UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20541
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended December 31, 1995
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities Act
of 1934
For the transition period from to
Commission File Number 1-5910
CARTER-WALLACE, INC.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Exact name of registrant as specified in its charter)
Delaware 13-4986583
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas
New York, New York 10105
(Address of principal executive
offices)
Registrant's telephone number, including area code: 212-339-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares of the registrant's Common Stock and Class B common
stock outstanding at December 31, 1995 were 33,696,700 and 12,471,600,
respectively.
CARTER-WALLACE, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
DECEMBER 31, 1995
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Statements of Earnings for the
three and nine months ended December 31, 1995 and 1994 1
Condensed Consolidated Balance Sheets at
December 31, 1995 and March 31, 1995 2
Condensed Consolidated Statements of Cash Flows
for the nine months ended December 31, 1995 and 1994 3
Notes to Condensed Consolidated Financial Statements 4
Report by KPMG Peat Marwick LLP on their Limited Review 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
<TABLE>
PART I - FINANCIAL INFORMATION
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
Revenues:
<S> <C> <C> <C> <C>
Net sales $162,004,000 $156,680,000 $493,851,000 $508,095,000
Other revenues 1,885,000 1,463,000 6,175,000 4,291,000
163,889,000 158,143,000 500,026,000 512,386,000
Cost and expenses:
Cost of goods sold 58,861,000 54,038,000 180,965,000 180,031,000
Advertising, marketing
& other selling
expenses 59,320,000 60,959,000 183,903,000 191,866,000
Research & development
expenses 6,764,000 6,536,000 20,121,000 32,261,000
General, administrative
& other expenses 20,460,000 22,835,000 64,418,000 67,168,000
Provision for
restructuring - 20,500,000 16,500,000 69,500,000
Provision for loss on
Felbatol - - - 36,640,000
Provision for condom
plant closing - - 20,100,000 -
Provision for loss on
discontinuance of the
Organidin (iodinated
glycerol) product line - - - 17,500,000
Interest expense 1,063,000 917,000 2,807,000 1,785,000
146,468,000 165,785,000 488,814,000 596,751,000
Earnings (loss) before
taxes on income 17,421,000 (7,642,000) 11,212,000 (84,365,000)
Provision (benefit) for
taxes on income 7,143,000 (2,980,000) 4,597,000 (32,902,000)
Net earnings (loss) $ 10,278,000 $ (4,662,000)$ 6,615,000 $(51,463,000)
Net earnings (loss) per
average share of common
stock outstanding $.22 $ (.10) $.14 $(1.12)
Cash dividends per share $.04 $ .0833 $.12 $ .2499
Average shares of common
stock outstanding 46,138,000 46,119,000 46,136,000 46,086,000
</TABLE>
<TABLE>
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, March 31,
1995 1995
Assets (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 64,356,000 $ 40,098,000
Short-term investments 23,391,000 18,188,000
Accounts and other receivables
less allowances of $7,154,000
at December 31, 1995 and
$6,344,000 at March 31, 1995 120,662,000 123,805,000
Inventories:
Finished goods 53,644,000 55,499,000
Work in process 15,055,000 12,359,000
Raw materials and supplies 24,130,000 21,359,000
92,829,000 89,217,000
Deferred taxes, prepaid expenses
and other current assets 37,756,000 32,009,000
Total Current Assets 338,994,000 303,317,000
Property, plant and equipment, at cost 252,342,000 252,226,000
Less: accumulated depreciation and
amortization 115,437,000 114,618,000
136,905,000 137,608,000
Intangible assets 136,445,000 129,852,000
Deferred taxes and other assets 105,269,000 109,447,000
Total Assets $717,613,000 $680,224,000
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 30,979,000 $ 31,318,000
Accrued expenses 161,143,000 165,987,000
Notes payable 14,987,000 5,416,000
Total Current Liabilities 207,109,000 202,721,000
Long-Term Liabilities:
Long-term debt 54,353,000 23,115,000
Deferred compensation 14,476,000 10,216,000
Accrued postretirement benefit obligation 70,450,000 68,969,000
Other long-term liabilities 39,512,000 48,064,000
Total Long-Term Liabilities 178,791,000 150,364,000
Stockholders' Equity:
Common stock 34,580,000 34,528,000
Class B common stock 12,625,000 12,677,000
Capital in excess of par value 3,248,000 2,184,000
Retained earnings 311,485,000 310,407,000
Less: Foreign currency translation adj. 17,317,000 18,949,000
Treasury stock, at cost 12,908,000 13,708,000
Total Stockholders' Equity 331,713,000 327,139,000
Total Liabilities and Stockholders' Equity $717,613,000 $680,224,000
</TABLE>
<TABLE>
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited)
<CAPTION>
1995 1994
Cash flows from operations:
<S> <C> <C>
Net earnings (loss) $ 6,615,000 $(51,463,000)
Current period one-time charges 36,600,000 123,640,000
Cash payments for current and
prior year one-time charges (25,817,000) (9,028,000)
Changes in assets and liabilities (762,000) (25,354,000)
Depreciation and Amortization 18,777,000 21,463,000
35,413,000 59,258,000
Cash flows used in investing activities:
Additions to property, plant and
equipment (25,700,000) (15,369,000)
Acquisition of product lines from
BioWhittaker Inc. and Clark Laboratories (11,555,000) -
Payments for international acquisitions,
net of cash received:
The Sante Beaute line in France - (19,876,000)
Technogenetics in Italy - (4,928,000)
The Curash line in Australia - (3,660,000)
(Increase) decrease in short-term
investments (4,898,000) 16,041,000
Other investing activities 617,000 (356,000)
(41,536,000) (28,148,000)
Cash flows used in financing activities:
Dividends paid (5,537,000) (11,525,000)
Increase in borrowings 43,204,000 13,018,000
Payments of debt (2,973,000) (3,529,000)
Purchase of treasury stock (4,216,000) (859,000)
30,478,000 (2,895,000)
Effect of exchange rate changes on
cash and cash equivalents (97,000) (865,000)
Increase in cash and cash equivalents $ 24,258,000 $ 27,350,000
</TABLE>
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
Note 1: Interim Reports
The results of the interim periods are not necessarily indicative of results
expected for a full year's operations. In the opinion of management, all
adjustments necessary for a fair statement of results of these interim
periods have been reflected in these financial statements and, except as
separately disclosed herein, are of a normal recurring nature.
Note 2: Review of Independent Auditors
The financial information included in this report has been reviewed by KPMG
Peat Marwick LLP, independent auditors. A copy of their report on this
limited review is included in this Form.
Note 3: Restructuring of Operations and Facilities
(a) As part of its restructuring program, the Company decided in September,
1995 to consolidate its two Canadian operations in order to reduce costs
and increase efficiencies. In this regard, the Company incurred a one-
time pre-tax charge of $6,300,000 ($3,720,000 after taxes or $.08 per
share) in the quarter ended September 30, 1995 consisting primarily of
employee termination costs ($3,900,000), pension and other benefit costs
($1,300,000) and plant closing costs including equipment write-offs
($700,000).
Also included in the quarter ended September 30, 1995 is a one-time pre-
tax charge of $8,400,000 ($4,960,000 after taxes or $.11 per share)
representing an increase to the restructuring charge recorded in the
prior year. The increase relates primarily to lower than anticipated
sub-rental income associated with the subleasing of office space on which
the Company holds a long-term lease.
In addition, as previously announced, the Company incurred a one-time
pre-tax charge of $1,800,000 ($1,060,000 after taxes or $.02 per share)
in the quarter ended September 30, 1995 related to the relocation of one
of the Company's divisions to its Cranbury, New Jersey facility.
(b) In connection with its restructuring program from inception in fiscal
year 1995 through December 31, 1995, the Company has incurred one-time
pre-tax charges of $90,560,000 consisting primarily of employee
termination costs ($31,700,000), net plant closing costs including
equipment write-offs ($23,800,000) and costs associated with the
subleasing of office space on which the Company holds a long-term lease
($27,800,000).
The total anticipated reduction in the number of worldwide employees will
be approximately 1,030 including 120 vacancies that will not be filled.
Through December 31, 1995, 625 employees have been terminated with
employee termination costs of $17,900,000 applied against the
restructuring liability. In addition, approximately 70 positions have
been eliminated as a result of voluntary resignations.
(Continued)
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(Continued)
Note 3: Restructuring of Operations and Facilities (Continued)
Net plant closing costs of $10,900,000, as well as $2,800,000 in costs
associated with the subleasing of office space on which the Company holds a
long-term lease have been applied against the restructuring liability.
Approximately $55,300,000 of the $90,560,000 provision for restructuring
charges remains to be utilized in future periods. Of the $55,300,000,
approximately $37,200,000 represents expected cash payments over a period of
years.
Note 4: Closure of the Trenton Condom Manufacturing Facility
As previously announced, the Company decided in mid-May, 1995 to close its
condom manufacturing plant in Trenton, New Jersey over a projected period of
eighteen to twenty-four months. The condom production currently performed at
Trenton will be transferred to the Company's recently acquired facility in
Colonial Heights, VA. The decision to close the Trenton plant resulted in a
one-time charge to pre-tax earnings in the quarter ended June 30, 1995 of
$20,100,000 ($11,860,000 after taxes or $.26 per share), consisting of plant
closing costs including equipment write-offs ($14,800,000) and employee
termination costs ($5,300,000). Additional pre-tax charges of approximately
$2,000,000 related to the Trenton closing are expected to be incurred in
fiscal year 1997.
Note 5: Discontinuance of the Organidin (Iodinated Glycerol) Product Line
As previously announced, in June, 1994 the Company and the Food and Drug
Administration reached an agreement to discontinue the manufacture and
shipment of the Company's Organidin (iodinated glycerol) line of products.
As a result of this agreement, the Company incurred in the quarter ended June
30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily
related to a provision for any product returns ($8,500,000) and for inventory
write-offs ($3,600,000).
Note 6: Felbatol
As previously reported, in the quarter ended September 30, 1994 the Company
incurred a one-time charge to pre-tax earnings of $36,640,000 related to use
restrictions for Felbatol. This charge was adjusted by $1,140,000 to
$37,780,000 in the quarter ended March 31, 1995. Depending on future sales
levels, additional inventory write-offs may be required. If for any reason
the product at some future date should no longer be available in the market,
the Company will incur an additional one-time charge that would have a
material adverse effect on the Company's results of operations and possibly
on its financial condition. Should the product no longer be available, the
Company currently estimates that the additional one-time charge, consisting
primarily of inventory write-offs and anticipated returns of product
currently in the market, will be in the range of $25,000,000 to $30,000,000
on a pre-tax basis.
(Continued)
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(Continued)
Note 7: Litigation
Information regarding Legal Proceedings involving the Company is presented in
Note 19 "Litigation Including Environmental Matters" of the Notes to the
Consolidated Financial Statements on pages 30 to 32 of the Company's 1995
Annual Report to Stockholders incorporated by reference in the Company's Form
10-K for the year ended March 31, 1995 and is herein expressly incorporated
by reference.
In addition to the legal proceedings outlined in the Company's 1995 Annual
Report to Stockholders, nineteen additional product liability actions related
to Felbatol have been filed against the Company, bringing the total number of
such actions to twenty-nine. Damages are specified in thirteen of those
actions, where the complaints seek compensatory damages of $39,850,000 and
punitive damages of $217,100,000. In the other actions, the damages sought
are unspecified.
The Company continues to believe, based upon opinion of counsel, it has good
defenses to all of the above actions and should prevail.
Note 8: Acquisitions
In December, 1995, the Company acquired the enzyme immunoassay line of
diagnostics products from BioWhittaker Inc. and agreed to purchase within 90
days thereafter BioWhittaker's immunofluorescent line of diagnostic products.
The purchase price for these product lines was $10,000,000. The Company also
agreed to purchase certain inventories at cost.
In a separate transaction with Clark Laboratories in December, 1995, the
Company has obtained exclusive sales and marketing rights to Clark's line of
enzyme immunoassay diagnostic products in the United States and has entered
into a long-term supply agreement with Clark related to the manufacture of
certain diagnostic products. The fee for these rights was $2,000,000, a
portion of which will be paid over the next two years.
These acquisitions are being accounted for by the purchase method and
accordingly, the results of operations for these lines are included in the
Company's results of operations from the acquisition date. Pro forma results
of operations are not presented since the effect would not be material.
Note 9: Recent Accounting Pronouncement
Effective April 1, 1995 the Company adopted Statement of Position 93-7,
"Reporting on Advertising Costs" issued by the American Institute of
Certified Public Accountants. Adoption of this statement had no material
impact on the Company's financial statements.
- Continued -
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Carter-Wallace, Inc.:
We have reviewed the condensed consolidated balance sheet of Carter-Wallace,
Inc. and subsidiaries as of December 31, 1995, and the related condensed
consolidated statements of earnings for the three-month and nine month
periods ended December 31, 1995 and 1994 and the condensed consolidated
statements of cash flows for the nine-month periods ended December 31, 1995
and 1994 in accordance with standards established by the American Institute
of Certified Public Accountants. These condensed consolidated financial
statements are the responsibility of the Company's management.
A review of interim financial information consists principally of applying
analytical procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is substantially less
in scope than an audit conducted in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles. The contingencies discussed in the explanatory paragraphs of our
unqualified opinion, included in our report dated May 3, 1995, on the March
31, 1995 consolidated financial statements still exist.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Carter-Wallace, Inc. and
subsidiaries as of March 31, 1995, and the related consolidated statements of
earnings and retained earnings, and cash flows for the year then ended (not
presented herein); and in our report dated May 3, 1995, we expressed an
unqualified opinion on those consolidated financial statements. This opinion
included explanatory paragraphs related to the Felbatol and litigation
matters discussed in footnote 17 and 19, respectively, to those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of March 31, 1995 is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG Peat Marwick LLP
January 30, 1996
New York, New York
</AUDIT-REPORT>
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three months ended December 31, 1995 compared to
three months ended December 31, 1994
Consolidated earnings after taxes in the three months ended December 31, 1995
("fiscal 1996 period") were approximately $10,300,000 or $.22 per share.
This compares to net earnings after taxes, before the one-time charges for
restructuring, in the three months ended December 31, 1994 ("fiscal 1995
period") of $7,800,000 or $.17 per share.
