<PAGE> 1
As filed with the Securities and Exchange Commission on August 3, 1994
Registration No. 33-54717
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
PRE-EFFECTIVE AMENDMENT
NO. 1 ON FORM S-3/A
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
FEDERAL-MOGUL CORPORATION
(Exact name of Registrant as specified in its charter)
Michigan 38-0533580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26555 Northwestern Highway
Southfield, Michigan 48034
(313) 354-7700
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
George N. Bashara, Jr., Esq.
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
(313) 354-7700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
copies to:
Andrew R. Brownstein, Esq. William J. Williams, Jr., Esq.
Wachtell, Lipton, Rosen & Katz Sullivan & Cromwell
51 West 52nd Street 125 Broad Street
New York, New York 10019 New York, New York 10004
(212) 403-1000 (212) 558-3722
Approximate date of commencement of proposed sale to
public: From time to time as determined by market conditions
after this Registration Statement is declared effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or investment plans, please check the following
box. [ ]
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or reinvestment plans, please check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each Class of Amount to be Price Per Offering Registration
Securities to be Registered Registered Unit(1) Price(1) Fee
--------------------------- ------------ --------- -------- ------------
<S> <C> <C> <C> <C>
Debt Securities (2) 100% $100,000,000 $34,483
Preferred Stock, without
par value
Common Stock, without par
value (3)
Warrants (4)
Depositary Shares (5) (6)
Debt Securities (7) (6)
Preferred Stock, without
par value (8) (6)
Common Stock, without
par value (3)(9) (6)
</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
(2) The aggregate initial offering price of all Securities registered pursuant
to this Registration Statement and offered from time to time will not
exceed $100,000,000, plus the amount set forth in the last paragraph of
this cover page, (or the equivalent thereof in one or more foreign
currencies, currency units or composite currencies, including European
Currency Units) or, in the case of Debt Securities (including Debt
Securities that are denominated or payable in one or more foreign
currencies, currency units or composite currencies, including European
Currency Units, or are denominated with amounts payable in respect of
principal of or any premium or interest on such Debt Securities to be
determined by reference to the value, rate or price of one or more
specified currencies or are issued at an original issue discount), such
principal amount as shall result in an aggregate initial offering price
equivalent to not more than $100,000,000, plus the amount set forth in the
last paragraph of this cover page. Any securities registered hereunder
may be sold separately or as units with other securities registered
hereunder.
(3) Includes Preferred Stock Purchase Rights. Prior to the occurrence of
certain events, the Rights will not be exercisable or evidenced separately
from the Common Stock.
(4) Warrants to be issued under this Registration Statement will be
exercisable for Debt Securities, Preferred Stock or Common Stock of the
Company.
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(5) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In
the event the Registrant elects to offer to the public fractional
interests in shares of the Preferred Stock registered hereunder, or
in the event fractional interests in shares of Preferred Stock are
issued upon conversion of Debt Securities or exercise of Warrants
registered hereunder, shares of Preferred Stock will be issued to the
Depositary under the Deposit Agreement and Depositary Receipts will
be distributed to those persons acquiring such fractional interests.
(6) No separate consideration will be received for (i) the Depositary Shares,
(ii) the Debt Securities issuable upon conversion of other Debt Securities
or Preferred Stock, (iii) the Preferred Stock issuable upon conversion of
Debt Securities, or (iv) the Common Stock issuable upon conversion of, or
in exchange for, Debt Securities or Preferred Stock.
(7) Such indeterminate amount of Debt Securities as may be issued upon
conversion of other Debt Securities or Preferred Stock.
(8) Such indeterminate amount of Preferred Stock as may be issued upon
conversion of Debt Securities.
(9) Such indeterminate number of shares of Common Stock as may be issued
upon conversion of, or in exchange for, Debt Securities or Preferred Stock.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus which is part of this Registration Statement is a combined
prospectus and includes all the information currently required in a prospectus
relating to the securities covered by Registration Statement 33-51265
previously filed by the Registrant. Under Registration Statement 33-51265,
$300,000,000 of the Registrant's securities was registered, of which
$102,343,750 remains unissued and may be issued under the combined
prospectus.
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[PRELIMINARY PROSPECTUS LEGEND]
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of any offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities Laws
of any such State.
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PROSPECTUS
FEDERAL-MOGUL CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS
Federal-Mogul Corporation ("Federal-Mogul" or the "Company") may from
time to time offer, together or separately, its (i) debt securities ("Debt
Securities"), which may be either senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities"),
consisting of debentures, notes and/or other unsecured evidences of
indebtedness in one or more series; (ii) shares of its Preferred Stock
("Preferred Stock"), which may be issued in the form of depositary shares
evidenced by Depositary Receipts ("Depositary Shares"); (iii) shares of its
Common Stock, without par value (the "Common Stock"); and (iv) warrants to
purchase Debt Securities, Preferred Stock or Common Stock of the Company as
shall be designated by the Company at the time of the offering (the "Warrants")
in amounts, at prices and on terms to be determined at the time of the
offering. The Debt Securities, Preferred Stock, Depositary Shares, Common
Stock and Warrants are collectively called the "Securities."
The Securities offered pursuant to this Prospectus may be issued in
one or more series or issuances at an aggregate initial offering price not to
exceed $202,343,750 (or the equivalent thereof in one or more foreign
currencies or currency units or, in the case of any Debt Securities (including
Debt Securities that are denominated or payable in one or more foreign
currencies or currency units or are denominated with amounts payable in respect
of principal of or any premium or interest on such Debt Securities to be
determined by reference to the value, rate or price or one or more specified
currencies or are issued at an original discount)), such principal amount
as shall result in an aggregate initial offering price equivalent to not more
than $202,343,750.
The Senior Debt Securities when issued will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company, and the
Subordinated Debt Securities when issued will be subordinated as described in
the accompanying Prospectus Supplement (the "Prospectus Supplement"). Certain
specific terms of the particular Securities in respect of which this Prospectus
is being delivered are set forth in the Prospectus Supplement, including, where
applicable, (i) in the case of Debt Securities, the title, aggregate principal
amount, denominations, maturity, any interest rate (which may be fixed or
variable) and time of payment of any interest, any terms for redemption at the
option of the Company or the holder, any
<PAGE> 6
terms for sinking fund payments, any terms for conversion into or exchange for
other securities, currency or currencies of denomination and payment, if other
than U.S. dollars, any listing on a securities exchange and any other terms in
connection with the offering and sale of the Debt Securities in respect of
which this Prospectus is delivered, as well as the initial public offering
price; (ii) in the case of Preferred Stock, the specific title, the aggregate
amount, any dividend (including the method of calculating payment of
dividends), liquidation, redemption, voting and other rights, any terms for
any conversion into or exchange for other Securities, any listing on a
securities exchange, the initial public offering price and any other terms;
(iii) in the case of Common Stock, the number of shares of Common Stock and
the terms of offering thereof; and (iv) in the case of Warrants, the
designation and number, the exercise price, any listing of the Warrants or the
underlying Securities on a securities exchange and any other terms in
connection with the offering, sale and exercise of the Warrants.
The Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to the Securities covered by the Prospectus Supplement. This
Prospectus may not be used to consummate the sale of Securities unless
accompanied by a Prospectus Supplement.
The Company's Common Stock is listed on the New York Stock Exchange
under the trading symbol "FMO." Any Common Stock sold pursuant to a Prospectus
Supplement will be listed on such exchange, subject to official notice of
issuance.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved
in the sale of the Securities in respect of which this Prospectus is being
delivered, the names of such agents, dealers or underwriters and any applicable
commissions or discounts are set forth in or may be calculated from the
Prospectus Supplement with respect to such Securities.
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The date of this Prospectus is August __, 1994.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, THE ACCOMPANYING PROSPECTUS
SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY REFERENCE
HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY
ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS OR PROSPECTUS SUPPLEMENT
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"):
(i) an Annual Report on Form 10-K for the year ended
December 31, 1993;
(ii) a Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1994 dated May 13, 1994;
(iii) a Current Report on Form 8-K dated February 8, 1994;
(iv) a Current Report on Form 8-K/A dated February 11, 1994
amending a Current Report on Form 8-K dated November 10, 1993; and
(v) a Current Report on Form 8-K dated July 25, 1994;
which are hereby incorporated by reference in and made a part of this
Prospectus.
All documents hereafter filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in and to be a
part of this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated by reference or deemed to be
incorporated herein shall be deemed
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to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST
DIRECTED TO: GEORGE N. BASHARA, JR., SECRETARY, FEDERAL-MOGUL CORPORATION,
26555 NORTHWESTERN HIGHWAY, SOUTHFIELD, MICHIGAN 48034 (TELEPHONE:
(313) 354-7700).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and
other information may be inspected and copies may be obtained at the principal
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following regional offices of the Commission: Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such materials can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and
other information concerning the Company can also be inspected at the offices
of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New
York 10005; and the Pacific Stock Exchange, Inc., 618 South Spring Street, Los
Angeles, California 90014, and 301 Pine Street, San Francisco, California
94104.
Federal-Mogul has filed with the Commission a Registration Statement
(herein, together with all amendments thereto, called the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered hereby. This Prospectus does
not contain all of the information included in the Registration Statement and
the exhibits and schedules thereto. Statements contained in this Prospectus as
to the contents of any contract or other document referred to herein and filed
as an exhibit to the Registration Statement are not necessarily complete, and,
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<PAGE> 9
in each instance, reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. For further
information with respect to Federal-Mogul and the Securities, reference is
hereby made to the Registration Statement and the exhibits and schedules
thereto.
THE COMPANY
Federal-Mogul is a global distributor and manufacturer of a broad range
of precision parts, primarily vehicular components for automobiles, light
trucks, heavy duty trucks and farm and construction vehicles and industrial
products. Through the Company's worldwide distribution network, Federal-Mogul
sells replacement parts in the vehicular aftermarket (the "Aftermarket") to
independent warehouse distributors, local parts suppliers and retail parts
stores. The Company also sells parts to original equipment ("OE")
manufacturers, principally the major automotive manufacturers in the United
States and Europe.
For the six months ended June 30, 1994, the Company's net sales were
$935.1 million.
The Company was incorporated in 1924 under Michigan law to carry on a
business begun in 1900. The Company's executive offices are located at 26555
Northwestern Highway, Southfield, Michigan 48034, telephone number (313)
354-7700.
USE OF PROCEEDS
Except as otherwise described in the accompanying Prospectus Supplement
or any Pricing Supplement, the net proceeds from the sale of Securities will be
used for general corporate purposes, which may include refinancings of
indebtedness, including amounts outstanding under the Company's Revolving
Credit and Competitive Advance Facility Agreement dated June 30, 1994, working
capital, capital expenditures and acquisitions.
RECENT DEVELOPMENTS
In October 1993, the Company acquired from SPX Corporation ("SPX") its
Sealed Power Replacement division ("SPR"),
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SPX's U.S. and Canadian automotive aftermarket operations (the
"Acquisition"), for approximately $137 million. See "Selected Financial Data
for SPR" and "Selected Pro Forma Combined Condensed Financial Data." These
operations distribute engine and chassis components to the North American
aftermarket. The Company also completed a long-term trademark agreement under
which the Company has become the exclusive distributor of engine and chassis
parts sold under the Sealed Power and Speed-Pro brand names in the United
States and Canada. The Company acquired the non-exclusive right to use these
trademarks throughout the rest of the world. The Company also entered into a
non-competition agreement for a period of seven years. The Acquisition
furthered the Company's strategy of emphasizing Aftermarket product sales and
the development of this aspect of the business.
SPR distributes a full line of chassis parts (15% of 1992 sales) and
engine parts (83% of 1992 sales) to the automotive Aftermarket to over 2,500
wholesale and retail distribution outlets. Net sales in 1992 were $163.2
million.
The Company believes that the Acquisition will (i) allow the Company to
broaden its customer base, (ii) increase the Company's product offerings in the
Aftermarket business, particularly in the case of heavy truck, agricultural and
construction parts, and (iii) allow the Company to realize substantial cost
savings through the consolidation of the distribution system of the two
companies.
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RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Ratio of Earnings to Fixed Charges:(A)
<TABLE>
<CAPTION>
Pro Forma
Six Months Ended Year Ended Years Ended December 31,
June 30, 1994 December 31, 1993(B) 1993 1992 1991 1990 1989
------------------ -------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
5.12 2.79 2.64 1.26 (c) 1.34 4.08
</TABLE>
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends(A):
<TABLE>
<CAPTION>
Pro Forma
Six Months Ended Year Ended Years Ended December 31,
June 30, 1994 December 31, 1993(B) 1993 1992 1991 1990 1989
------------------ -------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
3.70 2.35 2.18 1.21 (c) 1.28 3.52
</TABLE>
The ratio of earnings to fixed charges has been computed by
dividing earnings by fixed charges. The ratio of earnings to fixed charges and
preferred stock dividends has been computed by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements. Earnings consist of
income before income taxes plus fixed charges excluding capitalized interest.
Fixed charges consist of interest on all indebtedness, amortization of debt
issuance costs and the portion of rental expense representative of interest.
(A) The Company guarantees the debt of the Federal-Mogul Employee
Stock Ownership Plan ("ESOP"); the fixed charges of the ESOP are not
included in the above calculations.
(B) Gives effect to the Acquisition as if it occurred at the beginning of the
period presented.
(C) As a result of a special charge of $25.0 million, earnings in 1991
were $15.2 million, which were less than 1991 fixed charges of $33.8
million. Including preferred dividend requirements, earnings in 1991
were $20.0 million, which were less than 1991 fixed charges of $38.6
million.
7
<PAGE> 12
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may not
apply to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities.
The Senior Debt Securities are to be issued under an Indenture (the
"Senior Indenture"), to be entered into between the Company and Continental
Bank, as trustee. The Subordinated Debt Securities are to be issued under a
separate Indenture (the "Subordinated Indenture"), to be entered into between
the Company and Continental Bank, as trustee. The Senior Indenture and the
Subordinated Indenture are sometimes referred to collectively as the
"Indentures." Copies of the Senior Indenture and the Subordinated Indenture
have been filed as exhibits to the Registration Statement. Continental Bank,
as trustee under the Senior Indenture or the Subordinated Indenture, as
applicable, is referred to herein as the "Applicable Trustee."
The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities and the Indentures do not purport
to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture applicable to a particular
series of Debt Securities (the "Applicable Indenture"), including the
definitions therein of certain terms. Wherever particular Sections, Articles
or defined terms of the Indentures are referred to, it is intended that such
Sections, Articles or defined terms shall be incorporated by reference herein.
Section and Article references used herein are references to the Applicable
Indenture. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Applicable Indenture.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder, and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series.
Unless otherwise specified in the Prospectus Supplement, the Senior Debt
Securities when issued will be unsecured and unsubordinated obligations of the
Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment
8
<PAGE> 13
in full of all Senior Indebtedness (as defined in the Subordinated
Indenture) of the Company as described in the Prospectus Supplement applicable
to the offering of Subordinated Debt Securities.
Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby for a description of the
following terms or additional provisions of the Debt Securities:
(1) the title of the Debt Securities;
(2) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities;
(3) any limit on the aggregate principal amount of the Debt Securities
of the series of which they are a part;
(4) the Person to whom any interest on a Debt Security of such series
will be payable, if other than the Person in whose name that Debt
Security is registered at the close of business on the Regular Record
Date for such interest;
(5) the date or dates on which the principal of the Debt Securities
will be payable;
(6) the rate or rates at which the Debt Securities will bear interest,
if any;
(7) the date or dates from which any such interest will accrue and
the dates on which any such interest will be payable and the
record dates for such interest payments;
(8) the place or places where the principal of and any premium and
interest on the Debt Securities will be payable;
(9) the period or periods within which, the price or prices at which,
and the terms and conditions on which the Debt Securities may be
redeemed, in whole or in part, at the option of the Company;
(10) the obligation, if any, of the Company to redeem or purchase the
Debt Securities pursuant to any sinking fund or analogous provision or
at the option of the Holder thereof, and the period or periods within
which, the price or prices at which, and the terms and conditions
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<PAGE> 14
on which the Debt Securities will be redeemed or purchased, in whole
or in part, pursuant to such obligation;
(11) the terms and conditions, if any, pursuant to which such
Debt Securities are convertible into or exchangeable for a security or
securities of the Company;
(12) the denominations in which the Debt Securities will be issuable,
if other than denominations of $1,000 and any integral multiple thereof;
(13) if the amount of principal of or any premium or interest on any
Debt Securities may be determined with reference to an index or pursuant
to a formula, the manner in which such amounts will be determined;
(14) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any of the Debt Securities will be payable (and the
manner in which the equivalent thereof in the currency of the United
States of America is to be determined for any purpose, including for the
purpose of determining the principal amount deemed to be Outstanding at
any time);
(15) if the principal of or any premium or interest on the Debt
Securities is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than those in
which the Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to
which such election is made will be payable, the periods within which and
the terms and conditions upon which such election is to be made and the
amount so payable (or the manner in which such amount is to be determined);
(16) if other than the entire principal amount thereof, the portion
of the principal amount of any of the Debt Securities which will be payable
upon declaration of acceleration of the Maturity thereof;
(17) if the principal amount payable at the Stated Maturity of any of
the Debt Securities will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any Maturity
other than the Stated Maturity or which will be deemed to be Outstanding
as of any such
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<PAGE> 15
date (or, in any such case, the manner in which such deemed
principal amount is to be determined);
(18) if applicable, that the Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the
Applicable Indenture described under "Defeasance and Covenant Defeasance";
(19) whether any of the Securities will be issuable in whole or in
part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend
or legends to be borne by any such Global Security in addition to or in
lieu of the legend referred to under "Form, Exchange and Transfer --
Global Securities" and, if different from those described under such
caption, any circumstances under which any such Global Security may be
exchanged in whole or in part for Debt Securities registered, and any
transfer of such Global Security in whole or in part may be registered, in
the names of Persons other than the Depositary for such Global Security or
its nominee;
(20) any addition to or change in the Events of Default applicable to
any of the Debt Securities and any change in the right of the Applicable
Trustee or the Holders to declare the principal amount of any of the Debt
Securities due and payable;
(21) any addition to or change in the covenants in the Applicable
Indenture;
(22) if the Debt Securities are Subordinated Debt Securities, the
subordination provisions and the definition of Senior Indebtedness which
will be applicable to such Subordinated Debt Securities; and
(23) any other terms of the Debt Securities not inconsistent with the
provisions of the Applicable Indenture. (Sections 301 and 901)
Debt Securities may be issued as Original Issue Discount Securities to
be sold at a substantial discount below their principal amount. Certain
special United States federal income tax considerations applicable to Debt
Securities sold at an original issue discount will be described in the
Prospectus Supplement relating thereto. In addition, certain special United
States federal income tax or other considerations applicable to any Debt
Securities which are denominated in a currency or currency unit other than
United States dollars may be
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<PAGE> 16
described in the applicable Prospectus Supplement relating
thereto.
Unless otherwise provided in the Prospectus Supplement relating
thereto, principal of and any premium and interest on the Debt Securities will
be payable, and transfers thereof will be registrable, at the office or agency
of the Trustee in the Borough of Manhattan, The City of New York, except that,
at the option of the Company, interest may be paid by mailing a check to the
address of the Person entitled thereto as it appears in the Security Register.
(Sections 202, 305 and 1002)
Unless otherwise set forth in the applicable Prospectus Supplement,
neither the Indentures nor the Debt Securities will contain provisions that
would afford the Debt Securities protection in the event of a takeover,
recapitalization or similar restructuring involving the Company which could
adversely affect the Debt Securities.
FORM, EXCHANGE AND TRANSFER
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the Debt Securities will be issued only in fully registered form,
without coupons, and in denominations of $1,000 and integral multiples thereof.
(Section 302) No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305) The Indentures also provide that the Debt Securities
of any series, if so specified with respect to a particular series, may be
issued in permanent global form. See "Global Debt Securities."
At the option of the Holder, subject to the terms of the Applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series will be exchangeable for other Debt Securities of the same
series of any authorized denomination and of a like tenor and aggregate
principal amount. (Section 305)
Subject to the terms of the Applicable Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for exchange
as provided above or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
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sufficient to cover any tax or other governmental charge payable in
connection therewith. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. The
Company has appointed the Trustee as Security Registrar. Any transfer agent
(in addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Company may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified
terms) are to be redeemed in part, the Company will not be required to (i)
issue, register the transfer of or exchange any Debt Security of that series
(or of that series and specified terms, as the case may be) during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any such Debt Security that may be selected for
redemption and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion of any such
Debt Security being redeemed in part. (Section 305)
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in
right of payment, to the extent set forth in the applicable Prospectus
Supplement, to all "Senior Indebtedness" of the Company as defined in the
applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
The following restrictions apply to each series of Debt Securities
unless the terms of such series of Debt Securities provide otherwise.
