 1995 (the "March 1995 Balance Sheet")
and the related statements of income and cash flows for the period then
ended.
<PAGE>21
3.6 Absence of Undisclosed Liabilities. Neither NEI nor
Aptus have any debts, liabilities or obligations of any nature
whatsoever, whether absolute, accrued, contingent or otherwise
(collectively, the "Undisclosed Liabilities") except:
(a) liabilities that are referred to or reflected or
reserved against on the December 1994 Balance Sheet or the March 1995
Balance Sheet or the notes thereto to the extent that the applicable
accounting principles require such action, including matters relating to
deferred tax accounts;
(b) Retained Liabilities or other liabilities that were
not required to be referred to or reflected or reserved against on the
December 1994 Balance Sheet or the March 1995 Balance Sheet; and
(c) liabilities, not referred to or reflected or reserved
against on the December 1994 Balance Sheet or the March 1995 Balance
Sheet, incurred in the ordinary course of business and consistent with
past practices, none of which, individually or in the aggregate has a
Material Adverse Effect.
3.7 Absence of Certain Changes. Except as set forth in
Schedule 3.7 or as contemplated by Section 5.12 hereto (Intercompany
Accounts) or other provisions of this Agreement, the business of Aptus
has been conducted, since December 31, 1994, in the ordinary course, and
Aptus has not entered into any transaction (or committed to enter into
any such transaction) other than in the ordinary course of its business.
NEI is not conducting any business operations, and has not entered into
any transactions since December 31, 1994, except those transactions
necessary to vest title to the Owned Real Property in Aptus. In
particular, without limiting the generality of the foregoing, Aptus has
not since that date:
3.7.1 purchased or redeemed directly or indirectly
any shares of its capital stock;
3.7.2 issued or sold or agreed to issue or sell any
shares of its capital stock or any option, warrant, conversion or other
right to acquire any such share or any securities convertible into or
exchangeable for such shares, or amended its articles or by-laws;
3.7.3 declared or paid any dividend or declared or
made any other distribution on any of the shares of any class of their
capital stock or on any other of their securities;
3.7.4 acquired or sold, assigned, transferred,
licensed, terminated, leased or disposed of any intangible assets;
3.7.5 suffered or incurred any damage, destruction or
liability (whether or not covered by any insurance), or any strike or
work stoppage, that either by itself or in the aggregate has resulted in
a Material Adverse Effect;
3.7.6 incurred any obligations or liabilities for
money borrowed (except for obligations to be discharged on or before
Closing);
<PAGE>22
3.7.7 mortgaged or pledged or subjected to any Lien,
any of its material assets, tangible or intangible (excepting statutory
liens of landlords, carriers, warehousemen, mechanics, materialmen and
similar Persons incurred in the ordinary course of business for sums not
yet due);
3.7.8 sold, transferred or disposed of any of its
assets except assets used or consumed in the ordinary course of business
and obsolete equipment and equipment which has been replaced in the
ordinary course of business;
3.7.9 made any individual capital expenditures or
commitments therefor in excess of $50,000.00;
3.7.10 altered or revised in any material way any of its
accounting principles, procedures, methods or practices;
3.7.11 made any material amendment to any Contracts,
other than in the ordinary course of business and consistent with past
practices; or
3.7.12 increased the compensation of any employees,
except for normal periodic increases in the ordinary course of business
and consistent with past practices, or entered into any employment or
consulting agreement not terminable at will without penalty or
continuing obligation.
3.8 No Conflict; Seller Consents. Except as set forth on
Schedule 3.8 or as would not have a Material Adverse Effect, the
execution, delivery and performance by Seller of this Agreement will not
(a) violate any Law, (b) violate any Charter Document of Seller, (c)
require any Consent from any Governmental Authority, (d) breach any
Charter Document, Material Contract, Material Lease, or Material Permit
of Aptus, or (e) result in the creation of any Lien on any assets of
Aptus, including Transferred Assets. No governmental authorization,
approval, order, permission, license, permit, certificate, franchise or
consent, and no registration, declaration or filing with any court,
governmental department, commission, authority, board, bureau, agency or
other instrumentality, is required in connection with the execution,
delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby, other
than (a) those that have already been obtained (and copies provided to
Buyer), (b) the transfer of certain FCC licenses identified on Schedule
3.8 from Seller to Aptus and (c) the transfer of certain Financial
Assurances.
3.9 Real Property.
3.9.1 Owned Real Property.
(a) Schedule 3.9.1 lists and sets forth the full
legal description for all of the real property owned by Aptus (the
"Owned Real Property"). Aptus has good and marketable title to the
Owned Real Property subject to no Liens, except Permitted Liens and
except as disclosed on Schedule 3.9.1. Aptus owns no other real
property and has no options or other interests in real property, except
as disclosed on Schedule 3.9.1.
<PAGE>23
(b) Aptus has not received any written notice for
assessments for public improvements against any of the Owned Real
Property which remains unpaid (nor is it negotiating any such
assessments) and, to the best of Seller's knowledge, no such assessment
has been proposed. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting all or any portion of any
of such properties and, to the best of Seller's knowledge, no such
proceeding is contemplated.
3.9.2 Leased Real Property. Schedule 3.9.2 lists all of
the real property leased by Aptus (as landlord or tenant) as of the date
hereof (the "Leased Real Property"). All Leases relating to the Leased
Real Property (the "Real Property Leases") and all amendments thereto
are identified and described on Schedule 3.9.2 and true and correct
copies have been delivered or made available to Buyer. All Leases are
valid, binding and enforceable and in full force and effect, except as
would not have a Material Adverse Effect. There has been no breach of
any Real Property Lease by Aptus that would have a Material Adverse
Effect which has not been cured or waived.
3.9.3 NEI does not own, lease or have any interest in
any real property.
3.10 Personal Property.
3.10.1 Owned Personal Property. Except as set forth on
Schedule 3.10.1 and except for Permitted Liens, Aptus has good and
marketable title, subject to no Liens, to all personal property owned by
Aptus, including property reflected on the books and records of Aptus
and all personal property acquired or leased by Aptus since the date
thereof, including the Transferred Assets, other than (a) property that
has been disposed of in the ordinary course of business, (b) as
contemplated by Schedule 5.3 hereto and (c) Leased Personal Property.
3.10.2 Leased Personal Property. Schedule 3.10.2 lists
all of the personal property leased to Aptus pursuant to a Material
Personal Property Lease as of the date hereof ("Leased Personal
Property"). All Material Personal Property Leases and all amendments
thereto are identified and described on Schedule 3.10.2 and true and
correct copies have been delivered or made available to Buyer. All
Material Personal Property Leases are valid, binding and enforceable and
in full force and effect, except as would not have a Material Adverse
Effect. There has been no material breach of any such Material Personal
Property Lease by Aptus that would have a Material Adverse Effect which
has not been cured or waived.
3.10.3 Computer and Telecommunications Equipment and
Software.
3.10.3.1 Equipment. Schedule 3.10.3.1 sets
forth a complete listing and description of all computer or
telecommunications equipment owned by Aptus or used by Aptus in the
Business (the "MIS Equipment") indicating for each item of MIS Equipment
whether it is owned by Aptus, owned by Seller, leased by Aptus or leased
by Seller. Leased MIS Equipment is further identified by applicable
lease and maintenance agreements (including date and vendor), remaining
term and amount of monthly or yearly payments. If any MIS Equipment is
leased by Seller, the lease shall be transferred to Aptus on or prior to
<PAGE>24
Closing without modification and with no increase in the lease payments
for the then existing term. Certain MIS Equipment is identified by
Buyer on Schedule 3.10.3.1 as MIS Equipment not required by Buyer past
the MIS and Telecommunications Transition Period identified in Section
5.11 and shall be retained by Seller, or if leased equipment, the lease
obligations shall be retained or assumed by Seller.
3.10.3.2 Software. Schedule 3.10.3.2 sets
forth a complete listing and description of all computer or
telecommunications software owned by Aptus or used by Aptus in the
Business (the "MIS Software") indicating for each item of MIS Software
whether it is proprietary to Aptus, proprietary to Seller, licensed by
Aptus or licensed by Seller. Licensed MIS Software is further
identified by applicable license and support agreements (including date
and vendor), whether fully paid and if not, remaining term and amount of
monthly or yearly payments. If any MIS Software is licensed by Seller,
the license shall be transferred to Aptus (or to Buyer and all of its
Subsidiaries) on or prior to Closing without modification and with no
increase in the license fee for the then existing term of the license
until the next renewal or change in license fees. Certain MIS Software
is identified by Buyer on Schedule 3.10.3.2 as MIS Software not required
by Buyer past the MIS and Telecommunications Transition Period
identified in Section 5.11 and shall be retained by Seller, or if
licensed software, the license obligations shall be retained or assumed
by Seller.
3.10.4 NEI Property. NEI does not own, lease or have
any interest in any personal property.
3.11 Condition of Assets. The personal property owned or
leased by Aptus, including the Transferred Assets, and the improvements
and structures located on the Real Property and the fixtures and
appurtenances thereto are in working order, reasonable wear and tear
excepted, are reasonably suitable for the uses for which they are
intended and conform to the requirements of applicable law in all
material respects. Except as specifically set forth in this Agreement,
Seller makes no express or implied warranty of merchantability or
fitness for a particular purpose, or any other warranty as to the
condition or operation of the assets.
3.12 Insurance.
3.12.1 NEI, Aptus and its businesses and properties
are insured as provided for in and by the policies and contracts of
insurance fully described in Schedule 3.12.2. Schedule 3.12.2 also sets
forth a three (3) year history of all claims made under such policies
and the status or disposition of such claims. Such policies and
contracts of insurance cover risks and are in such amounts as are
required by applicable laws, permits, regulations, certificates,
agreements and other instruments.
3.12.2 All such policies are in full force and
effect, all premiums with respect thereto have been paid to the extent
due and no notice of cancellation or termination has been received with
respect to any such policy (other than policies that have been replaced
or are intended to be replaced prior to expiration by policies providing
substantially the same coverage).
<PAGE>25
3.13 Contracts. As of the date hereof, Schedule 3.13 sets
forth a listing of all written material leases, contracts or commitments
of any kind, or, to Seller's knowledge, all unwritten material leases,
contracts or commitments of Aptus (the "Material Contracts"), including:
(i) Contracts pertaining to the borrowing of money,
including any letters of credit;
(ii) Contracts creating Liens;
(iii) Contracts creating Guarantees;
(iv) Contracts relating to material employment or
consulting services which are not cancellable within sixty (60) days or
are in excess of Fifty Thousand Dollars ($50,000.00);
(v) Contracts relating to capital expenditures in excess
of Fifty Thousand Dollars ($50,000.00);
(vi) Contracts limiting the freedom of Aptus to engage in
or compete with any business;
(vii) Contracts not yet fully performed for the purchase,
lease or sale of real property or any business or line of business or
for any merger or consolidation;
(viii) Joint venture or partnership agreements;
(ix) Contracts or orders for future purchase or delivery
of goods or rendition of services involving the payment by any party of
more than Fifty Thousand Dollars ($50,000.00) or having a term greater
than one year;
(x) Powers of Attorney;
(xi) Performance Bonds; and
(xii) Contracts which commit Aptus to a volume guarantee
or price level and are not terminable within six (6) months.
All Material Contracts are valid and binding and in full force
and effect, except as would not have a Material Adverse Effect. There
has been no breach of any Material Contract by Aptus, that would have a
Material Adverse Effect which has not been cured or waived. True and
correct copies of all Material Contracts and all material amendments
thereto have been delivered or made available to Buyer.
NEI is not a party to any lease, contract or commitment of any
kind.
3.14 Inventory.
3.14.1 Schedule 3.14 lists the amount of inventory
held by Aptus for incineration or disposal by other means. The list
indicates inventory levels at the end of each calendar month for the
past twelve (12) months and is categorized by type of waste. All
inventory conforms to its corresponding waste profile, except to the
extent that nonconformance would not have a Material Adverse Effect.
<PAGE>26
3.14.2 Inventory on the December 1994 Balance Sheet,
other than inventory held for incineration or other disposal as
described in 3.14.1 above, is of such a quantity that is historically
usable in the ordinary course of business, and it has not been consigned
to third parties.
3.15 Accounts Receivable. All of the accounts and notes
receivable of Aptus represent amounts receivable for merchandise
actually delivered or services actually provided (or, in the case of
non-trade accounts or notes represent amounts receivable in respect of
other bona-fide business transactions), have arisen in the ordinary
course of business, are not subject to any counterclaims or offsets and
have been billed and are generally due within 30 days after such
billing. All such receivables are fully collectible in the normal and
ordinary course of business, except to the extent of a reserve in an
amount not in excess of the reserve for doubtful accounts reflected on
the balance sheet of Aptus. Schedule 3.15 hereto sets forth (a) the
total amount of accounts receivable of Aptus outstanding as of the last
day of the month immediately preceding the present month and (b) the
agings of such receivables based on the following schedule: 0-30 days,
31-60 days, 61-90 days, and over 90 days, from the date of the invoice
therefor.
3.16 Litigation. Except as set forth on Schedule 3.16, there
is no Action by any Person by or before any Governmental Authority that
is pending or, to Seller's Knowledge, threatened in writing against NEI,
Aptus or Seller dealing with the conduct or operation of the Business
that involves an amount in excess of Fifty Thousand Dollars
($50,000.00). Except as set forth on Schedule 3.16, NEI, Aptus and
Seller are not subject to any Order dealing with the conduct or
operation of the Business.
3.17 Laws and Permits.
3.17.1 Compliance with Laws. Except as disclosed on
Schedule 3.17.1, Aptus is in compliance with all federal, state and
local laws, statutes, rules and regulations in effect as of the Closing
Date that are applicable to Aptus, except where such noncompliance would
not have a Material Adverse Effect.
3.17.2 Permits and Licenses. All Permits required by
any federal, state, local or foreign law, rule or regulation and
necessary for the operation of Aptus as of the Closing Date have been
obtained. Aptus is in compliance with all Permits in connection with
the operation of the Business as of the Closing Date, except where
noncompliance would not have a Material Adverse Effect. All Permits are
current, valid and in full force and effect and will not be terminated
by the consummation of the transactions contemplated by this Agreement.
A listing of all Permits is set forth on Schedule 3.17.2 and complete
and correct copies of each have been made available to the Buyer.
Except as set forth in Schedule 3.17.2, neither NEI or Aptus has
received from any Governmental Authority any claim or notice of any
violation or possible violation, of any building, zoning, fire, health,
employment, environmental or other laws, ordinances, rules or
regulations relating to its properties, premises, business or employees,
within the past five (5) years with respect to environmental matters or
within the past three (3) years with respect to other matters, nor has
<PAGE>27
either received any notice that any revocation or limitation of any
license, permit, certificate, approval or other authorization is
threatened or pending. Aptus has complied or, with respect to any such
claim or notice received within the prior 60 days, will resolve such
claims or notices disclosed in Schedule 3.17.2 and there are no
outstanding issues resulting from any environmental, health and safety
inspections conducted by federal, state or local regulatory bodies
except as listed on Schedule 3.17.2 which would have a Material Adverse
Effect.
3.18 Environmental Matters.
3.18.1 Except as set forth in Schedule 3.18.1,
neither NEI nor Aptus has received written notice from any third party
including, without limitation any Governmental Authority, (i) that any
Hazardous Substance which it has generated, transported or disposed of,
has been found at any site at which a Governmental Authority or other
Person has conducted, plans to conduct, or has demanded that NEI or
Aptus conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (ii) that it is or shall be a
named party to any claim, action, cause of action, complaint, legal or
administrative proceeding arising out of any Person's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection
with the presence or release of Hazardous Substances.
3.18.2 Except as set forth in Schedule 3.18.2: (i)
no portion of the real property or other assets of NEI or Aptus has been
used by NEI or Aptus for the handling, processing, storage or disposal
of Hazardous Substances except in compliance with applicable
Environmental Laws, Permits, and Real Property Leases, unless any such
non-compliance would not have, or not be reasonably expected to have, a
Material Adverse Effect; (ii) in the course of any activities conducted
by NEI or Aptus, no Hazardous Substances have been generated or are
being used on such properties except in compliance with applicable
Environmental Laws, Permits, and Real Property Leases unless any such
non-compliance would not have, and would not be reasonably expected to
have, a Material Adverse Effect; and (iii) to the best of Seller's
knowledge, (I) there have been no releases of Hazardous Substances on,
upon, from or into any real property owned or leased by NEI or Aptus
which would have, or would be reasonably expected to have, a Material
Adverse Effect; (II) no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; and
(III) no friable asbestos is located on such properties.
3.18.3 Schedule 3.18.3 hereto lists by category or
individual item all environmental inspections, investigations, studies,
audits, tests, data, reviews or other analysis conducted by or on behalf
of NEI or Aptus in the past five (5) years in relation to compliance
with Environmental Laws at any property or business now or previously
owned, operated or leased by NEI or Aptus which have been submitted to a
Governmental Authority or conducted by or on behalf of any Governmental
Authority and submitted by such Governmental Authority to NEI or Aptus,
true and correct copies of which have been provided or made available to
Buyer.
3.18.4 To the best of Seller's knowledge, neither NEI
nor Aptus has disposed of any Hazardous Waste or PCBs generated by Aptus
or its customers (or under applicable Environmental Laws deemed to have
<PAGE>28
been generated by Aptus or its customers) at any facility, except these
set forth on Schedule 3.18.4.
3.19 Patents, Trademarks and Similar Rights.
3.19.1 Intellectual Property. Schedule 3.19 sets forth
a true and complete list of all patents, patent applications, customized
software, trade names, registered trademarks, registered copyrights and
registered service marks and all applications therefor that are owned,
licensed or used by Aptus (the "Intellectual Property") on the date of
this Agreement. Except as set forth on Schedule 3.19, Aptus owns all
right, title and interest in and to all Intellectual Property necessary
to the conduct of its business as presently conducted, subject to no
Lien or restriction (including confidentiality agreements). To Seller's
knowledge, Aptus has not suffered any infringement or misappropriation
of any Intellectual Property. No Action is pending or, to Seller's
Knowledge, threatened asserting any such infringement or
misappropriation by Aptus.
3.19.2 Licenses; Infringement. Schedule 3.19 sets forth
a true and complete list, as of the date of this Agreement, of all
licenses for Intellectual Property between Aptus and any other entity.
All such licenses are valid and in full force and effect. Except as set
forth on Schedule 3.19, there is no pending or, to Seller's Knowledge,
threatened, Action against Aptus contesting, its rights to or the
validity of any Intellectual Property that it owns or licenses.
3.20 Employees.
3.20.1 Employees. Schedule 3.20.1 lists all of the
employees who perform the majority of their work for Aptus as of the
most recent date for which such information is available ("Employees")
and sets forth the position and job classification of each such Employee
as of that date, together with the following additional information:
employer (if other than Aptus), location employed, date of hire, accrued
vacation, and status (active, union/nonunion, on worker's compensation,
disability, lay-off or leave). Seller has separately provided to Buyer
information relating to the compensation of all Employees.
3.20.2 Unions. Except as set forth on Schedule 3.20.2,
there are no collective bargaining agreements or other union agreements
applicable to any Aptus location. Since January 1, 1994, there has not
been and there is not presently pending or existing any strike,
slowdown, picketing, work stoppage, labor arbitration or proceeding in
respect of the grievance of any employee or other labor dispute against
or affecting Aptus or threatened against Aptus. No application for
certification of a collective bargaining unit has been instituted or is
pending or, to the best knowledge of Seller, has been threatened.
Seller has not received any written notification or threat of any work
stoppage or other labor dispute. There is no lock-out of any employee
by Aptus nor is Seller contemplating or threatening a lock-out. Aptus
has complied and is in compliance with all laws relating to the
employment of labor, including, without limitation, any provisions
thereof relating to wages, hours and collective bargaining except where
failure to comply with such laws would not have a Material Adverse
Effect.
<PAGE>29
3.20.3 Employee and Consulting Contracts. Except as
listed and described in Schedule 3.20.3, the directors, officers,
employees and agents of Aptus are not covered by any written contract,
agreement, indenture, instrument or commitment providing for a specified
notice of termination or fixed term of employment. Schedule 3.20.3
hereto contains list of all written employment, service, agency,
consulting, termination and severance contracts and agreements currently
in effect entered into by Aptus with or for any or all of its directors,
officers, employees, agents, consultants or independent contractors.
3.20.4 NLRB. Except as set forth in Schedule 3.20.4, to
Seller's Knowledge, no Aptus location is engaged in, nor has it received
any written notice of any unfair labor practice, and no such complaints
are pending before the National Labor Relations Board or any other
Governmental Authority.
3.21 Employee Benefits.
3.21.1 Plans. Schedule 3.21.1 lists, as of the date of
this Agreement, each written pension, retirement, profit-sharing,
deferred compensation, bonus, incentive, performance, stock option,
stock appreciation, phantom stock, stock purchase, restricted stock,
medical, hospitalization, vision, dental or other health, life,
disability, severance, termination or other employee benefit plan,
program, arrangement, agreement or policy (including each ERISA Plan)
(collectively, "Plans") which currently covers any Employee and to which
Aptus or Seller on behalf of Aptus currently contributes (each, an
"Employee Benefit Plan"). Except as set forth in Schedule 3.21.1, on
the date of this Agreement each Employee Benefit Plan complies in all
material respects, and has been operated and administered in all
material respects, in accordance with all applicable requirements of all
Laws, including ERISA and the Code, and no "reportable event",
"prohibited transaction" (as such terms are defined in ERISA and the
Code, as applicable) or termination has occurred with respect to any
Employee Benefit Plan. Each ERISA Plan intended to qualify under
Section 401(a) of the Code has received a ruling or determination letter
or will file for such determination letter within the applicable period,
concluding that such ERISA Plan so qualifies, and to Seller's Knowledge,
no event has occurred, amendment been adopted or action been taken that
would cause such ERISA Plan to lose its qualified status.
3.21.2 Records. Seller has delivered or made available
to Buyer, on or before the date of this Agreement, copies of each
Employee Benefit Plan and any amendments thereto and any related trust
agreement, and, if applicable (a) the most recent actuarial valuation
report, (b) the last filed Form 5500 or 5500-C, (c) the summary plan
description currently in effect for each Employee Benefit Plan and all
material modifications thereto, (d) the last financial statements for
each Employee Benefit Plan and its related trust, if any, (e) the most
recent determination letter issued with respect to each Employee Benefit
Plan, and (f) a sample form of loan document under the Savings Program.
3.21.3 Actions. Except as set forth on Schedule 3.21.3,
on the date of this Agreement, there are no Actions pending (other than
routine claims for benefits) or, to Seller's Knowledge, threatened, with
respect to any Employee Benefit Plan.
<PAGE>30
3.21.4 Funding. All contributions required under
applicable Law or the terms of any Plan to be made by Seller on behalf
of Aptus or Aptus to an Employee Benefit Plan have been made within the
time prescribed by the applicable Law or Plan. There does not exist, on
the date of this Agreement, any accumulated funding deficiency as to any
ERISA Plan, nor has any waiver of the minimum funding standards been
issued with respect to any ERISA Plan. On the date of this Agreement
the fair market value of the assets of the Pension Plan does not equal
or exceed the actuarial present value of all accrued benefits under such
ERISA Plan, including early retirement subsidies, plant closing benefits
and all other amounts considered to be benefit liabilities upon a
standard termination of a defined benefit plan subject to Title IV of
ERISA, with the said actuarial present value being determined by
application of the actuarial methods and assumptions applied by such
ERISA Plan's enrolled actuary at the most recent annual valuation of
such ERISA Plan.
3.21.5 Multiemployer Plans. On the date of this
Agreement:
(a) Schedule 3.21.5 sets forth the ERISA Plans which
are "multiple employer" plan within the meaning of Section 4063 or 4064
of ERISA;
(b) no ERISA Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA or other applicable employee
benefit legislation;
(c) Aptus has no primary or secondary liability under the
provisions of Section 4204 of ERISA or any agreement entered into in
accordance with the provisions of that Section; and
(d) neither Seller nor Aptus has (i) engaged in any
transaction that could result in the imposition of any material
liability pursuant to Section 4069 or 4212 of ERISA or (ii) incurred any
material liability under or pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans, and no event or condition exists with respect to Seller
or Aptus that may result in the imposition of any material liability
with respect to Buyer, Seller or Aptus or pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to
Employee Benefit Plans.
3.21.6 Acceleration of Benefits. Except as set forth on
Schedule 3.21.6, on the date of this Agreement, the consummation of the
transactions contemplated by this Agreement will not result in any
increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits payable to or in respect of
any Employee or former Employee or the beneficiary or dependent of any
Employee or former Employee.
3.22 Taxes.
3.22.1 Returns. All Covered Returns relating to NEI or
Aptus that were required to be filed on or before the Closing have or
will be timely filed. All Covered Taxes shown on such Covered Returns
that are payable on or before the Closing Date by NEI or Aptus or are
chargeable as a Lien upon any of their assets have been paid to the
<PAGE>31
extent due and payable on or before the Closing Date. All Covered Taxes
required to be withheld by or on behalf of NEI or Aptus have been
withheld, and such withheld Covered Taxes have been duly and timely paid
to the proper Governmental Authorities or are being properly held by NEI
or Aptus for such payment.
3.22.2 Extensions. Except as set forth on Schedule
3.22.2, no Contract extending the period of assessment or collection of
any Covered Taxes for which NEI or Aptus would be held liable has been
executed or filed, on or before the date of this Agreement, with the
Internal Revenue Service or any other Governmental Authority.
3.22.3 Affiliated Groups. Except as set forth on
Schedule 3.22.3, neither NEI nor Aptus is (a) a member of any combined,
consolidated, affiliated or unitary tax group (an "Affiliated Group")
for purposes of filing Covered Returns or paying Covered Taxes or (b) a
party to or bound by any tax sharing or similar Contract with respect to
Covered Taxes.
3.22.4 Audits. Except as set forth on Schedule 3.22.4,
to Seller's Knowledge, (a) no unresolved issue has been raised in
writing by any Governmental Authority in the course of any audit with
respect to Covered Taxes for which NEI or Aptus would be held liable and
(b) no taxing authority is now asserting or threatening to assert
against NEI or Aptus any deficiency or claim for additional Covered
Taxes or any adjustment of Covered Taxes. To Seller's Knowledge, there
is no reasonable basis for any such assertion.
3.23 Brokers. Except as set forth on Schedule 3.23, as to
which Seller agrees to indemnify Buyer, no Person is or will become
entitled to receive any brokerage or finder's fee, advisory fee or other
similar payment for the transactions contemplated by this Agreement
because it was engaged by or acted on behalf of Seller.
3.24 No Subsidiaries or Investments. Aptus has no Subsidiary
nor any investment or participation in any other Person. NEI has no
Subsidiary other than Aptus nor any investment or participation in any
other Person.
3.25 Sufficiency of Assets. The assets of Aptus, including
the Transferred Assets, together with the rights and interests of Aptus
under the Material Contracts and the Material Leases, constitute all of
the assets, rights and/or interests which are used in, and are
sufficient for, the operation of the Business as it is currently being
conducted in all material respects.
3.26 Bank Accounts. Schedule 3.26 hereto sets forth the name
of each bank in which Aptus has an account or safe deposit box, the
identifying numbers or symbols thereof and the names of all persons
authorized to draw thereon or to have access thereto. NEI has no bank
accounts.
3.27 Certain Relationships. Seller has provided to Buyer
access to the conflicts of interest forms required to be completed by
all Employees. Except as disclosed on Schedule 3.27, neither Seller nor
any Affiliate is a party to any agreement with Aptus that will extend
past Closing.
<PAGE>32
3.28 Full Disclosure.
Section 3.28.1 To Seller's Knowledge, this Agreement,
including the representations and warranties and schedules, does not
contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements herein not misleading in
light of the circumstances under which they were made.
Section 3.28.2 There is no fact known to the persons
listed on Schedule 13 and not disclosed to Buyer which has a Material
Adverse Effect or could reasonably be expected to have a Material
Adverse Effect.
3.29 Sophisticated Seller. Seller is an "accredited
investor" as that term is used in Section 4.5 hereto and has sufficient
knowledge and experience in financial and business matters so as to
enable it to evaluate the risks and merits inherent in the Securities
which comprise the Purchase Price. Seller acknowledges receipt and
review of copies of Buyer's most recent Annual Report to Shareholders,
Proxy Statement, Form 10-K and other filings with the Securities
Exchange Commission and has had access to such information concerning
Buyer as it has felt necessary or appropriate for its evaluation.
3.30 Schedule References. Any item disclosed in one Section
or Schedule shall be deemed to be disclosed in any other Section or
Schedule where such disclosure is relevant, even if there is no express
cross-reference, provided that the relevance of the disclosure is
reasonably apparent. Disclosure of items that may or may not be
required to be disclosed by this Agreement does not mean that such items
are material or create a standard of materiality.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to
Seller:
4.1 Organization; Power and Authority. Buyer is a
corporation duly organized, validly existing and in good standing under
the laws of Delaware. Buyer has all corporate power needed to execute,
deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
4.2 Authorization, Execution and Validity. The execution,
delivery and performance by Buyer of this Agreement and the consummation
by Buyer of the purchase of the Shares have been duly authorized by all
necessary corporate action. This Agreement has been duly and validly
executed and delivered by Buyer, constitutes its valid and binding
obligation and is enforceable against Buyer in accordance with its
terms.
4.3 No Conflict; Buyer Consents. The execution, delivery and
performance by Buyer of this Agreement will not (a) violate any Law, (b)
violate any Charter Document of Buyer, (c) require any Consent from any
Governmental Authority, or (d) breach any material Contract to which
Buyer is a party or by which it is bound.
<PAGE>33
4.4 Brokers. No Person is or will become entitled to receive
any brokerage or finder's fee, advisory fee or other similar payment for
the transactions contemplated by this Agreement because it was engaged
by or acted on behalf of Buyer.
4.5 Purchase for Investment. Buyer is acquiring the Shares
for its own account for investment and not with a view to their sale or
distribution. Buyer understands that the Shares have not been
registered under the Securities Act of 1933, as amended, or under
relevant state securities laws (the "Acts"). Buyer further understands
that the Shares cannot be sold except pursuant to an effective
registration statement, an exemption from such registration requirements
and in compliance with the Acts. Buyer is an accredited investor or
institutional investor under the Acts, and Buyer has sufficient
knowledge and experience in financial and business matters so as to
enable it to evaluate the risks and merits of purchasing the Shares and
is capable of bearing the economic risks of such investment. Buyer
has had access to such information concerning NEI and Aptus as Buyer has
felt necessary or appropriate for its evaluation.
ARTICLE 5
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
5.1 Cooperation by Seller. Subject to its rights under
Article 10, prior to the Closing, Seller will use all reasonable efforts
to take all actions and to do all things necessary or advisable to
consummate the transactions contemplated by this Agreement and to
cooperate with Buyer in connection with the foregoing, including using
reasonable efforts to obtain any Consents contemplated by Section 3.8.
However, Seller shall have no obligation to change any Permit or make
any payment to obtain any Consent.
5.2 Pre-Closing Access to Information. From the date hereof
through the Closing Date, Seller shall, subject to applicable
contractual obligations, afford to Buyer, its accountants and its
counsel reasonable access, upon reasonable notice, to all of the
relevant properties, books and records of NEI and Aptus that Buyer needs
to complete its due diligence. Buyer's representatives shall be
permitted to make and remove photocopies of any documents. Seller shall
cause the representatives of NEI and Aptus to give to the Buyer the
fullest cooperation with the object of providing access to the assets
and to all information as the Buyer may deem necessary. The above
described access shall not extend to books and records or self-
evaluative audits subject to attorney-client privilege. In addition to
the foregoing, upon prior written notice to Seller, and in the company
of Aptus's representative, if Seller so requests, the Buyer shall have
access to the customers of Aptus. Buyer shall direct all requests for
information to:
David A. Brakoniecki, Esquire
Westinghouse Electric Corporation
Room 1750
11 Stanwix Street
Pittsburgh, Pennsylvania 15222-1384
<PAGE>34
5.3 Conduct of Business.
5.3.1 Business in Ordinary Course. From the date hereof
through the Closing Date, Seller shall use all reasonable efforts to
cause Aptus to: (a) preserve its relationships with suppliers,
customers, Employees, creditors and Governmental Authorities, (b)
maintain their existing insurance coverage in all material respects, (c)
perform their obligations under the Material Contracts and Material
Permits in all material respects, (d) comply with all applicable Laws in
all material respects and (e) conduct its business in the ordinary
course and consistent with past practice. Except as contemplated by
Section 5.14 hereto (Intercompany Accounts) or unless otherwise required
by this Agreement, without the consent of Buyer, Seller will not permit
Aptus to:
(i) amend its Charter Documents in any material respect;
(ii) issue, sell or transfer any equity securities;
(iii) incur any debt for borrowed money, or guaranty any
debt;
(iv) sell, assign, transfer or permit the creation of any
Lien (other than Permitted Liens) on any of its (x) assets, or (y) real
property, provided that the sale of assets entered into in the ordinary
course of business and involving the payment by any party of less than
Fifty Thousand Dollars ($50,000.00) shall be permitted;
(v) enter into (x) any Material Contract outside the
ordinary course of business or (y) any customer contract which commits
Aptus to a volume guarantee or price level and is not terminable within
six (6) months, provided that (z) contracts or orders for future
purchase or delivery of goods or rendition of services entered into in
the ordinary course of business and involving the payment by any party
of less than Fifty Thousand Dollars ($50,000.00) shall be permitted;
(vi) amend or terminate any Material Contract or Material
Permit outside the ordinary course of business;
(vii) waive any right, forgive any debt (other than
intercompany debt) or release any claim, except in the ordinary course
of business, if such waiver, forgiveness or release would have a
Material Adverse Effect;
(viii) change its current practices with respect to
the payment of accounts payable at forty-five (45) days (or as otherwise
agreed to with the vendor); or
(ix) agree to take any of the actions described in
Sections 5.3(i) through 5.3(viii).
