UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-985
INGERSOLL-RAND COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 13-5156640
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Woodcliff Lake, New Jersey 07675
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(201)573-0123
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Series A Preference
Stock Purchase Rights New York, London and Amsterdam
Common Stock, $2 par value New York, London and Amsterdam
Income PRIDES New York
Growth PRIDES New York
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
The aggregate market value of common stock held by nonaffiliates
on February 27, 1999 was $7,838,722,194 based on the closing
price of such stock on the New York Stock Exchange. This
includes the shares owned by the Registrant's Leveraged Employee
Stock Ownership Plan.
The number of shares of common stock outstanding as of February
27,1999 was 164,889,619.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for fiscal year ended December
31, 1998. With the exception of those portions which are
incorporated by reference into Parts I, II and IV of this Form
10-K Annual Report, the 1998 Annual Report to Shareholders is not
to be deemed filed as part of this report.
Proxy Statement for Annual Meeting of Shareholders to be held
on May 5, 1999. See Part III of this Form 10-K Annual Report for
portions incorporated by reference. (A definitive proxy
statement has been filed with the Commission since the close of
the fiscal year).
PART I
Item 1. BUSINESS
Ingersoll-Rand Company (the company) was organized in 1905 under
the laws of the State of New Jersey as a consolidation of
Ingersoll-Sergeant Drill Company and the Rand Drill Company,
whose businesses were established in the early 1870's. Over the
years, the company has supplemented its original business, which
consisted primarily of the manufacture and sale of rock drilling
equipment, with additional products which have been developed
internally or obtained through acquisition.
The following acquisitions have been accounted for as purchases
and, accordingly, each purchase price was allocated to the
acquired assets and assumed liabilities based on their estimated
fair values. The results of operations since the dates of
acquisition are included in the consolidated financial
statements.
o In the first quarter of 1998, the company acquired for
approximately $15.4 million in cash, substantially all the
assets of Johnstone Pump Company (Johnstone). Johnstone
manufactures industrial piston pumps, automated dispensing
systems and related products for use primarily in the
automotive industry. The company also acquired for
approximately $18 million in cash, the door hardware technology
and intellectual property relating to residential door locksets
from the Master Lock unit of Fortune Brands, Inc. The Master
Lock transaction covers patents and certain manufacturing
assets used to produce residential locks, excluding padlocks.
In the third quarter of 1998, the company acquired full
ownership of GHH-RAND Schraubenkompressoren GmbH & Co. KG (GHH-
RAND), a manufacturer of air ends for air compressors. The
company previously owned 50 percent of GHH-RAND.
o On October 31, 1997, the company acquired Thermo King
Corporation (Thermo King) from Westinghouse Electric
Corporation, for an aggregate purchase price of approximately
$2.56 billion in cash. Thermo King designs, manufactures and
distributes transport temperature control systems and service
parts for a variety of mobile applications, including trailers,
truck bodies, seagoing containers, buses and light-rail cars.
o In April 1997, the company completed the acquisition of Newman
Tonks Group PLC (Newman Tonks), a United Kingdom-based
producer of architectural hardware products headquartered in
Birmingham, England. Newman Tonks is a leading manufacturer,
specifier and supplier of branded architectural hardware
products.
o On August 27, 1996, the company acquired for $34.3 million in
cash and the assumption of certain liabilities, substantially
all of the assets of Zimmerman International Corp. (Zimmerman).
Zimmerman manufactures equipment and systems that assist in
handling or lifting tools, components and materials for a
variety of industrial operations.
o On January 31, 1996, the company acquired for $95.4 million in
cash and the assumption of certain liabilities, the Steelcraft
Division of MascoTech, Inc. Steelcraft manufactures a wide
range of cold-rolled and galvanized steel doors for use
primarily in nonresidential construction.
Dispositions that the company has made in recent years are as
follows:
o In the first quarter of 1998, the company completed the sale of
Ing. G. Klemm Bohrtechnik GmbH. Also in 1998, the company sold
certain assets of Ingersoll-Rand Architectural Hardware Group
Limited (formerly Newman Tonks Group Limited). Sales proceeds
approximated the book value of these assets. In the third
quarter of 1998 the company sold the Spra-Coupe product line
which was reported as part of the Specialty Vehicle Segment.
The sale price of approximately $35 million resulted in a $9
million gain.
o On February 14, 1997, the company sold Clark-Hurth Components
Group (Clark-Hurth) to Dana Corporation for approximately
$241.5 million of net cash. This group's 1997 results,
inclusive of the sale transaction, produced operating income
for the first quarter of approximately $2.7 million, but on an
after-tax basis, reduced net earnings by approximately $3.6
million.
o During 1996, the company sold the Process Systems Group in two
separate transactions at a price of approximately $180.3
million. The company recorded a pretax gain of $55 million.
Products
The company manufactures and sells primarily nonelectrical
machinery and equipment. Principal products include the
following:
Air balancers
Air compressors & accessories
Air dryers
Air logic controls
Air motors
Air and electric tools
Architectural hardware trim
Asphalt compactors
Asphalt pavers
Automated dispensing systems
Automated production systems
Automotive components
Ball bearings
Blasthole drills
Blowers
Centrifugal pumps
Compact hydraulic excavators
Construction equipment
Diaphragm pumps
Door closers
Door control hardware
Door locks, latches & locksets
Doors and door frames (steel)
Drilling equipment and accessories
Electrical security systems
Engineered pumps
Engine-starting systems
Exit devices
Extrusion pump systems
Fastener-tightening systems
Fluid-handling equipment
Foundation drills
Golf cars
Hoists
Hydraulic breakers
Lubrication equipment
Material handling equipment
Mining equipment
Multistage pumps
Needle roller bearings
Parts-washing systems
Paving equipment
Piston pumps
Pneumatic breakers
Pneumatic cylinders
Pneumatic valves
Portable compressors
Portable generators
Portable light towers
Reciprocating pumps
Road-building machinery
Rock drills
Rock stabilizers
Roller bearings
Rotary drills
Rotary pumps
Rough-terrain forklifts
Skid-steer loaders
Soil compactors
Spray-coating systems
Submersible pumps
Transport temperature control systems
Utility vehicles
Vacuum pumps
Vertical turbine pumps
Waterjet-cutting systems
Water-well drills
Winches
These products are sold primarily under the company's name and
also under other names including ABG, Blaw-Knox, Bobcat, Charles
Maire, Club Car, Dixie-Pacific, Dor-O-Matic, Ecoair, Fafnir,
Falcon, Glynn-Johnson, Ingersoll-Dresser Pumps, Johnstone, LCN,
Legge, Monarch, Montabert, Normbau, Schlage, Steelcraft, Thermo
King, Torrington, Von Duprin and Zimmerman.
During the past three years, the division of the company's sales
between capital goods and expendables has been in the approximate
ratio of 63 percent and 37 percent, respectively. The company
generally defines as expendables those products which are not
capitalized by the ultimate user. Examples of such products are
parts sold for replacement purposes, power tools and needle
bearings.
Additional information on the company's business and financial
information about industry segments is presented in Note 17 to
the Consolidated Financial Statements included in the company's
Annual Report to Shareholders for 1998, incorporated by reference
in this Form 10-K Annual Report.
Distribution
The company's products are distributed by a number of methods
which the company believes are appropriate to the type of
product. Sales are made domestically through branch sales
offices and through distributorships and dealers across the
United States. International sales are made through
approximately 75 subsidiary sales and service companies with a
supporting chain of distributors in over 100 countries.
Working Capital
The working capital requirements of the company vary with respect
to the many products and industries in which it is involved. In
general, the requirements of its Engineered Products Segment,
which manufactures machinery for specialized customer needs,
involve a relatively long lead time and, at times, more
significant company investment with respect to the particular
product or order. Historically, these orders are generally
covered by progress payments, which reduce the company's
investment in the amount of inventory maintained by this segment.
The products manufactured by the company's Specialty Vehicles,
Air & Temperature Control and Hardware and Tools segments are
more in the nature of standard equipment. Consequently, a wider
variety of such products must usually be more readily available
to meet rapid delivery requirements. Such working capital
requirements are not, however, in the opinion of management,
materially different from those experienced by the company's
major competitors.
Customers
No material part of the company's business is dependent upon a
single customer or very few customers, the loss of any one of
which would have a material adverse effect on the company's
operations.
Competitive Conditions
The company's products are sold in highly competitive markets
throughout the world against products produced by both foreign
and domestic corporations. The principal methods of competition
in these markets relate to price, quality and service. The
company believes that it is one of the leading manufacturers in
the world of a broad line of air compression systems, anti-
friction bearings, construction equipment, transport temperature
control products, air tools, pumps, golf cars and utility
vehicles. In addition, the company believes it is a leading
supplier in domestic markets for locks, other door hardware
products, skid-steer loaders and asphalt paving equipment.
International Operations
Sales to customers outside the United States accounted for
approximately 38 percent of the consolidated net sales in 1998.
Sales outside of the United States are made in more than 100
countries; therefore, the attendant risks of manufacturing or
selling in a particular country, such as nationalization and
establishment of common markets, would not have a significant
effect on the company's international operations.
Raw Materials
The company manufactures many of the components included in its
products. The principal raw materials required for the
manufacture of the company's products are purchased from numerous
suppliers, and the company believes that available sources of
supply will generally be sufficient for its needs for the
foreseeable future.
Backlog
The company's approximate backlog of orders at December 31, 1998,
believed by it to be firm, was $248 million for the Specialty
Vehicles Segment, $304 million for the Air & Temperature Control
Segment, $189 million for the Hardware & Tools Segment and $743
million for the Engineered Products Segment as compared to $247
million, $323 million, $192 million and $783 million,
respectively, at December 31, 1997. These backlog figures are
based on orders received. While the major portion of the
company's products are built in advance of order and either
shipped or assembled from stock, orders for specialized machinery
or specific customer application are submitted with extensive
lead time and are often subject to revision, deferral,
cancellation or termination. The company estimates that
approximately 90 percent of the backlog will be shipped during
the next twelve months.
Research, Engineering and Development
The company maintains extensive research, engineering and
development facilities for experimenting, testing and developing
high quality products. The company employs approximately 1,821
professional employees for its research, engineering and
development activities. The company spent $259 million in 1998,
$216 million in 1997 and $209 million in 1996 on research,
engineering and development.
Patents and Licenses
The company owns numerous patents and patent applications and is
licensed under others. While it considers that in the aggregate
its patents and licenses are valuable, it does not believe that
its business is materially dependent on its patents or licenses
or any group of them. In the company's opinion, engineering and
production skills, and experience are more responsible for its
market position than patents or licenses.
Environmental Matters
The company has been and continues to be dedicated to an
environmental program to reduce the utilization and generation of
hazardous materials during the manufacturing process and to
remediate identified environmental concerns. As to the latter,
the company currently is engaged in site investigations and
remedial activities to address environmental cleanup from past
operations at current and former manufacturing facilities.
During 1998, the company spent approximately $8 million on
capital projects for pollution abatement and control and an
additional $6 million for environmental remediation expenditures
at sites presently or formerly owned or leased by the company.
It should be noted that these amounts are difficult to estimate
because environmental improvement costs are generally a part of
the overall improvement costs at a particular plant, and the
accurate estimate of which portion of an improvement or a capital
expenditure relates to an environmental improvement is difficult
to ascertain. The company believes that these expenditure levels
will continue and may increase over time. Given the evolving
nature of environmental laws, regulations and technology, the
ultimate cost of future compliance is uncertain.
The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental
laws and regulations from the Environmental Protection Agency and
similar state authorities. It is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-
site waste disposal at approximately 32 federal Superfund and
state remediations sites, excluding sites as to which the
company's records disclose no involvement or as to which the
company's liability has been fully determined. For all sites
there are other PRPs and in most instances, the company's site
involvement is minimal. In estimating its liability, the company
has assumed it will not bear the entire cost of remediation of
any site to the exclusion of other PRPs who may be jointly and
severally liable. The ability of other PRPs to participate has
been taken into account, based generally on the parties'
financial condition and probable contribution on a per site
basis. Additional lawsuits and claims involving environmental
matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash
flows of the company for any year. It should be noted that when
the company estimates its liability for environmental matters,
such estimates are based on current technologies and the company
does not discount its liability or assume any insurance
recoveries.
Employees
There are approximately 46,500 employees of the company
throughout the world, of whom approximately 29,000 work in the
United States and 17,500 in foreign countries. Approximately 38%
percent of the company's United States production and maintenance
employees, who work in 14 plants, are represented by 8 unions.
The company believes relations with its employees are good.
Item 2. PROPERTIES
The company's executive offices are located at Woodcliff Lake,
New Jersey. Manufacturing and assembly operations are conducted
in 60 plants in the United States; 5 plants in Canada; 39 plants
in Europe; 11 plants in Asia, and 7 plants in Latin America. The
company also maintains various warehouses, offices and repair
centers in the United States, Canada and abroad.
Substantially all plant facilities are owned by the company and
the remainder are under long-term lease. The company believes
that its plants and equipment have been well-maintained and are
generally in good condition. The company has several closed
facilities that it is actively marketing with the intent of
selling them at their net realizable value.
The reportable segments for which the facilities are primarily
used are as described below. Facilities under long-term lease are
included below and are not significant to each operating
segment's total number of plants or square footage.
Specialty Vehicles
The Specialty Vehicle Segment designs, manufactures and markets
powered vehicles that play a niche role in such fields as
infrastructure development, commercial construction and material
movement. This segment's products include machinery regularly
used in general manufacturing and in industries such as mining
and construction. This segment's branded products include Bobcat
skid-steer loaders and compact hydraulic excavators; Club Car
golf cars; Blaw-Knox pavers; and Ingersoll-Rand compactors,
drilling equipment and rough-terrain material handlers. The
segment's manufacturing locations are as follows:
Approximate
Number of Plants Square Footage
Domestic 7 2,299,000
International 3 547,000
Total 10 2,846,000
Air & Temperature Control
The Air and Temperature Control Segment focuses on markets
requiring air and refrigerant gas compression technology and
services. This segment's branded products include Thermo King
Transport Temperature-Control equipment, and Ingersoll-Rand air
compressors. The segment's manufacturing facilities are as
follows:
Approximate
Number of Plants Square Footage
Domestic 10 2,479,000
International 16 2,256,000
Total 26 4,735,000
Hardware and Tools
The Hardware and Tool Segment concentrates on manufacturing,
marketing, and managing the distribution channels required to
reach end user customers seeking products that enhance
productivity and security in the industrial, construction, and do-
it-yourself markets. This segment includes architectural
hardware products, such as Schlage locks, Von Duprin exit
devices, door-control hardware, steel doors, power operated doors
and architectural columns, and tools and related industrial-
production equipment. The segment's manufacturing facilities are
as follows:
Approximate
Number of Plants Square Footage
Domestic 20 3,495,000
International 20 1,542,000
Total 40 5,037,000
Engineered Products
The Engineered Products Segment is comprised of highly engineered
application products that are sold on a specific contract design
basis. This segment's products include Torrington and Fafnir
bearings and components, and pumps used in industrial, commercial
and municipal applications. The segment's manufacturing
facilities are as follows:
Approximate
Number of Plants Square Footage
Domestic 23 5,251,000
International 23 3,456,000
Total 46 8,707,000
Item 3. LEGAL PROCEEDINGS
In the normal course of business, the company is involved in a
variety of lawsuits, claims and legal proceedings, including
proceedings for off-site waste disposal cleanup of approximately
32 sites under federal Superfund and similar state laws. In the
opinion of the company, pending legal matters, including the one
discussed below, are not expected to have a material adverse
effect on the results of operations, financial condition,
liquidity or cash flows.
By letter dated February 4, 1999, the Michigan Department of
Environmental Quality ("DEQ") assessed a civil penalty in the
amount of $113,750 on the Company for an alleged violation of a
DEQ Administrative Order on Consent ("AOC"). The AOC governs the
Company's environmental investigation and cleanup obligations
related to the McCoy Creek Industrial Park, Buchanan, Michigan.
The Company contests the penalty and has invoked the dispute
resolution provisions of the AOC to resolve the matter.
See also the discussion under Item 1 - Environmental Matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security
holders during the last quarter of its fiscal year ended December
31, 1998.
The following information is included in accordance with the
provision of Part III, Item 10.
Date of
Service as Principal Occupation and
an Executive Other Information
Name and Age Officer for Past Five Years
James E. Perrella(63) 5/4/77 Chairman of the Board,
President and Chief
Executive Officer,
Director
Brian D. Jellison(53) 2/7/96 Executive Vice President,
(Vice President and
President of the
Architectural Hardware
Group, 1995 - 1998;
President of the Door
Hardware Group, 1994 - 1995)
Steven T. Martin(58) 5/2/96 Executive Vice President
(Vice President and
President of Production
Equipment Group,1996 - 1998;
President of Production
Equipment Group 1995 - 1996,
Vice President and General
Manager Fafnir Bearings
Division of Torrington,
1986-1995)
David W. Devonshire(53) 1/12/98 Senior Vice President and
Chief Financial Officer,
(Senior Vice President and
Chief Financial Officer,
Owens Corning 1993 - 1997)
Patricia Nachtigal(52) 11/2/88 Vice President and General
Counsel
Nicholas J. Pishotti(58) 4/10/95 Vice President - Strategic
Technologies (General
Manager, Aircraft Engine
Sourcing Department,
General Electric Company,
1988 - 1995)
Steven R. Shawley(46) 6/1/98 Controller (Thermo King
Business Unit Controller
1994-1998; Controller -
Power Generation Projects
Division of Westinghouse
Electric Corporation 1993
-1994)
No family relationship exists between any of the above-listed
executive officers of the company. All officers are elected to
hold office for one year or until their successors are elected
and qualify.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information regarding the principal market for the company's
common stock and related stockholder matters are as follows:
Quarterly share prices and dividends for the common stock are
shown in the following tabulation. The common shares are listed
on the New York Stock Exchange and also on the London and
Amsterdam exchanges.
Common Stock
High Low Dividend
1998
First quarter 49 1/4 36 1/2 $0.150
Second quarter 54 41 0.150
Third quarter 47 5/8 34 7/8 0.150
Fourth quarter 52 1/8 34 0.150
1997
First quarter $32 7/8 $28 9/16 $0.137
Second quarter 41 3/4 27 13/16 0.137
Third quarter 45 9/16 37 1/2 0.150
Fourth quarter 46 1/4 34 11/16 0.150
The Bank of New York (Church Street Station, P.O. Box 11258, New
York, NY 10286-1258, (800)524-4458) is the transfer agent,
registrar and dividend reinvestment agent.
There are no significant restrictions on the payment of
dividends. The approximate number of record holders of common
stock as of February 27, 1999 was 11,190.
Item 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended December 31,
1998, is as follows (in millions except per share amounts):
December 31 1998 1997 1996 1995 1994
Net sales $8,291.5 $7,103.3 $6,702.9 $5,729.0 $4,507.5
Net earnings 509.1 380.5 358.0 270.3 211.1
Total assets 8,309.3 8,415.6 5,621.6 5,563.3 3,596.9
Long-term debt 2,166.0 2,528.0 1,163.8 1,304.4 315.9
Shareholders'
equity 2,707.5 2,341.4 2,090.8 1,795.5 1,531.3
Basic earnings
per common share $3.11 $2.33 $2.22 $1.70 $1.33
Diluted earning
per common share 3.08 2.31 2.21 1.69 1.33
Dividends per
common share 0.60 0.57 0.52 0.49 0.48
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1998 Compared to 1997
The company reported a fifth consecutive year of record sales and
earnings for 1998. These financial achievements were the result
of a strong domestic economy, moderate economic growth in
selected international markets, and continued success of the
company's asset-management, strategic-sourcing and productivity-
improvement programs, despite depressed results in the company's
Asian markets.
Sales for 1998 totalled $8.3 billion, which generated $1,044.4
million of operating income and $509.1 million of net earnings
($3.08 diluted earnings per share). The company's results for
1998 included a full year's benefit from the October 31, 1997,
acquisition of Thermo King Corporation (Thermo King). Thermo
King reported 1998 sales of $1.2 billion with an operating
income contribution of $159.3 million and net earnings of $24.0
million or 15 cents diluted earnings per share after the
allocation of acquisition interest expense and the related tax
benefit.
The company's reported results for 1997 were sales of $7.1
billion, which generated $760.3 million of operating income and
produced net earnings for the year of $380.5 million ($2.31
diluted earnings per share). The 1997 noncomparable items
include the following:
o Thermo King's activity for the last two months of the year
generated $176.9 million of sales and produced an operating
loss of $0.2 million, after goodwill amortization and the
effect of estimated purchase accounting adjustments. Thermo
King's net loss for the two months ended December 31, 1997, was
$11.3 million (seven cents diluted earnings per share) after
the allocation of acquisition interest expense of $27.3
million.
o The equity in earnings of partially-owned affiliates in 1997
included a restructuring charge recorded by one of the
company's partially-owned affiliates. This charge reduced the
company's pretax earnings by $13.9 million and its after-tax
results by $11.6 million (seven cents diluted earnings per
share).
o During the fourth quarter of 1997, a consolidated (51-percent
owned) joint venture of the company recorded a $24 million
charge to operating income for costs to close and consolidate
underperforming operations. The effect of the restructure
charge, after taxes and minority interest, was $8.1 million
(five cents diluted earnings per share).
After considering the items listed above, adjusted 1997 net
sales, operating income and net earnings were approximately $6.9
billion, $784 million and $412 million ($2.50 diluted earnings
per share), respectively.
On an adjusted basis, 1998 sales increased modestly, with a 12.8-
percent increase in operating income resulting in a significant
increase of 18 percent in net earnings for 1998 over the adjusted
1997 results.
A comparison of key financial data between 1998 and 1997 follows:
o Net sales in 1998 established a record at $8.3 billion,
reflecting a 16.7-percent improvement over the 1997 total of
$7.1 billion. Excluding noncomparable units from both years,
adjusted sales for 1998 increased by 2.3 percent over the 1997
adjusted total.
o Cost of goods sold in 1998 was 72.9 percent of sales, compared
to 74.1 percent in 1997. There were no partial liquidations of
LIFO (last-in, first-out) inventory during 1998, but such
liquidations lowered 1997 costs by $4.1 million. Excluding the
effects of the LIFO liquidations, the 1997 cost of goods sold
relationship to sales would have been 74.2 percent versus 72.9
percent for 1998. Excluding noncomparable items from both
years, the adjusted ratio of cost of goods sold to sales
reflected a marked improvement in 1998, compared to 1997.
o Administrative, selling and service engineering expenses were
14.5 percent of sales in 1998, compared to 15.2 percent for
1997. This decrease is primarily attributable to the inclusion
of Thermo King, which traditionally had a ratio of selling and
administrative expenses to sales lower than the company's
historical lines of business.
o Operating income for the year totalled $1,044.4 million, a
37.4-percent increase over 1997 operating income of $760.3
million. The ratio of operating income to sales in 1998 was
12.6 percent, compared to 10.7 percent for the prior year.
After excluding the noncomparable items (previously
discussed) from both years, adjusted 1998 operating income
still reflects a double-digit improvement over the adjusted
1997 results. This improvement was the combined effect of
the company's aggressive productivity-improvement and
procurement programs, and the continued stability of domestic
markets.
o Interest expense for the year totalled $225.8 million versus
$136.6 million for 1997. Interest expense associated with the
debt incurred for the Thermo King acquisition totalled
approximately $129.3 million in 1998 (excluding costs related
to the company's equity-linked securities) and $27.3 million
for the last two months of 1997.
o Other income (expense), net, is the sum of foreign exchange
activities and other miscellaneous income and expense items.
In 1998, these activities resulted in a net expense of $22.0
million, an unfavorable change of $0.5 million compared to the
1997 net other expense of $21.5 million. This change was
caused by higher foreign exchange losses of $10.2 million in
1998, offset by lower net miscellaneous income and expense
items.
o The company's equity in earnings of partially-owned affiliates
includes its interest in several affiliates that operate in
similar lines of business and includes the company's 49-percent
interest in Dresser-Rand Company (Dresser-Rand). The combined
equity earnings for 1998 totalled $46.8 million compared to
$28.8 million for 1997. The year-over-year increase of $18.0
million reflects a $23.6 million improvement in the results
from Dresser-Rand. The Dresser-Rand improvement resulted from a
combination of stronger operating results in 1998 and a
nonrecurring charge of $11.6 million in 1997, which was
partially offset by lower earnings from the company's partially-
owned affiliates operating in Asian markets.
o The company's charges for minority interests are composed of
two items: (1) interests of minority owners (less than 50
percent) in a consolidated unit of the company which totalled
$34.5 million in 1998 and $17.3 million in 1997, and (2) $19.7
million of charges associated with the company's equity-linked
securities issued during the first quarter of 1998 as a
financing component of the Thermo King acquisition. The largest
minority interest relates to Ingersoll-Dresser Pump Company
(IDP), which represented $30.7 million of the 1998 balance,
compared to $13.7 million in 1997. IDP's change is due to
stronger operating results in 1998 and the 1997 pretax
restructuring charge of $24 million (discussed previously).
The remaining charges for minority interests during the two
periods were comparable.
o The company's effective tax rate for 1998 was 35.5 percent,
which improved from the 38.0 percent reported for the prior year
due to a full-year favorable tax benefit associated with the
Thermo King acquisition. The variance from the 35.0 percent
statutory rate primarily was due to the higher tax rates
associated with foreign earnings, the effect of state and local
taxes, the nondeductibility of a portion of the goodwill
associated with acquisitions and favorable tax benefits
associated with the Thermo King acquisition.
At December 31, 1998, employment totalled 46,525. This
represents a slight decrease from last year's level of 46,567.
Outlook
The company's outlook for 1999 is for steady improvement in
operating results based on continued stability and growth in
domestic markets, with no further deterioration in Asian
markets and some strengthening in European markets. These
expectations will be supported by aggressive asset-management,
strategic-sourcing and productivity-improvement programs.
Review of Business Segments
Specialty Vehicles
Specialty Vehicles Segment sales were $2.2 billion, an increase
of 8.4 percent over the $2.0 billion reported for 1997.
Operating income for 1998 totalled $333.3 million, representing
an increase of 47.0 percent over last year's total of $226.7
million. All major product lines reported improvements in sales,
operating income and operating margins for the year.
Air and Temperature Control
The Air and Temperature Control Segment reported sales and
operating income of $2.2 billion and $262.5 million,
respectively, compared with $1.3 billion and $133.7 million,
respectively, in 1997. The results for 1997 include only two
months of Thermo King, while the full year of 1998 produced
sales of $1.2 billion and operating income of $159.3 million.
Air compressor sales decreased by 4.3 percent, while
operating income decreased by 22.9 percent. This decline was
caused by continued weakness in the company's Asian markets.
Hardware and Tools
The Hardware and Tools Segment sales increased by 4.4 percent to
$1.7 billion. Operating income increased $33.5 million from
$254.8 million in 1997. Architectural hardware products reported
increases of 13.9 percent in sales and 26.9 percent in operating
income. Modest decreases in sales and operating income for
industrial-production equipment were attributable to continued
weakness in the automated production systems business.
Engineered Products
In 1998, the Engineered Products Segment reported a 1.5 percent
decrease in sales and a 9.4 percent increase in operating income
compared to 1997. The lower sales reflect weakness in the Fafnir
industrial bearings business. IDP's sales were up 4.9 percent
from 1997, and operating income increased $37.2 million, largely
due to the $24 million restructuring charge recorded in 1997.
Liquidity and Capital Resources
During 1998, the company made significant progress in improving
its liquidity and capital resources by (1) completing the
financing of the Thermo King acquisition with the issuance of
$402.5 million of equity-linked securities during the first
quarter of the year, and (2) reducing the company's debt by an
additional $570.9 million, which was generated from the company's
strong cash flow during the year. The proceeds from the equity-
linked securities were used to reduce the company's short-term
borrowings, which were originally issued to satisfy a portion of
the cash requirements for the acquisition of Thermo King on
October 31, 1997. These actions primarily contributed to the
company's reduction in its debt-to-total capital ratio from 58
percent at the end of last year to 43 percent at December 31,
1998.
The following table contains several key measures which the
company's management uses to gauge the company's financial
performance:
1998 1997 1996
Working capital (in millions) $579 $217 $1,245
Current ratio 1.3 1.1 2.0
Debt-to-total capital ratio 43% 58% 37%
Average working capital
to net sales 4.8% 10.3% 16.9%
Average days outstanding
in receivables 50.9 54.5 56.1
Average months' supply
of inventory 2.4 2.5 3.0
The company maintains significant operations in foreign
countries; therefore, the movement of the U.S. dollar against
foreign currencies has an impact on the company's financial
position. Generally, the functional currency of the company's
foreign subsidiaries is their local currency, the currency in
which they transact their business. The company manages exposure
to changes in foreign currency exchange rates through its normal
operating and financing activities, as well as through the use of
forward exchange contracts. The company attempts, through its
hedging activities, to mitigate the impact on income of changes
in foreign exchange rates. Additionally, the company maintains
operations in countries where the company transacts business in
U.S. dollars. The functional currency of these operations is the
U.S. dollar. (Additional information on the company's use of
financial instruments can be found in Note 7 to the Consolidated
Financial Statements.)
The following points highlight the financial results and
financial condition of the company's operations, with the impact
of foreign currency translation where appropriate:
o Cash and cash equivalents totalled $71.9 million at December
31, 1998, a $33.0 million reduction from the prior year-end
balance of $104.9 million. In evaluating the net change in
cash and cash equivalents, cash flows from operating, investing
and financing activities, and the effect of exchange rate
changes should be considered. Cash flows from operating
activities provided $899.0 million, investing activities used
$183.4 million and financing activities used $752.4 million.
Exchange rate changes during 1998 increased cash and cash
equivalents by $3.8 million.
o Marketable securities totalled $5.7 million at the end of 1998,
$1.2 million below the balance at December 31, 1997. The net
reduction was due to maturities and exchange rate changes.
o Receivables totalled $1,177.1 million at December 31, 1998,
compared to $1,281.5 million at the prior year end, a net
decrease of $104.4 million. The decrease is attributable to
improved cash collections and reductions from dispositions.
The company focuses on decreasing its receivables base through
its asset-management program, which produced a reduction in the
average days outstanding in receivables to 50.9 days from the
1997 level of 54.5 days.
o Inventories amounted to $940.8 million at December 31, 1998, an
increase of $86.0 million from last year's level of $854.8
million. Inventory increases at year end in anticipation of
early 1999 shipments, were the primary reason for the increase.
The company's emphasis on inventory control was demonstrated by
the reduction of the average months' supply of inventory to 2.4
months at December 31, 1998, compared to 2.5 months at the
prior year end.
o Prepaid expenses totalled $88.7 million at the end of the year,
$47.3 million lower than the balance at December 31, 1997.
Dispositions associated with assets held for sale are the
primary reason for the reduction in the account balance.
o Deferred income taxes (current) of $143.4 million at December
31, 1998, represented the deferred tax benefit of the
difference between the book and tax values of various current
assets and liabilities. The components of the balance are
included in Note 14 to the Consolidated Financial Statements.
o Investments in and advances with partially-owned equity
affiliates at December 31, 1998, totalled $344.7 million, $16.7
million above the 1997 balance of $328.0 million. This category
includes the company's 49-percent investment in Dresser-Rand
Company, as well as its investments in other partially-owned
equity affiliates. The investment in Dresser-Rand increased by
approximately $33 million during the year, reflecting the
company's portion of Dresser-Rand's 1998 results. The effects
of translation offset the reduction in the advance account
between the company and Dresser-Rand. Income and dividends from
the investments in all of the other partially-owned equity
affiliates were $13.8 million and $6.7 million, respectively.