Limitation on Liens. The Indentures contain a covenant providing that
so long as Debt Securities of any series entitled by their terms to the
benefits of such covenant shall be Outstanding, the Company will not create or
assume, and will not permit any Restricted Subsidiary to create or assume, any
notes, bonds, debentures or other similar evidences of Indebtedness secured by
any mortgage, pledge, security interest or
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lien (any such mortgage, pledge, security interest or lien being
hereinafter referred to as a "Mortgage" or "Mortgages") of or upon any
Principal Property owned by the Company or by any Restricted Subsidiary or on
shares of capital stock or evidence of Indebtedness of any Restricted
Subsidiary, whether owned at the date of the Applicable Indenture or thereafter
acquired, without making effective provision, and the Company in such case will
make or cause to be made effective provision, whereby all Debt Securities of
each series to which such covenant applies (together with, if the Company shall
so determine, any other Indebtedness of the Company or such Restricted
Subsidiary, whether then existing or thereafter created which is not
subordinated to such Debt Securities) shall be secured by such a Mortgage
equally and ratably with (or prior to) any and all other Indebtedness thereby
secured, provided, however, that the foregoing shall not apply to any of the
following:
(1) Mortgages on any Principal Property, shares of stock or
Indebtedness of any corporation existing at the time such corporation becomes a
Subsidiary;
(2) Mortgages on any Principal Property, shares of stock or
Indebtedness acquired, constructed or improved by the Company or any Restricted
Subsidiary after the date of the Applicable Indenture which are created or
assumed prior to, or contemporaneously with, such acquisition, construction or
improvement or within 365 days after the acquisition, completion of
construction or improvement or commencement of commercial operation of such
property, to secure or provide for the payment of all or any part of the
purchase price or the cost of such construction or improvement thereof, or, in
addition to Mortgages contemplated by clause (3) below, Mortgages on any
Principal Property, shares of stock or Indebtedness existing at the time of
acquisition thereof (including acquisition through merger or consolidation)
existing at the time of acquisition thereof;
(3) Mortgages on any Principal Property or shares of stock or
Indebtedness acquired from a corporation which is merged with or into the
Company or a Restricted Subsidiary;
(4) Mortgages on any Principal Property, shares of stock or
Indebtedness to secure Indebtedness to the Company or to a Restricted
Subsidiary;
(5) Mortgages on any Principal Property, shares of stock or
Indebtedness in favor of the United States of America or any State thereof or
The Commonwealth of Puerto Rico, or any department, agency or instrumentality
or political subdivision
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of the United States of America or any State thereof or The Commonwealth of
Puerto Rico, to secure partial, progress, advance or other payments, or to
secure any Indebtedness incurred for the purpose of financing all or any part
of the cost of acquiring, constructing or improving the Principal Property,
shares of stock or Indebtedness subject to such Mortgages (including Mortgages
incurred in connection with pollution control, industrial revenue, Title XI
maritime financings or similar financings), or other Mortgages in connection
with the issuance of tax-exempt industrial revenue bonds;
(6) Mortgages existing as of the date of the Applicable Indenture;
(7) Mortgages for taxes, assessments or other government charges, the
validity of which is being contested in good faith by appropriate proceedings
and materialmen's, mechanics' and other like Mortgages, or deposits to obtain
the release of such Mortgages;
(8) Mortgages created or deposits made to secure the payment of
workers' compensation claims or the performance of, or in connection with,
tenders, bids, leases, public or statutory obligations, surety and appeal
bonds, contracts, performance and return-of-money bonds or to secure (or in
lieu of) surety or appeal bonds and Mortgages made in the ordinary course of
business for similar purposes; and
(9) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to in
the foregoing clauses (1) to (8), inclusive; provided, however, that such
extension, renewal or replacement shall be limited to all or a part of the
property, shares of stock or Indebtedness which secured the Mortgage so
extended, renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing, the Company or any Restricted Subsidiary
may create or assume Mortgages in addition to those permitted by the
immediately preceding paragraph, and renew, extend or create such Mortgages,
provided, that at the time of such creation, assumption, renewal or
replacement, and after giving effect thereto, the aggregate amount of all
Indebtedness so secured by such a Mortgage as provided above (not including
Indebtedness excluded as provided in clauses (1) through (9) of the immediately
preceding paragraph), plus all Attributable Debt of the Company and its
Restricted Subsidiaries in respect of Sale and Lease-Back Transactions (as
defined below) which would
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not be permitted by either clause (1) or (2) of the first paragraph
under "Limitation on Sale and Lease-Back" below, would not exceed 20% of
Consolidated Assets. (Section 1009)
Limitation on Sale and Lease-Back. The Indentures contain a covenant
providing that so long as Debt Securities of any series entitled by their terms
to the benefits of such covenant shall be Outstanding, the Company will not,
nor will it permit any Restricted Subsidiary to, enter into any arrangement
with any Person (other than the Company or any Restricted Subsidiary) providing
for the leasing by the Company or a Restricted Subsidiary of any Principal
Property owned by the Company or such Restricted Subsidiary (except for leases
for a term of not more than three years), which property has been or is to be
sold or transferred by the Company or such Restricted Subsidiary to such person
on the security of such Principal Property more than 365 days after the
acquisition thereof or the completion of construction and commencement of full
operation thereof (herein referred to as a "Sale and Lease-Back Transaction"),
unless either (1) the Company or such Restricted Subsidiary would be entitled
pursuant to such covenant to incur Indebtedness secured by a Mortgage on the
Principal Property to be leased back equal in amount to the Attributable Debt
with respect to such Sale and Lease-Back Transaction without equally and
ratably securing the Debt Securities of such series, or (2) the Company shall,
and in any such case the Company covenants that it will, apply or cause to be
applied an amount equal to the greater of the net proceeds or the fair value
(as determined by the Board of Directors) of the property so sold to the
purchase of Principal Property or to the retirement (other than any mandatory
retirement), within 365 days of the effective date of any such Sale and
Lease-Back Transaction, of Debt Securities or other Funded Indebtedness;
provided, however, that any such retirement of Debt Securities shall be made in
accordance with the Applicable Indenture; and provided, further, that the
amount to be applied to such retirement of Debt Securities or other Funded
Indebtedness shall be reduced by an amount equal to the sum of (A) an amount
equal to the principal amount of any Debt Securities delivered within 365 days
after the effective date of such Sale and Lease-Back Transaction to the
Applicable Trustee for retirement and cancellation, and (B) the principal
amount of other Funded Indebtedness voluntarily retired by the Company within
such 365-day period, excluding in each case retirements pursuant to mandatory
sinking fund or prepayment provisions and payments at Maturity.
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Notwithstanding the foregoing,
(i) the Company or any Restricted Subsidiary may enter into
Sale and Lease-Back Transactions in addition to any permitted by the
immediately preceding paragraph and without any obligation to retire any
Debt Securities or other Indebtedness; provided, that at the time of
entering into such Sale and Lease-Back Transaction and after giving effect
thereto, Attributable Debt resulting from such Sale and Lease-Back
Transaction, plus the aggregate amount of all Indebtedness secured by a
Mortgage (not including Indebtedness excluded as provided in clauses (1)
through (9) under "-- Limitations on Liens" above), does not exceed 20% of
Consolidated Assets; and
(ii) the Company or any Restricted Subsidiary may, at any time,
enter into a Sale and Lease-Back Transaction with respect to any or all of
the following properties: its plant located in Mooresville, Indiana and
its Precision Forged Products Division manufacturing facilities located in
Gallipolis, Ohio; Plymouth, Michigan and Romulus, Michigan. (Section 1010)
CERTAIN DEFINITIONS
"Attributable Debt", when used in connection with a Sale and
Lease-Back Transaction, shall mean, as of any particular time, the lesser of
(a) the fair value (as determined by the Board of Directors) of the property
subject to such arrangement and (b) the then present value (computed by
discounting at the Composite Rate) of the obligation of a lessee for net rental
payments during the remaining term of any lease in respect of such property
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended). The term "net rental payments" under any
lease for any period shall mean the sum of the rental payments required to be
paid in such period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee (whether or not designated as rental
or additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges required to be paid by such lessee
thereunder or any amounts required to be paid by such lessee thereunder
contingent upon the amount of sales, maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges.
"Composite Rate" means, as of any particular time, the rate of
interest, per annum, compounded semiannually, equal to the sum of the rates of
interest borne by each of the Debt Securities Outstanding under the Applicable
Indenture, as specified on the face of each of the Debt Securities, provided,
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that in the case of Debt Securities with variable rates of interest, the
interest rate to be used in calculating the Composite Rate shall be the
interest rate applicable to such Debt Securities at the beginning of the most
recent period for which the interest rate was determined for such Debt
Securities in accordance with the terms thereof and provided, further, that,
in the case of Debt Securities which do not bear interest, the interest rate to
be used in calculating the Composite Rate shall be a rate equal to the yield to
Maturity on such Debt Securities, (calculated at the time of issuance of such
Debt Securities) multiplied, in the case of each of the Debt Securities, by the
percentage of the aggregate principal amount of all of the Debt Securities then
Outstanding represented by such Debt Security.
"Consolidated Assets" means the Company's assets, determined in
accordance with GAAP and consolidated for financial reporting purposes in
accordance with GAAP, such assets to be valued at book value.
"Funded Indebtedness" means all Indebtedness of the Company and its
Restricted Subsidiaries maturing by its terms more than one year after, or
which is renewable or extendable at the option of the Company for a period
ending more than one year after, the date as of which Funded Indebtedness is
being determined.
"GAAP" means such accounting principles as are generally accepted in
the United States at the date of the Applicable Indenture.
"Indebtedness" means, without duplication, (i) all obligations in
respect of borrowed money or for the deferred purchase or acquisition price of
property (including all types of real, personal, tangible, intangible or mixed
property) or services (excluding trade accounts payable, deferred taxes and
accrued liabilities which arise in the ordinary course of business) which are,
in accordance with GAAP, includible as a liability on a balance sheet
consolidated for financial reporting purposes in accordance with GAAP, (ii) all
amounts representing the capitalization of rental obligations in accordance
with GAAP, and (iii) all Contingent Obligations (defined below) with respect to
the foregoing; for purposes of clause (iii), "Contingent Obligation" means, as
to any Person, any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i)
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to purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase Property,
securities or services primarily for the purpose of assuring the beneficiary of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the beneficiary of such primary obligation against loss in respect thereof;
provided, however, that the term "Contingent Obligation" shall not include the
endorsement of instruments for deposit or collection in the ordinary course of
business. The term "Contingent Obligation" shall also include the liability
of a general partner in respect of the primary obligations of a partnership in
which it is a general partner. The amount of any Contingent Obligation of a
Person shall be deemed to be an amount equal to the principal amount of the
primary obligation in respect to which such Contingent Obligation is made.
"Principal Property" shall mean the principal manufacturing facilities
owned by the Company or a Restricted Subsidiary located in the United States,
except such as the Board of Directors, in its good faith opinion, reasonably
determines is not significant to the business, financial condition and earnings
of the Company and its consolidated Subsidiaries taken as a whole, as
evidenced by a Board resolution, and except for (i) any and all personal
property including, without limitation, (x) motor vehicles and other rolling
stock, and (y) office furnishings and equipment and information and electronic
data processing equipment, (ii) any property financed through obligations
issued by a state, territory or possession of the United States, or any
political subdivision or instrumentality of the foregoing, or (iii) any real
property held for development or sale.
"Restricted Subsidiary" means any consolidated Subsidiary that owns
any Principal Property.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
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EVENTS OF DEFAULT
Unless otherwise specified in the Prospectus Supplement relating to
a particular series of Debt Securities, the following events will constitute
an Event of Default under the Indentures with respect to Debt Securities of any
series: (a) failure to pay principal of or any premium on any Debt Security
of that series when due (in the case of the Subordinated Indenture, whether or
not such payment is prohibited by the subordination provisions); (b) failure
to pay any interest on any Debt Security of that series when due, and such
failure continues for 30 days (in the case of the Subordinated Indenture,
whether or not such payment is prohibited by the subordination provisions); (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series (in the case of the Subordinated Indenture, whether or
not such deposit is prohibited by the subordination provisions); (d) failure to
perform any other covenant of the Company in the Applicable Indenture or such
Debt Security (other than a covenant included in the Applicable Indenture
solely for the benefit of a series other than that series), continued for 60
days after written notice has been given by the Applicable Trustee, or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of that series, as provided in the Applicable Indenture; (e) a default under
any bond, debenture, note or other evidence of indebtedness for money borrowed
by the Company (including a default with respect to Securities of any series
other than that series), or under any mortgage, indenture or instrument
(including the Applicable Indenture) under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed by
the Company or any consolidated Subsidiary, whether such indebtedness now exists
or shall hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or annulled,
within a period of 10 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of that series a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled, and stating that such notice is a
"Notice of Default" under the Applicable Indenture; and (f) certain events in
bankruptcy, insolvency or reorganization. (Section 501)
If an Event of Default (other than an Event of Default described in
clause (f) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Applicable Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series by notice as provided in the Applicable Indenture
may declare the principal amount of the Debt Securities of that series (or, in
the case of any Debt Security that is an Original Issue Discount Security or the
principal amount of which is not then determinable, such portion of the
principal amount of such Debt Security, or such other amount in lieu of such
principal amount, as may be specified in the terms of such Debt Security) to be
due and payable immediately. If an Event of Default described in clause (f)
above with respect to the Debt Securities of any series at the time Outstanding
shall occur, the principal amount of all the Debt Securities of that series
(or, in the case of any such Original Issue Discount Security or other Debt
Security, such specified amount) will automatically, and without any action by
the Applicable Trustee or any Holder, become immediately due and payable.
After any such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority
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in aggregate principal amount of the Outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal (or
other specified amount), have been cured or waived as provided in the
Applicable Indenture. (Section 502) For information as to waiver of defaults,
see "Modification and Waiver."
Subject to the provisions of the Applicable Indenture relating to the
duties of the Applicable Trustee in case an Event of Default shall occur and
be continuing, the Applicable Trustee will be under no obligation to exercise
any of its rights or powers under the Applicable Indenture at the request
or direction of any of the Holders, unless such Holders shall have offered to
the Applicable Trustee reasonable indemnity. (Section 603) Subject to such
provisions for the indemnification of the Applicable Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Applicable Trustee or
exercising any trust or power conferred on the Applicable Trustee with respect
to the Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to
institute any proceeding with respect to the Applicable Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy thereunder,
unless (i) such Holder has previously given to the Applicable Trustee written
notice of a continuing Event of Default with respect to the Debt Securities of
that series, (ii) the Holders of at least 25% in aggregate principal amount of
the Outstanding Debt Securities of that series have made written request, and
such Holder or Holders have offered reasonable indemnity, to the Applicable
Trustee to institute such proceeding as trustee, and (iii) the Applicable
Trustee has failed to institute such proceeding, and has not received from the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series a direction inconsistent with such request, within
60 days after such notice, request and offer. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security
for the enforcement of payment of the principal of or any premium or interest
on such Debt Security on or after the applicable due date specified in such
Debt Security. (Section 508)
The Company will be required to furnish to the Applicable Trustee
annually a statement by certain of its officers as to whether or not the
Company, to their knowledge, is in
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default in the performance or observance of any of the terms, provisions and
conditions of the Applicable Indenture and, if so, specifying all such known
defaults. (Section 1004)
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into
Common Stock or other securities of the Company will be set forth in the
Prospectus Supplement relating thereto. Such terms will include provisions as
to whether conversion is mandatory or at the option of the Holder thereof and
may include provisions pursuant to which the number of shares of Common Stock
or other securities of the Company to be received by the Holders of Debt
Securities would be subject to adjustment.
GLOBAL DEBT SECURITIES
Some or all of the Debt Securities of any series may be represented,
in whole or in part, by one or more Global Securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby. Each Global Security will be registered in the name of a Depositary
or a nominee thereof identified in the applicable Prospectus Supplement, will
be deposited with such Depositary or nominee or a custodian therefor and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below and any such other matters as may be provided
for pursuant to the Applicable Indenture.
Notwithstanding any provision of the Applicable Indenture or any Debt
Security described herein, no Global Security may be exchanged in whole or in
part for Debt Securities registered, and no transfer of a Global Security in
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Security or any nominee of such Depositary unless
(i) the Depositary has notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be qualified
to act as such as required by the Applicable Indenture, (ii) there shall have
occurred and be continuing an Event of Default with respect to the Securities
represented by such Global Security or (iii) there shall exist such
circumstances, if any, in addition to or in lieu of those described above as
may be described in the applicable Prospectus Supplement. All securities issued
in exchange for a Global Security or any portion thereof will be registered in
such names as the Depositary may direct. (Sections 204 and 305)
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As long as the Depositary, or its nominee, is the registered Holder
of a Global Security, the Depositary or such nominee, as the case may be, will
be considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Applicable Indenture. Except in the limited circumstances referred to
above, owners of beneficial interests in a Global Security will not be entitled
to have such Global Security or any Debt Securities represented thereby
registered in their names, will not receive or be entitled to receive physical
delivery of certificated Debt Securities in exchange therefor and will not be
considered to be the owners or Holders of such Global Security or any Debt
Securities represented thereby for any purpose under the Debt Securities or the
Applicable Indenture. All payments of principal of and any premium and
interest on a Global Security will be made to the Depositary or its nominee,
as the case may be, as the Holder thereof. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be
limited to institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests) or any such participant
(with respect to interests of persons held by such participants on their
behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Applicable Trustee or any agent of the Company or the Applicable
Trustee will have any responsibility or liability for any aspect of the
Depositary's or any participant's records relating to, or for payments made on
account of, beneficial interests in a Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, beneficial
interests in a Global Security,
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in some cases, may trade in the Depositary's same-day funds settlement system,
in which secondary market trading activity in those beneficial interests would
be required by the Depositary to settle in immediately available funds. There
is no assurance as to the effect, if any, that settlement in immediately
available funds would have on trading activity in such beneficial interests.
Also, settlement for purchases of beneficial interests in a Global Security
upon the original issuance thereof may be required to be made in immediately
available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of interest on a Debt Security on any Interest Payment Date will be
made to the Person in whose name such Debt Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the applicable Security Register. Unless otherwise indicated in the
applicable Prospectus Supplement, the corporate trust office of the Trustee
in The City of New York will be designated as the Company's sole Paying Agent
for payments with respect to Debt Securities of each series. Any other Paying
Agents initially designated by the Company for the Debt Securities of a
particular series will be named in the applicable Prospectus Supplement. The
Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that the Company will be required to maintain a
Paying Agent in each Place of Payment for the Debt Securities of a particular
series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
the principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Debt Security thereafter may look only to the Company for payment thereof.
(Section 1003)
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the
Outstanding Debt Securities under the Indentures, may consolidate with or
merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person, and may permit any Person to
merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, the Company, provided (i) that any successor
Person must be a corporation, partnership or trust organized and validly
existing under the laws of any domestic jurisdiction and must assume the
Company's obligations on the Debt Securities and under the Indentures, (ii)
that after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing and (iii) that certain other
conditions are met. Upon any consolidation or merger into any other Person or
any conveyance, transfer or lease of the Company's assets substantially as an
entirety to any Person, the successor Person will succeed to, and be
substituted for, the Company under the Indentures, and the Company, except in
the case of a lease, will be relieved of all obligations and covenants under
the Indentures and the Debt Securities to the extent it was the predecessor
Person. (Article Eight)
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MODIFICATION AND WAIVER
Modifications and amendments of the Senior Indenture and the
Subordinated Indenture may be made by the Company and the Trustee under the
Applicable Indenture only with the consent of the Holders of a majority in
aggregate principal amount of each series of the Outstanding Debt Securities
issued under the Applicable Indenture and affected by such modification or
amendment unless a greater percentage of such aggregate principal amount is
specified in the applicable Prospectus Supplement; provided, however, that no
such modification or amendment may, without the consent of each Holder of such
Debt Security affected thereby, (a) change the Stated Maturity of the
principal of, or any instalment of principal of or interest on, any such Debt
Security, (b) reduce the principal amount of, or any premium or interest on,
any such Debt Security, (c) reduce the amount of principal of an Original
Issue Discount Security or any other Debt Security payable upon acceleration
of the maturity thereof, (d) change the place or currency of payment of
principal of, or any premium or interest on, any such Debt Security, (e)
impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security (f) in the case of the Subordinated
Indenture, modify the subordination provisions in a manner adverse to the
Holders of the Subordinated Debt Securities, (g) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Applicable
Indenture, (h) reduce the percentage in principal amount of outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Applicable Indenture or for waiver of certain defaults or
(i) modify such provisions with respect to modification and waiver. (Section
902 of the Indentures and Section 907 of the Subordinated Indenture)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by the Company with certain
restrictive provisions of the Applicable Indenture and, if applicable, such
Debt Securities, unless a greater percentage of such aggregate principal amount
is specified in the applicable Prospectus Supplement. (Section 1008) The
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series may waive any past default under the Applicable Indenture, except a
default in the payment of principal, premium or interest and certain covenants
and provisions of the Applicable Indenture and, if applicable, such Debt
Securities which may not be amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. (Section 513)
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OUTSTANDING DEBT SECURITIES
The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the
Applicable Indenture as of any date, (i) the portion of the principal amount of
an Original Issue Discount Security that will be deemed to be Outstanding for
such purpose will be the amount of the principal thereof that would be due and
payable as of such date upon acceleration of the maturity thereof to such date,
(ii) if, as of such date, the principal amount payable at the Stated Maturity
of a Debt Security is not determinable (for example, because it is based on an
index), the principal amount of such Debt Security deemed to be Outstanding as
of such date will be an amount determined in the manner prescribed for such
Debt Security and (iii) the portion of the principal amount of a Debt Security
denominated in one or more foreign currencies or currency units that will be
deemed to be Outstanding will be the U.S. dollar equivalent, determined as of
such date in the manner prescribed for such Debt Security, of the principal
amount of such Debt Security (or, in the case of a Debt Security described in
clause (i) or (ii) above, of the amount described in such clause). Certain
Debt Securities, including those for whose payment or redemption money has been
deposited or set aside in trust for the Holders and those that have been fully
defeased, will not be deemed to be Outstanding. In addition, Debt Securities
owned by the Company or any of its Affiliates will not be deemed to be
Outstanding. (Section 101)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide, if such provision is made applicable to the
Debt Securities of any series pursuant to Section 301 of the Applicable
Indenture (which will be indicated in the Prospectus Supplement relating
thereto), that the Company may elect either (A) to defease and be discharged
from any and all of its obligations with respect to such Debt Securities
(including, in the case of Subordinated Debt Securities, the subordination
provisions which will be described in the applicable Prospectus Supplement and
except for the obligations to exchange or register the transfer of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency with respect to the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to
be released from its obligations with respect to such Debt Securities
concerning certain restrictive covenants (including, in the case of
Subordinated Debt Securities, the subordination provisions which will be
described in
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the applicable Prospectus Supplement) which are subject to covenant defeasance
("covenant defeasance"), and the occurrence of certain Events of Default, which
are described above in clause (d) (with respect to such restrictive covenants)
and clause (e) under "Events of Default" and any that may be described in the
applicable Prospectus Supplement, shall no longer be an Event of Default, in
each case, upon deposit with the Applicable Trustee (or other qualifying
trustee), in trust for such purpose, money or U.S. Government Obligations, or
both (or Foreign Government Obligations (as defined) in the case of Debt
Securities denominated in foreign currencies), which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such Debt Securities.