5.3.2 Buyer's Consent. If Seller gives written notice
to Buyer that Aptus proposes to take any action for which Buyer's
consent is required under Section 5.3.1 and if Buyer has not delivered
within five (5) business days of Seller's notice Buyer's written
objection to the proposed action, Buyer shall be deemed to have
consented to the action described in Seller's notice. Buyer shall not
unreasonably withhold its consent under Section 5.3.1 to any action
taken or to be taken by Aptus.
<PAGE>35
5.3.3 Representations and Warranties. Seller shall use
reasonable efforts, and shall cause Aptus to use reasonable efforts, to
conduct its business in such a manner that at the Closing the
representations and warranties of Seller contained in this Agreement
shall be true and correct as though such representations and warranties
were made on, as of, and with reference to such date. Seller will
promptly notify the Buyer in writing of (i) any event or fact which
causes a breach of any of its representations, warranties, covenants or
agreements, or (ii) the occurrence of any condition or development
(exclusive of general economic factors affecting business in general) of
a nature that is or may be reasonably expected to have a Material
Adverse Effect.
5.4 Further Assurances.
5.4.1 Additional Documents. Subject to the other terms
and conditions of this Agreement, at any time and from time to time,
whether before or after the Closing, Seller shall execute and deliver
all instruments and documents and take all other action that Buyer may
reasonably request to consummate or to evidence the consummation of the
transactions contemplated by this Agreement.
5.4.2 Certain Consents. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any interest in any Contract, Lease,
Agreement or other instrument or arrangement or any claim, right or
benefit, or an agreement to assume any liability, obligation or
commitment arising thereunder or resulting therefrom, if an assignment
or transfer or an attempt to make such an assignment or transfer without
the Consent of a third party would constitute a breach or violation
thereof or a breach of Law, or affect adversely the rights of the Buyer
or the Seller, or Aptus thereunder; and any transfer or assignment to,
or any assumption by, Buyer of any interest in, or liability, obligation
or commitment under, any such Contract, Lease, Agreement or other
instrument or arrangement that requires the Consent of a third party
shall be made subject to such Consent being obtained. Prior to the
Closing, each party will use all reasonable efforts and cooperate in
obtaining all Consents necessary to effect the transfer of all such
Contracts, Leases, Agreements and other instruments and arrangements as
contemplated hereby, provided that, neither party shall be required to
pay or commit to pay any amount to (or incur any obligation in favor of)
any Person from whom any such Consent may be required (other than
nominal governmental filing fees payable to any governmental authority
or any fees which may be imposed under Section 3.10.3). In the event
any such Consent is not obtained on or prior to the Closing Date, the
parties will cooperate in any lawful and reasonable arrangement to
provide that the Buyer shall receive the benefits under any Contract,
Lease, Agreement or other instrument or arrangement not assigned and
transferred at the Closing by reason of the failure to obtain such
Consent (a "Non-Transferred Instrument"), including, if necessary, at
the request and expense of Buyer, enforcing performance by any third
party of its obligations in respect of such Non-Transferred Instrument;
provided that Seller shall bear the expense of such enforcement to the
extent it relates to Seller's failure to obtain such consent prior to
Closing; and provided that, to the extent the parties are successful in
providing the benefits of such Non-Transferred Instruments to the Buyer,
<PAGE>36
the Buyer will pay, honor and discharge when due all liabilities,
obligations and commitments of the Seller or Aptus related thereto to
the extent due to the operations of Aptus conducted after the Closing
Date. Seller shall use reasonable efforts to obtain any consents
necessary with respect to the transfer of Permits. Primary
responsibility shall rest with Seller and Buyer agrees to fully
cooperate.
5.5 Supplements to Schedules. If prior to Closing, to
Seller's Knowledge, any event occurs or condition changes that causes
any of its representations or warranties in this Agreement to be
inaccurate as of any date that is relevant for the particular
representation or warranty, Seller shall notify Buyer in writing. With
Buyer's consent, Seller may supplement the Schedules to account for such
event or change. Buyer need not consent if the change discloses an item
that is material or is in violation of Seller's covenants under this
Agreement. The supplemental Schedules will cure and correct any breach
of any representation or warranty that otherwise would have existed.
5.6 Certain Financial Covenants. At Closing, Seller shall
have (i) satisfied all long-term liabilities required to be disclosed as
such on the balance sheet of NEI or Aptus (other than capitalized
leases); (ii) contributed sufficient cash to Aptus such that at Closing,
Aptus shall have a cash account of not less than One Million Dollars
($1,000,000) (the "Working Capital Advance"); and (iii) canceled any
indebtedness or amounts owing from NEI or Aptus to Seller or any
Affiliate of Seller by classifying such indebtedness as additional
capital provided by parent company and reflected as such in
shareholder's equity (if not already so classified). The Working
Capital Advance is (a) not to be used by Seller or Aptus prior to
Closing to satisfy any liabilities or obligations of Aptus and must be
available in full to Buyer immediately after Closing; (b) not to be
included as part of the assets of Aptus for purposes of calculating the
Final Adjusted Net Worth; and (c) to be treated as an interest free
advance by Seller to Buyer. Aptus or Buyer shall repay this advance in
accordance with Section 6.7.
5.7 Exclusive Dealing. Seller agrees not to enter into or
continue any discussions or negotiations relating to the sale of Aptus
or the Business prior to March 31, 1995 or, in the event this Agreement
is extended, prior to the date this Agreement terminates.
5.8 Closure and Post Closure Costs and Financial Assurances.
5.8.1 Closing Date Closure and Post-Closure Costs
Defined. Closure and post-closure costs with respect to the three
primary facilities of Aptus (Aragonite, Utah; Coffeyville, Kansas; and
Lakeville, Minnesota) pursuant to 40 C.F.R. Section 265.110 et seq and
as implemented by applicable state and federal regulatory agencies as of
the date of Closing, shall be referred to herein as "Closing Date
Closure and Post-Closure Costs."
5.8.2 Financial Assurances Defined. Statutorily imposed
financial assurances provided to various state and federal regulatory
agencies with respect to Closing Date Closure and Post-Closure Costs,
pursuant to 40 C.F.R., Section 265.140 et seq, shall be referred to
herein as "Financial Assurances."
<PAGE>37
5.8.3 Increases in Costs or Required Assurances. For
purposes of this Section 5.8, the amount of Closing Date Closure and
Post-Closure Costs and Financial Assurances shall be fixed at the date
of Closing. Any increases in Closing Date Closure and Post-Closure
Costs or Financial Assurances, whether brought about by inflation
factors, facility changes or additions, or changes in applicable law,
shall be the responsibility of Buyer and Aptus.
5.8.4 Insurance Premium Payments. At Closing, Seller
shall pay to an insurance company designated by Buyer a premium payment
on behalf of Buyer in the amount of One Million, Five Hundred Thousand
Dollars ($1,500,000.00). Buyer agrees make a similar premium payment in
the amount of One Million, Seven Hundred and Fifty Thousand Dollars
($1,750,000.00). The total amount of Three Million, Two Hundred and
Fifty Thousand Dollars ($3,250,000.00) shall be applied to Buyer's
insurance program for the purpose of satisfying a portion of the
Financial Assurances.
5.8.5 Letters of Credit.
5.8.5.1 For the period beginning on the date of
Closing and ending on the third anniversary thereof, Seller shall
procure and/or maintain in effect letters of credit in an amount equal
to the Financial Assurances less the Three Million, Two Hundred and
Fifty Thousand Dollars ($3,250,000.00) provided for in Section 5.8.4
above, provided that Seller's obligation with respect to such letters of
credit shall not exceed an aggregate of Twenty-five Million Dollars
($25,000,000.00). Buyer shall reimburse Seller for the amount charged
to Seller by its lender or lenders for providing the letters of credit.
For letters of credit in effect prior to the date of Closing, this
reimbursement shall be limited to a reimbursement for the prorated cost
relative to the period the letters of credit are in effect after the
date of Closing. Payment shall be made in cash, without deduction or
offset, within ten (10) business days of Buyer's receipt of proof of
payment by Seller. The letters of credit shall be provided by Seller
without recourse, except as provided below. In the event that all or a
portion of the letters of credit are collected upon for any reason,
Seller shall have no right of indemnity or other claim against Buyer
arising therefrom; provided that Buyer agrees to indemnify and hold
harmless Seller from and against Damages relative to its providing the
letters of credit to the extent arising from (a) any Increases in Costs
or Required Assurances set forth in Section 5.8.3; (b) any failure of
Buyer to replace the letters of credit with alternative financial
assurances at the end of the three (3) year period specified herein; (c)
any voluntary facility closure initiated by Buyer; or (d) any violation
of a permit by Buyer or its Subsidiaries, or any negligent acts or
omissions of Buyer or its Subsidiaries, that result in the closure of a
facility.
5.8.5.2 For the period beginning on the third
anniversary of the date of Closing and ending on the fifth anniversary
of the date of Closing, responsibility for satisfying the Financial
Assurances and obtaining letters of credit shall rest with Buyer.
Seller shall reimburse Buyer for the amount charged to Buyer by its
lender or lenders for providing letters of credit in an amount equal to
the Financial Assurances less the Three Million, Two Hundred and Fifty
Thousand Dollars ($3,250,000.00) provided for in Section 5.8.4 above,
provided that Seller's obligation with respect to such reimbursement
shall be limited to letters of credit in the aggregate amount of Twenty
Five Million Dollars ($25,000,000.00). Payment shall be made in cash,
without deduction or offset, within ten (10) business days of Seller's
receipt of proof of payment by Buyer. Should Buyer choose to satisfy
its obligation to provide Financial Assurances by some alternative
method, it may, upon presenting proof that the alternative method is
acceptable to the applicable federal and state regulatory agencies,
require that Seller reimburse it for the amount that its lender or
lenders would have charged for the letters of credit.
5.8.5.3 This Section 5.8 contemplates that a
portion of the letters of credit already being provided by Seller
immediately prior to the date of Closing in order to satisfy the
Financial Assurances will be replaced by an insurance certificate issued
by the insurance company of Buyer designated in Section 5.8.4. The
parties recognize that there may be some delay in accomplishing this
replacement. Accordingly, and notwithstanding Section 5.8.5.1, for a
period of time equal to the lesser of thirty (30) days or the date on
which said insurance certificate is issued, Seller agrees to maintain in
effect all letters of credit already being provided by Seller
immediately prior to the date of Closing to satisfy the Financial
Assurances. Buyer shall be obligated to reimburse Seller for the cost
of the letters of credit in accordance with Section 5.8.5.1.
5.8.5.4 The letters of credit provided by Seller
in 5.8.5.1 above shall be issued by a lender chosen by Seller, shall
designate Aptus as the applicant and shall designate the relevant
governmental authorities as the beneficiaries. Notwithstanding the
designation of Aptus as the applicant, Seller's lender shall issue the
letters of credit based solely on the credit of Seller and shall have no
recourse against Aptus.
5.9 Right to Seller Business Post Closing. For a period of
five (5) years from the Closing Date, Seller shall include Buyer on its
approved list of vendors that provide off-site Hazardous Waste
incineration disposal services. Buyer will remain on the Approved
Vendor list during this time to the extent Buyer's facilities maintain
their permitted status and are not barred by any governmental agency
from accepting waste in accordance with U.S. EPA's CERCLA off-site rule
found at 40 CFR 300.440 et seq. or under imminent threat of being so
barred by any governmental agency. Seller will send a notice to its
operating divisions and facilities informing them of Buyer's inclusion
on such Approved Vendor list. In addition, Buyer will be afforded the
opportunity to bid on any project work originating with the Seller's
corporate Environmental Affairs group during this five (5) year period,
that requires Hazardous Waste incineration services. For purposes of
this Section, Buyer shall include any Subsidiary of Buyer.
5.10 Right to Seller Intellectual Property Post Closing. For
five (5) years after Closing, Seller, to the extent legally and
contractually possible, shall provide technology directly relating to
the incineration of Hazardous Waste to Buyer for Buyer's review. If
Buyer desires, Seller will grant Buyer a nonexclusive, nonassignable,
nontransferable, royalty-free license in perpetuity to use the
technology for the incineration of Hazardous Waste and for no other
purpose. Seller will not be liable to Buyer for the accuracy or
commercial usefulness of the technology. Seller will offer to Buyer
access to its technical personnel, if available, for a period not to
exceed forty (40) man hours per year. Buyer, to the exclusion of
Seller, is liable for all damages from the use of the technology by
<PAGE>39
Buyer. These terms and conditions will be set forth in a license
agreement between Seller and Buyer. For purposes of this Section, Buyer
shall include any Subsidiary of Buyer. None of the technologies listed
in Section 7.4.1 (j) (i) shall be considered to be incineration
technology.
5.11 MIS and Telecommunications Services Post Closing.
5.11.1 Seller provides to Aptus: (i) certain MIS
services, including payroll, accounts receivable and collections,
general ledger and fixed assets applications (the "Seller MIS
Services"); and (ii) certain telecommunications services, including long
distance, 800 service and voice communications (the "Seller
Telecommunications Services"). Seller agrees to continue to provide the
Seller MIS Services and the Seller Telecommunications Services to Aptus
after Closing (collectively, the "Post Closing Services") in
substantially the same manner as provided prior to Closing, and agrees
to cooperate with Buyer in transferring such services to applications to
be provided by Buyer.
5.11.2 Seller's obligations under this Section shall
continue until the transition to Buyer's applications is completed, but
not longer than six (6) months after Closing unless extended by mutual
agreement (the "MIS and Telecommunications Transition Period"). Seller
and Buyer agree to use reasonable efforts to effect the transfer of the
Post Closing Services to applications to be provided by Buyer as
promptly as practicable.
5.11.3 During the MIS and Telecommunications Transition
Period, Seller shall provide the Seller MIS Services pursuant to the
terms of the agreement attached as Exhibit 5.11.3 (1) hereto. During
the MIS and Telecommunications Transition Period, Seller shall provide
personnel to assist Buyer in transferring the Post Closing Services at
no cost to Buyer or Aptus. During the MIS and Telecommunications
Transition Period, Seller shall provide the Seller Telecommunications
Services to Aptus pursuant to the terms of the agreement attached as
Exhibit 5.11.3 (2) hereto. Buyer shall be entitled to cancel either
agreement on thirty (30) days advance written notice with no further
liability or obligation, except for charges which may have accrued up to
the date of termination.
5.11.4 Seller's obligation under Section 3.10.3.2 to
transfer to Buyer or Aptus software presently licensed to Seller shall
not require that Seller obtain the written consent to a software license
transfer if the software is what is commonly understood in the industry
to be "shrink wrap" software, provided that the "shrink wrap" software
license is not part of a master license with Seller that prohibits a
transfer to a third party without consent or payment of a fee. For a
period of three (3) years after Closing, Seller will indemnify Buyer
against any Actions for license fees or infringement made by the
licensors of such "shrink wrap" software arising out of the transfer of
the software to Buyer or Aptus hereunder.
5.12 Intercompany Accounts. Between execution hereof and
Closing, intercompany accounts shall be handled substantially in the
manner prior to Closing. At the Closing Date, intercompany receivables,
payables and loans then existing between Seller, NEI or Aptus shall be
terminated in accordance with Section 5.6.
<PAGE>40
5.13 Preparation of Financial Statements. The Financial
Statements referred to in Section 3.5 shall include such detail as is
required by Form 8-K of the Securities Act of 1934 and be prepared at
Seller's expense, except that Buyer agrees to pay one-half of the fees
of Seller's outside auditors up to a maximum of Thirty Thousand and
00/100 Dollars ($30,000.00). Buyer shall, at its expense, prepare any
pro forma financial statements required in connection with its Form 8-K
filing. To the extent additional audited or unaudited financial
information relating to the operations of NEI or Aptus prior to the
Closing is necessary or desirable in connection with the remarketing of
the Bonds or the registration rights set forth in the Senior Unsecured
Debentures or Subordinated Convertible Debentures, the preparation of
such financial information shall be at Seller's cost.
5.14 [Intentionally Left Blank]
5.15 Leased Real Property. On or prior to Closing, Seller
shall assume all obligations under certain Real Property Leases that
have been identified by notation on Schedule 3.9.2 as Leases that Buyer
does not require.
5.16 Certain Environmental Clean-ups.
5.16.1 Prior to Closing, or as soon thereafter as is
reasonably practicable, Seller shall clean up and properly dispose of
the construction debris presently stockpiled on the southeast corner of
the Coffeyville Facility.
ARTICLE 6
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
6.1 Cooperation by Buyer. Subject to its rights under
Article 10, prior to the Closing, Buyer will use all reasonable efforts
to take all actions and to do all things necessary or advisable to
consummate the transactions contemplated by this Agreement and to
cooperate with Seller in connection with the foregoing, including using
reasonable efforts to obtain any Consents contemplated by Section 4.3.
6.2 Due Diligence Activities. Each party shall comply with
the limitations on the disclosure and use of information set forth in
the Confidentiality Agreement with respect to information that the other
party provides in and pursuant to this Agreement. Buyer shall
coordinate its contacts with Employees with officers of Seller and shall
not conduct any soil, groundwater or other environmental sampling in
connection with the transactions contemplated hereby without the prior
written consent of Seller. Buyer shall refrain from imposing any undue
burden upon Aptus and from interfering with its operations while
conducting due diligence activities and preparing for the Closing.
Buyer has concluded its due diligence investigation of the Business.
6.3 Further Assurances. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether
before or after the Closing, Buyer shall execute and deliver all
instruments and documents and take all other action that Seller may
<PAGE>41
reasonably request to consummate or to evidence the consummation of the
transactions contemplated by this Agreement.
6.4 HSR Act Compliance. Buyer shall file any notification
required to be filed under the HSR Act to consummate the transactions
contemplated hereby. Buyer shall use all reasonable efforts to comply
as promptly as practicable with any request made pursuant to the HSR Act
for additional information. Buyer shall cooperate with Seller in such
compliance and shall pay the statutory filing fees required by the HSR
Act.
6.5 Release from Guarantees. Seller has not guaranteed any
obligations of Aptus, except for the Guarantees listed on Schedule 6.5.
Seller shall maintain the Guarantees in effect until the Closing Date,
but shall be entitled to terminate the Guarantees effective after the
Closing Date with respect to operations of Aptus conducted after the
Closing Date. After the Closing Date, Buyer shall indemnify and hold
Seller harmless from and against all Damage attributable to any claims
made under such Guarantees, but only to the extent that they relate to
operations of Aptus conducted after the Closing Date.
6.6 Due Diligence - Post-Signing. Buyer agrees that during
the period from the signing of this Agreement through Closing, Seller
shall have reasonable access to senior management of Buyer, the books
and records of the Buyer, subject to any attorney-client privilege so as
to permit continued due diligence by Seller of Buyer.
6.7 Repayment of Working Capital Advance. The Working
Capital Advance identified in Section 5.6 shall be repaid by Aptus or
Buyer, without deduction or offset, in accordance with the following
repayment schedule:
Number of Days Amount of
After Closing Payment
60 $200,000.00
90 $200,000.00
120 $200,000.00
150 $200,000.00
180 $200,000.00
ARTICLE 7
MUTUAL COVENANTS
7.1 Employee Matters.
7.1.1 Employment.
7.1.1.1 From the Employees designated on Schedule
3.20.1, Buyer shall provide a list to Seller placing the Employees into
three (3) categories: (a) Employees that Buyer shall offer employment to
at Closing (the "Continuing Employees"); (b) Employees that do not fall
into category (c) below and that Buyer shall not offer employment to at
Closing (the "Terminating Employees"); and (c) Employees that Buyer
shall not offer employment to at Closing but whose services Buyer
desires to retain on a contract basis for a limited transition period
(the "Transition Employees"). The parties acknowledge that each
<PAGE>42
category may be comprised of both exempt and non-exempt Employees.
Buyer shall provide this list to Seller as soon as practicable, but in
any event no later than ten (10) days prior to the Closing Date. Seller
shall have provided Buyer access to the Employees and their personnel
files in order to assist Buyer in this process, subject to the terms of
the December 12, 1994 Letter Agreement between Buyer and Seller.
7.1.1.2 Buyer agrees that the sum of the number of
Terminating Employees and Transition Employees shall not exceed One
Hundred (100). Buyer agrees that the number of Transition Employees
shall not exceed Twenty (20). To the extent that Employees are hired or
replaced by Seller or Aptus prior to Closing, Buyer agrees to include
such Employees on one of the lists referred to in Section 7.1.1.1 above;
provided that if the number of Employees on Schedule 3.20.1 increases,
Buyer reserves the right to a corresponding increase in the number of
Terminating Employees or Transition Employees, provided that no
adjustment shall be allowed to Buyer with respect to the hiring by Aptus
of one personnel manager at its Coffeyville facility.
7.1.1.3 Buyer shall offer employment to the
Continuing Employees with (a) wages or salaries equal to such wages and
salaries as such Employees are now paid by Aptus or Seller, and (b)
benefits, including a defined benefit pension plan, as set forth on
Schedule 7.1.1.3. With respect to Transition Employees, Seller agrees
to continue the employment of or hire such Employees as employees of
Seller upon the same terms and conditions as their present employment,
except that such Employees shall be leased to Aptus as contract
employees of Aptus for a period of time determined by Buyer but not to
exceed one hundred and twenty (120) days after the date of Closing (the
"Transition Period"). Buyer shall provide to Seller thirty (30) days
notice prior to terminating the contract with Seller for any Transition
Employee. Seller makes no guarantee that any Transition Employee will
choose to continue as an employee of Seller under this Section 7.1.1.3
and Seller shall have no obligation to replace any Transition Employee
that leaves Seller's employment. Employees whose services may be
separately provided post Closing pursuant to the MIS Services Agreement
will be included in the number of Terminating Employees, but will not be
deemed Transition Employees. Seller's wage and benefits costs for such
employees will be reimbursed pursuant to the MIS Services Agreement.
Seller shall be required to maintain sufficient agreed upon staffing
levels under the MIS Services Agreement whether or not employees
terminate their employment with Seller. Buyer shall indemnify Seller
against its out-of-pocket costs for wages and benefits for Transition
Employees to the extent applicable to the Transition Period. Buyer
reserves the right to offer employment to any Transition Employee in the
manner and upon the same terms, conditions, wages and benefits
prescribed herein for Continuing Employees.
7.1.1.4 Any liability to an Employee that is not
designated as a Continuing Employee for severance pay or other
separation benefits that arises out of such Employee's termination and
any liability that arises out of any breach by Seller of any of the
provisions of the Benefits Sections, shall be a Retained Liability.
Buyer agrees to assume responsibility for and retain any liability
associated with these reductions in employment levels to the extent that
they trigger compliance with the federal Worker Adjustment and
Retraining Notification Act. With respect to any claims, proceedings or
lawsuits brought against Buyer, Seller or Aptus alleging that Buyer's
<PAGE>43
listing of employees under Section 7.1.1.1 violates Title VII of the
Civil Rights Act, the Americans with Disabilities Act or the Family
Medical Leave Act or discriminates against an Employee in violation of
any applicable state or federal laws, each party shall bear its own
respective defense costs and expenses (including attorneys' fees) and
afford reasonable cooperation to the other parties. In the event that
Buyer is ultimately found liable in any such proceeding, it shall
indemnify Seller against the judgment or settlement and also reimburse
Seller's reasonable defense costs and expenses (including attorneys'
fees).
7.1.2 Union Representation. With respect to the
collective bargaining agreement identified on Schedule 3.20 which
expired by its terms on October 31, 1994, the parties agree as follows:
(i) Seller has postponed negotiations on a new collective bargaining
agreement by extending the existing agreement until March 15, 1995 or
thirty (30) days after Closing and by agreeing that any wage increases
will be effective retroactively to October 31, 1994; (ii) Buyer agrees
to cause Aptus to assume the obligations under the collective bargaining
agreement and its extension and to continue to recognize the union
signatory thereto as the collective bargaining representative of the
employees covered by the agreement post Closing, provided that Aptus
will not be able to continue providing any Westinghouse benefits but
will instead provide the Rollins benefits outlined on Schedule 7.1.1.3;
and (iii) Seller shall promptly reimburse Aptus within five (5) business
days after written notification (with documentation) to Seller of
payment by Aptus for any compensation paid to covered employees, for the
period between October 31, 1994 and Closing, provided that this
reimbursement by Seller shall be limited to not more than three (3)
percent of the prior regular hourly wages of the covered employee for
the period between October 31, 1994 and Closing.
7.1.3 Termination of Coverage Under Seller's Employee
Benefit Plans and Coverage Under Buyer's Employee Benefit Plans.
7.1.3.1 Effective as of the Closing, each
Continuing Employee who is a participant in an Employee Benefit Plan
sponsored by Seller (a "Seller's Plan") shall cease to be a participant
in each such Seller's Plan, and all of the Continuing Employees
(including Transition Employees hired by Buyer pursuant to Section
7.1.1.3) effective as of the date of hire of such Continuing Employee by
Buyer shall become eligible to participate in the employee benefit plans
of Buyer in accordance with the applicable provisions of this Agreement
and the terms and conditions of each such plan. Effective as of the
Closing, if Aptus has adopted any of Seller's Plans, Aptus shall
withdraw as an employer thereunder.
7.1.3.2 Employees of Aptus shall be entitled to the
accrued and vested benefits due to them as a result of Aptus's
termination of participation as described in Section 7.1.3.1 above or
their termination of employment, under all employee benefit plans,
programs, practices or arrangements of Seller, and Seller shall retain
liability for the payment of such accrued and vested benefits under and
in accordance with such plans, programs, practices and arrangements and
shall indemnify and hold Buyer and Aptus harmless from and against same.
<PAGE>44
7.1.4 Pension Plans. Buyer shall grant to each
Continuing Employee covered by the Pension Plan immediately before the
Closing credit for his or her period of employment with Aptus and Seller
prior to the Closing Date for the purpose of eligibility and vesting
under any defined benefit pension plan maintained by Buyer ("Buyer's
Pension Plan") for the benefit of such Employees following the Closing,
but not for the purpose of benefit accrual, it being understood that the
Buyer's pension plan is a defined benefit plan based on salary earned
with the Buyer (beginning on Closing) and that no credit will be
provided for any earnings prior to the Closing Date.
7.1.5 Savings Program. As of the Closing Date, the
Savings Program of Seller shall not accept contributions from Employees.
Buyer shall grant to each Continuing Employee covered by the Savings
Plan immediately before the Closing credit for his or her period of
employment with Aptus and Seller prior to the Closing Date for the
purpose of eligibility and vesting under Buyer's defined contribution
plan (the "Buyer's Savings Plan"), but not for the purpose of benefit
accrual. The Buyer's Savings Plan will accept "rollovers" of account
balances of Continuing Employees from the Savings Program with respect
to before tax contributions only, in accordance with the terms and
administrative policies of the Seller's Plan. Outstanding loans under
the Savings Program will not be transferable to the Buyer's Savings
Plan.
7.1.6 Welfare and Fringe Benefits.
(a) Buyer shall grant to each Continuing Employee who is
covered immediately before the Closing under Employee Welfare Benefit
Plans sponsored by Seller ("Seller's Employee Welfare Benefit Plans")
credit for his or her period of employment prior to the Closing with
Seller and Aptus under any Employee Welfare Benefit Plan maintained by
Buyer for the benefit of such Employees following the Closing (a
"Buyer's Employee Welfare Benefit Plan") (including but not limited to
arrangements providing disability, vacation, severance and sick time
benefits) and shall grant credit for deductibles and co-payments
previously paid under any Seller's Employee Welfare Benefit Plan for the
year in which Closing occurs. Buyer's Employee Welfare Benefit Plans
shall not exclude from coverage or limit coverage for any pre-existing
condition of any of the Employees.
(b) All claims of Employees described in Section 7.1.6(a)
which are made against Employee Welfare Benefit Plans and which are
incurred prior to the Closing (treating for this purpose costs for
hospital confinements that begin before the Closing and continue after
the Closing as having been incurred before the Closing) shall be paid in
accordance with the provisions and administrative policies of Seller's
Employee Welfare Benefit Plans. All claims of Employees described in
Section 7.1.6(a) which are made against Employee Welfare Benefit Plans
and which are incurred after the Closing shall be paid under Buyer's
Employee Welfare Benefit Plans.
7.2 Tax Covenants.
7.2.1 Apportionment of Income Taxes Between Pre-Closing
and Post-Closing Periods. In order to appropriately apportion any
Income Tax relating to any taxable year or any other period that is
treated as a taxable year (a "Period") that includes (but that would
<PAGE>45
not, but for this Section, close on) the Closing Date, the Parties will,
unless specifically prohibited by applicable law, elect with the
relevant taxing authority to treat for all purposes the Closing Date as
the last day of a taxable period of NEI or Aptus, and such Period shall
be treated as a Short Period and a Pre-Closing Period for purposes of
this Agreement. In any case where applicable law specifically
prohibits NEI or Aptus from treating the Closing Date as the last day of
a Short Period, then for purposes of this Agreement, the portion of such
Income Tax that is attributable to the operations of NEI or Aptus for
such Interim Period shall be the Income Tax that would be due with
respect to the Interim Period if such Interim Period were a Short
Period.
7.2.2 Payment of Income Taxes. In furtherance of the
foregoing, any Income Tax in respect of any Short Period shall, except
to the extent accrued or reserved for in the aggregate on the balance
sheet of NEI or Aptus at Closing, be borne by Seller, and any refunds or
credits in respect of such Income Tax for any such Short Period or any
Pre-Closing period, in excess of the amount reflected on the balance
sheet of NEI or Aptus at Closing, shall be the property of Seller. Any
Income Tax in respect of any Interim Period (including amounts payable
as a result of an audit or other adjustment), to the extent not paid on
or before the Closing Date or accrued or reserved for on the balance
sheet of NEI or Aptus at Closing, shall be paid by Seller to Buyer,
which shall pay such Income Tax to the relevant Governmental Authority,
no later than fifteen (15) days prior to the date such payment is due,
and any refunds or credits received by Buyer, NEI or Aptus in respect of
such Income Tax for such Interim Period, in excess of the amount
reflected on the balance sheet of NEI or Aptus at Closing, shall be the
property of Seller. Any Income Tax attributable to the operations of
Buyer, NEI or Aptus for any Post-Closing Period shall be borne by Buyer,
NEI or Aptus, as the case may be. Any refunds or credits in respect of
such Income Tax for any such Post-Closing Period shall be the property
of Buyer, NEI or Aptus, as the case may be.
7.2.3 Preparation and Filing of Income Tax Returns.
Seller shall be responsible, at its expense, for the preparation and
filing of all Income Tax Returns for any Short Period. Seller shall
prepare such Income Tax Returns in a manner consistent with prior years
and shall, in respect of such Income Tax Returns, determine the income,
gain, expenses, losses, deductions and credits of NEI or Aptus in a
manner consistent with prior practice. The results of operations of NEI
or Aptus from the first day of the taxable year through the Closing Date
shall be included in Seller's consolidated federal income tax return and
in any consolidated, combined or unitary Income Tax Returns required to
be filed by Seller after the Closing Date. The results of operations of
NEI or Aptus from the first day of the taxable year through the Closing
Date shall be included in any separate Income Tax Returns filed by NEI
or Aptus after the Closing Date; provided, however, that Seller shall
prepare (without cost to Buyer, NEI or Aptus) all such separate Income
Tax Returns for any Short Period (but not for any Period which includes
or ends after the Closing Date) and submit them to Buyer, and Buyer
shall have all such separate Income Tax Returns appropriately executed
and filed on a timely basis. With respect to any Income Tax Return to
be prepared by Seller, Buyer shall, and shall cause NEI or Aptus to,
provide to Seller information in a manner consistent with past practice
for use in preparation of such Income Tax Returns, in each case, no
later than sixty days (60) after the relevant Period ends.
<PAGE>46
Notwithstanding the foregoing, Buyer shall be responsible for preparing
and filing all Income Tax Returns of NEI or Aptus for Periods not ending
on or before the Closing Date, even if such Income Tax Returns cover
Periods prior to the Closing Date.