Amounts due from these units decreased $13.6 million from
December 31, 1997. Currency movements and capital infusions
were the primary cause of the remaining change in the account
balance.
o Net property, plant and equipment increased by $64.4 million in
1998 to a year-end balance of $1,347.6 million. Capital
expenditures in 1998 totalled $221.0 million, and acquisitions
(net of dispositions) added $13.0 million. Foreign exchange
fluctuations increased net fixed assets by approximately $4.6
million. The remaining net decrease was the result of
depreciation, and sales and retirements.
o Intangible assets, net, totalled $3,774.3 million at December
31, 1998, as compared to $3,833.0 million at December 31, 1997,
for a net decrease of $58.7 million. The amortization expense
for the current year was $110.5 million. Acquisition activity
and the effects of foreign currency translation accounted for
the balance of the change.
o Deferred income taxes (noncurrent) totalled $235.9 million at
December 31, 1998, which was $21.0 million higher than the 1997
balance. The components comprising the balance at December 31,
1998, can be found in Note 14 to the Consolidated Financial
Statements.
o Other assets totalled $179.4 million at year end, a decrease of
$32.2 million from the December 31, 1997, balance of $211.6
million. Other assets decreased by approximately $25 million
due to a decrease in prepaid pensions and a general reduction
in other noncurrent assets accounted for the balance of the
reductions. Foreign exchange activity in 1998 had a minimal
effect on the account balance during the year.
o Accounts payable and accruals totalled $1,488.6 million at
December 31, 1998, an increase of $118.1 million from last
year's balance of $1,370.5 million. Increased inventory levels
at year end and acquisitions, net of dispositions, along with
the timing of payrolls and benefits account for the increase in
1998.
o Loans payable were $318.7 million at the end of 1998, which
reflects a $606.4 million reduction from the $925.1 million
level at December 31, 1997. Proceeds of $389.6 million from
the issuance of the company's equity-linked securities, were
used to reduce short-term debt during the year. In addition, as
a result of the company's aggressive asset management policies,
the company also repaid an additional $468.4 million of short-
term debt during 1998. Current maturities of long-term debt
increased the account balance by an additional $251.8 million.
The effect of translation accounted for the remaining change in
the account balance from the previous year end.
o Long-term debt, excluding current maturities, totalled $2,166.0
million, a reduction of approximately $362.0 million from the
prior year's balance of $2,528.0 million. Reductions to long-
term debt of $251.8 million represent the reclassification of
the current maturities of long-term debt to loans payable. In
addition, the company also repaid $110.0 million of long-term
debt with accelerated payments during the year. Foreign
exchange activity had a minimal effect on the account balance
during the year.
o Postemployment liabilities at December 31, 1998, totalled
$897.1 million, a decrease of $40.0 million from the December
31, 1997, balance. Postemployment liabilities include medical
and life insurance postretirement benefits, long-term pension
and other noncurrent postemployment accruals. (See Notes 15 and
16 to the Consolidated Financial Statements for additional
information.)
o Minority interest liabilities at December 31, 1998, totalled
$133.6 million, which represents a net increase of $5.7 million
over the balance at the end of the prior year. This liability
represents the ownership interests of other entities in
selected consolidated subsidiaries of the company, the largest
being the 49-percent interest in IDP. IDP's minority interest
at December 31, 1997, was $104.3 million. This balance
increased by $30.7 million, based on IDP's 1998 earnings and
was reduced by $35.0 million, which represented increases in
advances to the minority partner and the effect of translation.
The liability for all other minority interests totalled $23.6
million at December 31, 1997, and increased to $33.6 million
during 1998 due to earnings, advances and changes in ownership
participation.
o Other liabilities (noncurrent) at December 31, 1998, totalled
$154.0 million, which approximated the balance at December 31,
1997. These obligations are not expected to be paid in the next
year. Generally, these accruals cover environmental, insurance,
legal and other contractual obligations.
Other information concerning the company's financial resources,
commitments and plans is as follows:
The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $315.8
million in 1998, compared to $380.0 million in 1997. The
weighted average interest rate during 1998 was 6.3%, compared to
6.2% during the previous year. The maximum amounts outstanding
during 1998 and 1997, were $796.2 million and $2,434.1 million,
respectively.
The company had $1.0 billion in domestic short-term credit lines
at December 31, 1998, and $454.2 million of foreign credit lines
available for working capital purposes, $1.4 billion of which was
unused at the end of the year. These facilities exceed projected
requirements for 1999 and provide direct support for commercial
paper and indirect support for other financial instruments, such
as letters of credit and comfort letters.
In 1998, foreign currency translation adjustments increased
shareholders' equity by $3.3 million. This change was due to the
minor weakening of the U.S. dollar against other currencies in
countries where the company has significant operations and the
local currencies are the functional currencies. Currency changes
in France, Germany, and Japan accounted for nearly all of the
change.
During 1997, the company established two wholly-owned special
purpose subsidiaries to purchase accounts and notes receivable at
a discount from the company on a continuous basis. These special
purpose subsidiaries simultaneously sell an undivided interest in
these accounts and notes receivable to a financial institution up
to a maximum of $170 million. The agreements between the special
purpose corporations and the financial institution will expire in
one-year periods. The company intends to renew these agreements
at their expiration dates with either the current or another
financial institution. The company is retained as the servicer
of the pooled receivables. Prior to 1997, the company had sold
an undivided interest in the accounts and notes receivable
directly to financial institutions. At December 31, 1998 and
1997, $170 million and $150 million, respectively, of such
receivables remained uncollected.
Capital expenditures were $221.0 million and $186.0 million in
1998 and 1997, respectively. The company continues investing to
improve manufacturing productivity, reduce costs and provide
environmental enhancements, and advanced technologies for
existing facilities. The capital expenditure program for 1999 is
estimated at approximately $220 million, including amounts
approved in prior periods. There are no planned projects, either
individually or in the aggregate, that represent a material
commitment for the company. Many of these projects are subject
to review and cancellation at the option of the company without
incurring substantial charges.
Equity-linked Securities
In March 1998, the company, together with a statutory business
trust of the company (Finance Trust) issued an aggregate of (a)
16,100,000 equity-linked securities, and (b) 1,610,000 Finance
Trust 6.22% capital securities, each with a stated liquidation
amount. The equity-linked securities consisted of (a) 14,490,000
income equity-linked securities, and (b) 1,610,000 growth equity-
linked securities. Additional details about these equity-linked
securities are included in Note 10 to the Consolidated Financial
Statements.
Financial Market Risk
The company generates foreign currency exposures in the normal
course of business. To mitigate the risk from foreign currency
exchange rate fluctuations, the company will generally enter into
forward currency exchange contracts for the purchase or sale of a
currency in accordance with authorized levels pursuant to the
company's policies and procedures. The company applies
sensitivity analysis and value at risk (VAR) techniques when
measuring the company's exposure to currency fluctuations. VAR
is a measurement of the estimated loss in fair value until
currency positions can be neutralized, recessed or liquidated and
assumes a 95-percent confidence level with normal market
conditions. The potential one day loss, as of December 31, 1998,
was $2.8 million and it is considered insignificant in relation
to the company's results of operations and shareholders' equity.
With regard to interest rate risk, the effect of a hypothetical
one-percentage point increase in interest rates, across all
maturities, would increase the estimated fair value of the
company's long-term debt at December 31, 1998 from its carrying
value of $2,166.0 million to $2,188.8 million.
Year 2000
The company has in place a year 2000 compliance program to
address the issues raised by computer date programs using the
last two digits of a year. Pursuant to its year 2000 program,
the company reviewed its computer information systems, computer
hardware and embedded technology used in the company's products
and processes. This review was designed to identify which
computer systems and embedded technology might fail to correctly
process the year 2000. Based upon this review, which is now
complete, the company is replacing, modifying and/or upgrading
certain computer systems and embedded technology with the
objective being that no significant systems or devices will
malfunction as the result of failing to correctly process the
year 2000. The company, through the use of both internal
resources and outside consultants, has actively engaged in this
replacement, modification and upgrading and had substantially
completed its remediation program and testing by the end of 1998.
The review of company products revealed that all products
currently being produced are year 2000 compliant.
The total estimated cost of the year 2000 compliance program is
approximately $60 million. Management estimates that as of
December 31, 1998, total costs incurred to date have been
approximately $55 million. Approximately 45 percent of these
expenses were internal costs of the company. Although the
company has incurred expenses prior to 1997, these costs were not
separately identified. The company will continue to fund the cost
of the year 2000 compliance program through operating cash flow.
In addition to its internal review process, the company has
contacted suppliers and distributors on the year 2000 issue to
minimize problems in its supply and distribution chains. Most
major suppliers have given assurances that their ability to
supply the company will not be affected by the year 2000 issue;
however, the company cannot assure timely compliance of third
parties and may be adversely affected by failure of a significant
third party to become year 2000 compliant.
The company believes that the costs to address the issues raised
by the year 2000 problem will not have a material impact on the
company's financial condition, results of operations, liquidity
or cash flows for any year. The schedule for successful
completion of the year 2000 program and the estimated costs are
based upon certain assumptions by management on future events,
including the continued availability of qualified resources to
implement the program and current costs for such resources.
If the company fails to successfully complete a significant
portion of its year 2000 compliance program, such failure may
have a material adverse impact on the company's financial
condition. Currently management does not consider the
possibility of such a failure to be reasonably likely; however,
in the event management's assessment changes an appropriate
contingency plan will be developed.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of
the European Union established fixed conversion rates between
their existing sovereign currencies and the euro. The
participating countries agreed to adopt the euro as their
common legal currency on that date.
The company continues to identify and address all euro conversion
compliance issues. At this time, the company has not experienced
significant difficulties, but cannot predict the impact of the
euro conversion because of the numerous uncertainties associated
with noncompliance by third parties and the effect in the market
place on pricing due to currency transparency.
Environmental Matters
The company has been and continues to be dedicated to an
environmental program to reduce the utilization and generation of
hazardous materials during the manufacturing process and to
remediate identified environmental concerns. As to the latter,
the company currently is engaged in site investigations and
remedial activities to address environmental cleanup from past
operations at current and former manufacturing facilities.
During 1998, the company spent approximately $8 million on
capital projects for pollution abatement and control, and an
additional $6 million for environmental remediation expenditures
at sites presently or formerly owned or leased by the company. It
should be noted that these amounts are difficult to estimate
because environmental improvement costs are generally a part of
the overall improvement costs at a particular plant. Therefore,
the accurate estimate of which portion of an improvement or a
capital expenditure relates to an environmental improvement is
difficult to ascertain. The company believes that these
expenditure levels will continue and may increase over time.
Given the evolving nature of environmental laws, regulations and
technology, the ultimate cost of future compliance is uncertain.
The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental
laws and regulations from the Environmental Protection Agency and
similar state authorities. It is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-
site waste disposal at approximately 32 federal Superfund and
state remediation sites, excluding sites as to which the
company's records disclose no involvement or as to which the
company's liability has been fully determined. For all sites
there are other PRPs and in most instances, the company's site
involvement is minimal. In estimating its liability, the company
has not assumed it will bear the entire cost of remediation of
any site to the exclusion of other PRPs who may be jointly and
severally liable. The ability of other PRPs to participate has
been taken into account, based generally on the parties'
financial condition and probable contributions on a per site
basis. Additional lawsuits and claims involving environmental
matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash
flows of the company for any year. It should be noted that when
the company estimates its liability for environmental matters,
such estimates are based on current technologies, and the company
does not discount its liability or assume any insurance
recoveries.
Forward-looking Statements
Information provided by the company in this 1998 Annual Report on
Form 10-K, in periodic reports on Form 10-Q, in press releases
and in statements made by employees in oral discussions may
constitute or contain "forward-looking statements" as that term
is defined in the Private Securities Litigation Reform Act of
1995 or by the Securities and Exchange Commission in its rules,
regulations and releases. Forward-looking statements represent
the company's expectations concerning future events and, by their
nature, involve risk and uncertainty.
The company cautions investors that forward-looking statements
are not guarantees of future performance. A variety of factors
could cause business conditions and actual results to differ
materially from expected results contained in forward-looking
statements. The company includes among those factors the
following: changes in the rate of economic growth in the United
States and in other major international economies; impacts of
unusual items resulting from ongoing evaluations of
organizational structures, business strategies and acquisitions
and dispositions; significant changes in trade, monetary and
fiscal policies worldwide; currency fluctuations among the U.S.
dollar and other currencies; demand for company products;
distributor inventory levels; performance issues with key
suppliers and subcontractors; impact of the year 2000; failure to
achieve the company's productivity targets; costs and effects of
unanticipated legal and administrative proceedings; and,
competitor actions, such as unanticipated pricing actions or cost
reduction strategies and entry into direct product line
competition.
1997 Compared to 1996
Sales for 1997 totalled $7.1 billion, which generated $760.3
million of operating income and $380.5 million of net earnings
($2.33 basic earnings per share).
The company's results for 1997 reflect a more impressive increase
over 1996, considering the following noncomparable items:
o On October 31, 1997, the company completed its acquisition of
Thermo King Corporation (Thermo King) from Westinghouse
Electric Corporation. For the last two months of 1997, Thermo
King generated $176.9 million of sales and produced an
operating loss of approximately $0.2 million, after goodwill
amortization and the effect of estimated purchase accounting
adjustments. Thermo King's net loss for the two months ended
December 31, 1997, was approximately $11.3 million (seven cents
per share) after the allocation of acquisition interest expense
of approximately $27.3 million.
o At the beginning of April 1997, the company completed its
acquisition of Newman Tonks Group PLC (Newman Tonks). Since
its acquisition, Newman Tonks has generated approximately $230
million of sales, and produced approximately $15 million of
operating income, after the effect of goodwill amortization,
estimated purchase accounting adjustments and synergistic
benefits from group operations. Newman Tonks essentially
operated at the break-even level for 1997 after considering the
allocation of approximately $17.0 million of acquisition
interest expense and its related tax benefit.
o Dresser-Rand Company (Dresser-Rand) is a partnership that
manufactures reciprocating compressor and turbomachinery
products, in which the company owns a 49-percent interest. The
company accounts for its interest in Dresser-Rand under the
equity accounting method in which the company only records its
related ownership interest in the results of Dresser-Rand.
During the fourth quarter of 1997, Dresser-Rand recorded a $36
million restructuring charge to reduce its headcount and to
close underperforming operations. This charge reduced the
company's pretax earnings by $13.9 million and its after tax
results by $11.6 million (seven cents per share). Prior to the
restructuring charge, Dresser-Rand generated approximately $47.5
million of net earnings (after tax costs for international
subsidiaries) for 1997.
o Ingersoll-Dresser Pump Company (IDP) is a joint venture, in
which the company owns a 51-percent interest and, therefore,
it is consolidated into the company's financial statements.
During the fourth quarter of 1997, IDP recorded a $24 million
charge to operating income for costs to close and consolidate
underperforming operations. The effect of the restructure
charge, after taxes and minority interest, was $8.1 million.
After considering the items listed above, adjusted 1997 net
sales, operating income and net earnings were approximately $6.7
billion, $770 million and $412 million ($2.52 basic earnings per
share), respectively.
The company reported sales of $6.7 billion in 1996, which
generated $683.5 million of operating income and $358.0 million
of net earnings ($2.22 basic earnings per share). The company's
1996 results also included the following noncomparable items:
o During 1996, the company sold the Process Systems Group in two
transactions, which generated a combined pretax gain of $55.0
million and benefitted net earnings by $34.7 million (21 cents
per share).
o Other noncomparable items in 1996, which caused a net reduction
to the company's operating income, were a $37 million
restructure charge (principally for European operations) and a
$5.4 million charge for the closure of a foundry at IDP. These
charges were reduced by a gain on the sale of an investment
during the 1996 first quarter of $4.8 million, which was
recorded as other income. The after-tax effect of these items
reduced net earnings by $22.5 million (14 cents per share).
After considering the effect of these items, adjusted 1996 net
sales, operating income and net earnings were $6.7 billion,
$670.9 million and $345.8 million ($2.15 basic earnings per
share), respectively.
A comparison of key financial data between 1997 and 1996 follows:
o Net sales in 1997 established a record at $7.1 billion,
reflecting a six-percent improvement over the 1996 total of
$6.7 billion. Excluding noncomparable units from both years,
adjusted sales for 1997 increased by a comparable percent over
the 1996 adjusted total.
o Cost of goods sold in 1997 was 74.1 percent of sales, compared
to 75.0 percent in 1996. Partial liquidations of LIFO (last-
in, first-out) inventory lowered 1997 costs by $4.1 million as
compared to a $4.8 million liquidation in 1996. Excluding the
effects of the LIFO liquidations, the 1997 cost of goods sold
relationship to sales would have been 74.2 percent versus 75.1
percent for 1996. Excluding noncomparable items from both
years, the adjusted ratio of cost of goods sold to sales
reflected a marked improvement in 1997, compared to 1996.
o Administrative, selling and service engineering expenses were
15.2 percent of sales in 1997, compared to 14.8 percent for
1996. This increase is primarily attributable to the inclusion
of Newman Tonks, which traditionally had a ratio of selling and
administrative expenses to sales higher than the company's
historical lines and the divestment of Clark-Hurth, which had a
lower ratio than that of the overall company.
o Operating income for the year totalled $760.3 million, an
11.2-percent increase over 1996 operating income of $683.5
million. The ratio of operating income to sales in 1997 was
10.7 percent, as compared to 10.2 percent for the prior year.
After excluding the noncomparable items (previously
discussed) from both years, adjusted 1997 operating income
reflects a significant improvement over the adjusted 1996
results. This improvement was the combined effect of the
company's aggressive productivity-improvement and procurement
programs and the continued stability of domestic markets.
o Interest expense for 1997 totalled $136.6 million versus $119.9
million for 1996. Interest expense associated with the debt
incurred for the Thermo King acquisition totalled approximately
$27.3 million.
o Other income (expense), net, is the sum of foreign exchange
activities, and other miscellaneous income and expense items.
In 1997, these activities resulted in a net expense of $21.5
million, an unfavorable change of $2.7 million compared to the
1996 net other expense of $18.8 million. This change was
caused by lower foreign exchange losses of approximately $4.6
million in 1997, the absence of the 1996 gain of $4.8 million
from the sale of an investment and higher net miscellaneous
expense items of approximately $2.5 million.
o The company's equity in earnings of partially-owned affiliates,
including Dresser-Rand results, for 1997 was $28.8 million as
compared to $42.4 million in 1996. This decrease is mainly due
to the Dresser-Rand restructuring charges, previously discussed.
o The company's charges for minority interests totalled $17.3
million in 1997 versus $18.9 million in 1996. These charges
represent the interests of minority owners (less than 50
percent) in a consolidated unit of the company. The largest
minority interest relates to IDP, which represents $13.7
million of the 1997 balance, compared to $17.3 million in 1996.
IDP's change is due to the 1997 pretax restructuring charge of
$24 million (discussed previously). The remaining charges
represent minority interests in the company's operations
principally located in India and China.
o The company's effective tax rate for 1997 was 38.0 percent,
which represented a slight increase over the 37.0 percent
reported for the prior year. The variance from the 35.0
percent statutory rate primarily was due to the higher tax
rates associated with foreign earnings, the effect of state and
local taxes, the nondeductibility of a portion of the goodwill
associated with acquisitions and favorable tax benefits
associated with the Thermo King acquisition.
At December 31, 1997, employment totalled 46,567. This
represents a net increase of 4,693 employees over the 1996 level
of 41,874. This increase principally results from 1997
acquisition activity, partially offset by a reduction resulting
from the Clark-Hurth disposition.
The most significant event affecting the company's liquidity
during 1997 was the acquisition of Thermo King on October
31,1997. The total purchase price paid for Thermo King was
approximately $2.56 billion in cash, which was financed mainly by
the issuance of both long-term and short-term debt. The effects
of this transaction are discussed throughout this report,
including in Note 2 to the Consolidated Financial Statements.
The following points highlight the financial results and
financial condition of the company's operations, with the impact
of currency variations where appropriate:
o Cash and cash equivalents totalled $104.9 million at December
31, 1997, a $79.2 million reduction from the prior year-end
balance of $184.1 million. These funds were used to reduce a
portion of the company's outstanding short-term debt incurred
in connection with the Thermo King acquisition. In evaluating
the net change in cash and cash equivalents, cash flows from
operating, investing and financing activities, and the effect
of exchange rate changes should be considered. Cash flows from
operating activities provided $703.5 million, investing
activities used $2.7 billion and financing activities provided
approximately $2.0 billion. Exchange rate changes during 1997
increased cash and cash equivalents by $1.6 million.
o Marketable securities totalled $6.9 million at the end of 1997,
$1.1 million below the balance at December 31, 1996. The net
reduction was due mainly to exchange rate changes.
o Receivables totalled $1,281.5 million at December 31, 1997,
compared to $1,066.2 million at the prior year end, a net
increase of $215.3 million. The increase is attributable to
the acquisitions of Thermo King and Newman Tonks, which added
approximately $228.2 million. This increase was partially
offset by currency translation, dispositions and
reclassifications to assets held for sale, which caused net
reductions of $34.5 million. The timing of the company's strong
fourth quarter sales also increased the year-end receivables
balance. The company focuses on decreasing its receivables
base through its asset-management program, which produced a
reduction in the average days outstanding in receivables to
54.5 days from the 1996 level of 56.1 days.
o Inventories amounted to $854.8 million at December 31, 1997, an
increase of $79.7 million from the prior year's level of $775.1
million. The acquisitions of Thermo King and Newman Tonks
accounted for increases of approximately $185.6 million, while
dispositions, reclassifications to assets held for sale and the
effects of currency fluctuations reduced inventories by $57.2
million. The company's emphasis on inventory control was
demonstrated by the reduction of the average months' supply of
inventory to 2.5 months at December 31, 1997, compared to 3.0
months at the prior year end.
o Prepaid expenses, including assets held for sale, totalled
$136.0 million at the end of the year, $203.8 million lower
than the balance at December 31, 1996. Assets held for sale
totalled $46.5 million at December 31, 1997, and principally
represented the net book value of selected operations from the
Newman Tonks acquisition that did not meet the company's long-
term objectives and certain European assets of the Specialty
Vehicles Segment. Assets held for sale at December 31, 1996,
comprised the net assets of Clark-Hurth, which were sold on
February 14, 1997. Foreign exchange activity had a minimal
effect on the remaining prepaid expenses, while acquisitions
accounted for $14.2 million of the increase.
o Deferred income taxes (current) of $160.8 million at December
31, 1997, represented the deferred tax benefit of the
difference between the book and tax values of various current
assets and liabilities. The components of the balance are
included in Note 14 to the Consolidated Financial Statements.
o Investments in partially-owned equity affiliates at December
31, 1997, totalled $328.0 million, $48.2 million below the 1996
balance of $376.2 million. Included in this account is the
investment in Dresser-Rand, which totalled $115.0 million at
December 31, 1997. Dresser-Rand's investment decreased $37.6
million from the 1996 balance of $152.6 million. The
components of the Dresser-Rand change for 1997 consisted of
income for the year of $9.4 million, a $42.9 million change in
the company's advance account and a $4.1 million reduction due
to foreign currency movements. Income and dividends from other
investments in partially-owned equity affiliates were $19.2
million and $8.7 million, respectively. Amounts due from
partially-owned affiliates excluding Dresser-Rand decreased
from $18.3 million to $13.5 million at December 31, 1997.
Currency movements were the primary cause of the remaining
$16.3 million reduction.
o Net property, plant and equipment increased by $137.8 million in
1997 to a December 31, 1997, balance of $1,283.2 million. Fixed
assets from acquisitions added $186.6 million. Capital
expenditures in 1997 totalled $186.0 million. Business
dispositions and reclassifications to assets held for sale
reduced the balance by $20.9 million. In addition, foreign
exchange fluctuations decreased net fixed assets by
approximately $24.5 million. The remaining net decrease was the
result of depreciation and sales and retirements.
o Intangible assets, net, totalled $3,833.0 million at December
31, 1997, as compared to $1,178.0 million at December 31, 1996,
for a net increase of approximately $2.7 billion. Goodwill
from the Thermo King and Newman Tonks acquisitions, net of
amortization expense of $54.7 million during 1997 accounted for
the change.
o Deferred income taxes (noncurrent) totalled $214.9 million at
December 31, 1997, which was $52.3 million higher than the 1996
balance. The components comprising the balance at December 31,
1997, can be found in Note 14 to the Consolidated Financial
Statements.
o Other assets totalled $211.6 million at December 31, 1997, a
decrease of $12.2 million from the December 31, 1996, balance
of $223.8 million. Other assets decreased by approximately $20
million due to prepaid pensions, an amount that was partially
offset by increases due to acquisitions. Foreign exchange
activity in 1997 had a minimal effect on the account balance
during the year.
o Accounts payable and accruals totalled $1,370.5 million at
December 31, 1997, an increase of $275.1 million from the 1996
balance of $1,095.4 million. Acquisition activity during 1997
accounted for $259.4 million of the increase, while
dispositions and currency fluctuations decreased accounts
payable and accruals by $36.3 million. Additionally, accruals
increased by $17 million due to IDP's restructure charge.
o Loans payable were $925.1 million at the end of 1997, which
reflects a $762.8 million increase over the $162.3 million at
December 31, 1996. Short-term debt assumed from companies
acquired during 1997 added $69.4 million and current maturities
of long-term debt increased the balance by an additional $145.4
million. The effects of translation, dispositions and
reclassifications to assets held for sale caused a $4.4 million
reduction. The remaining increase is primarily due to higher
short-term borrowings to finance Thermo King and other
acquisitions.
o Long-term debt, excluding current maturities, totalled $2,528.0
million, an increase of approximately $1.4 billion over the
prior year's balance of $1,163.8 million. Proceeds from the
issuance of long-term debt of $1,508.6 million were primarily
used for the Thermo King acquisition. Reductions to long-term
debt of $145.4 million represent the reclassification of the
current maturities of long-term debt to loans payable. Foreign
exchange activity had a minimal effect on the account balance
during the year.
o Postemployment liabilities at December 31, 1997, totalled
$937.1 million, an increase of $122.4 million from the December
31, 1996, balance. Postemployment liabilities include medical
and life insurance postretirement benefits, long-term pension
and other noncurrent postemployment accruals. The increase in
the liability during 1997 is almost exclusively related to the
acquisitions of Thermo King and Newman Tonks. (See Notes 15
and 16 to the Consolidated Financial Statements for additional
information.)
o Minority interest liabilities at December 31, 1997, totalled
$127.9 million, which also represented the balance at the end
of the prior year. This liability represents the ownership
interests of other entities in selected consolidated
subsidiaries of the company, the largest being Dresser
Industries' 49-percent interest in IDP. The other minority
interests relate primarily to joint ventures in India and
China. IDP's minority interest at December 31, 1996, was $113.4
million. It increased by $13.7 million, based on IDP's 1997
earnings and was reduced by $22.7 million, which represented
increases in advances to Dresser Industries and the effect of
translation. The liability for all other minority interests
totalled $14.5 million at December 31, 1996, and increased to
$23.5 million during 1997 due to earnings, acquisitions and
advances.
o Other liabilities (noncurrent) at December 31, 1997, totalled
$153.4 million, which were $19.2 million higher than the
balance at December 31, 1996. The net increase is primarily
related to the Thermo King acquisition. These obligations are
not expected to be paid in the next year. Generally, these
accruals cover environmental, insurance, legal and other
contractual obligations.
Other information concerning the company's financial resources,
commitments and plans is as follows:
The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $380 million
in 1997, compared to $58.0 million in 1996. The weighted average
interest rate during 1997 was 6.2%, compared to 7.8% during 1996.
The maximum amounts outstanding during 1997 and 1996, were $2.4
billion and $181.7 million, respectively.
The company had $1.5 billion in domestic short-term credit lines
at December 31, 1997, and $509.4 million of foreign credit lines
available for working capital purposes, $2.0 billion of which was
unused at the end of the year. These facilities provide direct
support for commercial paper and indirect support for other
financial instruments, such as letters of credit and comfort
letters.
At December 31, 1997, the debt-to-total capital ratio was 58
percent, as compared to 37 percent at the prior year end. This
substantial increase resulted from debt issued in connection with
the Thermo King acquisition.
In 1997, foreign currency translation adjustments decreased
shareholders' equity by $80.6 million. This change was due to
the strengthening of the U.S. dollar against other currencies in
countries where the company has significant operations and the
local currencies are the functional currencies. Currency changes
in Australia, Canada, Belgium, France, Germany, India, Italy,
Japan, the Netherlands, Singapore and Spain accounted for nearly
all of the change.
Stock Split
In August 1997, the board of directors declared a three-for-two
stock split on the company's common stock. The stock split was
made in the form of a stock dividend, and was paid on September
2, 1997, to shareholders of record on August 19, 1997. All prior
year per share amounts have been restated to reflect the stock
split.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
The information required by Item 7A is provided under the caption
"Financial Market Risk" in Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary financial
information included in the accompanying Annual Report to
Shareholders for 1998 are incorporated by reference in this Form
10-K Annual Report:
(a) The consolidated financial statements and the report thereon
of PricewaterhouseCoopers LLP dated February 2, 1999, are
included as Exhibit 13 - the Annual Report to Shareholders for
1998.
(b) The unaudited quarterly financial data for the two-year
period ended December 31, 1998, is as follows (in millions except
per share amounts):
Net Cost of Operating Net
1998 sales goods sold income earnings
First quarter $2,002.9 $1,484.1 $ 213.6 $ 99.1
Second quarter 2,186.2 1,596.7 286.3 140.9
Third quarter 2,020.0 1,484.1 250.2 119.4
Fourth quarter 2,082.4 1,481.7 294.3 149.7
Year 1998 $8,291.5 $6,046.6 $1,044.4 $509.1
Net Cost of Operating Net
1997 sales goods sold income earnings
First quarter $1,639.4 $1,228.4 $166.6 $ 77.8
Second quarter 1,837.4 1,355.5 209.6 111.6
Third quarter 1,694.0 1,250.8 179.7 97.1
Fourth quarter 1,932.5 1,429.0 204.4 94.0
Year 1997 $7,103.3 $5,263.7 $760.3 $380.5
1998 1997
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per per per per
common common common common
share share share share
First quarter $0.60 $0.60 $0.48 $0.48
Second quarter 0.86 0.85 0.68 0.68
Third quarter 0.73 0.72 0.60 0.58
Fourth quarter 0.92 0.91 0.57 0.57
Year $3.11 $3.08 $2.33 $2.31
Item 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is (i) incorporated by
reference in this Form 10-K Annual Report from pages 1 through 5,
17 and 18 of the company's definitive proxy statement for the
Annual Meeting of Shareholders to be held on May 5, 1999, and
(ii) included after Item 4 in Part I of this Form 10-K Annual
Report.
Item 11. EXECUTIVE COMPENSATION
Information on executive compensation is incorporated by
reference in this Form 10-K Annual Report from pages 7 through 17
of the company's definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 5, 1999.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information on security ownership of directors and nominees,
directors and officers as a group and certain beneficial owners
is incorporated by reference in this Form 10-K Annual Report on
pages 4 and 5 of the company's definitive proxy statement for the
Annual Meeting of Shareholders to be held on May 5, 1999.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated by reference in
this Form 10-K Annual Report from page 17 of the company's
definitive proxy statement for the Annual Meeting of Shareholders
to be held on May 5, 1999.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. and 2. Financial statements and financial statement
schedules
The financial statements, together with the
report thereon of PricewaterhouseCoopers LLP
dated February 2, 1999, included as Exhibit 13
and the unaudited quarterly financial data
included in Part II Item 8(b) are incorporated
by reference in this Form 10-K Annual Report.
The financial statement schedule listed in the
accompanying index should be read in conjunction
with the financial statements in such Annual
Report to Shareholders for 1998.
Separate financial statements for all 50 percent
or less owned companies, accounted for by the
equity method have been omitted because no
individual entity constitutes a significant
subsidiary.
3. Exhibits
The exhibits listed on the accompanying index to
exhibits are filed as part of this Form 10-K
Annual Report.
(b) Reports on Form 8-K
A Current Report on Form 8-K (Item 5) dated
November 4, 1998 reporting on the adoption of
a Shareholder Rights Plane effective December
22, 1998.
A Current Report on Form 8-K/A (Item 5) dated
November 4, 1998 amending the reporting on the
Shareholer Rights Plan.
INGERSOLL-RAND COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a) 1 and 2)
Form
10-K
Consolidated Financial Statements:
Report of independent accountants *
Consolidated balance sheet at
December 31, 1998 and 1997 *
For the years ended December 31, 1998, 1997
and 1996:
Consolidated statement of income *
Consolidated statement of shareholders'
equity *
Consolidated statement of cash flows *
Notes to consolidated financial statements *
Selected unaudited quarterly financial data **
Financial Statement Schedule:
Report of independent accountants on
financial statement schedule See below
Consolidated schedule for the years ended
December 31, 1998, 1997 and 1996:
Schedule II -- Valuation and Qualifying
Accounts See below
* See Exhibit 13 - Ingersoll-Rand Company Annual Report to
Shareholders for 1998.