As a condition to defeasance or covenant defeasance, the Company must
deliver to the Applicable Trustee an Opinion of Counsel (as specified in the
Applicable Indenture) to the effect that Holders of such Debt Securities will
not recognize gain or loss for federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not occurred. The
Company may exercise its defeasance option with respect to such Debt Securities
notwithstanding its prior exercise of its covenant defeasance option. If the
Company exercises its defeasance option, payment of such Debt Securities may
not be accelerated because of an Event of Default. If the Company exercises its
covenant defeasance option, payment of such Debt Securities may not be
accelerated by reference to the covenants noted under clause (B) above. In the
event the Company omits to comply with its remaining obligations with respect
to such Debt Securities under the Indentures after exercising its covenant
defeasance option and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations (or Foreign Government Obligations in the case of Debt
Securities denominated in foreign currencies) on deposit in the defeasance trust
may be insufficient to pay amounts due on the Debt Securities of such series
at the time of the acceleration resulting from such Event of Default. However,
the Company will remain liable in respect of such payments. (Article Thirteen)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the law of the
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State of New York, without regard to principles of conflicts of laws.
(Section 112)
REGARDING THE TRUSTEE
Continental Bank is the Trustee under the Senior Indenture and the
Subordinated Indenture. The Trustee may be deemed to have a conflicting
interest and may be required to resign as Trustee if at the time of a default
under one of the Indentures it is a creditor of the Company. In addition, the
Trustee will be required to resign as Trustee under one of the Indentures if at
the time of default under one Indenture Debt Securities have been issued under
the other Indenture. The Trustee or its affiliates perform certain commercial
banking services for the Company in the ordinary course of business.
Notices should be directed to 231 South LaSalle Street, Chicago,
Illinois, 60697, Attn: Corporate Trust Division.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms
of the Company's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the terms of any series may
differ from the terms set forth below. The description of certain provisions
of the Company's Preferred Stock does not purport to be complete and is subject
to and qualified in its entirety by reference to the provisions of the
Company's Second Restated Articles of Incorporation, as amended (the
"Articles"), and the Certificate of Designation (the "Certificate of
Designation") relating to each particular series of Preferred Stock which will
be filed or incorporated by reference, as the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such Preferred Stock.
GENERAL
Under the Company's Articles, the Board of Directors of the Company
is authorized, without further stockholder action, to provide for the issuance
of up to 5,000,000 shares of preferred stock (the "Preferred Stock"). The
Preferred Stock may be issued in one or more series, with such designations of
titles; dividend rates; any redemption provisions; special or
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relative rights in the event of liquidation, dissolution, distribution or
winding up of the Company; any sinking fund provisions; any conversion
provisions; any voting rights thereof; and any other preferences, privileges,
powers, rights, qualifications, limitations and restrictions, as shall be set
forth as and when established by the Board of Directors of the Company.
The shares of any series of Preferred Stock will be, when issued, fully paid
and non-assessable and holders thereof will have no preemptive rights in
connection therewith.
The liquidation preference of any series of Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with
changes in market and economic conditions, the financial condition and
prospects of the Company and other factors that generally influence the market
price of securities.
RANK
Any series of Preferred Stock will, with respect to rights on
liquidation, winding up and dissolution, rank (i) senior to all classes of
Common Stock and to all equity securities issued by the Company, the terms of
which specifically provide that such equity securities will rank junior to such
series of Preferred Stock (the "Junior Liquidation Securities"); (ii) on a
parity with all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank on a parity with
such series of Preferred Stock ("Parity Liquidation Securities"); and (iii)
junior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank senior to such
series of Preferred Stock (the "Senior Liquidation Securities"). In addition,
any series of Preferred Stock will, with respect to dividend rights, rank (i)
senior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank junior to such
series of Preferred Stock and, to the extent provided in the applicable
Certificate of Designation, to Common Stock, (ii) on a parity with all equity
securities issued by the Company, the terms of which specifically provide that
such equity securities will rank on a parity with such series of Preferred
Stock and, to the extent provided in the applicable Certificate of Designation,
to Common Stock ("Parity Dividend Securities") and (iii) junior to all equity
securities issued by the Company, the terms of which specifically provide that
such equity securities will rank senior to such series of Preferred Stock. As
used in any Certificate of Designation for these purposes, the term "equity
securities" will not include
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debt securities convertible into or exchangeable for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company out
of funds legally available therefor, cash dividends at such rates and on such
dates as are set forth in the Prospectus Supplement relating to such series of
Preferred Stock. Dividends will be payable to holders of record of Preferred
Stock as they appear on the books of the Company (or, if applicable, the
records of the Depositary referred to below under "Description of Depositary
Shares") on such record dates as shall be fixed by the Board of Directors.
Dividends on any series of Preferred Stock may be cumulative or non-cumulative.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any series of Preferred Stock unless dividends shall
have been paid or set apart for such payment on the Parity Dividend Securities.
If full dividends are not so paid, such series of Preferred Stock shall share
dividends pro rata with the Parity Dividend Securities.
CONVERSION AND EXCHANGE
The Prospectus Supplement for any series of Preferred Stock will
state the terms, if any, on which shares of that series are convertible into
shares of another series of Preferred Stock or Common Stock or exchangeable for
another series of Preferred Stock, Common Stock or Debt Securities of the
Company. The Common Stock of the Company is described below under "Description
of Common Stock."
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole
or in part, at the option of the Company or the holder thereof and may be
subject to mandatory redemption pursuant to a sinking fund or otherwise upon
terms and at the redemption prices set forth in the Prospectus Supplement
relating to such series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Company, or by any other method determined to be equitable by the Board of
Directors.
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On and after a redemption date, unless the Company defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption, and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Company, holders of each series of Preferred Stock that ranks senior
to the Junior Liquidation Securities will be entitled to receive out of assets
of the Company available for distribution to shareholders, before any
distribution is made on any Junior Liquidation Securities, including Common
Stock, distributions upon liquidation in the amount set forth in the Prospectus
Supplement relating to such series of Preferred Stock, plus an amount equal to
any accrued and unpaid dividends. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other Parity Liquidation
Securities are not paid in full, the holders of the Preferred Stock of such
series and the Parity Liquidation Securities will share ratably in any such
distribution of assets of the Company in proportion to the full liquidation
preferences to which each is entitled. After payment of the full amount of the
liquidation preference to which they are entitled, the holders of such series
of Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Company.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to
a particular series of Preferred Stock or except as expressly required by
applicable law, the holders of shares of Preferred Stock will have no voting
rights.
PREFERRED STOCK OUTSTANDING
As of the date hereof, the Company has issued and outstanding
1,600,000 shares of Series D Convertible Exchangeable Preferred Stock and as of
June 30, 1994, 931,765 shares of Series C ESOP Convertible Preferred Stock.
The shares of each issued and outstanding series are fully paid and
nonassessable. The Company has also authorized the Series B Junior
Participating Cumulative Preferred Stock in connection with its preferred stock
purchase rights plan. See "Description of Preferred Share Purchase Rights."
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<PAGE> 37
Series D Convertible Exchangeable Preferred Stock. The Series D
Convertible Exchangeable Preferred Stock bears a dividend of $3.875 per share
per annum. It is senior to the Common Stock, the Series C ESOP Convertible
Preferred Stock and, when and if issued, the Series B Junior Participating
Cumulative Preferred Stock, as to the payment of dividends and distributions of
assets on liquidation, dissolution and winding up of the Company.
Such shares provide for a liquidation preference of $50.00 per share,
plus accrued and unpaid dividends.
Holders of Series D Convertible Exchangeable Preferred Stock have no
general voting rights but have the right to vote in certain events.
Whenever dividends have not been paid on such shares or any other
class or series of stock ranking pari passu as to dividends in an aggregate
amount equal to six quarterly dividends (whether or not consecutive), the
number of members of the Company's Board of Directors will be increased by two,
and the holders of such shares, voting separately as a class with the holders
of such pari passu stock with like voting rights, will be entitled to elect
such two additional directors at any meeting of shareholders at which directors
are to be elected held during the period such dividends remain in arrears. Such
voting rights will continue until there are not such dividends in arrears.
The Series D Convertible Exchangeable Preferred Stock may not be
redeemed prior to September 20, 1996 and thereafter may be redeemed by the
Company, at its option, in whole or in part at any time at a redemption price
of $52.33 per share, plus accrued and unpaid dividends, if redeemed prior to
September 10, 1997, and at the following redemption prices per share,
if redeemed during the 12-month period ending September 9:
<TABLE>
<CAPTION>
PRICE
YEAR PER SHARE
---- ---------
<S> <C>
1998............................... $51.94
1999............................... 51.55
2000............................... 51.16
2001............................... 50.78
2002............................... 50.39
</TABLE>
and thereafter at $50 per share plus, in each case, accrued and unpaid
dividends. There is no mandatory redemption or sinking fund obligation with
respect to the Series D Convertible Exchangeable Preferred Stock.
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Each holder of Series D Convertible Exchangeable Preferred Stock has
the right, at the holder's option, to convert any or all such shares into
Common Stock at any time at a ratio (subject to adjustment) of 2.778 shares
of Common Stock for each share of Series D Convertible Exchangeable Preferred
Stock. The conversion rate is further adjusted in the event of certain
transactions involving the Company that would result in a "Fundamental Change"
as defined in the Series D Convertible Exchangeable Preferred Stock.
The Series D Convertible Exchangeable Preferred Stock is
exchangeable in whole but not in part, at the option of the Company on a
dividend payment date for the Series D Convertible Exchangeable Preferred
Stock, for Convertible Subordinated Debentures (the "Debentures"). In such
event, the holders of outstanding Series D Convertible Exchangeable Preferred
Stock will receive $50 principal amount of the Debentures for each share of
such stock so exchanged.
Such Debentures will be unsecured, subordinated obligations of the
Company, will mature on September 10, 2012, and will pay interest at a rate of
7 3/4% per annum. Each holder of Debentures will have the right, at the
holder's option, to convert any or all such Debentures into Common Stock at any
time at a ratio (subject to adjustment) of 2.778 shares of Common Stock for
each $50 principal amount of Debentures.
The Debentures will not be redeemable prior to September 20, 1996,
and thereafter may be redeemed by the Company, at its option, in whole or in
part, at any time at a redemption price of 104.65% of the principal amount,
plus accrued and unpaid interest, if redeemed prior to September 10, 1997, and
at the following redemption prices, if redeemed during the 12-month period
ending September 9:
<TABLE>
<CAPTION>
YEAR PRICE
---- -----
<S> <C>
1998............................... 103.88%
1999............................... 103.10%
2000............................... 102.33%
2001............................... 101.55%
2002............................... 100.78%
</TABLE>
and thereafter at 100% of the principal amount plus, in each case, accrued and
unpaid interest. There is no mandatory redemption or sinking fund obligation
with respect to the Debentures.
Series C ESOP Convertible Preferred Stock. The Series C ESOP
Convertible Preferred Stock bears a dividend of $4.78125 per share per annum,
subject to certain adjustments.
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The shares of Series C ESOP Convertible Preferred Stock are convertible into
shares of Common Stock at a rate of two shares of Common Stock per share,
subject to certain adjustments. The shares may only be issued to a trustee
acting on behalf of any employee stock ownership plan or other employee benefit
plan of the Company and will be automatically converted into Common Stock in
the event of any transfer to a person other than a plan trustee. Such shares
have a liquidation preference of $63.75 per share plus accrued and unpaid
dividends. The Series C ESOP Convertible Preferred Stock is redeemable, in
whole or in part, at the option of the Company at a redemption price per share
currently equal to 103.75% of the liquidation preference, declining by 75 basis
points each January 1, to the liquidation preference of $63.75 per share on and
after January 1, 1999, plus, in each case, accrued and unpaid dividends.
Holders of Series C ESOP Convertible Preferred Stock have full voting rights
and vote together with the Common Stock as one class, each share of the Series
C ESOP Convertible Preferred Stock having such number of votes as equals the
number of shares of Common Stock into which such share could be converted on the
record date for determining the stockholders entitled to vote. The shares of
the Series C ESOP Convertible Preferred Stock are not subject to any sinking
fund provisions and have no preemptive rights. The shares rank junior to the
Series D Convertible Exchangeable Preferred Stock and rank senior to the Series
B Junior Participating Cumulative Preferred Stock and the Common Stock as to
the payment of dividends and distribution of assets on liquidation, dissolution
and winding up of the Company.
In the event the Company is unable to pay dividends on the Series C
ESOP Preferred Stock, the Company is required pursuant to the terms of the
ESOP to make a contribution to the ESOP to satisfy the then current debt
service requirements of the Senior ESOP Note due December 31, 2000 (which
obligation is fully reflected in long-term debt on the Company's balance sheet).
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) does not purport to be complete and is subject to
and qualified in its entirety by reference to the forms of Deposit Agreement and
Depository Receipt relating to the Preferred Stock, included as exhibits to the
Registration Statement of which this Prospectus is a part.
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<PAGE> 40
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue receipts for Depositary Shares,
each of which will represent a fraction (to be set forth in the Prospectus
Supplement relating to a particular series of Preferred Stock) of a share of a
particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion
and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the
Depositary may, upon the written order of the Company or any holder of
deposited Preferred Stock, execute and deliver temporary Depositary Receipts
which are substantially identical to, and entitle the holders thereof to all
the rights pertaining to, the definitive Depositary Receipts. Depositary
Receipts will be prepared thereafter without unreasonable delay, and temporary
Depositary Receipts will be exchangeable for definitive Depositary Receipts at
the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the deposited Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary
will distribute property received by it to the
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<PAGE> 41
record holders of Depositary Shares entitled thereto. If the Depositary
determines that it is not feasible to make such distribution, it may, with the
approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
REDEMPTION OF STOCK
If a series of Preferred Stock represented by Depositary Shares is to
be redeemed, the Depositary Shares will be redeemed from the proceeds received
by the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The Depositary Shares will
be redeemed by the Depositary at a price per Depositary Share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of Preferred Stock so redeemed. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same date the number of Depositary Shares representing shares of Preferred
Stock so redeemed. If fewer than all the Depositary Shares are to be redeemed,
the Depositary Shares to be redeemed will be selected by the Depositary by lot
or pro rata or by any other equitable method as may be determined by the
Depositary.
WITHDRAWAL OF STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Depositary (unless the related
Depositary Shares have previously been called for redemption), receive the
number of whole shares of the related series of Preferred Stock and any money
or other property represented by such Depositary Receipts. Holders of
Depositary Shares making such withdrawals will be entitled to receive whole
shares of Preferred Stock on the basis set forth in the related Prospectus
Supplement for such series of Preferred Stock, but holders of such whole shares
of Preferred Stock will not thereafter be entitled to deposit such Preferred
Stock under the Deposit Agreement or to receive Depositary Receipts therefor.
If the Depositary Shares surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Depositary will deliver
to such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any
series of deposited Preferred Stock are entitled
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to vote, the Depositary will mail the information contained in such notice of
meeting to the record holders of the Depositary Shares relating to such series
of Preferred Stock. Each record holder of such Depositary Shares on the record
date (which will be the same date as the record date for the relevant series of
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of the Preferred Stock
represented by such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the amount of such series of Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all reasonable actions that may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which
materially and adversely alters the rights of the holders of the Depositary
Shares representing Preferred Stock of any series will not be effective unless
such amendment has been approved by the holders of at least the amount of the
Depositary Shares then outstanding representing the minimum amount of Preferred
Stock of such series necessary to approve any amendment that would materially
and adversely affect the rights of the holders of the Preferred Stock of such
series. Every holder of an outstanding Depositary Receipt at the time any such
amendment becomes effective, or any transferee of such holder, shall be deemed,
by continuing to hold such Depositary Receipt, or by reason of the acquisition
thereof, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. The Deposit Agreement automatically terminates
if (i) all outstanding Depositary Shares have been redeemed; or (ii) each share
of Preferred Stock has been converted into other preferred stock or common
stock or has been exchanged for debt securities; or (iii) there has been a
final distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the
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<PAGE> 43
depositary arrangements. The Company will pay all charges of the Depositary in
connection with the initial deposit of the relevant series of Preferred Stock
and any redemption of such Preferred Stock. Holders of Depositary Receipts
will pay transfer and other taxes and governmental charges and such other
charges or expenses as are expressly provided in the Deposit Agreement to be
for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove the
Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary and its acceptance of such appointment. Such
successor Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward all reports and communications from the
Company which are delivered to the Depositary and which the Company is required
to furnish to the holders of the deposited Preferred Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder, and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares, Depositary Receipts or shares of Preferred Stock unless
satisfactory indemnity is furnished. They may rely upon written advice of
counsel or accountants, upon information provided by holders of Depositary
Receipts or other persons believed to be competent and on documents believed to
be genuine.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 60,000,000 shares of Common Stock.
As of July 8, 1994, 35,531,510 shares of Common Stock were issued and
outstanding, and an aggregate of 673,669 shares of Common Stock were reserved
for issuance under the Company's incentive stock plans. The Common Stock is
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<PAGE> 44
listed on the New York Stock Exchange and the Pacific Stock Exchange.
The holders of Common Stock are entitled to receive such dividends as
may be declared from time to time by the Board of Directors out of funds
legally available therefor. The holders of Common Stock are entitled to one
vote per share on all matters submitted to a vote of shareholders and do not
have cumulative voting rights. Holders of Common Stock are entitled to
receive, upon any liquidation of the Company, all remaining assets available
for distribution to shareholders after satisfaction of the Company's
liabilities and the preferential rights of any preferred stock that may then be
issued and outstanding. The outstanding shares of Common Stock are, and the
shares offered hereby will be, fully paid and non-assessable. The holders of
Common Stock have no preemptive, conversion or redemption rights. The
registrar and transfer agent for the Common Stock is The Bank of New York.
DESCRIPTION OF PREFERRED SHARE PURCHASE RIGHTS
In 1988, the Company's Board of Directors authorized the distribution
of one Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock. Each Right entitles the holder thereof to buy one-half of one
one-hundredth of a share of Series B Junior Participating Cumulative Preferred
Stock at a price of $70.
As distributed, the Rights trade together with the Common Stock. They
may be exercised or traded separately only after the earlier to occur of: (i)
10 days following a public announcement that a person or group of persons has
obtained the right to acquire 10% or more of the outstanding Common Stock (20%
in the case of certain institutional investors), or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors)
following the commencement or announcement of an intent to make a tender offer
or exchange offer which would result in beneficial ownership by a person or
group of persons of 10% or more of the Company's outstanding Common Stock. If
the acquiring person or group of persons acquires 10% or more of the Common
Stock, each Right (other than those held by the acquiror) will entitle its
holder to purchase, at the Right's exercise price, shares of Common Stock
having a market value of twice the Right's exercise price. Additionally, if
the Company is acquired in a merger or other business combination, each Right
(other than those held by the surviving or acquiring company) will entitle its
holder to purchase, at the Right's exercise price, shares of the acquiring
company's common stock (or Common Stock of the Company if it is
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<PAGE> 45
the surviving corporation) having a market value of twice the Right's exercise
price.
Rights may be redeemed at the option of the Board of Directors for
$0.005 per Right at any time before a person or group of persons acquires 10%
or more of the Company's Common Stock. The Board may amend the Rights at any
time without shareholder approval. The Rights will expire by their terms on
November 14, 1998.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as Warrants to purchase Preferred Stock
or Common Stock of the Company. Warrants may be issued independently or
together with any Securities and may be attached to or separate from such
securities. The Warrants are to be issued under warrant agreements (each a
"Warrant Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Warrants being offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants, including
the following: (1) the title of such Debt Warrants; (2) the aggregate number
of such Debt Warrants; (3) the price or prices at which such Debt Warrants will
be issued; (4) the currency or currencies, including composite currencies or
currency units, in which the price of such Debt Warrants may be payable; (5)
the designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants, and the procedures and
conditions relating to the exercise of such Debt Warrants; (6) the designation
and terms of any related Debt Securities with which such Debt Warrants are
issued, and the number of such Debt Warrants issued with each such Debt
Security; (7) the currency or currencies, including composite currencies or
currency units, in which the principal of or any premium or interest on the
Debt Securities purchasable upon exercise of such Debt Warrants will be
payable; (8) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable; (9) the principal
amount of Debt Securities purchasable upon exercise of each Debt Warrant, and
the price at which and the currency or currencies, including composite
currencies or currency units,
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<PAGE> 46
in which such principal amount of Debt Securities may be purchased upon
such exercise; (10) the date on which the right to exercise such Debt Warrants
will commence, and the date on which such right will expire; (11) the maximum
or minimum number of such Debt Warrants which may be exercised at any time;
(12) a discussion of any material federal income tax considerations; and (13)
any other terms of such Debt Warrants and terms, procedures and limitations
relating to the exercise of such Debt Warrants,
Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement. Prior to the exercise of their Debt Warrants,
holders of Debt Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payment
of principal of or any premium or interest on the Debt Securities purchasable
upon such exercise.