7.2.4 Cooperation. Seller and Buyer shall, and shall
cause NEI or Aptus to, provide each other with such assistance as may
reasonably be requested by them in connection with the preparation of
any Income Tax Return, any Income Tax audit or other examination by any
Governmental Authority, or any judicial or administrative proceedings
related to liability for Income Taxes. Seller and Buyer shall, and
shall cause NEI or Aptus to, retain and provide each other with any
records or information which may be relevant to such preparation, audit,
examination, proceeding or determination. Such assistance shall include
making employees available on a mutually convenient basis to provide and
explain such records and information and shall include providing copies
of any relevant Income Tax Returns and supporting work schedules. The
Party requesting assistance hereunder shall reimburse the other for
reasonable out-of-pocket expenses incurred in providing such assistance.
7.2.5 Refund Claims. Subject to Section 7.2.11, Seller
will provide Buyer, NEI and Aptus with such assistance as it may
reasonably request to prepare any refund claim attributable to the
carryback of any tax losses or tax credits incurred by Buyer, NEI or
Aptus in any Pre-Closing Period to any consolidated, combined or unitary
Income Tax Return of Seller or to any separate Income Tax Return of NEI
or Aptus for any Pre-Closing Period, and Seller shall receive and retain
the amount of any resulting refunds together with any interest thereon
upon receipt by any party.
7.2.6 Tax Sharing Agreements. Any and all Tax (or
similar) agreements, arrangements or undertaking among Seller, NEI and
Aptus that relate to any liability of NEI or Aptus for the Taxes of
Seller shall terminate as of the Closing Date and any rights or
obligations resulting from such agreements shall be eliminated as of the
Closing Date.
7.2.7 Notice of Audit. If, in connection with any
examination, investigation, audit or other proceeding concerning any
Income Tax Return covering the operations of NEI or Aptus through the
Closing Date, any Governmental Authority issues to any of the Parties,
NEI or Aptus a notice of deficiency, a proposed adjustment, an assertion
of claim or a demand concerning the Period covered by such Income Tax
Return, the recipient shall notify the other Party that it has received
the same within twenty (20) days of its receipt.
7.2.8 Audits Controlled by Seller. Seller shall have
the sole and exclusive right, power and authority to negotiate, resolve,
settle or contest any such notice of deficiency, proposed adjustment or
assertion of claim or demand and to represent and act for and on behalf
of NEI or Aptus in connection with any such examination, investigation,
audit or other proceeding, including refund claims of any Income Tax
Return of NEI or Aptus for Periods ending on or before the Closing Date.
Seller agrees to keep Buyer informed of the progress of any such
proceedings.
<PAGE>47
7.2.9 Audits Controlled by Buyer. Buyer shall have the
sole and exclusive right, power and authority to negotiate, resolve,
settle or contest any such notice of deficiency, proposed adjustment or
assertion of claim or demand in connection with any such examination,
investigation, audit or other proceeding of any Income Tax Return of
Buyer, NEI or Aptus for Periods ending after the Closing Date. To the
extent that Seller has indemnified Buyer, NEI and Aptus with respect to
any such notice of deficiency, proposed adjustment or assertion or claim
or demand herein, Buyer shall not, and shall not permit NEI or Aptus to,
resolve, settle, compromise, or abandon any issue or claim without the
prior written consent of Seller if such action would materially and
adversely affect the Income Tax of Seller for any Period. Such consent
shall not be unreasonably delayed or withheld, and shall not be
necessary to the extent that Buyer notifies Seller that Buyer will
forego any obligation of Seller to indemnify Buyer, NEI and Aptus
against the effects of any such settlement. Buyer shall keep, and shall
cause NEI or Aptus to keep, Seller informed of the progress of any such
proceedings and to consult with Seller in good faith in connection
therewith.
7.2.10 338(h)(10) Election. Buyer and Seller agree that
no election under Code 338(h)(10) shall be made as a result of this
transaction.
7.2.11 Net Operating Loss. NEI and Aptus presently have
a net operating loss ("NOL") for fiscal year ended December 31, 1993
equal to or greater than $16,200,000, representing their apportioned
share of Seller's NOL for that year. Seller agrees that the amount of
the NOL shall equal or exceed $16,200,000. To the extent that it does
not, Seller shall provide to Buyer thirty-five percent (35%) of the
difference in cash within thirty (30) days of its determination. Buyer
and Seller acknowledge that all NOL amounts are subject to adjustment by
the IRS and will not be final until the audit covering the relevant
period has been completed by the IRS. To the extent that the NOL is
less than or equal to $19,200,000, Buyer shall be entitled to retain the
full amount. To the extent that the NOL exceeds $19,200,000, Seller
shall be entitled to make the appropriate election under the Code to
enable it to utilize any amount in excess of $19,200,000, provided that
if Seller is unable to utilize such amount, it shall be retained by
Buyer, if possible. There shall be no adjustments to Final Adjusted Net
Worth under Section 2.3.1 due to any payments by Seller under this
Section.
7.2.12 Carrybacks. Buyer agrees that it shall make any
election or exercise any option available to it under the Code (or
similar provisions, if any, under state, local or foreign Tax laws) to
waive the carryback of any post-Closing net operating loss, net capital
loss, foreign tax credit or other tax benefit to a pre-Closing Period.
7.3 Books and Records.
7.3.1 Access. Each Party shall provide the other Party
with reasonable access during normal business hours to its books and
records and the books and records of NEI or Aptus (other than books and
records protected by the attorney-client privilege) to the extent that
they relate to the condition or operation of NEI or Aptus prior to the
Closing and are requested by such Party to prepare its Income Tax
Returns, to respond to Third Party Claims, or for any other legitimate
<PAGE>48
purpose specified in writing. Each Party shall have the right, at its
own expense, to make copies of any such books and records.
7.3.2 Destruction. For a period of ten (10) years, or
the expiration of any longer period if required under applicable law,
neither Party shall dispose of or destroy any books and records of NEI
or Aptus to the extent that they relate to the condition or operation of
NEI or Aptus prior to Closing or any facility operated by NEI or Aptus
prior to Closing and any records dealing with the personal medical
records of any present or former Employees prior to the Closing without
first offering to turn over possession thereof to the other Party by
written notice at least thirty (30) days prior to the proposed date of
disposition or destruction, provided however that this section shall not
be applicable to records required under applicable law to be preserved
longer than ten (10) years.
7.3.3 Confidentiality. Each Party may take such action
as it deems reasonably appropriate to separate or redact information
unrelated to NEI or Aptus from documents and other materials requested
and made available pursuant to this Section and to condition access to
materials that it deems confidential to the execution and delivery of an
Agreement by the other Party not to disclose or misuse such information.
7.3.4 Assistance. Each Party shall, upon written
request and at the requesting Party's expense, make personnel available
to assist in locating and obtaining any books and records of NEI or
Aptus to the extent that they relate to Retained Liabilities or the
condition or operation of NEI or Aptus prior to the Closing (or after
the Closing with respect to information relating to Identified
Environmental Concerns) and make personnel available whose assistance,
participation or testimony is reasonably required in anticipation of,
preparation for or the prosecution or defense of any Third Party Action
in which the other Party does not have any adverse interest.
7.4 Non-Competition.
7.4.1 Seller covenants that upon Closing and until the
expiration of five (5) years from the Closing Date, Seller shall not,
and shall not allow any Affiliate to i) engage in the commercial
business of fixed based incineration of Hazardous Waste (as now defined
under RCRA or TSCA) or ii) engage in the commercial business of mobile
incineration by treating a stream of active industrial Hazardous Waste
(as now defined under RCRA or TSCA) at its manufacturing or processing
point of origin of such stream, (For purpose of this Section, the
Business shall mean those activities described in (i) and (ii).) within
the continental United States; provided, however, that the covenants
contained within this Section 7.4 shall not prevent Seller or any
Affiliate from:
(a) Maintaining and continuing existing standard
business operations in accordance with current and past practice;
(b) Continuing to own its current shares of
capital stock, partnership or other equity interests in the entities
identified on Schedule 7.4;
(c) Acquiring shares of capital stock,
partnership or other equity interests in any Person as investments of
<PAGE>49
Seller's pension funds or funds of any other employee benefit plan of
Seller whether or not such Person is engaged in the same business as the
Business;
(d) Acquiring no more than five percent (5%) of
the outstanding capital stock, partnership or other equity interests in
any Person;
(e) Acquiring up to one hundred percent (100%)
of the outstanding capital stock, partnership or other equity interests
in any Person for which the annual revenues derived directly from the
operations of such Person from any business that competes with the
Business are not more than the lesser of (i) ten percent (10%) of such
Person's total annual revenues or (ii) $10,000,000;
(f) Acquiring less than fifteen percent (15%)
but more than five percent (5%) of the outstanding capital stock,
partnership or other equity interests in any Person for which the annual
revenues derived directly from the operations of such Person from any
business that competes with the Business are more than the lesser of (i)
ten percent (10%) but less than twenty-five percent (25%) of such
Person's total annual revenues or (ii) $10,000,000;
(g) Acquiring more than fifty percent (50%) of
the outstanding capital stock, partnership or other equity interests
(which includes debt which is convertible into an equity interest) in
any Person for which the annual revenues derived directly from the
operations of such Person from any business that competes with the
Business are more than ten percent (10%) but less than twenty-five
percent (25%) of such Person's total annual revenues; provided, however,
that Seller shall use all commercially reasonable efforts to divest that
portion of such Person which competes with the Business on commercially
reasonable terms within three hundred sixty-five (365) days after the
acquisition of such ownership or interest; and provided further if such
divestiture cannot occur within this period then Seller shall pay to
Buyer a sum equal to five percent (5%) of the annual gross revenues of
the Person attributed to the Business and prorated for Seller ownership
interest but never more than operating profits prorated for Seller's
ownership interest for the Business until the earlier of divestiture of
such Business or the expiration of this Agreement;
(h) Acquiring no more than fifty percent (50%)
but more than fifteen percent (15%) of the outstanding capital stock,
partnership or other equity interests (I) in any Equity for which the
annual revenues derived directly from the operations of such Person from
any business that competes with the Business are more than ten percent
(10%) but less than twenty-five percent (25%) of such Person's total
annual revenues; provided, however, that Seller, directly or indirectly,
will have control of such Person sufficient to cause such Person to use
all commercially reasonable efforts to divest that portion of such
Person which competes with the Business on commercially reasonable terms
within three hundred sixty-five (365) days after the acquisition of such
ownership or interest; and provided, that Seller shall, directly or
indirectly, so cause such Person to so divest; and provided further if
such divestiture cannot occur within this period then Seller shall pay
to Buyer a sum equal to five percent (5%) of the annual gross revenues
of the Person attributable to the Business and prorated for the Seller's
ownership interest but never more than operating profits prorated for
<PAGE>50
the Seller's ownership interest for the Business until the earlier of
divestiture of such Business or the expiration of this Agreement;
(i) Performing any act or conducting any
business contemplated by this Agreement or the agreements attached
hereto or contemplated thereby; or
(j) Any business currently or in the future:
(i) involving the processing or disposing
of mixed / hazardous radioactive waste, Hazardous Waste or radioactive
waste, including but not limited to the following technologies:
(a) Plasma Torch technology and its
applications;
(b) Thermal Desorption technology and
its applications;
(c) Catalytic Extraction Processing
(CEP) and Quantum CEP Technology, both proprietary technologies of
Molten Metal Technology, Inc.;
(d) Soil Washing technology and its
applications; and
(e) Metal Melting technology and its
applications;
(f) Steam Reformation technology and
its applications;
(g) Wet Oxidation technology and its
applications; and
(h) Electro-Magnetic or beam type
processing technology such as ultra violet (UV), radio frequency (RF),
laser, or electron beam and their applications.
(ii) involving the incineration of
Hazardous Waste as part of a contract involving environmental
remediation of either a Superfund or non-Superfund site.
The provisions of (e), (f), (g), and (h) do not apply to
any partnership, joint venture, corporation or limited liability company
that is using the technologies listed in (j) above.
7.4.2 In the event that any part of this Section 7.4
(including any subparagraphs hereto) is declared invalid or
unenforceable by a court of competent jurisdiction, the validity or
enforceability of the remainder of this Section 7.4 shall nevertheless
continue to be valid and enforceable as though the invalid or
unenforceable portions had not been a part hereof. The territory and
time limitations set forth in this Section 7.4 are reasonable and
properly required for the adequate protection of the Buyer and Aptus.
In addition, the parties acknowledge that the nature of the business of
hazardous waste incineration and laboratory analysis is such that
competitive activities could be conducted effectively regardless of the
<PAGE>51
geographic distance between Aptus's place of business and the place of
any competitive business. In the event that the territorial or time
restrictions, or both, are determined by a court of competent
jurisdiction to be unenforceable, Seller hereby requests and authorizes
such court to modify said area or periods of duration to the extent
necessary to render them enforceable; and Seller shall accept and submit
to such modification(s).
7.4.3 Seller recognizes that immediate and irreparable
damage will result to Aptus or Buyer if Seller breaches any of the terms
and conditions of this Section 7.4 and accordingly, Seller acknowledges
that Buyer may be entitled under applicable law to an injunction against
Seller to restrain any such breach, in addition to any other remedies or
claims for money damages which Aptus or Buyer may otherwise have.
7.5 Access to Information. The parties shall cooperate in
any environmental due diligence and Buyer shall not engage in any
environmental due diligence investigation other than so-called "Phase I"
(i.e., documentary review and walk-through inspection) preliminary
environmental evaluations without the prior written consent of Seller.
7.6 Non-Solicitation of Employees.
(a) For a period of two (2) years after the Closing,
Seller shall not, without the prior written consent of Buyer, solicit
the employment of, or employ or offer to employ, any Continuing
Employees or any employees of Buyer that Seller had significant contact
with during the negotiation of this Agreement.
(b) For a period of two (2) years after the Closing,
Buyer shall not, without the prior written consent of Seller, solicit
the employment of, or employ or offer to employ, any employee listed on
Schedule 3.20.1 not employed by Buyer as a Continuing Employee or any
employee of Seller that Buyer had significant contact with during the
negotiation of this Agreement.
(c) This Section shall apply to employees in senior
management, operations, regulatory, financial, marketing and sales, or
permitting aspects of each Party's business. This Section shall not
apply to any employee ninety (90) days after such employee has left the
employ of either Party.
7.7 Rights Agreement. If necessary, Buyer shall take such
action as it determines is warranted to amend the Rights Agreement dated
as of June 14, 1989, between Buyer and Registrar and Transfer Company
(the "Rights Agreement"), to ensure that the issuance of the
Subordinated Debentures shall not cause a "Triggering Event" under and
as defined in the Rights Agreement.
7.8 Remarketing of IDBs and Cost Sharing.
7.8.1 Initial Remarketing. In connection with the
initial remarketing: (i) within four to six weeks from the date of
Closing (or as soon thereafter as is reasonably practicable), Buyer
shall use all reasonable efforts to cooperate in good faith with the
Remarketing Agent and Seller to effect the remarketing of the IDBs to
one or more third parties, including, without limitation, entering into
an underwriting agreement on customary terms and conditions, obtaining a
<PAGE>52
rating for the IDBs, assisting in the preparation of an offering
memorandum and participating in any sales efforts (including any road
shows).
7.8.2 Remarketing of IDBs. From and after the
Closing Date and until the IDB Backstop Expiry Date, (i) Seller shall
either, at its option, maintain a Letter of Credit enabling the IDBs to
be remarketed to one or more third parties at the principal amount
thereof, or hold the IDBs, and (ii) Buyer shall take all action
necessary to permit the Remarketing Agent to remarket the IDBs pursuant
to Section 3.03 of the IDB Indenture at Weekly Rates or Flexible Rates
as determined by Buyer (subject to the consent of Seller, which consent
shall not be unreasonably withheld). Seller is to ensure that the
Remarketing Agent's total fees and expenses for remarketing the IDBs
after the Closing Date and prior to the Effective Conversion Date shall
not exceed a rate of one-eighth (1/8) of one (1) percent per annum of
the average daily outstanding principal amount of the IDBs (or such
higher rate which is then the prevailing industry rate).
7.8.3 Effective Conversion Date.
7.8.3.1 Option of Buyer. On any Mandatory
Tender Date prior to the IDB Backstop Expiry Date, Buyer shall have the
right to convert the Rate Period for the IDBs to a Term Period with a
term expiring on the maturity date for the IDB; provided, that in the
event of such a conversion, from and after such Mandatory Tender Date
(the "Effective Conversion Date"):
(a) For purposes of Section 7.8.4, the IDB
Interest Rate shall be the lesser of (i) the actual IDB Interest Rate
and (ii) 10% per annum.
(b) On the Effective Conversion Date, the
remarketing proceeds shall be paid to the Letter of Credit issuer in
immediately available funds in an amount equal to the sum drawn related
to principal on the IDBs under the Letter of Credit in connection with
such Mandatory Tender Date, and any interest on the IDBs drawn under the
Letter of Credit shall be reimbursed to the Letter of Credit issuer and
shall be treated as any other IDB Costs.
(c) The obligation of Seller to either
cause the Letter of Credit to remain outstanding or hold the IDBs shall
automatically and without further action terminate.
7.8.3.2 Option of Seller. At any time prior to
the IDB Backstop Expiry Date, in the event Seller delivers to Buyer a
written notice from the Remarketing Agent to the effect that at the time
of such notice, a Term Rate could be established pursuant to Section
2.03 (b) (iii) of the IDB Indenture for a Term Period expiring on the
maturity date for the IDBs equal to or less than 10% per annum, unless
there shall be an IDB Remarketing Exception, (i) Buyer shall promptly
give all notices required pursuant to Section 2.04 of the IDB Indenture
of its election to convert on a date specified by Seller occurring no
earlier than sixteen (16) days thereafter the Rate Period to a Term
Period expiring on the maturity date for the IDBs, (ii) Buyer shall
cooperate with the Remarketing Agent and Seller to enable the IDBs to be
sold on such Mandatory Tender Date at a price equal to the principal
amount thereof, including, without limitation, furnishing information
<PAGE>53
and making representations to the Remarketing Agent and agreeing to such
other terms and conditions, including indemnification obligations, as
are customary or otherwise reasonably requested by the Remarketing Agent
in connection with the remarketing of the IDBs for a Term Period
expiring on the maturity date for the IDBs, and (iii) unless either (a)
when the Remarketing Agent determines that the Term Rate described in
Section 2.03 (b) (iii) of the IDB Indenture, would be likely to exceed
10% per annum were the rate period to be converted to a Term Period or
(b) Seller gives notice to Buyer prior to the time required on the
Mandatory Tender Date to effect the conversion that it does not consent
to the conversion of the Rate Period to a Term Period expiring on the
maturity date for the IDBs, Buyer shall arrange for and comply with its
delivery obligations under Section 2.04 (d) of the IDB Indenture in
order to cause such conversion to be effected on such Mandatory Tender
Date; provided, that in the event of such a conversion, from and after
such Mandatory Tender Date (the "Effective Conversion Date"):
(a) For purposes of Section 7.8.4, the
amount of IDB Costs shall be the actual IDB Costs.
(b) On the Effective Conversion Date, the
remarketing proceeds shall be paid to the Letter of Credit issuer in
immediately available funds in an amount equal to the sum drawn related
to principal on the IDBs under the Letter of Credit in connection with
such Mandatory Tender Date, and any interest on the IDBs drawn under the
Letter of Credit shall be reimbursed to the Letter of Credit issuer and
shall be treated as any other IDB Costs.
(c) The obligation of Seller to either
cause the Letter of Credit to remain outstanding or hold the IDBs shall
automatically and without further action terminate.
7.8.4 IDB Cost Sharing. If the IDB Costs for
any 12-month period following the Closing Date shall be (i) greater than
an amount equal to the interest on the aggregate principal amount of the
IDBs, calculated at a rate of 7-1/2 per annum, based on the actual
number of days in the year (the "IDB Cost Base"), Seller shall pay Buyer
one-half of the difference between (a) the Effective Annual IDB Costs
and (b) the IDB Cost Base, or (ii) less than the IDB Cost Base, Buyer
shall pay Seller one-half of the difference between (a) the Effective
Annual IDB Costs and (b) the IDB Cost Base (in either event, the "IDB
Cost Spread"). Notwithstanding the foregoing, if the IDBs shall have
been converted at the option of Seller pursuant to Section 7.8.3.2 and
the IDB Costs exceed 10% per annum, then IDB Costs under 10% shall be
addressed by the foregoing and IDB Costs in excess of 10% shall be borne
exclusively by Seller and reimbursed to Buyer in accordance with
7.8.4.1.
7.8.4.1 Calculation and Payment. Within
ten business days after the end of each quarter during the term of the
IDBs, each of the parties shall provide the other with a statement of
each of the IDB Costs incurred by it for the prior quarter. If there is
an IDB Cost Spread, calculated on an annual (360 days) cost basis, then
the party having responsibility for such IDB Cost Spread shall pay that
amount within 30 days after the end of each quarter to the party
entitled to such payment.
<PAGE>54
7.8.5 Cooperation. Each of the parties shall
use all reasonable efforts in good faith to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper
or advisable (other than to fund any payment obligations of the other
party as provided in this Section 7.8) to cooperate with the other party
in connection with the foregoing.
7.8.5.1 Remarketing Agent. Until the IDB
Backstop Expiry Date, notwithstanding any provision herein or in the IDB
Indenture or the Remarketing Agreement entered into in connection
therewith to the contrary, Seller shall have the exclusive right to
remove the Remarketing Agent and to select a successor Remarketing
Agent, subject in the case of the selection of a successor Remarketing
Agent, to the consent of Buyer, which consent shall not be unreasonably
withheld.
7.8.5.2 Interest Rate Cap. From time to
time until the IDB Backstop Expiry Date, Buyer shall have the right,
subject to the reasonable consent of the Seller, which consent shall not
be unreasonably withheld, to obtain an Interest Rate Cap and the cost of
which shall be subject to the provisions of Section 7.8.4.
7.8.6 Underwriting Costs. All Underwriting
Costs will be shared equally by Seller and Buyer; provided that in no
event will Buyer's share of the Underwriting Costs exceed $400,000 in
the initial remarketing or $600,000 in the aggregate for both the
initial remarketing and the conversion to a fixed term.
7.8.7 Conversion. Any conversion of the IDBs
under 7.8.3.1 (Option of Buyer) or 7.8.3.2 (Option of Seller) shall be
accomplished such that the IDBs be sold without a discount, with a term
expiring on the current maturity date for the IDB (2020), and with semi-
annual interest payments.
7.8.8 Rebate Obligation. Seller shall take all
steps necessary to comply with the rebate provisions of Article IV of
the Tax Exemption Certificate and Agreement, including, without
limitation, making the calculations, transfers and payments that may be
necessary to comply with the rebate requirements contained in Section
148(f) of the Code. Seller shall prepare the I.R.S. Form 8038-T
required to be filed in 1995 on the fifth anniversary of the Bond issue
and Seller shall deposit in the Rebate Fund an amount equal to the total
rebate payment, if any, then due. Buyer and Seller shall direct the
Trustee to make the required payment from the Rebate Fund to the U.S.
Government. Any subsequent filing obligations shall be the
responsibility of Buyer.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Buyer's Obligations. The
obligation of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following
conditions, any of which may be waived by Buyer:
<PAGE>55
8.1.1 Accuracy of Representations and Warranties. The
representations and warranties made by Seller in this Agreement shall be
true and correct as of the Closing Date except for (a) representations
and warranties made as of a specified date, which shall be true and
correct as of the specified date, (b) breaches and inaccuracies that do
not have a Material Adverse Effect and (c) breaches and inaccuracies
that Seller is working diligently to cure or remedy at its cost or
expense, provided that Seller agrees to either cure or remedy such
breaches or inaccuracies as soon as practicable or indemnify Buyer
against any Damages relating thereto.
8.1.2 Litigation. No Order shall be in effect
forbidding or enjoining the consummation of the transactions
contemplated hereby and no Action shall be pending or threatened which,
if adversely determined, would result in any such Order.
8.1.3 Covenants. Seller shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed by Seller prior to or at the
Closing.
8.1.4 Deliveries. Seller shall have delivered to Buyer
the documents required by Section 9.2.
8.1.5 Consents. The execution, delivery and performance
of this Agreement by Seller shall not conflict with any Law or result in
the creation of any Lien (other than Permitted Liens) on any assets of
Aptus. Seller and Aptus shall have obtained the Consents, if any, set
forth on Schedule 3.8. Such consents shall be in form and content
reasonably satisfactory to Buyer and shall have been reviewed with Buyer
in final (but unexecuted) form no less than fifteen (15) days prior to
Closing.
8.1.6 Customers. Aptus shall not have suffered the
loss of customers that would have a Material Adverse Effect.
8.1.7 No Material Adverse Effect. There shall have been
no event or occurrence since December 31, 1994 that has had a Material
Adverse Effect on NEI or Aptus.
8.2 Conditions Precedent to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following
conditions, any of which may be waived by Seller:
8.2.1 Truth of Representations and Warranties. The
representations and warranties made by Buyer in this Agreement shall be
true and correct in all material respects as of the Closing Date.
8.2.2 Litigation. No Order shall be in effect
forbidding or enjoining the consummation of the transactions
contemplated hereby and no Action shall be pending or threatened which,
if adversely determined, would result in any such Order.
8.2.3 Covenants. Buyer shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed by Buyer prior to or at the
Closing.
<PAGE>56
8.2.4 Deliveries. Buyer shall have delivered to Seller
the payment and documents required by Section 9.3.
8.2.5 [Intentionally Left Blank]
8.2.6 Permits. Seller shall have been able to obtain
any consents necessary to transfer the Permits.
ARTICLE 9
CLOSING
9.1 Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall take place at the offices of Seller in
Pittsburgh, Pennsylvania at 10:00 a.m., on Friday, March 31, 1995 or at
such other time and place as the Parties shall agree upon in writing
(the "Closing Date"). The Closing shall be deemed effective at 11:59
p.m. Pittsburgh time on the Closing Date.
9.2 Deliveries by Seller. At the Closing, Seller shall
deliver the following to Buyer:
9.2.1 Certificates representing all of the Shares,
together with duly executed stock transfer powers in favor of Buyer.
9.2.2 The stock books, stock ledgers, minute books and
corporate seal of NEI and Aptus.
9.2.3 The recorded Charter Documents of NEI and Aptus
recently certified by the Delaware Secretary of State.
9.2.4 Certificates of the Secretary or Assistant
Secretary of Seller concerning (a) its good standing, (b) the adoption
of resolutions by its board of directors authorizing the transactions
contemplated by this Agreement and (c) the incumbency of its officers,
all in form and substance satisfactory to Buyer.
9.2.5 Certificates of the Secretaries or Assistant
Secretaries (or the comparable officials) of NEI and Aptus, or a
certificate of an executive officer of Seller, concerning the Charter
Documents and good standing of NEI and Aptus.
9.2.6 Recent (dated within thirty (30) days of the
Closing) good standing certificates (or the comparable documents) for
NEI and Aptus issued by the Secretary of State or (the comparable
officials) of each of the jurisdictions in which NEI is incorporated,
Aptus is incorporated, or either is qualified to do business as a
foreign corporation.
9.2.7 A certificate signed by an executive officer of
Seller and dated the Closing Date certifying that (a) each of the
representations and warranties made by Seller in this Agreement is true
and correct as of the Closing Date in all material respects and (b) all
of the terms, covenants and conditions of this Agreement to be complied
with and performed by Seller on or before the Closing Date have been
complied with and performed in all material respects.
<PAGE>57
9.2.8 Copies of the Consents obtained by Seller and
Aptus pursuant to Section 3.8.
9.2.9 A receipt for the payment made as contemplated by
Section 2.2.1.
9.2.10 A written opinion addressed to Buyer from counsel
for Seller, in the form attached as Exhibit 9.2.10.
9.2.11 The written resignation of each director and
officer of Aptus and NEI. A complete list of all such officers and
directors is set forth on Schedule 9.2.11 hereto.
9.2.12 An executed Patent Assignment to Aptus in the
form of Exhibit 9.2.12 relating to the patent identified in Schedule
3.19 as registered in the name of Seller.
9.2.13 An executed Assignment and Assumption Agreement
relating to the IDB Bonds in the form of Exhibit 2.2.3.
9.2.14 An opinion of Counsel to Seller (or counsel to
the IDB Issuer) addressed to Buyer to the effect that the Assignment and
Assumption Agreement relating to the IDB Bonds will not adversely affect
the excludability of interest on the IDB Bonds from the gross income of
the owners thereof for purposes of federal income taxation.
9.2.15 An executed Assignment of Software License
Agreement in the form of Exhibit 9.2.15 relating to Seller's CORE
System.
9.2.16 An executed Debenture Purchase Agreement in the
form of Exhibit 2.2.2.
9.2.17 Such other documents, instruments and
certificates as Buyer may reasonably request for the transactions
contemplated by this Agreement.
9.3 Deliveries by Buyer. At the Closing, Buyer shall deliver
the following to Seller:
9.3.1 The payment of the Cash required under Section
2.2.1.
9.3.2 The issuance of the Senior Unsecured Debentures
and Subordinated Convertible Debentures.
9.3.3 An executed Assignment and Assumption Agreement
relating to the IDB Bonds in the form of Exhibit 2.2.3.
9.3.4 An opinion of counsel to Buyer addressed to
Security Pacific National Trust Company (New York), as Trustee or its
successor, to the effect that Buyer has expressly assumed in a writing
delivered to such Trustee the obligations of Seller under the IDB Loan
Agreement, satisfying the requirements of Section 6.1(b)(i) of the IDB
Loan
Agreement.
<PAGE>58
9.3.5 The recorded Charter Documents of Buyer, recently
certified by the Delaware Secretary of State.
9.3.6 A certificate of the Secretary or Assistant
Secretary of Buyer (or the comparable official) concerning (a) Buyer's
Charter Documents and good standing, (b) the adoption of resolutions by
its board of directors authorizing the transactions contemplated by this
Agreement and (c) the incumbency of its officers, all in form and
substance satisfactory to Seller.
9.3.7 A recent good standing certificate for Buyer
issued by the Delaware Secretary of State.
9.3.8 A certificate signed by an executive officer (or
the comparable official) of Buyer and dated the Closing Date certifying
that (a) each of the representations and warranties made by Buyer in
this Agreement is true and correct as of the Closing Date in all
material respects and (b) all of the terms, covenants and conditions of
this Agreement to be complied with and performed by Buyer on or before
the Closing Date have been complied with and performed in all material
respects.
9.3.9 A written opinion addressed to Seller from counsel
for Buyer, in the form attached as Exhibit 9.3.9.
9.3.10 An executed Assignment or Assignments of Software
License Agreement in the form of Exhibit 9.2.15 relating to Seller's
CORE System and Seller's WISHES System.
9.3.11 An executed Debenture Purchase Agreement in the
form of Exhibit 2.2.2.
9.3.12 Such other documents, instruments and
certificates as Seller may reasonably request for the transactions
contemplated by this Agreement.
ARTICLE 10
TERMINATION PRIOR TO CLOSING DATE
10.1 Termination. This Agreement may be terminated prior to
the Closing Date only as follows:
10.1.1 By the mutual written consent of the Parties;
10.1.2 By either Party immediately upon written notice
to the other Party, if the Closing has not occurred on or before March
31, 1995 and the failure to close is not attributable to the fault of
the party terminating; or
10.1.3 By either Party immediately upon written notice
to the other Party if (a) a preliminary injunction is issued at the
request of any Governmental Authority that enjoins or prohibits the
Closing or (b) a permanent injunction is issued by a Governmental
Authority that enjoins or prohibits the Closing and becomes final and
non-appealable.
10.2 Effect of Termination.
<PAGE>59
10.2.1 General. If this Agreement terminates pursuant
to Section 10.1, no Party shall have any liability or obligation to the
other Party hereunder, other than the confidentiality obligation set
forth in Section 6.2. However, such termination shall not relieve any
Party of liability for any willful, material breach of this Agreement.
Without limiting the foregoing, if Closing does not occur due to a
breach by Seller of its obligations under this Agreement, then Seller
shall promptly reimburse Buyer in full for the Forty-Five Thousand
Dollar ($45,000.00) HSR filing fee previously paid by Buyer.