Net sales increased $5,324,000 (3.4%) in the fiscal 1996 period as compared
to net sales in the fiscal 1995 period. The higher sales level was
principally related to the Health Care segment which benefitted from both
selling price increases and unit volume gains of pharmaceutical products,
primarily Organidin NR and Felbatol reduced in part by lower sales of other
pharmaceuticals. Sales of pharmaceutical products in the Health Care segment
continue to be adversely impacted by generic competition. Sales were lower
in the Consumer Products segment due to unit volume declines, including
reduced sales of anti-perspirant and deodorant products.
Lower foreign exchange rates in comparison with the prior year had the effect
of decreasing sales in the fiscal 1996 period by approximately $1,400,000.
Lower foreign exchange rates in Mexico were partially offset by higher
exchange rates in Europe. The effect of changes in foreign exchange rates on
results of operations in the fiscal 1996 period compared to the prior year
period was not significant.
Other revenues increased $422,000 or 28.8% due principally to higher interest
income.
Cost of goods sold as a percentage of net sales increased from 34.5% in the
fiscal 1995 period to 36.3% in the 1996 period primarily due to higher
production costs.
Advertising, marketing and other selling expenses decreased by $1,639,000 or
2.7% primarily due to lower spending levels in the Consumer Products segment.
Spending in the Health Care segment increased versus the prior year period.
Research and development expenses increased by $228,000 or 3.5%.
General, administrative and other expenses decreased $2,375,000 or 10.4%
primarily due to reduced compensation including fringe benefits and lower
rent expense, as well as a non-recurring prior year cost for a trade
receivable reserve.
Interest expense increased by $146,000 (15.9%) over the prior year period as
a result of increased borrowings.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations - Three months ended December 31, 1995 compared to
three months ended December 31, 1994 (Continued)
The estimated annual effective tax rate applied in the fiscal 1996 period was
41%, compared to the fiscal 1995 annual net tax rate benefit of 35.3%. The
tax rate benefit applied in the quarter ended December 31, 1994 was 39%. The
tax rates in the fiscal 1996 period and future years are and will be
adversely affected by the absence of tax savings resulting from the cessation
of Puerto Rico operations and the absence of research and development tax
credits.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Nine months ended December 31, 1995 compared to nine
months ended December 31, 1994
Consolidated earnings after taxes in the nine months ended December 31, 1995
("fiscal 1996 period") before the one-time charges were approximately
$28,200,000 or $.61 per share. This compares to net earnings after taxes in
the nine months ended December 31, 1994 ("fiscal 1995 period"), before
restructuring and other one-time charges, of $23,500,000 or $.51 per share.
The one-time charges in the current year period for the condom manufacturing
integration, the Canadian facilities integration and other restructuring
charges resulted in pre-tax charges of $36,600,000 ($21,600,000 after taxes
or $.47 per share). The one-time charges in the prior year period were
$123,640,000 on a pre-tax basis ($75,000,000 after taxes or $1.63 per share).
Net sales decreased $14,244,000 (2.8%) in the fiscal 1996 period as compared
to net sales in the fiscal 1995 period. The lower sales level was
attributable to reduced unit volume in the Health Care segment largely as a
result of reduced sales of Felbatol. Felbatol sales were adversely affected
by use restrictions beginning in August, 1994. The absence of sales of
Organidin Iodinated Glycerol (I.G.), which in the prior year period amounted
to approximately $21,000,000, was largely offset by increased sales of
Organidin NR, a reformulated version of Organidin which was introduced in
September, 1994. Current year sales of Organidin NR amount to $24,300,000,
an increase of $18,200,000 above the prior year. The Company continues to
maintain the $8,000,000 provision established in the prior year for possible
Organidin NR returns. As previously announced, sales of Organidin I.G. were
discontinued in June, 1994. Health Care sales were favorably impacted by
unit volume gains from the Technogenetics line of diagnostic products in
Italy acquired during the second quarter of fiscal 1995. Sales of
pharmaceutical products in the Health Care segment continue to be adversely
impacted by generic competition. Future sales of Organidin NR may be
particularly affected by generic competition.
Sales were higher in the Consumer Products segment predominately due to unit
volume gains from the Sante Beaute product line in France acquired in the
second quarter of fiscal 1995. Sales of anti-perspirants and deodorants,
also included in the Consumer Products segment, were lower than the prior
year period.
Selling price increases in both business segments had a positive effect on
sales in comparison with the prior year period. Lower foreign exchange rates
in comparison with the prior year had the effect of decreasing sales in the
fiscal 1996 period by approximately $2,800,000. Lower foreign exchange rates
in Mexico were partially offset by higher exchange rates in Europe. The
effect of changes in foreign exchange rates on results of operations in the
fiscal 1996 period compared to the prior year period was not significant.
Other revenues increased $1,884,000 or 43.9% due principally to higher
interest income.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations - Nine months ended December 31, 1995 compared to nine
months ended December 31, 1994 (Continued)
Cost of goods sold as a percentage of net sales increased from 35.4% in the
fiscal 1995 period to 36.6% in the 1996 period primarily due to changes in
product mix and cost increases.
Advertising, marketing and other selling expenses decreased by $7,963,000 or
4.2% due to reduced spending levels in the Health Care segment primarily for
Felbatol. The Company substantially reduced its pharmaceutical sales force
and marketing support staff in October, 1994. Spending in the Consumer
Products segment increased over the prior year primarily related to the Sante
Beaute line of products in France acquired in the second quarter of fiscal
1995.
Research and development expenses decreased by $12,140,000 or 37.6%,
primarily due to lower spending in the Health Care segment. This decline was
due to the termination of Organidin and Felbatol clinical activities coupled
with a reduction in Astelin clinical activities. In October, 1994 the
Company virtually eliminated its Wallace Laboratories Division internal
research and development capability. However, the Company has continued its
research and development of Astelin (azelastine) for rhinitis, and
taurolidine, an antitoxin for the treatment of sepsis, and to the extent such
work exceeds the Company's remaining internal research and development
resources, such work is being done through independent research facilities.
General, administrative and other expenses decreased $2,750,000 or 4.1% due
primarily to reduced compensation including fringe benefits, lower rent
expense in the current year and non-recurring prior year costs for a foreign
patent claim provision and trade receivable reserves.
Interest expense increased by $1,022,000 in fiscal 1996 over the prior year
as a result of financing costs related to international acquisitions.
The estimated annual effective tax rate applied in the fiscal 1996 period was
41%, compared to the fiscal 1995 annual net tax rate benefit of 35.3%. The
tax rate benefit applied in the nine months ended December 31, 1994 was 39%.
The tax rates in the fiscal 1996 period and future years are and will be
adversely affected by the absence of tax savings resulting from the cessation
of Puerto Rico operations and the absence of research and development tax
credits.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Restructuring of Operations and Facilities
(a) As part of its restructuring program, the Company decided in September,
1995 to consolidate its two Canadian operations in order to reduce costs
and increase efficiencies. In this regard, the Company incurred a one-
time pre-tax charge of $6,300,000 ($3,720,000 after taxes or $.08 per
share) in the quarter ended September 30, 1995 consisting primarily of
employee termination costs ($3,900,000), pension and other benefit costs
($1,300,000) and plant closing costs including equipment write-offs
($700,000).
Also included in the quarter ended September 30, 1995 is a one-time pre-
tax charge of $8,400,000 ($4,960,000 after taxes or $.11 per share)
representing an increase to the restructuring charge recorded in the
prior year. The increase relates primarily to lower than anticipated
sub-rental income associated with the subleasing of office space on
which the Company holds a long-term lease.
In addition, as previously announced, the Company incurred a one-time
pre-tax charge of $1,800,000 ($1,060,000 after taxes or $.02 per share)
in the quarter ended September 30, 1995 related to the relocation of one
of the Company's divisions to its Cranbury, New Jersey facility.
(b) In connection with its restructuring program from inception in fiscal
year 1995 through December 31, 1995, the Company has incurred one-time
pre-tax charges of $90,560,000 consisting primarily of employee
termination costs ($31,700,000), net plant closing costs including
equipment write-offs ($23,800,000) and costs associated with the
subleasing of office space on which the Company holds a long-term lease
($27,800,000).
The total anticipated reduction in the number of worldwide employees
will be approximately 1,030 including 120 vacancies that will not be
filled. Through December 31, 1995, 625 employees have been terminated
with employee termination costs of $17,900,000 applied against the
restructuring liability. In addition, approximately 70 positions have
been eliminated as a result of voluntary resignations.
Net plant closing costs of $10,900,000, as well as $2,800,000 in costs
associated with the subleasing of office space on which the Company
holds a long-term lease have been applied against the restructuring
liability.
Approximately $55,300,000 of the $90,560,000 provision for restructuring
charges remains to be utilized in future periods. Of the $55,300,000,
approximately $37,200,000 represents expected cash payments over a
period of years.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Closure of the Trenton Condom Manufacturing Facility
As previously announced, the Company decided in mid-May, 1995 to close its
condom manufacturing plant in Trenton, New Jersey over a projected period of
eighteen to twenty-four months. The condom production currently performed at
Trenton will be transferred to the Company's recently acquired facility in
Colonial Heights, VA. The decision to close the Trenton plant resulted in a
one-time charge to pre-tax earnings in the quarter ended June 30, 1995 of
$20,100,000 ($11,860,000 after taxes or $.26 per share), consisting of plant
closing costs including equipment write-offs ($14,800,000) and employee
termination costs ($5,300,000). Additional pre-tax charges of approximately
$2,000,000 related to the Trenton closing are expected to be incurred in
fiscal year 1997.
Discontinuance of the Organidin (Iodinated Glycerol) Product Line
As previously announced, in June, 1994 the Company and the Food and Drug
Administration reached an agreement to discontinue the manufacture and
shipment of the Company's Organidin (iodinated glycerol) line of products.
As a result of this agreement, the Company incurred in the quarter ended June
30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily
related to a provision for any product returns ($8,500,000) and for inventory
write-offs ($3,600,000).
Felbatol
As previously reported, in the quarter ended September 30, 1994 the Company
incurred a one-time charge to pre-tax earnings of $36,640,000 related to use
restrictions for Felbatol. This charge was adjusted by $1,140,000 to
$37,780,000 in the quarter ended March 31, 1995. Depending on future sales
levels, additional inventory write-offs may be required. If for any reason
the product at some future date should no longer be available in the market,
the Company will incur an additional one-time charge that would have a
material adverse effect on the Company's results of operations and possibly
on its financial condition. Should the product no longer be available, the
Company currently estimates that the additional one-time charge, consisting
primarily of inventory write-offs and anticipated returns of product
currently in the market, will be in the range of $25,000,000 to $30,000,000
on a pre-tax basis.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Astelin
Three Astelin (azelastine) New Drug Applications ("NDA") are pending at the
FDA. Following a unanimous recommendation for approval of the Astelin Nasal
Spray NDA for seasonal allergic rhinitis by the FDA's Pulmonary Advisory
Committee in November, 1995, the Company received an "approvable letter" in
January, 1996. The Company is preparing responses to the questions raised by
FDA in the "approvable letter" and will commence discussions with FDA
regarding these responses as well as the final labeling for the product.
Additional formulation work will be required on the tablet for rhinitis which
will remain pending during 1996. The Company is unable at this time to
determine when and if the Astelin tablet NDA for rhinitis will be approved.
The NDA for asthma will not be pursued but the NDA will remain filed for
administrative purposes while the tablet NDA for rhinitis is pending.
Liquidity and Capital Resources
Funds provided from operations are used for capital expenditures,
acquisitions, the purchase of treasury stock, the payment of dividends and
working capital requirements. External borrowings are incurred as needed to
satisfy cash requirements relating to seasonal business fluctuations, to
finance major facility expansion programs and to finance major acquisitions.
In December, 1995, the Company entered into a long-term private placement
financing in the amount of $35,000,000. The proceeds of this loan will
primarily be used to finance the expansion of the condom manufacturing
facility in Colonial Heights, VA.
The Company amended its revolving credit agreement with a group of banks to
increase the credit line from $75,000,000 to $150,000,000. The amended
revolving credit line is for a five year period beginning in October, 1995.
In the Statements of Cash Flows the change in assets and liabilities in the
current year period is lower than that in the prior year period due primarily
to a smaller increase in deferred taxes.
Cash outlays in the nine months ended December 31, 1995 relating to both
current and prior year one-time charges amount to approximately $25,800,000.
The cash requirements for the one-time charges of $36,600,000 recorded in the
nine months ended December 31, 1995 are estimated to be $23,500,000 of which
approximately $6,500,000 is expected to be incurred in the fiscal year ending
March 31, 1996, $11,300,000 in the fiscal year ending March 31, 1997 and the
remainder over a period of years. After taking into account estimated tax
benefits of $15,000,000 to be received over a period of years, the one-time
charges taken in the nine months ended December 31, 1995 are expected
ultimately to result in a net cash outlay of approximately $8,500,000.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Please refer to Note 7 "Litigation" of Notes to Condensed Consolidated
Financial Statements for information regarding legal proceedings.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit - Private placement note agreement dated as of December 1,
1995
(b) Reports on Form 8-K - No reports on Form 8-K have been filed
during the quarter ended December 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Carter-Wallace, Inc.
(Registrant)
Date: January 30, 1996 s/Daniel J. Black
Daniel J. Black
President & Chief
Operating Officer
Date: January 30, 1996 s/Paul A. Veteri
Paul A. Veteri
Vice President, Finance
& Chief Financial Officer
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 64,356,000
<SECURITIES> 23,391,000
<RECEIVABLES> 127,816,000
<ALLOWANCES> 7,154,000
<INVENTORY> 92,829,000
<CURRENT-ASSETS> 338,994,000
<PP&E> 252,342,000
<DEPRECIATION> 115,437,000
<TOTAL-ASSETS> 717,613,000
<CURRENT-LIABILITIES> 207,109,000
<BONDS> 69,340,000
<COMMON> 47,205,000
0
0
<OTHER-SE> 284,508,000
<TOTAL-LIABILITY-AND-EQUITY> 717,613,000
<SALES> 493,851,000
<TOTAL-REVENUES> 500,026,000
<CGS> 180,965,000
<TOTAL-COSTS> 488,814,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,807,000
<INCOME-PRETAX> 11,212,000
<INCOME-TAX> 4,597,000
<INCOME-CONTINUING> 6,615,000
<DISCONTINUED> 0
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<NET-INCOME> 6,615,000
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</TABLE>
Carter-Wallace, Inc.