** See Item 8 Financial Statements and Supplementary Data.
Financial statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not applicable
or the required information is shown in the financial statements
or notes thereto.
Financial statements of the company's 50 percent or less owned
companies, are omitted because individually they do not meet the
significant subsidiary test of Rule 3-09 of Regulation S-X.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Ingersoll-Rand Company:
Our audits of the consolidated financial statements referred to
in our report dated February 2, 1999, which is included as part
of Exhibit 13 - the Annual Report to Shareholders for 1998 of
Ingersoll-Rand Company, (which report and consolidated financial
statements are incorporated by reference in this Annual Report on
Form 10-K), also included an audit of the Financial Statement
Schedule listed in Item 14(a) of this Form 10-K. In our opinion,
this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/S/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
February 2, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statements on
Form S-3 (No. 333-38367, No. 333-37019, and No. 333-34029) and to
the incorporation by reference in the Registration Statements on
Form S-8 (No. 333-42133, No. 333-19445, No. 333-67257, No. 333-
00829, No. 33-35229, and No. 2-98258) of Ingersoll-Rand Company
of our report dated February 2, 1999, which is included as part
of Exhibit 13 - the Annual Report to Shareholders for 1998, which
is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the
Financial Statement Schedule, which appears on this page.
/S/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
March 26, 1999
SCHEDULE II
INGERSOLL-RAND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(Amounts in millions)
Additions
charged to
Balance at costs and Balance
beginning expenses Deductions at end
Description of year (*) (**) of year
1998
Doubtful accounts $33.9 $13.3 $ 5.2 $42.0
1997
Doubtful accounts $34.3 $11.7 $12.1 $33.9
1996
Doubtful accounts $38.3 $ 8.6 $12.6 $34.3
(*) "Additions" include foreign currency translation.
(**) "Deductions" include accounts and advances written off,
less recoveries.
INGERSOLL-RAND COMPANY
INDEX TO EXHIBITS
(Item 14(a))
Description
3 (i) Restated Certificate of Incorporation of Ingersoll-Rand
Company, as amended through May 28, 1992. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1993, filed March 30, 1994.
3 (ii) Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company filed May 28, 1992. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1993, filed March 30, 1994.
3 (iii) Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company filed August 20, 1997. Incorporated by
reference to Form S-3 filed October 2, 1997.
3 (iv) By-Laws of Ingersoll-Rand Company, as amended through
January 5, 1999. Filed herewith.
4 (i) Rights Agreement, dated as of November 9, 1998.
Incorporated by reference from Form 8-A/A of Ingersoll-
Rand Company filed on November 13, 1998.
4 (ii) Indenture, dated as of August 1, 1986 between Ingersoll-
Rand Company and The Bank of New York, as Trustee, as
supplemented. Incorporated by reference to Exhibits 4.1, 4.2 and
4.3 of the company's Form S-3 Registration Statement
No. 33-39474.
4(iii) Purchase Contract Agreement dated as of March 23, 1998
between Ingersoll-Rand Company and The Bank of New York, as
Purchase Contract Agent. Filed herewith.
4(iv) Pledge Agreement dated as of March 23, 1998 between
Ingersoll-Rand Company and The Chase Manhattan Bank, as
Collateral Agent, Custodial Agent and Securities Intermediary.
Filed herewith.
4(v) Indenture dated as of March 23, 1998 between Ingersoll-Rand
Company and The Bank of New York, as trustee. Filed herewith.
4(vi) First Supplemental Indenture dated as of March 23, 1998
between Ingersoll-Rand Company and The Bank of New York, as
trustee. Filed herewith.
4(vii) Amended and Restated Declaration of Trust for Ingersoll-
Rand Financing I, a Delaware statutory business trust, dated
March 23, 1998. Filed herewith.
4(viii) Guarantee Agreement dated as of March 23, 1998, between
Ingersoll-Rand Company and The First National Bank of Chicago, as
trustee. Filed herewith.
4 (ix) (a) Ingersoll-Rand Company is a party to several long-term
debt instruments under which in each case the total amount of
securities authorized does not exceed 10% of the total assets of
Ingersoll-Rand Company and its subsidiaries on a consolidated
basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Ingersoll-Rand Company agrees to furnish a copy
of such instruments to the Securities and Exchange Commission
upon request.
10 (iii) The following exhibits constitute management contracts
or compensatory plans or arrangements required by Item 601 of
Regulation S-K.
10 (iii) (a) Management Incentive Unit Plan of Ingersoll- Rand
Company. Amendment to the Management Incentive Unit Plan,
effective January 1, 1982. Amendment to the Management
Incentive Unit Plan, effective January 1, 1987. Amendment to the
Management Incentive Unit Plan, effective June 3, 1987.
Incorporated by reference to Form 10-K of Ingersoll-Rand Company
for the year ended December 31, 1993, filed March 30, 1994.
10 (iii) (b) Ingersoll-Rand Company Directors Deferred
Compensation and Stock Award Plan. Incorporated by reference to
Form 10-K for the year ended December 31, 1996, filed March 26,
1997.
10 (iii) (c) Forms of Contingent Compensation Agreements with
Vice Presidents and/or Group Presidents of Ingersoll-Rand
Company. Filed herewith.
10 (iii) (d) Description of Bonus Arrangements for Executive Vice
President of Ingersoll-Rand Company. Filed herewith.
10 (iii) (e) Description of Bonus Arrangements for Chairman,
President and Staff Officers. Incorporated by reference to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed March 30, 1994.
10 (iii) (f) Amended and Restated Form of Change of Control
Agreement as of March 1, 1999 with Chairman and Chief Executive
Officer of Ingersoll-Rand Company. Filed herewith.
10 (iii) (g) Amended and Restated Form of Change of Control
Agreement as of March 1, 1999, with selected executive officers
other than Chairman of Ingersoll-Rand Company. Filed herewith.
10 (iii) (h) Executive Supplementary Retirement Agreement for
selected executive officers. Incorporated by reference to Form 10-
K of Ingersoll-Rand Company for the year ended December 31, 1993,
filed March 30, 1994.
10 (iii) (i) Executive Supplementary Retirement Agreement for
selected executive officers. Incorporated by reference to Form 10-
K for the year ended December 31, 1996, filed March 26, 1997.
10 (iii) (j) Incentive Stock Plan of 1985 of Ingersoll-Rand
Company. Incorporated by reference to Form 10-K of Ingersoll-
Rand Company for the year ended December 31, 1993, filed March
30, 1994.
10 (iii) (k) Forms of insurance and related letter agreements
with certain executive officers. Incorporated by reference to
Form 10-K of Ingersoll-Rand Company for the year ended December
31, 1993, filed March 30, 1994.
10 (iii) (l) Incentive Stock Plan of 1990 of Ingersoll-Rand
Company. Incorporated by reference to Form 10-K of Ingersoll-
Rand Company for the year ended December 31, 1993, filed March
30, 1994.
10 (iii) (m) Restated Supplemental Pension Plan. Incorporated
by reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1995, filed March 29, 1996.
10 (iii) (n) Supplemental Stock and Savings Investment Plan
effective as of January 1, 1989. Incorporated by reference to
Form 10-K of Ingersoll-Rand Company for the year ended December
31, 1993, filed March 30, 1994.
10 (iii) (o) Supplemental Retirement Account Plan effective
as of January 1, 1989. Incorporated by reference to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed March 30, 1994.
10 (iii) (p) Incentive Stock Plan of 1995 of Ingersoll-Rand
Company. Incorporated by reference to the Notice of 1995 Annual
Meeting of Shareholders and Proxy Statement dated March 15, 1995.
See Appendix A of the Proxy Statement dated March 15, 1995.
10 (iii) (q) Senior Executive Performance Plan. Incorporated
by reference to the Notice of 1995 Annual Meeting of Shareholders
and Proxy Statement dated March 15, 1995. See Appendix B of the
Proxy Statement dated March 15, 1995.
10 (iii) (r) Amended and Restated Elected Officers Supplemental
Plan. Filed herewith.
10 (iii) (s) Selected Executive Officer Employment Agreement.
Incorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1995, filed
March 29, 1996.
10 (iii) (t) Executive Deferred Compensation and Stock Award
Plan. Incorporated by reference to Form 10-K for the year ended
December 31, 1996, filed March 26, 1997.
10 (iii) (u) Senior Vice President and Chief Financial
Officer Employment Agreement. Incorporated by reference to Form
10-k for the year ended December 31, 1997, filed March 6, 1998.
10 (iii) (v) Incentive Stock Plan of 1998 of Ingersoll-Rand
Company. Incorporated by reference to Appendix A to the Notice
of 1998 Annual Meeting of Shareholders and Proxy Statement dated
March 17, 1998.
11 Computation of Earnings Per Share. Filed herewith.
12 Computations of Ratios of Earnings to Fixed Charges.
Filed herewith.
13 Ingersoll-Rand Company Annual Report to Shareholders
for 1998. Not deemed to be filed as part of this report
except to the extent incorporated by reference. Filed herewith.
21 List of Subsidiaries of Ingersoll-Rand Company.
Filed herewith.
27 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
INGERSOLL-RAND COMPANY
(Registrant)
By /S/ David W. Devonshire
Date March 29, 1999
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
Chairman, President,
Chief Executive Officer
and Director (Principal
/S/ James E. Perrella Executive Officer) March 29, 1999
(James E. Perrella)
Senior Vice President
Chief Financial Officer
(Principal Financial
/S/ David W. Devonshire and Accounting Officer) March 29, 1999
(David W. Devonshire)
Controller (Principal
/S/ Steven R. Shawley Accounting Officer) March 29, 1999
(Steven R. Shawley)
/S/ Joseph P. Flannery Director March 29, 1999
(Joseph P. Flannery)
/S/ Peter C. Godsoe Director March 29, 1999
(Peter C. Godsoe)
/S/ Constance J. Horner Director March 29, 1999
(Constance J. Horner)
/S/ H. William Lichtenberger Director March 29, 1999
(H. William Lichtenberger)
/S/ Theodore E. Martin Director March 29, 1999
(Theodore E. Martin)
/S/ Orin R. Smith Director March 29, 1999
(Orin R. Smith)
/S/ Richard J. Swift Director March 29, 1999
(Richard J. Swift)
/S/ Tony L. White Director March 29, 1999
(Tony L. White)
BY-LAWS
of
INGERSOLL-RAND COMPANY
As amended through January 5, 1999
ARTICLE I.
STOCKHOLDERS' MEETINGS
Section 1. Annual Meeting: The annual meeting of the
Stockholders of the Company shall be held on the fourth Thursday
of April, in each year, or such other date as the Board of
Directors may determine, at such hour and at such place within or
without the State of New Jersey as may be fixed by the Board of
Directors and stated in the notice of the meeting, for the
election of Directors of the Company and for the transaction of
such other business as may come before it in accordance with the
provisions of these By-Laws.
At any such annual meeting of Stockholders, only such business
shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors, or (b) by
any Stockholder entitled to vote at such meeting who complies
with the procedures set forth in this Section 1. Any Stockholder
entitled to vote at such meeting may propose business to be
included in the agenda of such meeting only if written notice of
such Stockholder's intent is given to the Secretary of the
Company, either by personal delivery or by United States mail,
postage prepaid, not later than 90 days in advance of the
anniversary of the immediately preceding annual meeting or if the
date of the annual meeting of Stockholders occurs more than 30
days before or 60 days after the anniversary of such immediately
preceding annual meeting, not later than the close of business on
the seventh day following the date on which notice of such
meeting is given to Stockholders. A Stockholder's notice to the
Secretary shall set forth in writing as to each matter such
Stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear
on the Company's books, of the Stockholder proposing such
business, (c) the class and number of shares of the Company which
are beneficially owned by the Stockholder and (d) any material
interest of the Stockholder in such business. Notwithstanding
anything in these By-Laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the
procedures set forth in this Section 1. The officer of the
Company or other person presiding at the annual meeting shall, if
the facts so warrant, determine and declare to the meeting that
business was not properly brought before the meeting in
accordance with the provisions of this Section 1, and, if such
officer or other person should so determine, he or she shall so
declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
Section 2. Special Meetings: Special meetings of the
Stockholders may be held at the principal office of the Company
in the State of New Jersey or at such other place within or
without said State as may from time to time be designated by the
Board of Directors and stated in the notice of the meeting,
whenever called in writing by the Chairman of the Board, the
Vice-Chairman or the President or by vote of a majority of the
Board of Directors. At any special meeting of the Stockholders,
only such business shall be conducted as shall have been brought
before the meeting by or at the direction of the Board of
Directors and such business shall be confined to the object or
objects stated in the notice thereof.
Section 3. Quorum: Unless otherwise provided in the Certificate
of Incorporation of this Company or by statute, the presence in
person or by proxy of the holders of record of the shares
entitled to cast a majority of the votes at any meeting of the
Stockholders shall constitute a quorum at such meeting. Whenever
the holders of any class or series of shares are entitled to vote
separately on a specified item of business, the presence in
person or by proxy of the holders of record of the shares of such
class or series entitled to cast a majority of the votes thereon
shall constitute a quorum for the transaction of such specified
item of business. If the holders of the amount of stock
necessary to constitute a quorum shall fail to attend in person
or by proxy at the time and place fixed by these By-Laws for an
annual meeting, or as fixed by notice, as above provided for a
special meeting, a majority in interest of the Stockholders
present, in person or by proxy, may adjourn from time to time
without notice other than announcement at the meeting until the
holders of the amount of stock requisite to constitute a quorum
shall attend. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 4. Organization: The Chairman of the Board shall call
meetings of the Stockholders to order and shall act as Chairman
of such meetings. In the absence of the Chairman of the Board,
the Vice-Chairman or the President, or in his absence an
Executive Vice President shall preside: and in the absence of
any of the foregoing officers, the Stockholders present, or
the Board of Directors, may appoint any Stockholder to act as
Chairman of any meeting.
The Secretary of the Company shall act as Secretary of all
meetings of the Stockholders. In the absence of the Secretary at
any meeting of the Stockholders, the presiding officer may
appoint any person to act as Secretary of the Meeting.
Section 5. Voting: At each meeting of the Stockholders, every
Stockholder shall be entitled to vote in person or by proxy
appointed by instrument in writing subscribed by such Stockholder
or by his duly authorized attorney and delivered to the
inspectors at the meeting. The votes for Directors and, upon
demand of any Stockholder, the votes upon any question before the
meeting shall be by ballot.
Section 6. Inspectors: At each annual stated meeting of the
Stockholders for the election of Directors, the presiding officer
of such meeting shall appoint two persons to act as inspectors,
who shall be sworn to perform their duties in accordance with the
laws of the State of New Jersey, and who shall return a formal
certificate.
Section 7. Nominations of Directors: Nominations for the
election of Directors may be made by the Board of Directors or
any Stockholder entitled to vote for the election of Directors.
Any Stockholder entitled to vote for the election of Directors at
a meeting or to express a consent in writing without a meeting
may nominate a person or persons for election as a Director only
if written notice of such Stockholder's intent to make such
nomination is given to the Secretary of the Company, either by
personal delivery or United States mail, postage prepaid, not
later than (a) with respect to an election to be held at an
annual meeting of Stockholders, 90 days in advance of the
anniversary of the immediately preceding annual meeting or if the
date of the annual meeting of Stockholders occurs more than 30
days before or 60 days after the anniversary of such immediately
preceding annual meeting, not later than the close of business on
the seventh day following the date on which notice of such
meeting is given to Stockholders and (b) in the case of any
Stockholder who wishes to nominate a person or persons for
election as a Director pursuant to consents in writing by
Stockholders without a meeting (to the extent election by such
consents is permitted under applicable law and the Company's
Certificate of Incorporation), 60 days in advance of the date on
which materials soliciting such consents are first mailed to
Stockholders or, if no such materials are required to be mailed
under applicable law, 60 days in advance of the date on which the
first such consent in writing is executed. Each such notice
shall set forth the name and address of the Stockholder who
intends to make the nomination and of the person or persons to be
nominated for election as a Director, a representation that the
Stockholder is a holder of record of stock of the Company
entitled to vote at such meeting or to express such consent in
writing and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice
or to execute such a consent in writing to elect such person or
persons as a Director, a description of all arrangements or
understandings between the Stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations for election as a Director
are to be made by the Stockholder, such other information
regarding each nominee proposed by such Stockholder as would have
been required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission if
such nominee had been nominated, or was intended to be nominated,
for election as a Director by the Board of Directors, and the
consent of each nominee to serve as a Director of the Company if
so elected. The Board of Directors may refuse to acknowledge the
nomination of any person not made in compliance with the
foregoing procedures.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Number and Election: The business and property of the
Company shall be managed by a Board of nine Directors. The
number of Directors may be altered from time to time by the
alteration of these By-Laws, provided that, as required by the
Restated Certificate of Incorporation, the Board shall never
consist of less than eight members.
As provided in the Restated Certificate of Incorporation, the
Board of Directors shall be divided into three classes, each
consisting of three Directors. At each annual election, the
successors to the Directors of the class whose terms shall expire
in that year shall be elected to hold office for a term of three
years, so that the term of office of one class of Directors shall
expire in each year. Each Director shall serve for the term for
which such Director shall have been elected and until such
Director's successor shall have been duly elected.
Notwithstanding the foregoing provisions of this Section 1, if
and as long as the Restated Certificate of Incorporation provides
for the election of additional Directors by class or classes of
stock, such additional Directors shall be elected in the manner
and for the term provided in the Restated Certificate of
Incorporation.
Section 2. Vacancies: Subject to any requirements of the
Certificate of Incorporation with respect to the filling of
vacancies among additional Directors elected by a class or
classes of stock, if the office of any Director becomes vacant,
the remaining Directors may, by a majority vote, elect a
successor who shall hold office until the next succeeding annual
meeting of the Stockholders and until his successor shall have
been elected and qualified.
Section 3. Place of Meetings: The Directors may hold their
meetings and may have an office and keep the books of the Company
(except as otherwise may be provided for by law) in such place or
places in the State of New Jersey or outside of the State of New
Jersey as the Board from time to time may determine.
Section 4. Regular Meetings: Regular meetings of the Board of
Directors shall be held at such times and intervals as the Board
may from time to time determine. It shall be the duty of the
Secretary to send a notice to each of the Directors at his
address as it appears on the books of the Company at least two
(2) days before the holding of each regular meeting, but a
failure of the Secretary to send such notice shall not invalidate
any proceedings of the said Board.
Section 5. Special Meetings: Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the
Board or the Vice-Chairman or the President, or by one-third
(1/3) of the Directors for the time being in office.
The Secretary shall give notice of each special meeting by
mailing the same at least two (2) days before the meeting, or by
telegraphing the same at least one (1) day before the meeting to
each Director, but such notice may be waived by any Director. At
any meeting at which every Director shall be present, even
without notice, any business may be transacted.
Section 6. Quorum: Six (6) members of the Board of Directors,
but not less than one-third (1/3) of the entire Board, shall
constitute a quorum for the transaction of business; but if at
any meeting of the Board there be less than a quorum present,
those present may adjourn the meeting from time to time. At
meetings of the Board of Directors, business shall be transacted
in such order as from time to time the Board may determine.
Section 7. Director Emeritus: The Board of Directors may
appoint a person who has served with distinction and who has
retired from the Board upon reaching mandatory retirement as
provided herein to the position of Director Emeritus. A Director
Emeritus shall be invited to attend all meetings of the Board and
shall receive the same compensation as that paid to outside
Directors. While serving as a Director Emeritus, he shall not be
considered a retired director for pension benefit purposes;
however, any pension benefits to which he may be entitled will
commence upon his cessation of service as a Director Emeritus.
He shall be appointed by the Board for a one-year term and may be
reappointed from time to time by action of the Board. While the
presence of a Director Emeritus at a Board meeting will not be
considered for quorum or voting purposes, nevertheless, his
advice and counsel on all matters to come before the Board is
invited.
ARTICLE III.
COMMITTEES
The Board of Directors may appoint from their number such
standing committees as they deem best and to the extent permitted
by statute may invest them with such of their own powers as they
may deem advisable, subject to such conditions as they may
prescribe.
ARTICLE IV.
OFFICERS
Section 1. Officers: The executive officers of the Company
shall include a Chairman of the Board of Directors, President,
Treasurer and Secretary and may also include one or more
Vice-Chairmen, Executive Vice Presidents, Senior Vice Presidents,
Vice Presidents, and such other officers as the Board of
Directors shall deem necessary or otherwise appropriate to elect.
The Chief Executive Officer may hold the title of Chairman of the
Board, or President, or both titles.
The Board of Directors may appoint such other officers and
advisory boards as they shall deem necessary, who shall have such
authority and who shall perform such duties as from time to time
may be prescribed by the Board of Directors.
Any executive officer elected by the Board of Directors may be
removed at any time with or without cause by the affirmative vote
of two-thirds (2/3) of the entire Board of Directors.
Any other appointed or elected officer, agent, employee or member
of an advisory board may be removed at any time with or without
cause by affirmative vote of the Directors or by the Committee or
superior officer upon whom such power of removal may be
conferred.
Section 2. Powers and Duties: The Chairman of the Board shall
preside at all meetings of the Board of Directors and
Stockholders. Subject to designation by the Board of Directors
he shall be the Chief Executive Officer of the Company, and he
shall have responsibility for the active management of the
business of the Company. He may sign and execute contracts and
agreements authorized by the Board, delegate other officers to do
so and may, from time to time, require from other officers and
from employees of the Company opinions, reports or information
upon any matter specified by him or generally upon the interests
or affairs of the Company under the supervision of such officers
or employees respectively. He may appoint and remove assistant
officers and other employees and agents. He may exercise any
other powers conferred upon him by the Board of Directors.
Other officers shall have all the usual and customary powers and
shall perform all the usual and customary duties incident to
their respective offices and, in addition thereto and to any
duties specifically prescribed by any subsequent provisions of
these By-Laws, they shall respectively perform such other general
or special duties as may from time to time be assigned to them by
the Board of Directors or the Chief Executive Officer.
The Board of Directors may appoint an officer to act as Chief
Financial Officer of the Company, who shall have responsibility
for the financial affairs of the Company. He will be responsible
for the preparation of the financial statements of the Company,
and such other duties as from time to time may be assigned to him
by the Board of Directors or the Chief Executive Officer. The
Board of Directors may appoint an officer to act as General
Counsel of the Company, who shall have responsibility for the
legal affairs of the Company. The Board of Directors may appoint
the Comptroller to be the principal accounting and financial
control officer of the Company.
Securities of other corporations or interests in other entities
held by the Company may be voted by the Chairman of the Board or
by any other person designated by the Board of Directors or Chief
Executive Officer.
Section 3. Term: The executive officers elected by the Board of
Directors shall hold office for one year or until their
successors are elected and qualify. The Chairman, and any
Vice-Chairman, shall be elected by the Directors from among their
own number. One person may hold more than one office.
ARTICLE V.
BILLS, NOTES, AND CHECKS
All bills, notes, checks or other negotiable instruments of the
Company shall be made in the name of the Company and shall be
signed by two executive officers or by any two persons duly
authorized by the Board of Directors. No officers or agents of
the Company, either singly or together shall have power to make
any bill, note or check or other negotiable instrument in the
name of the Company to bind the Company thereby, except as in
this Article prescribed and provided.
No officer or agent of this Company shall have power to endorse
in the name, for or in behalf of the Company, any note, bill of
exchange, draft, check or other written instrument for the
payment of money, save only for purposes of the discount or the
collection of the said instrument, unless thereunto duly and
specially authorized by the vote of the Directors of this Company
entered on the minutes of said Board.
ARTICLE VI.
CAPITAL STOCK
Section 1. Certificates for Shares: The certificates for shares
of the capital stock of the Company shall be in such form not
inconsistent with the Certificate of Incorporation as shall be
prepared or be approved by the Board of Directors. The
certificates shall be signed by or bear thereon the facsimile
signature of the Chairman, the Vice-Chairman, President, or an
Executive Vice President, or a Vice President, and also be signed
by or bear thereon the facsimile signature of the Treasurer or an
Assistant Treasurer. The certificates shall be consecutively
numbered. The name of the person owning the shares represented
thereby, with the number of such shares and the date of issue,
shall be entered in the Company's books.
Section 2. Transfers: Shares of the capital stock of the
Company shall be transferred only on the books of the Company by
the holder thereof in person or by his attorney, upon surrender
of the certificate or certificates properly endorsed. The Board
of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of
the capital stock of the Company. The Board of Directors may
appoint Transfer Agents and Stock Registrars and may require all
stock certificates to bear the signatures of such a Transfer
Agent and of such a Registrar of Transfers, or any of them.
The stock transfer books may be closed for such period next
preceding any Stockholders' meeting, or the payment of dividends
as the Board of Directors may from time to time determine, and
during such period no stock shall be transferable.
The Board of Directors may also fix in advance a date not more
than 60 nor less than 10 days preceding the date of any meeting
of Stockholders, nor more than 60 days preceding the date for the
payment of any dividend on the Common Stock or any series of
Preference Stock, or the date for allotment of rights, or the
date when any change or conversion or exchange of capital stock
shall go into effect, as a record date for the determination of
the Stockholders entitled to notice of and to vote at any such
meeting, or entitled to receive payment of any such dividend, or
any such allotment of rights, or to exercise the rights in
respect to any such change, conversion or exchange of capital
stock. In such cases only Stockholders of record on the date so
fixed shall be entitled to such notice of and vote at such
meeting, or to receive payment of such dividend, or allotment of
rights, or to exercise such rights, as the case may be, and
notwithstanding any transfer of any stock on the books of the
Company after any such record date fixed as aforesaid.
Section 3. Lost Stock Certificates: In case any stock
certificate shall be lost, the Board of Directors may order a new
certificate to be issued in its place upon receiving such proof
of loss and such security therefor as may be satisfactory to it.
ARTICLE VII.
THE CORPORATE SEAL
The Corporate Seal of the Company shall consist of a circle
formed by the words "Ingersoll-Rand Company" and the letters "N.
J." with the words "Corporate Seal" and the figures "1905" in the
center.
The Seal shall be attested by the signature of the Secretary or
the Assistant Secretary or of the Treasurer or the Assistant
Treasurer.
When authorized by the Board of Directors, the Secretary shall
affix the Seal, or cause it to be affixed, to all documents
executed on behalf of the Company. The Board of Directors may
also specifically or generally authorize other persons to affix
the Seal.
ARTICLE VIII.
REACQUIRED SHARES
When shares of the Company are reacquired by the Company by
purchase, by redemption or by their conversion into other shares
of the Company, such shares shall be treated by the Company as
treasury shares, unless and to the extent the Board of Directors
determines at any time that any such shares shall be cancelled.
ARTICLE IX.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 1. Right to Indemnification: Each person who was or is
made a party or is threatened to be made a party to or is
involved in any pending, threatened or completed civil, criminal,
administrative or arbitrative action, suit or proceeding, or any
appeal therein or any inquiry or investigation which could lead
to such action, suit or proceeding ("proceeding"), by reason of
his or her being or having been a Director or officer of the
Company or of any constituent corporation absorbed by the Company
in a consolidation or merger, or by reason of his or her being or
having been a Director, officer, trustee, employee or agent of
any other corporation (domestic or foreign) or of any
partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise (whether or not for profit),
serving as such at the request of the Company or of any such
constituent corporation, or the legal representative of any
such Director, officer, trustee, employee or agent, shall be
indemnified and held harmless by the Company to the fullest
extent permitted by the New Jersey Business Corporation Act, as
the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights
than said Act permitted prior to such amendment), from and
against any and all reasonable costs, disbursements and
attorneys' fees, and any and all amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties,
incurred or suffered in connection with any such proceeding, and
such indemnification shall continue as to a person who has ceased
to be a Director, officer, trustee, employee or agent and shall
inure to the benefit of his or her heirs, executors,
administrators and assigns; provided, however, that there shall
be no indemnification hereunder with respect to any settlement or
other nonadjudicated disposition of any proceeding unless the
Company has given its prior consent to such settlement or
disposition. The right to indemnification conferred in this
Section 1 shall be a contract right and shall include the right
to be paid by the Company the expenses incurred in connection
with any proceeding in advance of the final disposition of such
proceeding as authorized by the Board of Directors; provided,
however, that, if the New Jersey Business Corporation Act so
requires, the payment of such expenses incurred by a Director or
officer in his or her capacity as a Director or officer in
advance of the final disposition of a proceeding shall be made
only upon receipt by the Company of an undertaking, by or on
behalf of such Director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such Director
or officer is not entitled to be indemnified under this Section 1
or otherwise. The Company may, by action of its Board of
Directors, provide for indemnification and advancement of
expenses to employees and agents of the Company with the same
scope and effect as the foregoing indemnification of Directors
and officers.
Section 2. Right of Claimant to Bring Suit: If a claim under
Section 1 of this Article IX is not paid in full by the Company
within thirty days after a written request has been received by
the Company, the claimant may at any time thereafter apply to a
court for an award of indemnification by the Company for the
unpaid amount of the claim and, if successful on the merits or
otherwise in connection with any proceeding, or in the defense of
any claim, issue or matter therein, the claimant shall be
entitled also to be paid by the Company any and all expenses
incurred or suffered in connection with such proceeding. It
shall be a defense to any such action (other than an action
brought to enforce a claim for the advancement of expenses
incurred in connection with any proceeding where the required
undertaking, if any, has been tendered to the Company) that the
claimant has not met the standard of conduct which makes it
permissible under the New Jersey Business Corporation Act for the
Company to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Company. Neither
the failure of the Company (including its Board of Directors,
independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such proceeding that
indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
forth in the New Jersey Business Corporation Act, nor an actual
determination by the Company (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant
has not met such applicable standard of conduct, nor the
termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent,
shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights: The right to
indemnification and advancement of expenses provided by or
granted pursuant to this Article IX shall not exclude or be
exclusive of any other rights, including the right to be
indemnified against any and all reasonable costs, disbursements
and attorneys' fees, and any and all amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties
incurred or suffered in proceedings by or in the right of the
Company, to which any person may be entitled under a certificate
of incorporation, by-law, agreement, vote of stockholders, or
otherwise, provided that no indemnification shall be made to or
on behalf of any person if a judgment or other final adjudication
adverse to such person establishes that such person has
not met the applicable standard of conduct required to be met
under the New Jersey Business Corporation Act.
ARTICLE X.
AMENDMENTS
The Board of Directors may, by a majority vote of the entire
Board, make By-Laws and from time to time alter, amend or repeal
any By-Law, but any By-Law made by the Board of Directors may be
altered or repealed by the Stockholders at any annual or special
meeting. Notice of such proposed alteration, amendment or repeal
of any By-Law shall be included in the notice of the meeting of
the Directors or Stockholders.
ARTICLE XI.
AUDITORS
The Board of Directors may appoint a firm of certified public
accountants to audit the books and accounts of the Company for
the calendar year in which such appointment is made.
INGERSOLL-RAND COMPANY
(a New Jersey Corporation)
INGERSOLL-RAND FINANCING I
(a Delaware Business Trust)
14,000,000 FELINE PRIDES
and
1,400,000 Capital Securities
UNDERWRITING AGREEMENT
Dated: March 17, 1998
Ingersoll-Rand Company
(a New Jersey Corporation)
INGERSOLL-RAND FINANCING I
(a Delaware Business Trust)
14,000,000 FELINE PRIDESSM
(Stated Amount of $25 per FELINE PRIDES),
consisting of
12,600,000 Income PRIDESsm
each consisting of
a Purchase Contract of Ingersoll-Rand Company Requiring the
Purchase on May 16, 2001 (or earlier) of certain Shares
of Common Stock of Ingersoll-Rand Company
and
a 6.22% Capital Security of Ingersoll-Rand Financing I
and
1,400,000 Growth PRIDESSM
each consisting of
a Purchase Contract of Ingersoll-Rand Company Requiring the
Purchase on May 16, 2001 (or earlier) of certain Shares
of Common Stock of Ingersoll-Rand Company
and
a 1/40 Undivided Beneficial Interest in a Zero-Coupon U.S.