OTHER WARRANTS
The Company may issue Warrants to purchase shares of Preferred Stock or
Common Stock of the Company. The applicable Prospectus Supplement will
describe the following terms of any such other Warrants in respect of which
this Prospectus is being delivered: (1) the title of such Warrants; (2)
whether the warrants are exercisable for Preferred Stock or Common Stock of the
Company; (3) the price or prices at which such Warrants will be issued; (4) the
currency or currencies, including composite currencies or currency units, in
which the price of such Warrants may be payable; (5) if applicable, the
designation and terms of the Preferred Stock or Common Stock with which such
Warrants are issued, and the number of such Warrants issued with each such
share of Preferred Stock or Common Stock; (6) if applicable, the date on and
after which such Warrants and the related Preferred Stock or Common Stock will
be separately transferable; (7) if applicable, a discussion of any material
federal income tax considerations; and (8) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities or number of shares of Preferred Stock or
Common Stock at such exercise price as shall in each case be set forth in, or
be determinable
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<PAGE> 47
as set forth in, the Prospectus Supplement relating to the Warrants
offered thereby. Warrants may be exercised at any time up to the close of
business on the expiration date set forth in the Prospectus Supplement relating
to the Warrants offered thereby. After the close of business on the expiration
date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented
by such warrants certificate are exercised, a new warrant certificate will be
issued for the remaining Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in four ways:
(i) directly to purchasers, (ii) through agents, (iii) through underwriters,
and (iv) through dealers. Any such underwriter or agent involved in the offer
and sale of the Securities will be named in the applicable Prospectus
Supplement.
If one or more underwriters or agents are used in the sale of
Securities, the Company will execute an underwriting or similar agreement with
such underwriters or agents setting forth, among other things, certain terms of
the sale and offering.
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Prospectus Supplement
will describe the method of distribution of the Securities. The Company also
may, from time to time, authorize underwriters acting as the Company's agents
to offer and sell the Securities upon the terms and conditions as shall be set
forth in the Prospectus Supplement.
In connection with the sale of Securities, underwriters and agents may
receive compensation both from the Company, in the form of discounts,
concessions or commissions, and from purchasers of Securities for whom they may
act as agents.
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<PAGE> 48
The underwriters, agents and dealers that participate in the
distribution of Securities may be deemed to be "underwriters" within the
meaning of, and any discounts or commissions received by them and any profit on
the resale of Securities by them may be deemed to be underwriting discounts and
commissions under, the Securities Act. Any such underwriters or agents will be
identified and any such compensation will be described in the Prospectus
Supplement.
Securities also may be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, by one or
more firms ("remarketing firms") acting as principals for their own account or
as agents for the Company. Any remarketing firm will be identified and their
terms of its agreement, if any, with the Company and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be deemed to be
underwriters in connection with the Securities remarketed thereby.
Under agreements which may be entered into by the Company,
underwriters, agents and dealers who participate in the distribution of
Securities may be entitled to indemnification by the Company against or in
respect of certain liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments required to be made in respect
thereof.
Certain of the underwriters, dealers and agents and their associates
may engage in transactions with, and perform services for, the Company in the
ordinary course of business.
If so indicated in an applicable Prospectus Supplement, the Company
will authorize underwriters or other persons acting as agents to solicit offers
by certain institutions to purchase Debt Securities or Preferred Stock from the
Company at the public offering price set forth in such Prospectus Supplement
pursuant to Delayed Delivery Contracts ("Contracts") providing for payment
and delivery on the date or dates stated in the applicable Prospectus
Supplement. Each Contract will be for an amount stated in the applicable
Prospectus Supplement. Institutions with whom Contracts, when authorized, may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except that (i) the purchase by
an institution of the Securities covered by its Contracts will not at the time
of delivery be prohibited under the laws of any
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<PAGE> 49
jurisdiction in the United States to which such institution is subject
and (ii) if the Securities are being sold to underwriters, the Company will
have sold to such underwriters such amount specified in the applicable
Prospectus Supplement. Agents and underwriters will have no responsibility in
respect of the delivery or performance of Contracts. A commission indicated in
the applicable Prospectus Supplement will be paid to underwriters and agents
soliciting purchases of Securities pursuant to Contracts accepted by the
Company.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
George N. Bashara, Jr., General Counsel of the Company, is passing upon the
validity of the Securities. On behalf of any underwriters, agents or dealers,
Sullivan & Cromwell, New York, New York, is passing upon the validity of the
Securities. In rendering its opinion, Sullivan & Cromwell will rely as to
matters of Michigan law on the opinion of George N. Bashara, Jr.
INDEPENDENT AUDITORS
The consolidated financial statements and schedules of Federal-Mogul
Corporation appearing in Federal-Mogul Corporation's Annual Report (Form 10-K)
for the year ended December 31, 1993, have been audited by Ernst & Young,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedules are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The combined statements of assets and liabilities of Sealed Power
Corporation and Sealed Power Corporation of Canada, Ltd. at December 31, 1992
and 1991 and the related combined statements of revenues and expenses and
changes in equity and cash flows for each of the years then ended, appearing in
Federal-Mogul Corporation's Form 8-K dated November 10, 1993, as amended on
Form 8-K/A, dated February 11, 1994, and incorporated herein by reference, have
been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their report, with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
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<PAGE> 50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
An itemized statement of the estimated amount of the expenses, other
than underwriting discounts and commissions, incurred and to be incurred by the
Company in connection with the issuance and distribution of the Securities
registered pursuant to this registration statement is as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.............. $ 34,483.00
Printing and engraving expenses............................ 50,000.00
Accounting fees and expenses............................... 50,000.00
Legal fees and expenses.................................... 100,000.00
Listing fees............................................... 10,000.00
Fees and expenses of trustee............................... 20,000.00
Rating agencies' fees...................................... 120,000.00
Blue sky fees and expenses and legal fees.................. 15,000.00
Miscellaneous.............................................. 10,517.00
-----------
Total............................................ $410,000.00
===========
</TABLE>
ITEM 15. MICHIGAN BUSINESS CORPORATION ACT
Sections 561 through 569 of the Michigan Business Corporation Act
(the "Act"), and Article XI of the Company's Bylaws relate to the
indemnification of the Company's directors and officers, among others, in a
variety of circumstances against Liabilities arising in connection with the
performance of their duties.
The Act permits indemnification of directors and officers acting in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interests of the Company or its shareholders (and, with respect to a
criminal proceeding, if they have no reasonable cause to believe their conduct
to be unlawful) against (i) expenses (including attorney's fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending, or completed action, suit,
or proceeding (other than an action by or in the right of the Company) arising
out of a position with the Company (or with some other entity at the Company's
request) and (ii) expenses (including attorneys' fees) and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending, or completed action or suit by or in the right of the Company, unless
the director or officer is found liable to the Company
II-1
<PAGE> 51
and an appropriate court does not determine that he or she is nevertheless
fairly and reasonably entitled to indemnification.
The Act requires indemnification for expenses to the extent that a director or
officer is successful on the merits in defending against any such action, suit
or proceeding, and otherwise requires in general that the indemnification
provided for in (i) and (ii) above be made only on a determination by (a) a
majority vote of a quorum of the Board of Directors who were not parties or
threatened to be made parties to the action, suit or proceeding, (b) if a
quorum cannot be obtained, by a majority vote of a committee duly designated
by the Board and consisting solely of two or more directors not at the time
parties or threatened to be made parties to the action, suit or proceeding, (c)
by independent legal counsel, (d) by all independent directors who are not
parties or threatened to be made parties to the action, suit or proceeding or
(e) by the shareholders (but shares held by directors or officers who are
parties or are threatened to be made parties may not be voted). In certain
circumstances, the Act further permits advances to cover such expenses before a
final determination that indemnification is permissible, upon receipt of a
written affirmation by the director or officer of their good-faith belief that
they have met the applicable standard of conduct set forth in the Act, receipt
of a written undertaking by or on behalf of the director or officer to repay
such amounts unless it shall ultimately be determined that they are entitled
to indemnification and a determination that the facts then known to those making
the advance would not preclude indemnification.
Indemnification under the Act is not exclusive of other rights to
indemnification to which a person may be entitled under the Company's Articles
of Incorporation, Bylaws, or a contractual agreement. The Act permits the
Company to purchase insurance on behalf of its directors and officers against
liabilities arising out of their positions with the Company whether or not such
liabilities would be within the foregoing indemnification provisions.
BYLAWS
Under the Company's Bylaws, the Company is required to indemnify any
person who was or is a party or is threatened to be made a party to or called
as a witness in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company, a "derivative action") and
any appeal thereof by reason of the fact that such person is, was or agreed to
become a director or officer of the Company,
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<PAGE> 52
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person was successful
in defending such action, suit or proceeding, or otherwise if such person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the Company or its shareholders, and,
with respect to any criminal action or proceeding had no reasonable cause to
believe was unlawful. A similar standard of care is applicable in the case
of derivative actions, except the indemnification extends only to expenses
(including actual and reasonable attorneys' fees) and amounts paid in
settlement incurred in connection with such an action and, where the person is
found to be liable to the Company, only if and to the extent that the court in
which such action was brought determines that such person is fairly and
reasonably entitled to such indemnity and then only for expenses which the
court considers proper.
The Company's Bylaws provide that the Company shall pay for the
expenses incurred by an indemnified director or officer in defending the
proceedings specified above, in advance of their final disposition, provided
that if required by the Act, the person furnishes the Company with an
undertaking to reimburse the Company if it is ultimately determined that
such person is not entitled to indemnification. The Company shall provide
indemnification to any person who is or was serving at the request of the
Company as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise to the same
degree as the foregoing indemnification of directors and officers. In
addition, the Company may purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Company (or is serving or
was serving at the request of the Company in a position and at an entity listed
in the preceding sentence) against any liability asserted against and incurred
by such person in such capacity, or arising out of the person's status as such
whether or not the Company would have the power or the obligation to indemnify
such person against such liability under the provisions of the Company's Bylaws.
ITEM 16. EXHIBITS
* 1-1 Form of Underwriting Agreement relating to preferred stock.
- ---------------
* Previously filed.
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<PAGE> 53
* 1-2 Form of Underwriting Agreement relating to common stock.
* 1-3 Form of Underwriting Agreement relating to debt securities.
* 4-1 The Company's Second Restated Articles of Incorporation, as amended
(filed as Exhibit 3.1 to Company's Form 10-Q for the quarter ended
September 30, 1992).
* 4-2 The Company's Bylaws, as amended (filed as Exhibit 3.2 to the
Company's Form 10-K for the year ended December 31, 1991).
* 4-3 Rights Agreement ("Rights Agreement") between the Company and
National Bank of Detroit as Rights Agent (filed as Exhibit 1 to the
Company's Form 8-A Registration Statement dated November 7, 1988).
* 4-4 Amendments dated July 25, 1990, to Rights Agreement (filed as
Exhibit 4.5 to the 1990 Second Quarter 10-Q).
* 4-5 Amendment Number Two dated as of September 23, 1992 to Rights
Agreement (filed as Exhibit 4-4 to the 1992 10-K).
* 4-7 Form of Senior Indenture.
* 4-8 Form of Subordinated Indenture.
* 4-9 Form of Deposit Agreement, including form of Depositary Receipt for
Depositary Shares.
* 4-10 Agreement of Purchase and Sale dated as of September 15, 1993 between
Federal-Mogul Corporation and SPX Corporation and certain of its
subsidiaries (filed as Exhibit 2.1 to a Form 8K dated November 10,
1993).
** 4-11 Revolving Credit and Competitive Advance Facility Agreement, dated
as of June 30, 1994, among the Company, various banks and Chemical
Bank, as Administrative Agent.
** 5-1 Opinion of George N. Bashara, Jr.
** 5-2 Opinion of Wachtell, Lipton, Rosen & Katz.
* 12-1 Computation of Ratio of Earnings to Fixed Charges.
- ---------------
* Previously filed.
** Filed herewith.
II-4
<PAGE> 54
* 12-2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
** 23-1 Consent of Ernst & Young, independent auditors.
** 23-2 Consent of Arthur Andersen & Co., independent public accountants.
** 23-3 Consent of George N. Bashara, Jr. (included in Exhibit 5-1).
** 23-4 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5-2).
** 24-1 Power of Attorney is included on page II-9.
* 25-1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Trustee for Senior Indenture.
* 25-2 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 or Trustee for Subordinated Indenture.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
A. to file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any fact or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in the
registration statement;
- ---------------
* Previously filed.
** Filed herewith.
II-5
<PAGE> 55
provided, however, that the undertakings set forth in the paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
B. that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. to supplement the prospectus, after the expiration of the
subscription period, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period, the amount of
unsubscribed securities to be purchased by the underwriters, and the terms of
any subsequent reoffering thereof. If any public offering by the underwriters
is to be made on terms differing from those set forth on the cover page of the
prospectus, a post-effective amendment will be filed to set forth the terms of
such offering.
D. to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
E. that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
F. that, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is,
II-6
<PAGE> 56
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act
and will be governed by the final adjudication of such issue.
G. that, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
H. that, for purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
I. to file an application for the purposes of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of such Act.
II-7
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Southfield, Michigan on August 3, 1994.
FEDERAL-MOGUL CORPORATION
By: /s/ Martin E. Welch III
------------------------------
Martin E. Welch III
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons of the
Registrant in the capacities and dates indicated.
<TABLE>
<S> <C> <C>
/s/ *
---------------------- Chairman of the Board August 3, 1994
Dennis J. Gormley and Chief Executive
Officer and Director
(Principal Executive
Officer)
/s/ *
---------------------- Senior Vice President August 3, 1994
Martin E. Welch III and Chief Financial
Officer (Principal
Financial Officer)
/s/ *
---------------------- Vice President and August 3, 1994
James B. Carano Controller (Principal
Accounting Officer)
/s/ *
---------------------- Director August 3, 1994
John J. Fannon
</TABLE>
II-8
<PAGE> 58
<TABLE>
<S> <C> <C>
*
--------------------------- Director August 3, 1994
Roderick M. Hills
*
--------------------------- Director August 3, 1994
Antonio Madero
*
--------------------------- Director August 3, 1994
Walter J. McCarthy, Jr.
*
--------------------------- Director August 3, 1994
Robert S. Miller, Jr.
*
--------------------------- Director August 3, 1994
John C. Pope
*
----------------------------- Director August 3, 1994
Dr. Hugo Michael Sekyra
* By:/s/ George N. Bashara, Jr.
------------------------- August 3, 1994
George N. Bashara, Jr.
Attorney-in-fact
</TABLE>
II-9
<PAGE> 59
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
* 1-1 Form of Underwriting Agreement relating to preferred stock.
* 1-2 Form of Underwriting Agreement relating to common stock.
* 1-3 Form of Underwriting Agreement relating to debt securities.
* 4-1 The Company's Second Restated Articles of Incorporation, as amended
(filed as Exhibit 3.1 to Company's Form 10-Q for the quarter ended
September 30, 1992).
* 4-2 The Company's Bylaws, as amended (filed as Exhibit 3.2 to the
Company's Form 10-K for the year ended December 31, 1991).
* 4-3 Rights Agreement ("Rights Agreement") between the Company and
National Bank of Detroit as Rights Agent (filed as Exhibit 1 to the
Company's Form 8-A Registration Statement dated November 7, 1988).
* 4-4 Amendments dated July 25, 1990, to Rights Agreement (filed as
Exhibit 4.5 to the 1990 Second Quarter 10-Q).
* 4-5 Amendment Number Two dated as of September 23, 1992 to Rights
Agreement (filed as Exhibit 4-4 to the 1992 10-K).
* 4-7 Form of Senior Indenture.
* 4-8 Form of Subordinated Indenture.
* 4-9 Form of Deposit Agreement, including form of Depositary Receipt for
Depositary Shares.
* 4-10 Agreement of Purchase and Sale dated as of September 15, 1993 between
Federal-Mogul Corporation and SPX Corporation and certain of its
subsidiaries (filed as Exhibit 2.1 to a Form 8K dated November 10,
1993).
** 4-11 Revolving Credit and Competitive Advance Facility Agreement, dated
as of June 30, 1994, among the Company, various banks and Chemical
Bank, as Administrative Agent.
** 5-1 Opinion of George N. Bashara, Jr.
** 5-2 Opinion of Wachtell, Lipton, Rosen & Katz.
* 12-1 Computation of Ratio of Earnings to Fixed Charges.
* 12-2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
** 23-1 Consent of Ernst & Young, independent auditors.
** 23-2 Consent of Arthur Andersen & Co., independent public accountants.
** 23-3 Consent of George N. Bashara, Jr. (included in Exhibit 5-1).
** 23-4 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5-2).
** 24-1 Power of Attorney is included on page II-9.
* 25-1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Trustee for Senior Indenture.
* 25-2 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 or Trustee for Subordinated Indenture.
- ---------------
* Previously filed.
** Filed herewith.
<PAGE> 1
EXHIBIT 4.11
REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY AGREEMENT, dated as
of June 30, 1994, among FEDERAL-MOGUL CORPORATION, a Michigan corporation (the
"Borrower"), the several banks and other financial institutions from time to
time parties to this Agreement (the "Lenders"), CHEMICAL BANK, a New York
banking corporation, as administrative agent for the Lenders hereunder (in such
capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent"), and COMERICA BANK, CONTINENTAL BANK, NBD
BANK, N.A. and THE BANK OF NEW YORK, as co-agents (together, the "Co-Agents").
The parties hereto hereby agree as follows:
SECTION I. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Accumulated Funding Deficiency": any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA.
"Administrative Agent": as defined in the preamble hereof.
"Affected Lender": as defined in subsection 2.21.
"Affiliate": of any Person, shall mean any Person that, directly or
indirectly, controls or is controlled by or is under common control with
such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise.
"Agreement": this Revolving Credit and Competitive Advance Facility
Agreement, as amended, supplemented or otherwise modified from time to
time.
"Applicable LIBO Rate": in respect of any CAF Advance requested
pursuant to a LIBO Rate CAF Advance Request, the London interbank offered
rate for deposits in Dollars for the period commencing on the date of such
CAF Advance and ending on the maturity date thereof which appears on
Telerate Page 3750 as of 11:00 A.M., London time, two Working Days prior to
the beginning of such period.
"Available Commitment": at a particular time, an amount equal to the
difference between (a) the amount of the Commitments at such time and (b)
the aggregate unpaid principal amount at such time of all Loans.
<PAGE> 2
2
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause
(b) of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Base Rate.
"Borrower": as defined in the preamble hereof.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3 or subsection 2.5(a) as a date on which the Borrower
requests the Lenders to make Revolving Credit Loans or CAF Advances, as the
case may be, hereunder.
"Business": as defined in subsection 3.16(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"CAF Advance": each CAF Advance made pursuant to subsection 2.4.
"CAF Advance Agent": as defined in the preamble hereof.
"CAF Advance Availability Period": the period from and including the
Closing Date until the date which is 14 days prior to the Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower of its
acceptance of CAF Advance Offers, which CAF Advance Confirmation shall be
substantially in the form of Exhibit E and shall be delivered to the CAF
Advance Agent by telecopy.
"CAF Advance Interest Payment Date": as to each CAF Advance, each
interest payment date specified by the
<PAGE> 3
3
Borrower for such CAF Advance in the related CAF Advance Request.
"CAF Advance Lenders": Lenders from time to time designated by the
Borrower, in consultation with the CAF Advance Agent, as CAF Advance
Lenders as provided in subsection 2.4.
"CAF Advance Maturity Date": as to any CAF Advance, the date specified
by the Borrower pursuant to paragraph 2.5(d)(ii) in its acceptance of the
related CAF Advance Offer.
"CAF Advance Note": as defined in subsection 2.7 (collectively, the
"CAF Advance Notes").
"CAF Advance Offer": each offer by a CAF Advance Lender to make CAF
Advances pursuant to a CAF Advance Request, which CAF Advance Offer shall
contain the information specified in Exhibit D and shall be delivered to
the CAF Advance Agent by telephone, immediately confirmed by telecopy.
"CAF Advance Request": each request by the Borrower for CAF Advance
Lenders to submit bids to make CAF Advances, which request shall contain
the information in respect of such requested CAF Advances specified in
Exhibit C and shall be delivered to the Agent in writing, by telecopy, or
by telephone, immediately confirmed by telecopy.
"Capital Expenditures": all expenditures of the Borrower and its
Subsidiaries on a consolidated basis for any fixed assets or improvements,
or for replacements, substitutions or additions thereto, which have a
useful life of more than one year, including, but not limited to, the
direct or indirect acquisition of such assets by way of increased product
or service charges, offset items or otherwise, including all expenditures
under capital leases, all determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Flow Coverage": for any period, the ratio of (a) the sum of
EBITDA less Capital Expenditures, divided by (b) Interest Expenses plus
dividends paid on the Borrower's preferred stock, in each case determined
for such period.
"Change of Control": (a) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the
<PAGE> 4
4
Securities and Exchange Act of 1934, as amended, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) of more than 50% of the then outstanding voting
stock of the Borrower other than in a transaction having the approval of
the board of directors of the Borrower at least a majority of which members
are Continuing Directors or (b) Continuing Directors shall cease to
constitute at least a majority of the directors constituting the board of
directors of the Borrower.
"Chemical": Chemical Bank.