Note Agreement
Dated as of December 1, 1995
Re: $35,000,000 7.62% Senior Notes
Due December 21, 2007
- --
Table of Contents
(Not a part of the Agreement)
Section Heading Page
Section 1. Description of Notes and Commitment 1
Section 1.1. Description of Notes 1
Section 1.2. Commitment, Closing Date 2
Section 1.3. Other Agreement 2
Section 2. Prepayment of Notes 2
Section 2.1. Required Prepayments 2
Section 2.2. Optional Prepayment with Premium 3
Section 2.3. Prepayment of Notes upon Prepayment Event 3
Section 2.4. Notice of Optional Prepayments 4
Section 2.5. Application of Prepayments 4
Section 2.6. Direct Payment 5
Section 3. Representations 5
Section 3.1. Representations of the Company 5
Section 3.2. Representations of the Purchaser 5
Section 4. Closing Conditions 7
Section 4.1. Conditions 7
Section 4.2. Waiver of Conditions 9
Section 5. Company Covenants 9
Section 5.1. Corporate Existence, Etc 9
Section 5.2. Insurance 9
Section 5.3. Taxes, Claims for Labor and Materials;
Compliance with Laws 9
Section 5.4. Maintenance, Etc 10
Section 5.5. Nature of Business 10
Section 5.6. Consolidated Net Worth 10
Section 5.7. Limitations on Indebtedness 10
Section 5.8. Limitation on Liens 11
Section 5.9. Limitation on Sale and Leasebacks 13
Section 5.10. Restricted Payments 13
Section 5.11. Mergers, Consolidations and Sales of Assets 14
Section 5.12. Repurchase of Notes 17
Section 5.13. Transactions with Affiliates 17
Section 5.14. Withdrawal from Multiemployer Plans and
Termination of Pension Plans 17
Section 5.15. Reports and Rights of Inspection 18
Section 5.16. ERISA Disclosure 22
Section 6. Events of Default and Remedies Therefor 22
Section 6.1. Events of Default 22
Section 6.2. Notice to Holders 23
Section 6.3. Acceleration of Maturities 23
Section 6.4. Rescission of Acceleration 24
Section 7. Amendments, Waivers and Consents 25
Section 7.1. Consent Required 25
Section 7.2. Solicitation of Holders 25
Section 7.3. Effect of Amendment or Waiver 25
Section 8. Interpretation of Agreement; Definitions 25
Section 8.1. Definitions 25
Section 8.2. Accounting Principles 35
Section 8.3. Directly or Indirectly 35
Section 9. Miscellaneous 35
Section 9.1. Registered Notes 35
Section 9.2. Exchange of Notes 35
Section 9.3. Loss, Theft, Etc. of Notes 36
Section 9.4. Expenses, Stamp Tax Indemnity 36
Section 9.5. Powers and Rights Not Waived; Remedies
Cumulative 37
Section 9.6. Notices 37
Section 9.7. Successors and Assigns 37
Section 9.8. Survival of Covenants and Representations 37
Section 9.9. Severability 37
Section 9.10. Governing Law 37
Section 9.11. Captions 38
Signature Page 39
Attachments to Note Agreement:
Schedule I _ Names and Addresses of Purchasers and
Amounts of Commitments
Schedule II _ Indebtedness; Liens Securing Indebtedness
(including Capitalized Leases); Subsidiaries; and
Significant Subsidiaries as of the Closing Date
Carter-Wallace, Inc.
1345 Avenue of the Americas
New York, New York 10105
Note Agreement
Re: $35,000,000 7.62% Senior Notes
Due December 21, 2007
Dated as of
December 1, 1995
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, Carter-Wallace, Inc., a Delaware
corporation (the "Company"), agrees with you as follows:
.c.Section 1. Description of Notes and Commitment;.
.c2.Section 1.1. Description of Notes;. The Company
will authorize the issue and sale of $35,000,000 aggregate
principal amount of its 7.62% Senior Notes (the "Notes") to
be dated the date of issue, to bear interest from such date
at the rate of 7.62% per annum, payable semiannually on the
twenty-first day of June and December in each year
(commencing June 21, 1996) and at maturity and to bear
interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium,
if any, and (to the extent legally enforceable) on any
overdue installment of interest at the Overdue Rate after
the date due, whether by acceleration or otherwise, until
paid, to be expressed to mature on December 21, 2007, and to
be substantially in the form attached hereto as Exhibit A.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months. The Notes are not
subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on
the terms and conditions and in the amounts and with the
premium, if any, set forth in Section 2 of this Agreement. The
term "Notes" as used herein shall include each Note
delivered pursuant to this Agreement and the separate
agreement with the other purchaser named in Schedule I. You
and the other purchaser named in Schedule I are hereinafter
sometimes referred to as the "Purchasers". The terms which
are capitalized herein shall have the meanings set forth in
Section8.1 unless the context shall otherwise require.
.c2.Section 1.2. Commitment, Closing Date;. Subject
to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the
Company agrees to issue and sell to you, and you agree to
purchase from the Company, Notes in the principal amount set
forth opposite your name on Schedule I hereto at a price of
100% of the principal amount thereof on the Closing Date
hereafter mentioned.
Delivery of the Notes will be made at the offices of Whitman
Breed Abbott & Morgan, 200 Park Avenue, New York, New York
10166, against payment therefor by wire transfer of Federal
Reserve or other funds current and immediately available to
the account of the Company specified to you in writing
pursuant to Section4.1(f) in the amount of the purchase price at
10:00 A.M., New York City time, on December 21, 1995 or such
later date (not later than December 31, 1995) as shall
mutually be agreed upon by the Company and the Purchasers
(the "Closing Date"). The Notes delivered to you on the
Closing Date will be delivered to you in the form of a
single registered Note in the form attached hereto as
Exhibit A for the full amount of your purchase (unless
different denominations are specified by you), registered in
your name or in the name of such nominee, as may be
specified in Schedule I attached hereto.
.c2.Section 1.3. Other Agreement;. Simultaneously
with the execution and delivery of this Agreement, the
Company is entering into a similar agreement with the other
Purchaser under which such other Purchaser agrees to
purchase from the Company the principal amount of Notes set
opposite such Purchaser's name in Schedule I, and your
obligation and the obligations of the Company hereunder are
subject to the execution and delivery of said similar
agreement by the other Purchaser. This Agreement and said
similar agreement with the other Purchaser are herein
collectively referred to as the "Agreements". The
obligations of each Purchaser shall be several and not joint
and no Purchaser shall be liable or responsible for the acts
of the other Purchaser.
.c.Section 2. Prepayment of Notes;.
.c2.Section 2.1. Required Prepayments;. In addition
to paying the entire outstanding principal amount and the
interest due on the Notes on the maturity date thereof, the
Company agrees that on December 21 in each year, commencing
December 21, 2003 and ending December 21, 2006, both
inclusive, it will prepay and apply and there shall become
due and payable on the principal indebtedness evidenced by
the Notes an amount equal to the lesser of (a) $7,000,000 or
(b) the principal amount of the Notes then outstanding. The
entire remaining principal amount of the Notes shall become
due and payable on December 21, 2007. No premium shall be
payable in connection with any required prepayment made
pursuant to this Section2.1.
In the event that the Company shall prepay less than all of
the Notes pursuant to Section2.2 or Section2.3, the amount of
each
prepayment required by this Section2.1 shall be reduced by an
amount which is the same percentage of such required
prepayment as the percentage that the principal amount of
Notes prepaid pursuant to Section2.2 or Section2.3 is of the
aggregate
principal amount of outstanding Notes immediately prior to
such prepayment.
.c2.Section 2.2. Optional Prepayment with Premium;.
In addition to the payments required by Section2.1, upon
compliance with Section2.4, the Company shall have the privilege,
at any time and from time to time on any interest payment
date of prepaying the outstanding Notes, either in whole or
in part (but if in part then in a minimum principal amount
of $3,500,000), by payment of the principal amount of the
Notes, or portion thereof to be prepaid, and accrued
interest thereon to the date of such prepayment, together
with a premium equal to the Make-Whole Amount, determined as
of two Business Days prior to the date of such prepayment
pursuant to this Section2.2.
.c2.Section 2.3. Prepayment of Notes upon Prepayment
Event;. (a) In the event that any Prepayment Event (as
hereinafter defined) shall occur or any Responsible Officer
of the Company shall have knowledge of any proposed
Prepayment Event, the Company will give written notice (the
"Company Notice") of such fact in the manner provided in
Section9.6 to the holders of the Notes. The Company Notice shall
be delivered promptly upon receipt of such knowledge by such
Responsible Officer of the Company and in any event no later
than three Business Days following the occurrence of any
Prepayment Event of which a Responsible Officer is aware.
The Company Notice shall (1) describe the facts and
circumstances of such Prepayment Event in reasonable detail,
(2) make reference to this Section2.3 and the right of the
holders
of the Notes to require prepayment of the Notes on the terms
and conditions provided for in this Section2.3, (3) offer in
writing to prepay the outstanding Notes, and with accrued
interest to the date of prepayment, together with the
premium, if any, specified in the last sentence of this
Section2.3(a), and (4) specify a date for such prepayment (the
"Prepayment Event Prepayment Date"), which Prepayment Event
Prepayment Date shall be not more than 90 days nor less than
30 days following the date of such Company Notice. Each
holder of the then outstanding Notes shall have the right to
accept such offer and require prepayment of the Notes held
by such holder in full by written notice to the Company (a
"Noteholder Notice") given not later than 20 days after
receipt of the Company Notice. If such Prepayment Event
shall in fact occur, the Company shall on the Prepayment
Event Prepayment Date prepay in full all of the Notes held
by holders which have so accepted such offer of prepayment.
The prepayment price of the Notes payable upon the
occurrence of any Prepayment Event shall be an amount equal
to 100% of the outstanding principal amount of the Notes so
to be prepaid and accrued interest thereon to the date of
such prepayment, together with a premium equal to the
Make-Whole Amount determined as of two Business Days prior
to the date of a prepayment made pursuant to this Section2.3(a)
in
the case of a Prepayment Event which is a Specified Priority
Indebtedness Incurrence, but without premium in the case of
a Prepayment Event which is a Change of Control.
(b)(1) Without limiting the foregoing,
notwithstanding any failure on the part of the Company to
give the Company Notice herein required as a result of the
occurrence of a Prepayment Event, each holder of the Notes
shall following a Prepayment Event have the right by
delivery of written notice to the Company to require the
Company to prepay, and the Company will prepay, such
holder's Notes in full, and with accrued interest thereon to
the date of prepayment, together with the premium, if any,
specified in the last sentence of this Section2.3(b)(1). Notice
of any required prepayment pursuant to this Section2.3(b)(1)
shall
be delivered by any holder of the Notes which was entitled
to, but did not receive, such Company Notice to the Company
after such holder has actual knowledge of such Prepayment
Event. On the date (the "Prepayment Event Delayed
Prepayment Date") designated in such holder's notice (which
shall be not more than 90 days nor less than 30 days
following the date of such holder's notice), the Company
shall prepay in full all of the Notes held by such holder,
together with accrued interest thereon to the date of
prepayment, and the premium, if any, specified in the last
sentence of this Section2.3(b)(1). If the holder of any Note
gives any notice pursuant to this Section2.3(b)(1), the Company
shall give a Company Notice within three Business Days of
receipt of such notice and identify the Prepayment Event
Delayed Prepayment Date to all other holders of the Notes
and each of such other holders shall then and thereupon have
the right to accept the Company's offer to prepay the Notes
held by such holder in full and require prepayment of such
Notes by delivery of a Noteholder Notice within 20 days
following receipt of such Company Notice; provided only that
any date for prepayment of such holder's Notes shall be the
Prepayment Event Delayed Prepayment Date. On the Prepayment
Event Delayed Prepayment Date, the Company shall prepay in
full the Notes of each holder thereof which has accepted
such offer of prepayment at a prepayment price equal to 100%
of the outstanding principal amount of the Notes so to be
prepaid and accrued interest thereon to the date of such
prepayment, together with a premium equal to the Make-Whole
Amount determined as of two Business Days prior to the date
of a prepayment made pursuant to this Section2.3(b) in the case
of
a Prepayment Event which is a Specified Priority
Indebtedness Incurrence, but without premium in the case of
a Prepayment Event which is a Change of Control.
(2) Compliance with the provisions of this Section2.3(b)
shall not be deemed to constitute a waiver of, or consent
to, any Default or Event of Default caused by any violation
of the provisions of Section2.3(a).
.c2.Section 2.4. Notice of Optional Prepayments;. The
Company will give notice of any prepayment of the Notes
pursuant to Section2.2 to each holder thereof not less than 30
days nor more than 60 days before the date fixed for such
optional prepayment specifying (a) such date, (b) the
principal amount of the holder's Notes to be prepaid on such
date, (c) that the Make-Whole Amount may be payable, (d) the
date when the Make-Whole Amount will be calculated, (e) the
estimated Make-Whole Amount, together with a reasonably
detailed computation of such estimated Make-Whole Amount,
and (f) the accrued interest applicable to the prepayment.
Such notice of prepayment shall also certify all facts, if
any, which are conditions precedent to any such prepayment.
Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice,
together with accrued interest thereon and the Make-Whole
Amount, if any, payable with respect thereto shall become
due and payable on the prepayment date specified in said
notice. Two Business Days prior to the prepayment date
specified in such notice, the Company shall provide each
holder of a Note written notice of the Make-Whole Amount, if
any, payable in connection with such prepayment and, whether
or not any Make-Whole Amount is payable, a reasonably
detailed computation of the Make-Whole Amount.
.c2.Section 2.5. Application of Prepayments;. All
partial prepayments made pursuant to Section2.1 or Section2.2
shall be
applied on all outstanding Notes ratably in accordance with
the unpaid principal amounts thereof. All partial
prepayments made pursuant to Section2.3 shall be applied only to
the Notes of the holders who have elected to participate in
such prepayment.