ARTICLE 11
INDEMNIFICATION AND PROCEDURES
11.1 Indemnification by Seller. Subject to the other
provisions of this Article 11 and Article 12 relating to certain
environmental indemnities, Seller shall indemnify and hold Buyer, its
Affiliates and their respective employees, representatives, officers,
directors and agents (the "Buyer Indemnitees") harmless from and against
any and all Damages suffered by any Buyer Indemnitee arising out of:
(a) the breach of any representation or warranty made by
Seller in this Agreement or in any other agreement or certificate
delivered by Seller at the Closing;
(b) the breach of any covenant, undertaking or agreement
by Seller in this Agreement or in any other agreement executed and
delivered at the Closing;
(c) in addition to and without limiting the scope of
paragraphs (a) and (b) above:
(I) any claim against Aptus or NEI for workman's
compensation pending as of the Closing or any such claim made after the
Closing based upon or alleging an incident occurring entirely prior to
Closing, including any unsatisfied judgments or other final awards or
settlements reached, whether or not scheduled in this Agreement, except
to the extent properly reserved for on the December 1994 Balance Sheet;
(II) any litigation instituted or threatened against
Aptus or NEI as of the Closing, including any unsatisfied judgments or
other final awards or settlements reached, whether or not scheduled in
this Agreement, except to the extent properly reserved for on the
December 1994 Balance Sheet;
(III) any litigation instituted or threatened against
Aptus or NEI after the Closing based upon or alleging an incident
occurring entirely prior to Closing;
(IV) any litigation instituted or threatened against
Aptus or NEI, other than litigation addressed by items (II) and (III)
above, but only to the extent attributable to the business of Aptus or
NEI prior to the Closing;
<PAGE>60
(V) any liability of any kind whatsoever (i) arising
from any incident or occurrence prior to July 1985 and relating in any
way to the business operations of NEI, any predecessor of NEI, any
Person merged into NEI or Aptus, or any Person whose liabilities were
assumed by NEI or Aptus as a result of an acquisition, divestiture or
reorganizations whether by operation of law or otherwise, or (ii)
relating in any way to the business operations of National Oil
Processing, Inc., Coffeyville Truck Center, Inc., National Investment
Company, or any Person required to be identified on Schedule 3.1.3 but
omitted therefrom. This section is intended to extend to any claims
made against Aptus with regard to the one (1) acre parcel of property
owned by Hawks and Meehan and located at the Coffeyville Facility.
(VI) any Undisclosed Liabilities.
The foregoing items (a), (b) and (c) being collectively
referred to as the "Retained Liabilities."
11.2 Indemnification by Buyer. Subject to the other
provisions of this Article 11 and Article 12 relating to certain
environmental indemnities, Buyer shall indemnify and hold Seller, its
Affiliates and their respective employees, representatives, officers,
directors and agents (the "Seller Indemnitees") harmless from and
against any Damages suffered by any Seller Indemnitee arising out of:
(a) the breach of any representation or warranty made by
Buyer in this Agreement or in any other agreement or certificate
delivered by Buyer at the Closing;
(b) the breach of any covenant by Buyer in this Agreement
or in any other agreement executed and delivered at the Closing;
(c) any claim made against Aptus or NEI for workman's
compensation made after the Closing, except to the extent such claim
constitutes a Retained Liability;
(d) any litigation instituted or threatened against Aptus
or NEI after the Closing, except to the extent such claim constitutes a
Retained Liability;
(e) after the Closing Date, the failure by Buyer, NEI or
Aptus to perform any of its obligations, except to the extent that such
obligations arise from events or conditions that entitle any Buyer
Indemnitee to indemnification pursuant to this Agreement; or
(f) the operation of the Business after the Closing Date,
including any liability of Seller as surety or indemnitor for NEI or
Aptus under any performance or surety bond or letter of credit (other
than those referred to and specifically handled pursuant to Section
5.8.5) relating to post closing operations of NEI or Aptus, except to
the extent that such Damages constitute a Retained Liability.
11.3 Notice and Resolution of Claims.
11.3.1 Notice. Each indemnified party (a "Beneficiary")
shall promptly give written notice to the indemnifying Party after
obtaining knowledge of any claim that it may have pursuant to this
<PAGE>61
Article 11. Such notice shall set forth in reasonable detail the claim
and the basis for indemnification.
11.3.2 Right to Assume Defense. If such claim for
indemnity shall arise from a claim or Action involving a third party (a
"Third Party Claim"), the Beneficiary shall permit the indemnifying
Party to assume its defense. If the indemnifying Party assumes the
defense of such Third Party Claim, it shall take all steps necessary to
investigate, defend or settle such Action and shall, subject to Section
11.4, hold the Beneficiary harmless from and against any and all Damages
caused by or arising out of any settlement approved by the indemnifying
Party or any judgment in connection with such Third Party Claim.
Without the written consent of the Beneficiary, the indemnifying Party
shall not consent to entry of any judgment or enter into any settlement
that does not include an unconditional and complete release of the
Beneficiary by the claimant or plaintiff making the Third Party Claim
(except in the case of an Action involving a Governmental Authority
where the Governmental Authority does not typically provide an
unconditional and complete release, in which case the indemnifying Party
shall not consent to entry of any judgment or enter into any settlement
that does not contain customary nonadmissions and settlement terms
peculiar to that Governmental Authority). The Beneficiary may
participate in such defense or settlement through its own counsel, but
at its own expense.
11.3.3 Failure to Assume Defense. Failure by the
indemnifying Party to notify the Beneficiary of its election to assume
the defense of any Third Party Claim within thirty (30) days after its
receipt of notice thereof shall be deemed a waiver by the indemnifying
Party of its right to assume the defense of such Third Party Claim. In
such event, the Beneficiary may defend against such Third Party Claim in
any manner it deems appropriate, at the cost and expense of the
Indemnifying Party. The Beneficiary may settle such Third Party Claim
or consent to the entry of any judgment with respect thereto, provided
that it acts reasonably and in good faith.
11.4 Limits on Indemnification.
11.4.1 Seller shall not be liable to defend, indemnify
and hold harmless Buyer against any Damages under this Article 11 unless
and until the aggregate Damages exceed Five Hundred Thousand
($500,000.00) Dollars (the "Basket"), and then shall be liable only for
Damages in excess of the Basket. Furthermore, neither Party shall be
liable to indemnify, defend and hold harmless an Indemnitee against
Damages in respect of which indemnification may be available in excess
of $135,000,000 (the "Cap"); provided, however, that the breach or non-
fulfillment of any covenant, undertaking or agreement (as distinguished
from a breach of a representation or warranty) shall not be subject to,
nor apply in calculating, the Basket or the Cap. For purposes of
determining the Basket, any breach by Seller of a representation or
warranty hereunder shall be determined without regard to whether the
breach resulted in a Material Adverse Effect. Notwithstanding the
foregoing, the liability of Seller with respect to the following items
shall not be subject to, nor apply in calculating, the Basket or the
Cap: Section 3.22 (Taxes); Section 7.2 (Tax Covenants); Section 7.1
(Employee Matters); Section 11.1 (c) (I) (relating to Workman's
Compensation); Section 11.1 (c) (II) (relating to pending litigation);
Section 11.1 (c) (V) (relating to certain potential predecessor
<PAGE>62
liabilities); and Section 3.15 (Accounts Receivable). In addition, the
limitations period provided in Section 11.5 shall not apply to the items
enumerated in the immediately preceding sentence and Seller's
representations and warranties and indemnification obligations related
to such items shall survive indefinitely (subject only to applicable
statutes of limitations and any extensions thereto), with the exception
of Section 11.1 (c) (V) which shall survive for twenty-five (25) years.
11.4.2 The determination of Final Adjusted Net Worth and
the post Closing adjustment of the Purchase Price in accordance with
Section 2.4 hereto shall not affect Buyer's ability to seek
indemnification for a breach of a representation or warranty relating to
the Financial Statements. Buyer may not make a claim against Seller for
breach of Section 3.15 relating to accounts receivable, unless it has
attempted to collect same in accordance with its normal collection
procedures. Buyer shall also be required to apply amounts which it
collects on receivables in the order in which the accounts receivable
were created, except with respect to disputed receivables.
11.5 Survival. With the exception of those items identified
in Article 12 or Section 11.4, Seller's representations and warranties
and indemnification obligations under this Agreement shall terminate
three (3) years from the Closing Date. Representations and warranties
that are made as of a specified date or are remade as of the Closing
Date are not intended to be deemed to be remade effective as of a date
subsequent to the Closing Date.
11.6 Exclusive Remedy. The remedies of Buyer and Seller
provided for in this Agreement shall be the exclusive remedies of the
Parties with respect to the matters covered by this Agreement, the
events giving rise to this Agreement, the Purchased Assets and the
Business. Without limiting the generality or effect of the foregoing,
as a material inducement to the other party entering into this
Agreement, except for the remedies set forth in this Agreement, each of
the Parties hereby waives any claim or cause of action which it might
assert, including, without limitation, under the common law, federal,
state or foreign securities, trade regulation, or other law, by reason
of this Agreement, the matters covered hereby, the events giving rise to
this Agreement, the Purchased Assets or the Business. Buyer shall not
be entitled to a rescission of this Agreement.
11.7 No Mitigation. The representations and warranties of
either Party shall not be mitigated by any investigation conducted by
the other Party or its representatives prior to Closing.
11.8 Indemnity Payments. All payments made pursuant to
Section 11.1 (other than interest payments) will be treated by the
Parties on all Returns as an adjustment to the Purchase Price.
11.9 Buyer's Cooperation.
11.9.1 Buyer shall promptly provide Seller with (a)
copies of all notices concerning the Retained Liabilities and any
indemnifiable claims that Buyer or Aptus receives after the Closing
Date, (b) the assistance, at Seller's cost, of all directors, officers,
employees, representatives and agents of Aptus, and (c) all other
information concerning the Retained Liabilities that Seller needs or
requests to manage and defend the Retained Liabilities.
<PAGE>63
11.10 Payment and Assignment of Claims.
11.10.1 Payment. Upon final determination by agreement
of the Parties or pursuant to arbitration as set forth in Section 14.12
that a Party is entitled to indemnification under this Article, the
indemnifying Party shall promptly pay or reimburse, as appropriate, the
Beneficiary for any Damages to which it is entitled to be indemnified
hereunder. Neither Party shall permit any exercise of any right of set-
off against the other Party until such final determination is made.
11.10.2 Assignment. If any of the Damages for which an
indemnifying Party is responsible or allegedly responsible under this
Article 11 are recoverable or potentially recoverable against any third
party, other than a Beneficiary's insurer, at the time when payment is
due hereunder, the Beneficiary shall assign any and all rights that it
may have to recover such Damages to the indemnifying Party or, if such
rights are not assignable for any reason, the Beneficiary hereunder
shall attempt in good faith, at the other party's cost and expense, to
collect any and all damages and losses on account thereof from such
third party for the benefit of the indemnifying Party.
11.11 Other Beneficiaries. Buyer shall cause the Buyer
Indemnitees, and Seller shall cause the Seller Indemnitees, to comply
with the provisions and to abide by the limitations set forth in this
Article 11.
11.12 Consequential Damages; Other Limitations.
11.12.1 Seller shall have no obligation to indemnify any
of the Buyer Indemnitees against any Consequential Damages suffered or
alleged by any of the Buyer Indemnitees. Buyer shall have no obligation
to indemnify any of the Seller Indemnitees against any Consequential
Damages suffered or alleged by any of the Seller Indemnitees. This
restriction shall not apply to a party's obligation to indemnify an
Indemnitee against Consequential Damages suffered or alleged by a Person
other than the Indemnitee.
11.12.2 Neither party shall have any obligation to
indemnify the other party or its Indemnitees to the extent that Damages
(including Retained Liabilities) are caused, contributed to or
exacerbated by the actions of the party seeking indemnification or its
contractors, subcontractors or agents.
ARTICLE 12
CERTAIN ENVIRONMENTAL MATTERS
12.1 Seller's Environmental Responsibility.
12.1.1 Seller Indemnity. Subject to the other
provisions of this Article 12, Seller shall indemnify and hold harmless
the Buyer Indemnitees from and against any and all Damages suffered by
any Buyer Indemnitee arising out of (collectively, the "Seller's
Environmental Responsibility"):
(a) Identified Environmental Concerns;
<PAGE>64
(b) Off-Site Disposal to the extent attributable to the
Business prior to Closing;
(c) Existing Environmental Violations, except to the
extent reserved for on the December 1994 Balance Sheet;
(d) Environmental Violations discovered after Closing, to
the extent attributable to the Business prior to Closing;
(e) Existing Third Party Environmental Claims;
(f) Third Party Environmental Claims to the extent
attributable to an Identified Environmental Concern; and
(g) Third Party Environmental Claims (excluding those
under Sections 12.1 (e) and 12.1 (f) above) to the extent attributable
to the Business prior to Closing.
(h) Government Remediation Claims to the extent
attributable to the Business prior to Closing.
12.1.2 For purposes of this Article 12, the "Business"
shall refer to any business conducted by NEI, Aptus or any Person
identified or required to be identified on Schedule 3.1.3.
12.2 Buyer Environmental Responsibility. Subject to the
other provisions of this Article 12, Buyer shall indemnify and hold
harmless the Seller Indemnitees from and against any and all Damages
suffered by any Seller Indemnitee arising out of (collectively, the
"Buyer's Environmental Responsibility"):
(a) Off-Site Disposal to the extent attributable to Buyer,
Aptus or NEI post Closing;
(b) Environmental Violations to the extent attributable to
Buyer, Aptus or NEI post Closing; and
(c) Third Party Environmental Claims to the extent
attributable to Buyer, Aptus or NEI post Closing.
12.3 Identified Environmental Concerns. "Identified
Environmental Concerns" shall refer to the following items and Seller's
responsibility therefor shall be as set forth in Section 12.10:
(a) "Coffeyville Contamination". The identified
groundwater contamination and other sources of contamination at the
Coffeyville, Kansas facility (the "Coffeyville Facility") identified on
Schedule 12.3 hereto.
12.4 Off-Site Disposal. "Off-Site Disposal" shall refer to
the disposal off-site of Hazardous Wastes or PCBs, provided that the
off-site migration of Hazardous Substances from on-site disposal at a
facility being transferred hereunder to Buyer shall be treated as a
Third Party Environmental Claim. In the case of Seller's Environmental
Responsibility, Seller's indemnity shall extend to disposal sites
whether or not listed by Seller on Schedule 3.18 hereto, but shall not
extend to (a) any sites ever owned or operated by Buyer or its
Subsidiaries, or (b) sites identified on Schedule 3.18 which Buyer, in
<PAGE>65
its sole discretion, shall have identified prior to the execution
hereof, as acceptable facilities.
12.5 Environmental Violations. "Environmental Violations"
shall mean any violation, as of the Closing Date, of Environmental Laws
(as such laws exist as of the Closing Date) in the operation of the
Business, or the failure to have any Permit, as of the Closing Date,
required by Environmental Laws (as such laws exist as of the Closing
Date) which are imposed on or incurred by Buyer as a result of an
affirmative obligation imposed upon Buyer by the actions of a
Governmental Authority, except to the extent reserved for on the
December 1994 Balance Sheet. "Existing Environmental Violations" shall
be those that are scheduled or required to be scheduled in this
Agreement.
12.6 Third Party Environmental Claim.
12.6.1 "Third Party Environmental Claim" means any claim
for Damages, including those for personal injury or property damage,
resulting from or alleged to result from exposure to any Hazardous
Substance as a result of the operation of the Business asserted by any
Person other than a party entitled to indemnification under this
Agreement, whether or not caused by an Environmental Violation. Third
Party Environmental Claims shall include (a) any claims made under
performance or surety bonds issued in connection with the Business prior
to Closing and (b) any claims that any Hazardous Substance generated,
transported or disposed of in connection with the Business, has been
found at a site at which any Person (other than a party entitled to
indemnification under this Agreement) has conducted, plans to conduct,
or has demanded that the receiver of the notice conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law. An "Existing Third Party Environmental Claim" shall
be one which has been made in writing prior to Closing, whether or not
scheduled in this Agreement.
12.6.2 With respect to Third Party Environmental Claims
based upon or alleging Damages as a result of exposure occurring or
condition existing from or on any Real Property both before and after
the Closing, responsibility shall be borne pro rata by Seller and Buyer
in proportion to the relative lengths of third party exposure during
their respective periods of occupancy of the Real Property; provided
that, for purposes of this allocation, (A) the respective periods of
occupancy for any claim shall be determined as of the date such claim is
first presented or filed and (B) subject to its right to pursue
contribution or indemnity from any other third party, Seller's occupancy
shall include any period of occupancy by its predecessors-in-interest
during which exposure is alleged.
12.7 Government Remediation Claim. "Government Remediation
Claim" means a Thirty Party Claim brought by a Governmental Authority
(other than an Identified Environmental Concern) relative to the
remediation of any contaminated property and shall extend to any
investigation, remediation or corrective action mandated by such
Government Authority (including inspections, monitoring, sampling and
removal of contaminated property).
12.8 Limitations and Deductibles.
<PAGE>66
12.8.1 Seller's Environmental Responsibility shall be
limited in accordance with the following table which identifies by cross
reference the items in Section 12.1:
<TABLE>
Category Limitations Period Deductible
<C> <C> <C>
12.1(a) (Identified Environmental Until remediated as None
Concerns) set forth in Section 12.10
12.1(b) (Off-Site Disposal) 15 years after Closing None
12.1(e) (Existing Environmental 30 months after Closing None
Violations)
12.1(d) (Environmental Violations 30 months after Closing $150,000 in
Discovered after Closing) the aggregate
12.1(e) (Existing Third Party 10 years after Closing None
Environmental Claims)
12.1(f) (Third Party Environmental The later of 10 years None
Claims attributable to an after Closing or until
Identified Environmental the Identified Environmental
Concern) Concern is remediated as
set forth in Section 12.10
12.1(g) (Third Party 10 years after Closing $1,000,000 in
Environmental Claims) the aggregate
12.1(h) (Government Remediation 5 years after Closing $400,000 in
Claims) the aggregate
12.8.2 With respect to the items set forth in Section
12.8.1 above: (a) Seller's Environmental Responsibility shall expire at
the end of the Limitations Period specified unless Buyer has made a
written claim for Damages prior to the expiration of such period or upon
Seller's completion of a scheduled or specific item; and (b) Buyer shall
assume responsibility for Damages up to the amount of the Deductible
therein specified.
<PAGE>67
12.8.3 The responsibilities for Deductibles and Damages
set forth in this Article 12 shall be distinct from those in Article 11
and not be subject to nor apply in calculating any Baskets set forth in
Article 11. To the extent that the recovery of Damages is addressed by
one of the categories set forth in Section 12.1.1, Article 12 shall
govern to the exclusion of Article 11; provided that to the extent any
Damages are recoverable by any Buyer Indemnitee under Section 11.1 (c)
(V) (relating to certain potential predecessor liabilities), it shall
also be entitled to indemnification under such Section; provided further
that the exclusive remedy of any Buyer Indemnitee for Damages with
respect to Identified Environmental Concerns recoverable under Section
12.10 shall be as set forth in that Section.
12.8.4 Seller shall have no obligation to indemnify and
hold harmless the Buyer Indemnitees under this Article 12 in excess of
the $135,000,000 cap set forth in Section 11.4; provided that (a) for
purposes of calculating this limitation, Seller shall be afforded a
dollar for dollar credit for Damages it has indemnified Buyer against
under Article 11 to the extent that such Damages are governed by the
cap; and (b) the liability of Seller with respect to Off-Site Disposal
shall not be subject to, nor apply in calculating any deductibles or
cap.
12.9 Miscellaneous. The following Sections of Article 11
shall apply equally to Article 12 and the obligations of Seller under
this Article 12 shall be deemed Retained Liabilities.
11.3 Notice and Resolution of Claims
11.6 Exclusive Remedy
11.7 Mitigation
11.8 Indemnity Payments
11.9 Buyer's Cooperation
11.10 Payment and Assignment of Claims
11.11 Other Beneficiaries
11.12 Consequential Damages; Other Limitations
12.10 Certain Remediation Activities.
12.10.1 Coffeyville Contamination.
12.10.1.1 Responsibility of Seller. In the case of
the remediation of the Coffeyville Contamination, Seller shall, at
Seller's sole cost and expense, perform such investigation, remediation
or corrective action, in full compliance with the requirements of any
Governmental Authority (whether or not pursuant to Environmental Laws in
effect on or prior to Closing) including inspections, monitoring,
sampling and the removal of any groundwater and associated soils and any
other materials mandated by an affirmative action of a Governmental
Authority. Seller's obligation under this Section shall extend to (a)
the ongoing RCRA corrective action (the "RCRA Action") and (b) any other
investigation, remediation or corrective action initiated within ten
(10) years after Closing by any Governmental Authority in connection
with the Coffeyville Contamination or the items identified on Schedule
12.3 as sources or potential sources of contamination. Seller shall
also be responsible for maintaining any financial assurances required by
any Governmental Authority in connection with the above, whether
required under a RCRA corrective action order or as part of the
Coffeyville Facility's RCRA or TSCA permits; provided that this
<PAGE>68
obligation shall not extend to any Financial Assurances otherwise
required of Buyer as part of the Coffeyville Facility's RCRA or TSCA
permits.
12.10.1.2 TCE Cost Sharing. Buyer shall not be
restricted by this Agreement in its ability post Closing to transport,
store, handle, incinerate or otherwise dispose of waste streams
containing trichloroethylene (TCE) at the Coffeyville Facility.
However, in the event the Coffeyville Facility engages in any of the
foregoing activities or otherwise begins to use TCE in its operations
post Closing, Buyer and Seller agree that remediation costs under the
RCRA Action shall be borne by both Buyer and Seller in a ratio such that
Seller's percentage of liability decreases by five (5) percent for each
100,000 pounds of TCE, if any, brought onto the Coffeyville Facility for
use in Buyer's operations post Closing or spilled by Buyer at the
Coffeyville Facility post Closing.
12.10.1.3 Survival. Seller's responsibility and
liability under this Agreement with respect to the RCRA Action shall
terminate when the remediation has achieved to the satisfaction of the
Governmental Authority the established remediation clean up levels
required by the final remediation plan and such levels have been
sustained for one (1) year. After this has been achieved, any post
remediation monitoring of the Coffeyville Facility required as a result
of the facility's RCRA permit or the groundwater contamination shall be
the sole responsibility of Buyer.
12.10.2 Control. With respect to Identified
Environmental Concerns or Government Remediation Claims, Seller shall
have full control in dealing and negotiating with the cognizant
regulatory authorities; provided that (a) Buyer shall have the right to
attend, at its own expense, any meetings with the regulatory authorities
and shall be provided copies of all correspondence, reports, or other
documents (including inspections, monitoring, sampling and analytical
results) submitted or received by or on behalf of Seller, and (b) Seller
shall not, without the prior written consent of Buyer (which shall not
be unreasonably withheld), take any measure or step that imposes any
unreasonable burden or encumbrance upon the operation or conduct of
Buyer's business unless mandated to do so by a Governmental Authority.
In this regard, Seller agrees to coordinate its activities with Buyer's
plant manager and safety manager at the facility in question. In the
event that Buyer shares liability due to its actions post Closing as
provided herein, Buyer shall have equal responsibility in proportion to
its liability in dealing with the regulatory agency(ies). In any event,
Buyer shall have the right to review all submissions or proposals to the
cognizant regulatory agency(ies) reasonably in advance of such
submissions or proposals being offered to such agency(ies).
12.10.3 Access. Buyer hereby grants to Seller and its
consultants a right of reasonable access to its facilities (and those of
its tenants, if required) in order to meet its obligations under this
Article 12; provided that Seller shall conduct any such remediation or
corrective action in a manner so as to assure no unreasonable
interference with the ongoing operations or conduct of Buyer's business
unless mandated to do so by a Governmental Authority. Any dispute under
this Section as to the reasonableness of Seller's actions may be
submitted for resolution to arbitration as set forth in Section 14.12.
Buyer shall allow Seller and its representatives and agents to store all
<PAGE>69
equipment and materials that are necessary or desirable for undertaking
remediation or corrective actions required.
12.10.4 Cooperation. With respect to Identified
Environmental Concerns or Government Remediation Claims, each party
shall reasonably cooperate with the other towards effecting any
remediation or corrective action required and shall provide the other
with copies of any studies, analytical test results or reports which may
come into its possession or control, including consultants retained by
or on its behalf with respect to environmental conditions. As long as
Seller's Environmental Responsibility at a facility is in effect, (a)
each party shall provide notice and documentation to the other of any
spill incidents, whether or not reportable, occurring after the Closing
Date in, on or around the Coffeyville Facility, Lakeville facility or
Utah facility within ten (10) days of such incident and (b) each party
shall also promptly provide to the other a copy of any written
statement, report, notice, registration, application, permit, license,
claim, action or proceeding given to or received from any Person
entering or occupying the Coffeyville Facility, Lakeville facility or
Utah facility concerning the spill, release, discharge of or exposure to
any Hazardous Substance or contamination in, on, or about the
Coffeyville Facility, Lakeville facility or Utah facility including but
not limited to all such documents as may be involved in any air and
water discharges from the site. Further, the Buyer shall provide to
Seller reasonable access to its purchasing and disposal records and
shall provide timely notice of any material change in type or volume of
product used in its operations at the Coffeyville Facility greater than
thirty-three and one-third (33 1/3%) percent of the preceding year's
annual inventory.
12.10.5 Monitoring and Sampling. Buyer agrees that
Seller may for the purposes of (a) complying with government ordered
remediation; or (b) establishing baseline assessments of contamination;
or (c) monitoring of any new, preexisting or suspected contamination;
take soil samples or install additional groundwater monitoring wells and
sample such wells and soils as needed in specific areas of concern;
provided that Seller shall conduct any such remediation or corrective
action in a manner so as to assure no unreasonable interference with the
ongoing operations or conduct of Buyer's business unless mandated to do
so by a Governmental Authority. Any disputes under this Section as to
the reasonableness of Seller's actions may be submitted for resolution
to arbitration as set forth in Section 14.12 with the exception of
government mandated actions. Buyer shall be given advance notice of
such testing and sampling and shall be entitled to split samples, if
requested, at its expense. Buyer may also choose to conduct its own
testing and sampling (including sampling of groundwater wells installed
by Seller). Buyer and Seller agree, at Seller's sole cost and expense
(except as noted below) to the establishment and permanent location, if
necessary, of a Westinghouse representative on the Coffeyville site and
further agree to provide such representative with office space to
perform the remediation, monitoring and oversight of planned remediation
activities at the site as well as baseline monitoring of activities at
site. Buyer agrees to absorb the costs of office space for such full
time representative over the lifetime of the remedial action.
12.10.6 Conduct. If Seller or its officers, employees,
agents or representatives enter any properties of Aptus, pursuant to
this Agreement after the Closing, each Party shall indemnify and save
<PAGE>70
harmless the other and its Indemnitees from and against any Damages
arising therefrom to the extent resulting from the negligence or willful
misconduct of the Indemnifying Party or its contractors, subcontractors
or agents.
ARTICLE 13
DEFINITIONS
For purposes of this Agreement, the terms set forth below
shall have the following meanings:
"AAA" shall have the meaning set forth in Section 14.12.
"Action" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, for any Person, any other Person
controlling, controlled by, or under common control with such Person.
The term "control" means the possession, directly or indirectly, of the
power to direct the management and policies of such Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Purchase Agreement, together with the
Schedules and Exhibits.
"Aptus" shall have the meaning set forth in the recitals to
this Agreement.
"Aptus Shares" means 1,000 shares of Common Stock of Aptus,
constituting all of the issued and outstanding shares of capital stock
of Aptus.
"Assignment and Assumption Agreement" shall have the meaning
set forth in Section 2.2.3.
"Audited Financial Statements" shall have the meaning set
forth in Section 3.5.
"Authenticating Agent" shall have the meaning set forth in the
IDB Indenture.
"Basket" shall have the meaning set forth in Section 11.4
hereto.
"Beneficiary" shall have the meaning set forth in Section
11.3.1.
"Business" shall have the meaning set forth in the Recitals
Section.
"Buyer" shall have the meaning set forth in the heading to
this Agreement.
"Buyer Indemnitees" shall have the meaning set forth in
Section 11.1.
<PAGE>71
"Buyer's Employee Welfare Benefit Plan" shall have the meaning
set forth in Section 7.1.6.
"Buyer's Environmental Responsibility" shall have the meaning
set forth in Section 12.2.
"Buyer's Pension Plan" shall have the meaning set forth in
Section 7.1.4(a).
"Cap" shall have the meaning set forth in Section 11.4 hereto.
"Charter Documents" means the articles or certificate of
incorporation and its by-laws, as each has been amended or supplemented
from time to time.
"Closing" shall have the meaning set forth in Section 2.2.1.
"Closing Date" shall have the meaning set forth in Section
9.1.
"Closing Date Closure and Post Closure Costs" shall have the
meaning set forth in Section 5.8 hereto.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Coffeyville Facility" shall have the meaning set forth in
Section 12.3.
"Coffeyville Contamination" shall have the meaning set forth
in Section 12.3.
"Confidentiality Agreement" means the Confidentiality
Agreement dated as of November 30, 1993 between Seller and Buyer.
"Consent" means a consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority.
"Consequential Damages" are Damages that arise out of any
interruption of business, loss of profits, loss of use of the
facilities, claims of customers or other indirect damages.
Consequential Damages shall exclude compensatory or actual damages and
incidental damages (as that term is used in the Uniform Commercial
Code).
"Continuing Employees" shall have the meaning set forth in
Section 7.1.1.
"Covered Returns" means Returns with respect to Covered Taxes.
"Covered Taxes" means any Taxes.
"Damages" means all losses, claims, damages, costs, fines,
penalties, obligations, payments and liabilities (including those
arising out of any Action), together with all reasonable costs and
expenses (including reasonable outside attorneys' fees and reasonable
out-of-pocket expenses) incurred in connection with any of the
foregoing. Damages shall include any costs of actions within the
<PAGE>72
definition of "response action" under CERCLA Section 101(25) or any
similar or successor legislation, including the installation of
equipment at a facility required to address an Environmental Violation.
"December 1994 Adjusted Net Worth" shall have the meaning set
forth in Section 2.3.2.
"December 1994 Balance Sheet" means the Balance Sheet dated
December 31, 1994 and attached to Schedule 3.5 hereto.
"Dollars" or "$" means lawful currency of the United States.
"Effective Conversion Date" shall have the meaning set forth
in either Section 7.8.3.1 or Section 7.8.3.2, as applicable.
"Employee" shall have the meaning set forth in Section 3.20.1.
"Employee Benefit Plans" shall have the meaning set forth in
Section 3.21.1.
"Employee Welfare Benefit Plans" shall have the meaning set
forth in Section 3(1) of ERISA, whether or not such plans are subject to
ERISA.
"Environmental Laws" means any of the following in effect and
as interpreted as of the Closing Date: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
9601 et seq.; the Toxic Substance Control Act, as amended, 15 U.S.C.
2601 et seq.; the Hazardous Materials Transportation Act, as amended 49
U.S.C. 1802 et seq.; the Resource Conservation Recovery Act, as
amended, 42 U.S.C. 9601, et seq.; the Clean Water Act, as amended, 33
U.S.C. 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. 7401 et
seq.; the Occupational Safety and Health Act, 29 U.S.C. 651 et seq.;
and all applicable U.S. federal, state, municipal, local and foreign
laws, principles of common law ordinances, codes, as well as orders,
decrees, judgments, seizures or injunctions issued, promulgated,
approved or entered on or before the Closing Date thereunder relating to
pollution, protection of the environment, or protection of the public
from pollution or employee health and safety, including, but not limited
to the release or threatened release of Hazardous Substances into the
environment or otherwise relating to the presence, manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances.
"Environmental Violations" shall have the meaning set forth in
Section 12.5.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan" shall have the meaning set forth in Section 3(3)
of ERISA with respect to employee benefit plans maintained or
contributed to by Seller on behalf of Aptus or Aptus that currently
cover Employees and are subject to ERISA.
"Existing Environmental Violations" shall have the meaning set
forth in Section 12.5.
<PAGE>73
"Existing Third Party Environmental Claim" shall have the
meaning set forth in Section 12.6.
"Final Adjusted Net Worth" shall have the meaning set forth in
Section 2.4.1.
"Financial Assurances" shall have the meaning set forth in
Section 5.8.
"Financial Statements" shall have the meaning set forth in
Section 3.5.
"Flexible Period" shall have the meaning set forth in the IDB
Indenture.
"Flexible Rate" shall have the meaning set forth in the IDB
Indenture.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, state or local
government, any of its subdivisions, agencies, authorities, commissions,
boards or bureaus, any special improvement district, any federal, state
or local court or tribunal of competent jurisdiction.
"Governmental Remediation Claim" shall have the meaning set
forth in Section 12.7.
"Guarantee" means any guarantee, any indemnification
obligation and any other contingent obligation to purchase, to provide
funds for payment, to supply funds to invest in any Person or otherwise
to assure a creditor against loss including performance bonds and
letters of credit.
"Hazardous Substance" means any of the following in effect and
as interpreted as of the Closing Date: any "hazardous substance" as
defined under CERCLA or the rules and regulations promulgated
thereunder, any Hazardous Waste, radioactive materials, petroleum or
petroleum-derived substance or waste, PCB, asbestos, or any constituent
or combination of any of the above.
"Hazardous Waste" means "hazardous waste" as defined in RCRA
or the rules and regulations promulgated thereunder (as in effect and as
interpreted as of the Closing Date).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder.