Treasury Security Having a Principal Amount Equal
to $1,000 and maturing on May 15, 2001;
and
1,400,000 6.22% Capital Securities of
Ingersoll-Rand Financing I (Liquidation Amount $25 per
Capital Security)
UNDERWRITING AGREEMENT
March 17, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-12091
Ladies and Gentlemen:
Ingersoll-Rand Company, a New Jersey corporation (the
"Company"), and Ingersoll-Rand Financing I, a Delaware statutory
business trust (the "Trust" and, together with the Company, the
"Offerors"), confirm their agreement with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Under
writer"), with respect to the sale to the Underwriter of
14,000,000 FELINE PRIDES and 1,400,000 6.22% Capital Securities
(the "Capital Securities" and, together with the FELINE PRIDES,
the "Initial Securities") of the Trust. The FELINE PRIDES will
initially consist of (A) 12,600,000 units (referred to as "Income
PRIDES") with a Stated Amount, per Income PRIDES, of $25 (the
"Stated Amount") and (B) at least 1,400,000 units (referred to as
"Growth PRIDES") with a face amount, per Growth PRIDES, equal to
the Stated Amount. Each Income PRIDES will initially consist of
a unit comprised of (a) a stock purchase contract (a "Purchase
Contract") under which (i) the holder will purchase from the
Company on May 16, 2001 (the "Purchase Contract Settlement
Date"), for an amount of cash equal to the Stated Amount, a
number of newly issued shares of common stock, $2 par value per
share (the "Shares"), of the Company equal to the Settlement Rate
described herein, and (ii) the Company will pay the holder
unsecured contract adjustment payments ("Contract Adjustment
Payments") at the rate of 6.22% of the Stated Amount per annum
and (b) beneficial ownership of a Capital Security. Each Growth
PRIDES will initially consist of a unit comprised of (a) a
Purchase Contract under which (i) the holder will purchase from
the Company on the Purchase Contract Settlement Date, for an
amount in cash equal to the Stated Amount, the number of Shares
of Common Stock of the Company, equal to the Settlement Rate, and
(ii) the Company will pay the holder Contract Adjustment
Payments, at the rate of 6.22% of the Stated Amount per annum, and
(b) a 1/40 undivided beneficial interest in a zero-coupon U.S.
Treasury Security (CUSIP No. 912820 BAY) in an amount equal to
$1,000 payable on May 15, 2001 (the "Treasury Securities"). The
Company and the Trust also propose to grant to the Underwriter
options to purchase up to 1,890,000 additional Income PRIDES
210,000 additional Growth PRIDES and 210,000 additional Capital
Securities (the "Option Securities" and together with the Initial
Securities, the "Securities") as described in Section 2(b)
hereof. In accordance with the terms of the Purchase Contract
Agreement (as defined below), to be dated as of March 23, 1998,
between the Company and The Bank of New York, as Purchase
Contract Agent (the "Purchase Contract Agent"), the Capital
Securities constituting a part of the Income PRIDES, and the
Treasury Securities constituting a part of the Growth PRIDES,
will be pledged by the Purchase Contract Agent, on behalf of the
holders of the Securities, to the Chase Manhattan Bank, as Collateral
Agent, pursuant to the Pledge Agreement, to be dated as of
March 23, 1998 (the "Pledge Agreement"), among the Company, the
Purchase Contract Agent and the Collateral Agent, to secure the
holders' obligation to purchase Common Stock under the Purchase
Contracts. The rights and obligations of a holder of Securities
in respect of Capital Securities, subject to the pledge thereof,
and Purchase Contracts will be evidenced by Security Certificates
(the "Security Certificates") to be issued pursuant to the
Purchase Contract Agreement.
The Capital Securities and Common Securities (as defined
below) will be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and
otherwise (the "Guarantee") pursuant to the Guarantee Agreement,
to be dated as of March 23, 1998 (the "Guarantee Agreement"),
executed and delivered by the Company and The First National Bank of
Chicago, as trustee (the "Guarantee Trustee"), for the benefit of
the holders from time to time of the Capital Securities and the
Common Securities, and certain back-up undertakings of the
Company. All of the net proceeds from the sale of the Capital
Securities will be combined with the entire net proceeds from the
sale by the Trust to the Company of its common securities (the
"Common Securities" and, together with the Capital Securities,
the "Trust Securities") will be used by the Trust to purchase the
% Debentures due May 16, 2003 (the "Debentures") of the Company.
The Trust Securities will be issued pursuant to the amended and
restated declaration of trust of the Trust, dated as of March 23,
1998 (the "Declaration"), among the Company, as Sponsor, Ronald
G. Heller, Nancy Casablanca and Patricia Nachtigal (the "Regular
Trustees"), and The First National Bank of Chicago, as the
institutional trustee (the "Institutional Trustee") and First Chicago
Delaware, Inc., as the Delaware trustee (the "Delaware Trustee"
and, together with the Institutional Trustee and the Regular
Trustees, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The
Debentures will be issued pursuant to the Indenture, dated as of
March 17, 1998 (the "Base Indenture"), between the Company and
The Bank of New York, as Trustee (the "Debt Trustee"), as supple
mented by the First Supplemental Indenture, dated March 23, 1998
(the Base Indenture, as supplemented and amended, being referred
to as the "Indenture"). Capitalized terms used
herein without definition shall be used as defined in the
Prospectus.
Prior to the purchase and public offering of the Securities
by the Underwriter, the Offerors and the Underwriter shall enter
into an agreement substantially in the form of Exhibit A hereto
(the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written communication
between the Offerors and the Underwriter and shall specify such
applicable information as is indicated in Exhibit A hereto. The
offering of the Securities will be governed by this Agreement, as
supplemented by the Pricing Agreement. From and after the date
of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
Pursuant to a remarketing agreement (the "Remarketing
Agreement") to be dated as of March 23, 1998, among the Company,
the Trust, the Purchase Contract Agent and a nationally recognized
investment banking firm chosen by the Company, the Capital
Securities may be remarketed, subject to certain terms and
conditions.
The Company and the Trust have filed with the Securities and
Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-38367) and pre-effective amendment no. 1
thereto covering the registration of securities of the Company
and the Trust, including the Securities and the Purchase Contracts
and Capital Securities included in, and Shares underlying,
the Securities, under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or
prospectuses, and the offering thereof from time to time in
accordance with the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and the Company has
filed such post-effective amendments thereto as may be required
prior to the execution of the Pricing Agreement. Such registration
statement, as so amended, has been declared effective by the
Commission. Such registration statement, as so amended, including
the exhibits and schedules thereto, if any, and the information,
if any, deemed to be a part thereof pursuant to Rule
430A(b) of the 1933 Act Regulations (the "Rule 430A Information")
or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement";
and the final prospectus relating to the offering of the Securities,
in the form first furnished to the Underwriter by the Company for
use in connection with the offering of the Securities, are collectively
referred to herein as the "Prospectus"; provided, however, that all
references to the "Registration Statement" and the "Prospectus"
shall be deemed to include all documents incorporated therein by
reference pursuant to the Securities Exchange Act of 1934, as amended
(the "1934 Act"), prior to the execution of the applicable Pricing
Agreement;provided, further, that if the Offerors file a registration
statement with the Commission pursuant to Section 462(b) of the
1933 Act Regulations (the "Rule 462(b) Registration Statement"),
then after such filing, all references to "Registration Statement"
shall be deemed to include the Rule 462(b) Registration
Statement; and provided, further, that if the Offerors elect to
rely upon Rule 434 of the 1933 Act Regulations, then all references
to "Prospectus" shall be deemed to include the final or
preliminary prospectus and the applicable term sheet or abbreviated
term sheet (the "Term Sheet"), as the case may be, in the form first
furnished to the Underwriter by the Company in reliance upon Rule
434 of the 1933 Act Regulations, and all references in this
Underwriting Agreement to the date of the Prospectus shall mean
the date of the Term Sheet. A "preliminary prospectus" shall be
deemed to refer to any prospectus used before the registration
statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information
or other information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of
the 1933 Act Regulations, that was used after such effectiveness
and prior to the execution and delivery of the applicable Pricing
Agreement. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus
or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the electronically transmitted
copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included"
or "stated" in the Registration Statement, any preliminary
prospectus or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements
and schedules and other information which is incorporated by
reference in the Registration Statement, any preliminary prospectus
or the Prospectus, as the case may be; and all references in
this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the
1934 Act which is incorporated by reference in the Registration
Statement, such preliminary prospectus or the Prospectus, as the
case may be.
The Offerors understand that the Underwriter proposes to
make a public offering of the Securities as soon as the Under
writer deems advisable after the Pricing Agreement has been
executed and delivered and the Declaration, the Indenture and the
Guarantee Agreement have been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
SECTION 1. Representations and Warranties.
(a) The Offerors represent and warrant to each Underwriter
as of the date hereof, as of the date of the Pricing Agreement
and as of each Date of Delivery (as defined) (such later date
being hereinafter referred to as the "Representation Date") that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been initiated or, to the knowledge of the Offerors,
threatened by the Commission.
(ii) The Company and the Trust meet, and at the
respective times of the commencement and consummation of the
offering of the Securities will meet, the requirements for the
use of Form S-3 under the 1933 Act. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act. At the respective times the
Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendments thereto became effective and at
each Representation Date, the Registration Statement, any Rule
462 Registration Statement and any amendments or supplements
thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the Commission
under the 1939 Act (the "1939 Act Regulations") and did not and
will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At
the date of the Prospectus and at the Closing Time (as defined
herein), the Prospectus and any amendments and supplements thereto
did not and will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. If the Offerors elect to rely
upon Rule 434 of the 1933 Act Regulations, the Offerors will
comply with the requirements of Rule 434. Notwithstanding the
foregoing, the representations and warranties in this subsection
shall not apply to (A) statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon
and in conformity with information furnished to the Offerors in
writing by the Underwriter expressly for use in the Registration
Statement or the Prospectus or (B) the part of the Registration
Statement which shall constitute the Statement of Eligibility
(Form T-1) under the 1939 Act.
Each preliminary prospectus and prospectus filed as
part of the Registration Statement as originally filed or as part
of any amendment thereto, or filed pursuant to Rule 424 under the
1933 Act, complied as so filed in all material respects with the
1933 Act Regulations and, if applicable, each preliminary prospectus
and the Prospectus delivered to the Underwriter for use in connection
with the offering of the Securities will, at the time of such delivery,
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(iii) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, at the time they were or hereafter are filed or last
amended, as the case may be, with the Commission, complied and
will comply in all material respects with the requirements of the
1934 Act, and the rules and regulations of the Commission there
under (the "1934 Act Regulations"), and at the time of filing or
as of the time of any subsequent amendment, did not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration
Statement or the Prospectus will, if and when such documents are
filed with the Commission, or when amended, as appropriate,
comply in all material respects to the requirements of the 1934
Act and the 1934 Act Regulations and will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Offerors by the Underwriter expressly for use in the
Registration Statement or the Prospectus.
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(v) The financial statements of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus, together with the related schedules and notes,
present fairly the financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the
results of their operations for the periods specified in all
material respects. Such financial statements have been prepared
in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly in accordance with GAAP the information
required to be stated therein in all material respects. The
ratio of earnings to fixed charges included in the Prospectus has
been calculated in compliance with Item 503(d) of Regulation S-K
of the Commission. The selected financial information and the
summary financial data included in the Prospectus present fairly
in all material respects the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement and
the Prospectus. The pro forma financial statements and the
related notes thereto included in the Registration Statement and
the Prospectus present fairly in all material respects the
information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(vi) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and
except as otherwise stated therein, (A) there has been no material
adverse change and no development which could reasonably be expected
to result in a material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs of the Company and
its subsidiaries, considered as one enterprise whether or not arising
in the ordinary course of business (a "Material Adverse Effect"),
(B) there have been no transactions entered into by the Company or
any of its subsidiaries, other than those arising in the ordinary
course of business, which are material with respect to the Company
and its subsidiaries, considered as one enterprise, (C) except for
regular dividends on the Common Stock in amounts per share that are
consistent with past practice or the applicable charter document or
supplement thereto, respectively, there has been no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(vii) The Company has been incorporated, is validly
existing as a corporation and is in good standing under the laws
of the State of New Jersey, has the corporate power and authority
to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus
and to enter into and perform its obligations under, or as
contemplated under, this Agreement, the Pricing Agreement, the
Remarketing Agreement, the Purchase Contract Agreement, the
Pledge Agreement and the Guarantee Agreement. The Company is
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify or be in good standing would not have a Material
Adverse Effect.
(viii) Other than the Trust, each "Significant Subsidiary"
(as defined in Rule 1-02 of Regulation S-X of the 1933 Act) of the
Company is set forth on Schedule I hereto, has been incorporated and
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus,
and is qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect. Except as
otherwise stated in the Registration Statement and the Prospec-
tus, all of the issued and outstanding shares of capital stock of
each subsidiary of the Company have been authorized and validly
issued, are fully paid and non-assessable and all such shares are
owned by the Company, directly or through its subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of
capital stock of the subsidiaries was issued in violation of
preemptive or other similar rights arising by operation of law,
under the charter or by-laws of any subsidiary or under any
agreement to which the Company or any subsidiary is a party, or
otherwise.
(ix) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus; since the
date indicated in the Prospectus there has been no change in the
consolidated capitalization of the Company and its subsidiaries
(other than changes in outstanding Common Stock resulting from em-
ployee benefit plan or dividend reinvestment and stock purchase
plan transactions); and all of the issued and outstanding capital
stock of the Company has been authorized and validly issued, is
fully paid and non-assessable and conforms to the descriptions
thereof contained in the Prospectus.
(x) The Trust has been created and is validly existing
in good standing as a business trust under the Delaware Business
Trust Act (the "Delaware Act") with the power and authority to
own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and
perform its obligations under this Agreement, the Pricing Agree-
ment, the Remarketing Agreement, the Capital Securities and the
Declaration; the Trust is qualified to transact business as a
foreign company and is in good standing in each jurisdiction in
which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a Material
Adverse Effect on the Trust; the Trust is not a party to or
otherwise bound by any agreement other than those described in
the Prospectus; the Trust is and will, under current law, be
classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation.
(xi) The Purchase Contract Agreement has been autho-
rized by the Company and, at the Closing Time, when validly
executed and delivered by the Company and assuming due authoriza-
tion, execution and delivery of the Purchase Contract Agreement
by the Purchase Contract Agent, will constitute a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally, or by general equitable
principles (whether considered in a proceeding in equity or at
law) (the "Bankruptcy Exceptions"), and will conform in all
material respects to the description thereof contained in the
Prospectus.
(xii) The Pledge Agreement has been authorized by the
Company and, at the Closing Time, when validly executed and
delivered by the Company and assuming due authorization, execu-
tion and delivery of the Pledge Agreement by the Collateral Agent
and the Purchase Contract Agent, will constitute a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions,
and will conform in all material respects to the description
thereof contained in the Prospectus.
(xiii) The Common Securities have been authorized by
the Declaration and, when issued and delivered by the Trust to
the Company against payment therefor as described in the Regis-
tration Statement and Prospectus, will be validly issued, will
represent undivided beneficial interests in the assets of the
Trust and will conform in all material respects to the descrip-
tion thereof contained in the Prospectus; the issuance of the
Common Securities is not subject to preemptive or other similar
rights; and at the Closing Time all of the issued and outstanding
Common Securities of the Trust will be directly owned by the
Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equitable right.
(xiv) The Declaration has been authorized by the
Company and, at the Closing Time, will have been executed and
delivered by the Company and the Trustees, and assuming due
authorization, execution and delivery of the Declaration by the
Institutional Trustee and the Delaware Trustee, the Declaration
will, at the Closing Time, be a legal, valid and binding obliga-
tion of the Company and the Regular Trustees, enforceable against
the Company and the Regular Trustees in accordance with its
terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions, and will conform in all
material respects to the description thereof contained in the
Prospectus; and at the Closing Time, the Declaration will have
been duly qualified under the 1939 Act.
(xv) The Guarantee Agreement has been authorized by
the Company and, when validly executed and delivered by the
Company, and, assuming due authorization, execution and delivery
by the Guarantee Trustee, will constitute a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions,
and the Guarantee and the Guarantee Agreement will conform in all
material respects to the description thereof contained in the
Prospectus; and at the Closing Time, the Guarantee Agreement will
have been duly qualified under the 1939 Act.
(xvi) The Securities have been authorized for issuance
and sale to the Underwriter and, when issued and delivered
against payment therefor as provided herein, will be validly
issued and fully paid and non-assessable and will conform in all
material respects to the description thereof contained in the
Prospectus; the issuance of the Securities is not subject to
preemptive or other similar rights.
(xvii) The Shares, when issued and delivered in accor
dance with the provisions of the Purchase Contract Agreement and
the Pledge Agreement, will be authorized, validly issued and
fully paid and non-assessable and will conform in all material
respects to the description thereof contained in the Prospectus;
and the issuance of such Shares will not be subject to preemptive
or other similar rights.
(xviii) The Indenture has been authorized by the
Company and qualified under the 1939 Act and, at the Closing
Time, will have been executed and delivered and will constitute a
legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; the Indenture will conform in all material respects
to the description thereof contained in the Prospectus.
(xix) The Debentures have been authorized by the
Company and, at the Closing Time, will have been executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment therefor as described in
the Prospectus, will constitute legal, valid and binding obliga-
tions of the Company, enforceable against the Company in accor
dance with their terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions, and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to the
description thereof contained in the Prospectus.
(xx) Each of the Regular Trustees of the Trust is an
employee of the Company and has been authorized by the Company to
execute and deliver the Declaration.
(xxi) Neither the Company nor any of its subsidiaries
is in violation of its articles of incorporation or by-laws. The
Trust is not in violation of the Declaration or its certificate
of trust filed with the State of Delaware on August 18, 1997 (the
"Certificate of Trust"); none of the Company, any of its subsid
iaries or the Trust is in default in the performance or obser-
vance of any obligation, agreement, covenant or condition con-
tained in any contract, indenture, mortgage, note, lease, loan or
credit agreement or any other agreement or instrument to which
the Company, any of its subsidiaries or the Trust is a party or
by which any of them may be bound, or to which any of the proper-
ty or assets of the Company, any subsidiary or the Trust is sub-
ject, or in violation of any applicable law, rule or regulation
or any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdic-
tion over the Company or any of its subsidiaries or any of their
respective properties or assets, which violation or default
would, singly or in the aggregate, have a Material Adverse
Effect.
(xxii) The entry into the Purchase Contracts underly-
ing the Securities by the Company, the offer of the Securities as
contemplated herein and in the Prospectus, the issue of the
Shares and the sale of the Shares by the Company pursuant to the
Purchase Contracts, the execution, delivery and performance of
this Agreement, the Pricing Agreement, the Remarketing Agreement,
the Purchase Contracts, the Purchase Contract Agreement, the
Pledge Agreement, the Declaration, the Capital Securities, the
Common Securities, the Indenture, the Debentures, the Guarantee
Agreement and the Guarantees, and the consummation of the transac-
tions contemplated herein, therein and the Registration Statement
(including the issuance and sale of the Securities and the use of
proceeds from the sale of the Securities as described in the
prospectus under the caption "Use of Proceeds") and compliance by
the Offerors with their obligations hereunder and thereunder have
been authorized by all necessary action (corporate or otherwise)
and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a
breach of any of the terms or provisions of, or constitute a
default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, any subsidiary or the
Trust pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other
agreement or instrument to which the Company, the Trust or any
subsidiary is a party or by which any of them may be bound, or to
which any of the Property of any of them is subject (the
"Agreements and Instruments") (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would
not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary or the Declaration or
Certificate of Trust or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company, any subsidiary or the Trust or any
of their assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company, any subsidiary or
the Trust.
(xxiii) There is no action, suit, proceeding, inquiry
or investigation before or by any court or governmental agency or
body, domestic or foreign, now pending or to the knowledge of the
Company threatened against or affecting the Trust, the Company or
any of its subsidiaries which is required to be disclosed in the
Registration Statement and the Prospectus (other than as stated
therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might be reasonably expected to
have a Material Adverse Effect on the assets, properties or opera-
tions thereof or the consummation of this Agreement, the Pricing
Agreement, the Remarketing Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the Guarantee
Agreement, the Indenture or the transactions contemplated herein
or therein.
(xxiv) The Company and its subsidiaries have good and
marketable title to all material real and personal property owned
by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Registration
Statement or the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the
Company and its subsidiaries; and any material real property and
buildings held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries; the
Company and its subsidiaries possess all licenses, franchises,
permits, certificates, authorizations, approvals, consents and
orders of all governmental authorities or agencies which are
necessary for the ownership or lease of the material properties
owned or leased by each of them and for the operation of the
business now operated by each of them with such exceptions which,
singly or in the aggregate, are not material and do not material-
ly interfere with the conduct of the business of the Company and
its subsidiaries, considered as one enterprise; all such licens-
es, franchises, permits, certificates, orders, authorizations,
approvals and consents are in full force and effect and contain
no unduly burdensome provisions that would interfere with the
conduct of the business of the Company and its subsidiaries,
considered as one enterprise and, except as otherwise set forth
in the Registration Statement or the Prospectus, there are no
legal or governmental proceedings pending or threatened that
would result in a material modification, suspension or revocation
thereof.
(xxv) No authorization, approval, consent, order,
registration or qualification of or with any court or governmen-
tal authority or agency is required for the entry into the Pur
chase Contracts underlying the Securities, in connection with the
issuance and sale of the Common Securities, the offering of the
Securities and the issuance and sale of the Shares by the Company
pursuant to such Purchase Contracts, except such as have been
obtained and made under the federal securities laws and such as
may be required under state or foreign securities or Blue Sky
laws.
(xxvi) This Agreement, the Remarketing Agreement and
the Pricing Agreement have been authorized, executed and deliv-
ered by each of the Offerors.
(xxvii) None of the Trust nor the Company or any of
its subsidiaries is, and upon the issuance and sale of the Securi-
ties as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
(xxviii) None of the Company, its subsidiaries or any
of their respective directors, officers or controlling persons,
has taken, directly or indirectly, any action resulting in a
violation of Regulation M under the 1934 Act, or designed to
cause or result in, or that has constituted or that reasonably
might be expected to constitute, the stabilization or manipula-
tion of the price of any security of the Company to facilitate
the sale or resale of the Securities or the Common Stock.
(xxix) No "forward looking statement" (as defined in
Rule 175 under the 1933 Act) contained in the Registration
Statement, any preliminary prospectus or the Prospectus was made
or reaffirmed without a reasonable basis or was disclosed other
than in good faith.
(b) Any certificate signed by any officer of the
Company or a Trustee of the Trust and delivered to the Underwrit-
er or to counsel for the Underwriter shall be deemed a repre-
sentation and warranty by the Company or the Trust, as the case
may be, to the Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein
set forth, the Offerors agree to sell to the Underwriter, and the
Underwriter agrees to purchase from the Offerors, at the price
per security set forth in the Pricing Agreement, 14,000,000
Initial Securities.
(1) If the Offerors have elected not to rely upon Rule
430A of the 1933 Act Regulations, the initial public offering
price per Security and the purchase price per Security to be paid
by the Underwriter for the Securities have each been determined
and set forth in the Pricing Agreement, dated the date hereof,
and any necessary amendments to the Registration Statement and
the Prospectus will be filed before the Registration Statement
becomes effective.
(2) If the Offerors have elected to rely upon Rule
430A of the 1933 Act Regulations, the purchase price per Security
to be paid by the Underwriter shall be an amount equal to the
initial public offering price per Security, less an amount per
Security to be determined by agreement between the Underwriter
and the Offerors. The initial public offering price per Security
shall be a fixed price to be determined by agreement between the
Underwriter and the Offerors. The initial public offering price
and the purchase price, when so determined, shall be set forth in
the Pricing Agreement. In the event that such prices have not
been agreed upon and the Pricing Agreement has not been executed
and delivered by all parties thereto by the close of business on
the fourth business day following the date of this Agreement,
this Agreement shall terminate forthwith, without liability of
any party to any other party, unless otherwise agreed to by the
Offerors and the Underwriter.
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and condi-
tions herein set forth, the Offerors hereby grant to the Under
writer the right to purchase at its election up to 1,890,000
Income PRIDES, 210,000 Growth PRIDES and 210,000 Capital Securi-
ties at the price per share set forth in the Pricing Agreement;
provided, that, pursuant to such options, the Underwriter shall
purchase, proportionately, at least as many Capital Securities as
Growth PRIDES and shall purchase proportionately, at least as
many Growth PRIDES as Income PRIDES. The option hereby granted
will expire automatically at the close of business on the 30th
calendar day after (i) the later of the date the Registration
Statement and any Rule 462(b) Registration Statement becomes
effective, if the Offerors have elected not to rely upon
Rule 430A under the 1933 Act Regulations, or (ii) the Representa-
tion Date, if the Offerors have elected to rely upon Rule 430A
under the 1933 Act Regulations, and may be exercised in whole or
in part from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Under
writer to the Offerors setting forth the aggregate number of
additional Optional Securities to be purchased and the time and
date of delivery for the related Option Securities. Any such
time and date of delivery (a "Date of Delivery") shall be deter
mined by the Underwriter but shall not be later than seven full
business days after the exercise of such option, nor in any event
before the Closing Time, unless otherwise agreed upon by the
Underwriter and the Offerors.
(c) The Capital Securities and Treasury Securities underly-
ing the Securities will be pledged with the Collateral Agent to
secure the holders' obligations to purchase Common Stock under
the Purchase Contracts. Such pledge shall be effected by the
transfer to the Collateral Agent of the Capital Securities and
Treasury Securities to be pledged at the Closing Time and appro-
priate Date of Delivery, if any, in accordance with the Pledge
Agreement.
(d) Delivery of certificates for the Initial Securities and
the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the first business
day prior to the Closing Time) shall be made at the offices of
the Underwriter in New York, against the delivery to the Collat-
eral Agent of the Capital Securities and Treasury Securities
relating to such Securities by such Underwriter or on its behalf,
and payment of the purchase price for such Securities shall be
made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
919 Third Avenue, New York, New York 10022 or at such other place
as shall be agreed upon by the Underwriter and the Offerors, at
9:00 a.m. (New York time) on the third business day after the
date the Registration Statement becomes effective (or, if the
Offerors have elected to rely upon Rule 430A, the third full
business day after execution of the Pricing Agreement (or, if
pricing of the Securities occurs after 4:30 p.m., Eastern time,
on the fourth full business day thereafter)), or such other time
not later than ten business days after such date as shall be
agreed upon by the Underwriter and the Offerors (such time and
date of payment and delivery being referred to herein as the
"Closing Time"). Payment for the Securities purchased by the
Underwriter shall be made by wire transfer of immediately avail-
able funds, payable to the Company, against delivery to the
account of the Underwriter of the Securities to be purchased by
it. Delivery of, and payment for, the Securities shall be made
through the facilities of The Depository Trust Company. In
addition, if the Underwriter purchase any or all of the Option
Securities, payment of the purchase price and delivery of certif-
icates for such Option Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP set forth above, or at
such other place as shall be agreed upon by the Underwriter and
the Offerors, on each Date of Delivery as specified in the
relevant notice from the Underwriter to the Offerors.
Certificates for the Initial Securities and the Option
Securities, if any, shall be in such denominations and registered
in such names as the Underwriter may request in writing at least
two full business days before the Closing Time or any Date of
Delivery, as the case may be. The certificates for the Initial
Securities and the Option Securities, if any, will be made
available for examination by the Underwriter no later than
10:00 a.m. (New York City time) on the last business day prior to
the Closing Time or the Date of Delivery, as the case may be.
(e) If settlement for the Option Securities occurs after
the Closing Time, the Offerors will deliver to the Underwriter on
the relevant Date of Delivery, and the obligations of the Under
writer to purchase the Option Securities shall be conditioned
upon the receipt of, supplemental opinions, certificates and
letters confirming as of such date the opinions, certificates and
letters delivered at the Closing Time pursuant to Section 5(k)
hereof.
SECTION 3. Covenants of the Offerors. The Offerors agree
with the Underwriter as follows:
(a) Promptly following the execution of this Agreement, the
Offerors will cause the Prospectus to be filed with the Commis-
sion pursuant to Rule 424 of the 1933 Act Regulations and the
Offerors will promptly advise the Underwriter when such filing
has been made. Prior to the filing, the Offerors will cooperate
with the Underwriter in the preparation of such Prospectus to
assure that the Underwriter has no reasonable objection to the
form or content thereof when filed or mailed.
(b) The Offerors will comply with the requirements of Rule
430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act
Regulations if and as applicable, and will notify the Underwriter
immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment to the Registration
Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission,
(iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus or for additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings
for that purpose and (v) of the issuance by any state securities
commission or other regulatory authority of any order suspending
the qualification or the exemption from qualification of the
Securities or the Shares under state securities or Blue Sky laws
or the initiation or threatening of any proceeding for such
purpose. The Offerors will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible
moment.
(c) The Offerors will give the Underwriter notice of their
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment and any filing
under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or
any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise; will furnish the Underwriter with
copies of any such Rule 462(b) Registration Statement, Term
Sheet, amendment, supplement or revision a reasonable amount of
time prior to such proposed filing or use, as the case may be;
and will not file any such Rule 462(b) Registration Statement,
Term Sheet, amendment, supplement or revision to which the
Underwriter or counsel for the Underwriter shall object.
(d) The Company will deliver to the Underwriter and counsel
for the Underwriter, without charge, signed copies of the Regis-
tration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be
incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to
the Underwriter, without charge, a conformed copy of the Registra-
tion Statement as originally filed and of each amendment thereto
(without exhibits). If applicable, the copies of the Registra-
tion Statement and each amendment thereto furnished to the
Underwriter will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(e) The Company has delivered to the Underwriter, without
charge, as many copies of each preliminary prospectus as the
Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act.
The Company will furnish to the Underwriter, without charge,
during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriter may
reasonably request. If applicable, the Prospectus and any
amendments or supplements thereto furnished to the Underwriter
will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to
the extent permitted by Regulation S-T.
(f) The Offerors will comply with the 1933 Act and the 1933
Act Regulations and the 1934 Act and the 1934 Act Regulations so
as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Registration State-
ment and the Prospectus. If at any time when the Prospectus is
required by the 1933 Act or the 1934 Act to be delivered in
connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in
the opinion of counsel for the Underwriter or for the Offerors,
to amend the Registration Statement in order that the Registra-
tion Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not mislead-
ing or to amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circum-
stances existing at the time it is delivered to a purchaser, or
if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supple-
ment the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Offerors will
promptly prepare and file with the Commission, subject to Section
3(c), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement
or the Prospectus comply with such requirements, and the Offerors
will furnish to the Underwriter, without charge, such number of
copies of such amendment or supplement as the Underwriter may
reasonably request.
(g) The Offerors will use their best efforts, in coopera-
tion with the Underwriter, to qualify the Securities for offering
and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Underwriter may
designate; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securi
ties have been so qualified, the Offerors will file such state-
ments and reports as may be required by the laws of such juris-
diction to continue such qualification in effect for so long as
may be required in connection with distribution of the Securities
and the Shares.
(h) The Company will make generally available to its
securityholders as soon as practicable, but not later than 45
days (or 90 days, in the case of a period that is also the
Company's fiscal year) after the close of the period covered
thereby, an earnings statement of the Company and its subsidiar-
ies (in form complying with the provisions of Rule 158 of the
1933 Act Regulations).
(i) The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(j) If, at the time that the Registration Statement became
(or in the case of a post-effective amendment becomes) effective,
any information shall have been omitted therefrom in reliance
upon Rule 430A or Rule 434 of the 1933 Act Regulations, then
immediately following the execution of the Pricing Agreement, the
Offerors will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A or Rule 434 and Rule
424(b) of the 1933 Act Regulations, copies of an amended Prospec
tus, or Term Sheet, or, if required by such Rule 430A, a
post-effective amendment to the Registration Statement (including
an amended Prospectus), containing all information so omitted.
(k) If the Offerors elect to rely upon Rule 462(b), the
Offerors shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable
fees in accordance with Rule 111 of the 1933 Act Regulations by
the earlier of (i) 10:00 p.m. Eastern time on the date of the
Pricing Agreement and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(l) The Offerors, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the 1934 Act within the time periods
required by the 1934 Act and the 1934 Act Regulations.
(m) The Offerors will use their best efforts to effect the
listing of the Income PRIDES and the Growth PRIDES on the New
York Stock Exchange and to cause the Securities to be registered
under the 1934 Act.