.c2.Section 2.6. Direct Payment;. Notwithstanding
anything to the contrary contained in this Agreement or the
Notes, in the case of any Note owned by you or your nominee
or owned by any subsequent Institutional Holder which has
given written notice to the Company requesting that the
provisions of this Section2.6 shall apply, the Company will
punctually pay when due the principal thereof, interest
thereon and premium, if any, due with respect to said
principal, without any presentment thereof, except that upon
written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company
at its principal executive office or at the place of payment
most recently designated by the Company pursuant to Section9.6.
Prior to any sale or other disposition of any Note held by
you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Section9.2. All payments of principal,
interest and premium, if any, to which this Section2.6 shall
apply, shall be paid by the Company directly to you, to your
nominee or to such subsequent Institutional Holder at your
address or your nominee's address set forth in Schedule I
hereto or such other address as you, your nominee or such
subsequent Institutional Holder may from time to time
designate in writing to the Company or, if a bank account
with a United States bank is designated for you or your
nominee on Schedule I hereto or in any written notice to the
Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such
payments in immediately available funds to such bank
account, no later than 12:00 Noon Chicago, Illinois time on
the date due, marked for attention as indicated, or in such
other manner or to such other account in any United States
bank as you, your nominee or any such subsequent
Institutional Holder may from time to time direct in
writing. Payments received on the date due shall bear
interest at the coupon rate applicable to the Notes.
Payments received on a date after the date due shall bear
interest at the Overdue Rate for the period from and after
the date due to and including the date actually paid.
.c.Section 3. Representations;.
.c2.Section 3.1. Representations of the Company;. The
Company represents and warrants that all representations and
warranties set forth in Exhibit B are true and correct as of
the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in
full.
.c2.Section 3.2. Representations of the Purchaser;.
(a) You represent, and in entering into this Agreement the
Company understands, that you are acquiring the Notes for
the purpose of investment and not with a view to the
distribution thereof, and that you have no present intention
of selling, negotiating or otherwise disposing of the Notes;
it being understood, however, that the disposition of your
property shall at all times be and remain within your
control.
(b) You further represent that at least one of the
following statements, concerning each source of funds to be
used by you to purchase the Notes is accurate as of the
Closing Date:
(i) the source of funds is your "insurance company
general account" within the meaning of Department of Labor
Prohibited Transaction Exemption ("PTE") 95-60 (issued July
12, 1995) and either (x) there is no employee benefit plan
with respect to which the amount of the reserves and
liabilities for the general account contract(s) held by or
on behalf of such employee benefit plan (as defined by the
annual statement for life insurance companies approved by
the National Association of Insurance Commissioners (the
"NAIC Annual Statement")) together with the amount of the
reserves and liabilities for the general account contract(s)
held by or on behalf of any other employee benefit plan
maintained by the same employer (or affiliate thereof as
defined in PTE 95-60) or by the same employee organization
(as defined by the NAIC Annual Statement) in the general
account exceeds 10% of the total reserves and liabilities of
the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual
Statement filed with your state of domicile (for purposes of
the percentage limitation, the amount of reserves and
liabilities for the general account contract(s) held by or
on behalf of an employee benefit plan shall be determined
before reduction for credits on account of any reinsurance
ceded on a coinsurance basis) and the purchase of the Notes
by you satisfies Section IV of PTE 95-60 or (y) if you are
the Purchaser named in the last paragraph of Paragraph 16 of
Exhibit B to this Agreement (for whom the disclosure
required by such paragraph is intended), the amount of the
reserves and liabilities for the interest or interests in
all contracts in such general account held by or on behalf
of any Covered Plan disclosed by the Company on Schedule III
attached hereto and all Related Plans, if any, identified by
the Company with respect thereto do not exceed 10% of the
total of all reserves and liabilities of such general
account (such reserves and liabilities being calculated in
accordance with the provisions of PTE 95-60) plus your
surplus as set forth in the NAIC Annual Statement filed with
your state of domicile as of the date of the Closing, and
the purchase of the Notes by you satisfies Section IV of PTE
95-60;
(ii) the source of funds constitutes assets of a
separate account maintained by you, you have disclosed to
the Company in writing the name of each employee benefit
plan whose assets in such separate account exceed 10% of the
total assets or are expected to exceed 10% of the total
assets of such account as of the date of such purchase (for
the purpose of this clause (ii), all employee benefit plans
maintained by the same employer or employee organization are
deemed to be a single employee benefit plan) and the
purchase of the Notes by you satisfies Section III of PTE
90-1 (issued January 29, 1990);
(iii) the source of funds constitutes assets of a
bank collective investment fund maintained by you, and you
have disclosed to the Company in writing the name of each
employee benefit plan whose assets in such collective
investment fund exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such fund as
of the date of such purchase (for the purpose of this clause
(iii), all employee benefit plans maintained by the same
employer or employee organization are deemed to be a single
employee benefit plan) and the purchase of the Notes
satisfies Section III of PTE 91-38 (issued June 12, 1991);
(iv) the source of funds constitutes assets of one
or more employee benefit plans, each of which has been
identified to the Company in writing;
(v) the source of funds is assets of a "governmental
plan" as defined in Section 3(32) of ERISA and Section
414(d) of the Code;
(vi) the source constitutes assets of an
"investment fund" (within the meaning of Part V of PTE
84-14) managed by a "qualified professional asset manager"
or "QPAM" (within the meaning of Part V of PTE 84-14), no
employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of PTE 84-14) of such employer or by the same
employee organization and managed by such QPAM, exceed 20%
of the total client assets managed by such QPAM, the
conditions of Part l(c) and (g) of PTE 84-14 are satisfied,
neither the QPAM nor a person controlling or controlled by
the QPAM (applying the definition of "control" in Section
V(e) of PTE 84-14) owns a 5% or more interest in the Company
and you have identified this clause (vi) as such source of
funds and have disclosed (A) the identity of such QPAM and
(B) the names of all employee benefit plans whose assets are
included in such investment fund to the Company in writing
not later than two (2) Business Days prior to the Closing
Date pursuant to this clause (vi); or
(vii) if you are other than an insurance company,
the source of funds are funds which do not constitute "plan
assets".
As used in this Section3.2(b), the terms "separate account" and
"employee benefit plan" shall have the respective meanings
assigned to them in ERISA and the term "plan assets" shall
have the meaning assigned to it in Department of Labor
Regulation 29 C.F.R. Section2510.3-101.
.c.Section 4. Closing Conditions;.
.c2.Section 4.1. Conditions;. Your obligation to
purchase the Notes on the Closing Date shall be subject to
the performance by the Company of its agreements hereunder
which by the terms hereof are to be performed at or prior to
the time of delivery of the Notes and to the following
further conditions precedent:
(a) Closing Certificate. You shall have received a
certificate dated the Closing Date, signed by the President
or a Vice President of the Company, the truth and accuracy
of which shall be a condition to your obligation to purchase
the Notes proposed to be sold to you and to the effect that
(1) the representations and warranties of the Company set
forth in Exhibit B hereto are true and correct on and with
respect to the Closing Date, (2) the Company has performed
all of its obligations hereunder which are to be performed
on or prior to the Closing Date, and (3) no Default or Event
of Default has occurred and is continuing.
(b) Legal Opinions. You shall have received (1) from
Chapman and Cutler, who are acting as your special counsel
in this transaction, and (2) from Whitman, Breed, Abbott &
Morgan, counsel for the Company, and Ralph Levine, General
Counsel of the Company, their respective opinions dated the
Closing Date, in form and substance satisfactory to you, and
covering the matters set forth in Exhibits C and D,
respectively, hereto.
(c) Company's Existence and Authority. On or prior to
the Closing Date, you shall have received, in form and
substance reasonably satisfactory to you and your special
counsel, such documents and evidence with respect to the
Company as you may reasonably request in order to establish
the existence and good standing of the Company and the
authorization of the transactions contemplated by this
Agreement.
(d) Related Transactions. Contemporaneously with the
purchase of Notes to be purchased by you at the Closing, the
Company shall have consummated the sale of the entire
principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to the other agreement referred to in
Section1.3.
(e) Private Placement Number. On or prior to the
Closing Date, special counsel to the Purchasers shall have
duly made the appropriate filings with Standard & Poor's
CUSIP Service Bureau, as agent for the National Association
of Insurance Commissioners, in order to obtain a private
placement number for the Notes.
(f) Funding Instructions. At least three Business Days
prior to the Closing Date, you shall have received written
instructions executed by a Responsible Officer of the
Company directing the manner of the payment of funds and
setting forth (1) the name and address of the transferee
bank, (2) such transferee bank's ABA number, (3) the account
name and number into which the purchase price for the Notes
is to be deposited, and (4) the name and telephone number of
the account representative responsible for verifying receipt
of such funds.
(g) Special Counsel Fees. Concurrently with the
delivery of the Notes to you on the Closing Date, the
charges and disbursements of Chapman and Cutler, your
special counsel, shall have been paid by the Company.
(h) Legality of Investment. The Notes to be purchased
by you shall be a legal investment for you under the laws of
each jurisdiction to which you may be subject (without
resort to any so-called "basket provisions" to such laws).
(i) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this
Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to you
and your special counsel, and you shall have received a copy
(executed or certified as may be appropriate) of all legal
documents or proceedings taken in connection with the
consummation of said transactions.
.c2.Section 4.2. Waiver of Conditions;. If on the
Closing Date the Company fails to tender to you the Notes to
be issued to you on such date or if the conditions specified
in Section4.1 have not been fulfilled, you may thereupon elect to
be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified
in Section4.1 have not been fulfilled, you may waive compliance
by
the Company with any such condition to such extent as you
may in your sole discretion determine. Nothing in this
Section4.2
shall operate to relieve the Company of any of its
obligations hereunder or to waive any of your rights against
the Company.
.c.Section 5. Company Covenants;.
From and after the Closing Date and continuing so long as
any amount remains unpaid on any Note:
.c2.Section 5.1. Corporate Existence, Etc;. The
Company will preserve and keep in full force and effect, and
will cause each Significant Subsidiary to preserve and keep
in full force and effect, its corporate existence and all
licenses and permits necessary to the proper conduct of its
business, provided that the foregoing shall not prevent (a)
any transaction permitted by Section5.12 or (b) any termination
or
failure to keep in full force and effect any such corporate
existence of a Significant Subsidiary, or any such license
or permit, if any such failure or termination could not
reasonably be expected to materially and adversely affect
the properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
.c2.Section 5.2. Insurance;. The Company will
maintain, and will cause each Significant Subsidiary to
maintain, insurance coverage by financially sound and
reputable insurers and in such forms and amounts and against
such risks (including customary deductibles, co-insurance
and self-insurance, if adequate reserves are maintained
therefor) as are customary for corporations of established
reputation engaged in the same or a similar business and
owning and operating similar properties.
.c2.'Section 5.3. Taxes, Claims for Labor and
Materials; Compliance with Laws';. (a) The Company will
promptly pay and discharge, and will cause each Significant
Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon
the Company or such Significant Subsidiary, respectively, or
upon or in respect of all or any part of the property or
business of the Company or such Significant Subsidiary to
the extent the same have become due and payable and before
they have become delinquent, all trade accounts payable in
accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might
become a Lien upon any property of the Company or such
Significant Subsidiary; provided the Company or such
Significant Subsidiary shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if
(1) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
property of the Company or such Significant Subsidiary or
any material interference with the use thereof by the
Company or such Significant Subsidiary, and (2) the Company
or such Significant Subsidiary shall set aside on its books
reserves deemed by it to be adequate with respect thereto.
(b) The Company will promptly comply and will cause
each Significant Subsidiary to promptly comply with all
laws, ordinances or governmental rules and regulations to
which it is subject, including, without limitation, the
Occupational Safety and Health Act of 1970, as amended,
ERISA and all Drug Laws and Environmental Laws, the
violation of which could reasonably be expected to
materially and adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole, or would
result in any Lien not permitted under Section5.8.
.c2.Section 5.4. Maintenance, Etc;. The Company will
maintain, preserve and keep, and will cause each Significant
Subsidiary to maintain, preserve and keep, its properties
which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good
repair and working order (ordinary wear and tear excepted)
and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times
the efficiency thereof shall be maintained, provided that
the foregoing shall not prevent the Company or any
Subsidiary from discontinuing the operation or maintenance
of any of its properties if such discontinuance is desirable
in the conduct of its business and the Company has concluded
that such discontinuance could not, individually or in the
aggregate, reasonably be expected to materially and
adversely affect the properties, business, prospects,
profits or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole.
.c2.Section 5.5. Nature of Business;. Neither the
Company nor any Subsidiary will engage in any business if,
as a result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the
Company and its Subsidiaries would be substantially changed
from the general nature of the business engaged in by the
Company and its Subsidiaries on the date of this Agreement.
.c2.Section 5.6. Consolidated Net Worth;. The Company
will at all times keep and maintain Consolidated Net Worth
at an amount not less than the sum of (a) $260,000,000 plus
(b) 40% of Consolidated Net Income computed on a cumulative
basis for each of the elapsed fiscal years ending after
March 31, 1995; provided that notwithstanding that
Consolidated Net Income for any such elapsed fiscal year may
be a deficit figure, no reduction as a result thereof shall
be made in the sum to be maintained pursuant hereto.
.c2.Section 5.7. Limitations on Indebtedness;. (a)
The Company will not, and will not permit any Subsidiary to,
create, assume, guarantee or otherwise incur or in any
manner be or become liable in respect of any Indebtedness,
except:
(1) Indebtedness evidenced by the Notes;
(2) Indebtedness of the Company and its Subsidiaries
outstanding as of the date of this Agreement and described
on Schedule II hereto;
(3) additional Indebtedness of the Company and its
Subsidiaries if, at the time of creation, issuance,
assumption, guarantee or incurrence thereof and after giving
effect thereto and to the application of the proceeds
thereof, Consolidated Indebtedness shall not exceed 50% of
Consolidated Total Capitalization; provided, that the
Company shall be permitted to incur Indebtedness under any
revolving credit or similar agreement notwithstanding the
terms of this Section5.7(a)(3) if immediately after such
incurrence the aggregate principal amount of Indebtedness
outstanding under such agreement shall not exceed the
maximum amount of Indebtedness outstanding under such
agreement during the 90 days immediately preceding such
incurrence; and
(4) Indebtedness of a Subsidiary to the Company or to a
Wholly-owned Subsidiary.