"IDB Backstop Expiry Date" means the earliest to occur of (i)
the discharge of the lien of the IDB Indenture pursuant to Section 12.01
thereof, (ii) June 1, 2020, and (iii) the Effective Conversion Date.
"IDB Costs" whether incurred by Buyer or Seller, shall consist
of (i) any annual or other periodic fees and expenses relating to a
Letter of Credit, (ii) any fees or premium payable with respect to an
IDB Interest Rate Cap, (iii) any annual or other periodic fees and
expenses payable to the Remarketing Agent (subject to Section 7.8.2
hereof), (iv) any annual or other periodic fees and any expenses payable
<PAGE>74
to any rating agency, (v) the interest payable on the aggregate
principal amount of the IDBs at the IDB Interest Rate, but shall not
include any Underwriting Costs.
"IDB Indenture" means the Indenture of Trust between Tooele
County, Utah and Security Pacific National Trust Company (New York), as
Trustee, dated as of June 1, 1990, as amended.
"IDB Interest Rate" means at any time the actual interest
payable (without giving effect to any penalty charges) on the IDBs by
the Company (after giving effect to the Interest Rate Cap but before
giving effect to the cost sharing provision of this Agreement), as it
may be adjusted pursuant to Section 7.8.3.2 (a).
"IDB Interest Rate Cap" means a policy or contract allocating
to the provider thereof the obligation to pay a portion of the interest
which Buyer obligated to pay with respect to the IDBs, issued in
accordance with Section 7.8.5.2, as the same may from time to time be
reissued or extended in accordance with its terms, or any substitute
therefor which, in any case shall be issued by a provider and be on
terms and subject to conditions reasonably acceptable to Seller.
"IDB Loan Agreement" shall have the meaning set forth in
Section 2.1.
"IDBs" means the industrial development bonds defined in
Section 2.1(b).
"Identified Environmental Concerns" shall have the meaning set
forth in Section 12.3.
"Immediate Notices" shall have the meaning set forth in the
IDB Indenture.
"Income Tax" means any federal, state or local income,
alternative minimum and franchise or other similar tax, duty,
governmental charge or assessment imposed by or on behalf of any
Governmental Authority that is based on or measured by income
(including, interest and penalties on any of the forgoing).
"Income Tax Returns" means any Returns with respect to Income
Tax.
"Independent Firm" shall have the meaning set forth in Section
2.3.1.
"Intellectual Property" shall have the meaning set forth in
Section 3.19.1.
"Interim Period" means, with respect to any Tax, imposed on
NEI or Aptus on a periodic basis for which the Closing Date is not the
last day of a Short Period, the period of time beginning on the first
day of the actual taxable period that includes (but does not end on) the
Closing Date and ending on the Closing Date.
"Issuer" shall have the meaning set forth in the IDB
Indenture.
<PAGE>75
"Law" means any statute, rule, regulation or ordinance.
"Lease" means any lease or sublease of real or personal
property to Aptus.
"Leased Personal Property" shall have the meaning set forth in
Section 3.10.2.
"Leased Real Property" shall have the meaning set forth in
Section 3.9.2.
"Letter of Credit" shall mean an irrevocable letter of credit
to be dated the Closing Date from a bank in favor of the trustee under
the IDB Indenture, issued at the request of Seller, as the same may from
time to time be reissued or extended in accordance with its terms, or
any substitute therefor.
"Letter of Intent" shall mean the Letter of Intent entered
into on August 22, 1994 between Buyer and Seller.
"Lien" means any lien, mortgage, deed of trust, security
interest, charge, pledge, retention of title agreement, easement,
encroachment, condition, reservation, covenant or other encumbrance
affecting title.
"Mandatory Tender Date" shall have the meaning set forth in
the IDB Indenture.
"Material Adverse Effect" means a material adverse effect on
(a) the Business, financial condition or results of operations of the
Business, taken as a whole (without giving effect to any effect in the
Retained Liabilities), or (b) the ability of Seller to consummate the
transactions contemplated by this Agreement.
"Material Contracts" means the Contracts identified on
Schedule 3.13.
"Material Lease" means any Real Property Lease or Material
Personal Property Lease.
"Material Personal Property Lease" means any lease of personal
property involving one (1) year or rental obligations exceeding Fifty
Thousand Dollars ($50,000.00).
"NEI" shall have the meaning set forth in the recitals to this
Agreement.
"Non-Transferred Instrument" shall have the meaning set forth
in Section 5.4.2.
"Off-Site Disposal" shall have the meaning set forth in
Section 12.4.
"Order" means any order, judgment, injunction, decree or award
of any Governmental Authority.
"Owned Real Property" shall have the meaning set forth in
Section 3.9.1.
<PAGE>76
"Party" means Buyer or Seller.
"PCB" means PolyChlorinated Biphenyl.
"Pension Plan" means the Westinghouse Pension Plan.
"Period" has the meaning set forth in Section 7.2.1.
"Permit" means any permit, license, certificate (including a
certificate of occupancy) registration, authorization or approval issued
by a Governmental Authority.
"Permitted Liens" means (a) Liens for Taxes that are not yet
due and payable or that are being contested in good faith by appropriate
proceedings and as to which reserves have been established consistent
with GAAP, (b) landlords' and similar Liens imposed by Law that have
been incurred in the ordinary course of business, and (c) other title
defects, easements, encroachments and encumbrances that do not,
individually or in the aggregate, materially impair the value or
continued use of the property to which they relate, assuming that Aptus
uses such property for commercial purposes.
"Person" means an individual, partnership, joint venture,
association, corporation, trust or any Governmental Authority.
"Plan" shall have the meaning set forth in Section 3.21.1.
"Post-Closing Period" means any Period that begins after the
Closing Date and, with respect to any Period beginning before and ending
after the Closing Date, the portion of such Period commencing on the day
following the Closing Date.
"Purchase Price" shall have the meaning set forth in Section
2.1.
"Rate Period" shall have the meaning set forth in the IDB
Indenture.
"Real Property" means the Owned Real Property and the Leased
Real Property.
"Real Property Lease" shall have the meaning set forth in
Section 3.9.2.
"Remarketing Agent" shall have the meaning set forth in the
IDB Indenture.
"Retained Liabilities" shall have the meaning set forth in
Section 11.1 hereto.
"Returns" means any federal, state or local tax Returns,
reports, declarations and forms with respect to Taxes.
"Savings Program" means the Westinghouse Savings Program.
"Seller" shall have the meaning set forth in the heading to
this Agreement.
<PAGE>77
"Seller Indemnitees" shall have the meaning set forth in
Section 11.2.
"Seller's Employee Welfare Benefit Plan" shall have the
meaning set forth in Section 7.1.6.
"Seller's Environmental Responsibility" shall have the meaning
set forth in Section 12.1.
"Seller's Knowledge" or "to the knowledge of Seller" shall
mean the actual knowledge, after due and appropriate inquiry of the
person identified on Schedule 13.
"Seller's Plan" shall have the meaning set forth in Section
7.1.3.
"Senior Unsecured Debentures" shall have the meaning set forth
in Section 2.1.
"Shares" means 3,000 shares of Common Stock of NEI,
constituting all of the issued and outstanding shares of capital stock
of NEI.
"Short-Period" means any Period ending on the Closing Date.
"Subordinated Debentures" shall have the meaning set forth in
Section 2.1.
"Subsidiary" of any Person means any corporation of which 50%
or more of its shares of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors,
managers, or trustees of such corporation, irrespective of whether or
not at the time, stock of any other class or classes shall have or might
have voting power by reason of the happening of any contingency, are
owned or controlled directly or indirectly by such Person or by any
other Subsidiary of such Person.
"Tax" or "Taxes" means all income, profits, franchise, gross
receipts, capital, sales, use, withholding, value added, ad valorem,
transfer, employment, social security, disability, occupation, property,
severance, production, waste, excise and other taxes, duties and similar
governmental charges and assessments imposed by or on behalf of any
Governmental Authority (including interest and penalties thereon).
"Tax Exemption Certificate and Agreement" shall mean such
document dated June 26, 1990 among Seller, Issuer and Trustee.
"Tax Laws" means the Code and all other Laws relating to
Taxes.
"Tender Agent" shall have the meaning set forth in the IDB
Indenture.
"Term Period" shall have the meaning set forth in the IDB
Indenture.
"Terminating Employees" shall have the meaning set forth in
Section 7.1.1.
<PAGE>78
"Third Party Claim" shall have the meaning set forth in
Section 11.3.2.
"Third Party Environmental Claim" shall have the meaning set
forth in Section 12.6.
"Transition Employees" shall have the meaning set forth in
Section 7.1.1.
"Trustee" shall have the meaning set forth in the IDB
Indenture.
"Unaudited Financial Statements" shall have the meaning set
forth in Section 3.5.
"Underwriting Costs" shall mean the underwriting fees and
expenses of the Remarketing Agent in connection with the remarketing of
the IDBs at the Closing Date and at the Effective Conversion Date, and
all related underwriting costs, including, without limitation, the fees
and expenses of accountants and bond counsel, fees and expenses in
connection with the delivery of other legal opinions or required in
connection with obtaining a rating on the IDBs, fees and expenses
relating to any feasibility study required in connection with
remarketing the IDBs, fees and expenses incurred in connection with the
initial issuance of the Letter of Credit and the initial rating agency
fees, and printing and mailing fees, but shall not include any IDB
Costs.
"Undisclosed Liabilities" shall have the meaning set forth in
Section 3.6.
ARTICLE 14
MISCELLANEOUS
14.1 Severability. If any provision of this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement will not be
affected or impaired thereby.
14.2 Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Parties; provided, however, that this
Agreement may not be assigned by any Party without the express written
consent of the other Party.
14.3 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be
an original and all of which when taken together shall constitute the
same instrument.
14.4 Headings. The headings of the Sections are inserted for
convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
14.5 Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the Party which is
entitled to the benefits thereof. No waiver of any of the provisions of
<PAGE>79
this Agreement shall be deemed or shall constitute a waiver of such
provision at any time in the future or a waiver of any other provision
hereof.
14.6 No Third-Party Beneficiaries. Nothing in this Agreement
shall create any third-party beneficiary rights in any Person other than
the Beneficiaries.
14.7 Sales and Transfer Taxes. Seller shall pay all sales,
transfer, deed, duties, stamp, notary public and other similar taxes,
duties and transfer fees applicable to the transactions contemplated by
this Agreement, if any, including fees to record assignments.
14.8 Other Expenses. Except as otherwise expressly provided
for herein or in any agreement entered into on the date hereof, Seller
and Buyer shall each pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and legal counsel. Costs or expenses of Seller
shall be paid by Seller and not by Aptus or from the assets of Aptus.
Any and all fees, costs and expenses for title or survey work related to
any of the Real Property shall be paid by Buyer. Any further or
additional environmental investigations, studies or analyses relating to
any of the Real Property shall be paid by Buyer.
14.9 Notices. Any notice, request, instruction, consent or
other document to be given hereunder by either party hereto to the other
party shall be in writing and delivered personally, by nationally
recognized overnight courier service, or sent by registered or certified
mail, postage prepaid, as follows:
If to Seller:
Office of the Chairman
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222-1384
Fax Number:
With a copy to:
Office of General Counsel
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222-1384
Fax Number:
If to Buyer:
Office of the Vice Chairman
Rollins Environmental Services, Inc.
2200 Concord Pike
Wilmington, DE 19803
<PAGE>80
With a copy to:
Klaus M. Belohoubek, Esquire
Rollins Environmental Services, Inc.
2200 Concord Pike
Wilmington, DE 19803
or at such other address for a Party as shall be specified in writing by
that Party. Any notice which is delivered personally or by nationally
recognized overnight courier service to the addresses provided herein
shall be deemed to have been duly given to the Party to whom it is
directed upon actual receipt by such Party. Any notice which is
addressed and mailed in the manner herein provided shall be deemed given
to the Party to which it is addressed when received.
14.10 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the Laws of Pennsylvania
applicable to agreements made and to be performed wholly within the
Commonwealth. Unless specifically stated, otherwise, references to
Articles, Sections, Exhibits and Schedules refer to Articles, Sections,
Exhibits and Schedules in this Agreement. References to "includes" and
"including" mean "includes without limitation" and "including without
limitation."
14.11 Public Announcements. Seller and Buyer shall agree on
the terms of the press releases to be issued upon the execution of this
Agreement and shall consult with each other before issuing any other
press releases with respect to this Agreement and the transactions
contemplated hereby, including any termination of this Agreement for any
reason.
14.12 Arbitration.
14.12.1 In the event of any dispute arising between the
parties hereto, regarding any of the terms or provisions or breach of
this Agreement, such disputes shall be resolved by submitting same to
arbitration, the results of which shall be final and binding upon the
parties and in accordance with the Commercial Arbitration Rules of the
American Association of Arbitrators ("AAA"). Such arbitration shall be
held in Pittsburgh, Pennsylvania or Wilmington, Delaware, as determined
in the sole discretion of the arbitrators, before a three person
arbitration panel consisting of practicing attorneys familiar with
environmental law if the dispute involves environmental issues. The
arbitrators shall not reside in Pittsburgh or Wilmington and shall be
subject to the AAA's no conflict rules. The arbitration panel shall be
selected from a list of arbitrators supplied by AAA as follows: one
arbitrator by Seller, one arbitrator by Buyer, and the third arbitrator
selected by the arbitrators appointed by Seller and Buyer:
(a) Upon the written or telexed demand for arbitration by
any of the parties hereto, Buyer and Seller shall appoint their
respective selection as arbitrator not later than ten days following
receipt of the list supplied by AAA.
(b) The two arbitrators so selected by Buyer and Seller,
shall appoint a third arbitrator not later than ten (10) days thereafter
and the three man arbitration panel so constituted shall call for an
arbitration hearing not later than thirty (30) days thereafter. The
<PAGE>81
period of arbitration, from the time of the first hearing, shall not
exceed ninety (90) days unless such period be extended by the
arbitrators for good cause shown.
(c) The final decision of the arbitrators shall be a
written decision setting forth the findings of fact and conclusions
reached by the arbitrators, shall be rendered not more than thirty (30)
days following the final hearing and shall be sent to the parties by
registered mail forthwith, thereafter.
(d) The prevailing party in any such arbitration shall be
entitled to interest on amounts due and to reimbursement of fees and
expenses (including reasonable attorneys' fees) as determined by the
arbitrators.
(e) The decision of the arbitrators shall be final and
nonappealable in accordance with AAA rules, except as follows: to the
extent that either the claim for damages or the amount of damages
awarded exceeds Ten Million and 00/100 Dollars ($10,000,000.00), then
the arbitrators shall be required to include in their decision both the
factual and the legal conclusions reached in support of the decision and
either party shall be entitled to appeal the decision to a court of
competent jurisdiction based on error in the application of governing
legal principles only. In this regard, the arbitrators shall be
required to observe Section 11.6 to this Agreement (Exclusive Remedy).
The findings of fact shall remain undisturbed unless manifestly in
error. The prevailing party in any such litigation shall be entitled to
interest on amounts due and to reimbursement of fees and expenses
(including reasonable attorneys' fees) as determined by the court. For
purposes of this Section, the parties consent to the jurisdiction of
federal and state courts within Pennsylvania and Delaware.
14.12.2 This Section, with the exception of the last
sentence of 14.1.2.1, shall not apply to disputes under Section 7.4
(Non-Competition). In addition, any disputes brought under the
Indentures governing the Senior Unsecured Debentures or the Subordinated
Debentures shall be governed by such Indentures and not by this Section.
14.13 Financial Projections. Buyer and Seller may have
shared with each other certain financial projections relating to their
respective businesses or the combined business of Buyer and Aptus post
Closing. Buyer and Seller acknowledge that such financial projections
should not be relied upon as accurate or reliable since they are based
on various estimates and assumptions that may be unwarranted or
speculative. Accordingly, neither Party shall have any liability to the
other based on the sharing of such financial projections.
14.14 Confidentiality. The terms of the Confidentiality
Agreement shall be extended for a period of five (5) years post Closing.
Without limiting the generality of the foregoing, the terms of the
Confidentiality Agreement shall extend to the Parties ongoing business
and contractual relationships under this Agreement as long as such
relationships continue (whether or not beyond the five (5) year period),
including without limitation Section 5.9 (Right to Seller Business Post
Closing), Section 5.10 (Right to Seller Intellectual Property Post
Closing), and Articles 11 and 12 (relating to Indemnification Post
Closing).
<PAGE>82
14.15 Entire Agreement; Amendment. This Agreement, the
Confidentiality Agreement and the other written agreements, if any,
entered into on the date hereof constitute the sole understanding of the
Parties with respect to the matters contemplated hereby and thereby and
supersede all prior agreements and understandings, including the Letter
of Intent, between the Parties with respect to such matters. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly
executed by the Party against whom it would apply.
14.16 Further Assurances. At any time and from time to time
prior to and after the Closing Date, each party shall, at the reasonable
request of the other, execute and deliver any further instruments or
documents and take all such further action as such party may reasonably
request in order to consummate more effectively the transactions
contemplated by this Agreement.
14.17 Exclusive Jurisdiction and Consent to Service of
Process. Subject to Section 14.12, the Parties agree that any legal
action, suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby, shall be instituted in a
Federal or state court sitting in either Pennsylvania or Delaware. Such
courts shall be the exclusive jurisdiction and venue of said legal
proceedings and each Party hereto waives any objection which such party
may now or hereafter have to the laying of venue of any such action,
suit or proceeding, and irrevocably submits to the jurisdiction of any
such court in any such action, suit or proceeding. Any and all service
of process and any other notice in any such action, suit or proceeding
shall be effective against such Party when transmitted in accordance
with this Agreement. Nothing contained herein shall be deemed to affect
the right of any Party hereto to serve process in any manner permitted
by law.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ Fredric G. Reynolds
Title: Executive Vice President and
Chief Fiancial Office
ROLLINS ENVIRONMENTAL
SERVICES, INC.
By: /s/ Nicholas Pappas
Title: President
<PAGE>83
EXHIBIT 2
DEBENTURE PURCHASE AGREEMENT
This DEBENTURE PURCHASE AGREEMENT ("Agreement") is dated as of
March 31, 1995 by and between ROLLINS ENVIRONMENTAL SERVICES, INC., a
Delaware corporation ("Rollins"), and WESTINGHOUSE ELECTRIC CORPORATION,
a Pennsylvania corporation ("Westinghouse").
R E C I T A L S
A. Rollins wishes to acquire from Westinghouse, and
Westinghouse wishes to sell to Rollins, all of the issued and
outstanding shares of capital stock (the "Shares") of National Electric,
Inc., a Minnesota corporation and a wholly owned subsidiary of
Westinghouse, pursuant to that certain Stock Purchase Agreement dated as
of March 7, 1995 by and between Rollins and Westinghouse (the "Stock
Purchase Agreement").
B. In connection with and pursuant to Section 2.1 of the
Stock Purchase Agreement, Rollins proposes to issue and sell to
Westinghouse $66,000,000 aggregate principal amount of its 7.25%
Convertible Subordinated Securities Due 2005 (the "Subordinated
Securities"), to be issued pursuant to an indenture (the "Subordinated
Debt Indenture") to be dated as of the date of issue, between Rollins
and Texas Commerce Bank, N.A., as Trustee. Any capitalized term used but
not defined herein will have the meaning ascribed to such term in the
Subordinated Debt Indenture.
C. In connection with and pursuant to Section 2.1 of the
Stock Purchase Agreement, Rollins proposes to issue and sell to
Westinghouse $16,800,000 aggregate principal amount of its 7.75% Senior
Unsecured Series Securities Due 2005 subject to adjustment pursuant to
Section 2.4 of the Stock Purchase Agreement (the "Senior Securities";
together with the Subordinated Securities, the "Securities"), to be
issued pursuant to an indenture (the "Senior Debt Indenture", together
with the Subordinated Debt Indenture, the "Indentures") to be dated as
of the date of issue, between Rollins and First Fidelity Bank, N.A., as
Trustee.
NOW, THEREFORE, Rollins and Westinghouse, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
Definitions
<PAGE>84
1.1 Definitions. For purposes of this Agreement, the
terms set forth below will have the following meanings:
"Demand Registration Statement" has the meaning ascribed to
such term in Section 6.2(a).
"Indentures" has the meaning ascribed to such term in the
Recitals.
"Other Holders" has the meaning ascribed to such term in
Section 6.3(b).
"Other Securities" has the meaning ascribed to such term in
Section 6.3(a).
"Permitted Transferee" means any Person who acquires
Registrable Securities from Westinghouse in a transaction exempt from
registration under the Securities Act, or any subsequent purchaser from
any such Person in any such transaction.
"Piggyback Registration Statement" has the meaning ascribed to
such term in Section 6.3(a).
"Registrable Securities" means the Subordinated Securities and
the Senior Securities owned by Westinghouse. As to any particular
Registrable Securities, once issued such securities will cease to be
Registrable Securities when (a) a registration statement with respect to
the sale of such securities will have become effective under the
Securities Act and such securities will have been disposed of in
accordance with such registration statement, (b) they will have been
sold as permitted by Rule 144 (or any successor provision) under the
Securities Act, (c) they will have been transferred or sold to any
Person, or (d) they will have ceased to be outstanding.
"Registration Expenses" means all expenses, other than Selling
Expenses, incurred by Rollins in effecting any registration of
Securities under the Securities Act, including, without limitation, all
underwriting discounts, fees, spreads and selling commissions, all
registration, qualification, listing and filing fees applicable to any
sale of Securities for the account of Westinghouse (including, without
limitation, fees relating to registration or qualification under the
"blue sky" or securities laws of any jurisdiction), printing expenses,
fees and disbursements of counsel to Rollins and the independent
accountants of Rollins relating to any Registration Statement, and
expenses associated with any communications with Westinghouse required
or permitted hereunder, including without limitation the cost of mailing
such communications to Westinghouse.
"Registration Request" has the meaning ascribed to such term
in Section 6.2(a).
"Registration Statement" means a Piggyback Registration
Statement or a Demand Registration Statement.
"Rollins" means Rollins Environmental Services, Inc., a
Delaware corporation.
<PAGE>85
"Rule 415" means Rule 415 under the Securities Act and any
successor rule thereto.
"Rule 430A" means Rule 430A under the Securities Act and any
successor rule thereto.
"Rule 424" means Rule 424 under the Securities Act and any
successor rule thereto.
"Securities" has the meaning ascribed to such term in the
Recitals.
"Securities Legend" has the meaning ascribed to such term in
Section 4.1(c).
"Selling Expenses" means all underwriting discounts, fees,
spreads, and selling commissions applicable to the sale of Registrable
Securities for the account of Westinghouse when participating in any
registration by Rollins of any securities under the Securities Act, any
fees and disbursements of counsel, any accountants, and financial or
other advisors for Westinghouse when participating in such registration,
and any direct or indirect costs incurred under this Agreement by
Westinghouse.
"Stock Purchase Agreement" has the meaning ascribed to such
term in the Recitals.
"Westinghouse" means Westinghouse Electric Corporation, a
Pennsylvania corporation.
ARTICLE 2
Issuance of Securities
2.1 Issuance of Securities. Subject to the terms and
conditions set forth herein, Rollins hereby agrees to issue, and
Westinghouse hereby agrees to accept, the Securities in the face amount
set forth in the Recitals as part of the total consideration for the
purchase of the Shares pursuant to the Stock Purchase Agreement.
ARTICLE 3
Representations and
Warranties of Rollins
3.1 Authorization, Execution and Validity of Agreement.
The execution, delivery and performance by Rollins of this Agreement,
the Indentures and the issuance of the Securities have been duly
authorized by all necessary corporate action. This Agreement and the
Indentures have been duly and validly executed by Rollins, constitutes
its valid and binding obligation and is enforceable against Rollins in
accordance with its terms.
3.2 No Conflict; Rollins Consents. The execution,
delivery and performance by Rollins of this Agreement will not (a)
violate any Law, (b) violate and Charter Document of Rollins, (c)
<PAGE>86
require any Consent from any Governmental Authority, or (d) breach any
material Contract to which Rollins is a party or by which it is bound
(each of the foregoing capitalized terms as defined in the Stock
Purchase Agreement).
3.3 No Defaults. Assuming that the Securities were
outstanding on the date hereof, no Event of Default has occurred and is
continuing, and no event has occurred and is continuing which with the
lapse of time or the giving of notice, or both, would constitute an
Event of Default thereunder.
3.4 Use of Proceeds. The issuance of the Securities will
be part of the total consideration for the purchase of the Shares
pursuant to the Stock Purchase Agreement. None of the transactions
contemplated in this Agreement or the Indentures (including, without
limitation, the use of proceeds from the issuance and sale of the
Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation issued pursuant thereto, including,
without limitation, Regulations G, T and X of the Board of Governors of
the United State Federal Reserve System (the "Board"), 12 CFR, Article
II. Neither Rollins or any Subsidiary of Rollins owns or intends to
carry or purchase any "margin stock" within the meaning of Regulation G
of the Board. None of the proceeds from the sale of the Securities
hereunder will be used, directly or indirectly, to purchase or refinance
any borrowing, the proceeds of which were used to purchase any
"security" within the meaning of the Exchange Act.
3.5 Private Offering. Neither Rollins, directly or
indirectly, nor any agent on its behalf has offered or will offer the
Securities or any similar security or has solicited or will solicit an
offer to acquire the Securities or any similar security from any Person
so as to cause the issuance and sale of the Securities to violate the
provisions of Section 5 of the Securities Act.
ARTICLE 4
Representations and
Warranties of Westinghouse
4.1 Purchase of Securities; Restrictions on Transfer. (a)
Westinghouse is acquiring the Securities for its own account for
investment purposes only and not with a view to distribution or for
resale in a manner that would violate the securities law but subject,
nevertheless, to the disposition of the Securities being at all times
within Westinghouse's control.
(b) Westinghouse understands that the Securities have not
been registered under the Securities Act or under relevant state
securities laws (collectively, the "Acts"). Westinghouse further
understands that the Securities cannot be sold except pursuant to an
effective registration statement under the Securities Act or an
exemption from such registration requirements and in compliance with the
Securities Act and the Acts.
<PAGE>87
(c) Unless sold pursuant to an effective registration
statement under the Securities Act and except as set forth in this
Section, Securities will bear the following legend (the "Securities
Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND OF THE APPLICABLE LAWS OF EACH
STATE OF THE UNITED STATES OR IN TRANSACTIONS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION REQUIREMENTS.
Rollins will re-issue any Security, without the Securities
Legend, and Rollins will cause the Trustee to authenticate such
re-issued Security, if:
(i) such Security has been transferred in a transaction that (A)
is in compliance with Rule 144(k) under the Securities Act, (B) is in
compliance with Rule 904 of Regulation S under the Securities Act or (C)
does not require registration under the Securities Act, and in the case
of the foregoing Westinghouse will have delivered to Rollins such
documentation and legal opinions as Rollins may reasonably request, such
documentation and legal opinions to be reasonably satisfactory in form
and substance to Rollins; or
(ii) such Security has been transferred in a transaction that is
pursuant to an effective registration statement under the Securities
Act; or
(iii) three years will have elapsed since the later to occur of
(A) the issuance of the Securities or (B) the date, if any, on which
such Security was transferred by an affiliate (within the meaning of
Rule 144) of Rollins or by a Person that had been such an affiliate at
any time during the three months prior to such transfer (provided,
however, that Westinghouse is not such an affiliate or a Person that had
been such an affiliate at any time during the three months prior to such
re-issuance).
4.2 Accredited Investor. Westinghouse is an "accredited
investor" as that term is used in Section 4.5 of the Stock Purchase
Agreement and has sufficient knowledge and experience in financial and
business matters so as to enable it to evaluate the risks and merits
inherent in the Securities which comprise the Purchase Price (as defined
in the Stock Purchase Agreement). Westinghouse acknowledges receipt and
review of copies of Rollins' most recent Annual Report to Shareholders,
Proxy Statement, Form 10-K and other filings with the Commission and has
had access to such information concerning Rollins as it has felt
necessary or appropriate for its evaluation.
ARTICLE 5
Covenants of Westinghouse
5.1 Resale of Securities. Westinghouse will not, without
the prior written consent of Rollins, knowingly and intentionally sell,
transfer or otherwise dispose of Common Stock or a principal amount of
the Subordinated Securities equal to more than .843793% of the
Outstanding Common Stock on a fully-diluted basis (including shares
<PAGE>88
issuable upon redemption or conversion pursuant to the Subordinated
Indenture) to any individual purchaser or its Affiliates in a private
transaction.
5.2 Acquisition of Ownership of Rollins. As of the date
hereof, Westinghouse does not beneficially own any Voting Securities (as
defined below). So long as no Default or Event of Default has occurred
and is continuing under either of the Indentures, and no event has
occurred and is continuing which with the lapse of time or the giving of
notice, or both, would constitute an Event of Default, Westinghouse
agrees that except within the terms of a specific request from Rollins,
neither Westinghouse nor any of its Affiliates will propose or publicly
announce or otherwise disclose an intent to propose, or enter into or
agree to enter into, singly or with any other person or directly or
indirectly, (a) any form of business combination, acquisition, or other
transaction relating to Rollins or any majority-owned Affiliate thereof,
(b) any form of restructuring, recapitalization or similar transaction
with respect to Rollins or any such Affiliate, or (c) any demand,
request or proposal to amend, waive or terminate any provision of this
Agreement, nor will Westinghouse or any Affiliate as a principal (i)
acquire, or offer, propose or agree to acquire, by purchase or
otherwise, any securities entitled to be voted generally in the election
of directors of Rollins or any direct or indirect options or other
rights to acquire such securities ("Voting Securities"), (ii) make, or
in any way participate in, any solicitation of proxies with respect to
any Voting Securities (including by the execution of action by written
consent), become a participant in any election contest with respect to
Rollins, seek to influence any person with respect to any Voting
Securities or demand a copy of Rollins' list of stockholders or other
books and records, (iii) participate in or encourage the formation of
any partnership, syndicate or other group which owns or seeks or offers
to acquire beneficial ownership of any Voting Securities or which seeks
to affect control of Rollins or for the purpose of circumventing this
Agreement, or (iv) otherwise act, alone or in concert with others
(including by providing financing for another person) to seek or to
offer to control or influence, in any manner, the management, Board of
Directors, or policies of Rollins. For purposes of this Section, an
"Affiliate" of Westinghouse will be deemed not to include the
Westinghouse Pension Fund, its trustees and investment managers.
5.3 Voting Power. So long as no Default or Event of
Default has occurred and is continuing under either of the Indentures,
and no event has occurred and is continuing which with the lapse of time
or the giving of notice, or both, would constitute an Event of Default,
with respect to any matter as to which all holders of Common Stock have
a right to vote, Westinghouse will deliver to Rollins proxies to vote
all shares of Common Stock which Westinghouse owns on each matter
submitted for a vote to all holders of the Common Stock in the same
proportion as all other shares of Common Stock are voted. The parties
intend for this Section to be an enforceable voting agreement under
Section 218 to the Delaware General Corporation Law, or any successor
legislation. To the extent that counsel to either party is of the
written opinion that this Section may not be enforceable, the parties
agree to negotiate and enter into a separate voting agreement, voting
trust or similar instrument that effects the intent of this Section.
Westinghouse agrees to execute such voting instructions, proxies, or
similar instruments as shall be reasonably requested by Rollins or its
transfer agent in order to effect the intent of this Section.
<PAGE>89
ARTICLE 6
Registration Rights
6.1 Limitation on Obligations of Rollins.
(a) Termination of Obligation to Register. The demand
registration rights and the piggyback registration rights provided under
this Section will terminate upon the earlier of the date (i) counsel for
Rollins will have delivered to Westinghouse an opinion that all of the
shares of Registrable Securities then owned by Westinghouse can be sold
without registration under Section 5 of the Securities Act or (ii)
Westinghouse will have sold all of the Securities held by it.
6.2 Demand Registration Rights.
(a) Registration Request. Upon the written request of
Westinghouse that Rollins effect the registration under the Securities
Act of all or part of the Registrable Securities representing not less
than 5% of the aggregate principal amount of the Registrable Securities
(a "Registration Request"), at any time after March 31, 1996, Rollins
will use its best efforts to effect the registration under the
Securities Act. Pursuant to such Registration Request, Rollins will
prepare and file, on such appropriate form as Rollins in its discretion
will determine (which form will satisfy any relevant provisions of the
Registration Request), a registration statement under the Securities Act
(a "Demand Registration Statement") to effect such registration and seek
to have such Demand Registration Statement become effective as promptly
as practicable.
A Registration Request will (i) specify the number of shares
of Registrable Securities intended to be offered and sold, (ii) express
the present intention of Westinghouse to offer or cause the offering of
such Registrable Securities for distribution, (iii) describe the nature
or method of the proposed offer and sale thereof and (iv) contain the
undertaking of Westinghouse to provide all such information and
materials and take all such action as may be required in order to permit
Rollins to comply with all applicable requirements of the Commission and
to obtain any desired acceleration of the effective date of such Demand
Registration Statement.