"Closing Date": the date on which the conditions precedent set forth
in subsection 4.1 have been satisfied (or compliance therewith shall have
been waived by the Lenders).
"Co-Agents": as defined in the preamble hereof.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment": as to any Lender, the obligation of such Lender to make
Revolving Credit Loans to the Borrower hereunder in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule I, as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Loans then outstanding constitutes of the aggregate principal
amount of the Loans then outstanding).
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate of a Responsible Officer in
the form of Exhibit F delivered by the Borrower to each Lender pursuant to
subsection 5.2(a).
<PAGE> 5
5
"Consolidated Tangible Net Worth": at any date, the total of
stockholders equity (including, but not limited to, Capital Stock,
additional paid-in capital and retained earnings after deducting treasury
stock and unearned compensation) less Intangible Assets (net of accumulated
amortization) of the Borrower and its Subsidiaries on a consolidated basis
as at such date determined in accordance with GAAP; provided, that
Consolidated Tangible Net Worth shall not reflect any additions or
deductions resulting from foreign currency translation gains or losses, the
initial implementation of FAS 109 (including any adjustments to goodwill)
or the application from time to time of FAS 106.
"Consolidated Total Liabilities": all liabilities of the Borrower and
its Subsidiaries on a consolidated basis as determined in accordance with
GAAP, including, without limitation, all Indebtedness; provided, that
Consolidated Total Liabilities shall not include any amount resulting from
the initial implementation of FAS 109 or the application from time to time
of FAS 106.
"Continuing Directors": the collective reference to (a) all members of
the board of directors of the Borrower who have held office continually
since the date hereof, and (b) all members of the board of directors of the
Borrower who assumed office after the date hereof and whose nomination for
election by the Borrower's shareholders was approved by a vote of at least
50% of the Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking by which such Person or any of its property is bound.
"Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"EBITDA": for any period, the sum of (a) the consolidated net income
(or loss) of the Borrower and its Subsidiaries for such period before
deduction of income and franchise taxes and depreciation, determined in
conformity with GAAP, but excluding the income of any Person (other than
Subsidiaries of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, until such income has been received
by the Borrower or a Subsidiary in a cash distribution, plus (b) any
Interest Expenses reported during such period, plus (c) amortization of
Intangible Assets deducted in determining net income for
<PAGE> 6
6
such period plus (d) any amount deducted in determining net income for
such period as a result of the application of FAS 106.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves) under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
average (rounded upward to the nearest 1/16th of 1%) of the respective
rates notified to the Administrative Agent by each of the Reference Lenders
as the rate at which such Reference Lender is offered Dollar deposits at or
about 11:00 A.M., London time, two Working Days prior to the beginning of
such Interest Period in the London interbank market for delivery on the
first day of such Interest Period for the number of days comprised therein
and in an amount comparable to the amount of its Eurodollar Loan to be
outstanding during such Interest Period.
"Eurodollar Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Margin": for each day and each Eurodollar Loan, the rate
per annum set forth below opposite the applicable S&P Bond Rating and
Moody's Bond Rating:
<PAGE> 7
7
Bond Rating Eurodollar
(S&P/Moody's) Level Margin
---------------------- -------- ----------
A-/A3 or better I .2750%
BBB+/Baa1 or better II .2750%
BBB/Baa2 or better III .2625%
BBB-/Baa3 or better IV .3000%
BB+/Ba1 or below V .5000%;
provided that if the ratings of such rating agencies do not fall within
the same Level, the Eurodollar Margin applicable to such day will be (a) if
the lower rating is one Level lower than the higher rating, the rate
opposite such lower Level, and (b) if the lower rating is two or more
Levels lower than the higher rating, the rate opposite the next higher
Level from such lower Level; provided, further, that in the event a rating
is not available from either rating agency, such rating agency will be
deemed to have assigned its lowest rating.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7, provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Existing Plan": any Plan existing on the date of this Agreement
without giving effect to any amendment thereof made after the date of this
Agreement.
"FAS 106": Statement of Financial Accounting Standards No. 106 as
published by the Financial Accounting Standards Board.
"FAS 109": Statement of Financial Accounting Standards No. 109 as
published by the Financial Accounting Standards Board.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next
<PAGE> 8
8
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"Fixed Rate CAF Advance": any CAF Advance made pursuant to a Fixed
Rate CAF Advance Request.
"Fixed Rate CAF Advance Request": any CAF Advance Request requesting
the CAF Advance Lenders to offer to make CAF Advances at a fixed rate (as
opposed to a rate composed of the Applicable LIBO Rate plus (or minus) a
margin).
"Funded Debt": all Indebtedness of the Borrower and its Subsidiaries
on a consolidated basis maturing one year or more after incurrence thereof.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time; provided, that if at any time after
the Closing Date there shall occur any change in respect of such generally
accepted accounting principles from those used in the preparation of the
audited financial statements referred to in subsection 3.1 in a manner
which would have a material effect on any matter which is material to
Section 6, the Borrower and the Administrative Agent will, within five
Business Days of a notice from the Administrative Agent or the Borrower, as
the case may be, to that effect, commence, and continue in good faith,
negotiations with a view towards making appropriate amendments to the
provisions hereof acceptable to the Required Lenders, to reflect as nearly
as possible the effect of the provisions of Section 6 as in effect on the
date hereof.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty": any guaranty by any Person of Indebtedness or other
obligations of any other Person that is not a consolidated subsidiary of
such Person or any assurance with respect to the financial condition of any
other Person that is not a consolidated subsidiary of such Person
(including, without limitation, any purchase or repurchase agreement, any
indemnity or any keep-well, take-or-pay, through-put or other arrangement
having the effect of assuring or holding harmless any third Person against
loss with respect to any Indebtedness or other obligation of such other
Person) except endorsements of negotiable instruments for collection in the
ordinary course of business.
<PAGE> 9
9
"Heavy Wall Bearing Business": the operations of the Borrower and
certain Subsidiaries engaged in the manufacture and sale of heavy wall
bearings and related products including those conducted by Braunschweiger
Huttenwerk GmbH, an indirect, wholly-owned Subsidiary of the Borrower,
Glyco do Brazil Industria Metalurgica Ltda., an indirect wholly-owned
Subsidiary of the Borrower, and by a manufacturing facility in Mooresville,
Indiana.
"Indebtedness": any (a) indebtedness for borrowed money or for the
deferred purchase price of property or services, (b) obligations under
leases which, in accordance with GAAP, are to be recorded as capital
leases, (c) obligations which are evidenced by notes, acceptances or other
instruments, (d) net liabilities under interest rate swap, foreign currency
swap, commodity swap, exchange or cap agreements, (e) obligations, whether
or not assumed, secured by Liens or payable out of proceeds or production
from property now or hereafter owned or acquired and (f) any withdrawal
obligation to a Multiemployer Plan; provided, however, that the term
"Indebtedness" shall not include short-term obligations payable to
suppliers incurred in the ordinary course of business.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intangible Assets": assets having no physical existence and that, in
conformity with GAAP, should be classified as intangible assets, including,
without limitation, patents, patent rights, trademarks, trade names,
copyrights, franchises, licenses, customer lists, organizational expenses
and goodwill (the value of the goodwill attributable to the purchase of
Glyco AG shall be determined using a constant Deutsche Mark to Dollar
exchange rate equal to 1.6835 to 1.00).
"Intellectual Property": as defined in subsection 3.9.
"Interest Expenses": with respect to any period, the aggregate of all
interest expense reported by the Borrower and its Subsidiaries in
accordance with GAAP during such period. As used in this definition, the
term "interest" shall include, without limitation, all interest, fees and
costs payable with respect to the obligations under this Agreement (other
than fees and costs which may be capitalized as transaction costs in
accordance with GAAP), any discount in respect of sales of accounts
receivable and/or related contract rights and the interest portion of
capitalized lease payments during such period, all as determined in
accordance with GAAP.
<PAGE> 10
10
"Interest Payment Date": (a) as to any Base Rate Loan, the last
Business Day of each March, June, September and December to occur while
such Loan is outstanding, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period, and
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, the day which is three months after the first day of such Interest
Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Working Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, the foregoing provisions are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Working Day, such Interest
Period shall be extended to the next succeeding Working Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end
on the immediately preceding Working Day;
(ii) any Interest Period that would otherwise extend beyond
the date final payment is due on the Loans shall end on such date of
final payment;
(iii) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Working Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Working Day of a calendar month; and
<PAGE> 11
11
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Lenders": as defined in the preamble hereof.
"LIBO Rate CAF Advance": any CAF Advance made pursuant to a LIBO Rate
CAF Advance Request.
"LIBO Rate CAF Advance Request": any CAF Advance Request requesting
the CAF Advance Lenders to offer to make CAF Advances at an interest rate
equal to the Applicable LIBO Rate plus (or minus) a margin.
"Lien": (i) any judgment lien or execution, attachment, levy,
distraint or similar legal process and (ii) any mortgage, pledge,
hypothecation, assignment, lien, charge, encumbrance or other security
interest of any kind or nature whatsoever (including, without limitation,
the interest of the lessor under any capital lease and the interest of the
seller under any conditional sale or other title retention agreement),
which secures or purports to secure any Indebtedness or other indebtedness
or obligations.
"Loan": any Revolving Credit Loan or CAF Advance made by any Lender
pursuant to this Agreement (collectively, the "Loans").
"Loan Documents": this Agreement and the Notes.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower to perform its obligations under this Agreement or
any of the Notes or (c) the validity or enforceability of this Agreement or
any of the Notes or the rights or remedies of the Administrative Agent or
the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $25,000,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
<PAGE> 12
12
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Minority Interest": the minority interest of Persons other than the
Borrower and its Subsidiaries in the Borrower's Subsidiaries as shown from
time to time in the most recent consolidated balance sheet of the Borrower
and its Subsidiaries.
"Moody's Bond Rating": for any day, the rating of the Borrower's
senior long-term unsecured debt by Moody's Investor Service, Inc. in effect
at 11:00 A.M., New York City time, on such day.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Note": any Revolving Credit Note or CAF Advance Note (collectively,
the "Notes").
"Participants": as defined in subsection 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor corporation.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at any particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Precision Forged": the Precision Forged Products Division of the
Borrower.
"Prime Rate": the rate of interest per annum publicly announced from
time to time by Chemical as its prime rate in effect at its principal
office in New York City (each change in the Prime Rate to be effective on
the date such change is publicly announced). The Prime Rate is not
intended to be the lowest rate of interest charged by Chemical in
connection with extensions of credit to debtors.
"Process Agent's Consent": shall mean the written consent of C T
Corporation System to its appointment by the Borrower pursuant to this
Agreement as agent to receive and accept service of certain legal process
on behalf of the
<PAGE> 13
13
Borrower, such consent to be in form and substance satisfactory to the
Administrative Agent.
"Prohibited Transaction": any "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code.
"Properties": as defined in subsection 3.16(a).
"Purchasing Lenders": as defined in subsection 9.6(c).
"Reference Lenders": Chemical and Comerica Bank.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Register": as defined in subsection 9.6(d).
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replacement Lender": a bank or financial institution (other than a
subsidiary of the Borrower) acceptable to the Administrative Agent.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
"Required Lenders": (a) at any time that Commitments are outstanding,
Lenders the Commitment Percentages of which aggregate at least 66-2/3% and
(b) at any time that Commitments have been terminated, Lenders holding at
least 66-2/3% of the aggregate unpaid principal amount of the Notes.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president, the
chief financial officer, the treasurer or the controller of the Borrower.
"Revolving Credit Loans": as defined in subsection 2.1(a).
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"Revolving Credit Note": as defined in subsection 2.2 (collectively,
the "Revolving Credit Notes").
"S&P Bond Rating": for any day, the rating of the Borrower's senior
long-term unsecured debt by Standard & Poor's Ratings Group in effect at
11:00 A.M., New York City time, on such day.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Subsidiary": at any particular time, any Person which could be
included as a consolidated subsidiary of the Borrower in the financial
statements prepared and filed with the Borrower's annual reports on Form
10-K under the Securities Exchange Act of 1934, as amended, if such
financial statements were prepared at, and as of, such time. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of the
Borrower.
"Taxes": as defined in subsection 2.19(a).
"Termination Date": June 29, 1998 or such earlier date on which the
Commitments shall terminate as provided herein.
"Tranche": the collective reference to Eurodollar Loans the Interest
Periods with respect to all of which begin on the same date and end on the
same later date.
"Transferee": as defined in subsection 9.6(f).
"Transfer Effective Date": as defined in subsection 9.6(c).
"Type": as to any Revolving Credit Loan, its nature as a Base Rate
Loan or a Eurodollar Loan.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London, England.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
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15
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION II. AMOUNT AND TERMS OF COMMITMENTS AND CAF ADVANCE FACILITY
2.1 Revolving Credit Commitments; the Revolving Credit Loans.
(a) Subject to the terms and conditions hereof, each Lender severally agrees
to make revolving credit loans ("Revolving Credit Loans") to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the amount of such Lender's Commitment;
provided that the aggregate amount of the Loans outstanding shall not at any
time exceed the aggregate amount of the Commitments. During the Commitment
Period the Borrower may use the Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be
(i) Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with subsections 2.3 and 2.10, provided that no Revolving Credit
Loan shall be made as a Eurodollar Loan after the day that is one month prior
to the Termination Date.
2.2 Revolving Credit Notes. The Revolving Credit Loans made
by each Lender shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit A, with appropriate insertions as to
payee, date and principal amount (a "Revolving Credit Note"), payable to the
order of such Lender and in a principal amount equal to the lesser of (a) the
amount of the initial Commitment of such Lender and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender. Each
Lender is hereby authorized to record the date, Type and amount of each
Revolving Credit Loan made by such Lender, each continuation thereof, each
conversion of all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof and, in the case of Eurodollar
Loans, the length of each Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (i) be dated the
Closing Date, (ii) be stated to mature on the
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Termination Date and (iii) provide for the payment of interest in accordance
with subsection 2.13.
2.3 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Commitments during the Commitment Period on any Business
Day, provided that the Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
10:00 A.M., New York City time, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans or (b) on the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base
Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely
or partly of Eurodollar Loans, the respective amounts of such Type of Revolving
Credit Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Commitments shall be in an amount equal to
(A) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or,
if the then Available Commitments are less than $1,000,000, such lesser amount)
and (B) in the case of Eurodollar Loans, $10,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Lender thereof.
Each Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
office of the Administrative Agent specified in subsection 9.2 prior to 11:00
A.M., New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting
the account of the Borrower on the books of such office with the aggregate of
the amounts made available to the Administrative Agent by the Lenders and in
like funds as received by the Administrative Agent.
2.4 CAF Advances. Subject to the terms and conditions of
this Agreement, the Borrower may borrow CAF Advances from time to time during
the CAF Advance Availability Period on any Business Day (in the case of CAF
Advances made pursuant to a Fixed Rate CAF Advance Request) or any Working Day
(in the case of CAF Advances made pursuant to a LIBO Rate CAF Advance Request).
The Borrower shall, in consultation with the CAF Advance Agent, designate
Lenders from time to time as CAF Advance Lenders by written notice to the CAF
Advance Agent. The CAF Advance Agent shall transmit each such notice of
designation promptly to each designated CAF Advance Lender. CAF Advances shall
be borrowed in amounts such that the aggregate amount of Loans outstanding at
any time shall not exceed the aggregate amount of the Commitments at such time.
Within the limits and on the conditions hereinafter set forth with respect to
CAF Advances, the Borrower from time to time may borrow, repay and reborrow CAF
Advances.
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2.5 Procedure for CAF Advance Borrowing. (a) The Borrower
shall request CAF Advances by delivering a CAF Advance Request to the CAF
Advance Agent, not later than 12:00 Noon (New York City time) four Working Days
prior to the proposed Borrowing Date (in the case of a LIBO Rate CAF Advance
Request), and not later than 10:00 A.M. (New York City time) one Business Day
prior to the proposed Borrowing Date (in the case of a Fixed Rate CAF Advance
Request). Each CAF Advance Request may solicit bids for CAF Advances in an
aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000
in excess thereof and having not more than three alternative maturity dates.
The maturity date for each CAF Advance shall be not less than 14 days nor more
than 180 days after the Borrowing Date therefor (and in any event shall be not
later than the Termination Date); provided that each LIBO Rate CAF Advance
shall mature one, two, three or six months after the Borrowing Date therefor.
The CAF Advance Agent shall notify each CAF Advance Lender promptly by telecopy
of the contents of each CAF Advance Request received by the CAF Advance Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF
Advance Request, each CAF Advance Lender may elect, in its sole discretion, to
offer irrevocably to make one or more CAF Advances at the Applicable LIBO Rate
plus (or minus) a margin determined by such CAF Advance Lender in its sole
discretion for each such CAF Advance. Any such irrevocable offer shall be made
by delivering a CAF Advance Offer to the CAF Advance Agent, before 10:30 A.M.
(New York City time) on the day that is three Working Days before the proposed
Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each maturity date
and the aggregate maximum amount of CAF Advances for all maturity
dates which such CAF Advance Lender would be willing to make (which
amounts may, subject to subsection 2.4, exceed such CAF Advance
Lender's Commitment); and
(ii) the margin above or below the Applicable LIBO Rate at
which such CAF Advance Lender is willing to make each such CAF
Advance.
The CAF Advance Agent shall advise the Borrower before 11:00 A.M. (New York
City time) on the date which is three Working Days before the proposed
Borrowing Date of the contents of each such CAF Advance Offer received by it.
If the CAF Advance Agent, in its capacity as a CAF Advance Lender, shall elect,
in its sole discretion, to make any such CAF Advance Offer, it shall advise the
Borrower of the contents of its CAF Advance Offer before 10:15 A.M. (New York
City time) on the date which is three Working Days before the proposed
Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents
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of such CAF Advance Request, each CAF Advance Lender may elect, in its sole
discretion, to offer irrevocably to make one or more CAF Advances at a rate of
interest determined by such CAF Advance Lender in its sole discretion for each
such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF
Advance Offer to the CAF Advance Agent before 9:30 A.M. (New York City time) on
the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each maturity
date, and the aggregate maximum amount for all maturity dates, which
such CAF Advance Lender would be willing to make (which amounts may,
subject to subsection 2.4, exceed such CAF Advance Lender's
Commitment); and
(ii) the rate of interest at which such CAF Advance Lender is
willing to make each such CAF Advance.
The CAF Advance Agent shall advise the Borrower before 10:00 A.M. (New York
City time) on the proposed Borrowing Date of the contents of each such CAF
Advance Offer received by it. If the CAF Advance Agent, in its capacity as a
CAF Advance Lender, shall elect, in its sole discretion, to make any such CAF
Advance Offer, it shall advise the Borrower of the contents of its CAF Advance
Offer before 9:15 A.M. (New York City time) on the proposed Borrowing Date.
(d) Before 11:30 A.M. (New York City time) three Working Days
before the proposed Borrowing Date (in the case of CAF Advances requested by a
LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time) on
the proposed Borrowing Date (in the case of CAF Advances requested by a Fixed
Rate CAF Advance Request), the Borrower, in its absolute discretion, shall:
(i) cancel such CAF Advance Request by giving the CAF Advance
Agent telephone notice to that effect, or
(ii) by giving telephone notice to the CAF Advance Agent
(immediately confirmed by delivery to the CAF Advance Agent of a CAF
Advance Confirmation in writing or by telecopy) (A) subject to the
provisions of subsection 2.5(e), accept one or more of the offers made
by any CAF Advance Lender or CAF Advance Lenders pursuant to
subsection 2.5(b) or subsection 2.5(c), as the case may be, of the
amount of CAF Advances for each relevant maturity date and (B) reject
any remaining offers made by CAF Advance Lenders pursuant to
subsection 2.5(b) or subsection 2.5(c), as the case may be.
(e) The Borrower's acceptance of CAF Advances in response to
any CAF Advance Request shall be subject to the following limitations:
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(i) the amount of CAF Advances accepted for each maturity
date specified by any CAF Advance Lender in its CAF Advance Offer
shall not exceed the maximum amount for such maturity date specified
in such CAF Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all
maturity dates specified by any CAF Advance Lender in its CAF Advance
Offer shall not exceed the aggregate maximum amount specified in such
CAF Advance Offer for all such maturity dates;
(iii) the Borrower may not accept offers for CAF Advances for
any maturity date in an aggregate principal amount in excess of the
maximum principal amount requested in the related CAF Advance Request;
and
(iv) if the Borrower accepts any of such offers, it must
accept offers based solely upon pricing for such relevant maturity
date and upon no other criteria whatsoever and if two or more CAF
Advance Lenders submit offers for any maturity date at identical
pricing and the Borrower accepts any of such offers but does not wish
to (or by reason of the limitations set forth in subsection 2.4 or in
clause 2.5(e)(iii) of this proviso, cannot) borrow the total amount
offered by such CAF Advance Lenders with such identical pricing, the
Borrower shall accept offers from all of such CAF Advance Lenders in
amounts allocated among them pro rata according to the amounts offered
by such CAF Advance Lenders (or as nearly pro rata as shall be
practicable after giving effect to the requirement that CAF Advances
made by a CAF Advance Lender on a Borrowing Date for each relevant
maturity date shall be in a principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof; provided that if
the number of CAF Advance Lenders that submit offers for any maturity
date at identical pricing is such that, after the Borrower accepts
such offers pro rata in accordance with the foregoing, the CAF Advance
to be made by such CAF Advance Lenders would be less than $5,000,000
principal amount, the number of such CAF Advance Lenders shall be
reduced by the CAF Advance Agent by lot until the CAF Advances to be
made by such remaining CAF Advance Lenders would be in a principal
amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof).