(b) The renewal, extension or refunding of any
Indebtedness, issued, incurred or outstanding pursuant to
Section5.7(a) shall constitute the issuance of additional
Indebtedness which is, in turn, subject to the limitations
of the applicable provisions of this Section5.7.
(c) Any Person which becomes a Subsidiary after the
date hereof shall for all purposes of this Section5.7 be deemed
to
have created, assumed or incurred at the time it becomes a
Subsidiary all Indebtedness of such Person existing
immediately after it becomes a Subsidiary.
.c2.Section 5.8. Limitation on Liens;. The Company
will not, and will not permit any Subsidiary to, create or
incur, or suffer to be incurred or to exist, any Lien on its
or their property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same
to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to
acquire, or permit any Subsidiary to acquire, any property
or assets upon conditional sales agreements or other title
retention devices, except:
(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided that payment
thereof is not at the time required by Section5.3;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which
shall not have expired, or in respect of which the Company
or a Subsidiary shall at any time in good faith be
prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in
connection with worker's compensation, unemployment
insurance and other like laws, warehousemen's and attorneys'
liens and statutory landlords' liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to
secure statutory obligations, surety or appeal bonds or
other Liens of like general nature, in any such case
incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each
case, the obligation secured is not overdue or, if overdue,
is being contested in good faith by appropriate actions or
proceedings;
(d) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which
customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not
in any event materially impair their use in the operation of
the business of the Company and its Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to the
Company or to another Wholly-owned Subsidiary;
(f) Liens existing as of the date hereof and described
on Schedule II hereto;
(g) Liens created or incurred after the Closing Date
given to secure the payment of the purchase price incurred
in connection with the acquisition, purchase or construction
of fixed assets useful and intended to be used in carrying
on the business of the Company or a Subsidiary, including
Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition or
purchase by the Company or a Subsidiary of any business
entity then owning such fixed assets, whether or not such
existing Liens were given to secure the payment of the
purchase price of the fixed assets to which they attach,
provided that (1) the Lien shall attach solely to the fixed
assets acquired, purchased or constructed, improvements
thereto and proceeds thereof, (2) such Lien shall have been
created or incurred within six months of the date of
acquisition, purchase or construction, (3) at the time of
acquisition, purchase or construction of such fixed assets,
the aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such fixed assets, whether or not
assumed by the Company or a Subsidiary, shall not exceed an
amount equal to 90% (or 100% in the case of Capitalized
Leases) of the lesser of the total purchase price or fair
market value at the time of acquisition, purchase or
construction of such fixed assets (as determined in good
faith by a Senior Responsible Officer or the board of
directors of the Company), and (4) all such Indebtedness
shall have been incurred within the limitations provided in
Section5.7(a)(3);
(h) Liens created or incurred after the Closing Date
given to secure Indebtedness of the Company or any
Subsidiary in addition to the Liens permitted by the
preceding clauses (a) through (g) hereof, provided that all
Indebtedness secured by such Liens shall have been incurred
within the limitations provided in Section5.7(a)(3); and
(i) any extension, renewal or refunding of any Lien
permitted by the preceding clause (f) or (g) of this Section5.8
in respect of the same property theretofore subject to such
Lien in connection with the extension, renewal or refunding
of the Indebtedness secured thereby; provided that (1) such
extension, renewal or refunding of Indebtedness shall be
without increase in the principal amount remaining unpaid as
of the date of such extension, renewal or refunding, (2)
such Lien shall attach solely to the same such property,
improvements thereto and proceeds thereof, and (3) the
principal amount remaining unpaid as of the date of such
extension, renewal or refunding of Indebtedness is less than
or equal to the fair market value of the property
(determined in good faith by a Senior Responsible Officer or
the board or directors of the Company) to which such Lien is
attached.
.c2.Section 5.9. Limitation on Sale and Leasebacks;.
The Company will not, and will not permit any Subsidiary to,
enter into any arrangement, directly or indirectly, whereby
the Company or any Subsidiary shall in one or more related
transactions, sell, transfer or otherwise dispose of any
property owned by the Company or any Subsidiary to any
Person and thereupon the Company or any Subsidiary shall
lease or intend to lease, as lessee, the same property or
substantially similar property or any part of any thereof
pursuant to any lease (a "Sale and Leaseback Transaction")
unless the following conditions are satisfied:
(a) the sale of such property is for cash consideration
which (after deduction of any expenses incurred by the
Company or any Subsidiary in connection with such Sale and
Leaseback Transaction) equals or exceeds the fair market
value of the property so sold (as determined in good faith
by a Senior Responsible Officer or the board of directors of
the Company);
(b) the sale of such property is made within the
limitations of Section5.12(b)(2);
(c) the Indebtedness relating to such Sale and
Leaseback Transaction shall have been incurred within the
limitations provided in Section5.7(a)(3) and the Company shall
have complied with Section2.3, if applicable; and
(d) immediately after the consummation of the Sale and
Leaseback Transaction and after giving effect thereto, no
Default or Event of Default would exist.
.c2.Section 5.10. Restricted Payments;. The Company
will not except as hereinafter provided:
(a) Declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class
(except dividends or other distributions payable solely in
shares of common stock of the Company);
(b) Directly or indirectly, or through any Subsidiary
or through any Affiliate of the Company, purchase, redeem or
retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any
shares of its capital stock (other than in exchange for or
out of the net cash proceeds to the Company from the
substantially concurrent issue or sale of shares of common
stock of the Company or warrants, rights or options to
purchase or acquire any shares of its common stock); or
(c) Make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect
of its capital stock;
(such declarations or payments of dividends, purchases,
redemptions or retirements of capital stock and warrants,
rights or options and all such other payments or
distributions being herein collectively called "Restricted
Payments"), if after giving effect to the proposed
Restricted Payment, a Default under Section6.1(a) hereof or an
Event of Default would exist.
.c2.Section 5.11. Mergers, Consolidations and Sales of
Assets;. (a) The Company will not, and will not permit any
Subsidiary to, consolidate with or be a party to a merger
with any other Person, or sell, lease or otherwise dispose
of all or substantially all of its assets; provided that:
(1) any Subsidiary may merge or consolidate with or
into the Company or any other Subsidiary, so long as in the
case of the merger or consolidation of a Significant
Subsidiary into another Subsidiary, the Company shall own
more than 80% (by number of votes) of the Voting Stock of
the continuing or surviving corporation, and any Person may
merge or consolidate with or into the Company so long as in
any merger or consolidation involving the Company, the
Company shall be the surviving or continuing corporation;
(2) any Subsidiary may sell or otherwise transfer all
or substantially all of its assets to the Company or another
Wholly-owned Subsidiary and may thereafter liquidate and
dissolve; and any Subsidiary may merge or consolidate with
or into any other Person if such Subsidiary shall be the
continuing or surviving corporation and either (i) the
Company shall continue to own the same or a greater
percentage (by number of votes) of the Voting Stock of the
continuing or surviving corporation as it owned of the
subject Subsidiary immediately prior to such merger or
consolidation or (ii) in the event the Company shall own
less than the percentage of the Voting Stock of the
continuing or surviving corporation than it owned of the
subject Subsidiary immediately prior to such merger or
consolidation, the disposition of Voting Stock resulting in
such reduction in the percentage of Voting Stock shall meet
the requirements of clauses (i), (ii) and (iv) of
Section5.11(c)(3) hereof and such disposition shall thereafter be
treated as a sale of assets for all subsequent
determinations made pursuant to this Section5.11;
(3) the Company may consolidate or merge with or into
any other corporation if (i) the corporation which results
from such consolidation or merger (the "surviving
corporation") is organized under the laws of any state of
the United States or the District of Columbia, (ii) the due
and punctual payment of the principal of and premium, if
any, and interest on all of the Notes, according to their
tenor, and the due and punctual performance and observation
of all of the covenants in the Notes and this Agreement to
be performed or observed by the Company are expressly
assumed in writing by the surviving corporation and the
surviving corporation shall furnish to the holders of the
Notes an opinion of counsel satisfactory to such holders to
the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the
legal, valid and binding contract and agreement of the
surviving corporation enforceable in accordance with its
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles, and (iii) at
the time of such consolidation or merger and immediately
after giving effect thereto, (A) no Default or Event of
Default would exist and (B) the surviving corporation would
be permitted by the provisions of Section5.7(a)(3) to incur at
least $1.00 of additional Indebtedness;
(4) the Company may sell or otherwise dispose of all or
substantially all of its assets (other than stock and
Indebtedness of a Subsidiary, which may only be sold or
otherwise disposed of pursuant to Section5.11(c)) to any Person
for consideration which represents the fair market value of
such assets (as determined in good faith by a Senior
Responsible Officer or the board of directors of the Company
at the time of such sale or other disposition) if (i) the
acquiring Person is a corporation organized under the laws
of any state of the United States or the District of
Columbia, (ii) the due and punctual payment of the principal
of and premium, if any, and interest on all the Notes,
according to their tenor, and the due and punctual
performance and observance of all of the covenants in the
Notes and in this Agreement to be performed or observed by
the Company are expressly assumed in writing by the
acquiring corporation and the acquiring corporation shall
furnish to the holders of the Notes an opinion of counsel
satisfactory to such holders to the effect that the
instrument of assumption has been duly authorized, executed
and delivered and constitutes the legal, valid and binding
contract and agreement of such acquiring corporation
enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles, and (iii) at the time of
such sale or disposition and immediately after giving effect
thereto, (A) no Default or Event of Default would exist and
(B) the acquiring corporation would be permitted by the
provisions of Section5.7(a)(3) to incur at least $1.00 of
additional Indebtedness.
(b) The Company will not, and will not permit any
Subsidiary to, sell, lease, transfer, abandon or otherwise
dispose of assets (except assets sold in the ordinary course
of business for fair market value and except as provided in
Section5.11(a)(2) and (4)); provided that the foregoing
restrictions do not apply to:
(1) the sale, lease, transfer or other disposition of
assets of a Subsidiary to the Company or a Wholly-owned
Subsidiary; or
(2) the sale of assets for cash or other property to a
Person or Persons other than an Affiliate if all of the
following conditions are met:
(i) such assets (valued at net book value) do not,
together with all other assets of the Company and its
Subsidiaries previously disposed of during the immediately
preceding 12-month period (other than in the ordinary course
of business), exceed 15% of Consolidated Total Assets,
determined as of the end of the immediately preceding fiscal
year;
(ii) in the opinion of (A) a Senior Responsible
Officer if the aggregate sale price of such assets is from
$1,000,000 to $5,000,000 or (B) the board of directors of
the Company if the aggregate sale price of such assets
exceeds $5,000,000, the sale is for fair value and is in the
best interests of the Company; and
(iii) immediately after the consummation of the
transaction and after giving effect thereto, (A) no Default
or Event of Default would exist, and (B) the Company would
be permitted by the provisions of Section5.7(a)(3) to incur at
least $1.00 of additional Indebtedness;
Computations pursuant to this Section5.11(b) shall include
dispositions made pursuant to Section5.11(c) and computations
pursuant to Section5.11(c) shall include dispositions made
pursuant to this Section5.11(b).
(c) The Company will not, and will not permit any
Subsidiary to, sell, pledge or otherwise dispose of any
shares of the stock (including as "stock" for the purposes
of this Section5.11(c) any options or warrants to purchase stock
or other Securities exchangeable for or convertible into
stock) of a Subsidiary (said stock, options, warrants and
other Securities herein called "Subsidiary Stock") or any
Indebtedness of any Subsidiary, nor will any Subsidiary
issue, sell, pledge or otherwise dispose of any shares of
its own Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(1) the issue of directors' qualifying shares; or
(2) the issue of Subsidiary Stock to the Company or
another Subsidiary; or
(3) the sale or other disposition at any one time to a
Person (other than directly or indirectly to an Affiliate)
of the entire Investment of the Company and its other
Subsidiaries in any Subsidiary if all of the following
conditions are met:
(i) the assets (valued at net book value) of such
Subsidiary do not, together with all other assets of the
Company and its Subsidiaries previously disposed of during
the immediately preceding 12-month period (other than in the
ordinary course of business), exceed 15% of Consolidated
Total Assets, determined as of the end of the immediately
preceding fiscal year;
(ii) in the opinion of (A) a Senior Responsible
Officer if the aggregate sale price of such assets is from
$1,000,000 to $5,000,000 or (B) the board of directors of
the Company if the aggregate sale price of such assets
exceeds $5,000,000, the sale is for fair value and is in the
best interests of the Company;
(iii) immediately after the consummation of the
transaction and after giving effect thereto, such Subsidiary
shall have no Indebtedness of or continuing Investment in
the capital stock of the Company or of any Subsidiary and
any such Indebtedness or Investment shall have been
discharged or acquired, as the case may be, by the Company
or a Subsidiary; and
(iv) immediately after the consummation of the
transaction and after giving effect thereto, (A) no Default
or Event of Default would exist, and (B) the Company would
be permitted by the provisions of Section5.7(a)(3) to incur at
least $1.00 of additional Indebtedness;
Computations pursuant to this Section5.11(c) shall include
dispositions made pursuant to Section5.11(b) and computations
pursuant to Section5.11(b) shall include dispositions made
pursuant to this Section5.11(c).
.c2.Section 5.12. Repurchase of Notes;. Neither the
Company nor any Subsidiary, directly or indirectly, may
repurchase or make any offer to repurchase any Notes, except
pursuant to an offer made on the same terms to all holders
of Notes.
.c2.Section 5.13. Transactions with Affiliates;. The
Company will not, and will not permit any Subsidiary to,
enter into or be a party to any transaction or arrangement
with any Affiliate (including, without limitation, the
purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except
in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the
Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person other than an
Affiliate, provided, however, that the foregoing shall not
prohibit the continuation by the Company and its
Subsidiaries of their respective employee compensation and
benefit programs if in the opinion of management such
programs are in the best interests of the Company and its
Subsidiaries.
.c2.Section 5.14. Withdrawal from Multiemployer Plans
and Termination of Pension Plans;. The Company will not and
will not permit any Subsidiary to withdraw from any
Multiemployer Plan if such withdrawal would reasonably be
expected to result in withdrawal liability (as described in
Part I of Subtitle E of Title IV of ERISA), which would
materially and adversely affect the properties, business,
prospects, or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole. The Company
will not and will not permit any Subsidiary to terminate or
have terminated any Plan under Sections 4041(c) or 4042 of
ERISA if such termination could result in the imposition of
a lien on any property of the Company or any Subsidiary
pursuant to Section 4068 of ERISA.