(b) Company Piggyback Registration Rights. If Rollins
files a registration statement pursuant to this Section for an
underwritten offering, Rollins will be entitled to include in such
registration statement, as a part of such underwritten offering,
additional shares of Common Stock to be sold for the account of Rollins
or for any other Persons, on the same terms and conditions as the
Registrable Securities being sold by Westinghouse; provided, however,
that if the managing underwriters of such offering advises in writing
that in their opinion the inclusion in such Demand Registration
Statement of all securities proposed to be included by Rollins or such
other Persons exceeds the number of securities which can be sold in such
offering or substantially affects the price that Westinghouse could
obtain in such offering, then the number of securities to be included in
such Demand Registration Statement for the account of Rollins or such
other Persons will be reduced, pro rata, to such number that such
managing underwriters advise could be included in such underwriting
<PAGE>90
without interfering with the successful marketing of the Registrable
Securities proposed to be sold by Westinghouse.
(c) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities
so to be registered will be selected by Rollins with the consent of
Westinghouse, such consent not to be unreasonably withheld.
(d) Priority in Requested Registration. In addition to
cutbacks required pursuant to paragraph (b) above, if the managing
underwriter of any underwritten offering will advise Rollins in writing
(with a copy to Westinghouse) that, in its opinion, the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range
acceptable to Westinghouse, Rollins will include Registrable Securities
in such registration to the extent of the number which Rollins is so
advised can be sold in such offering. In connection with any such
registration to which this paragraph is applicable, no securities other
than Registrable Securities will be covered by such registration.
(e) Current Demand Registration Statement Obligation. Upon
any Demand Registration Statement becoming effective, Rollins will use
its best efforts to keep such Demand Registration Statement current for
a period of 90 days or such shorter period which will terminate when all
Registrable Securities covered by such Demand Registration Statement
have been sold.
(f) Permissible Delays and Other Limitations of Rollins's
Obligations. Notwithstanding the foregoing, (i) Rollins will not be
obligated to cause any special audit to be undertaken in connection with
any Demand Registration Statement, (ii) Rollins will be entitled to
postpone for a reasonable period of time the filing of any Demand
Registration Statement otherwise required to be prepared and filed by it
(A) to the extent necessary to prepare the financial statements of
Rollins for the fiscal period most recently ended prior to the related
Registration Request, (B) if Rollins would be required to disclose in
such Demand Registration Statement the existence of any fact relating to
a material business situation, transaction or negotiation not otherwise
required to be disclosed, or (C) if Rollins notifies Westinghouse that a
registration at the time and on the terms requested would adversely
affect any equity financing by Rollins that had been contemplated by
Rollins prior to receipt of notice requesting registration pursuant to
paragraph (a) above; provided, however, that in the event of a delay
pursuant to clause (B), Rollins will not be entitled to delay the filing
for more than 100 days and (iii) Rollins will not be obligated to file a
Demand Registration Statement during the 100-day period following the
effectiveness of the registration statement filed by Rollins in
connection with an underwritten primary or a secondary offering of its
securities.
(g) Expenses. Rollins will pay all of the Registration
Expenses incurred in connection with up to two Demand Registration
Statements that become effective pursuant to this Section, and
Westinghouse will pay for any Registration Expenses incurred in
connection with any additional Demand Registration Statements up to the
limit for such registrations set forth in paragraph (i) below; provided
that if any securities are registered for sale for the account of any
Person other than Westinghouse or Rollins pursuant to paragraph (b)
<PAGE>91
above, each such Person will bear its pro rata share of all Registration
Expenses (provided that for purposes of this Section, Rollins may pay
such pro rata expenses on behalf of the Persons other than Westinghouse;
provided, further, that in no event will Westinghouse be required to pay
any internal costs of Rollins. Westinghouse will pay all Selling
Expenses under any such Demand Registration Statement.
(h) Effectiveness of Registration Statement. For purposes
of this Agreement, a Registration Statement will not be deemed to have
become effective:
(i) if, after a Registration Statement has become effective, such
Registration Statement is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental
authority for any reason other than an act or omission of Westinghouse;
(ii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied other than by reason of some act or
omission by Westinghouse; or
(iii) if Rollins voluntarily takes any action that would result in
Westinghouse not being able to sell such Registrable Securities covered
thereby during the period specified in paragraph (b) above, unless such
action is required under applicable laws, provided that the foregoing
will not apply to actions taken by Rollins in good faith and for valid
business reasons, including without limitation the acquisition or
divestiture of assets.
(i) Limitation on Demand Registration Rights.
Notwithstanding anything in this Section to the contrary, in no event
will Rollins be required to effect, in the aggregate, without regard to
Westinghouse making such request, more than two effective registrations
pursuant to this Section; subject to diminution pursuant to Section
6.3(d). The use of any demand registration right will not diminish the
number of piggyback registration rights available to Westinghouse
pursuant to Section 6.3(c).
6.3 Incidental Registration.
(a) Piggyback Rights. If Rollins at any time proposes to
register any of its securities ("Other Securities") under the Securities
Act (other than a registration on Form S-4 or S-8 or an S-3 registration
statement which relates solely to a dividend reinvestment plan or
employee purchase plan), whether or not for sale for its own account, in
a manner which would permit registration of Registrable Securities for
sale to the public under the Securities Act, it will each such time give
prompt written notice to Westinghouse of its intention to do so at least
30 days prior to the anticipated filing date of the registration
statement relating to such registration. Such notice will offer
Westinghouse the opportunity to include in such registration statement
(a "Piggyback Registration Statement") such number of Registrable
Securities as Westinghouse may request. Upon the written request of
Westinghouse made within 10 days after the receipt of Rollins's notice
(which request will specify the number of Registrable Securities
intended to be disposed of and the intended method of disposition
thereof), Rollins will use its best efforts to effect, in connection
with the registration of the Other Securities, the registration under
<PAGE>92
the Securities Act of all Registrable Securities which Rollins has been
so requested to register by Westinghouse to the extent required to
permit the disposition (in accordance with such intended methods as
requested by Westinghouse) of the Registrable Securities to be so
registered on the same terms and conditions as any similar securities of
Rollins included in such Piggyback Registration Statement; provided that
if, at any time after giving such written notice of its intention to
register any Other Securities and prior to the effective date of the
Piggyback Registration Statement, Rollins will determine for any reason
not to register the Other Securities, Rollins may, at its election, give
written notice of such determination to Westinghouse and thereupon
Rollins will be relieved of its obligation to register such Registrable
Securities in connection with the registration of such Other Securities
(but not from its obligation to pay Registration Expenses to the extent
incurred in connection therewith as provided in paragraph (e) below).
(b) Priority in Incidental Registrations. If the
registration referred to in the first sentence of paragraph (a) above is
to be: (i) an underwritten primary registration on behalf of Rollins,
and the managing underwriters advise Rollins in writing that in their
opinion the total number of securities requested to be included in such
registration exceeds the number of securities which can be sold in such
offering or substantially affects the price that Rollins could obtain in
such offering, Rollins will include in such registration (A) first, up
to the full number of securities Rollins proposes to sell and (B)
second, up to the full number of securities that such underwriters
advise can be so sold allocated pro rata among the holders of Other
Securities (other than the securities sold by Rollins) (the "Other
Holders") who have also requested registration of their securities and
Westinghouse on the basis of the number of securities (including
Registrable Securities) requested to be included therein by the each
Other Holder and by Westinghouse; or (ii) an underwritten secondary
registration of other securities of Rollins on behalf of Persons other
than Westinghouse or Rollins ("Initiating Persons"), and the managing
underwriters advise Rollins in writing that in their opinion (A) the
total number of securities requested to be included in such registration
exceeds the number of securities which can be sold in such offering or
substantially affects the price that the Initiating Persons could obtain
in such offering, Rollins will include in such registration (x) first,
up to the full number of securities the Initiating Persons requesting
registration propose to sell and (y) second, up to the full number of
securities that such underwriters advise can be so sold allocated pro
rata among Rollins, Westinghouse and the Other Holders (other than the
Initiating Persons), who have also requested registration of their
securities, on the basis of the number of securities (including
Registrable Securities) requested to be included therein by Rollins,
Westinghouse and the Other Holders (other than the Initiating Persons)
or (B) the request to include Registrable Securities would be
detrimental to such secondary offering, Rollins may exclude such
securities.
(c) Limitation of Piggyback Obligation. Notwithstanding
anything in this Section to the contrary, in no event will Rollins be
required to effect, in the aggregate, without regard to Westinghouse
making such request, more than two effective registrations pursuant to
this Section. The use of any demand registration right will not
diminish the number of piggyback registration rights available to
Westinghouse pursuant to this Section. Without limiting the generality
<PAGE>93
or effect of any other provision hereof, Rollins will not be required to
effect any registration of Registrable Securities under this Section
incidental to the registration of any of its securities in connection
with mergers, acquisitions, exchange offers, subscription offers,
dividend reinvestment plans or stock option or other employee benefit
plans.
(d) Limitation on Piggyback Registration Rights. No
registration of Registrable Securities effected under this Section will
relieve Rollins of its obligation to effect a registration of
Registrable Securities pursuant to Section 6.2; provided, however, that
such number of demand rights will be decreased by the number of
piggyback registrations that will have become effective as to the full
number of shares requested to be registered by Westinghouse.
(e) Expenses. Rollins will pay all Registration Expenses
in connection with any registration pursuant to this Section, except
that Westinghouse will pay any Selling Expenses in connection with any
registration pursuant to this Section.
6.4 Hold-Back Agreements.
(a) Restrictions on Public Sale by Westinghouse. If
Westinghouse holds any Registrable Securities covered by a Registration
Statement, Westinghouse agrees, if requested by the managing
underwriters in an underwritten offering, not to effect any public sale
or distribution of securities of Rollins of the same class as the
securities included in such Registration Statement, including a sale
pursuant to Rule 144 (except as part of such underwritten registration),
during the 10-day period prior to, and during the 90-day period
beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, or such other period to which
Rollins and Westinghouse may agree, to the extent timely notified in
writing by Rollins or the managing underwriters. The foregoing
provisions will not apply to Westinghouse if it is prevented by any
applicable statute or regulation from entering any such agreement;
provided, however, that Westinghouse will undertake, in its request to
participate in any such underwritten offering, not to effect any public
sale or distribution of any applicable class of Registrable Securities
commencing on the date of sale of such applicable class of Registrable
Securities unless it has provided 45 days' prior written notice of such
sale or distribution to the underwriter or underwriters.
(b) Restrictions on Sale of Securities by Rollins and
Others. Rollins agrees (i) not to effect any public or private offer,
sale or distribution of its securities, including a sale pursuant to
Regulation D under the Securities Act, (A) during the 10-day period
prior to, and during the 90-day period beginning with, the effectiveness
of any Registration Statement, or such other period to which Rollins and
Westinghouse may agree, (except as part of such registration, if
permitted, or pursuant to registrations on Forms S-4 or S-8 or any
successor form to such forms) and (B) during the 20-day period following
receipt by Rollins of a notice in writing from Westinghouse of an
intention to sell Registrable Securities pursuant to an effective
Registration Statement (except as part of such registration, if
permitted, or pursuant to registrations on Forms S-4 or S-8 or any
successor form to such Forms) and (ii) to use its best efforts to cause
<PAGE>94
its directors and executive officers to comply with all restrictions of
the securities laws during the periods set forth in clauses (A) or (B)
above.
6.5 Registration Procedures.
(a) Prospectuses; State Qualification. In connection with
any offering of Registrable Securities pursuant to this Agreement,
Rollins (i) will furnish to Westinghouse such number of copies of any
prospectus (including any preliminary prospectus) and prospectus
supplement as it may reasonably request in order to effect the offering
and sale of the Registrable Securities to be offered and sold, but only
while Rollins will be required under the provisions hereof to cause the
Registration Statement to remain current, and (ii) take such action as
will be necessary to qualify the Registrable Securities covered by such
registration under such blue sky or other state securities laws for
offer and sale as Westinghouse will request; provided, however, that
Rollins will not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it will not be then
qualified or to file any general consent to service of process.
(b) Underwriting Agreements. If requested, Rollins will
enter into an underwriting agreement with an investment banking firm
selected by Rollins in connection with a Piggyback Registration
Statement, or with a nationally recognized investment banking firm
selected pursuant to Section 6.2(c) in connection with a Demand
Registration Statement; in either case containing representations,
warranties, indemnities and agreements then customarily included by an
issuer in underwriting agreements with respect to secondary
distributions.
(c) Certificates. In connection with any offering of
Registrable Securities registered pursuant to this Agreement, Rollins
will (i) furnish Westinghouse, at Rollins's expense, with unlegended
certificates (in such denominations as Westinghouse will request)
representing ownership of the Registrable Securities which are sold
pursuant to any Registration Statement and (ii) instruct the Trustee and
registrar of the Securities to release any transfer restrictions with
respect to the Registrable Securities so sold.
(d) Covenants of Rollins. In connection with Rollins's
obligations pursuant to Sections 6.2 and 6.3, Rollins will:
(i) cooperate and assist in any filings required to be made the
Trust Indenture Act of 1939, as amended;
(ii) cooperate and assist in any filings required to be made with
any national securities exchange; and before filing a Registration
Statement or prospectus or any amendments or supplements thereto,
Rollins will furnish to counsel selected by Westinghouse (at
Westinghouse's expense) copies of all such documents proposed to be
filed, which documents will be subject to their review and comments;
(iii) cause the prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424;
<PAGE>95
(iv) notify Westinghouse when Registrable Securities are covered
by a Registration Statement promptly: (A) when the prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to such Registration Statement or any post-effective
amendment, when the same has become effective; (B) of any request by the
Commission for any amendments or supplements to such Registration
Statement or the prospectus or for additional information; (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose; (D) if, at any time prior to the closing
contemplated by an underwriting agreement entered into in connection
with such Registration Statement, that the representations and
warranties of Rollins contemplated by paragraph (b) above cease to be
true and correct; (E) of the receipt by Rollins of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and (F) of the happening of any
event which makes any statement made in such Registration Statement, the
prospectus or any document incorporated therein by reference untrue and
which requires the making of any changes in such Registration Statement,
the prospectus or any document incorporated therein by reference in
order to make the statements therein not misleading;
(v) make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement;
(vi) furnish to Westinghouse when Registrable Securities are
covered by a Registration Statement, without any additional charge, one
signed copy of such Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(vii) upon the occurrence of any event contemplated by paragraph
(d)(iii)(F) above, prepare a supplement or post-effective amendment to
the Registration Statement, 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, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(viii) cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange on which similar
securities issued by Rollins are then listed if requested by
Westinghouse or the managing underwriters, if any; and
(ix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission.
6.6 Indemnification and Contribution.
(a) Indemnification by Rollins. In the case of any offering
registered pursuant to this Agreement, Rollins agrees to indemnify and
hold Westinghouse, each underwriter of securities of Rollins under such
registration approved by Rollins as provided in Section 6.4 of this
Agreement and each person who controls any of the foregoing within the
meaning of Section 15 of the Securities Act harmless against any and all
<PAGE>96
losses, claims, damages or liabilities to which they or any of them may
become subject under the Securities Act or any other statute or common
law or otherwise, and to reimburse them for any reasonable legal or
other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as any such losses, claims,
damages, liabilities or actions will arise out of or will be based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement relating to the sale of such
Registrable Securities, 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 (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus (as amended or supplemented if Rollins will have
filed with the Commission any amendment or supplement thereof), if used
prior to the effective date of such Registration Statement, or contained
in the prospectus (as amended or supplemented if Rollins will have filed
with the Commission any amendment or supplement thereof, including the
information deemed part of such Registration Statement pursuant to Rule
430A), if used within the period during which Rollins will be required
to keep the Registration Statement to which such prospectus relates
current pursuant to the terms of this Agreement, or the omission or
alleged omission to state therein (if so used) a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
indemnification agreement contained in this Section will not apply to
such losses, claims, damages, liabilities or actions which will arise
from the sale of Registrable Securities to any person if such losses,
claims, damages, liabilities or actions will arise out of or will be
based upon any such untrue statement or alleged untrue statement, or any
such omission or alleged omission, if such statement or omission will
have been made in reliance upon and in conformity with information
furnished in writing to Rollins by Westinghouse or any such underwriter
specifically for use in connection with the preparation of the
Registration Statement or any preliminary prospectus or prospectus
contained in the Registration Statement or any such amendment thereof or
supplement thereto.
(b) Indemnification by Westinghouse and Underwriters. In
the case of each offering registered pursuant to this Agreement
Westinghouse agrees, and each underwriter participating therein will
agree, in the same manner and to the same extent as set forth in
paragraph (a) above severally to indemnify and hold harmless Rollins and
each person, if any, who controls Rollins within the meaning of Section
15 of the Securities Act, its directors and those officers of Rollins
who will have signed any such Registration Statement with respect to any
statement in or omission from such Registration Statement or any
preliminary prospectus (as amended or as supplemented, if amended or
supplemented as aforesaid) or prospectus contained in such Registration
Statement (as amended or as supplemented, if amended or supplemented as
aforesaid), if such statement or omission will have been made in
reliance upon and in conformity with information furnished in writing to
Rollins by Westinghouse or such underwriter specifically for use in
connection with the preparation of such Registration Statement or any
preliminary prospectus or prospectus contained in such Registration
Statement or any such amendment or supplement thereof.
(c) Conduct of Indemnification Procedures. Each party
indemnified under paragraphs (a) or (b) above will, promptly after
<PAGE>97
receipt of notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought, notify
the indemnifying party in writing of the commencement thereof. The
omission of any indemnified party so to notify an indemnifying party of
any such action will not relieve the indemnifying party from any
liability in respect of such action which it may have to such
indemnified party on account of the indemnity agreement in paragraphs
(a) or (b) above, unless and to the extent the indemnifying party was
prejudiced by such omission, and in no event will relieve the
indemnifying party from any other liability which it may have to such
indemnified party. In case any such action will be brought against any
indemnified party and it will notify an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under paragraphs (a) or (b)
above for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigations; provided, however, that the
indemnifying party will not be entitled to assume the defense of the
indemnified party if in the reasonable judgment of such indemnified
party based on written advice of counsel, a conflict of interest may
exist between such indemnified party and any other of the indemnified
parties with respect to such claim.
(d) Contribution. If for any reason the indemnification
provided for in paragraphs (a) and (b) above is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated in
paragraphs (a) and (b) above, then the indemnifying party will
contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative
fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations, provided that Westinghouse
will not be required to contribute in an amount greater than the dollar
amount of the proceeds received by Westinghouse with respect to the sale
of any securities. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE 7
Miscellaneous
7.1 Certain Rights of Westinghouse if Named in a Registration
Statement. If any Registration Statement refers to Westinghouse by name
or otherwise as the holder of any securities of Rollins, then
Westinghouse will have the right to require (a) the insertion therein of
language, in form and substance reasonably satisfactory to Westinghouse
and Rollins, to the effect that the holding by Westinghouse of such
securities (i) does not necessarily make Westinghouse a "controlling
person" of Rollins within the meaning of the Securities Act, (ii) is not
<PAGE>98
to be construed as a recommendation by Westinghouse of the investment
quality of Rollins's securities covered thereby and (iii) does not imply
that Westinghouse will assist in meeting any future financial
requirements of Rollins or (b) in the event that such reference to
Westinghouse by name or otherwise is not required by the Securities Act
or any of the rules and regulations promulgated thereunder, the deletion
of the reference to Westinghouse.
7.2 Public Company Status. Rollins will take all actions
reasonably necessary to maintain its registration under the Securities
Exchange Act of 1934, as amended. If Rollins fails to maintain such
registration, Westinghouse will have the right to require Rollins to
redeem all or any portion of Westinghouse's Subordinated Securities for
cash at a price equal to the product of (i) $6.82 multiplied by (ii) the
number of shares (calculated as to each conversion to the nearest 1/100
of a share) of Common Stock into which the principal amount of
Subordinated Securities is convertible at the Conversion Price (or at a
current adjusted Conversion Price if an adjustment has been made as
provided in the Subordinated Debt Indenture), together with accrued
interest to the date of payment.
7.3 Severability. If any provision of this Agreement or
in the Securities will be held invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will
not be affected or impaired thereby.
7.4 Successors and Assigns. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon the
successors and assigns of the parties hereto; provided, however, that
this Agreement may not be assigned by and party hereto without the
express written consent of the other party.
7.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which will for all purposes be deemed to
be an original and all of which when taken together will constitute the
same instrument.
7.6 Headings. The headings of the Sections are inserted
for convenience only and will not be deemed to constitute part of this
Agreement or to affect the construction hereof.
7.7 Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of
this Agreement will be deemed or will constitute a waiver of such
provision at any time in the future or a waiver of any other provision
hereof.
7.8 No Third-Party Beneficiaries. Nothing in this
Agreement or in the Securities will create any third-party beneficiary
rights in any Person other than the Beneficiaries (as defined in the
Stock Purchase Agreement).
7.9 Notices. Any notice, request, instruction, consent or
other document to be given hereunder by either party hereto to the other
party will be in writing and delivered personally, by telecopy or sent
by registered or certified mail, postage prepaid, as follows:
<PAGE>99
If to Westinghouse:
Office of the Chairman
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222-1384
facsimile: 412/642-3851
With a copy to:
Office of General Counsel
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222-1384
facsimile: 412/642-5224
If to Rollins, to:
Office of the Vice Chairman
Rollins Environmental Services, Inc.
2200 Concord Pike
Wilmington, DE 19803
facsimile: 302/426-3555
With a copy to:
Klaus M. Belohoubek, Esquire
Rollins Environmental Services, Inc.
2200 Concord Pike
Wilmington, DE 19803
facsimile: 302/426-3555
or at such other address for a party as will be specified in writing by
that Party. Notice delivered as provided above will be deemed to have
been duly given to the party to whom it is directed upon actual receipt
by such party.
7.10 Governing Law; Interpretation. This Agreement will
be construed in accordance with and governed by the laws of the State of
Delaware applicable to agreements made and to be performed wholly within
the State. Unless specifically stated otherwise, references to
Articles, Sections and Exhibits refer to Articles, Sections and Exhibits
in this Agreement. References to "includes" and "including" mean
"includes without limitation" and "including without limitation."
7.11 Arbitration. In the event of any dispute arising
between the parties hereto regarding any of the terms or provisions or
breach of this Agreement, such disputes will be resolved by submitting
same to arbitration, the results of which will be final and binding upon
the parties and in accordance with the Commercial Arbitration Rules of
the American Association of Arbitrators ("AAA"). Such arbitration will
be held in Pittsburgh, Pennsylvania or Wilmington, Delaware, as
determined in the sole discretion of the arbitrators, before a three
person arbitration panel. The arbitration panel will be selected from a
list of arbitrators supplied by AAA as follows: one arbitrator by
Westinghouse, one arbitrator by Rollins, and the third arbitrator
selected by the arbitrators appointed by Westinghouse and Rollins:
<PAGE>100 (a) Upon the written or telexed demand for arbitration by
any of the parties hereto, Westinghouse and Rollins will appoint their
respective selection as arbitrator not later than ten days following
receipt of the list supplied by AAA.
(b) The two arbitrators so selected by Westinghouse and
Rollins will appoint a third arbitrator not later than ten days
thereafter and the three person arbitration panel so constituted will
call for an arbitration hearing not later than 30 days thereafter. The
period of arbitration, from the time of the first hearing, will not
exceed 90 days unless such period be extended by the arbitrators for
good cause shown.
(c) The final decision of the arbitrators will be a
written decision setting forth the findings of fact and conclusions
reached by the arbitrators, will be rendered not more than 30 days
following the final hearing and will be sent to the parties by
registered mail forthwith, thereafter.
(d) The prevailing party in any such arbitration will be
entitled to interest on amounts due and to reimbursement of fees and
expenses (including reasonable attorneys' fees) as determined by the
arbitrators. The decision of the arbitrators will be final and
nonappealable in accordance with AAA rules, except as follows: to the
extent that either the claim for damages or the amount of damages
awarded exceeds Ten Millon and 00/100 Dollars ($10,000,000.00), then the
arbitrators will be required to include in their decision both the
factual and the legal conclusions reached in support of the decision and
either party will be entitled to appeal the decision to a court of
competent jurisdiction based on error in the application of governing
legal principles only. The findings of fact will remain undisturbed
unless manifestly in error. The prevailing party in any such litigation
will be entitled to interest on amounts due and to reimbursement of fees
and expenses (including reasonable attorneys' fees) as determined by the
court. For purposes of this Section, the parties consent to the
jurisdiction of Federal and state courts within Pennsylvania and
Delaware.
7.12 Entire Agreement; Amendments. This Agreement
constitutes the sole understanding of the parties hereto with respect to
the matters contemplated hereby and thereby and supersede all prior
agreements and understandings between the parties hereto with respect to
such matters. No amendment, modification or alteration of the terms or
provisions of this Agreement will be binding unless the same will be in
writing and duly executed by the party against whom it would apply.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
ROLLINS ENVIRONMENTAL SERVICES, INC.
By: /s/ Nicholas Papas
Name: Nicholas Papas
Title: President
<PAGE>101
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ Fredric G. Reynolds
Name: Fredric G. Reynolds
Title: Executive Vice President and Chief
Financial Officer
<PAGE>102
EXHIBIT 3
Indenture
Dated as of March 31, 1995
$66,000,000
7.25% Convertible Subordinated Debentures Due March 31, 2005
TABLE OF CONTENTS
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions. 1
SECTION 102. Compliance Certificates and Opinions 7
SECTION 103. Form of Documents Delivered to Trustee 8
SECTION 104. Acts of Holders; Record Dates 9
SECTION 105. Notices Etc., to Trustee and Company 10
SECTION 106. Notice to Holders: Waiver. 10
SECTION 107. Conflict with Trust Indenture Act. 11
SECTION 108. Effect of Headings and Table of Contents. 11
SECTION 109. Successors and Assigns. 11
SECTION 110. Separability Clause. 11
SECTION 111. Benefits of Indenture. 11
SECTION 112. Governing Law. 12
SECTION 113. Legal Holidays. 12
SECTION 114. No Security Interest Created. 12
SECTION 115. Limitation on Individual Liability. 12
SECTION 116. No Right of Set-Off. 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally. 13
SECTION 202. Form of Face of Security. 13
SECTION 203. Form of Reverse of Security. 15
SECTION 204. Form of Trustee's Certificate of Authentication.
21
ARTICLE THREE
The Securities
SECTION 301. Title and Terms. 22
SECTION 302. Denominations. 22
SECTION 303. Execution, Authentication, Delivery and Dating.
22
SECTION 304. Temporary Securities. 23
<PAGE>103
SECTION 305. Registration, Registration of Transfer and
Exchange. 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities. 25
SECTION 307. Payment of Interest; Interest Rights
Preserved. 26
SECTION 308. Persons Deemed Owners. 27
SECTION 309. Cancellation. 27
SECTION 310. Computation of Interest. 28
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture 28
SECTION 402. Application of Trust Money. 29
SECTION 403. Reinstatement. 29
ARTICLE FIVE
Remedies
SECTION 501. Events of Default. 30
SECTION 502. Acceleration of Maturity; Rescission and
Annulment. 32
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. 33
SECTION 504. Trustee May File Proofs of Claim. 34
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities. 35
SECTION 506. Application of Money Collected 35
SECTION 507. Limitation on Suits. 35
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest and
to Convert. 36
SECTION 509. Restoration of Rights and Remedies. 36
SECTION 510. Rights and Remedies Cumulative. 37
SECTION 511. Delay or Omission Not Waiver. 37
SECTION 512. Control by Holders. 37
SECTION 513. Waiver of Past Defaults. 38
SECTION 514. Undertaking for Costs. 38
SECTION 515. Waiver of Stay or Extension Laws. 39
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities. 39
SECTION 602. Notice of Defaults. 39
SECTION 603. Certain Rights of Trustee. 39
SECTION 604. Not Responsible for Recitals or Issuance of
Securities. 41
SECTION 605. May Hold Securities. 41
SECTION 606. Money Held in Trust. 41
SECTION 607. Compensation and Reimbursement. 41
SECTION 608. Disqualification; Conflicting Interests. 42
SECTION 609. Corporate Trustee Required; Eligibility. 42
SECTION 610. Resignation and Removal; Appointment of
Successor. 42
<PAGE>104
SECTION 611. Acceptance of Appointment by Successor. 44
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business. 44
SECTION 613. Preferential Collection of Claims Against
Company. 44
SECTION 614. Appointment of Authenticating Agent. 45
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders. 47
SECTION 702. Preservation of Information; Communications to
Holders. 47
SECTION 703. Reports by Trustee. 48
SECTION 704. Reports by Company. 48
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc. 48
SECTION 802. Successor Substituted. 49
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of
Holders. 50
SECTION 902. Supplemental Indenture with Consent of
Holders. 50
SECTION 903. Execution of Supplemental Indentures. 51
SECTION 904. Effect of Supplemental Indentures. 52
SECTION 905. Conformity with Trust Indenture Act. 52
SECTION 906. Reference in Securities to Supplemental
Indentures. 52
SECTION 907. Notice of Supplemental Indenture. 52
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest. 52
SECTION 1002. Maintenance of Office or Agency. 52
SECTION 1003. Money for Security Payments to be Held in
Trust. 53
SECTION 1004. Statement by Officers as to Default. 54
SECTION 1005. Existence. 55
SECTION 1006. Payment of Taxes and Other Claims. 55
SECTION 1007. Maintenance of Properties. 55
SECTION 1008. Commission Reports. 55
SECTION 1009. Waiver of Certain Covenants. 56
SECTION 1010. Reservation and Issuance of Common Stock. 56
SECTION 1011. Registration and Listing of Shares. 56
<PAGE>105
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption. 57
SECTION 1102. Applicability of Article. 57
SECTION 1103. Election to Redeem; Notice to Trustee. 57
SECTION 1104. Notice of Redemption. 57
SECTION 1105. Securities Payable on Redemption Date. 58
SECTION 1106. Fractions of Shares. 58
SECTION 1107. Taxes on Redemptions. 59
SECTION 1108. Provisions of Consolidation, Merger or Sale of
Assets 59
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinated to Senior
Indebtedness. 60
SECTION 1202. Payment Over of Proceeds Upon Dissolution,
Etc. 50
SECTION 1203. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities. 61
SECTION 1204. No Payment When Senior Indebtedness in
Default. 62
SECTION 1205. Payment Permitted If No Default. 62
SECTION 1206. Subrogation to Rights of Holders of Senior
Indebtedness. 63
SECTION 1207. Provisions Solely to Define Relative
Rights. 63
SECTION 1208. Trustee to Effectuate Subordination. 64
SECTION 1209. No Waiver of Subordination Provisions. 64
SECTION 1210. Notice to Trustee. 64
SECTION 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent. 65
SECTION 1212. Trustee Not Fiduciary For Holders of Senior
Indebtedness. 66
SECTION 1213. Right of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's
Rights. 66
SECTION 1214. Article Applicable to Paying Agents. 66
SECTION 1215. Certain Conversions Deemed Payment. 66
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Privilege and Conversion Price. 67
SECTION 1302. Exercise of Conversion Privilege. 67
SECTION 1303. Fractions of Shares. 69
SECTION 1304. Adjustment of Conversion Price. 69
SECTION 1305. Notice of Adjustments of Conversion Price. 76
<PAGE>106
SECTION 1306. Notice of Certain Corporate Action. 76
SECTION 1307. Taxes on Conversions. 77
SECTION 1308. Cancellation of Converted Securities. 78
SECTION 1309. Provisions of Consolidation, Merger or Sale of
Assets 78
ARTICLE FOURTEEN
Redemption at Holder's Option
SECTION 1401. Right to Redemption. 79
SECTION 1402. Applicability of Article 79
SECTION 1403. Notice of Redemption Event 79
SECTION 1404. Notice of Election 80
SECTION 1405. Securities Payable on Redemption Date 80
SECTION 1406. Securities Redeemed in Part 81
SECTION 1407. Fractions of Shares 81
Certain Sections of this
Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
310(a)(1) 609
(a)(2) 609
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 608
610
311(a) 613
(b) 613
312(a) 701
702(a)
(b) 702(b)
(c) 702(c)
313(a) 703(a)
(b) 703(a)
(c) 703(a)
(d) 703(b)
314(a) 704
(b) Not Applicable
(c)(1) 102
(c)(2) 102
(c)(3) Not Applicable
(d) Not Applicable
(e) 102
315(a) 601
(b) 602
(c) 601
(d) 601
(e) 514
316(a) 101
(a)(1)(A) 502
512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
<PAGE>107
(c) 104(c)
317(a)(1) 503
(a)(2) 504
(b) 1003
318(a) 107
- ---------------------
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
INDENTURE, dated as of March 31, 1995 between ROLLINS
ENVIRONMENTAL SERVICES, INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"),
having its principal executive offices at 2200 Concord Pike, One Rollins
Plaza, Wilmington, Delaware 19803, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under
the laws of the United States of America, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
its 7.25% Convertible Subordinated Debentures due March 31, 2005
(herein called 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.