(f) If the Borrower notifies the CAF Advance Agent that a CAF
Advance Request is cancelled pursuant to subsection 2.5(d)(i), the CAF Advance
Agent shall give prompt telephone notice thereof to the CAF Advance Lenders.
(g) If the Borrower accepts pursuant to paragraph 2.5(d)(ii)
one or more of the offers made by any CAF Advance Lender or CAF Advance
Lenders, the CAF Advance Agent promptly shall notify each CAF Advance Lender
which has made such a CAF Advance Offer of (i) the aggregate amount of such CAF
Advances to
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be made on such Borrowing Date for each maturity date and (ii) the acceptance
or rejection of any offers to make such CAF Advances made by such CAF Advance
Lender. Before 12:00 Noon (New York City time) on the Borrowing Date specified
in the applicable CAF Advance Request, each CAF Advance Lender whose CAF
Advance Offer has been accepted shall make available to the Administrative
Agent at its office set forth in subsection 9.2 the amount of CAF Advances to
be made by such CAF Advance Lender, in immediately available funds. The
Administrative Agent will make such funds available to the Borrower as soon as
practicable on such date at the Administrative Agent's aforesaid address. As
soon as practicable after each Borrowing Date, the CAF Advance Agent shall
notify each Lender of the aggregate amount of CAF Advances advanced on such
Borrowing Date and the respective maturity dates thereof.
2.6 CAF Advance Payments. (a) The Borrower shall repay to
the Administrative Agent for the account of each CAF Advance Lender which has
made a CAF Advance on the applicable CAF Advance Maturity Date the then unpaid
principal amount of such CAF Advance. The Borrower shall not have the right to
prepay any principal amount of any CAF Advance.
(b) The Borrower shall pay interest on the unpaid principal
amount of each CAF Advance from the Borrowing Date to applicable CAF Advance
Maturity Date at the rate of interest specified in the CAF Advance Offer
accepted by the Borrower in connection with such CAF Advance (calculated on the
basis of a 360-day year for actual days elapsed), payable on each applicable
CAF Advance Interest Payment Date.
(c) If all or a portion of the principal amount of any CAF
Advance shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Lender under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 2% above the
rate which would otherwise be applicable pursuant to the CAF Advance Note
evidencing such CAF Advance until the stated maturity date of such CAF Advance,
and for each day thereafter at a rate per annum which is 2% above the Base
Rate, in each case until paid in full (as well after as before judgment).
Interest accruing pursuant to this paragraph (c) shall be payable from time to
time on demand.
2.7 CAF Advance Notes. The CAF Advances made by each CAF
Advance Lender shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit B with appropriate insertions (a "CAF
Advance Note"), payable to the order of such CAF Advance Lender and
representing the obligation of the Borrower to pay the unpaid principal amount
of all CAF Advances made by such CAF Advance Lender, with interest on the
unpaid principal amount from time to time outstanding of each CAF Advance
evidenced thereby as prescribed in subsection 2.6(b).
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Each CAF Advance Lender is hereby authorized to record the date and amount of
each CAF Advance made by such CAF Advance Lender, the maturity date thereof,
the date and amount of each payment of principal thereof and the interest rate
with respect thereto on the schedule attached to and constituting part of its
CAF Advance Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, however,
that the failure to make any such recordation shall not affect the obligations
of the Borrower hereunder or under any CAF Advance Note. Each CAF Advance Note
shall be dated the Closing Date and each CAF Advance evidenced thereby shall
bear interest for the period from and including the Borrowing Date of such CAF
Advance on the unpaid principal amount thereof from time to time outstanding at
the applicable rate per annum determined as provided in, and such interest
shall be payable as specified in, subsection 2.6(b).
2.8 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee for the
period from and including the first day of the Commitment Period to the
Termination Date, computed at a variable rate on the average daily amount of
the Commitment of such Lender during the period for which payment is made,
which rate will vary according to the S&P Bond Rating and the Moody's Bond
Rating as follows:
Bond Rating Facility
(S&P/Moody's) Level Fee Rate
-------------------- ----- --------
A-/A3 or better I .1250%
BBB+/Baa1 or better II .1500%
BBB/Baa2 or better III .1875%
BBB-/Baa3 or better IV .2000%
BB+/Ba 1 or below V .2500%;
provided that if the ratings of such rating agencies do not fall within the
same Level, the rate applicable to such day will be (i) if the lower rating is
one Level lower than the higher rating, the rate opposite such lower Level, and
(ii) if the lower rating is two or more Levels lower than the higher rating,
the rate opposite the next higher Level from such lower Level, provided,
further, that in the event a rating is not available from either rating agency,
such rating agency will be deemed to have assigned its lowest rating. Such
facility fees shall be payable quarterly in arrears on the last day of each
March, June, September and December and on the Termination Date or such earlier
date on which the Commitments shall terminate as provided
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herein, commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative
Agent and the CAF Advance Agent the fees set forth in the letter, dated May 11,
1994, from Chemical Securities Inc. and Chemical to the Borrower.
2.9 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that if at any time as a result
of such termination or reduction of Commitments the aggregate principal amount
of the Loans then outstanding exceeds the Commitments, the Borrower shall
immediately repay the Loans by the amount equal to such excess. Any such
reduction shall be in an amount equal to $10,000,000 or a whole multiple
thereof and shall reduce permanently the Commitments then in effect.
2.10 Optional Prepayments. The Borrower may, at its option
at any time and from time to time, prepay the Revolving Credit Loans, in whole
or in part, without premium or penalty, upon at least two Business Days' notice
to the Administrative Agent specifying the date and amount of prepayment and
whether the payment is of Eurodollar Loans, Base Rate Loans or a combination
thereof and, if of a combination thereof, the amount allocable to each,
provided that each partial prepayment shall be in an aggregate amount equal to
$1,000,000 or a whole multiple thereof. Upon receipt of such notice, the
Administrative Agent shall promptly (on the same day) notify each Lender
thereof. Such notice shall be irrevocable, and the payment amount specified in
such notice shall be due and payable on the date specified, together with any
amounts payable pursuant to subsection 2.20 and, in the case of prepayments of
Eurodollar Loans only, accrued interest to such date on the amount prepaid.
2.11 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Working
Days' prior irrevocable notice of such election. Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans and Base Rate Loans may be converted as provided
herein, provided that (i) no Base Rate Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
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Administrative Agent has or the Required Lenders have determined that such a
conversion is not appropriate, (ii) any such conversion may only be made if,
after giving effect thereto, subsection 2.12 shall not have been contravened
and (iii) no Base Rate Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent (who shall promptly notify
each Lender thereof), in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Eurodollar Loans, provided that no
Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined that such a continuation is not appropriate, (ii) if,
after giving effect thereto, subsection 2.12 would be contravened or (iii)
after the date that is one month prior to the Termination Date and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Eurodollar Loans shall be automatically
converted to Base Rate Loans on the last day of such then expiring Interest
Period.
2.12 Minimum Amounts of Revolving Credit Loans. All
borrowings, conversions and continuations of Revolving Credit Loans hereunder
and all selections of Interest Periods hereunder shall be in such amounts and
be made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of the Revolving Credit Loans comprising each
Tranche shall be equal to $10,000,000 or a whole multiple of $1,000,000 in
excess thereof; provided, that, at any time one Tranche in a principal amount
which is less than $10,000,000 or not a whole multiple of $1,000,000 may be
outstanding.
2.13 Interest Rates and Payment Dates for Revolving Credit
Loans. (a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Eurodollar Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate.
(c) If all or a portion of (i) the principal amount of any
Revolving Credit Loan, (ii) any interest payable thereon or (iii) any fee or
other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest for each day from the date of such non-payment until paid in full at a
rate per annum which is 2% per annum plus the Base Rate for such day until such
amount is paid in full (as well after as before
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judgment), provided that if such overdue amount is of the principal amount of
any Eurodollar Loans and the due date therefor is other than the last day of
the Interest Period with respect thereto, such Eurodollar Loans shall bear
interest from the date that such principal amount was due to the last day of
such Interest Period at a rate per annum which is 2% per annum plus the rate
which would otherwise be applicable pursuant to paragraph (a) above and for
each day thereafter at 2% per annum plus the Base Rate for such day until such
amount is paid in full (as well after as before judgment).
(d) Interest on the Revolving Credit Loans shall be payable
in arrears on each Interest Payment Date and on the Termination Date, provided
that interest accruing pursuant to paragraph (c) of this subsection shall be
payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Interest in
respect of Base Rate Loans shall be calculated on the basis of a (i) 365-day
(or 366-day, as the case may be) year for the actual days elapsed when such
Base Rate Loans are based on the Prime Rate and (ii) a 360-day year for the
actual days elapsed when based on the Federal Funds Effective Rate. Interest
in respect of Eurodollar Loans and fees shall be calculated on the basis of a
360-day year for the actual days elapsed. The Administrative Agent shall as
soon as practicable notify the Borrower and the Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Revolving Credit
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate pursuant to
subsection 2.13(a).
(c) If any Reference Lender shall for any reason no longer
have a Commitment or any Loans, such Reference Lender shall thereupon cease to
be a Reference Lender, and if, as a result, there shall only be one Reference
Lender remaining, the Administrative Agent (after consultation with the
Borrower and the Lenders) shall, by notice to the Borrower and the Lenders,
designate another Lender as a Reference Lender so that there shall at all times
be at least two Reference Lenders.
(d) Each Reference Lender shall use its best efforts to
furnish quotations of rates to the Administrative Agent as
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contemplated hereby. If any of the Reference Lenders shall be unable or shall
otherwise fail to supply such rates to the Administrative Agent upon its
request, the rate of interest shall, subject to the provisions of subsection
2.15, be determined on the basis of the quotations of the remaining Reference
Lenders or Reference Lender.
2.15 Inability to Determine Interest Rate. (a) If prior to
the first day of any Interest Period:
(i) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(ii) the Administrative Agent shall have received notice
from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Revolving Credit
Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the Lenders as soon as practicable thereafter. If such notice
is given (A) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (B) any Base Rate Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (C) any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans shall be continued as such, nor shall the
Borrower have the right to convert Base Rate Loans to Eurodollar Loans.
(b) In the event that the CAF Advance Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining the
Applicable LIBO Rate with respect to a proposed CAF Advance to be made pursuant
to a LIBO Rate CAF Advance Request, the CAF Advance Agent shall forthwith give
notice of such determination to the Borrower and the CAF Advance Lenders at
least two Business Days prior to the proposed Borrowing Date, and such CAF
Advances shall not be made as LIBO Rate CAF Advances on such Borrowing Date.
Until any such notice has been withdrawn by the CAF Advance Agent, no further
LIBO Rate CAF Advance Requests shall be submitted by the Borrower.
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2.16 Pro Rata Treatment and Payments. (a) Each borrowing
(other than CAF Advances) by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any facility fee hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata according to
the respective Commitment Percentages of the Lenders. Each payment (including
each prepayment) by the Borrower on account of principal of and interest on the
Loans shall be made pro rata according to the respective amounts of principal
then due and owing to the Lenders with respect of the Loans. All payments
(including prepayments) to be made by the Borrower hereunder and under the
Notes, whether on account of principal, interest, fees or otherwise, shall be
made without set off or counterclaim and shall be made prior to 12:00 Noon, New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Administrative Agent's office specified in
subsection 9.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans or LIBO Rate CAF Advances) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan or a LIBO Rate CAF Advance
becomes due and payable on a day other than a Working Day, the maturity thereof
shall be extended to the next succeeding Working Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Working Day.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Lender's share
of such borrowing is not made available to the Administrative Agent by such
Lender within three Business Days of such Borrowing Date, the Administrative
Agent shall also be entitled to recover such amount with interest thereon at
the rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower.
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2.17 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled or, (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
2.20.
2.18 Requirements of Law. If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Eurodollar Loan or any
LIBO Rate CAF Advance made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for taxes covered
by subsection 2.19 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate or
Applicable LIBO Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or LIBO Rate CAF Advances or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Borrower, through the Administrative Agent, of the event by reason of which it
has
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become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under
this Agreement and the Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Administrative
Agent and each Lender, net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or such Lender, as the
case may be, as a result of a present or former connection between the
jurisdiction of the government or taxing authority imposing such tax and the
Administrative Agent or such Lender (excluding a connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or the
Notes) or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required to
be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder or under the Notes, the amounts so payable to the Administrative
Agent or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the Notes. Whenever any Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof agrees that prior to the date
any payment is required to be made to it hereunder it will deliver to the
Borrower and the Administrative Agent (i) two duly completed copies of United
States Internal
<PAGE> 29
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Revenue Service Form 1001 or 4224 or successor applicable form, as the case may
be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Lender also agrees to deliver to the Borrower and
the Administrative Agent two further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower or the Administrative Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Administrative Agent. Such Lender
shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
2.20 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in payment
when due of the principal amount of or interest on any Eurodollar Loan or CAF
Advance, (b) default by the Borrower in making a borrowing of, conversion into
or continuation of Eurodollar Loans or CAF Advances after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (c) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (d) the making of a prepayment of Eurodollar Loans or CAF Advances
on a day which is not the last day of an Interest Period or the CAF Advance
Maturity Date, as the case may be, with respect thereto. Such indemnification
may include an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any) over (ii)
the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this
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Agreement and the payment of the Notes and all other amounts payable hereunder.
2.21 Capital Adequacy. If a Lender determines the amount of
capital required or expected to be maintained by such Lender, or any
corporation controlling such Lender is increased as a result of a Change (as
defined below), then, within 60 days of demand by such Lender, the Borrower
shall pay such Lender the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which such Lender
determines is attributable to this Agreement, its Loans or its obligation to
make Loans hereunder (after taking into account such Lender's policies as to
capital adequacy). In addition, if the Borrower notifies the Administrative
Agent within five (5) Business Days after any Lender (herein the "Affected
Lender") notifies the Borrower of any increased cost pursuant to the foregoing
provisions of this subsection 2.21, the Borrower may arrange for any
Replacement Lender to be substituted, within a period of not more than sixty
(60) days from the date of such notice by the Borrower to the Administrative
Agent, for the Affected Lender by having the Replacement Lender and the
Affected Lender execute an Assignment and Acceptance in the form of Exhibit H
hereto. Notwithstanding any election by the Borrower pursuant to the preceding
sentence, the Borrower shall in all events remain liable for the increased
costs of the Affected Lender for the period prior to the substitution of the
Replacement Lender. In addition, if the Borrower shall elect the option
described above, the Affected Lender shall be entitled to withdraw its notice
of increased costs within a period of fifteen (15) days from the date of notice
by the Borrower to the Administrative Agent as set forth above, whereupon the
Borrower shall no longer be entitled to substitute a Replacement Lender for the
Affected Lender as described above. If the Borrower is unable to obtain
alternative financing from a Replacement Lender as aforesaid, the Borrower
shall pay the increased costs of the Affected Lender as provided in the first
sentence of this subsection 2.21. "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines (as defined below) or
(ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement.
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SECTION III. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the CAF Advance Agent and
the Lenders to enter into this Agreement and to make the Loans, the Borrower
hereby represents and warrants to the Administrative Agent, the CAF Advance
Agent and each Lender that:
3.1 Financial Condition. The consolidated balance sheets of
the Borrower and its consolidated Subsidiaries as at December 31, 1992 and
December 31, 1993, respectively, and the related consolidated statements of
earnings, cash flows and shareholders' equity for the fiscal years ended on
such dates, reported on by Ernst & Young, copies of which have heretofore been
furnished to each Lender, are complete and correct in all material respects and
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such dates, and the consolidated results of
their operations and their consolidated cash flows for the fiscal years then
ended. The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at March 31, 1994 and the related unaudited
consolidated statements of earnings and of cash flows for the three-month
period ended on such date, certified by a Responsible Officer, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the three-month period
then ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Neither the Borrower nor any of its
consolidated Subsidiaries (taken as a whole) had, at the date of the most
recent balance sheet referred to above, any material Guaranty, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto. During the period from December
31, 1993 to and including the date hereof there has been no sale, transfer or
other disposition by the Borrower or any of its consolidated Subsidiaries of
any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the consolidated financial condition of
the Borrower and its consolidated Subsidiaries at December 31, 1993, other than
any such sale, transfer or other disposition that would have been permitted by
this Agreement if this Agreement had been in effect at all times during such
period.
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3.2 No Change. Since December 31, 1993, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
3.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization except to
the extent that, with respect to the Subsidiaries, the lack of such
organization, existence or good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which
it is currently engaged except to the extent that, with respect to the
Subsidiaries, the lack of such power, authority or legal right could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect, (c) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except to the extent that
the failure to qualify or be in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations.
The Borrower has the corporate power and authority, and the legal right, to
make, deliver and perform this Agreement and the Notes and to borrow hereunder
and has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and the Notes and to authorize the
execution, delivery and performance of this Agreement and the Notes. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder, with the execution, delivery,
performance, validity or enforceability of this Agreement or the Notes except
for consents which have been obtained and are in full force and effect. This
Agreement has been, and each Note will be, duly executed and delivered on
behalf of the Borrower. This Agreement constitutes, and each Note when
executed and delivered will constitute, a legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the Notes, the borrowings
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hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of the Borrower or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to this Agreement or the Notes or any of the
transactions contemplated hereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and
its Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other material property, and none of such
property is subject to any Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any
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assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed,
and, to the knowledge of the Borrower, no claim is being asserted, with respect
to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U.
3.13 ERISA. Neither a Reportable Event nor an Accumulated
Funding Deficiency has occurred during the five-year period prior to the date
on which this representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan has
occurred, and no Lien in favor of PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by an amount which could reasonably be
expected to have a Material Adverse Effect, either individually or in the
aggregate with all other Single Employer Plans under which such accrued
benefits exceed such assets. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
during the five-year period prior to the date on which this representation is
made or deemed made which could, in the aggregate with other such withdrawals
during such period, reasonably be expected to have a Material Adverse Effect,
and neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or is Insolvent.
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3.14 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
3.15 Subsidiaries. The companies set forth on Schedule II to
this Agreement constitute all the Subsidiaries of the Borrower at the date
hereof.
3.16 Environmental Matters. (a) The facilities and
properties owned, leased or operated by the Borrower or any of its Subsidiaries
(the "Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be expected
to give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are
in compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
the Borrower or any of its Subsidiaries (the "Business") which could materially
interfere with the continued operation of the Properties or materially impair
the aggregate fair saleable value of the Properties.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business, nor
does the Borrower have knowledge or reason to believe that any such notice will
be received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that
is or are reasonably likely to result in the payment of a Material
Environmental Amount.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location which could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of the
Properties in violation of, or in a manner that could reasonably be expected to
give rise to liability under, any applicable Environmental Law except insofar
as any such violation or liability referred to in this paragraph, or any
aggregation
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thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named
as a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the Business
except insofar as such proceeding, action, decree, order or other requirement,
or any aggregation thereof, is not reasonably likely to result in the payment
of a Material Environmental Amount.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or arising from
or related to the operations of the Borrower or any Subsidiary in connection
with the Properties or otherwise in connection with the Business, in violation
of or in amounts or in a manner that could reasonably give rise to liability
under Environmental Laws except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not reasonably
likely to result in the payment of a Material Environmental Amount.
3.17 Accuracy and Completeness of Information. All
information heretofore furnished by the Borrower to the Lenders for purposes of
or in connection with this Agreement, and all such information hereafter
furnished by the Borrower to any Lender for purposes of this Agreement will
not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made or to be made, in
the light of the circumstances under which they were or will be made, not
misleading. Prior to the date hereof, the Borrower has disclosed to the
Lenders in writing any and all facts which materially and adversely affect (to
the extent the Borrower can as of the date hereof reasonably foresee), the
business, operations or financial condition of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Borrower to perform its
obligations under the Loan Documents.
3.18 Other Unsecured Indebtedness. The obligations of the
Borrower under this Agreement and the Notes rank at least pari passu in right
of payment with all other unsecured and unsubordinated Indebtedness of the
Borrower.
SECTION IV. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The obligation of each
Lender to make its initial Loans hereunder is subject to the satisfaction of
the following conditions precedent:
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37
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender and (ii) for the account of
each Lender, a Revolving Credit Note and a CAF Advance Note conforming to
the requirements hereof and executed by a duly authorized officer of the
Borrower.
(b) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the Notes and
(ii) the borrowings contemplated hereunder, certified by the Secretary or
an Assistant Secretary of the Borrower as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(c) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of the Borrower executing any Loan Document satisfactory in form
and substance to the Administrative Agent, executed by any Responsible
Officer and the Secretary or any Assistant Secretary of the Borrower.
(d) Corporate Documents. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies of
the certificate of incorporation and by-laws of the Borrower, certified as
of the Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of the Borrower.
(e) Fees. The Administrative Agent shall have received the fees to be
received on the Closing Date in connection with this Agreement.
(f) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of George N. Bashara, Jr.,
Esq., general counsel of the Borrower, given upon the express
instructions of the Borrower, substantially in the form of Exhibit
G-1; and
(ii) the executed legal opinion of Simpson Thacher & Bartlett,
special counsel to the Administrative Agent and the CAF Advance Agent,
substantially in the form of Exhibit G-2.
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(g) The Administrative Agent shall have received the Process Agent's
Consent.
(h) All loans, accrued interest and other fees and any other amounts
owing to the Lenders and the Agent under the Second Amended and Restated
Revolving Credit Agreement, dated as of October 19, 1993, among the
Borrower, the several banks and other financial institutions from time to
time parties thereto, Chemical, as Agent for the Lenders thereunder and
Comerica Bank and Continental Bank N.A., as Co-Agents, shall have been paid
in full, and the commitments to make loans thereunder shall have been
cancelled.