.c2.Section 5.15. Reports and Rights of Inspection;.
The Company will keep, and will cause each Subsidiary to
keep, proper books of record and account in which full and
correct entries will be made of all dealings or transactions
of, or in relation to, the business and affairs of the
Company or such Subsidiary, in accordance with GAAP
consistently applied (except for changes disclosed in the
financial statements furnished to you pursuant to this
Section5.15
and concurred in by the independent public accountants
referred to in Section5.15(b)), and will furnish to you so long
as
you are the holder of any Note and to each other
Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in
any event within 60 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies
of:
(1) a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the close of such quarterly
fiscal period, setting forth in comparative form the
consolidated figures for the fiscal year then most recently
ended,
(2) consolidated statements of earnings and retained
earnings of the Company and its consolidated Subsidiaries
for such quarterly fiscal period and for the portion of the
fiscal year ending with such quarterly fiscal period, in
each case setting forth in comparative form the consolidated
figures for the corresponding periods of the preceding
fiscal year, and
(3) a consolidated statement of cash flows of the
Company and its consolidated Subsidiaries for the portion of
the fiscal year ending with such quarterly fiscal period,
setting forth in comparative form the consolidated figures
for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and
correct by an authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in any
event within 105 days after the close of each fiscal year of
the Company, copies of:
(1) a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the close of such fiscal
year, and
(2) consolidated statements of earnings, retained
earnings and cash flows of the Company and its consolidated
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by a report thereon of a
firm of independent public accountants of recognized
national standing selected by the Company to the effect that
the consolidated financial statements present fairly, in all
material respects, the consolidated financial position of
the Company and its consolidated Subsidiaries as of the end
of the fiscal year being reported on and the consolidated
results of the operations and cash flows for said year in
conformity with GAAP and that the examination of such
accountants in connection with such financial statements has
been conducted in accordance with generally accepted
auditing standards and included such tests of the accounting
records and such other auditing procedures as said
accountants deemed necessary in the circumstances;
(c) Audit Reports. At any time that the Company shall
not be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, promptly upon
receipt thereof, one copy of each interim or special audit
made by independent accountants of the books of the Company
or any Subsidiary;
(d) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to its
creditors and stockholders generally and of each regular or
periodic report, and any registration statement or
prospectus (in each case excluding exhibits thereto) filed
by the Company or any Significant Subsidiary with any
securities exchange or the Securities and Exchange
Commission or any successor agency (other than those on Form
S-8 or a successor form relating to the registration of
securities pursuant to an employee benefit plan);
(e) Promptly upon their issuance, copies of any orders
in any proceedings to which the Company or any of its
Significant Subsidiaries is a party, issued by any
governmental entity, Federal or state, having jurisdiction
over the Company or any of its Significant Subsidiaries, the
issuance of which could reasonably be expected to materially
and adversely affect the properties, business, prospects or
condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
(f) ERISA Reports. Promptly upon the Company's
obtaining knowledge of the occurrence thereof, written
notice of (1) a Reportable Event with respect to any Plan;
(2) the issuance by the Company, any ERISA Affiliate, or any
Plan administrator of a notice of intent to terminate any
Plan pursuant to Section 4041(c) of ERISA or the
commencement of proceedings by the PBGC to terminate any
Plan pursuant to Section 4042 of ERISA; (3) the withdrawal
by the Company or any ERISA Affiliate from any Multiemployer
Plan, in connection with which the Company or any Subsidiary
would reasonably be expected to incur a withdrawal liability
(as described in Part 1 of Subtitle E of Title IV of ERISA);
(4) a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA in connection with any Plan with
respect to which the Company or any Subsidiary would be
subject to any liability under Section 502(i) of ERISA or
Section 4975 of the Code; (5) any increase in the contingent
liability of the Company or any Subsidiary with respect to
any post-retirement welfare liability; or (6) the taking of
any action by the Internal Revenue Service, the Department
of Labor or the PBGC with respect to any of the foregoing;
provided, with respect to clauses (4), (5) and (6) of this
paragraph, that such notice shall be required only for
events described therein which would reasonably be expected
to materially and adversely affect the properties, business,
prospects or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole;
(g) Officer's Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of a
financial officer of the Company who shall be a Senior
Responsible Officer stating that such officer has reviewed
the provisions of this Agreement and setting forth: (1) the
information and computations (in sufficient detail) required
in order to establish whether the Company was in compliance
with the requirements of SectionSection5.6 through 5.11 at the
end of
the period covered by the financial statements then being
furnished, and (2) whether there existed as of the date of
such financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the
certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default
and, if any such condition or event exists on the date of
the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(h) Requested Information. With reasonable promptness,
such other data and information as you or any such
Institutional Holder may reasonably request with respect to
results of operations, financial condition, assets or
properties of the Company or any Subsidiary and pertinent to
the ability of the Company to perform its obligations under
this Agreement and the Notes, provided that if a Default or
an Event of Default has occurred and is continuing, the
Company shall also provide such other data and information
with respect to the business and affairs of the Company or
any Subsidiary as you or such Institutional Holder shall
reasonably request.
The Company shall permit the representatives of each holder
of Notes that is an Institutional Holder:
(x) if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of
the Company, to discuss the affairs, finances and accounts
of the Company and its Subsidiaries with the Company's
officers, and, with the consent of the Company (which
consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may
be reasonably requested in writing; and
(y) if a Default or Event of Default then exists, at
the expense of the Company (including out-of-pocket expenses
of any such holder, but excluding (1) salary expenses of
employees of such holder conducting such visitation or
inspection and (2) other internal overhead expenses of such
holder) to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all
of their respective books of account, records, reports and
other papers, to make copies and extracts therefrom, and to
discuss with you their respective affairs, finances and
accounts with their respective officers and independent
public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries), all at
such times and as often as may be requested.
You agree that you will keep confidential in accordance with
your internal policies and procedures in effect from time to
time for protecting confidential information of third
parties delivered to you any written information with
respect to the Company or its Subsidiaries which is
furnished pursuant to this Agreement and which is designated
by the Company or its Subsidiaries to you in writing as
confidential, provided that you may disclose any such
information (1) as has become generally available to the
public (other than as a consequence of your actions) or to
you on a non-confidential basis from a source other than the
Company or its Subsidiaries or as was known to you on a
non-confidential basis prior to its disclosure by the
Company or its Subsidiaries, (2) as may be required in your
reasonable judgment in any report, statement or testimony
submitted to any municipal, state or Federal regulatory body
having or claiming to have jurisdiction over you or to the
National Association of Insurance Commissioners or similar
organizations or their successors, (3) as may be required or
appropriate in response to any summons or subpoena or in
connection with any litigation, (4) to the extent that in
your reasonable judgment you believe it required in order to
protect your investment in the Notes following the
occurrence of a Default or Event of Default or, at any time,
in order to comply with any law, order, regulation or ruling
applicable to you, (5) to your officers, trustees,
employees, auditors or counsel or to rating agencies or
another holder of the Notes, (6) to Persons who are parties
to similar confidentiality agreements relating to the Notes,
or (7) to a prospective transferee which has agreed in
writing prior to its receipt of such confidential
information to be bound by the provisions of this Section5.15 in
connection with any contemplated transfer of any of the
Notes by you. By its acceptance of a Note, any transferee
shall be bound by the terms of this Section5.15.
In the event that you shall be required to disclose any
information pursuant to any summons or subpoena as referred
to in the foregoing clause (3), you will use your best
efforts to give the Company prompt written notice of the
request giving rise to any such requirement so that the
Company may contest such requirement or seek an appropriate
protective order. In the event that such protective order
or other remedy is not obtained on or prior to the date such
information is required to be disclosed in such summons or
subpoena, or the Company elects not to seek any such order
or remedy, you shall be permitted to disclose the
information requested in compliance with such subpoena or
summons.
Notwithstanding anything contrary contained in this
Agreement, neither the Company nor any of its Subsidiaries
will have any obligation to disclose or permit any
inspection with respect to engineering, scientific or other
proprietary technical data (including, without limitation,
laboratory and research reports and reports on product
development and testing), except to the extent such matters
could reasonably be expected to materially and adversely
affect the properties, business, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole.
.c2.Section 5.16. ERISA Disclosure;. Upon the written
request of the Purchaser named in the last paragraph of
Paragraph 16 of Exhibit B to this Agreement (no such request
to be made more than once during any twelve-month period),
the Company will update the information set forth on
Schedule III attached hereto as of the date of such request.
.c.Section 6. Events of Default and Remedies Therefor;.
.c2.Section 6.1. Events of Default;. Any one or more
of the following shall constitute an "Event of Default" as
such term is used herein:
(a) Default shall occur in the payment of interest on
any Note when the same shall have become due and such
default shall continue for more than five days; or
(b) Default shall occur in the making of any required
prepayment on any of the Notes as provided in Section2.1; or
(c) Default shall occur in the making of any other
payment of the principal of any Note or premium, if any,
thereon at the expressed or any accelerated maturity date or
at any date fixed for prepayment; or
(d) Default shall occur in the observance or
performance of any covenant or agreement contained in Section5.6
through Section5.11; or
(e) Default shall occur in the observance or
performance of any other provision of this Agreement which
is not remedied within 30 days after the earlier of (1) the
day on which a Responsible Officer of the Company first
obtains knowledge of such default, or (2) the day on which
written notice thereof is given to the Company by the holder
of any Note; or
(f) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for
redemption or otherwise) of the principal of or interest on
any Indebtedness for borrowed money (other than the Notes)
of the Company or any Subsidiary in excess of $10,000,000
and such default shall continue beyond the period of grace,
if any, allowed with respect thereto, provided that in the
case of any such default in the payment of Indebtedness for
borrowed money of a Foreign Subsidiary outstanding in the
principal amount of $10,000,000 to $20,000,000 (denominated
in U.S. Dollars or the equivalent if denominated in any
other currency), no Event of Default shall occur under this
Section6.1(f) until the earlier of (1) a date which is five days
following the occurrence of such default under this Section6.1(f)
or (2) the acceleration of such Indebtedness for borrowed
money; or
(g) Default or the happening of any event shall occur
under any indenture, agreement or other instrument under
which any Indebtedness for borrowed money (other than the
Notes) of the Company or any Subsidiary in excess of
$10,000,000 may be issued and such default or event shall
continue for a period of time sufficient to permit the
acceleration of the maturity of any Indebtedness for
borrowed money of the Company or any Subsidiary outstanding
thereunder, provided that in the case of any such default or
event with respect to Indebtedness for borrowed money of a
Foreign Subsidiary outstanding in the principal amount of
$10,000,000 to $20,000,000 (denominated in U.S. Dollars or
the equivalent if denominated in any other currency), no
Event of Default shall occur under this Section6.1(g) until the
earlier of (1) a date which is five days following the
occurrence of such default under this Section6.1(g) or (2) the
acceleration of such Indebtedness for borrowed money; or
(h) Any representation or warranty made by the Company
herein, or made by the Company in any statement or
certificate furnished by the Company in connection with the
consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making
thereof; or
(i) Final judgment or judgments for the payment of
money aggregating in excess of $5,000,000 is or are
outstanding against the Company or any Subsidiary or against
any property or assets of either and such judgment or
judgments remain unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of 30 days from the date of
entry; or
(j) A custodian, liquidator, trustee or receiver is
appointed for the Company or any Significant Subsidiary or
for the major part of the property of either and is not
discharged within 60 days after such appointment; or
(k) The Company or any Significant Subsidiary becomes
insolvent or bankrupt, is generally not paying its debts as
they become due or makes an assignment for the benefit of
creditors, or the Company or any Significant Subsidiary
applies for or consents to the appointment of a custodian,
liquidator, trustee or receiver for the Company or such
Significant Subsidiary or for the major part of the property
of either; or
(l) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief
under any bankruptcy or similar law or laws for the relief
of debtors, are instituted by or against the Company or any
Significant Subsidiary and, if instituted against the
Company or any Significant Subsidiary, are consented to or
are not dismissed within 60 days after such institution.
.c2.Section 6.2. Notice to Holders;. When any Event
of Default described in the foregoing Section6.1 has occurred, or
if the holder of any Note or of any other evidence of
Indebtedness for borrowed money of the Company referred to
in paragraph (f) or (g) of Section6.1 gives any notice or takes
any other action with respect to a claimed default, the
Company agrees to give notice within three Business Days of
such event to all holders of the Notes then outstanding.
.c2.Section 6.3. Acceleration of Maturities;. When
any Event of Default described in paragraph (a), (b) or (c)
of Section6.1 has happened and is continuing, the holder of such
Note may, by notice in writing sent to the Company in the
manner provided in Section9.6, declare the entire principal and
all interest accrued on such Note to be, and such Note shall
thereupon become forthwith due and payable, without any
presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. When any Event of
Default described in paragraphs (a) through (i), inclusive,
of said Section6.1 has happened and is continuing, the holder or
holders of 35% or more of the principal amount of the Notes
at the time outstanding may, by notice in writing to the
Company in the manner provided in Section9.6, declare the entire
principal and all interest accrued on all Notes to be, and
all Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived. When
any Event of Default described in paragraph (j), (k) or (l)
of Section6.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due
and payable as a result of any Event of Default as
aforesaid, the Company will forthwith pay to the holders of
the Notes the entire principal and interest accrued on the
Notes and, to the extent not prohibited by applicable law,
an amount as liquidated damages for the loss of the bargain
evidenced hereby (and not as a penalty) equal to the
Make-Whole Amount, determined as of the date on which the
Notes shall so become due and payable. No course of dealing
on the part of the holder or holders of any Notes nor any
delay or failure on the part of any holder of Notes to
exercise any right shall operate as a waiver of such right
or otherwise prejudice such holder's rights, powers and
remedies. The Company further agrees, to the extent
permitted by law, to pay to the holder or holders of the
Notes all costs and expenses incurred by them in the
collection of any Notes upon any default hereunder or
thereon, including reasonable compensation to such holder's
or holders' attorneys for all services rendered in
connection therewith.