(n) During a period of 90 days from the date of the Pricing
Agreement, neither the Trust nor the Company will, without the
prior written consent of the Underwriter, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or other-
wise dispose of, or enter into any agreement to sell, any Income
PRIDES, Growth PRIDES, Purchase Contracts, Capital Securities or
Common Stock, as the case may be, or any securities of the
Company similar to the Income PRIDES, Growth PRIDES, Purchase
Contracts, Capital Securities or Common Stock or any security
convertible into or exchangeable or exercisable for Income
PRIDES, Growth PRIDES, Purchase Contracts, Capital Securities or
Common Stock other than shares of Common Stock or options for
shares of Common Stock issued pursuant to or sold in connection
with any employee benefit, dividend reinvestment and stock option
and stock purchase plans of the Company and its subsidiaries and
other than the Growth PRIDES or Income PRIDES to be created or
recreated upon substitution of Pledged Securities, or shares of
Common Stock issuable upon early settlement of the Income PRIDES
or Growth PRIDES or upon exercise of stock options, or (B) enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Securities, any security
convertible into or exchangeable into or exercisable for the
Securities substantially similar to equity securities substantial-
ly similar to the Securities, whether any such swap or
transaction is to be settled by delivery of Securities, or other
securities, in cash or otherwise.
(o) For a period of three years from the Closing Time, the
Company will furnish to the Underwriter copies of all annual
reports, quarterly reports and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such similar forms as
may be designated by the Commission, and such other documents,
reports and information as shall be furnished by the Company to
its stockholders or securityholders generally, provided, however,
that the Company shall not be required to provide the Underwriter
with any such reports or similar forms that have been filed with
the Commission by electronic transmission pursuant to EDGAR.
(p) The Company will reserve and keep available at all
times, free of preemptive or other similar rights and liens and
adverse claims, sufficient shares of Common Stock to satisfy any
obligations to issue Shares upon settlement of the Purchase
Contracts and shall take all actions necessary to keep effective
the Registration Statement with respect to the Shares.
(q) None of the Company, its subsidiaries or any of their
respective directors, officers or controlling persons, will take,
directly or indirectly, any action resulting in a violation of
Regulation M under the 1934 Act, or designed to cause or result
in, or that reasonably might be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or the
Common Stock.
SECTION 4. Payment of Expenses. The Company will pay all
expenses incident to the performance of its obligations under
this Agreement, the Pricing Agreement, the Purchase Contracts,
the Purchase Contract Agreement and the Pledge Agreement, includ-
ing, without limitation, expenses related to the following, if
incurred: (i) the preparation, delivery, printing and filing of
the Registration Statement and Prospectus as originally filed
(including financial statements and exhibits) and of each amend-
ment thereto; (ii) the preparation, issuance and delivery of the
certificates for the Securities and the Shares; (iii) the fees
and disbursements of the Company's counsel, accountants and other
advisors or agents (including the transfer agents and regis
trars), as well as fees and disbursements of the Trustees, the
Purchase Contract Agent, the Collateral Agent and any Depositary,
and their respective counsel (except as provided for in the
Prospectus); (iv) the qualification of the Securities and the
Shares under securities laws in accordance with the provisions of
Section 3(g), including filing fees and the fees and disburse
ments of counsel for the Underwriter in connection therewith and
in connection with the preparation of the Blue Sky Survey; (v)
the printing and delivery to the Underwriter of copies of the
Registration Statement as originally filed and of each amendment
thereto, of each preliminary prospectus, any Term Sheet and of
the Prospectus and any amendments or supplements thereto;
(vi) any fees payable in connection with the rating of the
Securities by nationally recognized statistical rating organiza-
tions; and (vii) any fees payable or expenses incurred pursuant
to any Uniform Commercial Code related filings; and (viii) the
fees and expenses incurred in connection with the listing of the
Income PRIDES, the Growth PRIDES and the Shares on the New York
Stock Exchange.
If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 5 or Section 9(a)(i)
hereof with respect to the Initial Securities or the Option
Securities, as the case may be, the Company shall reimburse the
Underwriter for all of its reasonable out-of-pocket expenses
incurred in connection with the Initial Securities or Option
Securities, as the case may be, including the fees and disburse-
ments of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase and pay for the
Securities pursuant to this Agreement are subject to the accuracy
of the representations and warranties of the Offerors herein
contained or in certificates of any officer of the Company or any
subsidiary or the trustees of the Trust delivered pursuant to the
provisions hereof, to the performance by the Offerors of their
obligations hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective under the
1933 Act not later than 5:30 p.m., New York City time, on the
date hereof, and on the date hereof and at the Closing Time and
any Date of Delivery, no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied
with to the satisfaction of counsel to the Underwriter. A
prospectus containing information relating to the description of
the Securities, the specific method of distribution and similar
matters shall have been filed with the Commission in accordance
with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information
shall have been filed and declared effective in accordance with
the requirements of Rule 430A), or, if the Company has elected to
rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet in-
cluding the Rule 434 Information shall have been filed with the
Commission in accordance with Rule 424(b)(7).
(b) At the Closing Time the Underwriter shall have re
ceived:
(1) The favorable opinion, dated as of the Closing
Time, of Patricia Nachtigal, Esq., Vice President and General
Counsel of the Company, in form and substance reasonably satisfac-
tory to counsel for the Underwriter, to the effect that:
(i) The Company has been incorporated, is valid-
ly existing as a corporation and is in good standing under
the laws of the State of New Jersey.
(ii) The Company has corporate power and author
ity to own, lease and operate its properties and to conduct
its business as described in the Prospectus.
(iii) The Company is qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required,
except where such failure to qualify or be in good standing
would not have a Material Adverse Effect.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospec-
tus (except for subsequent issuances, if any, pursuant to
incentive compensation plan, employee benefit plan or divi-
dend reinvestment and stock purchase plan transactions), and
the shares of issued and outstanding capital stock of the
Company have been authorized and validly issued and are
fully paid and non-assessable.
(v) Except for the Trust, each Significant
Subsidiary of the Company has been incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation; to such
counsel's knowledge, each subsidiary of the Company has the
corporate power and authority to own, lease and operate its
properties and to conduct its business as presently con
ducted and as described in the Prospectus, and is qualified
as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the fail-
ure to so qualify or be in good standing would not have a
Material Adverse Effect; and to such Counsel's knowledge all
of the issued and outstanding capital stock of each subsid-
iary of the Company has been authorized and validly issued,
is fully paid and non-assessable and all shares owned by the
Company, directly or through its subsidiaries, are owned
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(vi) The Declaration has been authorized, exe
cuted and delivered by the Company and the Trustees and is a
legal, valid and binding obligation of the Company, enforce-
able against the Company and each of the Regular Trustees in
accordance with its terms, except as enforcement thereof may
be limited by the Bankruptcy Exceptions; and the Declaration
has been duly qualified under the 1939 Act.
(vii) All legally required proceedings in connec-
tion with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with
this Agreement have been taken and all legally required
orders, consents or other authorizations or approvals of any
other public boards or bodies in connection with the autho-
rization, issuance and validity of the Securities and the
sale of the Securities in accordance with this Agreement
(other than in connection with or in compliance with the
provisions of the securities or Blue Sky laws of any juris
dictions, as to which no opinion need be expressed) have
been obtained and are in full force and effect.
(viii) The Registration Statement is effective
under the 1933 Act and, to the best knowledge of such coun-
sel, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act,
and no proceedings therefor have been initiated or threat
ened by the Commission.
(ix) Each of the documents incorporated by
reference in the Registration Statement or the Prospectus at
the time they were filed or last amended (other than the
financial statements and the notes thereto, the financial
schedules, and any other financial data included or incorpo
rated by reference therein, as to which such counsel need
express no belief), complied as to form in all material
respects with the requirements of the 1934 Act and the 1934
Act Regulations, as applicable; and such counsel has no
reason to believe that any of such documents, when such
documents became effective or were so filed, as the case may
be, contained, in the case of a registration statement which
became effective under the 1933 Act, an untrue statement of
a material fact, or omitted to state a material fact re-
quired to be stated therein or necessary to make the state-
ments therein not misleading, and, in the case of other
documents which were filed under the 1934 Act with the
Commission, an untrue statement of a material fact or omit-
ted to state a material fact necessary in order to make the
statements therein not misleading.
(x) The Company and the Trust meet the regis-
trant requirements for use of Form S-3 under the 1933 Act
Regulations.
(xi) The Income PRIDES and Growth PRIDES have
been duly authorized, executed and delivered by the Company,
and (assuming due execution by the Purchase Contract Agent
as attorney-in-fact of the holders thereof and due authenti-
cation by the Purchase Contract Agent) and upon payment
therefore as set forth herein, will be duly and validly
issued and outstanding, and will constitute valid and bind-
ing obligations of the Company entitled to the benefits of
the Purchase Contract Agreement and enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy
Exceptions. The Shares and the Securities are each regis
tered under the 1934 Act, and the Income PRIDES issuable at
the Closing Time and the Shares issuable by the Company
pursuant to the Purchase Contracts have been authorized for
listing on the New York Stock Exchange, upon official notice
of issuance.
(xii) The Shares subject to the Purchase Contract
Agreement have been validly authorized and reserved for
issuance and, when issued and delivered by the Company in
accordance with the provisions of the Purchase Contract
Agreement, the Purchase Contracts and the Pledge Agreement,
will be fully paid and non-assessable; the issuance of such
Shares will not be subject to preemptive or other similar
rights arising by law or, to the best of such counsel's
knowledge, otherwise.
(xiii) The issuance of the Securities is not
subject to preemptive or other similar rights arising by law
or, to the best of such counsel's knowledge, otherwise.
(xiv) All of the issued and outstanding Common
Securities of the Trust are directly owned by the Company
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right.
(xv) This Agreement, the Remarketing Agreement
and the Pricing Agreement have been duly authorized, exe
cuted and delivered by each of the Company and the Trust.
(xvi) The Purchase Contract Agreement has been
duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by the
Purchase Contract Agent, constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent that enforce-
ment thereof may be limited by the Bankruptcy Exceptions.
(xvii) The Pledge Agreement has been duly autho-
rized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by the Collateral
Agent and the Purchase Contract Agent, constitutes a legal,
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xviii) The Guarantee Agreement has been duly
authorized, executed and delivered by the Company; the
Guarantee Agreement, assuming it is duly authorized, exe-
cuted, and delivered by the Guarantee Trustee, constitutes a
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to
the extent that enforcement thereof may be limited by Bank-
ruptcy Exceptions.
(xix) The Indenture has been executed and deliv-
ered by the Company and, assuming authorization, execution,
and delivery thereof by the Debt Trustee, is a valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xx) The Debentures are in the form contemplated
by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt
Trustee in the manner provided for in the Indenture and
delivered against payment therefor by the Trust, will con-
stitute valid and binding obligations of the Company, en-
forceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions.
(xxi) The entry into the Purchase Contracts
underlying the Securities by the Company, the offer of the
Securities as contemplated herein and in the Prospectus, the
issuance of the Shares and the sale of the Shares by the
Company pursuant to the Purchase Contracts, the execution,
delivery and performance of this Agreement, the Pricing
Agreement, the Remarketing Agreement, the Purchase Con-
tracts, the Purchase Contract Agreement, the Pledge Agree-
ment, the Declaration, the Capital Securities, the Common
Securities, the Indenture, the Debentures, the Guarantee
Agreement and the Guarantees, and the consummation of the
transactions contemplated herein, therein and the Registra-
tion Statement (including the issuance and sale of the
Securities and the use of proceeds from the sale of the
Securities as described in the prospectus under the caption
"Use of Proceeds") and compliance by the Offerors with their
obligations hereunder and thereunder have been authorized by
all necessary action (corporate or otherwise) and do not and
will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a
breach of any of the terms or provisions of, or constitute a
default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, any
subsidiary or the Trust pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the
Company or any Significant Subsidiary or the Declaration or
Certificate of Trust or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any govern-
ment, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company, any subsid-
iary or the Trust or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company, any subsidiary or the
Trust.
(xxii) All conditions precedent provided for in
the Purchase Contract Agreement relating to the authentica-
tion and delivery of the Security Certificates have been
complied with and the Company is duly entitled to the au-
thentication and delivery of the Security Certificates in
accordance with the terms of the Purchase Contract Agree-
ment; the Security Certificates are in a form contemplated
by the Purchase Contract Agreement and comply with all
applicable statutory requirements and with the requirements
of the New York Stock Exchange.
(xxiii) There are no actions, suits or proceed-
ings before or by any court or governmental agency or body,
domestic or foreign, now pending or, to the best of such
counsel's knowledge, threatened, which are required to be
disclosed in the Registration Statement or the Prospectus,
other than those disclosed therein.
(xxiv) The information in the Prospectus under
the caption "Description of the Common Stock," to the extent
that it involves matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all material re
spects.
(xxv) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages,
agreements, notes, leases or other instruments required to
be described or referred to or incorporated by reference in
the Registration Statement or to be filed as exhibits there
to other than those described or referred to or incorporated
by reference therein or filed as exhibits thereto; the
descriptions thereof or references thereto are true and
correct in all material respects, and no default exists in
the due performance or observance of any material obliga-
tion, agreement, covenant or condition contained in any
contract, indenture, mortgage, agreement, note, lease or
other instrument so described, referred to, filed or incor-
porated by reference which would result in a Material Ad
verse Effect.
(xxvi) No authorization, approval, consent,
order, registration or qualification of or with any court or
federal or state governmental authority or agency is re-
quired for the issuance and sale of the Securities by the
Offerors to the Underwriter or the performance by the Trust
and the Company of their respective obligations in this
Agreement, the Remarketing Agreement, the Pricing Agreement,
the Purchase Contract Agreement, the Purchase Contracts, the
Pledge Agreement, the Indenture, the Debentures, the
Guarantee Agreement, the Declaration and the Securities
except such as has been obtained and made under the federal
securities laws or such as may be required under state or
foreign securities or Blue Sky laws.
(xxvii) The Company and its subsidiaries possess
all licenses, franchises, permits, certificates, authoriza-
tions, approvals, consents and orders of all governmental
authorities or agencies necessary for the ownership or lease
of the material properties owned or leased by each of them
and for the operation of the business carried on by each of
them as described in the Registration Statement and the
Prospectus with such exceptions as are not material and do
not materially interfere with the conduct of the business of
the Company and its subsidiaries, considered as one enter-
prise; all such licenses, franchises, permits, certificates,
authorizations, approvals, consents and orders are in full
force and effect and, except as otherwise set forth in the
Registration Statement or the Prospectus, there are no legal
or governmental proceedings pending or, to such counsel's
knowledge, threatened that would result in a material modi-
fication, suspension or revocation thereof.
Moreover, such counsel shall confirm that nothing has come
to such counsel's attention that would lead such counsel to
believe that the Registration Statement, including any
information provided pursuant to Rule 430A or Rule 434
(except for financial statements and the notes thereto, the
financial schedules and any other financial data included or
incorporated by reference therein, as to which counsel need
express no opinion), at the time it became effective or at
the Representation Date, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (except for
financial statements and the notes thereto, the financial
schedules, and any other financial data included or incorpo
rated by reference therein, as to which counsel need express
no opinion), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided
to the Underwriter by the Company for use in connection with
the offering of the Securities which differs from the Pro-
spectus on file at the Commission at the time the Regis-
tration Statement became effective, in which case at the
time it is first provided to the Underwriter for such use)
or at the Closing Time, included (or includes) an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
In giving such opinion, such counsel may rely, as to
matters of Delaware law, upon the opinion of Richards, Layton &
Finger, P.A., special Delaware counsel to the Offerors, in which
case the opinion shall state that such counsel believes that you
and such counsel are entitled to so rely.
(2) The favorable opinion, dated as of the Closing
Time, of Simpson Thacher & Bartlett, special counsel to the Offer-
ors, in form and substance satisfactory to counsel for the
Underwriter and subject to the qualifications and assumptions
stated therein, to the effect that:
(i) The Registration Statement has become
effective under the 1993 Act and the Prospectus was filed on
March 19, 1998 pursuant to Rule 424(b) of the 1933 Act
Regulations and, to our knowledge, no stop order suspending
the effectiveness of the Registration Statement has been
issued or proceeding for that purpose has been instituted or
threatened by the Commission.
(ii) The Registration Statement, as of its
effective date, and the Prospectus, as of its issue date
complied as to form in all material respects with the re
quirements of the 1933 Act, the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and the applicable
rules and regulations of the Commission thereunder, except
that in each case we express no opinion with respect to the
financial statements or other financial data contained or
incorporated by reference in the Registration Statement or
the Prospectus.
(iii) The statements made in Prospectus under the
captions "Description of the FELINE PRIDES," "Description of
the Purchase Contracts," "Certain Provisions of the Purchase
Contract Agreement and the Pledge Agreement," "Description
of the Guarantee," "Description of the Debentures," and
"Effect of Obligations Under the Debentures and the Guaran-
tee," insofar as they purport to constitute summaries of the
certain terms of the documents referred to therein, consti-
tute accurate summaries of the terms of such documents in
all material respects.
(iv) The Purchase Contract Agreement and the
Pledge Agreement have been duly authorized, executed and
delivered by the Company and (assuming due execution and
delivery by the Purchase Contract Agent) constitute valid
and binding agreements of the Company enforceable against
the Company in accordance with their respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a pro-
ceeding in equity or at law); provided, however, that upon
the occurrence of a Termination Event, Section 365(e)(1) of
the Bankruptcy Code (11 U.S.C. 101-1330, as amended)
should not invalidate or nulify the provisions of Sections
3.15 and 5.8 of the Purchase Contract Agreement and of
Section 4.3 of the Pledge Agreement that require termination
of the Purchase Contracts and release of the Collateral
Agent's security interest in the Capital Securities, the
Debentures, the Applicable Ownership Interest in the Trea-
sury Portfolio or the Treasury Securities; provided, fur-
ther, that the automatic stay under Section 362 of the
Bankruptcy Code may preclude such termination for a period
of time and the procedures for obtaining relief from such
stay may delay exercise of such termination rights.
(v) The Income PRIDES and the Growth PRIDES have
each been duly authorized, executed and delivered by the
Company and (assuming due execution by the Purchase Contract
Agent as attorney-in-fact of the holders thereof and due
authentication by the Purchase Contract Agent) and upon
payment therefor as set forth in the Underwriting Agreement,
will be duly and validly issued and outstanding, and will
constitute valid and binding obligations of the Company
entitled to the benefits of the Purchase Contract Agreement
and enforceable against the Company in accordance with their
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganizations, moratorium and other
similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether
considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(vi) The provisions of the Pledge Agreement are
effective to create in favor of the Collateral Agent for the
benefit of the Company, a valid and perfected security
interest under the Uniform Commercial Code as in effect on
the date of such opinion in the State of New York in the
Pledged Capital Securities, Pledged Debentures, Applicable
Ownership Interests (as specified in clause (A) of the
definition thereof in the Declaration) of the Treasury
Portfolio and the Pledged Treasury Securities from time to
time credited to the Collateral Account.
(vii) The Guarantee Agreement has been duly
authorized, executed and delivered by the Company and duly
qualified under the Trust Indenture Act and (assuming due
execution and delivery by the Guarantee Trustee) constitutes
a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent convey-
ance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, gen-
eral equitable principles (whether considered in a proceed-
ing in equity or at law) and an implied covenant of good
faith and fair dealing.
(viii) The Indenture has been duly authorized,
executed and delivered by the Company and duly qualified
under the Trust Indenture Act, and (assuming due authentica-
tion, execution and delivery by the Debt Trustee) consti-
tutes valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to
the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, and general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
(ix) The Debentures have been duly authorized,
executed and delivered by the Company and (assuming due
authentication by the Debt Trustee) and upon payment there
for as set forth herein, will constitute valid and binding
obligations of the Company entitled to the benefits of the
Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a pro-
ceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(x) The issuance and sale of the Income PRIDES
and Growth PRIDES in accordance with this Agreement do not
contravene the Commodity Exchange Act or the regulations of
the Commodity Futures Trading Commission.
(xi) None of the Trust nor the Company is, and
upon the issuance and sale of the Income PRIDES and Growth
PRIDES as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not
be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined within the
meaning of and subject to registration under the Investment
Company Act of 1940, as amended.
(xii) Based upon current law and the assumptions
stated or referred to therein, under current United States
Federal income tax law: (i) the Trust will be classified as
a grantor trust and not as an association taxable as a
corporation; (ii) the Debentures will be classified as
indebtedness of the Company and (iii) the discussion in the
Prospectus unde the caption "Certain Federal Income Tax
Consequences" is a fair and accurate summary of the matters
addressed therein.
Moreover, such counsel shall confirm that based upon
their examination of the Registration Statement and the
Prospectus and their investigations made in connection with
the preparation of the Registration Statement and the Pro-
spectus (excluding any documents incorporated therein) and
their participations in conferences with certain officers
and employees of the Company, with representatives of Price
Waterhouse LLP and counsel to the Company such counsel has
no reason to believe that the Registration Statement, as of
its effective date (including any documents incorporated
therein on file with Commission on such effective date),
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary in order to make the statements therein not mis
leading or that the Prospectus as of its date or as of the
Date of Delivery (including the documents incorporated
therein by reference) contains any untrue statement of a
material fact or omits to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that in each case such counsel need express no belief
with respect to the financial statements or other financial
data contained or incorporated by reference in the Registra-
tion Statement, the Prospectus or the documents incorporated
therein.
In giving such opinion, such counsel may rely, as to
matters of New Jersey law, upon the opinion of Patricia
Nachtigal, Esq. Vice President and General Counsel of the Com
pany.
(3) The favorable opinion, dated as of the Closing
Time, of Richards, Layton & Finger, P.A., special Delaware
counsel to the Offerors, in form and substance satisfactory to
counsel for the Underwriter, to the effect that:
(i) The Trust has been created and is validly
existing in good standing as a business trust under the
Delaware Act, and has the trust power and authority to
conduct its business as described in the Prospectus.
(ii) The Declaration constitutes a legal, valid
and binding obligation of the Company and is enforceable
against the Company in accordance with its terms, except
that to the extent enforceability thereof may be limited by
the (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance and
transfer, and other similar laws relating to or affecting
the rights and remedies of creditors generally, (ii) princi-
ples of equity, including applicable law relating to fidu-
ciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (iii) the effect
of applicable public policy on the enforcement of provisions
related to indemnification.
(iii) Under the Delaware Act and the Declaration,
the Trust has the trust power and authority to (i) execute
and deliver, and to perform its obligations under, this
Agreement and the Pricing Agreement and (ii) issue, and
perform its obligations under, the Trust Securities.
(iv) Under the Delaware Act and the Declaration,
the execution and delivery by the Trust of this Agreement
and the Pricing Agreement, and the performance by the Trust
of its obligations hereunder and under the Pricing Agree-
ment, have been authorized by all necessary trust action on
the part of the Trust.
(v) The Capital Securities have been authorized
by the Declaration and, when executed by the Trust and
authenticated by the Institutional Trustee in accordance
with the Declaration and delivered against payment therefor
in accordance with the terms of this Agreement, will be
validly issued and, subject to qualifications hereinafter
expressed, fully paid and nonassessable undivided beneficial
interests in the assets of the Trust; the Holders of the
Capital Securities, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability ex
tended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of
Delaware; said counsel may note that the holders of the
Capital Securities may be obligated to make payments as set
forth in the Declaration.
(vi) The Common Securities have been authorized
by the Declaration and, when issued, executed and authenti-
cated in accordance with the terms of the Declaration, and
delivered and paid for as set forth in the Prospectus, will
be validly issued, undivided beneficial interests in the
assets of the Trust.
(vii) Under the Delaware Act and the Declaration,
the issuance of the Trust Securities is not subject to
preemptive or other similar rights.
(viii) None of the execution and delivery by
the Trust of, or the performance by the Trust of its
obligations under, this Agreement, the issuance and sale of
the Capital Securities by the Trust in accordance with the
terms of this Agreement and the Pricing Agreement, or the
consummation by the Trust of the other transactions
contemplated thereby, will contravene any provisions of
applicable Delaware law or Delaware administrative
regulations or the Certificate of Trust or the Declaration.
(ix) No authorization, approval, consent, order,
registration or qualification of or with any Delaware state
governmental authority or Delaware state agency is required
for the entry into the Purchase Contracts underlying the
Securities, the issuance and sale by the Trust of the Capi-
tal Securities to the Underwriter, or the performance by the
Company and the Trust of their respective obligations under
this Agreement, the Pricing Agreement, the Purchase Con-
tracts, the Purchase Contract Agreement, the Pledge Agree-
ment, the Indenture, the Debentures, the Capital Securities
Guarantee Agreement, the Capital Securities Guarantee, the
Declaration and the Trust Securities, except such counsel
need not express any opinion regarding any securities laws.
(4) The favorable opinion, dated as of the Closing
Pepper Hamilton LLP, counsel to First National Bank of Chicago,
as Institutional Trustee under the Declaration, and Guarantee
Trustee under the Guarantee Agreement, and to First Chicago
Delaware Inc., as Delaware Trustee, in form and substance
satisfactory to counsel for the Underwriter, to the effect that:
(i) The Institutional Trustee is a national
banking association with trust powers, duly organized,
validly existing and in good standing under the laws of the
United States with all necessary corporate power and author-
ity to execute, deliver, and to carry out and perform its
obligations under the terms of, the Declaration and the
Guarantee.
(ii) The Delaware Trustee is a Delaware corpora-
tion, duly organized, validly existing and in good standing,
with full corporate power and authority to execute and
deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(iii) The execution, delivery and performance by
each of the Institutional Trustee and the Delaware Trustee
of the Declaration, and the execution, delivery and perfor-
mance by Guarantee Trustee of the Guarantee, have been duly
authorized by all necessary corporate action on the part of
the Institutional Trustee and the Delaware Trustee, respec-
tively, in the case of the Declaration, and by the Guarantee
Trustee, in the case of the Guarantee. The Declaration and
the Guarantee have been duly executed and delivered by the
Institutional Trustee and the Delaware Trustee, respec-
tively, in the case of the Declaration, and by the Guarantee
Trustee, in the case of the Guarantee, and constitute the
legal, valid and binding obligation of the Institutional
Trustee and the Delaware Trustee, in the case of the Decla-
ration, and of the Guarantee Trustee, in the case of the
Guarantee, enforceable against the Institutional Trustee and
the Delaware Trustee in the case of the Declaration, and
against the Guarantee Trustee, in the case of the Guarantee,
in accordance with their terms. Such opinions may be lim-
ited by (i) public policy considerations; (ii) applicable
bankruptcy, solvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the enforcement of credi-
tors' rights generally, as well as awards by courts of
relief in lieu of the remedy of specific performance of
contractual provisions; and (iii) general principles of
equity (regardless of whether such enforceability is consid-
ered a proceeding in equity or at law) as a court having
jurisdiction may impose.
(iv) The execution, delivery and performance by
each of the Institutional Trustee and the Delaware Trustee
of the Declaration, and the execution, delivery and perfor-
mance by the Guarantee Trustee of the Guarantee, do not
conflict with, or constitute a breach of, the Institutional
Trustee's, the Delaware Trustee's or the Guarantee Trustee's
respective charter or bylaws.
(5) The favorable opinion, dated as of the Closing
Time, of Emmet, Marvin & Martin, counsel to The Bank of New York,
as Purchase Contract Agent, in form and substance satisfactory to
counsel for the Underwriter, to the effect that:
(i) The Bank of New York, is duly incorporated
and is validly existing as a banking corporation with trust
powers under the laws of the United States with all neces-
sary power and authority to execute, deliver and perform its
obligations under the Purchase Contract Agreement and the
Pledge Agreement.
(ii) The execution, delivery and performance by
the Purchase Contract Agent of the Purchase Contract Agree-
ment and the Pledge Agreement, and the authentication and
delivery of the Securities have been duly authorized by all
necessary corporate action on the part of the Purchase
Contract Agent. The Purchase Contract Agreement and the
Pledge Agreement have been duly executed and delivered by
the Purchase Contract Agent, and constitute the legal, valid
and binding obligations of the Purchase Contract Agent,
enforceable against the Purchase Contract Agent in accor
dance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(iii) the execution, delivery and performance of
the Purchase Contract Agreement and the Pledge Agreement by
the Purchase Contract Agent does not conflict with or con-
stitute a breach of the charter or by-laws of the Purchase
Contract Agent.
(iv) No consent, approval or authorization of, or
registration with or notice to, any New York or federal gov-
ernmental authority or agency is required for the execution,
delivery or performance by the Purchase Contract Agent of
the Purchase Contract Agreement and the Pledge Agreement.
(6) The favorable opinion, dated as of the Closing
Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Underwriter, in form and substance satisfactory to the Under
writer, with respect to the issuance and sale of the Securities,
and other related matters as the Underwriter may reasonably
require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them
to pass upon such matters.
(c) Between the date of this Agreement and prior to
the Closing Time, no material adverse change shall have occurred
in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Trust or the
Company and its subsidiaries, considered as one enterprise,
whether or not in the ordinary course of business.
(d) At the Closing Time, the Underwriter shall have re-
ceived a certificate of the President or a Vice-President of the
Company and of the Chief Financial Officer or Chief Accounting
Officer of the Company and a certificate of a Regular Trustee of
the Trust, and dated as of the Closing Time, to the effect that
(i) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Trust or the Company and its subsidiar-
ies considered as one enterprise, whether or not in the ordinary
course of business, (ii) the representations and warranties in
Section 1 hereof are true and correct as though expressly made at
and as of the Closing Time, (iii) the Company and the Trust have
complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to the
Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commis-
sion.
(e) At the time of the execution of this Agreement, the
Underwriter shall have received from Price Waterhouse LLP a
letter dated such date in form and substance satisfactory to the
Underwriter, to the effect set forth below and as to such other
matters as the Underwriter may reasonably request, that:
(i) They are independent accountants with respect to
the Company within the meaning of the Act and the applicable
published rules and regulations thereunder.
(ii) In their opinion, the consolidated financial
statements audited by them and incorporated by reference in
the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the 1934 Act and the published rules and regu-
lations thereunder with respect to registration statements
on Form S-3.
(iii) They have not audited any financial statements
of the Company as of any date or for any period subsequent
to December 31, 1997. Therefore, they are unable to and do
not express any opinion on the financial position, results
of operations or cash flows as of any date or for any period
subsequent to December 31, 1997.
(iv) For purposes of such letter, they have read the
minutes of the 1998 meetings of the Board of Directors and
the Board Committees (Compensation and Nominating, Corporate
Affairs, Audit and Finance) of the Company as set forth in
the minute books at March 13, 1998, officials of the Company
having advised them that the minutes of all such meetings
through that date were set forth therein (except for the
minutes of the February 3, 1998 Audit Committee meeting, the
March 3, 1998 Finance Committee meeting and the March 3,
1998 Corporate Affairs Committee meeting which were not
approved in final form, for which drafts were provided to
them; and except for the February 3, 1998 Compensation and
Nominating Committee meeting and the March 4, 1998 Board of
Directors meeting for which no minutes were available and
for which an agenda for the meeting was provided to them;
the officials of the Company have represented that such
drafts and agenda include all substantive actions taken at
such meetings), and have carried out other procedures to
March 13, 1998 (their work did not extend to the period from
March 14, 1998 to March 17, 1998, inclusive), as follows:
a. With respect to the period from January 1,
1998 to February 28, 1998 they have:
(1) read the unaudited consolidated finan-
cial data of the Company and subsidiaries for
January of both 1997 and 1998 furnished them by
the Company, officials of the Company having ad-
vised them that no such financial data as of any
date or for any period subsequent to January 31,
1998 were available; and
(2) inquired of certain officials of the
Company who have responsibility for financial and
accounting matters as to whether the unaudited
financial data referred to in 4.a.(1) above are
stated on a basis substantially consistent with
that of the audited financial statements included
in the Registration Statement.
The foregoing procedures do not constitute an audit made in
accordance with generally accepted auditing standards. Also,
they would not necessarily reveal matters of significance
with respect to the comments in the following paragraph.
Accordingly, they make no representations as to the suffi-
ciency of the foregoing procedures for the Underwriter's
purposes.