4.2 Conditions to Each Loan. The agreement of each Lender to make any
Loan requested to be made by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of such date as if
made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans
requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in this subsection 4.2 have been satisfied.
SECTION V. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as the
Commitments remain in effect, any Note remains outstanding and unpaid or any
other amount is owing to any Lender, the Administrative Agent or the CAF
Advance Agent hereunder:
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39
5.1 Financial Statements. The Borrower will furnish to each
Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such year and
the related consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, certified without qualification or exception by independent public
accountants of nationally recognized standing selected by the Borrower; and
(b) as soon as available, but in any event within 60 days after the
end of each of the first three quarterly periods of each fiscal year of the
Borrower, a copy of the unaudited consolidated condensed balance sheet of
the Borrower and its Subsidiaries as at the end of each such quarter and
the related unaudited consolidated condensed statements of income and cash
flows of the Borrower and its Subsidiaries for the portion of the fiscal
year through such date, setting forth in each case in comparative form such
figures for the previous year, certified by a Responsible Officer;
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except for such changes
in accounting principles as may be approved by such Responsible Officer and
concurred in by the Borrower's independent public accountants and disclosed
therein).
5.2 Certificates; Other Information. The Borrower will
furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a) and (b), a certificate of a Responsible
Officer in the form of Exhibit F (i) stating that such officer has no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) showing in reasonable detail the calculations
supporting such statement in respect of subsections 6.1 and 6.2;
(b) on or prior to February 28 of each year, a copy of the projections
by the Borrower of the operating budget and cash flow budget of the
Borrower and its Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on a reasonable basis
and in good faith;
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40
(c) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its common or preferred
stockholders as a class, and promptly after the same are filed, copies of
all regular, periodic and special reports which the Borrower may file with
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) if requested by the Administrative Agent or by any Lender through
the Administrative Agent, promptly after the same is furnished to PBGC,
copies of all information furnished by the Borrower, any Subsidiary or any
Commonly Controlled Entity to PBGC, except, in each case, information
furnished as to ordinary operational aspects of the business of the
Borrower or any Subsidiary and not relating to any deviation by the
Borrower or any Subsidiary from rules and regulations of PBGC; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Accrual of Liabilities; Payment of Obligations. The
Borrower will maintain, and cause each Subsidiary to maintain, in accordance
with GAAP, appropriate reserves for the accrual of taxes and all other
obligations, liabilities and claims and pay, discharge or otherwise satisfy,
and cause each Subsidiary to pay, discharge or otherwise satisfy, at or before
their maturity or before they become delinquent, as the case may be, all
obligations except where the same are being contested in good faith by
appropriate proceedings diligently pursued.
5.4 Maintenance of Corporate Existence; Maintenance of
Properties. The Borrower will (a) maintain its corporate existence, rights and
franchises necessary to continue its business and the corporate existence,
rights and franchises necessary to continue the business of each Subsidiary,
provided that the foregoing shall not be a limitation (i) on the right of the
Borrower to discontinue any operations if in the opinion of the Borrower such
discontinuance is in the best interest of the Borrower and would not materially
affect the ability of the Borrower to pay its debts as they become due, (ii) on
asset sales permitted under subsection 6.7 and (iii) on the right of any
Subsidiary to merge with or be liquidated into the Borrower or another
Subsidiary if a Default does not then exist and would not result therefrom; and
(b) maintain, and cause each Subsidiary to maintain, the properties which are
used or useful in its respective operations in good working order and
condition.
5.5 Insurance. The Borrower will maintain, and cause each
Subsidiary to maintain, insurance with financially sound and reputable
companies in such form and upon such terms and in such amounts and against such
risks (including liability for bodily injury and property damage) as in the
reasonable opinion of the
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41
Borrower is available on commercially reasonable terms and will provide sound
and reasonable protection for the Borrower's or such Subsidiary's assets and
operations. At the Administrative Agent's request, the Borrower will furnish
to the Administrative Agent (with copies for each Lender) certificates of
insurance or other evidence that such insurance is being maintained.
5.6 Notices. The Borrower will (a) promptly give notice in
writing to the Administrative Agent (which shall promptly notify each Lender)
of the occurrence of any Default or Event of Default under this Agreement, or
of the commencement of (i) any material litigation or proceedings affecting the
Borrower or any Subsidiary or (ii) any dispute between the Borrower or any
Subsidiary and any Governmental Authority or any other party if such
litigation, proceedings or dispute could reasonably be expected to result in a
Material Adverse Effect; and (b) as soon as possible and in any event within 45
days after the Borrower knows or has reason to know that any Reportable Event
(other than a Reportable Event not subject to the provision for 30-day notice
to PBGC pursuant to the regulations issued under ERISA) has occurred with
respect to any Single Employer Plan or that PBGC or the Borrower or any
Commonly Controlled Entity has instituted or will institute proceedings under
Title IV of ERISA to terminate any Single Employer Plan, deliver to the
Administrative Agent (which shall promptly notify each Lender) a certificate of
a Responsible Officer of the Borrower setting forth details as to such
Reportable Event and the action that the Borrower proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that may
be required to be filed with PBGC, or any notice delivered by PBGC evidencing
its intent to institute such proceedings or any notice to PBGC that such Plan
is to be terminated, as the case may be. For all purposes of clause (b) of
this subsection 5.6, the Borrower shall be deemed to have all knowledge or
knowledge of all facts attributable to the administrator of a Single Employer
Plan.
5.7 Compliance with Contractual Obligations and Laws. The
Borrower will, and will cause each Subsidiary to, comply with all provisions of
any Contractual Obligation, applicable law, rule, regulation, order, writ,
judgment, injunction, decree, award or ordinance to which it is subject, except
to the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.8 Access to Books and Inspection. The Borrower shall keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and give the
Administrative Agent and any reasonable number of representatives of the
Lenders access, at the Borrower's principal office, during normal business
hours to, and permit any such representatives to examine, copy or make excerpts
from, any and all books, records and documents in the possession of the
Borrower relating to its
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affairs and the affairs of the Subsidiaries, and to inspect any of the
properties of the Borrower or the Subsidiaries. Notwithstanding any provision
in this subsection, the Borrower (i) shall be given a reasonable opportunity
upon reasonable notice to have an officer or officers of the Borrower accompany
any such representative during any such visit, and (ii) shall not be
responsible for any expenses incurred by any such representative.
5.9 Use of Proceeds. The Borrower shall use the proceeds of
the Loans for working capital, acquisitions, refinancing of Indebtedness and
other general corporate purposes consistent with the terms of this Agreement.
5.10 Environmental Laws. The Borrower will, and will cause
each Subsidiary to, (a) comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain,
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except to the extent that the failure
to do so, or any aggregation thereof, is not reasonably likely to result in the
payment of a Material Environmental Amount, (b) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency of
such proceedings is not reasonably likely to result in the payment of a
Material Environmental Amount and (c) defend, indemnify and hold harmless the
Administrative Agent, the CAF Advance Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any and
all claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower, any of its Subsidiaries or the Properties, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, investigation and laboratory fees, response
costs, court costs, litigation expenses and reasonable attorneys' and
consultants' fees, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. The agreements in clause (c) of this subsection shall survive
repayment of the Notes and all other amounts payable hereunder.
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SECTION VI. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as the
Commitments remain in effect, any Note remains outstanding and unpaid or any
other amount is owing to any Lender, the Administrative Agent or the CAF
Advance Agent hereunder:
6.1 Cash Flow Coverage. The Borrower will not permit the
Cash Flow Coverage to be less than a ratio of 1.75 to 1.00 for (i) the fiscal
quarter ended June 30, 1994, (ii) the two consecutive fiscal quarters ended
September 30, 1994, (iii) the three consecutive fiscal quarters ended December
31, 1994 or (iv) any period of four consecutive fiscal quarters ended on or
after March 31, 1995.
6.2 Total Liabilities to Consolidated Tangible Net Worth.
The Borrower will not permit Consolidated Total Liabilities plus Minority
Interest as a percentage of Consolidated Tangible Net Worth as of the last day
of any fiscal quarter of the Borrower to be greater than 300%.
6.3 Limitation on Liens. The Borrower will not, nor will
it permit any Subsidiary to, create, assume or incur or suffer to be created,
assumed or incurred or to exist any Lien on any of its properties or assets,
whether now owned or hereafter acquired, provided, however, that the foregoing
restriction shall not apply to the following:
(a) Liens existing on the Closing Date and described on Schedule III;
(b) Liens on property or assets of any corporation existing at the
time such corporation becomes a Subsidiary;
(c) Liens in favor of the Borrower or any wholly-owned Subsidiary;
(d) Liens in favor of any Governmental Authority to secure progress,
advance or other payments pursuant to any contract or provision of any
statute;
(e) Liens (including, without limitation, the interest of the lessor
under any capital lease) on property or assets existing at the time of the
acquisition thereof (including acquisition through merger or consolidation)
or to secure the payment of all or any part of the purchase price or
construction cost thereof or to secure any Indebtedness incurred prior to,
at the time of, or within six months after, the acquisition or completion
of such property or assets for the purpose of financing all or any part of
the purchase price or construction cost thereof;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole
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or in part, of any Lien referred to in the foregoing clauses (a) through
(e), inclusive; provided that (i) no such extension, renewal or replacement
shall result in an increase in the liabilities secured thereby and (ii)
such extension, renewal or replacement Lien shall be limited to all or a
part of the same property that secured the Lien so extended, renewed or
replaced (plus additions, accessions, replacements and improvements to such
property);
(g) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently pursued if adequate
reserves with respect thereto are maintained on the books of the Borrower
or such Subsidiary, as the case may be, in accordance with GAAP;
(h) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
(A) which are not overdue for a period of more than 60 days or (B) which
are being contested in good faith and by appropriate proceedings diligently
pursued if adequate reserves with respect thereto are maintained on the
books of the Borrower or such Subsidiary, as the case may be, in accordance
with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course
of business which, in the aggregate, are not greater than $5,000,000 (to
the extent the dollar values of such encumbrances are calculable) and which
do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Borrower or its Subsidiaries;
(j) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(k) liens ratably securing the obligations of the Borrower to the
Lenders hereunder or under the Notes; and
(l) other Liens incidental to the conduct of the Borrower's or any
Subsidiary's business or the ownership of its property and assets that were
incurred in connection with the borrowing of money or the obtaining of
advances or credit or capital leases; provided, however, that the
indebtedness secured thereby does not exceed in the aggregate for the
Borrower and all Subsidiaries an amount equal to $30,000,000; and provided,
further, that at no time shall the debt secured by the Liens allowed under
this subsection 6.3(l) plus all other Indebtedness of the Borrower's
Subsidiaries be equal to or greater than 40
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percent (40%) of Consolidated Tangible Net Worth (determined as of the
end of the most recent fiscal quarter of the Borrower).
6.4 Subsidiary Indebtedness. The Borrower will not permit
any Subsidiary to create, incur or suffer to exist any Indebtedness, except
Indebtedness of the Borrower's Subsidiaries which, together with the secured
Indebtedness allowed under subsection 6.3(l), shall not exceed forty percent
(40%) of Consolidated Tangible Net Worth (determined as of the end of the most
recent fiscal quarter of the Borrower).
6.5 Limitation on Mergers. The Borrower will not, nor will
it permit any Subsidiary to, merge or consolidate with or into any other
corporation except that any Subsidiary may merge or consolidate (i) with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation), (ii) with or into any one or more wholly-owned
Subsidiaries or (iii) with or into any Person to be acquired pursuant to
subsection 6.11.
6.6 Multiemployer Plans. The Borrower will not, as of any
date, permit any liability to occur to which the Borrower or any Commonly
Controlled Entity would become subject under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding such date.
6.7 Asset Sales. The Borrower will not, nor will it permit
any Subsidiary to, lease, sell or otherwise dispose of all or any portion of
its property, assets or business to any Person except for (a) sales of assets
in the ordinary course of business, (b) the sale of Precision Forged and the
Heavy Wall Bearing Business, (c) sales of accounts receivable or related
contract rights and (d) any other sales of assets having a book value which,
when added to the book value of all other assets sold pursuant to this clause
(d) since the date of this Agreement, does not exceed 10% of the Borrower's
consolidated net worth as of the last day of the fiscal quarter ended
immediately prior to the date of such sale.
6.8 Limitation on More Restrictive Covenants. The Borrower
shall not enter into any new debt agreement that would contain, nor enter into
any amendment, supplement or other modification to any indenture, instrument or
other agreement concerning the Funded Debt or any refinancing thereof, if such
indenture, instrument or other agreement at the time entered into or after
giving effect to any such amendment, supplement or other modification thereto,
would contain (a) any covenant or event of default that is more restrictive on
the Borrower than those set forth in this Agreement, (b) any covenant with
respect to financial performance the scope of which is materially different
from the covenants respecting such matters set forth in subsections 6.1 or 6.2
or (c) any covenant which would prohibit
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the granting of liens on its assets by the Borrower or its Subsidiaries in
favor of the Lenders.
6.9 Subsidiary Guaranties. The Borrower will not, and will
not allow any Subsidiary to, make or suffer to exist any Guaranty except (a)
any Guaranty existing on the Closing Date listed on Schedule IV attached
hereto, including, but not limited to, that certain Guaranty and Contingent
Purchase Agreement dated February 15, 1989 by and between the Borrower and
Aetna Life Insurance Company and any replacement in whole or in part of any
Guaranty listed on Schedule IV in connection with any extension, refinancing or
refunding of the Indebtedness guarantied thereby and (b) Guaranties with
respect to Indebtedness or other obligations not exceeding $500,000 in the
aggregate at any one time.
6.10 Affiliates. The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.
6.11 Acquisitions. The Borrower will not, and it will not
permit any of its Subsidiaries to, acquire, in a single transaction or in a
series of related transactions, all or substantially all of the equity
interests in, or assets of, any other Person, or all or substantially all of
the assets constituting a division or business segment of any other Person,
except that the Borrower or any of its Subsidiaries may make any such
acquisition if:
(a) after giving effect thereto, no Default or Event of Default shall
be in existence; and
(b) if such acquisition is the acquisition of equity interests of any
Person, such acquisition is approved by the board of directors or analogous
governing body of such Person.
SECTION VII. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Note, or any other amount payable hereunder,
within five
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47
days after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in subsections 5.4(a) or 5.6 or Section 6; or
(d) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after receipt by the Borrower
of notice of such default from the Administrative Agent or any Lender; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment or payments of principal or interest in an aggregate amount of more
than $5,000,000 (or its equivalent in another currency) at any one time on
any Indebtedness (other than the Notes) or in the payment of any Guaranty,
beyond the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guaranty was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness (other than the Notes)
the principal amount of which exceeds $5,000,000 or any Guaranty
guarantying Indebtedness the principal amount of which exceeds $5,000,000
or contained in any instrument or agreement evidencing, securing or
relating to any such Indebtedness or Guaranty, beyond any applicable period
of grace (not to exceed 30 days), or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guaranty (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guaranty to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization,
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arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Borrower
or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other action of
a nature referred to in clause (i) above which (A) results in the entry of
an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Borrower or any of its material
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Borrower or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any Prohibited Transaction
involving any Plan, (ii) any Accumulated Funding Deficiency, whether or not
waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
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49
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the insurance carrier
has admitted liability) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or
(i) The validity or enforceability of this Agreement or any of the
other documents required to be delivered in connection herewith shall be
challenged by the Borrower or any of its Subsidiaries or shall fail to
remain in full force and effect for any reason other than in accordance
with its express terms; or
(j) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the Notes shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments
to be terminated forthwith, whereupon the Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the Notes to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
SECTION VIII. THE ADMINISTRATIVE AGENT AND CAF ADVANCE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates
and appoints Chemical as the Administrative Agent and CAF Advance Agent of such
Lender under this Agreement, and each Lender irrevocably authorizes Chemical,
as the Administrative Agent and CAF Advance Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the Notes and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent and CAF Advance Agent by the terms of this Agreement
and the Notes, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
<PAGE> 50
50
Agreement, the Administrative Agent and CAF Advance Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Note or otherwise exist against the Administrative Agent or
the CAF Advance Agent. Notwithstanding anything to the contrary contained in
this Agreement, the parties hereto agree that no Co-Agent shall have any
rights, duties or responsibilities in its capacity as a Co-Agent and that no
Co-Agent shall have the authority to take any action hereunder in its capacity
as such.
8.2 Delegation of Duties. The Administrative Agent and the
CAF Advance Agent may execute any of its duties under this Agreement and the
Notes by or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The
Administrative Agent and the CAF Advance Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. None of the Administrative
Agent, the CAF Advance Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any Note (except for its or such Person's own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by the Borrower or any officer thereof contained in this Agreement or any Note
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent or the CAF Advance
Agent, as applicable, under or in connection with, this Agreement or any Note
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or for any failure of the Borrower
to perform its obligations hereunder or thereunder. Neither the Administrative
Agent nor the CAF Advance Agent shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any Note, or to
inspect the properties, books or records of the Borrower.
8.4 Reliance by Administrative Agent and CAF Advance Agent.
The Administrative Agent and the CAF Advance Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the
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51
Borrower), independent accountants and other experts selected by the
Administrative Agent and the CAF Advance Agent. The Administrative Agent and
the CAF Advance Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any Note unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent and the CAF
Advance Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the Notes in accordance with a request of
the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders
of the Notes.
8.5 Notice of Default. Neither the Administrative Agent nor
the CAF Advance Agent shall be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
promptly give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent, CAF Advance Agent
and Other Lenders. Each Lender expressly acknowledges that none of the
Administrative Agent, the CAF Advance Agent or any of its respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Administrative Agent
or the CAF Advance Agent hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or warranty
by the Administrative Agent or the CAF Advance Agent to any Lender. Each
Lender represents to the Administrative Agent and the CAF Advance Agent that it
has, independently and without reliance upon the Administrative Agent, the CAF
Advance Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of
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the Borrower and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently
and without reliance upon the Administrative Agent, the CAF Advance Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the
Notes, and to make such investigation as it deems necessary to inform itself as
to the business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent or the CAF Advance Agent hereunder, neither the
Administrative Agent nor the CAF Advance Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent, CAF Advance Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent and the CAF Advance Agent in their respective capacities
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this subsection, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent or the CAF Advance
Agent in any way relating to or arising out of this Agreement, any of the Notes
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent or the CAF Advance Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Administrative Agent's or the CAF Advance Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the
payment of the Notes and all other amounts payable hereunder.
8.8 Administrative Agent and CAF Advance Agent in Its
Individual Capacity. The Administrative Agent, the CAF Advance Agent and its
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Administrative
Agent or the CAF Advance Agent were not the Administrative Agent or the CAF
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53
Advance Agent, as applicable, hereunder. With respect to its Loans made or
renewed by it and any Note issued to it, the Administrative Agent and the CAF
Advance Agent shall have the same rights and powers under this Agreement and
the Notes as any Lender and may exercise the same as though it were not the
Administrative Agent or the CAF Advance Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent and CAF Advance Agent in their
respective individual capacity.
8.9 Successor Administrative Agent and CAF Advance Agent.
The Administrative Agent and the CAF Advance Agent may resign as Administrative
Agent or CAF Advance Agent, as applicable, upon 10 days' notice to the Lenders.
If the Administrative Agent or the CAF Advance Agent shall resign as
Administrative Agent or CAF Advance Agent, as applicable, under this Agreement,
then the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which successor agent shall be approved by the Borrower,
whereupon such successor agent shall succeed to the rights, powers and duties
of the Administrative Agent or CAF Advance Agent, as applicable, and the term
"Administrative Agent" or "CAF Advance Agent", as applicable, shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's or CAF Advance Agent's, as applicable, rights, powers
and duties as Administrative Agent or CAF Advance Agent, as applicable, shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or CAF Advance Agent, as applicable, or any of the
parties to this Agreement or any holders of the Notes. After any retiring
Administrative Agent's or CAF Advance Agent's resignation as Administrative
Agent or CAF Advance Agent, as applicable, the provisions of this subsection
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent or CAF Advance Agent, as applicable, under
this Agreement.
SECTION IX. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any Note
nor any terms hereof or thereof may be amended, supplemented or modified except
in accordance with the provisions of this subsection. The Required Lenders, or
with the written consent of the Required Lenders, the Administrative Agent,
may, from time to time, (a) enter into with the Borrower written amendments,
supplements or modifications hereto and to the Notes for the purpose of adding
any provisions to this Agreement or the Notes or changing in any manner the
rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive,
on such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the Notes or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of
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54
maturity of any Note or of any installment thereof, or reduce the stated rate
of any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitment, in each case without the consent of the Lender affected
thereby, or (ii) amend, modify or waive any provision of this subsection or
reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the Notes, in each case without the
written consent of all the Lenders, or (iii) amend, modify or waive any
provision of Section 8 without the written consent of the then Administrative
Agent and CAF Advance Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Administrative Agent, the CAF
Advance Agent and all future holders of the Notes. In the case of any waiver,
the Borrower, the Lenders, the Administrative Agent and CAF Advance Agent shall
be restored to their former position and rights hereunder and under the
outstanding Notes and any Default or Event of Default waived shall be deemed to
be cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or four days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Borrower, the
Administrative Agent and CAF Advance Agent, and as set forth in Schedule I in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Borrower: Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
Attention: Treasurer
Telecopy: 810-354-8103
The Administrative
Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Susan Kane
Telecopy: 212-972-9854
with a copy to:
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55
Chemical Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Richard Thayer
Telecopy: 212-972-9854
The CAF Advance
Agent: Chemical Bank Agency Services
Corporation
140 East 45th Street
New York, New York 10017
Attention: Terri Reilly
Telecopy: 212-622-0002
provided that any notice, request or demand to or upon the Administrative
Agent, the CAF Advance Agent or the Lenders pursuant to subsection 2.3, 2.5,
2.9, 2.10, 2.11 or 2.15 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes.