All things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by
the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and
its terms, have been done.
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 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:
<PAGE>108
(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;
(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 generally accepted
accounting principles, and, except as otherwise herein expressly
provided the term "generally accepted accounting principles" with
respect to any computation required and permitted hereunder shall mean
such accounting principles as are generally accepted and accepted and
adopted by the Company at the date of this Indenture; and
(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.
Certain terms used in Article Eleven, Twelve or Thirteen are
defined in such Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with 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 the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 614 to act on behalf of the Trustee to
authenticate Securities.
The term "Beneficial Owner" is determined in accordance with
Rule 13d-3, promulgated by the Commission under the Exchange Act.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company 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.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York,
New York or the city in which the Corporate Trust Office is located are
authorized or obligated to close by law or executive order.
"Closing Price" has the meaning specified in Section 1304(h).
<PAGE>109
"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 instrument 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.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company and which is not subject to redemption by the
Company. However, subject to the provisions of Section 1108 and Section
1309, shares issuable on redemption or conversion of Securities shall
include only shares of the class designated as Common Stock at the date
of this Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which are not subject to redemption by the Company;
provided, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total
number of shares or all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a Successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman of the Board, its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Continuing Directors" means any directors of the Company who
either (a) were directors of the Company on the date of issuance or the
securities or (b) became directors of the Company subsequent to the date
of the issuance of the Securities and whose election or nomination for
election by the shareholders of the Company was duly approved by the
Continuing Directors who were at the time of election or nomination
directors of the Company, either by a specific vote or by approval of
the proxy statement issued by the Company in which such individual was
named as a nominee for director of the Company.
"Conversion Price" has the meaning specified in Section 203 as
the same may be adjusted pursuant to Section 1304.
"Corporate Trust Office" means the office of the Trustee in
Austin, Texas, or such other location as the Trustee designates.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Current Market Price" has the meaning specified in Section
1304.
<PAGE>110
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indenture" means this instrument as originally executed or 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, including, for all purposes of this instrument and
any such supplemental indenture, the provisions of the Trust Indenture
Act that are deemed to be a part of and govern this instrument and any
such supplemental indenture, respectively.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity thereof or by
declaration of acceleration, redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or
a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to
the Trustee. One of the officers signing an Officers' Certificate given
pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for or an employee of the Company.
"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 cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount have 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, or portions thereof, are
to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefore satisfactory to the Trustee has
been made; and
(c) Securities which have been paid pursuant to Section
306 or 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
<PAGE>111
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
under Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of 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
satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledge is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of and premium, if any, or interest on any Securities
on behalf of the Company.
"Person" means any individual, Corporation, partnership, joint
venture, 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 306
in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"Record Date" means either a Regular Record Date or a Special
Record Date, as applicable.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Event" has the meaning specified in Section 1401.
"Redemption Price", when used with respect to any Security to
be redeemed, means the number of shares of Common Stock to be delivered
upon redemption pursuant to this Indenture on the applicable Redemption
Date.
"Regular Record Date", for the interest payable on any
Interest Payment Date, means the August 31 or February 28 (whether or
not a Business Day), as the case may be, next preceding such Interest
Payment Date.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
<PAGE>112
is junior in right of payment to the Securities, or
(ii) ranks pari passu with the Securities, and (b) amendments, renewals,
extensions, modifications and refundings of any such indebtedness. For
the purposes of this definition, "indebtedness for money borrowed" when
used with respect to the Company and any Subsidiary means (x) any
obligation of, or any obligation guaranteed by, the Company or any
Subsidiary for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (y) any
deferred payment obligation of, or any such obligation guaranteed by,
the Company or any Subsidiary for the payment of the purchase price of
property or assets evidenced by a note or similar instrument, and (z)
any obligation of, or any such obligation guaranteed by, the Company or
any Subsidiary for the payment of rent or other amounts under a lease of
property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company
or any Subsidiary under generally accepted accounting principles.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or
such installment of interest is due and payable.
"Subsidiary" means a Corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by
the Company or by one or more other Subsidiaries or by the Company and
one or more other Subsidiaries. For the purposes of this definition,
"voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason any contingency.
"Trading Day" has the meaning specified in Section 1304(h).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended
after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company means
any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. 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
shall furnish to the Trustee such certificates and opinions as may be
required under the Trust Indenture Act. Each such certificate or
opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be
given by counsel, and shall comply with the requirements of the Trust
<PAGE>113
Indenture Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
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;
a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. 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 or the Company may be
based, insofar as it relates to legal matters, upon a certification 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 of Counsel 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 stating that the information with
respect to such factual matters is in the possession of the Company,
unless such 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.
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.
<PAGE>114
SECTION 104. Acts of Holders; Record Dates.
(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 agents 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 (subject to Section 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in
this Section.
(b) 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.
(c) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by
Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case
of any such vote, prior to such vote, the record date for any such
action or vote shall be the 30th day (or, if later, the date of the most
recent list of Holders required to be provided pursuant to Section 701)
prior to such first Solicitation or vote, as the case may be. With
regard to any record date, only the Holders on such date (or their duly
designated proxies) shall be entitled to give or take, or vote on, the
relevant action. Notwithstanding the foregoing, the Company shall not
set a record date for, and the provisions of this paragraph shall not
apply with respect to, any Act by the Holders pursuant to Section 501,
502 or 512.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer therefor or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
<PAGE>115
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any
particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard
to all or any different part of such principal amount.
SECTION 105. Notices Etc., to Trustee and Company.
Any Act of Holders or other documents 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 shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: [Corporate Trust Department], or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it, at the address of its principal
executive offices specified in the first paragraph of this instrument or
at any other address previously furnished in writing to the Trustee by
the Company, Attention: Chief Financial Officer, with a copy to the
General Counsel.
SECTION 106. 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, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date (if
any), and not earlier than the earliest date (if any), prescribed for
the giving of such notice. In any case where notice to Holders is given
by mail, neither the failure to mail any 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. 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 give such
notice by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for
every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
<PAGE>116
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to
be a part of and govern this Indenture, the latter provision 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 108. 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.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. 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 111. 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, the holders of Senior Indebtedness and the
Holders of Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of Delaware, but
without regard to the principles of conflicts of laws.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last date on which a Holder
has the right to convert his Securities shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal and premium, if any, or
conversion of the Securities 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 the Interest Payment Date or Redemption Date, or at the
Stated Maturity, or on such last day for conversion; provided, that no
interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 114. No Security Interest Created.
Nothing in this Indenture or in the Securities, express or
implied, shall be construed to constitute a security interest under the
Uniform Commercial Code or similar legislation, as now or hereafter
<PAGE>117
enacted and in effect in any jurisdiction where property of the Company
or its Subsidiaries is or may be located.
SECTION 115. Limitation on Individual Liability.
No recourse under or upon any obligation, covenant or
agreement contained in this Indenture or in any Security, or for any
claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or any successor Corporation,
either directly or through the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that
this Indenture and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders,
officers or directors, as such, of the Company or any successor Person,
or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or
agreements contained in this Indenture or in any Security or implied
therefrom; and that any and all such personal liability of every name
and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the
creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or
in any Security or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Security.
SECTION 116. No Right of Set-Off.
The obligations of the Company to pay and perform hereunder
shall be absolute and unconditional and not subject to any set-off or
counterclaim.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of
authentication shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, 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 any law or with the rules of any securities exchange on which the
Securities are listed or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution
of the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel
engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed,
<PAGE>118
all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
SECTION 202. Form of Face of Security.
ROLLINS ENVIRONMENTAL SERVICES, INC.
7.25% Convertible Subordinated Debentures Due March 31, 2005
No. __________ $_______
Rollins Environmental Services, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (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 _______________________ Dollars on March 31, 2005, and to pay
interest thereon from March 31, 1995 or from and including the most
recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on March 31 and September 30 in each year,
commencing September 30, 1995, at the rate of 7.25% per annum, until the
principal hereof is paid or made available for payment. 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 one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the August 31 or February 28 (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
will 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 one or more 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 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 said
Indenture. Notice of a Special Record Date shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date.
Payment of the principal of and premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained
for that purpose pursuant to Section 1002 of the Indenture, in such coin
or currency of the United States of America as of the time of payment is
legal tender for payment of public and private debts; provided, however,
that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such
address shall appear in 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
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
<PAGE>119
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
ROLLINS ENVIRONMENTAL SERVICES, INC.
By
Attest:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities
of the Company designated as its 7.25% Convertible Subordinated
Debentures Due March 31, 2005 (herein called the "Securities"), limited
in aggregate principal amount to $66,000,000, issued and to be issued
under an Indenture, dated as of March 31, 1995 (herein called the
"Indenture"), between the Company and Texas Commerce Bank National
Association, 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 and immunities
thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at such Holder's
option, at any time on or before the close of business on March 31,
2005, or in case this Security is called for redemption, then in respect
of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption) not after, the close of
business on the Redemption Date, to convert this Security (or any
portion of the principal amount hereof which is $1,000 or an integral
multiple thereof), at the principal amount hereof, or of such portion,
into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock at a
conversion price (the "Conversion Price") equal to $6.15 principal
amount for each share of Common Stock (or at a current adjusted
Conversion Price if an adjustment has been made as provided in the
Indenture) by surrender of this Security, duly endorsed or assigned to
the Company or in blank, to the Company at its office or agency
maintained for that purpose pursuant to Section 1002 of the Indenture,
accompanied by written notice to the Company in the form provided in
this Security (or such other notice as is acceptable to the Company)
that the Holder hereof elects to convert this Security, or if less than
the entire principal amount hereof is to be converted, the portion
hereof to be converted. If this Security (or any portion hereof) is
surrendered for conversion during the period from the opening of
business on any Regular Record Date next preceding any Interest Payment
Date to the close of business on such Interest Payment Date (unless this
Security has been called for redemption on a Redemption Date within such
period), it shall also be accompanied by payment in New York Clearing
<PAGE>120
House funds or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted. If this Security (or any
portion hereof) is converted after any Regular Record Date and on or
prior to the next succeeding Interest Payment Date (unless the Maturity
hereof is prior to such Interest Payment Date), interest whose Stated
Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name such Security (or one or more Predecessor
Securities) is registered at the close of business on such Regular
Record Date. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding
any Interest Payment Date and on or before such Interest Payment Date,
to the right of the Holder of this Security (or any Predecessor
Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the
Indenture), no payment or adjustment is to be made upon conversion on
account of any interest accrued hereon or on account of any dividends on
the Common Stock issued upon conversion. The Conversion Price is
subject to adjustment as provided in the Indenture.
This Security is subject to redemption, in whole but not in
part, at the election of the Company, upon not more than 15 days' notice
by mail to the Holder, at any time on or after March 31, 1998 when the
price per share of Common Stock exceeds $6.97 for ten consecutive
Trading Days at a Redemption Price equal to the number of fully paid and
nonassessable shares (calculated to the nearest 1/100 of a share) of
Common Stock determined by dividing the principal amount of Outstanding
Securities by $6.15 (or at a current adjusted Conversion Price if an
adjustment has been made as provided in the Indenture), together in the
case of any such redemption with accrued Interest to the Redemption Date
payable in cash, but interest installments whose Maturity is on or prior
to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates, all as provided in the
Indenture or, if greater, that number of fully paid and nonassessable
shares (calculated to the nearest 1/100 of a share) of Common Stock
determined by dividing the principal amount of Outstanding Securities by
the price per share of Common Stock on the Redemption Date provided that
the total number of shares so issued will not exceed eleven million
shares in the aggregate for all redemptions, such eleven million shares
subject to adjustment in the case of any subdivision or combination of
all outstanding shares of Common Stock. Such additional shares will be
distributed on a pro rata basis, with no fractional shares being issued.
This Security is subject to redemption, in whole or in part,
at the election of the Holder if not previously called for redemption by
the Company, upon the occurrence of a Redemption Event at a Redemption
Price equal to the number of fully paid and nonassessable shares
(calculated to the nearest 1/100 of a share) of Common Stock determined
by dividing the principal amount of the Holder's Securities (or any
portion of the Principal amount thereof which is $1,000 or an integral
multiple thereof) by the Current Market Price, together in the case of
any such redemption with accrued interest to the Redemption Date payable
in cash, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the
<PAGE>121
close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture. The Company shall give each
Holder of a Security notice of the occurrence of a Redemption Event no
later than 15 days after the occurrence thereof.
Notice of redemption having been given as aforesaid, a Holder
of Securities electing to require redemption of all or a portion of such
Holder's Securities shall make such election by delivering an
irrevocable written notice to the Company at its office or agency to be
maintained by the Company pursuant to Section 1002 of the Indenture not
later than two Business Days prior to the Redemption Date, setting forth
the name of the Holder, the principal amount of the Securities to be so
redeemed at the Redemption Price and a statement that the election to
require redemption is being made thereby.
In the event of redemption or conversion of this Security in
part only, a new Security or Securities for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof. No fractional shares or scrip
representing fractions of shares will be issued on redemption or
conversion, but instead of any fractional share the Company shall pay a
cash adjustment as provided in the Indenture. In addition, the
Indenture provides that in case of certain consolidations or mergers to
which the Company is a party or the sale or transfer of all or
substantially all of the assets of the Company, the Indenture shall be
amended, without the consent of any Holders of Securities, so that this
Security, if then Outstanding, will be convertible or redeemable
thereafter, during the period this Security shall be convertible or
redeemable as specified above, only into the kind and amount of
securities, cash and other property receivable upon the consolidation,
merger, sale or transfer by a holder of the number of shares of Common
Stock into which this Security might have been converted or redeemed
immediately prior to such consolidation, merger, sale or transfer
(assuming such holder of Common Stock failed to exercise any right of
election and received per share the kind and amount received per share
by a plurality of non-electing shares).
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness, and this
Security is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided,
and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default shall occur and be continuing, the
principal 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 as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding.
<PAGE>122
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 with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of
this Security and 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.
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, 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 or to convert
this Security as provided in the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in
any place where the principal of and premium, if any, and interest on
this Security are payable, 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 his 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.
The Securities are issuable only in fully 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, Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange except as provided in the Indenture, and 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, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, except as provided in this
Security, whether or not this Security be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
CONVERSION NOTICE
To: Rollins Environmental Services, Inc.
<PAGE>123
The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the
portion hereof (which is $1,000 or a multiple thereof) designated below,
into shares of Common Stock in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon the conversion, together with any check in
payment for a fractional share and any Security representing any
unconverted principal amount hereof, be issued and delivered to the
registered owner hereof unless a different name has been provided below.
If this Notice is being delivered on a date after the opening of
business on any Regular Record Date next preceding any Interest Payment
Date to the close of business on such Interest Payment Date (except in
the case of Securities which have been called for redemption on a
Redemption Date within such period), this Notice is accompanied by
payment in New York Clearing House funds or other funds acceptable to
the Company of an amount equal to the interest payable on such Interest
Payment Date on the principal of this Security to be converted. If
shares or any portion of this Security not converted are to be issued in
the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount
required to be paid by the undersigned on account of interest
accompanies this Security.
Dated:
Signature(s)
Signature(s) must be guaranteed
by a commercial bank or trust
company or a member firm of a
national stock exchange if shares
of Common Stock are to be
delivered, or Securities to be
issued, other than to and in the
name of the registered owner.
Signature Guarantee
Fill in for registration of
shares if they are to be delivered,
or Securities if they are to be
issued, other than to and in the
name of the registered owner:
(Name)
(Street Address)
<PAGE>124
(City, State and zip code)
(Please print name and address)
Register: __ Common Stock
__ Securities
(Check appropriate line(s))
Principal amount to be converted
(if less than all):
$ ,000
Social Security or other
Taxpayer Identification Number
of owner
SECTION 204. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities referred to in the within-
mentioned Indenture.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Trustee
By
Authorized Officer
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
$66,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities pursuant to Section 304, 305, 306, 906, 1302 or 1406.
The Securities shall be known and designated as the "7.25%
Convertible Subordinated Debentures Due March 31, 2005" of the Company.
Their Stated Maturity shall be March 31, 2005 and they shall bear
interest at the rate of 7.25% per annum, from March 31, 1995 or from the
most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually on March 31
<PAGE>125
and September 30 commencing September 30, 1995, until the principal
thereof is paid or made available for payment.
The principal of and premium, if any, and interest on the
Securities shall be payable at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however,
that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
The Securities shall be redeemable for Common Stock as
provided in Article Eleven and Article Fourteen. The Securities shall
be subordinated in right of payment to Senior Indebtedness as provided
in Article Twelve. The Securities shall be convertible into Common
Stock as provided in Article Thirteen.
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
its Chairman of the Board, its Vice Chairman of the Board, its President
or one of its Vice Presidents, under its corporate seal or a facsimile
thereof reproduced thereon, attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the original 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 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 either at
one time or from time to time pursuant to such instructions as may be
described therein authenticate and deliver such Securities as in this
Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security 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, 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
the Indenture.
<PAGE>126
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed 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 evidenced by their execution of such
Securities. Any such temporary Security shall be in global form. Every
such temporary Security shall be executed by the Company and shall be
authenticated and delivered by the Trustee upon the same conditions and
in substantially the same manner, and with the same effect, as the
definitive Security or Securities in lieu of which it is issued.
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 any office or agency of the Company designated
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 deliver in exchange
therefor one or more definitive Securities of a like principal amount 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 to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002
being herein sometimes collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities
and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided. At all reasonable times the
Security Register shall be open for inspection by the Company.
Upon surrender for registration of transfer of any Security at
an office or agency of the Company designated pursuant to Section 1002
for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations
and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at
the office or agency maintained for that purpose. Whenever any
Securities are so surrendered for exchange, the Company shall execute,
and the Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive.
<PAGE>127
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligation of the Company,
evidencing the same debt, 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 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 for any registration of
transfer or exchange of Securities except as provided in Section 306.
The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906, 1302 or 1406 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 day of the mailing of a notice of
redemption of Securities 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 after such notice of redemption.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (b) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and 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 new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee)
connected therewith.
Every new 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, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
<PAGE>128
anyone, and shall be entitled to all the benefits of 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 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest. At the option of the Company, interest on any
Security may be paid by mailing checks to the addresses of the Holders
thereof as such addresses appear in the Securities Register.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable
to the Person who is the Holder on the relevant Regular Record Date,
and, instead, such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (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 their
respective 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 of the proposed
payment, 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 date of the
proposed payments such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause 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 proposed
payment 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 of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his 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 therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no longer
be payable pursuant to the following Clause (b).
<PAGE>129
(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 notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, 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.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Security whose Maturity is prior to such
Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except
as otherwise expressly provided in the immediately preceding sentence,
in the case of any Security which is converted, interest whose Stated
Maturity is after the date of conversion of such Security shall not be
payable.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered
as the owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and (subject to Section 307) interest
on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer, exchange or conversion shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and
shall be promptly cancelled by it. The Company may at any time deliver
to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly
cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a
Company Order.
SECTION 310. Computation of Interest.
<PAGE>130
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of conversion or
registration of transfer or exchange of Securities herein expressly
provided for), and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(a) either
all Securities theretofore authenticated and delivered (other than
(A) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (B) Securities for
whose payment money has 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
all such Securities not theretofore delivered to the Trustee for
cancellation
have become due and payable, or
will become due and payable at their Stated Maturity within one
year, or
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, or
are delivered to the Trustee for conversion in accordance with
Article Thirteen,
and the Company, in the case of (A), (B), (C) or (D) above,
has deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation for principal and premium, if any, and interest
to the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
<PAGE>131
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section
607, the obligations of the Trustee to any Authenticating Agent under
Section 614 and, if money shall have been deposited with the Trustee
pursuant to sub-clause (ii) of Clause (a) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 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 Person entitled thereto, of
the principal and premium, if any, and interest for whose payment such
money has been deposited with the Trustee. All moneys deposited with
the Trustee pursuant to Section 401 (and held by it or any Paying Agent)
for the payment of Securities subsequently converted shall be returned
to the Company upon Company Request.
SECTION 403. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article Four 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 shall be revived and
reinstated as though no deposit had occurred pursuant to this Article
Four until such time as the Trustee or Paying Agent is permitted to
apply all money held in trust with respect to the Securities; provided,
however, that if the Company makes any payment of principal of or
premium, if any, or interest on any Security following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the
Holders of the Securities to receive such payment from the money so held
in trust.
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 occasioned by the provisions of Article Twelve or be
voluntary or involuntary or be effected by operation of law or pursuant
<PAGE>132
to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
default in the payment of any interest upon any Security when it
becomes due and payable, whether or not such payment is prohibited by
the provisions of Article Twelve, and continuance of such default for a
period of 30 days; or
default in the payment of the principal of or premium, if any, on
any Security at its Maturity, whether or not such payment is prohibited
by the provisions of Article Twelve; or
(c) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default
or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(d) the Company or any of its Subsidiaries shall have
failed to pay principal at maturity of, or an event of default shall
have occurred and be continuing under and resulted in the acceleration
of, any loan agreement, mortgage, indenture or other instrument under
which there is issued or by which there is secured or evidenced any
Indebtedness of the Company (other than the Securities) or any of its
Subsidiaries whether such Indebtedness now exists or shall be created
hereafter, and the principal amount of such Indebtedness which, together
with any such other Indebtedness so accelerated or not paid at maturity,
aggregates an amount equal to or greater than $5,000,000, and such
acceleration is not waived or rescinded within a period of 10 Business
Days after there shall have been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Securities then
outstanding a written notice specifying such default and requiring the
Company to cause such acceleration to be rescinded, annulled or
discharged and stating that such notice is a "Notice of Default"
hereunder; or
(e) the entry by a court having jurisdiction in the
premises of (i) a decree or order for relief in respect of the Company
in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
<PAGE>133
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by it to the
entry of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing or such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Company in furtherance of any such action.
Upon receipt by the Trustee of any Notice of Default pursuant
to this Section, a record date shall automatically and without any other
action by any Person be set for the purpose of determining the Holders
of Outstanding Securities entitled to join in such Notice of Default,
which record date shall be the close of business on the day the Trustee
receives such Notice of Default. The Holders of Outstanding Securities
on such record date (or their duly appointed agents), and only such
Persons, shall be entitled to join in such Notice of Default, whether or
not such Holders remain Holders after such record date; provided, that
unless such Notice of Default shall have become effective by virtue of
the Holders of the requisite principal amount of Outstanding Securities
on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such Notice
of Default shall automatically and without any action by any Person be
cancelled and of no further force or effect.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities may declare the principal
of all the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal plus any interest accrued on
the Securities to the date of declaration shall become immediately due
and payable.
At any time after such a declaration of acceleration has been
made and 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 principal amount of the Outstanding
Securities, 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 overdue interest on all Securities,
<PAGE>134
(ii) the principal of and premium, if any, on
any Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the
Securities,
(iii) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by
the Securities, and
(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(b) all Events of Default, other than the non-payment of
the principal of Securities which has become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission and annulment shall affect any subsequent default or
impair any right consequent thereon.
Upon receipt by the Trustee of any declaration of
acceleration, or any rescission and annulment of any such declaration,
pursuant to this Section, a record date shall automatically and without
any other action by any Person be set for the purpose of determining the
Holders of Outstanding Securities entitled to join in such declaration,
or rescission and annulment, as the case may be, which record date shall
be the close of business on the day the Trustee receives such
declaration, or rescission and annulment, as the case may be. The
Holders of Outstanding Securities on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in
such declaration, or rescission and annulment, as the case may be,
whether or not such Holders remain Holders after such record date;
provided, that unless such declaration, or rescission and annulment, as
the case may be, shall have become effective by virtue of Holders of the
requisite principal amount of outstanding Securities on such record date
(or their duly appointed agents) having joined therein on or prior to
the 90th day after such record date, such declaration, or rescission and
annulment, as the case may be, shall automatically and without any
action by any Person be cancelled and of no further force or effect.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants 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 or
premium, if any, on any Security at the Maturity thereof,
the Company 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 principal and premium, if any, and interest, and,
<PAGE>135
to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and premium, if any, and
on any overdue 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 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, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company or any other obligor
upon the Securities and collect the money adjudged or decreed to be
payable in the manner provided by law out of the property of the Company
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 by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such
rights, 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 to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors,
the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under
the Trust Indenture Act in order to have the claims of the Holders and
the Trustee allowed in any such proceeding. In particular, the Trustee
shall be authorized 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 other 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 to 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.
No provision of this Indenture 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; provided, however, that the Trustee may,
on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and may be a member of the Creditors'
Committee.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
<PAGE>136
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any 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 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 or 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.
Subject to Article Twelve, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of
such money on account or principal or 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 payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid
for principal of and premium, if any, and interest on the Securities 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 and premium, if any, and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture,
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;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer 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 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities;
<PAGE>137
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 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, except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if
any, and (subject to Section 307) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to convert such Security in
accordance with Article Thirteen and to institute suit for the
enforcement of any such payment and right to convert, and such rights
shall not be impaired without the consent of such Holder.
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 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,
subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall 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.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section
306, 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.
<PAGE>138
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for 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;
(b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction; and
(c) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall determine that the action so directed would
involve the Trustee in personal liability or would be unduly prejudicial
to Holders not joining in such direction.
Upon receipt by the Trustee of any such direction, a record
date shall automatically and without any other action by any Person be
set for the purpose of determining the Holders of Outstanding Securities
entitled to join in such direction, which record date shall be the close
of business on the day the Trustee receives such direction. The Holders
of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to join in such
direction, whether or not such Holders remain Holders after such record
date; provided, that unless such direction shall have become effective
by virtue of Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having
joined therein on or prior to the 90th day after such record date, such
direction shall automatically and without any action by any Person be
cancelled and of no further force or effect.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities may on behalf of the Holders of all the
Securities waive any past default hereunder and its consequences, except
a default
in the payment of the principal of or premium, if any, or interest
on any Security, or
in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
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.
<PAGE>139
SECTION 514. Undertaking for Costs.
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, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; provided,
that neither this Section nor the Trust Indenture Act shall be deemed to
authorize any court to require such an undertaking or to make such an
assessment in 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 (or 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) or in any
suit for the enforcement of the right to convert any Security in
accordance with Article Thirteen.
SECTION 515. Waiver of Stay or Extension Laws.
The Company 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 wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and
the Company (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.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, 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. Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character
specified in Section 501(c), no such notice to Holders shall be given
<PAGE>140
until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(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) 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;
(d) the Trustee may consult with counsel and the written
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;
(e) 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 reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(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, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see 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; and
(g) 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. Not Responsible for Recitals or Issuance of Securities.
<PAGE>141
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 and any Authenticating Agent
assume no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or
of the Securities. The Trustee and any Authenticating Agent shall not
be accountable for the use or application by the Company of Securities
or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual
or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other
agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust
hereunder need not be segregated from other funds except to the extent
required by law. The Trustee or any Paying Agent shall be under no
liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder as may be mutually agreed upon in
writing by the Company and the Trustee (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel) except to the
extent any such expense, disbursement or advance may be attributable to
its negligence or bad faith; and
to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
<PAGE>142
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the Holders of
particular Securities.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act
and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as
such, has a combined capacity and surplus of at least $50,000,000 and
has its Corporate Trust Office in the Borough of Manhattan, The City of
New York. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of a Federal or state
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person 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,
it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
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 in accordance
with the applicable requirements of Section 611.
The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the resigning
Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
The Trustee may be removed at any time after the Trustee has failed
to comply with its duties and responsibilities under this Indenture by
an Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Trustee and to the Company.
If at any time:
the Trustee shall fail to comply with Section 608 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
<PAGE>143
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
such Holder, or
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 such case, (x) the Company by a Board Resolution may remove
the Trustee, or (y) subject to Section 514, 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 removal of the Trustee and the
appointment of a successor Trustee.
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 such successor Trustee shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy,
a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to
the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611 become the successor
Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section
611, 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.
The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall
include the name of the successor Trustee and the address of its
Corporate Trust Office.
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; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any
such successor Trustee, the Company shall execute any and all
<PAGE>144
instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
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 the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such Corporation shall
be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any
of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had
itself authenticated such securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon 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).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer, partial conversion or partial redemption or
pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall at all times be a
Person organized and doing business under the laws of the United States
of America, any State thereof or the District or Columbia, authorized
<PAGE>145
under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent 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 an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting
from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any Person succeeding to the
corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such Person shall
be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee
may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section,
the Trustee may appoint a successor Authenticating Agent which shall be
acceptable to the Company and shall mail notice of such appointment by
first-class mail, postage prepaid, to all Holders as their names and
addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment under this Section shall become
vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating
Agent. No successor Authenticating Agent shall be appointed unless
eligible to act as such under the provisions of this Section.
Any Authenticating Agent by the acceptance of its appointment
shall be deemed to have represented to the Trustee that it is eligible
for appointment as Authenticating Agent under this Section and to have
agreed with the Trustee that it will perform and carry out the duties of
an Authenticating Agent as herein set forth, including among other
things the duties to authenticate Securities when presented to it in
connection with the original issuance and with exchanges, registrations
of transfer or redemptions or conversions thereof or pursuant to Section
306; it will keep and maintain, and furnish to the Trustee from time to
time as requested by the Trustee, appropriate records of all
transactions carried out by it as Authenticating Agent and will furnish
to the Trustee such other information and reports as the Trustee may
reasonably require; and it will notify the Trustee promptly if it shall
cease to be eligible to act as Authenticating Agent in accordance with
the provisions of this Section. Any Authenticating Agent by the
acceptance of its appointment shall be deemed to have agreed with the
Trustee to indemnify the Trustee against any loss, liability or expense
incurred by the Trustee and to defend any claim asserted against the
<PAGE>146
Trustee by reason of any acts or failure to act of such Authenticating
Agent, but such Authenticating Agent shall have no liability for any
action taken by it in accordance with the specific written direction of
the Trustee.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 607.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustees
certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Securities described in the within-
mentioned Indenture.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
As Trustee
By
As Authenticating Agent
By
Authorized Officer
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
semi-annually, 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
at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
<PAGE>147
notwithstanding the foregoing, so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it
as provided in Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities,
and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant
to the Trust Indenture Act, within 120 days after January 1 of each year
commencing with January 1, 1996, or at such other times required by the
Trust Indenture Act, and in the manner provided therein.
A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which
the Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports,
and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such
Act; provided, that any such information, documents or reports required
to be filed with the Commission pursuant to Section 13 or 15(d) of the
<PAGE>148
Exchange Act shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company shall not
permit any Person to consolidate with or merge into the Company, unless:
in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a
Corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of and premium, if any, and interest on all the Securities and
the performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed and shall have provided
for rights of redemption in accordance with Section 1108 and conversion
privileges in accordance with Section 1309;
immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
such consolidation, merger, conveyance, transfer or lease does not
adversely affect the validity or enforceability of the Securities; and
the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
<PAGE>149
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, 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,
in form satisfactory to the Trustee, for any of the following purposes:
to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein
and in the Securities; or
to add to the covenants of the Company for the benefit of the
Holders or an additional Event of Default, or to surrender any right or
power herein conferred upon the Company; or
to secure the Securities; or
to make provision with respect to the rights of redemption and
conversion privileges of Holders pursuant to the requirements of Section
1108 and Section 1309, respectively; or
to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities; or
(f) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture; provided, that such
action pursuant to this Clause (f) shall not adversely affect the
interests of the Holders in any material respect.
<PAGE>150
SECTION 902. Supplemental Indenture with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders
under this Indenture; provided, however, that no such supplemental
indenture 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, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or 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), or adversely
affect the right to convert any Security as provided in Article Thirteen
including, without limitation, Section 1304 (except as permitted by
Section 901(d)), or modify the provisions of this Indenture with respect
to the subordination of the Securities in a manner adverse to the
Holders, or
(b) 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 of compliance with certain provisions of this Indenture
or certain defaults hereunder and their consequences provided for in
this Indenture, or
(c) modify any of the provisions of this Section, Section
513 or Section 1009, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this Clause shall not
be deemed to require the consent of any Holder with respect to changes
in the references to "the Trustee" and concomitant changes in this
Section and Section 1009, or the deletion of this proviso, in accordance
with the requirements of Section 901(e).
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 601) shall
be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted
by this Indenture. The Trustee may, but shall not be obligated to,
<PAGE>151
enter into any such supplemental indenture which adversely affects in a
material way the Trustee's own rights, duties or immunities under this
Indenture 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
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article 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 Company, to any such supplemental
indenture may be prepared and executed by the Company and authenticated
and delivered by the Trustee in exchange for Outstanding Securities.