(v) Nothing came to their attention as a result of the
foregoing procedures, however, that caused them to believe
that:
a. (i) At January 31, 1998 there was any change
in the capital stock (except for any increases in the
capital stock in connection with any employee benefit,
dividend reinvestment or stock purchase plan of the
Company), increase in long-term debt or any decreases
in consolidated net current assets (working capital) or
shareholders' equity of the Company and consolidated
subsidiaries as compared with amounts shown in the
December 31, 1997 audited consolidated balance sheet
incorporated by reference in the Registration Statement
or (ii) for the period from January 1, 1998 to January
31, 1998, there were any decreases, as compared with
the corresponding period in the preceding year, in
consolidated net sales or in the total or per share
amounts of net income, except in all instances for
changes, increases, or decreases that the Registration
Statement discloses have occurred or may occur.
(vi) As mentioned under (iv)a, Company officials have
advised them that no consolidated financial data as of any
date or for any period subsequent to February 28, 1998 are
available; accordingly, the procedures carried out by them
with respect to changes in financial statement items after
February 28, 1998 have been, of necessity, even more limited
than those with respect to the period referred to in (iv).
They have made inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
as to whether there was any increase in long-term debt or
any decrease in shareholders' equity of the Company and
consolidated subsidiaries at March 13, 1998 as compared with
amounts shown on the December 31, 1997 audited consolidated
balance sheet incorporated by reference in the Registration
Statement. On the basis of these inquiries and their reading
of the minutes as described in (iv), nothing came to their
attention that caused them to believe that there was any
such change, increase or decrease, except in all instances
for increases or decreases which the Registration Statement
discloses have occurred or may occur.
(vii) For purposes of such letter, they have also read
the items identified by the Underwriter on the Form 10-K
forming part of the Registration Statement incorporated by
reference thereto and have performed the procedures de
scribed in such letter.
(viii) Their audit of the consolidated financial
statements for the period referred to in the introductory
paragraph of such letter comprised audit tests and proce-
dures deemed necessary for the purpose of expressing an
opinion on such consolidated financial statements taken as a
whole. For neither the periods referred to therein nor any
other period did they perform audit tests for the purpose of
expressing an opinion on individual balances of accounts or
summaries of selected transactions such as those enumerated
in such letter and, accordingly, they express no opinion
thereon.
(ix) They have:
a. Read the unaudited pro forma condensed consol-
idated statement of income for the year ended December
31, 1997, incorporated by reference in the Registration
Statement.
b. Inquired of certain officials of the Company
who have responsibility for financial and accounting
matters about:
(1 The basis for their determination of the
pro forma adjustments, and
(2 Whether the unaudited pro forma con-
densed consolidated financial statement referred
to in 9.a. complies as to form in all material
respects with the applicable accounting require-
ments of Rule 11-02 of Regulation S-X.
c. Proved the arithmetic accuracy of the applica-
tion of the pro forma adjustments to the historical
amounts in the unaudited pro forma condensed consoli
dated financial statement.
The foregoing procedures are substantially less in scope
than an examination, the objective of which is the expres-
sion of an opinion on management's assumptions, the pro
forma adjustments, and the application of those adjustments
to historical financial information. Accordingly, they do
not express such an opinion. The foregoing procedures would
not necessarily reveal matters of significance with respect
to the comments in the following paragraph. Accordingly,
they make no representation about the sufficiency of such
procedures for the Underwriter's purposes.
(x) Nothing came to their attention as a result of the
procedures specified in paragraph (ix), however, that caused
them to believe that the unaudited pro forma condensed
consolidated financial statement referred to in (ix)a.
incorporated by reference in the Registration Statement does
not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regula-
tion S-X and that the pro forma adjustments have not been
properly applied to the historical amounts in the compila-
tion of those statements. Had they performed additional
procedures or had they made an examination of the condensed
consolidated pro forma financial statement, other matters
might have come to their attention that would have been
reported to the Underwriter.
(f at the time of the execution of this Agreement, the
Underwriter shall have received from KPMG Peat Marwick LLP
independent certified public accountants to Thermo King Corpora-
tion ("Thermo King"), a letter dated such date in form and
substance satisfactory to the Underwriter, to the effect set
forth below and as to such other matters as the Underwriter may
reasonably request, that:
(i) They are independent certified public accountants
with respect to Thermo King within the meaning of the Act
and the applicable published rules and regulations thereun-
der.
(ii) In their opinion, the combined financial state-
ments audited by them and incorporated by reference in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the related published rules and regulations
thereunder with respect to a registration statement on Form
S-3.
(iii) They have not audited any financial statements
of Thermo King as of any date or for any period subsequent
to December 31, 1996; although they have conducted an audit
for the year ended December 31, 1996, the purpose (and
therefore the scope) of the audit was to enable them to
express their opinion on the combined financial statements
as of December 31, 1996, and for the year then ended, but
not on the financial statement for any interim period within
that year. Therefore, they are unable to and do not express
any opinion on the unaudited combined balance sheet as of
September 30, 1997 and 1996, and the unaudited combined
statements of income and cash flows for the nine-month
periods ended September 30, 1996 and 1997, incorporated by
reference in the registration statement, or on the financial
position or results of operations as of any date or for any
period subsequent to December 31, 1996.
(iv) Thermo King was acquired by the Company effective
October 31, 1997. They have performed no procedures since
that date. For purposes of such letter they have read the
minutes of the meetings of the Board of Directors of Thermo
King as set forth in the minute books at October 31, 1997,
officials of Thermo King having advised them that the min-
utes of all such meetings through that date were set forth
therein; they have carried out other procedures to October
31, 1997, as follows (their work did not extend to the
period from November 1, 1997, to March 17, 1998, inclusive:
a. With respect to the nine-month period ended
September 30, 1997 they have:
(1 Performed the procedures specified by
the American Institute of Certified Public Accoun-
tants for a review of interim financial informa-
tion as described in SAS No. 71, Interim Financial
Information, on the unaudited combined balance
sheet as of September 30, 1997, and the unaudited
combined statement of income and cash flows for
the nine-month period ended September 30, 1997,
incorporated by reference in the Registration
Statement.
(2 Inquired of certain officials of Thermo
King who have responsibility for financial sand
accounting matters whether the unaudited combined
financials statements referred to in 4.a.(i) com-
ply as to form in all material respects with the
applicable accounting requirements of the Act and
the related published rules and regulations.
The foregoing procedures do not constitute an audit
conducted in accordance with generally accepted audit-
ing standards. Also, they would not necessarily reveal
matters of significance with respect to the comments in
the following paragraph. Accordingly, they make no
representations regarding the sufficiency of the fore
going procedures of the Underwriter's purposes.
(v) Nothing came to their attention as a result of
the foregoing procedures, however, that caused them to
believe that:
a. (1) Any material modifications should be made
to the unaudited combined financial statements de-
scribed in 4.a.(i), incorporated by reference in the
registration statement, for them to be in conformity
with generally accepted accounting principles.
(vi) The Company was acquired by Ingersoll-Rand Com-
pany effective October 31, 1997. They have performed no
procedures since that date. They have inquired of certain
officials of Thermo King who have responsibility for finan-
cial and accounting matters whether (a) at October 31, 1997,
there was any increase in long-term debt or any decreases in
combined net current assets of the combined companies as
compared with amounts shown on the September 30, 1997,
unaudited combined balance sheet incorporated by reference
in the registration statement and (b) for the period from
October 1, 1997, to October 31, 1997, there were any de-
creases, as compared with the corresponding period in the
preceding year, in combined net sales or in the amount of
income before interest and taxes. On the basis of these
inquiries and their reading of the minutes as described in
4, nothing came to their attention that caused them to
believe that there was any such change, increase, or de-
crease, except in all instances for increases, or decreases
that the Registration Statement discloses have occurred or
may occur.
(g At the Closing Time, the Underwriter shall have re-
ceived from Price Waterhouse, LLP a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (e) of this
Section, except that the specified date referred to shall be a
date not more than five days prior to the Closing Time.
(h At the Closing Time, and at each Date of Delivery, if
any, counsel for the Underwriter shall have been furnished with
such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Offerors in connec-
tion with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
(i At the Closing Time, (i) the Securities shall be rated
Investment Grade by any nationally recognized statistical rating
agency, and the Offerors shall have delivered to the Underwriter
a letter, from such nationally recognized statistical rating
agency, or other evidence satisfactory to the Underwriter,
confirming that the Securities have Investment Grade ratings;
(ii) there shall not have occurred any decrease in the rating
assigned to the Securities or any other securities of the Company
or of the financial condition of the Company by any "nationally
recognized statistical rating organization," as defined for
purposes of Rule 436(g)(2) under the 1933 Act Regulations, and
(iii) no such organization shall have publicly announced that it
has under surveillance or review its rating of the Securities or
any other securities of the Company or of the financial condition
of the Company.
(j At the Closing Time, the Income PRIDES, the Growth
PRIDES and the Shares shall have been approved for listing on the
New York Stock Exchange upon notice of issuance.
(k In the event that the Underwriter exercises the options
provided in Section 2(b) hereof to purchase all or any portion of
the Option Securities, the representations and warranties of the
Offerors contained herein and the statements in any certificates
furnished by the Offerors hereunder shall be true and correct as
of, and as if made on, each Date of Delivery, and at the relevant
Date of Delivery, the Underwriter shall have received:
(1 A certificate, dated such Date of Delivery, of the
President or a Vice-President of the Company and the Chief
Financial Officer or Chief Accounting Officer of the Company
and a certificate of a Regular Trustee of the Trust confirm-
ing that the certificate delivered at the Closing Time pursu-
ant to Section 5(d) hereof is true and correct as of, and as
if made on, such Date of Delivery.
(2 The favorable opinion of Patricia Nachtigal, Esq.,
Vice President and General Counsel for the Company, in form
and substance satisfactory to counsel for the Underwriter,
dated such Date of Delivery, relating to the Option Securi-
ties and otherwise to the same effect as the opinion re-
quired by Section 5(b)(1) hereof.
(3 The favorable opinion of Simpson Thacher & Bart-
lett, special counsel and special tax counsel for the Offer-
ors, in form and substance satisfactory to counsel for the
Underwriter, dated such Date of Delivery, relating to the
Option Securities and otherwise to the same effect as the
opinion required by Sections 5(b)(2) and 5(b)(6) hereof.
(4 The favorable opinion of Richards, Layton & Fin-
ger, P.A., special Delaware counsel for the Offerors, in
form and substance satisfactory to counsel for the Under
writer, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion
required by Section 5(b)(3) hereof.
(5 The favorable opinion of Pepper Hamilton LLP coun-
sel to The First National Bank of Chicago, in form and sub-
stance satisfactory to counsel for the Underwriter, dated
such Date of Delivery, relating to the Option Securities and
otherwise to the same effect as the opinion required by
Section 5(b)(4) hereof.
(6 The favorable opinion of Emmet, Marvin and Martin,
counsel to The Bank of New York, as Purchase Contract Agent,
in form and substance satisfactory to counsel for the Under
writer, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion
required by Section 5(b)(5) hereof.
(7 The favorable opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Underwriter, dated such
Date of Delivery, relating to the Option Securities and
otherwise to the same effect as the opinion required by
Section 5(b)(7) hereof.
(8 A letter from Price Waterhouse LLP in form and sub
stance satisfactory to the Underwriter and dated such Date
of Delivery, substantially the same in form and substance as
the letter furnished to the Underwriter pursuant to Sec-
tion 5(e) hereof, except that the "specified date" in the
letter furnished pursuant to this Section shall be a date
not more than five days prior to such Date of Delivery.
(9 At such Date of Delivery, (i) the Securities shall
be rated Investment Grade by any nationally recognized
statistical rating agency, and the Offerors shall have
delivered to the Underwriter a letter from such nationally
recognized statistical rating agency, or other evidence
satisfactory to the Underwriter, confirming that the Securi-
ties have Investment Grade ratings; (ii) there shall not
have occurred any decrease in the rating assigned to the
Securities or any other securities of the Company or of the
financial condition of the Company by any "nationally recog-
nized statistical rating organization," as defined for
purposes of Rule 436(g)(2) under the 1933 Act Regulations,
and (iii) no such organization shall have publicly announced
that it has under surveillance or review its rating of the
Securities or any other securities of the Company or of the
financial condition of the Company.
If any condition specified in this Section 5 shall not have
been fulfilled when and as required to be fulfilled, this Agree-
ment, or, in the case of any condition to the purchase of Option
Securities on a Date of Delivery which is after the Closing Time,
the obligations of the Underwriter to purchase the relevant
Option Securities may be terminated by the Underwriter by notice
to the Company at any time at or prior to the Closing Time, or
such Date of Delivery, as the case may be, and such termination
shall be without liability of any party to any other party except
as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and
effect.
SECTION 6. Indemnification.
(a The Offerors agree to jointly and severally indemnify
and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising
out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information
and the Rule 434 Information deemed to be part thereof, if
applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any gov-
ernmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission,
provided, that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense whatsoever,
as incurred (including the fees and disbursements of counsel
chosen by the Underwriter), reasonably incurred in inves-
tigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity agreement shall
not apply to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in confor-
mity with written information furnished to the Offerors by the
Underwriter expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applica-
ble, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(b The Underwriter agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the
Registration Statement, the Trust and each of its Trustees who-
signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration State-
ment (or any amendment thereto), including the Rule 430A Informa-
tion and the Rule 434 Information deemed to be a part thereof, if
applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Offerors by
the Underwriter expressly for use in the Registration Statement
(or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability hereunder
to the extent it is not materially prejudiced as a result thereof
and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement.
In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by
the Underwriter, and, in the case of parties indemnified pursuant
to section 6(b) above, counsel to the indemnified parties shall
be selected by the Company. An indemnifying party may partici-
pate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemni-
fying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any
one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmen-
tal agency or body, commenced or threatened, or any claim whatso-
ever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not
the indemnified parties are actual or potential parties thereto),
unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liabili-
ty arising out of such litigation investigation, proceeding or
claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d If at any time an indemnified party shall have request-
ed an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that
it shall be liable for any settlement of the nature contemplated
by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settle-
ment being entered into and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided
for in Section 6 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative bene-
fits received by the Offerors on the one hand, and the Underwrit-
er, on the other hand, from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of
the Offerors on the one hand, and the Underwriter, on the other
hand, in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or expens-
es, as well as any other relevant equitable considerations.
The relative benefits received by Offerors on the one hand,
and the Underwriter, on the other hand, in connection with the
offering of the Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net
proceeds from the offering of such Securities (before deducting
expenses) received by the Offerors and the total underwriting
discount received by the Underwriter, in each case as set forth
on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate
initial public offering price of such Securities as set forth on
such cover.
The relative fault of the Offerors, on the one hand, and the
Underwriter, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Offerors or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Offerors and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable consider-
ations referred to above in this Section 7. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by
an indemnified party and referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or pro-
ceeding by any governmental agency or body, commenced or threat-
ened, or any claim whatsoever based upon any such untrue or
alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Under
writer shall not be required to contribute any amount in excess
of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which the Under
writer has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omis-
sion.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudu-
lent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights
to contribution as the Underwriter, and each director of the
Company, each officer of the Company and each Trustee of the
Trust who signed the Registration Statement, and each person, if-
any, who controls the Company and the Trust within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Offerors.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement and the Pricing Agreement, or con-
tained in certificates of officers of the Company or trustees of
the Trust submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by
or on behalf of the Underwriter or controlling person, or by or
on behalf of the Company, and shall survive delivery of and
payment for the Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a The Underwriter may terminate this Agreement, by notice
to the Company at any time at or prior to the Closing Time, if
(i) there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Prospec-
tus, any material adverse change or any development which could
reasonably be expected to result in a prospective material
adverse change, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business, or (ii) there has occurred
any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation of
hostilities or other calamity or crisis, or any change or devel-
opment involving a prospective change in national or interna-
tional political, financial or economic conditions the effect of
which is such as to make it, in the judgment of the Underwriter
impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the Common
Stock or any other security of the Company has been suspended or
limited by the Commission, NASD or the New York Stock Exchange,
or if trading generally on either the American Stock Exchange,
the New York Stock Exchange or in the over-the-counter market has
been suspended or limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securi-
ties have been required, by either of said exchanges or by such
system or by order of the Commission, NASD or any other govern-
mental authority, or (iv) if a banking moratorium has been
declared by either Federal, New York or New Jersey authorities.
(b If this Agreement and the Pricing Agreement are termi-
nated pursuant to this Section 9, such termination shall be
without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed
to the Underwriter c/o Merrill Lynch at Merrill Lynch World Head
quarters, World Financial Center, North Tower, New York, New
York 10281, Attention of Huston McCollough, Managing Director,
with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Atten-
tion of John Osborn, Esq.; notices to the Offerors shall be
directed to it at Ingersoll-Rand Company, 200 Chestnut Ridge
Road, Woodcliff Lake, New Jersey 07675, Attention of Patricia
Nachtigal, Esq., Vice President and General Counsel.
SECTION 11. Parties. This Agreement and the Pricing Agree-
ment shall each inure to the benefit of and be binding upon the
Offerors and the Underwriter and their respective successors.
Nothing expressed or mentioned in this Agreement or the Pricing
Agreement is intended or shall be construed to give any person,
firm or corporation, other than the Underwriter and the Offerors
and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or the
Pricing Agreement or any provision herein or therein contained.
This Agreement and the Pricing Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the parties hereto and thereto and their
respective successors and legal representatives, and said con-
trolling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person,
firm or corporation. No purchaser of Securities from the Under
writer shall be deemed to be a successor by reason merely of such
purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE
PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORD
ANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF
DAY REFER TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 13. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your under-
standing of our agreement, please sign and return to the Company
a counterpart hereof, whereupon this instrument, along with all
counterparts, shall become a binding agreement among the Company,
the Trust and the Underwriter in accordance with its terms.
Very truly yours,
INGERSOLL-RAND COMPANY
By:
Name:
Title:
INGERSOLL-RAND FINANCING I
By: INGERSOLL-RAND COMPANY
as Depositor
By:
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
Name:
Authorized Signatory:
Schedule I
Significant Subsidiaries
Clark Equipment Company
Thermo King Corporation
The Torrington Company
Schlage Lock Company
Ingersoll-Rand Company
(a New Jersey Corporation)
Ingersoll-Rand Financing I
(a Delaware Business Trust)
14,000,000 FELINE PRIDES_
(Stated Amount of $25 per Security)
Consisting of
12,600,000 Income PRIDES_
each consisting of
a Purchase Contract of Ingersoll-Rand Company Requiring the
Purchase on May 16, 2001 (or earlier) of certain Shares of Common
Stock of Ingersoll-Rand Company
and
a 6.22% Capital Security of Ingersoll-Rand Financing I
and
1,400,000 Growth PRIDES_
each consisting of
a Purchase Contract of Ingersoll-Rand Company Requiring the
Purchase on May 16, 2001 (or earlier) of certain shares of Common
Stock of Ingersoll-Rand Company
and
a 1/40 Undivided Beneficial Interest in a Zero-Coupon U.S.
Treasury Security having a Principal Amount equal to $1,000 and
maturing on May 15, 2001
and
1,400,000 6.22% Capital Securities of Ingersoll-Rand Financing I
(Liquidation Amount $25 per Capital Security)
PRICING AGREEMENT
_____________________
"FELINE PRIDES," "Income PRIDES" and "Growth PRIDES"
are service marks of Merrill Lynch & Co., Inc.
March 17, 1998
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
March 17, 1998 (the "Underwriting Agreement"), relating to the
purchase by the Underwriter named therein of the above Income
PRIDES (the "Income PRIDES"), Growth PRIDES (The "Growth PRIDES")
and Capital Securities (the "Capital Securities" and, together
with the Income PRIDES and Growth PRIDES, the "Securities") of
Ingersoll-Rand Company (the "Company"), and Ingersoll-Rand
Financing I (the "Trust"). The Securities are being issued and
sold by the Company and the Trust to the Underwritier on the
terms and conditions set forth in the Underwriting Agreement.
Pursuant to Section 2 of the Underwriting Agreement,
the Company and the Trust agree with the Underwriter as follows:
1. The initial public offering price, and the aggre
gate interest rate to be paid by the Offerors, per security
for the Securities, determined as provided in said Section
2, shall be (a) in the case of each Income PRIDES, $25.00
and 6.75%, (b) in the case of each Growth PRIDES, $21.13 and
.78% and (c) in the case of each separately offered Capital
Security, $25.00 and 6.22%.
2. The respective purchase prices per security for the
Securities to be paid by the several Underwriters shall be
equal to the initial public offering prices set forth in
paragraph 1. above. The Company shall pay a commission to
the Underwriters equal, in the case of the Initial Securi
ties, to $10,500,000 and, with respect to the Option Securi
ties, $.75 per security in the case of Income PRIDES, $.575
per security in the case of Growth PRIDES and $.175 per
security in the case of separately offered Capital Securi
ties.
If the foregoing is in accordance with your under
standing of our agreement, please sign and return to the Company
a counterpart hereof, whereupon this instrument, along with all
counterparts, shall become a binding agreement among the Company,
the Trust and the Underwriter in accordance with its terms.
Very truly yours,
INGERSOLL-RAND COMPANY
By:
Name:
Title:
INGERSOLL-RAND FINANCING I
By: INGERSOLL-RAND COMPANY
as Depositor
By:
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
Name:
Authorized Signatory:
INGERSOLL-RAND COMPANY,
THE CHASE MANHATTAN BANK,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE BANK OF NEW YORK,
as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of March 23, 1998
TABLE OF CONTENTS
Page
RECITALS 1
Section 1. Definitions 3
Section 2. Pledge; Control and Perfection 8
Section 2.1. The Pledge 8
Section 2.2. Control and Perfectio 10
Section 3. Distributions on Pledged Collateral 12
Section 4. Substitution, Release, Repledge and
Settlement of Capital Securities 14
Section 4.1. Substitution for Capital
Securities and the Creation
of Growth PRIDES 14
Section 4.2. Substitution of Treasury
Securities and the Creation
of Income PRIDES 15
Section 4.3. Termination Event 16
Section 4.4. Cash Settlement 17
Section 4.5. Early Settlement 19
Section 4.6. Application of Proceeds
Settlement 19
Section 5. Voting Rights -- Capital Securities 22
Section 6. Rights and Remedies; Distribution
of the Debentures; Tax Event
Redemption 23
Section 6.1. Rights and Remedies of the
Collateral Agent 23
Section 6.2. Distribution of the Debentures;
Tax Event Redemption 25
Section 6.3. Substitutions 26
Section 7. Representations and Warranties;
Covenants 26
Section 7.1. Representations and Warranties 26
Section 7.2. Covenants 27
Section 8. The Collateral Agent 28
Section 8.1. Appointment, Powers and
Immunities 28
Section 8.2. Instructions of the Company 29
Section 8.3. Reliance by Collateral Agent 30
Section 8.4. Rights in Other Capacities 30
Section 8.5. Non-Reliance on Collateral Agent 31
Section 8.6. Compensation and Indemnity 31
Section 8.7. Failure to Act 31
Section 8.8. Resignation of Collateral
Agent 32
Section 8.9. Right to Appoint Agent or
Advisor 34
Section 8.10. Survival 34
Section 8.11. Exculpation 34
Section 9. Amendment 34
Section 9.1. Amendment Without Consent
of Holders 34
Section 9.2. Amendment with Consent of
Holders 35
Section 9.3. Execution of Amendments 36
Section 9.4. Effect of Amendments 36
Section 9.5. Reference to Amendments 36
Section 10. Miscellaneous 37
Section 10.1. No Waiver 37
Section 10.2. Governing Law 37
Section 10.3. Notices 38
Section 10.4. Successors and Assigns 38
Section 10.5. Counterparts 38
Section 10.6. Severability 38
Section 10.7. Expenses, etc. 39
Section 10.8. Security Interest Absolute 39
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING
EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of March 23, 1998 (this
"Agreement"), among Ingersoll-Rand Company, a New Jersey
corporation (the "Company"), The Chase Manhattan Bank, a New York
banking corporation, not individually but solely as collateral
agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent") as custodial agent (in such
capacity, together with its successors in such capacity, the
"Custodial Agent") and in its capacity as a "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors
in such capacity, the "Securities Intermediary"), and The Bank of
New York, not individually but solely as purchase contract agent
and as attorney-in-fact of the Holders (as defined in the
Purchase Contract Agreement) from time to time of the Securities
(as hereinafter defined) (in such capacity, together with its
successors in such capacity, the "Purchase Contract Agent") under
the Purchase Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to
the Purchase Contract Agreement, dated as of the date hereof (as
modified and supplemented and in effect from time to time, the
"Purchase Contract Agreement"), pursuant to which there may be
issued up to 16,100,000 FELINE PRIDES of the Company, having a
stated amount of $25 (the "Stated Amount") per FELINE PRIDES.
The FELINE PRIDES will initially consist of (A) 14,490,000
units (referred to as "Income PRIDES") with a face amount, per
Income PRIDES, equal to the Stated Amount and (B)1,610,000 units
(referred to as "Growth PRIDES" and, together with the Income
PRIDES, the "Securities") with a face amount, per Growth PRIDES,
equal to the Stated Amount. Each Income PRIDES will initially be
comprised of (a) a stock purchase contract (a "Purchase
Contract") under which (i) the holder will purchase from the
Company on May 16, 2001 (the "Purchase Contract Settlement
Date"), for an amount of cash equal to the Stated Amount, a
number of newly issued shares of common stock, $2.00 par value
per share (the "Common Stock"), of the Company equal to the
Settlement Rate (as defined below) and (ii) the Company will pay
the Holder Contract Adjustment Payments (as defined below) at the
rate of .53% of the Stated Amount per annum and (b) either bene
ficial ownership of a Capital Security (as defined below) or upon
the occurrence of a Tax Event Redemption the Applicable Ownership
Interest of the Treasury Portfolio. Each Growth PRIDES will
initially be comprised of (a) a Purchase Contract under which (i)
the holder will purchase from the Company on the Purchase
Contract Settlement Date, for an amount in cash equal to the
Stated Amount, a number of newly issued shares of Common Stock of
the Company, equal to the Settlement Rate, and (ii) the Company
will pay the Holder Contract Adjustment Payments, at the rate of
.78% of the Stated Amount per annum, and (b) a 1/40 undivided
beneficial interest in a zero-coupon U.S. Treasury Security
(CUSIP No. 912820BA4) having a principal amount equal to $1,000
and maturing on May 15, 2001 (the "Treasury Securities").
Pursuant to the terms of the Declaration (as defined below),
Ingersoll-Rand Financing I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust") will issue
16,100,000 6.22% Capital Securities (the "Capital Securities")
having a stated liquidation value equal to the Stated Amount.
Pursuant to the terms of the Purchase Contract Agreement and
the Purchase Contracts, the Holders, from time to time, of the
Securities have irrevocably authorized the Purchase Contract
Agent, as attorney-in-fact of such Holders, among other things,
to execute and deliver this Agreement on behalf of such Holders
and to grant the pledge provided hereby of the Capital
Securities, any Applicable Ownership Interest in the Treasury
Portfolio and any Treasury Securities delivered in exchange there
for to secure each Holder's obligations under the related
Purchase Contract, as provided herein and subject to the terms
hereof. Upon such pledge, the Capital Securities will be
beneficially owned by the Holders but will be owned of record by
the Purchase Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the
Holders from time to time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
(b) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision;
(c) the following terms have the meanings assigned to
them in the Purchase Contract Agreement: (i) Act, (ii)
Agent, (iii) Board Resolution, (iv) Cash Settlement, (v)
Certificate, (vi) Contract Adjustment Payments, (vii)
Debentures, (viii) Early Settlement, (ix) Early Settlement
Amount, (x) Early Settlement Date, (xi) Failed Remarketing,
(xii) Holder, (xiii) Opinion of Counsel, (xiv) Outstanding
Securities, (xv) Purchase Agreement, (xvi) Purchase
Contract, (xvii) Purchase Contract Settlement Date, (xviii)
Remarketing Agent, (xix) Remarketing Agreement, (xx)
Remarketing Underwriting Agreement, (xxi) Settlement Rate,
and (xxii) Termination Event; and
(d) the following terms have the meanings assigned to
them in the Declaration: (i) Applicable Ownership Interest
(ii) Applicable Principal Amount, (iii) Institutional
Trustee, (iv) Investment Company Event,(v) Primary Treasury
Dealer, (vi) Quotation Agent, (vii) Redemption Amount,
(viii) Redemption Price, (ix) Tax Event, (x) Tax Event
Redemption, (xi) Tax Event Redemption Date, (xii) Treasury
Portfolio, (xiii) Treasury Portfolio Purchase Price.
"Agreement" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or
more agreements supplemental hereto entered into pursuant to the
applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code,
or any other law of the United States that from time to time
provides a uniform system of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday
or any other day on which banking institutions in The City of New
York (in the State of New York) are permitted or required by any
applicable law to close.
"Capital Securities" has the meaning specified in the
Recitals.
"Cash" means any coin or currency of the United States as at
the time shall be legal tender for payment of public and private
debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1
hereof.
"Collateral Account" means the securities account (number
C27328) maintained at The Chase Manhattan Bank in the name "The
Bank of New York, as Purchase Contract Agent on behalf of the
holders of certain securities of Ingersoll-Rand Financing I,
Collateral Account subject to the security interest of The Chase
Manhattan Bank, as Collateral Agent, for the benefit of Ingersoll-
Rand Company, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first
paragraph of this instrument.
"Common Stock" has the meaning specified in the Recitals.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor shall have
become such, and thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the Recitals.
"Debenture Trustee" means The Bank of New York, as trustee
under the Indenture until a successor is appointed thereunder,
and thereafter means such successor trustee.
"Declaration" means the Amended and Restated Declaration of
Trust, dated as of March 23, 1998, among the Company as sponsor,
the trustees named therein and the holders from time to time of
undivided beneficial interests in the assets of the Trust.
"Intermediary" means any entity that in the ordinary course
of its business maintains securities accounts for others and is
acting in that capacity.
"Permitted Investments" means any one of the following which
shall mature not later than the next succeeding Business Day (i)
any evidence of indebtedness with an original maturity of 365
days or less issued, or directly and fully guaranteed or insured,
by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof or such indebt
edness constitutes a general obligation of it); (ii) deposits,
certificates of deposit or acceptances with an original maturity
of 365 days or less of any institution which is a member of the
Federal Reserve System having combined capital and surplus and
undivided profits of not less than US$ 200.0 million at the time
of deposit; (iii) investments with an original maturity of 365
days or less of any Person that is fully and unconditionally
guaranteed by a bank referred to in clause (ii); (iv) investments
in commercial paper, other than commercial paper issued by the
Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which
commercial paper has a rating at the time of purchase at least
equal to "A-1" by Standard & Poor's Ratings Services ("S&P") or
at least equal to "P-1" by Moody's Investors Service, Inc.
("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in
the highest applicable rating category by S&P or Moody's.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Capital Securities" has the meaning specified in
Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in
Section 2.1 hereof.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in 8-102(a)(9) of the
Code) and other property from time to time received, receivable
or otherwise distributed upon the sale, exchange, collection or
disposition of the Collateral or any proceeds thereof.
"Purchase Contract" has the meaning specified in the
Recitals.
"Purchase Contract Agent" has the meaning specified in the
first paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in
the Recitals.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the
first paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the Code.
"Separate Capital Securities" means any Capital Securities
that are not Pledged Capital Securities.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry
System maintained by the Federal Reserve Bank of New York
pursuant to the TRADES Regulations.
"TRADES Regulations" means the regulations of the United
States Department of the Treasury, published at 31 C.F.R. Part
357, as amended from time to time. Unless otherwise defined
herein, all terms defined in the TRADES Regulations are used
herein as therein defined.
"Transfer" means, with respect to the Collateral and in
accordance with the instructions of the Collateral Agent, the
Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities
which cannot be delivered by book-entry or which the
parties agree are to be delivered in physical form,
delivery in appropriate physical form to the
recipient accompanied by any duly executed
instruments of transfer, assignments in blank,
transfer tax stamps and any other documents necessary
to constitute a legally valid transfer to the
recipient;
(ii) in the case of Collateral consisting of securities
maintained in book-entry form by causing a
"securities intermediary" (as defined in Section
8-102(a)(14) of the Code) to (i) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of
the Code) with respect to such securities to a
"securities account" (as defined in Section 8-501(a)
of the Code) maintained by or on behalf of the
recipient and (ii) to issue a confirmation to the
recipient with respect to such credit. In the case
of Collateral to be delivered to the Collateral
Agent, the Securities Intermediary shall be the
Securities Intermediary and the securities account
shall be the Collateral Account.