9.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse each of the Administrative Agent and the CAF Advance Agent
for all its out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the Notes and any other documents prepared
in connection herewith, and the consummation and administration of the
transactions contemplated hereby, including, without limitation, the fees and
disbursements of counsel to the Administrative Agent and the CAF Advance Agent,
(b) to pay or reimburse each Lender, the Administrative Agent and the CAF
Advance Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the Notes and
any such other documents, including, without limitation, the fees and
disbursements of counsel to the Administrative Agent, the CAF Advance Agent and
to the several Lenders, and (c) to pay, indemnify, and hold each Lender, the
Administrative Agent and the CAF Advance Agent
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56
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes and any such other documents, and (d) to pay,
indemnify, and hold each Lender, the Administrative Agent and the CAF Advance
Agent (and their respective directors, officers, employees and agents) harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Notes and any other
related document (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Borrower shall have no
obligation hereunder to the Administrative Agent, the CAF Advance Agent or any
Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Administrative Agent, the CAF Advance
Agent or any such Lender or (ii) legal proceedings commenced against the
Administrative Agent, the CAF Advance Agent or any such Lender by any security
holder or creditor thereof arising out of and based upon rights afforded any
such security holder or creditor solely in its capacity as such. The
agreements in this subsection shall survive repayment of the Notes and all
other amounts payable hereunder.
9.6 Successors and Assigns; Participations; Purchasing
Lenders. (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent, the CAF Advance Agent, all
future holders of the Notes and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due or
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unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in subsection 9.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall
be entitled to the benefits of subsections 2.17, 2.18, and 2.19 with respect to
its participation in the Commitments and the Loans outstanding from time to
time; provided, that no Participant shall be entitled to receive any greater
amount pursuant to such subsections than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Lender or any affiliate thereof and, with the consent of the Borrower and the
Administrative Agent (which in each case shall not be unreasonably withheld),
to one or more additional banks or financial institutions ("Purchasing
Lenders") all or any part of its rights and obligations under this Agreement
and the Notes pursuant to an Assignment and Acceptance, substantially in the
form of Exhibit H, executed by such Purchasing Lender, such transferor Lender
(and, in the case of a Purchasing Lender that is not then a Lender or an
affiliate thereof, by the Administrative Agent) and delivered to the
Administrative Agent for its acceptance and recording in the Register;
provided, however, that the consent of the Borrower shall be required for sales
which would result in withholding costs to the Borrower; and provided, further,
that a sale to a Purchasing Lender that is not then a Lender shall be in a
minimum amount of $5,000,000 (or, if less, the entire Commitment of the
assigning Lender). Upon such execution, delivery, acceptance and recording,
from and after the Transfer Effective Date determined pursuant to such
Assignment and Acceptance (the "Transfer Effective Date"), (x) the Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto). Such Assignment and Acceptance shall be
deemed to amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Lender and the resulting adjustment
of Commitment
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Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Notes. On or prior to the Transfer Effective Date determined
pursuant to such Assignment and Acceptance, the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent in exchange for the Note
of the transferor Lender a new Note to the order of such Purchasing Lender in
an amount equal to the Loan purchased by it pursuant to such Assignment and
Acceptance and, if the transferor Lender has retained a Loan hereunder, a new
Note to the order of the transferor Lender in an amount equal to the Loan
retained by it hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Note replaced thereby. The Note
surrendered by the transferor Lender shall be returned by the Administrative
Agent to the Borrower marked "cancelled".
(d) The Administrative Agent shall maintain at its address
referred to in subsection 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment of, and principal amount
of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by a transferor Lender and Purchasing Lender (and, in the case of a Purchasing
Lender that is not then a Lender or an affiliate thereof, by the Borrower, if
applicable, and the Administrative Agent) together with payment to the
Administrative Agent of a registration and processing fee of $2,500 (payable by
the transferor or the Purchasing Lender, as agreed between them), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance,
(ii) give notice of such acceptance to the Lenders and the Borrower and (iii)
on the Transfer Effective Date determined pursuant thereto, record the
information contained therein in the Register.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Borrower and its Affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Borrower in connection
with such Lender's credit evaluation of the Borrower and its Affiliates prior
to becoming a party to this Agreement.
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59
(g) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of subsection
2.19(b) to the same extent as the Lenders that are parties to this Agreement
originally are required to comply.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
9.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder or under the Notes (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
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9.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement and the Notes represent the
agreement of the Borrower, the Administrative Agent, the CAF Advance Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth
or referred to herein or in the Notes.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any Note, or for recognition and
enforcement of any judgement in respect thereof, to the non-exclusive
general jurisdiction of the Courts of the State of New York, the courts of
the United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) designates and appoints C T Corporation System and such
other persons located in New York City (provided that the Administrative
Agent receive (i) prior notice of the appointment of such other persons and
(ii) a Process Agent's Consent of such other persons) as may hereafter be
selected by the Borrower which agree in writing to so serve as its agent to
receive on its behalf service of all process in any
<PAGE> 61
61
proceeding in any court, such service by registered or certified mail
(or any substantially similar form of mail), postage prepaid, being hereby
acknowledged by the Borrower to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by
registered mail to the Borrower at its address provided in subsection 9.2
hereof except that unless otherwise provided by applicable law, any failure
to mail such copy shall not affect the validity of service of process. If
any agent appointed by the Borrower refuses to accept service or the
Borrower revokes the appointment of the agent without the approval of the
Administrative Agent and a new agent, satisfactory to the Administrative
Agent, is not appointed, the Borrower agrees that service upon it in
accordance with subsection 9.2 hereof shall constitute sufficient notice;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes;
(b) none of the Administrative Agent, the CAF Advance Agent or any
Lender has any fiduciary relationship with or duty to the Borrower arising
out of or in connection with this Agreement or any Note, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture exists among the Borrower and the Lenders.
<PAGE> 62
62
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT, THE CAF ADVANCE AGENT, THE CO-AGENTS AND THE LENDERS HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE NOTES AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
FEDERAL-MOGUL CORPORATION
By
Title:
CHEMICAL BANK,
as Administrative Agent, CAF
Advance Agent and as a Lender
By
Title:
COMERICA BANK,
as a Co-Agent and as a Lender
By
Title:
CONTINENTAL BANK,
as a Co-Agent and as a Lender
By
Title:
NBD BANK, N.A.,
as a Co-Agent and as a Lender
By
Title:
By
Title:
<PAGE> 63
63
THE BANK OF NEW YORK,
as a Co-Agent and as a Lender
By
Title:
BANQUE PARIBAS
By
Title:
By
Title:
MELLON BANK, N.A.
By
Title:
ROYAL BANK OF CANADA
By
Title:
THE BANK OF NOVA SCOTIA
By
Title:
THE NIPPON CREDIT BANK, LTD.
By
Title:
<PAGE> 64
64
UNION BANK OF SWITZERLAND-CHICAGO BRANCH
By
Title:
By
Title:
BAYERISCHE VEREINSBANK AG CHICAGO
BRANCH
By
Title:
By
Title:
BERLINER HANDELS - UND -
FRANKFURTER BANK
By
Title:
By
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By
Title:
CREDIT LYONNAIS CAYMAN ISLANDS
BRANCH
By
Title:
<PAGE> 65
65
DEUTSCHE BANK AG CHICAGO AND/OR
CAYMAN ISLANDS BRANCHES
By
Title:
By
Title:
DRESDNER BANK AG CHICAGO AND GRAND
CAYMAN BRANCHES
By
Title:
By
Title:
NATIONAL CITY BANK
By
Title:
THE BANK OF TOKYO TRUST COMPANY
By
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By
Title:
By
Title:
<PAGE> 1
EXHIBIT 5.1
[Federal-Mogul Corporation Letterhead]
August 3, 1994
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
Ladies and Gentlemen:
This opinion is delivered in connection with the Registration Statement
on Form S-3 (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act")
for the registration of the sale by Federal-Mogul Corporation (the "Company"),
from time to time, of up to $100,000,000 maximum aggregate initial offering
price of Debt Securities, Preferred Stock, without par value ("Preferred
Stock"), depositary shares representing fractional interests in shares of
Preferred Stock ("Depositary Shares"), Common Stock, without par value,
including the Preferred Stock Purchase Rights attached thereto ("Common Stock"),
warrants to purchase Debt Securities ("Debt Warrants") or other types of
warrants to purchase Securities ("Other Warrants" together with the Debt
Warrants, the "Warrants"). The Debt Securities, the Preferred Stock, the
Depositary Shares, the Common Stock, and the Warrants are hereinafter referred
to collectively as the "Securities". Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Registration Statement.
The Debt Securities will constitute either senior or subordinated debt
of the Company and will be issued under, in the case of the senior Debt
Securities, an indenture to be between the Company and Continental Bank,
as trustee (the "Senior Debt Indenture"), and in the case of the subordinated
Debt Securities, an indenture to be between the Company and Continental Bank,
as trustee (the "Subordinated Debt Indenture"). The Senior Debt Indenture and
the Subordinated Debt Indenture are hereinafter referred to collectively as
the "Indentures".
Depositary Shares will be deposited under a Deposit Agreement between
the Company and a bank or trust company and evidenced by Depositary Receipts.
Debt Warrants and Other Warrants will be issued either independently or
together with other Securities and will
<PAGE> 2
Federal-Mogul Corporation
August 3, 1994
Page 2
be issued pursuant to a Warrant Agreement between the Company and a bank or
trust company as Warrant Agent.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of
public officials, and other instruments as I have deemed necessary or advisable
for purposes of this opinion.
Based upon the foregoing, I am of the opinion that, except as limited
by (i) in the case of paragraphs 1 and 5, bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) in the case of paragraphs 1 and
5, general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), (iii) in the case of paragraph
1, requirements that a claim with respect to any Debt Securities denominated
other than in United States dollars (or a judgement denominated other than in
United States dollars with respect of such a claim) be converted into United
States dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law, and (iv) in the case of paragraphs 1 and 5, governmental
authority to limit, delay, or prohibit the making of payments outside the
United States or in foreign currency or composite currency:
1. When the specific terms of a particular Debt Security
(including any Debt Security duly issued upon a conversion for any
other Debt Securities, the conversion or the exchange of any Preferred
Stock or upon exercise of any Warrants) and its issuance and sale have
been duly established in accordance with the Senior Indenture or the
Subordinated Indenture, as the case may be, and such Debt Security has
been duly executed and authenticated in accordance with the Senior
Indenture or Subordinated Indenture, as the case may be, and duly
issued and sold as contemplated by the Registration Statement and
applicable Prospectus Supplement or upon exchange, conversion or
exercise in accordance with the terms of any other Security that has
been validly issued, paid for and delivered, such Debt Security will
constitute the valid and binding obligation of the Company.
2. Upon designation of the preferences and relative,
participating, optional and other special rights, and qualifications,
limitations or restrictions, of any series of Preferred Stock (including
<PAGE> 3
Federal-Mogul Corporation
August 3, 1994
Page 3
Preferred Stock duly issued upon conversion of any Debt Securities or
the conversion or exhange of any other Preferred Stock or upon
exercise of any Warrants) establishing terms for issuance and sale of
such Preferred Stock in conformity with the Company's Second Amended
and Restated Articles of Incorporation (the "Articles"), and upon
proper filing as required by the Michigan Business Corporation Act of a
Certificate of Designations relating to such series of Preferred Stock,
and when such shares of Preferred Stock are issued and sold as
contemplated by the Registration Statement and applicable Prospectus
Supplement or upon exchange, conversion or exercise in accordance with
the terms of any other Security that has been validly issued, paid for
and delivered, shares of such series of Preferred Stock will be validly
issued, fully paid and nonassessable.
3. When the terms of Depositary Shares evidenced by Depositary
Receipts are duly established and such Depositary Shares are
issued and sold, in each case, in accordance with the terms of the
Deposit Agreement against the deposit of validly issued, fully paid and
nonassessable shares of Preferred Stock, and when the Depositary
Shares as evidenced by Depositary Receipts are issued and sold as
contemplated by the Registration Statement and applicable Prospectus
Supplement, such Depositary Shares will entitle the persons in whose
names the Depositary Receipts evidencing such Depositary Shares are
registered to the rights specified therein and in the Deposit
Agreement.
4. When the terms of issuance and sale of such Common Stock (including
any Common Stock duly issued upon a conversion of any Debt
Securities or the conversion or exchange of any Preferred Stock, or
upon exercise of any Warrants) have been duly established in conformity
with the Company's Articles, and when such shares of Common Stock are
issued and sold as contemplated by the Registration Statement and
applicable Prospectus Supplement or upon exchange, conversion or
exercise in accordance with the terms of any other Security that has
been validly issued, paid for and delivered, such shares of Common
Stock will be validly issued, fully paid and nonassessable.
<PAGE> 4
Federal-Mogul Corporation
August 3, 1994
Page 4
5. When the specific terms of a particular Warrant have been duly
established in conformity with the Warrant Agreement and such Warrant
has been duly executed and countersigned in accordance with the
Warrant Agreement and issued and sold in the applicable form to be
filed as an exhibit to the Registration Statement and as contemplated
by the Registration Statement and applicable Prospectus Supplement,
such Warrant will constitute the valid and binding obligation of the
Company.
In connection with my opinions expressed above, I have assumed that, at
or prior to the time of the delivery of any such Security, (i) the Board of
Directors, themselves or as so delegated, shall not have modified or rescinded
the duly authorized issuance and sale of such Security, (ii) the Registration
Statement shall have been declared effective and such effectiveness shall not
have been terminated or rescinded, (iii) with respect to paragraph 1, the
applicable Indentures shall have been duly authorized, executed and delivered
by the Company and the applicable Trustee, (iv) with respect to paragraph 3,
the applicable Deposit Agreement relating to the Depositary Shares shall have
been duly authorized, executed and delivered by the Company, (v) with respect
to paragraph 5, the Warrant Agreement relating to the Warrants to be filed as
an exhibit to the Registration Statement shall have been duly authorized,
executed and delivered by the Company, and (vi) there will not have occurred
any change in law affecting the validity or enforceability of such Security. I
have also assumed that none of the terms of any Security to be established
subsequent to the date hereof nor the issuance and sale of such Security, nor
the compliance by the Company with the terms of such Security, will violate any
applicable law or will result in a violation of any provision of any instrument
or agreement then binding upon the Company, or any restriction imposed by any
court or governmental body having jurisdiction over the Company.
I am a member of the Bar of the State of Michigan, and the foregoing
opinion is limited to the laws of the State of Michigan, and the federal laws
of the United States of America. In rendering my opinions, I have relied as to
matters of New York law upon the opinion of Wachtell, Lipton, Rosen & Katz
dated as of the date hereof.
I hereby consent to the use of this opinion as an Exhibit to the
Registration Statement of the Company relating
<PAGE> 5
Federal-Mogul Corporation
August 3, 1994
Page 5
to the Securities and to the reference to my name in the Prospectus contained
therein. In giving such consent, I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ George N. Bashara, Jr.
<PAGE> 1
EXHIBIT 5.2
[WLRK Letterhead]
August 3, 1994
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
Ladies and Gentlemen:
This opinion is delivered in connection with the Registration Statement
on Form S-3 (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act")
for the registration of the sale by Federal-Mogul Corporation (the "Company"),
from time to time, of up to $100,000,000 maximum aggregate initial offering
price of Debt Securities, Preferred Stock, without par value ("Preferred
Stock"), depositary shares representing fractional interests in shares of
Preferred Stock ("Depositary Shares"), Common Stock, without par value,
including the Preferred Stock Purchase Rights attached thereto ("Common
Stock"), warrants to purchase Debt Securities ("Debt Warrants") or other types
of warrants to purchase Securities ("Other Warrants" together with the Debt
Warrants, the "Warrants"). The Debt Securities, the Preferred Stock, the
Depositary Shares, the Common Stock, and the Warrants are hereinafter referred
to collectively as the "Securities". Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Registration Statement.
The Debt Securities will constitute either senior or subordinated debt
of the Company and will be issued under, in the case of the senior Debt
Securities, an indenture to be between the Company and Continental Bank,
as trustee (the "Senior Debt Indenture"), and in the case
of
<PAGE> 2
Federal-Mogul Corporation
August 3, 1994
Page 2
the subordinated Debt Securities, an indenture to be between the Company and
Continental Bank, as trustee (the "Subordinated Debt
Indenture"). The Senior Debt Indenture and the Subordinated Debt Indenture are
hereinafter referred to collectively as the "Indentures".
Depositary Shares will be deposited under a Deposit Agreement between
the Company and a bank or trust company and evidenced by Depositary Receipts.
Debt Warrants and Other Warrants will be issued either independently or
together with other Securities and will be issued pursuant to a Warrant
Agreement between the Company and a bank or trust company as Warrant Agent.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials, and other instruments as we have deemed necessary or
advisable for purposes of this opinion.
Based upon the foregoing, we are of the opinion that, except as limited
by (i) in the case of paragraphs 1 and 3, bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) in the case of paragraphs 1 and
3, general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), (iii) in the case of paragraph
1, requirements that a claim with respect to any Debt Securities denominated
other than in United States dollars (or a judgement denominated other than in
United States dollars with respect of such a claim) be converted into United
States dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law, and (iv) in the case of paragraphs 1 and 3, governmental
authority to limit, delay, or prohibit the making of payments outside the
United States or in foreign currency or composite currency:
1. When the specific terms of a particular Debt Security
(including any Debt Security duly issued upon a conversion for any
other Debt Securities, the conversion or exchange of any shares of
Preferred Stock or upon exercise of any Warrants) and its issuance and
sale have been duly established in accordance with the Senior
Indenture or the Subordinated Indenture, as the case may be, and such
Debt Security has been duly executed and authenticated in accordance
with the Senior Indenture or Subordinated
<PAGE> 3
Federal-Mogul Corporation
August 3, 1994
Page 3
Indenture, as the case may be, and duly issued and sold as
contemplated by the Registration Statement and applicable Prospectus
Supplement or upon exchange, conversion or exercise in accordance with
the terms of any other Security that has been validly issued, paid for
and delivered, such Debt Security will constitute the valid and
binding obligation of the Company.
2. When the terms of Depositary Shares evidenced by Depositary
Receipts are duly established and such Depositary Shares are issued
and sold, in each case, in accordance with the terms of the Deposit
Agreement against the deposit of validly issued, fully paid and
nonassessable shares of Preferred Stock, and when the Depositary
Shares as evidenced by Depositary Receipts are issued and sold as
contemplated by the Registration Statement and applicable Prospectus
Supplement, such Depositary Shares will entitle the persons in whose
names the Depositary Receipts evidencing such Depositary Shares are
registered to the rights specified therein and in the Deposit
Agreement.
3. When the specific terms of a particular Warrant have been duly
established in conformity with the Warrant Agreement and such Warrant
has been duly executed and countersigned in accordance with the
Warrant Agreement and issued and sold in the applicable form to be
filed as an exhibit to the Registration Statement and as
contemplated by the Registration Statement and applicable Prospectus
Supplement, such Warrant will constitute the valid and binding
obligation of the Company.
In connection with the opinions expressed above, we have assumed with
your consent that, at or prior to the time of the delivery of any such
Security, (i) the Board of Directors, themselves or as so delegated, shall not
have modified or rescinded the duly authorized issuance and sale of such
Security, (ii) the Registration Statement shall have been declared effective
and such effectiveness shall not have been terminated or rescinded, (iii) with
respect to paragraph 1, the applicable Trustee and the applicable Indentures
shall have been qualified under the Trust Indenture Act of 1939, as amended,
(iv) with respect to paragraphs 1 to 3, the Company (a) shall have full
<PAGE> 4
Federal-Mogul Corporation
August 3, 1994
Page 4
power and authority to execute, deliver and perform the obligations set forth
in the applicable documents, (b) the applicable documents shall have been duly
authorized, executed and delivered by the Company and (c) the execution and
delivery of the applicable documents and the performance by the Company of its
obligations thereunder shall not have violated, breached or otherwise given
rise to a default under the terms or provisions of its charter documents and
bylaws or of any material contract, commitment or other obligation to which the
Company is a party and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company,
and (v) there will not have occurred any change in law affecting the validity
or enforceability of such Security. We have also assumed that none of the
terms of any Security to be established subsequent to the date hereof nor the
issuance and sale of such Security, nor the compliance by the Company with the
terms of such Security, will violate any applicable law or will result in a
violation of any provision of any instrument or agreement then binding upon the
Company, or any restriction imposed by any court or governmental body having
jurisdiction over the Company.
We are members of the Bar of the State of New York, and the foregoing
opinion is limited to the laws of the State of New York, and the federal laws
of the United States of America.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement of the Company relating to the Securities and to the
reference to our name in the Prospectus contained therein. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" in the Registration Statement on Form S-3 and the related combined
Prospectus of Federal-Mogul Corporation for the registration of $100,000,000 of
debt securities, preferred stock, depository shares, common stock and warrants,
and to the incorporation by reference therein of our report dated February 8,
1994, with respect to the consolidated financial statements and schedules of
Federal-Mogul Corporation included in its Annual Report (Form 10-K) for the
year ended December 31, 1993, filed with the Securities and Exchange
Commission.
ERNST & YOUNG
Detroit, Michigan
August 2, 1994
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 29, 1993,
included in Federal-Mogul Corporation's Form 8-K, dated November 10, 1993, as
amended by Form 8-K/A, dated February 11, 1994, and to all references to our
Firm included in this registration statement.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
August 2, 1994