SECTION 907. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustees
of any supplemental indenture pursuant to Section 902, the Company shall
transmit to the Holders a notice setting forth the substance of such
supplemental indenture.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of and
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 will maintain in New York, New York an office or
agency, which office or agency may be maintained through the Trustee or
the Paying Agent, where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of
transfer, where Securities may be surrendered for exchange or conversion
and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in
the location, of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail
<PAGE>152
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee, and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation
to maintain an office or agency in New York, New York for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of and premium, if
any, or interest on any of the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal and 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.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of and premium, if any, or
interest on any Securities, deposit with a Paying Agent a sum sufficient
to pay the principal and premium, if any, and interest so becoming due,
such sum to be held as provided by the Trust Indenture Act, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
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) comply with
the provisions of the Trust Indenture Act applicable to it as a Paying
Agent and hold all sums held by it for the payment of principal and
premium, if any, and 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; and (b) at any time
during the continuance of any default by the Company (or any other
obligor upon the Securities) in the making of any payment in respect of
the Securities, upon the written request of the Trustee, forthwith pay
to the Trustee all sums held in trust by such Paying Agent for payment
in respect of the Securities.
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.
<PAGE>153
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
and 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 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 a newspaper
published in the English language, customarily published on each
Business Day and of general circulation in New York, New York, 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
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate stating whether or not to the best knowledge of
the signers thereof after due inquiry the Company is in default in the
performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, rights
(charter and Statutory) and franchises; provided, however, that neither
the Company nor any Subsidiary shall be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company and that the loss thereof is not disadvantageous
in any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before any penalty accrues from the failure to so pay or
discharge, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits
or property of the Company or any Subsidiary, and (b) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become
a Lien upon the property of the Company or any Subsidiary; 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
the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate provision
has been made.
<PAGE>154
SECTION 1007. Maintenance of Properties.
The Company will, and will cause each of its Subsidiaries to,
maintain its respective properties and assets (including all licenses)
in good working order and condition (ordinary wear and tear excepted)
and make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto, as, in the reasonable judgment of
the Company in its sole discretion, shall be reasonably necessary for
the proper conduct of its business.
SECTION 1008. Commission Reports.
The Company will file with the Trustee, within 15 days after
it files them 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 by rules and regulations
prescribe) which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Company will
also comply with the applicable provisions of the Trust Indenture Act.
SECTION 1009. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 1005, 1006 or 1007, if
before the time for such compliance the Holders of at least a majority
in principal amount of the Outstanding Securities shall, by Act of such
Holders, either waive such compliance in such instance or generally
waive compliance with such covenant or condition, 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.
SECTION 1010. Reservation and Issuance of Common Stock.
The Company will at all times reserve and keep available, free
from preemptive rights, out of the authorized but unissued Common Stock
or out of the Common Stock held in treasury, for the purpose of
effecting the redemption of Securities pursuant to Section 1101 or
Section 1401 or the conversion of Securities pursuant to Section 1301,
the full number of shares of Common Stock then issuable upon the
redemption or conversion of all Outstanding Securities.
All shares of Common Stock which may be issued upon redemption
of Securities pursuant to Section 1101 or Section 1401 or conversion of
Securities pursuant to Section 1301 will upon issue be fully paid and
nonassessable and, except as provided in Section 1107 and Section 1307,
the Company will pay all taxes, liens and charges with respect to the
issue thereof.
SECTION 1011. Registration and Listing of Shares.
If any shares of Common Stock required to be reserved for
purposes of redemption of Securities under Article Eleven or Article
Fourteen or conversion of Securities under Article Thirteen require
registration with or approval of any governmental authority under any
Federal or State law before such shares may be issued upon redemption or
<PAGE>155
conversion, the Company will in good faith and as expeditiously as
possible endeavor to cause such shares of Common Stock to be duly
registered or approved, as the case may be. Further, if and so long as
the Common Stock is listed on the New York Stock Exchange or any other
national securities exchange, the Company will, if permitted by the
rules of such exchange, list and keep listed on such exchange, upon
official notice of issuance, all shares of Common Stock issuable upon
redemption of Securities pursuant to Section 1101 or Section 1401 or
upon conversion of Securities pursuant to Section 1301.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
The Securities may be redeemed at the election of the Company,
in whole at any time after March 31, 1998 when the price per share of
Common Stock exceeds $6.97 for ten consecutive Trading Days at the
Redemption Price specified in the form of Security hereinbefore set
forth, together with accrued interest to the Redemption Date, payable in
cash.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company as
permitted by any provision of this Indenture shall be made in accordance
with such provision and this Article.
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 Board Resolution. Upon a
redemption, the Company shall, at least 30 days prior to the Redemption
Date fixed by the Company (unless a shorter period shall be satisfactory
to the Trustee), notify the Trustee of such Redemption Date.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not more than 15 days prior to the Redemption
Date, to each Holder of Securities, at his address appearing in the
Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date,
(d) the Conversion Price, the date on which the right to
convert the Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for conversion, and
<PAGE>156
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
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 request, by the Trustee in the name and at the expense of the
Company.
SECTION 1105. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities 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. Upon
surrender of any such Security for redemption in accordance with the
notice of redemption, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date
payable in cash; provided, however, that installments of interest whose
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 at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
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 the Security.
Securities redeemed pursuant to Section 1101 or Section 1401
shall be deemed to have been redeemed immediately prior to the close of
business on the Redemption Date, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or
Persons entitled to receive the Common Stock issuable upon redemption
shall be treated for all purposes as the record holder or holders of
such Common Stock as and after such time. As promptly as practicable on
or after the Redemption Date, the Company shall issue and shall deliver
at such office or agency a certificate or certificates for the number of
full shares of Common Stock issuable upon redemption, together with
payment in lieu of any fraction of a share, as provided in Section 1106.
SECTION 1106. Fractions of Shares.
No fractional shares of Common Stock shall be issued upon
redemption of Securities pursuant to Section 1101. Instead of any
fractional share of Common Stock which would otherwise be issuable upon
redemption of any Security or Securities, the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same
fraction of the Closing Price (as hereafter defined) at the close of
business on the Redemption Date (or, if such day is not a Trading Day
(as hereafter defined), on the Trading Day immediately preceding such
day).
SECTION 1107. Taxes on Redemptions.
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on redemption
of Securities pursuant to Section 1101 or Section 1401. The Company
<PAGE>157
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the Holder of the Security or
Securities to be redeemed, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
SECTION 1108. Provisions of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock) or any sale or transfer of all or substantially
all of the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Securities shall be redeemable
as specified in Section 1101 or Section 1401 only in exchange for the
kind and amount of securities, cash and other property, if any,
receivable upon such consolidation, merger, sale or transfer by a holder
of the number of shares of Common Stock which the Holder of such
Security might have received upon a redemption immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common
Stock (a) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (b) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer is not the same for each share of Common Stock
held immediately prior to such consolidation, merger, sale or transfer
by other than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("nonelecting share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each nonelecting share shall
be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). Such supplemental indenture shall
provide for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Indenture.
The above provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinated 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
<PAGE>158
Article, the indebtedness represented by the Securities and the payment
of the principal of and premium, if any, and interest on each and all of
the Securities are hereby expressly made subordinate and subject in
right of payment to the prior payment in full of all Senior
Indebtedness.
SECTION 1202. 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, relative to the Company or to its creditors,
as such, or to a substantial part of its assets, or (b) any proceeding
for the liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (c) any assignment for the benefit of creditors or any
other marshalling of assets and liabilities of the Company, then and in
any such event the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holders of the Securities
are entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities, on account of
principal of or premium, if any, or interest on the Securities, and to
that end the holders of Senior Indebtedness shall be entitled to
receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities, which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or
other winding up or event.
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, including
any such payment or distribution which may be payable or deliverable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, before all Senior
Indebtedness is paid in full or payment thereof provided for, and if
such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or such Holder, as the
case may be, then and in such event such payment or distribution shall
be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution 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, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property
or securities" shall not be deemed to include securities of the Company
as reorganized or readjusted, or securities of the Company or any other
Corporation provided for by a plan of reorganization or readjustment
which are subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same extent
<PAGE>159
as, or to a greater extent than, the Securities are so subordinated as
provided in this Article. The consolidation of the Company with, or the
merger of the Company into, another Person or the liquidation or
dissolution of the Company following the conveyance or transfer 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 marshalling of assets and
liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged
or which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article Eight.
SECTION 1203. Prior Payment to Senior Indebtedness Upon Acceleration
of Securities.
In the event that any Securities are declared due and payable
before their Stated Maturity, then and in such event the holders of
Senior Indebtedness outstanding at the time such Securities so become
due and payable shall be entitled to receive payment in full of all
amounts due on or in respect of such Senior Indebtedness, or provision
shall be made for such payment in money or money's worth, before the
Holders of the Securities are entitled to receive any payment (including
any payment which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities) by the Company on account of the principal of or premium, if
any, or interest on the Securities or on account of the purchase or
other acquisition of Securities.
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, and if such fact
shall, at or prior to the time of such payment, have been made known to
the Trustee or such Holder, as the case may be, then and in such event
such payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment
with respect to which Section 1202 would be applicable.
SECTION 1204. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any
default in the payment of principal of or premium, if any, or interest
on any Senior Indebtedness beyond any applicable grace period with
respect thereto, or in the event that any event of default with respect
to any Senior Indebtedness shall have occurred and be continuing and
shall have resulted in such Senior Indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise
have become due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or (b) in the event
any judicial proceeding shall be pending with respect to any such
default in payment or event of default, then no payment (including any
payment which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities) shall be made by the Company on account of the principal of
<PAGE>160
or premium, if any, or interest on the Securities or on account of the
purchase or other acquisition of Securities.
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, and if such fact
shall, at or prior to the time of such payment, have been made known to
the Trustee or such Holder, as the case may be, then and in such event
such payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment
with respect to which Section 1202 would be applicable.
SECTION 1205. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (a) 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 marshalling of assets and liabilities of the
Company referred to in Section 1202 or under the conditions described in
Section 1203 or 1204, from making payments at any time of principal of
and premium, if any, or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to
the payment of or on account of the principal of and premium, if any, or
interest on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not
have knowledge that such payment would have been prohibited by the
provisions of this Article.
SECTION 1206. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all amounts due on or in
respect of Senior Indebtedness, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the
holders of such Senior Indebtedness pursuant to the provisions of this
Article (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness
of the Company to substantially the same extent as the Securities are
subordinated and is entitled to like rights of subrogation) 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 and premium, if any, and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the 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 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 1207. Provisions Solely to Define Relative Rights.
<PAGE>161
The provisions of this Article are and 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 and 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 of 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 to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 1208. 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.
SECTION 1209. No Waiver of Subordination Provisions.
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 noncompliance 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.
Without in any way limiting the generality of the foregoing
paragraph, 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: (a) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in
any manner for the collection of Senior Indebtedness; and (d) exercise
or refrain from exercising any rights against the Company and any other
Person.
SECTION 1210. Notice to Trustee.
<PAGE>162
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 any trustee therefor; and, prior
to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, 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 at least three
Business Days 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 and premium, if any, or interest on any
Security), then, anything herein contained to the contrary
notwithstanding, 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 within three Business Days prior to
such date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or a trustee therefor). 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 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of
Section 601, 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, delivered to
the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the 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.
<PAGE>163
SECTION 1212. Trustee Not Fiduciary For Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other Person cash,
property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 1213. Right of Trustee as 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 any claim of, or
payments to, the Trustee under or pursuant to Section 607.
SECTION 1214. 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 hereunder,
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
1213 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
SECTION 1215. Certain Conversions Deemed Payment.
For the purposes of this Article only, (a) the issuance and
delivery of junior securities upon conversion of Securities in
accordance with Article Thirteen shall not be deemed to constitute a
payment or distribution on account of the principal of or premium, if
any, or interest on Securities or on account of the purchase or other
acquisition of Securities, and (b) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on
account of the principal of such Security. For the purposes of this
Section, the term "junior securities" means (i) shares of any class of
capital stock of the Company and (ii) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which
may be outstanding at the time of issuance or delivery of such
securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders or
the Securities, the right, which is absolute and unconditional, of the
Holder of any Security to convert such Security in accordance with
Article Thirteen.
<PAGE>164
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this
Article, at any time on or before the close of business on March 31,
2005 and at the option of the Holder thereof, any Security or any
portion of the principal amount thereof which equals $1,000 or any
integral multiple thereof may be converted at the principal amount
thereof, or of such portion thereof, into fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock, at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. In case the
Securities are called for redemption, such conversion privilege in
respect of each Security shall expire at the close of business on the
Redemption Date, unless the Company defaults in making the payment due
upon redemption.
The Conversion Price shall be $6.15 principal amount per share
of Common Stock. The number of shares of Common Stock received shall be
equal to the principal amount of the Securities converted divided by the
Conversion Price. The Conversion Price shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i)
of Section 1304.
SECTION 1302. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security shall surrender such Security, duly endorsed or assigned to
the Company or in blank, at any office or agency of the Company
maintained pursuant to Section 1002, accompanied by written notice to
the Company in the form provided in the Security (or such other notice
as is acceptable to the Company) at such office or agency that the
Holder elects to convert such Security or, if less than the entire
principal amount thereof is to be converted, the portion thereof to be
converted. Securities surrendered for conversion during the period from
the opening of business on any Regular Record Date next preceding any
Interest Payment Date to the close of business on such Interest Payment
Date shall (except in the case of Securities which have been called for
redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds acceptable to
the Company of an amount equal to the interest payable on such Interest
Payment Date on the principal amount being surrendered for conversion.
Except as provided in the immediately preceding sentence and subject to
the fourth paragraph of Section 307, no payment or adjustment shall be
made upon any conversion on account of any interest accrued on the
Securities surrendered for conversion or on account of any dividends on
the Common Stock issued upon conversion.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such
Securities for conversion in accordance with the foregoing provisions,
and at such time the rights of the Holders of such Securities as Holders
shall cease, and the Person or Persons entitled to receive the Common
Stock issuable upon conversion shall be treated for all purposes as the
record holder or holders of such Common Stock as and after such time.
<PAGE>165
As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1303.
In the case of any Security which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Security or Securities of authorized denominations in
aggregate principal amount equal to the unconverted portion of the
principal amount of such Security.
So long as any rights pursuant to the Company's rights plan
(the "Rights Plan"), adopted by the Board of Directors of the Company on
June 14, 1989, have not expired, been redeemed or otherwise terminated
(other than the termination of rights held by an Acquiring Person or an
affiliate of an Acquiring Person (as defined in the Rights Plan) in
accordance with the terms of the Rights Plan), the Holder of any
Security surrendered for conversion will be entitled to receive upon
such conversion, in addition to the shares of Common Stock issuable upon
such conversion (the "Issuable Shares"), a number of rights with the
terms described in the Rights Plan to be determined as follows: (a) if
such conversion occurs on or prior to the Distribution Date (as defined
in the Rights Plan), the same number of rights to which a holder of a
number of shares of Common Stock equal to the number of Issuable Shares
is entitled at the time of such conversion in accordance with the terms
and provisions of the Rights Plan applicable to the rights, and (b) if
such conversion occurs after the Distribution Date, the same number of
rights to which a holder of the number of shares of Common Stock into
which such Security was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of the Rights Plan applicable
to the rights. The conversion price of the Securities will not be
subject to adjustment on account of any declaration, distribution or
exercise of the rights. If the Rights Plan shall terminate in
accordance with its terms and the Company shall adopt a successor plan
with substantially similar terms which provide that the Common Stock
issuable hereunder is entitled to the benefits of such successor plan,
the provisions of this paragraph shall apply to such successor plan as
if it were the Rights Plan.
SECTION 1303. Fractions of Shares.
No fractional shares of Common Stock shall be issued upon
conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of
full shares which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of the
Securities (or specified portions thereof) so surrendered. Instead of
any fractional share of Common Stock which would otherwise be issuable
upon conversion of any Security or Securities (or specified portions
thereof), the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Closing Price at
the close of business on the day of conversion (or, if such day is not a
Trading Day, on the Trading Day immediately preceding such day).
<PAGE>166
SECTION 1304. Adjustment of Conversion Price.
(a) In case the Company shall pay or make a dividend or
other distribution on the Common Stock exclusively in Common Stock or
shall pay or make a dividend or other distribution on any other class of
capital stock of the Company which dividend or distribution includes
Common Stock, the Conversion Price in effect at the opening of business
on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (a), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(b) Subject to the last sentence of paragraph (g) of this
Section, in case the Company shall pay or make a dividend or other
distribution on the Common Stock consisting exclusively of, or shall
otherwise issue to all holders of the Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the Current Market Price
(determined as provided in paragraph (h) of this Section) on the date
fixed for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this paragraph (b),
the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company shall not issue any
rights or warrants in respect of shares of Common Stock held in the
treasury of the Company.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of
<PAGE>167
Common Stock shall be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective
shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or
combination becomes effective.
(d) Subject to the last sentence of this paragraph (d) and
the last sentence of paragraph (g) of this Section, in case the Company
shall, by dividend or otherwise, distribute to all holders of the Common
Stock evidences of its indebtedness, shares of any class of its capital
stock, cash or other assets (including securities, but excluding any
rights or warrants referred to in paragraph (b) of this Section,
excluding any dividend or distribution paid exclusively in cash and
excluding any dividend or distribution referred to in paragraph (a) of
this Section), the Conversion Price shall be reduced by multiplying the
Conversion Price in effect immediately prior to the close of business on
the date fixed for the determination of stockholders entitled to such
distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section)
on such date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
Board Resolution) on such date of the portion of the evidences of
indebtedness, shares of capital stock, cash and other assets to be
distributed applicable to one share of Common Stock and the denominator
shall be such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d) by reference to the
actual or when issued trading market for any securities comprising part
or all of such distribution, it must in doing so consider the prices in
such market over the same period used in computing the Current Market
Price pursuant to paragraph (h) of this Section, to the extent possible.
For purposes of this paragraph (d), any dividend or distribution that
includes shares of Common Stock, rights or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock shall be deemed to be (x) a
dividend or distribution of the evidences of indebtedness, cash, assets
or shares of capital stock other than such shares of Common Stock, such
rights or warrants or such convertible or exchangeable securities
(making any Conversion Price reduction required by this paragraph (d))
immediately followed by (y) in the case of such shares of Common Stock,
such rights or warrants, a dividend or distribution thereof (making any
further Conversion Price reduction required by paragraph (a) or (b) of
this Section, except any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the meaning
of paragraph (a) of this Section), or (b) in the case of such
convertible or exchangeable securities, a dividend or distribution of
the number of shares of Common Stock as would then be issuable upon the
conversion or exchange thereof, whether or not the conversion or
exchange of such securities is subject to any conditions (making any
further Conversion Price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or
distribution shall not be deemed "outstanding at the close of business
on the date fixed for such determination" within the meaning of
paragraph (a) of this Section).
<PAGE>168
(e) In case the Company shall, by dividend or otherwise,
at any time distribute to all holders of the Common Stock cash
(excluding any cash that is distributed as part of a distribution
referred to in paragraph (d) of this Section or in connection with a
transaction to which Section 1309 applies) in an aggregate amount that,
together with (i) the aggregate amount of any other distributions to all
holders of the Common Stock made exclusively in cash within the 12
months preceding the date fixed for the determination of stockholders
entitled to such distribution and in respect of which no Conversion
Price adjustment pursuant to this paragraph (e) has been made previously
and (ii) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) as of such date of
determination of consideration payable in respect of any tender offer by
the Company or a Subsidiary for all or any portion of the Common Stock
consummated within the 12 months preceding such date of determination
and in respect of which no Conversion Price adjustment pursuant to
paragraph (f) of this Section has been made previously, exceeds 12.5% of
the product of the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date of determination times the
number of shares of Common Stock outstanding on such date, the
Conversion Price shall be reduced by multiplying the Conversion Price in
effect immediately prior to the close of business on such date of
determination by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section)
on such date less the amount of cash to be distributed at such time
applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day after such date.
(f) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall be
consummated and such tender offer shall involve an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
Board Resolution) as of the last time (the "Expiration Time") that
tenders may be made pursuant to such tender offer (as it shall have been
amended) that, together with (i) the aggregate of the cash plus the fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution)
as of the Expiration Time of the other consideration paid in respect of
any other tender offer by the Company or a Subsidiary for all or any
portion of the Common Stock consummated within the 12 months preceding
the Expiration Time and in respect of which no Conversion Price
adjustment pursuant to this paragraph (f) has been made previously and
(ii) the aggregate amount of any distributions to all holders of the
Common Stock made exclusively in cash within the 12 months preceding the
Expiration Time and in respect of which no Conversion Price adjustment
pursuant to paragraph (e) of this Section has been made previously,
exceeds 12.5% of the product of the Current Market Price (determined as
provided in paragraph (h) of this Section) immediately prior to the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, the Conversion
Price shall be reduced by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be (x) the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) immediately
prior to the Expiration Time times the number of shares of Common Stock
<PAGE>169
outstanding (including any tendered shares) at the Expiration Time minus
(y) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders upon consummation of such tender
offer and the denominator shall be the product of (A) such Current
Market Price times (B) such number of outstanding shares at the
Expiration Time minus the number of shares accepted for payment in such
tender offer (the "Purchased Shares"), such reduction to become
effective immediately prior to the opening of business on the day
following the Expiration Time; provided, that if the number of Purchased
Shares or the aggregate consideration payable therefor have not been
finally determined by such opening of business, the adjustment required
by this paragraph (f) shall, pending such final determination, be made
based upon the preliminarily announced results of such tender offer,
and, after such final determination shall have been made, the adjustment
required by this paragraph (f) shall be made based upon the number of
Purchased Shares and the aggregate consideration payable therefor as is
finally determined.
(g) The reclassification of Common Stock into securities
which include securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section 1309
applies) shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and
the effective date of such reclassification shall be deemed to be "the
date fixed for the determination of stockholders entitled to such
distributions" within the meaning of paragraph (d) of this Section), and
(ii) a subdivision or combination, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification
shall be deemed to be "the day upon which such subdivision becomes
effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph (c) of
this Section). Rights or warrants issued by the Company to all holders
of the Common Stock entitling the holders thereof to subscribe for or
purchase shares of Common Stock (either initially or under certain
circumstances), which rights or warrants (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable
and (iii) are also issued in respect of future issuances of Common
Stock, in each case in clauses (i) through (iii) until the occurrence of
a specified event or events ("Trigger Event"), shall for purposes of
this Section 1304 not be deemed issued until the occurrence of the
earliest Trigger Event.
(h) For the purpose of any computation under this
paragraph and paragraphs (b), (d) and (e) of this Section, the current
market price per share of Common Stock (the "Current Market Price") on
any date shall be deemed to be the average of the daily Closing Prices
for the five consecutive Trading Days selected by the Company commencing
not more than 20 Trading Days before, and ending not later than, the
date in question; provided, however, that (i) if the "ex" date for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or
after the 20th Trading Day prior to the date in question and prior to
the "ex" date for the issuance or distribution requiring such
computation, the Closing Price for each Trading Day prior to the "ex"
<PAGE>170
date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Conversion Price is so required
to be adjusted as a result of such other event, (ii) if the "ex" date
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the date in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted
as a result of such other event, and (iii) if the "ex" date for the
issuance or distribution requiring such computation is on or prior to
the date in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date in
question (as determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of paragraph (d) or
(e) of this Section, whose determination shall be conclusive and
described in a Board Resolution) of the evidences of indebtedness,
shares of capital stock or assets being distributed applicable to one
share of Common Stock as of the close of business on the day before such
"ex" date. For the purpose of any computation under paragraph (f) of
this Section, the Current Market Price on any date shall be deemed to be
the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender offer requiring
such computation and (iii) the date of the last amendment, if any, of
such tender offer involving a change in the maximum number of shares for
which tenders are sought or a change in the consideration offered, and
ending not later than the Expiration Time of such tender offer;
provided, however, that if the "ex" date for any event (other than the
tender offer requiring such computation) that requires an adjustment to
the Conversion Price pursuant to paragraph (a), (b), (c), (d), (e) or
(f) above occurs on or after the Commencement Date and prior to the
Expiration Time for the tender offer requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as
a result of such other event. The closing price for any Trading Day
(the "Closing Price") shall be the last reported sales price regular way
or, in case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if the Common Stock is not listed or
admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ, National Market System or, if the
Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System, the
average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm selected
from time to time by the Company for that purpose. For purposes of this
paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are
generally not traded on the applicable securities exchange or in the
<PAGE>171
applicable securities market and the term "ex" date", (i) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Prices were obtained without the
right to receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision
or combination becomes effective, and (iii) when used with respect to
any tender offer means the first date on which the Common Stock trades
regular way on such exchange or in such market after the last time that
tenders may be made pursuant to such tender offer (as it shall have been
amended).
(i) The Company may make such reductions in the Conversion
Price, in addition to those required by paragraphs (a), (b), (c), (d),
(e) and (f) of this Section, as it considers to be advisable in order
that any event treated for federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients or, if that
is not possible, to diminish any income taxes that are otherwise payable
because of such event.
(j) No adjustment in the Conversion Price shall be
required unless such adjustment (plus any other adjustments not
previously made by reason of this paragraph (j)) would require an
increase or decrease of at least 1% in the Conversion Price; provided,
however, that any adjustments which by reason of this paragraph (j) are
not required to be made shall be carried forward and taken into account
in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section
1304, no adjustment to the Conversion Price shall reduce the Conversion
Price below the then par value per share of the Common Stock, and any
such purported adjustment shall instead reduce the Conversion Price to
such par value. The Company hereby covenants not to take any action to
increase the par value per share of the Common Stock.
SECTION 1305. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion
Price in accordance with Section 1304 and shall prepare a certificate
signed by the Treasurer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed
(with a copy to the Trustee) at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section 1002; and
(b) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall forthwith
be prepared, and as soon as practicable after it is prepared, such
notice shall be mailed by the Company to all Holders at their last
addresses as they shall appear in the Security Register.
SECTION 1306. Notice of Certain Corporate Action.
In case:
<PAGE>172
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than exclusively
in cash or (ii) exclusively in cash in an amount that would require a
Conversion Price adjustment pursuant to paragraph (e) of Section 1304;
or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights
(excluding shares of capital stock or options for capital stock issued
pursuant to a benefit plan for employees, officers or directors of the
Company); or
(c) of any reclassification of the Common Stock (other
than a subdivision or combination of the outstanding shares of Common
Stock), or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any stockholders of the
Company is required, or of the sale or transfer of all or substantially
all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the outstanding shares of Common Stock (or
shall amend any such tender offer to change the maximum number of shares
being sought or the amount or type of consideration being offered
therefor);
then the Company shall cause to be filed at each office or agency
maintained pursuant to Section 1002, and shall cause to be mailed to all
Holders at their last addresses as they shall appear in the Security
Register, at least 21 days (or 11 days in any case specified in clause
(a), (b) or (e) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record
who will be entitled to such dividend, distribution, rights or warrants
are to be determined, (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date
as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding up, or (z) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms
thereof (or the material terms of any amendment thereto). Neither the
failure to give any such notice nor any defect therein shall affect the
legality or validity of any action described in clauses (a) through (e)
of this Section 1306.
SECTION 1307. Taxes on Conversions.
<PAGE>173
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion
of Securities pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until
the Person requesting such issue has paid to the Company the amount of
any such tax, or has established to the satisfaction of the Company that
such tax has been paid.
SECTION 1308. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to
the Trustee to be cancelled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 309.
SECTION 1309. Provisions of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock) or any sale or transfer of all or substantially
all of the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 1301, to convert
such Security only into the kind and amount of securities, cash and
other property, if any, receivable upon such consolidation, merger, sale
or transfer by a holder of the number of shares of Common Stock into
which such Security might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common
Stock (a) is not a Constituent Person or an Affiliate of a Constituent
Person and (b) failed to exercise his rights of election, if any, as to
the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer (provided that if the
kind or amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer is not the same for each
nonelecting share, then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each nonelecting share shall
be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). Such supplemental indenture shall
provide for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The
above provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
ARTICLE FOURTEEN
Redemption at Holder's Option
<PAGE>174
SECTION 1401. Right to Redemption.
(a) Upon the occurrence of a Redemption Event, each Holder
of Securities shall have the right, at the Holder's option, to require
the Company to redeem on the Redemption Date all or any portion (equal
to $1,000 or any integral multiple thereof) of the Holder's Securities
for Common Stock at the Redemption Price equal to 100% of the principal
amount of the Securities to be so redeemed, together with accrued
interest to the Redemption Date payable in cash. The Redemption Date
for purposes of this Article Fourteen shall be the 60th day after the
occurrence of a Redemption Event.
(b) A "Redemption Event" shall be deemed to have occurred
at such time as (i) any Person, which for this purpose shall include any
group as defined by Sections 13(d) and 14(d)(2) of the Exchange Act,
becomes the Beneficial Owner, directly or indirectly, of shares of stock
of the Company, entitling such Person to exercise 50% or more of the
total voting power of all classes of stock of the Company, entitled to
vote in elections of directors or (ii) Continuing Directors cease to
constitute at least a majority of the Board of Directors of the Company.
SECTION 1402. Applicability of Article.
Redemption of Securities at the election of the Holder thereof
shall be made in accordance with the provisions of this Article.
SECTION 1403. Notice of Redemption Event.
Unless the Company shall have theretofore called all the
outstanding securities for redemption pursuant to Article Eleven, notice
with respect to a Redemption Event shall be given by first class mail,
postage prepaid, mailed not more than 15 days after the occurrence of
such Redemption Event, to each Holder of Securities, at his address
appearing in the Security Register, but failure to give such notice by
mailing in the manner herein provided to the Holder of any Security, or
any defect in the notice to any Holder, shall not affect the validity of
the proceedings for the redemption of any other Security.
All such notices shall state:
(a) the event constituting the Redemption Event;
(b) the Redemption Date;
(c) the Redemption Price;
(d) that on the Redemption Date the Redemption Price will
become due and payable upon each Security with respect to which a Holder
has elected redemption, and interest thereon shall cease to accrue on
and after such date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and that the Securities
must be surrendered at such place[s] to collect the Redemption Price;
and
(f) the date on which the Holder must exercise its
redemption option.
<PAGE>175
Notice of a Redemption Event shall be given by the Company or,
at the Company's request, by the Trustee in the name and at the expense
of the Company.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to require the redemption of Securities
pursuant to this Article.
SECTION 1404. Notice of Election.
A Holder of Securities electing to require redemption of all
or any portion of such Securities shall make such election by delivering
to the office or agency to be maintained by the Company pursuant to
Section 1002 not later than two Business Days prior to the Redemption
Date a validly executed notice of election ("Notice of Election"),
setting forth the name of the Holder, the principal amount of the
Securities, or portions thereof, with respect to which an election to
require redemption is being made and a statement that the election to
require redemption is being made thereby. A Notice of Election shall
be irrevocable.
SECTION 1405. Securities Payable on Redemption Date.
The Securities with respect to which Holders shall have
elected to require redemption shall, on the Redemption Date, become due
and payable at the Redemption Price, and from and after such date such
Securities shall not bear interest. Upon surrender of any such Security
for redemption in accordance with any Notice of Election pursuant to
Section 1404, such Security shall be paid by the Company at the
Redemption Price; provided, however, that installments of interest whose
Stated Maturity is prior to or on the Redemption Date and after the
relevant Record Dates shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.
If any Security to be redeemed shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1406. Securities Redeemed in Part.
Any Security that is to be redeemed only in part shall be
surrendered at any office or agency of the Company designated for that
purpose pursuant to Section 1002 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his 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 exchange for the
unredeemed portion of the principal of the Security so surrendered.
For all purposes of this Article, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in
<PAGE>176
part, to the portion of the principal amount of such Security that has
been or is to be redeemed.
SECTION 1407. Fractions of Shares.
No fractional shares of Common Stock shall be issued upon
redemption of Securities pursuant to Section 1401. If more than one
Security shall be surrendered for redemption at one time by the same
Holder, the number of full shares which shall be issuable upon
redemption thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon redemption of any Security or
Securities, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Closing Price at
the close of business on the Redemption Date (or, if such day is not a
Trading Day, on the Trading Day immediately preceding such day).
This instrument may be executed in any number of counterparts
each of which when so executed shall be deemed to be an original, but
all such Counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first above
written.
ROLLINS ENVIRONMENTAL SERVICES, INC.
By: /s/ Nicholas Pappas
Name: Nicholas Pappas
Title: President
Attest:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Peterson Foster
Name:Peterson Foster
Title: Executive Vice President
Attest:
<PAGE>178
) ss.:
)
On the day of March, 1995, before me personally came
- -------------, to me known, who, being by me duly sworn, did depose and
say that he is ---------------------- of Rollins Environmental Services,
Inc., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was
so affixed by authority of the Board of Directors of said corporation;
and that he signed his name thereto by like authority.
) ss.:
)
On the ------- day of March, 1995, before me personally came -
- ------------, to me known, who, being by me duly sworn, did depose and
say that he is --------- of Texas Commerce Bank National Association, a
national banking association organized under the laws of the United
States of America, one of the entities described in and which executed
the foregoing instrument; that he knows the seal of said association;
that the seal affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said association; and
that he signed his name thereto by like authority.
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