"Treasury Security" means a zero-coupon U.S. Treasury
Security (Cusip Number 912820 BA 4) which are the principal
strips of the U.S. Treasury Securities which mature on May 15,
2001.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date
means, as to (i) a Capital Security, the Stated Amount, (ii)
Cash, the face amount thereof and (iii) Treasury Securities, the
aggregate principal amount thereof at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1. The Pledge. The Holders from time to time
acting through the Purchase Contract Agent, as their attorney-in-
fact, hereby pledge and grant to the Collateral Agent, for the
benefit of the Company, as collateral security for the
performance when due by such Holders of their respective
obligations under the related Purchase Contracts, a security
interest in (i) all of the right, title and interest of such
Holders (a) in the Capital Securities and Treasury Securities
constituting a part of the Securities and any Treasury Securities
delivered in exchange for any Capital Securities, and any Capital
Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been
Transferred to or received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the
provisions of this Agreement; (b) in payments made by Holders
pursuant to Section 4.4; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited
thereto and all Security Entitlements related thereto; (d) in any
Debentures delivered to the Collateral Agent upon the occurrence
of an Investment Company Event or a liquidation of the Trust as
provided in Section 6.2; (e) in the Treasury Portfolio purchased
on behalf of the Holders of Income PRIDES by the Collateral Agent
upon the occurrence of a Tax Event Redemption as provided in
Section 6.2 and (f) all Proceeds of the foregoing (all of the
foregoing, collectively, the "Collateral"). Prior to or concur
rently with the execution and delivery of this Agreement, the
Purchase Contract Agent, on behalf of the initial Holders of the
Securities, shall cause the Capital Securities comprising a part
of the Income PRIDES, and the Treasury Securities comprising a
part of the Growth PRIDES, to be Transferred to the Collateral
Agent for the benefit of the Company. Such Capital Securities
shall be Transferred by physically delivering such Securities to
the Securities Intermediary endorsed in blank and causing the
Securities Intermediary to credit the Collateral Account with
such Securities and sending the Collateral Agent a confirmation
of the deposit of such Securities. In the event a Holder of
Income PRIDES so elects, such Holder may Transfer Treasury
Securities to the Collateral Agent for the benefit of the Company
in exchange for the release by the Collateral Agent on behalf of
the Company of Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
with an aggregate stated liquidation amount equal to the
aggregate principal amount of the Treasury Securities so
Transferred, in the case of Capital Securities, or with an
appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio
equal to the aggregate principal amount of the Treasury
Securities so transferred, in the event that a Tax Event
Redemption has occurred, to the Purchase Contract Agent on behalf
of such Holder. Treasury Securities and the Treasury Portfolio,
as applicable, shall be Transferred to the Collateral Account
maintained by the Collateral Agent at the Securities Intermediary
by book-entry transfer to the Collateral Account in accordance
with the TRADES Regulations and other applicable law and by the
notation by the Securities Intermediary on its books that a
Security Entitlement with respect to such Treasury Securities or
Treasury Portfolio, has been credited to the Collateral Account.
For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or
the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction, the Collateral Agent shall be the agent
of the Company as provided herein. The pledge provided in this
Section 2.1 is herein referred to as the "Pledge" and the Capital
Securities (or the Debentures that are delivered pursuant to
Section 6.2 hereof) or Treasury Securities subject to the Pledge,
excluding any Capital Securities (or the Debentures that are
delivered pursuant to Section 6.2 hereof) or Treasury Securities
released from the Pledge as provided in Section 4 hereof, are
hereinafter referred to as "Pledged Capital Securities" or the
"Pledged Treasury Securities," respectively. Subject to the
Pledge and the provisions of Section 2.2 hereof, the Holders from
time to time shall have full beneficial ownership of the
Collateral. Whenever directed by the Collateral Agent acting on
behalf of the Company, the Securities Intermediary shall have the
right to reregister the Capital Securities or any other
Securities held in physical form in its name.
Except as may be required in order to release Capital
Securities in connection with a Holder's election to convert its
investment from an Income PRIDES to a Growth PRIDES, or except as
otherwise required to release Securities as specified herein,
neither the Collateral Agent nor the Securities Intermediary
shall relinquish physical possession of any certificate
evidencing a Capital Security prior to the termination of this
Agreement. If it becomes necessary for the Securities
Intermediary to relinquish physical possession of a certificate
in order to release a portion of the Capital Securities evidenced
thereby from the Pledge, the Securities Intermediary shall use
its best efforts to obtain physical possession of a replacement
certificate evidencing any Capital Securities remaining subject
to the Pledge hereunder registered to it or endorsed in blank
within fifteen days of the date it relinquished possession. The
Securities Intermediary shall promptly notify the Company and the
Collateral Agent of the Securities Intermediary's failure to
obtain possession of any such replacement certificate as required
hereby.
Section 2.2. Control and Perfection. (a) In connection
with the Pledge granted in Section 2.1, and subject to the other
provisions of this Agreement, the Holders from time to time
acting through the Purchase Contract Agent, as their attorney-in-
fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the
Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any
instructions and entitlement orders (as defined in Section 8-
102(a)(8) of the Code) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral
Account, the Collateral credited thereto and any security
entitlements with respect to any thereof. Such instructions and
entitlement orders may, without limitation, direct the Securities
Intermediary to transfer, redeem, sell, liquidate, assign,
deliver or otherwise dispose of the Capital Securities, the
Treasury Securities, the Treasury Portfolio, and any Security
Entitlements with respect thereto and to pay and deliver any
income, proceeds or other funds derived therefrom to the Company.
The Holders from time to time acting through the Purchase
Contract Agent hereby further authorize and direct the Collateral
Agent, as Agent of the Company, to itself issue instructions and
entitlement orders, and to otherwise take action, with respect to
the Collateral Account, the Collateral credited thereto and any
security entitlements with respect thereto, pursuant to the terms
and provisions hereof, all without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the Agent of the Company
and shall act as directed in writing by the Company. Without
limiting the generality of the foregoing, the Collateral Agent
shall issue entitlement orders to the Securities Intermediary
when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and agrees
that: (i) all securities or other property underlying any
financial assets credited to the Collateral Account shall be
registered in the name of the Securities Intermediary, indorsed
to the Securities Intermediary or in blank or credited to another
Collateral Account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to
the Collateral Account be registered in the name of the Purchase
Contract Agent, the Collateral Agent, the Company or any Holder,
payable to the order of, or specially indorsed to, the Purchase
Contract Agent, the Collateral Agent, the Company or any Holder
except to the extent the foregoing have been specially indorsed
to the Securities Intermediary or in blank; (ii) all property
delivered to the Securities Intermediary pursuant to this Pledge
Agreement (including, without limitation, any Capital Securities,
the Treasury Portfolio or Treasury Securities) will be promptly
credited to the Collateral Account; (iii) the Collateral Account
is an account to which financial assets are or may be credited,
and the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Purchase Contract Agent as entitled to
exercise the rights of any financial asset credited to the
Collateral Account; (iv) the Securities Intermediary has not
entered into, and until the termination of the this Agreement
will not enter into, any agreement with any other person relating
the Collateral Account and/or any financial assets credited
thereto pursuant to which it has agreed to comply with entitle
ment orders (as defined in Section 8-102(a)(8) of the Code) of
such other person; and (v) the Securities Intermediary has not
entered into, and until the termination of this Agreement will
not enter into, any agreement with the debtor or the secured
party purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders as set
forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each
item of property (whether investment property, financial asset,
security, instrument or cash) credited to the Collateral Account
shall be treated as a "financial asset" within the meaning of
Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or
any portion thereof) and any other agreement now existing or
hereafter entered into, the terms of this Agreement shall
prevail.
Section 3. Distributions on Pledged Collateral. So long
as the Purchase Contract Agent is the registered owner of the
Pledged Capital Securities, it shall receive all payments
thereon. If the Pledged Capital Securities are reregistered,
such that the Collateral Agent becomes the registered holder, all
payments of the Stated Amount or, if applicable, the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, or cash
distributions on, the Pledged Capital Securities or on the appro
priate Applicable Ownership Interest (as specified in clause (B)
of the definition of such term) of the Treasury Portfolio, as the
case may be, and all payments of the principal of, or cash
distributions on, any Pledged Treasury Securities received by the
Collateral Agent that are properly payable hereunder shall be
paid by the Collateral Agent by wire transfer in same day funds:
(i) In the case of (A) cash distributions with respect
to the Pledged Capital Securities or the appropriate
Applicable Ownership Interest (as specified in clause (B) of
the definition of such term) of the Treasury Portfolio, as
the case may be, and (B) any payments of the Stated Amount
or, if applicable, the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio with respect to any
Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, that
have been released from the Pledge pursuant to Section 4.3
hereof, to the Purchase Contract Agent, for the benefit of
the relevant Holders of Securities, to the account
designated by the Purchase Contract Agent for such purpose,
no later than 2:00 p.m., New York City time, on the Business
Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or
after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m.,
New York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with
respect to any Treasury Securities that have been released
from the Pledge pursuant to Section 4.3 hereof, to the
Holders of the Growth PRIDES to the accounts designated by
them in writing for such purpose no later than 2:00 p.m.,
New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day
that is not a Business Day or after 12:30 p.m., New York
City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the
next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of
any Pledged Capital Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the
case may be, or the principal of any Pledged Treasury
Securities, to the Company on the Purchase Contract
Settlement Date in accordance with the procedure set forth
in Section 4.6(a) or 4.6(b) hereof, in full satisfaction of
the respective obligations of the Holders under the related
Purchase Contracts.
All payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant
to the provisions of the Purchase Contract Agreement. If,
notwithstanding the foregoing, the Purchase Contract Agent shall
receive any payments of the Stated Amount or, if applicable, the
appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) on account of any Capital
Security or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as applicable that, at the time of such
payment, is a Pledged Capital Security or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, or a Holder of a Growth PRIDES shall receive any
payments of principal on account of any Treasury Securities that,
at the time of such payment, are Pledged Treasury Securities, the
Purchase Contract Agent or such Holder shall hold the same as
trustee of an express trust for the benefit of the Company (and
promptly deliver the same over to the Company) for application to
the obligations of the Holders under the related Purchase
Contracts, and the Holders shall acquire no right, title or
interest in any such payments of Stated Amount or principal so
received.
Section 4. Substitution, Release, Repledge and Settlement
of Capital Securities.
Section 4.1. Substitution for Capital Securities and the
Creation of Growth PRIDES. At any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract
Settlement Date (unless a Tax Event Redemption has occurred), a
Holder of Income PRIDES shall have the right to substitute
Treasury Securities for the Pledged Capital Securities securing
such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of
40 Income PRIDES by (a) Transferring to the Collateral Agent Trea
sury Securities having a Value equal to the Stated Amount of the
Pledged Capital Securities to be released and (b)(i) in the event
that Contract Adjustment Payments are at a higher rate for Growth
PRIDES than for Income PRIDES, delivering to the Purchase
Contract Agent Cash in an amount equal to the excess of the
Contract Adjustment Payments that would have accrued since the
last Payment Date through the date of substitution on the Growth
PRIDES being created by the Holder, over the Contract Adjustment
Payments that have accrued over the same time period on the
related Income PRIDES, which amount the Purchase Contract Agent
shall promptly remit to the Company, and (ii) delivering the
related Income PRIDES to the Purchase Contract Agent, accompanied
by a notice, substantially in the form of Exhibit B hereto, to
the Purchase Contract Agent stating that such Holder has
Transferred Treasury Securities to the Collateral Agent pursuant
to clause (a) above (stating the Value of the Treasury Securities
Transferred by such Holder) and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Capital Securities related to such Income
PRIDES. The Purchase Contract Agent shall instruct the
Collateral Agent in the form provided in Exhibit A; provided, how
ever, that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES,
Holders of Income PRIDES may make such substitution only in
integral multiples of 1,600,000 Income PRIDES at any time on or
prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date. Upon receipt of Treasury
Securities from a Holder of Income PRIDES and the related
instruction from the Purchase Contract Agent, the Collateral
Agent shall release the Pledged Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, and shall promptly Transfer such
Pledged Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
Section 4.2. Substitution of Treasury Securities and the
Creation of Income PRIDES. At any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract
Settlement Date (unless a Tax Event Redemption has occurred), a
Holder of Growth PRIDES shall have the right to establish or
reestablish Income PRIDES consisting of the Purchase Contracts
and Capital Securities in integral multiples of 40 Income PRIDES
by (a) Transferring to the Collateral Agent Capital Securities
having a Value equal to the Value of the Pledged Treasury
Securities to be released and (b) delivering the related Growth
PRIDES to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase
Contract Agent stating that such Holder has transferred Capital
Securities to the Collateral Agent pursuant to clause (a) above
and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Treasury
Securities related to such Growth PRIDES. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in
Exhibit A; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Growth PRIDES may make such
substitution only in integral multiples of 1,600,000 Growth
PRIDES, at any time on or prior to the Business Day immediately
preceding the Purchase Contract Settlement Date. Upon receipt of
the Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from such
Holder and the instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Treasury Securities and shall
promptly Transfer such Treasury Securities, free and clear of any
lien, pledge or security interest created hereby, to the Purchase
Contract Agent.
Section 4.3. Termination Event. Upon receipt by the
Collateral Agent of written notice from the Company or the
Purchase Contract Agent that there has occurred a Termination
Event, the Collateral Agent shall release all Collateral from the
Pledge and shall promptly Transfer any Pledged Capital Securities
(or the Applicable Ownership Interest of the Treasury Portfolio
if a Tax Event Redemption has occurred) and Pledged Treasury
Securities to the Purchase Contract Agent for the benefit of the
Holders of the Income PRIDES and the Growth PRIDES, respectively,
free and clear of any lien, pledge or security interest or other
interest created hereby.
If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code, and if the
Collateral Agent shall for any reason fail promptly to effectuate
the release and Transfer of all Pledged Capital Securities, the
Treasury Portfolio or of the Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall (i) use its best efforts to obtain an
opinion of a nationally recognized law firm reasonably acceptable
to the Collateral Agent to the effect that, as a result of the
Company's being the debtor in such a bankruptcy case, the
Collateral Agent will not be prohibited from releasing or
Transferring the Collateral as provided in this Section 4.3, and
shall deliver such opinion to the Collateral Agent within ten
days after the occurrence of such Termination Event, and if (y)
the Purchase Contract Agent shall be unable to obtain such
opinion within ten days after the occurrence of such Termination
Event or (z) the Collateral Agent shall continue, after delivery
of such opinion, to refuse to effectuate the release and Transfer
of all Pledged Capital Securities, the Treasury Portfolio or the
Pledged Treasury Securities, as the case may be, as provided in
this Section 4.3, then the Purchase Contract Agent shall within
fifteen days after the occurrence of such Termination Event
commence an action or proceeding in the court with jurisdiction
of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and
transfer of all Pledged Capital Securities, the Treasury
Portfolio or of the Pledged Treasury Securities, as the case may
be, as provided by this Section 4.3 or (ii) commence an action or
proceeding like that described in subsection (i)(z) hereof within
ten days after the occurrence of such Termination Event.
Section 4.4. Cash Settlement. (a) Upon receipt by the
Collateral Agent of (i) a notice from the Purchase Contract Agent
promptly after the receipt by the Purchase Contract Agent of such
notice that a Holder of an Income PRIDES or Growth PRIDES has
elected, in accordance with the procedures specified in Section
5.4(a)(i) or (d)(i) of the Purchase Contract Agreement,
respectively, to settle its Purchase Contract with Cash and (ii)
payment by such Holder on or prior to 11:00 a.m., New York City
time, on the Business Day immediately preceding the Purchase
Contract Settlement Date in lawful money of the United States by
certified or cashiers' check or wire transfer in immediately
available funds payable to or upon the order of the Company, then
the Collateral Agent shall, promptly invest any Cash received
from a Holder in connection with a Cash Settlement in Permitted
Investments. Upon receipt of the proceeds upon the maturity of
the Permitted Investments on the Purchase Contract Settlement
Date, the Collateral Agent shall pay the portion of such proceeds
and deliver any certified or cashiers' checks received, in an
aggregate amount equal to the Purchase Price, to the Company on
the Purchase Contract Settlement Date, and shall distribute any
funds in respect of the interest earned from the Permitted Invest
ments to the Purchase Contract Agent for payment to the relevant
Holders.
(b) If a Holder of an Income PRIDES fails to notify the
Agent of its intention to make a Cash Settlement in accordance
with Section 5.4(a)(i) of the Purchase Contract Agreement, such
failure shall constitute an event of default under the Purchase
Contract Agreement and hereunder, and the Holder shall be deemed
to have consented to the disposition of the pledged Capital
Securities pursuant to the remarketing as described in Section
5.4(b) of the Purchase Contract Agreement, which is incorporated
herein by reference. If a Holder of an Income PRIDES does notify
the Agent as provided in Section 5.4(a)(i) of the Purchase
Contract Agreement of its intention to pay the Purchase Price in
cash, but fails to make such payment as required by Section
5.4(a)(ii) of the Purchase Contract Agreement, the Capital
Securities of such a Holder will not be remarketed but instead
the Collateral Agent, for the benefit of the Company, will
exercise its rights as a secured party with respect to such
Capital Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law. In
addition, in the event of a Failed Remarketing as described in
Section 5.4(b) of the Purchase Contract Agreement, such Failed
Remarketing shall constitute an event of default hereunder by
such Holder and the Collateral Agent, for the benefit of the
Company, will also exercise its rights as a secured party with
respect to such Capital Securities at the direction of the
Company to retain or dispose of the Collateral in accordance with
applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the
Purchase Contract Agent of such Holder's intention to make a Cash
Settlement in accordance with Section 5.4(d)(i) of the Purchase
Contract Agreement, or if a Holder of an Income PRIDES does
notify the Agent as provided in paragraph (d)(i) of the Purchase
Contract Agreement of its intention to pay the Purchase Price in
cash, but fails to make such payment as required by paragraph
5.4(d)(ii) of the Purchase Contract Agreement, such failure shall
constitute an event of default hereunder by such Holder and upon
the maturity of any Pledged Treasury Securities or the Treasury
Portfolio, if any, held by the Collateral Agent on the Business
Day immediately preceding the Purchase Contract Settlement Date,
the principal amount of the Pledged Treasury Securities or the
Treasury Portfolio received by the Collateral Agent shall, upon
written direction of the Company, be invested promptly in
Permitted Investments. On the Purchase Contract Settlement Date,
an amount equal to the Purchase Price will be remitted to the
Company as payment thereof. In the event the sum of the proceeds
from the related Pledged Treasury Securities or the Treasury
Portfolio, as the case may be, and the investment earnings earned
from such investments is in excess of the aggregate Purchase
Price of the Purchase Contracts being settled thereby, the
Collateral Agent will distribute such excess to the Purchase
Contract Agent for the benefit of the Holder of the related
Growth PRIDES or Income PRIDES when received.
Section 4.5. Early Settlement. Upon written notice to the
Collateral Agent by the Purchase Contract Agent that one or more
Holders of Securities have elected to effect Early Settlement of
their respective obligations under the Purchase Contracts forming
a part of such Securities in accordance with the terms of the
Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such
Holders have elected to effect Early Settlement), and that the
Purchase Contract Agent has received from such Holders, and paid
to the Company as confirmed in writing by the Company, the
related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that
all conditions to such Early Settlement have been satisfied, then
the Collateral Agent shall release from the Pledge, (a) Pledged
Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio in the case of a Holder of
Income PRIDES or (b) Pledged Treasury Securities in the case of a
Holder of Growth PRIDES, as the case may be, with a principal
amount equal to the product of (i) the Stated Amount times (ii)
the number of such Purchase Contracts as to which such Holders
have elected to effect Early Settlement and shall Transfer all
such Pledged Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge
created hereby, to the Purchase Contract Agent for the benefit of
the Holders.
Section 4.6. Application of Proceeds Settlement. (a) In
the event a Holder of Income PRIDES (if a Tax Event Redemption
has not occurred) has not elected to make an effective Cash
Settlement by notifying the Purchase Contract Agent in the manner
provided for in paragraph 5.4(a)(i) in the Purchase Contract
Agreement or has not made an Early Settlement of the Purchase
Contract(s) underlying its Income PRIDES, such Holder shall be
deemed to have elected to pay for the shares of Common Stock to
be issued under such Purchase Contract(s) from the Proceeds of
the related Pledged Capital Securities. The Collateral Agent
shall, by 10:00 a.m., New York City time, on the fourth Business
Day immediately preceding the Purchase Contract Settlement Date,
without any instruction from such Holder of Income PRIDES,
present the related Pledged Capital Securities to the Remarketing
Agent for remarketing. Upon receiving such Pledged Capital
Securities, the Remarketing Agent, pursuant to the terms of the
Remarketing Agreement and the Remarketing Underwriting Agreement,
will use its reasonable efforts to remarket such Pledged Capital
Securities on such date at a price not less than approximately
100.5% of the aggregate Value of such Pledged Capital Securities,
plus accrued and unpaid distributions (including deferred
distributions), if any, thereon. After deducting as the
Remarketing Fee an amount not exceeding 25 basis points (.25%) of
the aggregate Value of the Pledged Capital Securities from any
amount of such Proceeds in excess of the aggregate Value, plus
such accrued and unpaid distributions (including deferred
distributions) of the remarketed Pledged Capital Securities, the
Remarketing Agent will remit the entire amount of the Proceeds of
such remarketing to the Collateral Agent. On the Purchase
Contract Settlement Date, the Collateral Agent shall apply that
portion of the Proceeds from such remarketing equal to the
aggregate Value, plus such accrued and unpaid distributions
(including deferred distributions) of such Pledged Capital
Securities, to satisfy in full the obligations of such Holders of
Income PRIDES to pay the Purchase Price to purchase the Common
Stock under the related Purchase Contracts. The remaining
portion of such Proceeds, if any, shall be distributed by the
Collateral Agent to the Purchase Contract Agent for payment to
the Holders. If the Remarketing Agent advises the Collateral
Agent in writing that it cannot remarket the related Pledged
Capital Securities of such Holders of Income PRIDES at a price
not less than 100% of the aggregate Value of such Pledged Capital
Securities plus any accrued and unpaid distributions (including
deferred distributions), thus resulting in a Failed Remarketing
and an event of default under the Purchase Contract Agreement and
hereunder, the Collateral Agent, for the benefit of the Company
will, at the written direction of the Company, retain or dispose
of the Pledged Capital Securities in accordance with applicable
law and satisfy in full, from any such disposition or retention,
such Holder's obligation to pay the Purchase Price for the Common
Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES
(if a Tax Event Redemption has occurred) has not made an Early
Settlement of the Purchase Contract(s) underlying its Growth
PRIDES or Income PRIDES, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under
such Purchase Contract(s) from the Proceeds of the related
Pledged Treasury Securities or the Treasury Portfolio, as the
case may be. On the Business Day immediately prior to the
Purchase Contract Settlement Date, the Collateral Agent shall, at
the written direction of the Purchase Contract Agent, invest the
Cash proceeds of the maturing Pledged Treasury Securities or the
Treasury Portfolio, as the case may be, in overnight Permitted
Investments. Without receiving any instruction from any such
Holder of Growth PRIDES or Income PRIDES, the Collateral Agent
shall apply the Proceeds of the related Pledged Treasury
Securities or Treasury Portfolio to the settlement of such
Purchase Contracts on the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related
Pledged Treasury Securities or Treasury Portfolio and the
investment earnings from the investment in overnight Permitted
Investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent
shall distribute such excess, when received, to the Purchase
Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the
terms of the Remarketing Underwriting Agreement, on or prior to
the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, but no earlier than the Payment Date
immediately preceding the Purchase Contract Settlement Date,
holders of Separate Capital Securities may elect to have their
Separate Capital Securities remarketed by delivering their Sepa
rate Capital Securities, together with a notice of such election,
substantially in the form of Exhibit C hereto, to the Custodial
Agent. The Custodial Agent will hold such Separate Capital
Securities in an account separate from the Collateral Account. A
holder of Separate Capital Securities electing to have its
Separate Capital Securities remarketed will also have the right
to withdraw such election by written notice to the Custodial
Agent, substantially in the form of Exhibit D hereto, on or prior
to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, upon which notice the Custodial Agent
will return such Separate Capital Securities to such holder. On
the fourth Business Day immediately preceding the Purchase
Contract Settlement Date, the Custodial Agent will deliver to the
Remarketing Agent for remarketing all separate Capital Securities
delivered to the Custodial Agent pursuant to this Section 4.6(c)
and not withdrawn pursuant to the terms hereof prior to such
date. The portion of the proceeds from such remarketing equal to
the aggregate Value of such Separate Capital Securities will
automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such Separate
Capital Securities. In addition, after deducting as the
Remarketing Fee an amount not exceeding 25 basis points (.25%) of
the Value of the remarketed Separate Capital Securities, from any
amount of such proceeds in excess of the aggregate Value of the
remarketed Separate Capital Securities plus any accrued and
unpaid distributions (including deferred distributions, if any),
the Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit of
such holders. If, despite using its reasonable efforts, the
Remarketing Agent advises the Custodial Agent in writing that it
cannot remarket the related Separate Capital Securities of such
holders at a price not less than 100% of the aggregate Value of
such Separate Capital Securities plus accrued and unpaid distribu
tions (including deferred distributions) and thus resulting in a
Failed Remarketing, the Remarketing Agent will promptly return
such Capital Securities to the Custodial Agent for redelivery to
such holders. In the event of a dissolution of the Trust and the
distribution of the Debentures as described in the Declaration,
all references to "Separate Capital Securities" in this Section
4.6(c) shall be deemed to be references to Debentures.
Section 5. Voting Rights -- Capital Securities. The
Purchase Contract Agent may exercise, or refrain from exercising,
any and all voting and other consensual rights pertaining to the
Pledged Capital Securities or any part thereof for any purpose
not inconsistent with the terms of this Agreement and in
accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or,
as the case may be, shall not refrain from exercising such right
if, in the judgment of the Company, such action would impair or
otherwise have a material adverse effect on the value of all or
any of the Pledged Capital Securities; and provided, further,
that the Purchase Contract Agent shall give the Company and the
Collateral Agent at least five days' prior written notice of the
manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Capi
tal Securities, including notice of any meeting at which holders
of Capital Securities are entitled to vote or solicitation of
consents, waivers or proxies of holders of Capital Securities,
the Collateral Agent shall use reasonable efforts to send
promptly to the Purchase Contract Agent such notice or
communication, and as soon as reasonably practicable after
receipt of a written request therefor from the Purchase Contract
Agent, execute and deliver to the Purchase Contract Agent such
proxies and other instruments in respect of such Pledged Capital
Securities (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Purchase Contract Agent with
respect to the Pledged Capital Securities.
Section 6. Rights and Remedies; Distribution of the
Debentures; Tax Event Redemption
Section 6.1. Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies specified in Section
4.4 hereof or otherwise available at law or in equity, after an
event of default hereunder, the Collateral Agent shall have all
of the rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code as in effect in
the State of New York (the "Code") (whether or not the Code is in
effect in the jurisdiction where the rights and remedies are
asserted) and the TRADES Regulations and such additional rights
and remedies to which a secured party is entitled under the laws
in effect in any jurisdiction where any rights and remedies
hereunder may be asserted. Without limiting the generality of
the foregoing, such remedies may include, to the extent permitted
by applicable law, (i) retention of the Pledged Capital
Securities or other Collateral in full satisfaction of the
Holders obligations under the Purchase Contracts or (ii) sale of
the Pledged Capital Securities or other Collateral in one or more
public or private sales.
(b) Without limiting any rights or powers otherwise granted
by this Agreement to the Collateral Agent, in the event the
Collateral Agent is unable to make payments to the Company on
account of the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the
Treasury Portfolio or on account of principal payments of any
Pledged Treasury Securities as provided in Section 3 hereof in
satisfaction of the obligations of the Holder of the Securities
of which such Pledged Treasury Securities, or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the
inability to make such payments shall constitute an event of
default hereunder and the Collateral Agent shall have and may
exercise, with reference to such Pledged Treasury Securities, or
such appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such Holder,
any and all of the rights and remedies available to a secured
party under the Code and the TRADES Regulations after default by
a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted
by this Agreement to the Collateral Agent, the Collateral Agent
is hereby irrevocably authorized to receive and collect all
payments of (i) the Stated Amount of or, cash distributions on,
the Pledged Capital Securities, (ii) the principal amount of the
Pledged Treasury Securities, or (iii) the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, subject, in each case,
to the provisions of Section 3, and as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of
Securities, in the event such Holder becomes the Holder of a
Growth PRIDES, agrees that, from time to time, upon the written
request of the Collateral Agent, the Purchase Contract Agent or
such Holder shall execute and deliver such further documents and
do such other acts and things as the Collateral Agent may
reasonably request in order to maintain the Pledge, and the
perfection and priority thereof, and to confirm the rights of the
Collateral Agent hereunder. The Purchase Contract Agent shall
have no liability to any Holder for executing any documents or
taking any such acts requested by the Collateral Agent hereunder,
except for liability for its own negligent act, its own negligent
failure to act or its own willful misconduct.
Section 6.2. Distribution of the Debentures; Tax Event
Redemption. Upon the occurrence of an Investment Company Event
or a liquidation of the Trust, a principal amount of the
Debentures constituting the assets of the Trust and underlying
the Capital Securities equal to the aggregate stated liquidation
amount of the Pledged Capital Securities shall be delivered to
the Collateral Agent in exchange for the Pledged Capital
Securities. In the event the Collateral Agent receives such
Debentures in respect of Pledged Capital Securities upon the
occurrence of an Investment Company Event or liquidation of the
Trust, the Collateral Agent shall Transfer the Debentures to the
Collateral Account in the manner specified herein for Pledged
Capital Securities to secure the obligations of the Holders of
Income PRIDES to purchase the Company's Common Stock under the
related Purchase Contracts. Thereafter, the Collateral Agent
shall have such security interests, rights and obligations with
respect to the Debentures as it had in respect of the Pledged
Capital Securities as provided in Sections 2, 3, 4, 5 and 6
hereof, and any reference herein to the Pledged Capital
Securities shall be deemed to be referring to such Debentures.
Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable
on the Tax Event Redemption Date with respect to the Applicable
Principal Amount of Debentures shall be delivered to the
Collateral Agent by the Institutional Trustee or upon a
dissolution of the Trust and the distribution of the related
Debentures by the Debenture Trustee on or prior to 12:30 p.m.,
New York City time, by check or wire transfer in immediately
available funds at such place and at such account as may be desig
nated by the Collateral Agent in exchange for the Pledged Capital
Securities or Debentures, as the case may be. In the event the
Collateral Agent receives such Redemption Price, the Collateral
Agent will, at the written direction of the Company, apply an
amount equal to the Redemption Amount of such Redemption Price to
purchase from the Quotation Agent, the Treasury Portfolio and
promptly remit the remaining portion of such Redemption Price to
the Purchase Contract Agent for payment to the Holders of Income
PRIDES. The Collateral Agent shall Transfer the Treasury
Portfolio to the Collateral Account in the manner specified
herein for Pledged Capital Securities to secure the obligation of
all Holders of Income PRIDES to purchase Common Stock of the
Company under the Purchase Contracts constituting a part of such
Income PRIDES, in substitution for the Pledged Capital
Securities. Thereafter the Collateral Agent shall have such
security interests, rights and obligations with respect to the
Treasury Portfolio as it had in respect of the Pledged Capital
Securities or Debentures, as the case may be, as provided in
Sections 2, 3, 4, 5 and 6, and any reference herein to the
Pledged Capital Securities or the Debentures shall be deemed to
be reference to such Treasury Portfolio.
Section 6.3. Substitutions. Whenever a Holder has the
right to substitute Treasury Securities, Capital Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, for Collateral held by the
Collateral Agent, such substitution shall not constitute a
novation of the security interest created hereby.
Section 7. Representations and Warranties; Covenants.