.c2.Section 6.4. Rescission of Acceleration;. The
provisions of Section6.3 are subject to the condition that if the
principal of and accrued interest on all or any outstanding
Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described
in paragraphs (a) through (i), inclusive, of Section6.1, the
holders of 66-2/3% in aggregate principal amount of the
Notes then outstanding may, by written instrument filed with
the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such
declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under Section6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
Section7.1;
and provided further, that no such rescission and annulment
shall extend to or affect any subsequent Default or Event of
Default or impair any right consequent thereto.
.c.Section 7. Amendments, Waivers and Consents;.
.c2.Section 7.1. Consent Required;. Any term,
covenant, agreement or condition of this Agreement may, with
the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the
Company shall have obtained the consent in writing of the
holders of at least 66-2/3% in aggregate principal amount of
outstanding Notes; provided that without the written consent
of the holders of all of the Notes then outstanding, no such
amendment or waiver shall be effective (a) which will change
the time of payment (including any prepayment required by
Section2.1) of the principal of or the interest on any Note or
change the principal amount thereof or change the rate of
interest thereon, or (b) which will change any of the
provisions with respect to optional prepayments, or (c)
which will change the percentage of holders of the Notes
required to consent to any such amendment or waiver of any
of the provisions of this Section7 or Section6.
.c2.Section 7.2. Solicitation of Holders;. So long as
there are any Notes outstanding, the Company will not
solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of
this Agreement or the Notes unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make
an informed decision with respect thereto. The Company will
not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as
consideration for or as an inducement to entering into by
any holder of Notes of any waiver or amendment of any of the
terms and provisions of this Agreement or the Notes unless
such remuneration is concurrently offered, on the same
terms, ratably to the holders of all Notes then outstanding.
Promptly and in any event within 30 days of the date of
execution and delivery of any such waiver or amendment, the
Company shall provide a true, correct and complete copy
thereof to each of the holders of the Notes.
.c2.Section 7.3. Effect of Amendment or Waiver;. Any
such amendment or waiver shall apply equally to all of the
holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company, whether
or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon.
.c.'Section 8. Interpretation of Agreement;
Definitions';.
.c2.Section 8.1. Definitions;. Unless the context
otherwise requires, the terms hereinafter set forth when
used herein shall have the following meanings and the
following definitions shall be equally applicable to both
the singular and plural forms of any of the terms herein
defined:
"Affiliate" shall mean any Person (other than a Subsidiary
and any holder of the Notes) (a) which directly or
indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, the
Company, (b) which beneficially owns or holds 5% or more of
the Voting Stock of the Company or (c) 5% or more of the
Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in New York, New York or
Milwaukee, Wisconsin are required by law to close or are
customarily closed.
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized
on a consolidated balance sheet of the lessee and its
subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean, as of the
date of any determination thereof, the amount at which the
aggregate Rentals due and to become due under all
Capitalized Leases under which such Person is a lessee would
be reflected as a liability on a consolidated balance sheet
of such Person.
"Change of Control" shall mean any event or series of
related events whereby members of the Hoyt Family shall
cease to beneficially own a majority of the Voting Stock of
the Company. For purposes of this definition, the term
"Hoyt Family" means Henry Hoyt, Sr., his lineal descendants,
spouses of his lineal descendants and any trust established
for the benefit of any of them.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations from time to time promulgated
thereunder.
"Company" shall mean Carter-Wallace, Inc., a Delaware
corporation, and any Person who succeeds to all, or
substantially all, of the assets and business of
Carter-Wallace, Inc..
"Consolidated Attributable Indebtedness" shall mean in
connection with any Sale and Leaseback Transaction entered
into within the limitations of Section5.9, as of the date of any
determination thereof, the fair market value of the property
or assets which is or are the subject of such Sale and
Leaseback transaction (as determined in good faith by a
Senior Responsible Officer or the board of directors of the
Company at or about the time of the consummation of such
Sale and Leaseback Transaction).
"Consolidated Indebtedness" shall mean, as of the date of
any determination thereof, all Indebtedness of the Company
and its Subsidiaries, determined on a consolidated basis
eliminating intercompany items.
"Consolidated Net Income" for any period shall mean, as of
the date of any determination thereof, the gross revenues of
the Company and its Subsidiaries for such period less all
expenses and other proper charges (including taxes on
income), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding
Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other
disposition of Investments or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued
prior to the date it became a Subsidiary;
(d) net earnings and losses of any corporation (other
than a Subsidiary), substantially all the assets of which
have been acquired in any manner by the Company or any
Subsidiary, realized by such corporation prior to the date
of such acquisition;
(e) net earnings and losses of any corporation (other
than a Subsidiary) with which the Company or a Subsidiary
shall have consolidated or which shall have merged into or
with the Company or a Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a
Subsidiary) in which the Company or any Subsidiary has an
ownership interest unless such net earnings shall have
actually been received by the Company or such Subsidiary in
the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary
which for any reason is unavailable for payment of dividends
to the Company or any other Subsidiary;
(h) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(i) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(j) any gain arising from the acquisition of any
Securities of the Company or any Subsidiary;
(k) any reversal of any contingency reserve, except to
the extent that provision for such contingency reserve shall
have been made from income arising during such period; and
(l) any other extraordinary gain.
"Consolidated Net Worth" shall mean, as of the date of any
determination thereof, the sum of (a) the amount of the
capital stock accounts (net of treasury stock, at cost) of
the Company and its Subsidiaries as determined in accordance
with GAAP, plus (or minus in the case of a deficit) (b) the
retained earnings of the Company and its Subsidiaries as
determined in accordance with GAAP.
"Consolidated Total Assets" means as of the date of any
determination thereof, total assets of the Company and its
Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Capitalization" shall mean, as of the
date of any determination thereof, the sum of (a)
Consolidated Indebtedness plus (b) Consolidated Net Worth.
"Default" shall mean any event or condition the occurrence
of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
"Drug Law" shall mean any international, federal, state or
local statute, law, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction,
treaty, convention, ordinance or other requirement relating
to public health and safety, including, without limitation,
those relating to the development, manufacture, processing,
packaging or distribution of Drugs (as that term is defined
in 21 U.S.C. Section321(g)) and any regulation, order, notice or
demand issued pursuant to such law, statute or ordinance,
including without limitation, the following: the Drug
Amendments of 1962, the Drug Listing Act of 1972, the Drug
Price Competition and Patent Term Restoration Act of 1984,
the Drug Enforcement Enhancement Act of 1986, the Food and
Drug Administration Act of 1988, the Food and Drug
Administration Revitalization Act, the Federal Food, Drug,
and Cosmetic Act, the Prescription Drug Marketing Act of
1987, the Prescription Drug Amendments of 1992 and any
similar or implementing state law, and any state statute and
any further amendments to these laws and all rules,
regulations, guidance documents and publications promulgated
thereunder.
"Environmental Law" shall mean any international, federal,
state or local statute, law, regulation, order, consent
decree, judgment, permit, license, code, covenant, deed
restriction, treaty, convention, ordinance or other
requirement relating to public health, safety or the
environment, including, without limitation, those relating
to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the
use and handling of polychlorinated biphenyls or asbestos,
to the disposal, treatment, storage or management of
hazardous or solid waste, or Hazardous Substances or crude
oil, or any fraction thereof, or to exposure to toxic or
hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid Hazardous
Substances and any regulation, order, notice or demand
issued pursuant to such law, statute or ordinance, in each
case applicable to the property of the Company and its
Subsidiaries or the operation, construction or modification
of any thereof, including without limitation, the following:
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Hazardous Materials Transportation
Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking
Water Control Act, the Clean Air Act of 1966, as amended,
the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution
Act of 1990 and any similar or implementing state law, and
any state statute and any further amendments to these laws
providing for financial responsibility for cleanup or other
actions with respect to the release or threatened release of
Hazardous Substances or crude oil, or any fraction thereof,
and all rules, regulations, guidance documents and
publications promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, as interpreted by the regulations
thereunder, as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of
trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in
Section6.1.
"Foreign Subsidiary" shall mean any Subsidiary organized
under the laws of a jurisdiction other than the United
States or any political subdivision thereof.
"GAAP" shall mean at any time, generally accepted accounting
principles at the time.
"Guaranties" by any Person shall mean, as of the date of any
determination thereof, all obligations (other than
endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such
Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any property or assets
constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness
or obligation, or (2) to maintain working capital or any
balance sheet or income statement condition or otherwise to
advance or make available funds for the purchase or payment
of such Indebtedness or obligation, (c) to lease property or
to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation,
or (d) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under
this Agreement, a Guaranty in respect of any Indebtedness
for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect
of any other obligation or liability or any dividend shall
be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Hazardous Substance" shall mean any hazardous or toxic
material, substance or waste, pollutant or contaminant which
is regulated under any statute, law, ordinance, rule or
regulation of any local, state, regional or federal
authority having jurisdiction over the property of the
Company and its Subsidiaries or its use, including but not
limited to any material, substance or waste which is: (a)
defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section1317), as
amended; (b) regulated as a hazardous waste under Section
1004 or Section 3001 of the Federal Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery
Act (42 U.S.C. Section6901 et seq.), as amended; (c) defined as a
hazardous substance under Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C. Section9601 et seq.), as amended; or (d) defined or
regulated as a hazardous substance or hazardous waste under
any rules or regulations promulgated under any of the
foregoing statutes.
"Indebtedness" of any Person shall mean, as of the date of
any determination thereof, all (a) obligations of such
Person for borrowed money, (b) obligations which have been
incurred in connection with the acquisition of property or
assets (exclusive of trade accounts payable and accrued
liabilities which arise in the ordinary course of business),
(c) obligations secured by any Lien upon property or assets
owned by such Person, even though such Person has not
assumed or become liable for the payment of such
obligations, (d) obligations created or arising under any
conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller, lender
or lessor under such agreement in the event of default are
limited to repossession or sale of property, (e) Capitalized
Rentals and (f) Guaranties of obligations of others of the
character referred to in this definition.
"Institutional Holder" shall mean any of the following
Persons: (a) any bank, savings and loan association,
savings institution, trust company or national banking
association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance
company, (d) any fraternal benefit society, (e) any pension,
retirement or profit-sharing trust or fund within the
meaning of Title I of ERISA or for which any bank, trust
company, national banking association or investment adviser
registered under the Investment Advisers Act of 1940, as
amended, is acting as trustee or agent, (f) any investment
company or business development company, as defined in the
Investment Company Act of 1940, as amended, (g) any small
business investment company licensed under the Small
Business Investment Act of 1958, as amended, (h) any broker
or dealer registered under the Securities Exchange Act of
1934, as amended, or any investment adviser registered under
the Investment Advisers Act of 1940, as amended, (i) any
government, any public employees' pension or retirement
system, or any other government agency supervising the
investment of public funds, (j) any other entity all of the
equity owners of which are Institutional Holders or (k) any
other Person which may be within the definition of
"qualified institutional buyer" as such term is used in Rule
144A, as from time to time in effect, promulgated under the
Securities Act of 1933, as amended.
"Investments" shall mean, as of the date of any
determination thereof, all investments, in cash or by
delivery of property, made directly or indirectly in any
property or assets or in any Person, whether by acquisition
of shares of capital stock, Indebtedness or other
obligations or Securities or by loan, advance, capital
contribution or otherwise; provided that "Investments" shall
not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the
owner of the property, whether such interest is based on the
common law, statute or contract, and including but not
limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security
purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements) affecting
property. For the purposes of this Agreement, the Company
or a Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a
conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a
Lien.
"Make-Whole Amount" shall mean in connection with any
prepayment of Notes pursuant to Section2.2 or Section2.3, or
acceleration of the Notes an amount equal to the excess, if
any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Notes
over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
Section2.2 or Section2.3 or has become or is declared to be
immediately
due and payable pursuant to Section6.3, as the context requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting
all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that
on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% plus the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New
York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on
the display designated as "Page 678" on the Telerate Access
Service (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date.
Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and
(b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the duration closest to
and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by
(b) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled
due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is
not a date on which interest payments are due to be made
under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to
Section2.2, Section2.3 or Section6.3.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section2.2 or Section2.3
or has
become or is declared to be immediately due and payable
pursuant to Section6.3, as the context requires.
"Minority Interests" shall mean, as of the date of any
determination thereof, any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as
required by law) that are not owned by the Company and/or
one or more of its Subsidiaries. Minority Interests shall
be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating
value of such preferred stock, whichever is greater, and by
valuing Minority Interests constituting common stock at the
book value of capital and surplus applicable thereto
adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method
of valuing Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as in
Section 4001(a)(3) of ERISA.
"Overdue Rate" shall mean the lesser of (a) the maximum
interest rate permitted by law and (b) the greater of (1)
9.62% per annum and (2) the rate which Morgan Guaranty Trust
Company of New York, New York, New York, announces from time
to time as its prime lending rate as in effect from time to
time, plus 2%.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions
under ERISA.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated
organization, and a government or agency or political
subdivision thereof.
"Plan" shall mean a "pension plan," as such term is defined
in ERISA, to which the provisions of Title IV of ERISA apply
and which is established or maintained by the Company or any
ERISA Affiliate or as to which the Company or any ERISA
Affiliate contributed or is a member or otherwise may have
any liability pursuant to Title IV of ERISA.
"Prepayment Event" shall mean either (i) a Change of
Control, or (ii) a Specified Priority Indebtedness
Incurrence.
"Priority Indebtedness" shall mean and include, as of the
date of any determination thereof, the sum, without
duplication, of (a) all Indebtedness of the Company and its
Subsidiaries secured by any Lien created or incurred within
the limitations of Section5.8(h) plus (b) Consolidated
Attributable Indebtedness created or incurred within the
limitations of Section5.9 plus (c) all other Indebtedness of
Subsidiaries (other than Indebtedness owed to the Company or
a Wholly-owned Subsidiary).
"Purchasers" shall have the meaning set forth in Section1.1.
"Rentals" shall mean, as of the date of any determination
thereof, all fixed payments (including as such all payments
which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property)
payable by the Company or a Subsidiary, as lessee or
sublessee under a lease of real or personal property
(excluding such fixed payments owing by the Company or a
Subsidiary to the Company or a Wholly-owned Subsidiary), but
shall be exclusive of any amounts required to be paid by the
Company or a Subsidiary (whether or not designated as rents
or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any
so-called "percentage leases" shall be computed solely on
the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall mean a "reportable event" as
described in Section 4043(c) of ERISA for which the notice
requirement to the PBGC has not been waived (provided that
the loss of qualification of a Plan and the failure by any
Plan to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any waiver of the notice
requirement by the PBGC).
"Responsible Officer" shall mean and include any of (a) the
Chairman, the Chief Operating Officer, the President, any
Corporate Vice President responsible for financial or legal
matters, and (b) any other financial or legal officer of the
Company and any other officer of the Company responsible for
monitoring compliance by the Company with the terms of this
Agreement and the Notes.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
"Senior Responsible Officer" shall mean any officer of the
Company described in clause (a) of the definition of
"Responsible Officer" set forth in this Section8.1.
"Significant Subsidiary" shall mean any Subsidiary which
meets any of the following conditions:
(1) The Company's and each other Subsidiary's
investments in and advances to such Subsidiary exceed 7.5%
of the consolidated total assets of the Company and its
Subsidiaries as of the end of the most recently completed
fiscal year; or
(2) The Company's and each other Subsidiary's
proportionate share of the consolidated total assets of such
Subsidiary exceeds 7.5% of the consolidated total assets of
the Company and its Subsidiaries as of the end of the most
recently completed fiscal year; or
(3) The Company's and each other Subsidiary's equity in
the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting principles of such Subsidiary exceeds 7.5% of
such income of the Company and its Subsidiaries consolidated
for the most recently completed fiscal year (excluding
one-time charges against income taken by the Company or any
Subsidiary during such fiscal year).
"Specified Priority Indebtedness Incurrence" shall mean the
incurrence by the Company or any Subsidiary of Priority
Indebtedness if after giving effect to such incurrence
Priority Indebtedness shall exceed 30% of Consolidated Total
Capitalization.
The term "subsidiary" shall mean as to any particular parent
corporation any corporation of which more than 50% (by
number of votes) of the Voting Stock shall be beneficially
owned, directly or indirectly, by such parent corporation.
The term "Subsidiary" shall mean a subsidiary of the
Company.
"Voting Stock" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the
corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as
directors' qualifying shares) shall be owned by the Company
and/or one or more of its Wholly-owned Subsidiaries.
.c2.Section 8.2. Accounting Principles;. Where the
character or amount of any asset or liability or item of
income or expense is required to be determined or any
consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall
be done in accordance with GAAP, to the extent applicable,
except where such principles are inconsistent with the
requirements of this Agreement.
.c2.Section 8.3. Directly or Indirectly;. Where any
provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking,
such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
.c.Section 9. Miscellaneous;.
.c2.Section 9.1. Registered Notes;. The Company shall
cause to be kept at its principal office a register for the
registration and transfer of the Notes, and the Company will
register or transfer or cause to be registered or
transferred, as hereinafter provided, any Note issued
pursuant to this Agreement.
At any time and from time to time the holder of any Note
which has been duly registered as hereinabove provided may
transfer such Note upon surrender thereof at the principal
office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the holder
of such Note or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall
be deemed and treated as the owner and holder thereof for
all purposes of this Agreement. Payment of or on account of
the principal, premium, if any, and interest on any Note
shall be made to or upon the written order of such holder.
.c2.Section 9.2. Exchange of Notes;. At any time and
from time to time, upon surrender of such Note at its
office, the Company will deliver in exchange therefor,
without expense to such holder, except as set forth below, a
Note for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, or Notes
in the denomination of $500,000 (or such lesser amount as
shall constitute 100% of the Notes of such holder) or any
amount in excess thereof as such holder shall specify, dated
as of the date to which interest has been paid on the Note
so surrendered or, if such surrender is prior to the payment
of any interest thereon, then dated as of the date of issue,
registered in the name of such Person or Persons as may be
designated by such holder, and otherwise of the same form
and tenor as the Notes so surrendered for exchange. The
Company may require the payment of a sum sufficient to cover
any stamp tax or governmental charge imposed upon such
exchange or transfer.
.c2.Section 9.3. Loss, Theft, Etc. of Notes;. Upon
receipt of evidence satisfactory to the Company of the loss,
theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of
a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note,
the Company will make and deliver without expense to the
holder thereof, a new Note, of like tenor, in lieu of such
lost, stolen, destroyed or mutilated Note. If the Purchaser
or any subsequent Institutional Holder is the owner of any
such lost, stolen or destroyed Note, then the affidavit of
an authorized officer of such owner, setting forth the fact
of loss, theft or destruction and of its ownership of such
Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution
and delivery of a new Note other than the written agreement
of such owner to indemnify the Company.
.c2.Section 9.4. Expenses, Stamp Tax Indemnity;.
Whether or not the transactions herein contemplated shall be
consummated, the Company agrees to pay directly all of your
reasonable out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and
the transactions contemplated hereby, including but not
limited to the reasonable charges and disbursements of
Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes,
adequately insured to you at your home office or at such
other place as you may designate, and all such expenses
relating to any amendments, waivers or consents pursuant to
the provisions hereof (whether or not the same are actually
executed and delivered), including, without limitation, any
amendments, waivers, or consents resulting from any
work-out, renegotiation or restructuring relating to the
performance by the Company of its obligations under this
Agreement and the Notes. The Company also agrees to pay,
within ten Business Days of receipt thereof, supplemental
statements of Chapman and Cutler for disbursements unposted
or not incurred as of the Closing Date. The Company further
agrees that it will pay and save you harmless against any
and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of
this Agreement or the Notes, whether or not any Notes are
then outstanding. The Company agrees to protect and
indemnify you against any liability for any and all
brokerage fees and commissions payable or claimed to be
payable to any Person in connection with the transactions
contemplated by this Agreement. Without limiting the
foregoing, the Company agrees to pay the cost of obtaining
the private placement number for the Notes and authorizes
the submission of such information as may be required by
Standard & Poor's CUSIP Service Bureau for the purpose of
obtaining such number.
.c2.'Section 9.5. Powers and Rights Not Waived;
Remedies Cumulative';. No delay or failure on the part of
the holder of any Note in the exercise of any power or right
shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further
exercise thereof, or the exercise of any other power or
right, and the rights and remedies of the holder of any Note
are cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
.c2.Section 9.6. Notices;. All communications
provided for hereunder shall be in writing and, if to you,
delivered or mailed prepaid by registered or certified mail
or overnight air courier, or by facsimile communication, in
each case addressed to you at your address appearing on
Schedule I to this Agreement or such other address as you or
the subsequent holder of any Note initially issued to you
may designate to the Company in writing, and if to the
Company, delivered or mailed by registered or certified mail
or overnight air courier, or by facsimile communication, to
the Company at 1345 Avenue of the Americas, New York, New
York 10105, Attention: Treasurer, Telecopy No. (212)
339-5257 or to such other address as the Company may in
writing designate to you or to a subsequent holder of the
Note initially issued to you; provided, however, that a
notice to you by overnight air courier shall only be
effective if delivered to you at a street address designated
for such purpose in Schedule I, and a notice to you by
facsimile communication shall only be effective if confirmed
by transmission of a copy thereof by prepaid overnight air
courier, or, in either case, as you or a subsequent holder
of any Note initially issued to you may designate to the
Company in writing.
.c2.Section 9.7. Successors and Assigns;. This
Agreement shall be binding upon the Company and its
successors and assigns and shall inure to your benefit and
to the benefit of your successors and assigns, including
each successive holder or holders of any Notes.
.c2.Section 9.8. Survival of Covenants and
Representations;. All covenants, representations and
warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in
connection with the Closing Date, shall survive the closing
and the delivery of this Agreement and the Notes.
.c2.Section 9.9. Severability;. Should any part of
this Agreement for any reason be declared invalid or
unenforceable, such decision shall not affect the validity
or enforceability of any remaining portion, which remaining
portion shall remain in force and effect as if this
Agreement had been executed with the invalid or
unenforceable portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement
without including therein any such part, parts or portion
which may, for any reason, be hereafter declared invalid or
unenforceable.
.c2.Section 9.10. Governing Law;. This Agreement and
the Notes issued and sold hereunder shall be governed by and
construed in accordance with New York law, including all
matters of construction, validity and performance.
.c2.Section 9.11. Captions;. The descriptive headings
of the various Sections or parts of this Agreement are for
convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth,
and this Agreement may be executed in any number of
counterparts, each executed counterpart constituting an
original but all together only one agreement.
.c4.Signature Page;
Carter-Wallace, Inc.
By
Its
Accepted as of December __, 1995.
[Variation]
By
Its
I-
Schedule I
(to Note Agreement)
Names and Addresses
of Purchasers
Principal Amount
of Notes to Be
Purchased
The Northwestern Mutual Life $20,000,000
Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Securities Department
Telecopier Number: (414) 299-7124
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Carter-Wallace, Inc.,
7.62% Senior Notes Due 2007, PPN 146285 A#8, principal or
interest") to:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
ABA #0210-01033
for credit to: The Northwestern Mutual Life Insurance
Company
Account Number 00-000-027
Notices
All notices and communications to be addressed as first
provided above, except notices with respect to payments and
written confirmation of each such payment to be addressed,
Attention: Treasurer's Department/Securities Operations.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 39-0509570
Names and Addresses
of Purchasers
Principal Amount
of Notes to Be
Purchased
Nationwide Life Insurance Company $15,000,000
One Nationwide Plaza
Columbus, Ohio 43215-2220
Telecopier Number: (614) 249-4698
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Carter-Wallace, Inc.,
7.62% Senior Notes Due 2007, PPN 146285 A#8, principal or
interest") to:
Morgan Guaranty Trust Company of New York (ABA #021-000-238)
JOURNAL #999-99-024
For the account of Nationwide Life Insurance Company Custody
Account #71615
Attention: Custody Service Department
Notices
All notices of payment on or in respect of the Notes and
written confirmation of each such payment to:
Nationwide Life Insurance Company
One Nationwide Plaza_1-32-09
Columbus, Ohio 43215-2220
Attention: Corporate Money Management
All notices and communications other than those in respect
to payments to be addressed:
Nationwide Life Insurance Company
One Nationwide Plaza_1-33-07
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Telecopier Number: (614) 249-4553
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
Schedule II
(to Note Agreement)
Description of Debt and Leases
1. Indebtedness (other than Capitalized Rentals) of the
Company and its Restricted Subsidiaries outstanding on the
Closing Date is as follows:
2. Capitalized Leases of the Company and its Restricted
Subsidiaries outstanding on the Closing Date are as follows:
3. Secured Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Closing Date is as follows:
II-
Schedule II
(to Note Agreement)
Subsidiaries of the Company
1. Significant Subsidiaries:
Percentage of Voting Stock
Name of Jurisdiction of Owned by Company and
Subsidiary Incorporation Each Other Subsidiary
2. Subsidiaries (other than Significant Subsidiaries):
Percentage of Voting Stock
Name of Jurisdiction of Owned by Company and
Subsidiary Incorporation Each Other Subsidiary
1. SIGNIFICANT SUBSIDIARIES:
PERCENTAGE OF VOTING
STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
Carter-Wallace N.S. Inc. Delaware, U.S.A. 100%
Carter-Wallace Limited United Kingdom 100%
2. SUBSIDIARIES (OTHER THAN SIGNIFICANT SUBSIDIARIES):
PERCENTAGE OF VOTING
STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
Carter-Wallace (Australia) Pty. Ltd. Australia 100%
CWASuperannuation Pty. Ltd. Australia 100%
Denver Laboratories (Canada) Limited Canada 100%
Frank W. Horner Inc. Canada 100%
Horner Pharmaceuticals Inc. Canada 100%
Dermalogos, S.A. France 100%
Email Diamant, S.A. France 100%
Germancos, S.A.R.L. France 100%
Laboratoires Ethical S.A.R.L. France 100%
Laboratoires Fumouze S.A. France 100%
Sante Beaute, S.A. France 100%
Sofibel S.A.R.L. France 100%
Teutonia Beteiligungsverwaltung GmbH Germany 100%
PERCENTAGE OF VOTING
STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
Carter Wallace (Hong Kong) Limited Hong Kong 100%
Bouty S.p.A. Italy 100%
Technogenetics S.r.l. Italy 100%
Karlan International, S.A. Luxembourg 100%
Carter Wallace, S.A. Mexico 100%
Icart, S.A. Spain 100%
Denver Laboratories Limited United Kingdom 100%
Carter Family Products, Inc. Delaware, U.S.A. 100%
Carter-Wallace O.S. Inc. Delaware, U.S.A. 100%
Nimes, Inc. Delaware, U.S.A. 63%
International Biological
Laboratories, Inc. Maryland, U.S.A. 95%
Carter-Wallace FSC Corp. Virgin Islands 100%
DESCRIPTION OF DEBT AND LEASES
AS OF NOVEMBER 30, 1995
INDEBTEDNESS (other than capitalized rentals)
Outstanding Due
Lender Rate Balance Date
Merrill Lynch 6.75% $4,300,000 01-Oct-98
Istituto Mobilare Italiano 9.00% $3,144,500 30-Jun-01
Centrobanca 9.00% $3,144,500 01-Jul-01
Decatur IRB 72% of Prime $3,000,000 01-Dec-10
to 12/1/95,
adjustable
thereafter
Youngs Notes 5.86% $2,457,318 12-Sep-96
Banque Nationale de Paris 7.59% $2,192,430 06-Aug-01
CIC - Union Europeene 7.75% $2,105,348 06-Aug-01
International Et Cie
State Street Bank 9.64% $1,141,050 28-Jul-98
Istituto Mobilare Italiano 4.50% $743,619 01-Jul-02
Midlantic Bank, as Trustee 7.38% $610,000 01-Sep-04
Istituto Mobilare Italiano 5.50% $298,466 01-Jul-98
OVERDRAFTS / SHORT TERM DEBT
France - Sofibel $4,571,319
- Sante Beaute $1,445
Italy - Laboratori Bouty $4,057,499
- Technogenetics $2,937,944
CAPITALIZED LEASES
Principal Interest Total
France $150,770 $33,315 $184,085
Spain $19,419 $2,123 $21,542
SECURED INDEBTEDNESS
NONE