Section 7.1. Representations and Warranties. The Holders
from time to time, acting through the Purchase Contract Agent as
their attorney-in-fact (it being understood that the Purchase
Contract Agent shall not be liable for any representation or
warranty made by or on behalf of a Holder), hereby represent and
warrant to the Collateral Agent, which representations and
warranties shall be deemed repeated on each day a Holder
Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral
delivered in physical form, is the sole holder of
such Collateral and is the sole beneficial owner
of, or has the right to Transfer, the Collateral
it Transfers to the Collateral Agent, free and
clear of any security interest, lien,
encumbrance, call, liability to pay money or
other restriction other than the security
interest and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the
Collateral Account, the Collateral Agent, for the
benefit of the Company, will have a valid and
perfected first priority security interest
therein (assuming that any central clearing opera
tion or any Intermediary or other entity not
within the control of the Holder involved in the
Transfer of the Collateral, including the
Collateral Agent, gives the notices and takes the
action required of it hereunder and under
applicable law for perfection of that interest
and assuming the establishment and exercise of
control pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of
its obligations under this Agreement will not
result in the creation of any security interest,
lien or other encumbrance on the Collateral other
than the security interest and lien granted under
Section 2 hereof or violate any provision of any
existing law or regulation applicable to it or of
any mortgage, charge, pledge, indenture, contract
or undertaking to which it is a party or which is
binding on it or any of its assets.
Section 7.2. Covenants. The Holders from time to time,
acting through the Purchase Contract Agent as their attorney-in-
fact (it being understood that the Purchase Contract Agent shall
not be liable for any covenant made by or on behalf of a Holder),
hereby covenant to the Collateral Agent that for so long as the
Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such
Holders will create or purport to create or allow
to subsist any mortgage, charge, lien, pledge or
any other security interest whatsoever over the
Collateral or any part of it other than pursuant
to this Agreement; and
(b) neither the Purchase Contract Agent nor such
Holders will sell or otherwise dispose (or
attempt to dispose) of the Collateral or any part
of it except for the beneficial interest therein,
subject to the pledge hereunder, transferred in
connection with the Transfer of the Securities.
Section 8. The Collateral Agent. It is hereby agreed as
follows:
Section 8.1. Appointment, Powers and Immunities. The
Collateral Agent shall act as Agent for the Company hereunder
with such powers as are specifically vested in the Collateral
Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. Each of the
Collateral Agent, the Custodial Agent and the Securities
Intermediary: (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and no implied
covenants or obligations shall be inferred from this Agreement
against any of them, nor shall any of them be bound by the provi
sions of any agreement by any party hereto beyond the specific
terms hereof; (b) shall not be responsible for any recitals
contained in this Agreement, or in any certificate or other
document referred to or provided for in, or received by it under,
this Agreement, the Securities or the Purchase Contract
Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or
the Purchase Contract Agreement or any other document referred to
or provided for herein or therein or for any failure by the
Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may
be) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;
(c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section
8.2 hereof, subject to Section 8.6 hereof); (d) shall not be
responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith,
except for its own negligence or willful misconduct; and (e)
shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with
respect to, the Securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral
hereunder.
No provision of this Agreement shall require the Collateral
Agent, the Custodial Agent or the Securities Intermediary to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder. In
no event shall the Collateral Agent, the Custodial Agent or the
Securities Intermediary be liable for any amount in excess of the
Value of the Collateral. Notwithstanding the foregoing, the
Collateral Agent, the Custodial Agent and Securities
Intermediary, each in its individual capacity, hereby waive any
right of setoff, bankers lien, liens or perfection rights as
securities intermediary or any counterclaim with respect to any
of the Collateral.
Section 8.2. Instructions of the Company. The Company
shall have the right, by one or more instruments in writing
executed and delivered to the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be, to
direct the time, method and place of conducting any proceeding
for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the
Collateral Agent, the Custodial Agent or the Securities Intermedi
ary, as the case may be, or to direct the taking or refraining
from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the
provisions of any law or of this Agreement and (ii) the
Collateral Agent, the Custodial Agent and the Securities
Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not
inconsistent with such direction.
Section 8.3. Reliance by Collateral Agent. Each of the
Securities Intermediary, the Custodial Agent and the Collateral
Agent shall be entitled conclusively to rely upon any
certification, order, judgment, opinion, notice or other
communication (including, without limitation, any thereof by
telephone, telecopy, telex or facsimile) believed by it to be
genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon
advice and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not
expressly provided for by this Agreement, the Collateral Agent,
the Custodial Agent and the Securities Intermediary shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
Section 8.4. Rights in Other Capacities. The Collateral
Agent, the Custodial Agent and the Securities Intermediary and
their affiliates may (without having to account therefor to the
Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust
or other business with the Purchase Contract Agent and any Holder
of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may
be, and the Collateral Agent, the Custodial Agent and the
Securities Intermediary and their affiliates may accept fees and
other consideration from the Purchase Contract Agent and any
Holder of Securities without having to account for the same to
the Company; provided that each of the Securities Intermediary,
the Custodial Agent and the Collateral Agent covenants and agrees
with the Company that it shall not accept, receive or permit
there to be created in favor of itself and shall take no
affirmative action to permit there to be created in favor of any
other Person, any security interest, lien or other encumbrance of
any kind in or upon the Collateral.
Section 8.5. Non-Reliance on Collateral Agent. None of the
Securities Intermediary, the Custodial Agent or the Collateral
Agent shall be required to keep itself informed as to the
performance or observance by the Purchase Contract Agent or any
Holder of Securities of this Agreement, the Purchase Contract
Agreement, the Securities or any other document referred to or
provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Securities.
The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall not have any duty or responsibility to provide
the Company with any credit or other information concerning the
affairs, financial condition or business of the Purchase Contract
Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral
Agent, the Custodial Agent or the Securities Intermediary or any
of their respective affiliates.
Section 8.6. Compensation and Indemnity. The Company
agrees: (i) to pay each of the Collateral Agent and the Custodial
Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent or the
Custodial Agent, as the case may be, for all services rendered by
each of them hereunder and (ii) to indemnify the Collateral
Agent, the Custodial Agent and the Securities Intermediary for,
and to hold each of them harmless from and against, any loss,
liability or reasonable out-of-pocket expense incurred without
negligence, willful misconduct or bad faith on its part, arising
out of or in connection with the acceptance or administration of
its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable
fees and expenses of counsel) of defending itself against any
claim or liability in connection with the exercise or performance
of such powers and duties.
Section 8.7. Failure to Act. In the event of any ambiguity
in the provisions of this Agreement or any dispute between or
conflicting claims by or among the parties hereto or any other
Person with respect to any funds or property deposited hereunder,
the Collateral Agent and the Custodial Agent shall be entitled,
after prompt notice to the Company and the Purchase Contract
Agent, at its sole option, to refuse to comply with any and all
claims, demands or instructions with respect to such property or
funds so long as such dispute or conflict shall continue, and
neither the Collateral Agent nor the Custodial Agent shall be or
become liable in any way to any of the parties hereto for its
failure or refusal to comply with such conflicting claims,
demands or instructions. The Collateral Agent and the Custodial
Agent shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally
determined by a court of competent jurisdiction or settled by
agreement between the conflicting parties as evidenced in a
writing, satisfactory to the Collateral Agent or the Custodial
Agent, as the case may be, or (ii) the Collateral Agent or the
Custodial Agent, as the case may be, shall have received security
or an indemnity satisfactory to the Collateral Agent or the
Custodial Agent, as the case may be, sufficient to save the
Collateral Agent or the Custodial Agent, as the case may be,
harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which the Collateral Agent or
the Custodial Agent, as the case may be, may incur by reason of
its acting. The Collateral Agent or the Custodial Agent may in
addition elect to commence an interpleader action or seek other
judicial relief or orders as the Collateral Agent or the
Custodial Agent, as the case may be, may deem necessary. Notwith
standing anything contained herein to the contrary, neither the
Collateral Agent nor the Custodial Agent shall be required to
take any action that is in its opinion contrary to law or to the
terms of this Agreement, or which would in its opinion subject it
or any of its officers, employees or directors to liability.
Section 8.8. Resignation of Collateral Agent. Subject to
the appointment and acceptance of a successor Collateral Agent or
Custodial Agent as provided below, (a) the Collateral Agent and
the Custodial Agent may resign at any time by giving notice
thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities, (b) the
Collateral Agent and the Custodial Agent may be removed at any
time by the Company and (c) if the Collateral Agent or the
Custodial Agent fails to perform any of its material obligations
hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent or the Custodial Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral
Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company
shall have the right to appoint a successor Collateral Agent or
Custodial Agent, as the case may be. If no successor Collateral
Agent or Custodial Agent, as the case may be, shall have been so
appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's or Custodial Agent's giving
of notice of resignation or such removal, then the retiring
Collateral Agent or Custodial Agent, as the case may be, may
petition any court of competent jurisdiction for the appointment
of a successor Collateral Agent or Custodial Agent, as the case
may be. Each of the Collateral Agent and the Custodial Agent
shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Collateral Agent or Custodial
Agent, as the case may be, hereunder by a successor Collateral
Agent or Custodial Agent, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent or
Custodial Agent, as the case may be, and the retiring Collateral
Agent or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor. The
retiring Collateral Agent or Custodial Agent shall, upon such
succession, be discharged from its duties and obligations as
Collateral Agent or Custodial Agent hereunder. After any
retiring Collateral Agent's or Custodial Agent's resignation
hereunder as Collateral Agent or Custodial Agent, the provisions
of this Section 8 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while
it was acting as the Collateral Agent or Custodial Agent. Any
resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Custodial Agent and the Securities
Intermediary.
Section 8.9. Right to Appoint Agent or Advisor. The
Collateral Agent shall have the right to appoint agents or
advisors in connection with any of its duties hereunder, and the
Collateral Agent shall not be liable for any action taken or
omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith. The appointment of agents
pursuant to this Section 8.9 shall be subject to prior consent of
the Company, which consent shall not be unreasonably withheld.
Section 8.10. Survival. The provisions of this Section 8
shall survive termination of this Agreement and the resignation
or removal of the Collateral Agent or the Custodial Agent.
Section 8.11. Exculpation. Anything in this Agreement to
the contrary notwithstanding, in no event shall any of the
Collateral Agent, the Custodial Agent or the Securities
Intermediary or their officers, employees or agents be liable
under this Agreement to any third party for indirect, special,
punitive, or consequential loss or damage of any kind whatsoever,
including lost profits, whether or not the likelihood of such
loss or damage was known to the Collateral Agent, the Custodial
Agent or the Securities Intermediary, or any of them, incurred
without any act or deed that is found to be attributable to gross
negligence or willful misconduct on the part of the Collateral
Agent, the Custodial Agent or the Securities Intermediary.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without
the consent of any Holders or the holders of any Separate Capital
Securities, the Company, the Collateral Agent, the Custodial
Agent, the Securities Intermediary and the Purchase Contract
Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the
covenants of the Company; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company so long as such covenants
or such surrender do not adversely affect the validity,
perfection or priority of the security interests granted or
created hereunder; or
(3) to evidence and provide for the acceptance of
appointment hereunder by a successor Collateral Agent,
Securities Intermediary or Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other
such provisions herein, or to make any other provisions with
respect to such matters or questions arising under this
Agreement, provided such action shall not adversely affect
the interests of the Holders.
Section 9.2. Amendment with Consent of Holders. With the
consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of said
Holders delivered to the Company, the Purchase Contract Agent or
the Collateral Agent, as the case may be, the Company, when duly
authorized, the Purchase Contract Agent, the Collateral Agent,
the Custodial Agent and the Securities Intermediary may amend
this Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in
respect of the Securities; provided, however, that no such sup
plemental agreement shall, without the consent of the Holder of
each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying
a Security (except for the rights of holders of Income
PRIDES to substitute the Treasury Securities for the Pledged
Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, or
the rights of Holders of Growth PRIDES to substitute Capital
Securities or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as applicable, for the Pledged
Treasury Securities), impair the right of the Holder of any
Security to receive distributions on the underlying
Collateral or otherwise adversely affect the Holder's rights
in or to such Collateral; or
(2) otherwise effect any action that would require the
consent of the Holder of each Outstanding Security affected
thereby pursuant to the Purchase Contract Agreement if such
action were effected by an agreement supplemental thereto;
or
(3) reduce the percentage of Purchase Contracts the
consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such Act shall approve the
substance thereof.
Section 9.3. Execution of Amendments. In executing any
amendment permitted by this Section, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent shall be entitled to receive and (subject to
Section 6.1 hereof, with respect to the Collateral Agent, and
Section 7.1 of the Purchase Contract Agreement, with respect to
the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that
all conditions precedent, if any, to the execution and delivery
of such amendment have been satisfied.
Section 9.4. Effect of Amendments. Upon the execution of
any amendment under this Section 9, this Agreement shall be
modified in accordance therewith, and such amendment shall form a
part of this Agreement for all purposes; and every Holder of
Certificates theretofore or thereafter authenticated, executed on
behalf of the Holders and delivered under the Purchase Contract
Agreement shall be bound thereby.
Section 9.5. Reference to Amendments. Security
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to this
Section may, and shall if required by the Collateral Agent or the
Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and the Collateral Agent as to any matter
provided for in such amendment. If the Company shall so deter
mine, new Security Certificates so modified as to conform, in the
opinion of the Collateral Agent, the Purchase Contract Agent and
the Company, to any such amendment may be prepared and executed
by the Company and authenticated, executed on behalf of the
Holders and delivered by the Purchase Contract Agent in
accordance with the Purchase Contract Agreement in exchange for
Outstanding Security Certificates.
Section 10. Miscellaneous.
Section 10.1. No Waiver. No failure on the part of the
Collateral Agent or any of its agents to exercise, and no course
of dealing with respect to, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the
Collateral Agent or any of its agents of any right, power or
remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any
remedies provided by law.
Section 10.2. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. Without limiting the foregoing, the above
choice of law is expressly agreed to by the Securities
Intermediary, the Collateral Agent and the Holders from time to
time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and
maintenance of the Collateral Account. The Company, the
Collateral Agent and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction
of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent and the Holders from
time to time of the Securities, acting through the Purchase
Contract Agent as their attorney-in-fact, irrevocably waive, to
the fullest extent permitted by applicable law, any objection
which they may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in
an inconvenient forum.
Section 10.3. Notices. All notices, requests, consents and
other communications provided for herein (including, without
limitation, any modifications of, or waivers or consents under,
this Agreement) shall be given or made in writing (including,
without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name
on the signature pages hereof or, as to any party, at such other
address as shall be designated by such party in a notice to the
other parties. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given
when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
Section 10.4. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the respective
successors and assigns of the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, and the Holders from time to time of the
Securities, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have
ratified the agreements of, and the grant of the Pledge hereunder
by, the Purchase Contract Agent.
Section 10.5. Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
Section 10.6. Severability. If any provision hereof is
invalid and unenforceable in any jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions
of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
Section 10.7. Expenses, etc. The Company agrees to
reimburse the Collateral Agent and the Custodial Agent for: (a)
all reasonable out-of-pocket costs and expenses of the Collateral
Agent and the Custodial Agent (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral Agent
and the Custodial Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any
of the terms of this Agreement; (b) all reasonable costs and
expenses of the Collateral Agent (including, without limitation,
reasonable fees and expenses of counsel) in connection with (i)
any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its
obligations under the Purchase Contracts forming a part of the
Securities and (ii) the enforcement of this Section 10.7; and (c)
all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document
referred to herein and all costs, expenses, taxes, assessments
and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest
contemplated hereby.
Section 10.8. Security Interest Absolute. All rights of
the Collateral Agent and security interests hereunder, and all
obligations of the Holders from time to time hereunder, shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any
provision of the Purchase Contracts or the Securities or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or any other term of, or any increase in the amount of,
all or any of the obligations of Holders of Securities
under the related Purchase Contracts, or any other amendment
or waiver of any term of, or any consent to any departure
from any requirement of, the Purchase Contract Agreement or
any Purchase Contract or any other agreement or instrument
relating thereto; or
(c) any other circumstance which might otherwise
constitute a defense available to, or discharge of, a
borrower, a guarantor or a pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
INGERSOLL-RAND COMPANY
By: _______________________
Name: __________________
Title:
Address for Notices:
INGERSOLL-RAND COMPANY
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attention: Chief Financial Officer
Telecopy: (201) 573-3172
THE BANK OF NEW YORK,
as Purchase Contract Agent and as
attorney-in-fact of the Holders from time
to time of the Securities
By: _________________________
Name: ____________________
Title:
Address for Notices:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust
Administration, Deriva-
tive Products Unit
Telecopy: (212) 815-7157
THE CHASE MANHATTAN BANK,
as Collateral Agent, Custodial Agent and
as Securities Intermediary
By:
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Attention: Corporate Trust
Administration Department
Telecopy: (212) 946-8160
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10010-2697
Attention: Corporate Trust Administration Department
Re: FELINE PRIDES of Ingersoll-Rand Company (the
"Company"), and Ingersoll-Rand Financing I
We hereby notify you in accordance with Section [4.1] [4.2]
of the Pledge Agreement, dated as of March 23, 1998, (the "Pledge
Agreement") among the Company, yourselves, as Collateral Agent,
Custodial Agent and Securities Intermediary and ourselves, as Purchase
Contract Agent and as attorney-in-fact for the holders of [Income
PRIDES] [Growth PRIDES] from time to time, that the holder of
Securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount of Treasury Securities]
[$_______Stated Amount of Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] in exchange
for an equal Value of [Pledged Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] [Pledged
Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio]
to you, as Collateral Agent. We hereby instruct you, upon receipt of
such [Pledged Treasury Securities] [Pledged Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio],
to release the [Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Treasury Securities]
related to such [Income PRIDES] [Growth PRIDES] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Date:_____________ ___________________________
By:______________________
Name:
Title:
Signature Guarantee:_____________
Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury
Portfolio] for the [Pledged Capital Securities or the Treasury
Portfolio] [Pledged Treasury Securities]:
___________________________ ______________________________
Name Social Security or other
Taxpayer Identification
Number, if any
___________________________
Address
___________________________
___________________________
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street
12E
New York, New York 10286
Attention: Corporate Trust Administration, Derivative
Products Unit
Re: FELINE PRIDES of Ingersoll-Rand Company (the
"Company"), and Ingersoll-Rand Financing I
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent, [$_______
aggregate principal amount of Treasury Securities] [$
aggregate Stated Amount of Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] in exchange
for an equal Value of [Pledged Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] [Pledged
Treasury Securities] held by the Collateral Agent (the "Pledge
Agreement"), in accordance with Section 4.1 of the Pledge Agreement,
dated March 23, 1998, between you, the Company and the Collateral
Agent. The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned Holder
the [Pledged Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Pledged Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES].
Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.
Dated:_____________ _________________________
Signature
Signature Guarantee:_______________________
Please print name and address of Registered Holder:
_________________________ _________________________
Name Social Security or other
Taxpayer Identification
_________________________ Number, if any
Address
_________________________
_________________________
_________________________
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
Attention: Corporate Trust Administration Department
Re: Capital Securities of Ingersoll-Rand
Company (the "Company"), and
Ingersoll-Rand Financing I
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of March 23, 1998
(the "Pledge Agreement"), among the Company, yourselves, as Collateral
Agent, Securities Intermediary and Custodial Agent, and The Bank of
New York, as Purchase Contract Agent and as attorney-in-fact for the
Holders of Income PRIDES and Growth PRIDES from time to time, that the
undersigned elects to deliver $ stated liquidation amount of Capital
Securities for delivery to the Remarketing Agent on the fourth
Business Day immediately preceding the Purchase Contract Settlement
Date for remarketing pursuant to Section 4.6(c) of the Pledge
Agreement. The undersigned will, upon request of the Remarketing
Agent, execute and deliver any additional documents deemed by the
Remarketing Agent or by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Capital Securities
tendered hereby.
The undersigned hereby instructs you, upon receipt of the
Proceeds of such remarketing from the Remarketing Agent to deliver
such Proceeds to the undersigned in accordance with the instructions
indicated herein under "A. Payment Instructions". The undersigned
hereby instructs you, in the event of Failed Remarketing, upon receipt
of the Capital Securities tendered herewith from the Remarketing
Agent, to be delivered to the person(s) and the address(es) indicated
herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents
and warrants that the undersigned has full power and authority to
tender, sell, assign and transfer the Capital Securities tendered
hereby and that the undersigned is the record owner of any
Capital Securities tendered herewith in physical form or a
participant in The Depositary Trust Company ("DTC") and the
beneficial owner of any Capital Securities tendered herewith by
book-entry transfer to your account at DTC and (ii) agrees to be
bound by the terms and conditions of Section 4.6(c) of the Pledge
Agreement. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.
Date:_____________
By:
Name:
Title:
Signature Guarantee:
Please print name and address:
Name Social Security or
other Taxpayer Identification
Number, if any
Address
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Capital Securities which
are in physical form should be delivered to the person(s) set
forth below and mailed to the address set forth below.
Name(s) ____________________________
(Please Print)
Address ____________________________
(Please Print)
____________________________________
____________________________________
(Zip Code)
_____________________________________
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Capital Securities which
are in book-entry form should be credited to the account at The
Depositary Trust Company set forth below.
___________________
DTC Account Number
Name of Account Party: ______________
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name
of the person(s) set forth below and mailed to the address set
forth below.
Name(s) _____________________________
(Please Print)
Address _____________________________
(Please Print)
_____________________________________
_____________________________________
(Zip Code)
_____________________________________
(Tax Identification or Social Security Number)
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
Attention: Corporate Trust Administration Department
Re: Capital Securities of Ingersoll-Rand
Company (the "Company"), and
Ingersoll-Rand Financing I
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of March 23, 1998
(the "Pledge Agreement") among the Company, yourselves, as Collateral
Agent, Securities Intermediary and Custodial Agent and The Bank of New
York, as Purchase Contract Agent and as attorney-in-fact for the
Holders of Income PRIDES and Growth PRIDES from time to time, that the
undersigned elects to withdraw the $_____ aggregate stated liquidation
amount of Capital Securities delivered to the Custodial Agent on May
16, 2001 for remarketing pursuant to Section 4.6(c) of the Pledge
Agreement. The undersigned hereby instructs you to return such
Capital Securities to the undersigned in accordance with the
undersigned's instructions. With this notice, the Undersigned hereby
agrees to be bound by the terms and conditions of Section 4.6(c) of
the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date:_____________
By:
Name:
Title:
Signature Guarantee:
Please print name and address:
Name Social Security or other
Taxpayer Identification
Number, if any
Address
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Capital Securities which are
in physical form should be delivered to the person(s) set forth below
and mailed to the address set forth below.
Name(s) ____________________________
(Please Print)
Address ____________________________
(Please Print)
____________________________________
____________________________________
(Zip Code)
_____________________________________
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Capital Securities which
are in book-entry form should be credited to the account at The
Depositary Trust Company set forth below.
___________________
DTC Account Number
Name of Account Party: ______________
INGERSOLL-RAND COMPANY,
AS ISSUER
TO
THE BANK OF NEW YORK,
AS TRUSTEE
Indenture
DATED AS OF March 23, 1998
INGERSOLL-RAND COMPANY
RECONCILIATION AND TIE BETWEEN TRUST
INDENTURE ACT OF 1939, AS AMENDED
AND INDENTURE, DATED AS OF MARCH 23, 1998
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
Section 310(a)(1) 609
(a)(2) 609
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 608, 610
Section 311(a) 613
(b) 613
Section 312(a) 701, 702(a)
(b) 702(b)
(c) 702(c)
Section 313(a) 703(a)
(b) Not Applicable
(c) 703(a), 703(b)
(d) 703(b)
Section 314(a) 704
(b) Not Applicable
(c)(1) 102
(c)(2) 102
(c)(3) Not Applicable
(d) Not Applicable
(e) 102
Section 315(a) 601(a)
(b) 602
(c) 601(b)
(d) 601(c)
(d)(l) 601(a), 601(c)
(d)(2) 601(c)
(d)(3) 601(c)
(e) 514
Section 316(a)(1)(A) 512
(a)(1)(B) 502, 513
(a)(2) Not Applicable
(b) 508
Section 317(a)(1) 503
(a)(2) 504
(b) 1009
Section 318(a) 107
NOTE: THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE,
BE DEEMED TO BE A PART OF THIS INDENTURE.
TABLE OF CONTENTS
Page
ARTICLE 1DEFINITIONS AND OTHER PROVISIONSOF GENERAL APPLICATION 1
SECTION 101.Definitions 1
Act 1
Affiliate 1
Authenticating Agent 2
Bankruptcy Law 2
Board of Directors 2
Board Resolution 2
Business Day 2
Capitalized Lease Obligation 2
Capital Stock 2
Commission 2
Common Depositary 2
Company 2
Company Request 2
Company Order 2
Corporate Trust Office 2
Covenant Defeasance 2
Custodian 2
Default 2
Defaulted Interest 2
Defeasance 2
Dollars 3
Event of Default 3
Exchange Act 3
Funded Indebtedness 3
GAAP 3
Holder 3
Security holder 3
Indenture 3
Interest 3
Interest Payment Date 3
Maturity 3
Officer 3
Officer's Certificate 3
Opinion of Counsel 3
Original Issue Discount Security 3
Outstanding 3
Paying Agent 4
Person 4
Place of Payment 4
Principal Property 4
Redemption Date 4
Redemption Price 4
Registered Security 4
Regular Record Date 4
Responsible Officer 4
Restricted Subsidiary 4
Securities 4
Security Register 4
Security Registrar 4
Special Record Date 4
Stated Maturity 5
Subsidiary 5
Trust Indenture Act 5
Trustee 5
U.S. Depositary 5
U.S. Government Obligations 5
Vice President 5
SECTION 102.Compliance Certificates and Opinions 5
SECTION 103.Form of Documents Delivered to Trustee 6
SECTION 104.Acts of Holders 6
SECTION 105.Notices, Etc., to Trustee and Company 7
SECTION 106.Notice to Holders; Waiver 7
SECTION 107.Conflict with Trust Indenture Act 8
SECTION 108.Effect of Headings and Table of Contents 8
SECTION 109.Successors and Assigns 8
SECTION 110.Separability Clause 8
SECTION 111.Benefits of Indenture 8
SECTION 112.Governing Law 8
SECTION 113.Legal Holidays 8
SECTION 114.No Recourse Against Others 8
ARTICLE 2 SECURITY FORMS 9
SECTION 201.Forms Generally 9
SECTION 202.Form of Face of Security 9
SECTION 203.Form of Reverse of Security 11
SECTION 204.Form of Trustee's Certificate of Authentication 14
SECTION 205.Securities in Global Form 14
SECTION 206.CUSIP Number 15
SECTION 207. Form of Legend for the Securities in Global
Form15
ARTICLE 3 THE SECURITIES 15
SECTION 301.Amount Unlimited; Issuable in Series 15
SECTION 302.Denominations 17
SECTION 303.Execution, Authentication, Delivery and Dating 17
SECTION 304.Temporary Securities 18
SECTION 305.Registration, Registration of Transfer and
Exchange 19
SECTION 306.Mutilated, Destroyed, Lost and Stolen Securities 20
SECTION 307.Payment of Interest; Interest Rights Preserved 21
SECTION 308.Persons Deemed Owners 21
SECTION 309.Cancellation 22
SECTION 310.Computation of Interest 22
ARTICLE 4 SATISFACTION AND DISCHARGE 22
SECTION 401.Satisfaction and Discharge of Indenture 22
SECTION 402.Application of Trust Money 23
ARTICLE 5 REMEDIES 23
SECTION 501.Events of Default 23
SECTION 502.Acceleration of Maturity; Rescission and Annulment 24
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee 25
SECTION 504.Trustee May File Proofs of Claim 25
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities 26
SECTION 506.Application of Money Collected 26
SECTION 507.Limitation on Suits 26
SECTION 508. UnconditionLa Right of Holders to Receive
Principal, Premium and Interest. 27
SECTION 509.Restoration of Rights and Remedies 27
SECTION 510.Rights and Remedies Cumulative 27
SECTION 511.Delay or Omission Not Waiver 27
SECTION 512.Control by Holders 27
SECTION 513.Waiver of Past Defaults 27
SECTION 514.Undertaking for Costs 28
ARTICLE 6 THE TRUSTEE 28
SECTION 601. Certain Duties and Responsibilities of the
Trustee 28
SECTION 602. Notice of Defaults 28
SECTION 603. Certain Rights of Trustee 28
SECTION 604. Not Responsible for Recitals or Issuance of
Securities 29
SECTION 605. May Hold Securities 29
SECTION 606. Money Held in Trust 30
SECTION 607. Compensation and Reimbursement 30
SECTION 608. Disqualification; Conflicting Interests 30
SECTION 609. Corporate Trustee Required; Eligibility 30
SECTION 610. Resignation and Removal; Appointment of
Successor 31
SECTION 611. Acceptance of Appointment by Successor 32
SECTION 612. Merger, Conversion, Consolidation or
Succession to Busines 32
SECTION 613. Preferential Collection of Claims Against
Company 33
SECTION 614. Appointment of Authenticating Agent 33
ARTICLE 7 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
COMPANY 34
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders 34
SECTION 702. Preservation of Information; Communications to
Holders 34
SECTION 703. Reports by Trustee 35
SECTION 704. Reports by Company 35
ARTICLE 8 CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER 36
SECTION 801. When Company May Merge, Etc. 36
SECTION 802. Opinion of Counsel 36
SECTION 803. Successor Corporation Substituted 36
ARTICLE 9 SUPPLEMENTAL INDENTURES 37
SECTION 901. Supplemental Indentures Without Consent of
Holders 37
SECTION 902. Supplemental Indentures with Consent of Holders 37
SECTION 903. Execution of Supplemental Indentures 38
SECTION 904. Effect of Supplemental Indentures 38
SECTION 905. Conformity with Trust Indenture Act 38
SECTION 906. Reference in Securities to Supplemental
Indentures 39
ARTICLE 10 COVENANTS 39
SECTION 1001.Payments of Securities 39
SECTION 1002.Maintenance of Office or Agency 39
SECTION 1003.Compliance Certificates 39
SECTION 1004.Money for Securities Payments to Be Held in
Trust 39
SECTION 1005.Limitation on Liens 40
SECTION 1006 Limitation on Sale and Leaseback Transactions 42
SECTION 1008 Waiver of Certain Covenants 42
ARTICLE 11 REDEMPTION OF SECURITIES 42
SECTION 1101.Applicability of Article 42
SECTION 1102.Election to Redeem; Notice to Trustee 43
SECTION 1103.Selection by Trustee of Securities to Be
Redeemed 43
SECTION 1104.Notice of Redemption 43
SECTION 1105.Deposit of Redemption Price 44
SECTION 1106.Securities Payable on Redemption Date 44
SECTION 1107.Securities Redeemed in Part 44
ARTICLE 12 SINKING FUNDS 44
SECTION 1201.Applicability of Article 44
SECTION 1202.Satisfaction of Sinking Fund Payments with
Securities 45
SECTION 1203.Redemption of Securities for Sinking Fund 45
ARTICLE 13 DEFEASANCE AND COVENANT DEFEASANCE 45
SECTION 1301.Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance 45
SECTION 1302.Defeasance and Discharge 45
SECTION 1303.Covenant Defeasance 46
SECTION 1304.Conditions to Defeasance or Covenant Defeasance 46
SECTION 1305.Deposited Money and Government Obligations To Be
Held In Trust 47
ARTICLE 14 MISCELLANEOUS 47
SECTION 1401.Miscellaneous 47
Indenture, dated as of March 23, 1998, between INGERSOLL-
RAND COMPANY, a corporation duly organized and existing under the
laws of the State of New Jersey (herein called the "Company "),
having its principal office at 200 Chestnut Ridge Road, Woodcliff
Lake, New Jersey 07675 and The Bank of New York, a
, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time
of its unsecured debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in
one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of series thereof, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 11. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well
as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP;
(4) the word "including" (and with the correlative meaning
"Include") means including, without limiting the generality of,
any description preceding such term; and
(5) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined
in that Article.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate
Securities. "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors.
"Board of Directors" means the board of directors of the
Company; provided, however, that when the context refers to
actions or resolutions of the Board of Directors, then the term
"Board of Directors" shall also mean any duly authorized
committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to
exercise the power of the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day," when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in that
Place of Payment are authorized or obligated by law or regulation
to close.
"Capitalized Lease Obligation" means an obligation under a
lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of
such obligations determined ln accordance with such principles.
"Capital Stock" of any Person shall mean any and all shares,
interests, participations or other equivalents of or interests in
(however designated) equity of such Person, including any
preferred stock, but excluding any debt securities convertible
into such equity.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing
such duties at such time.
"Common Depositary" has the meaning specified in Section
304.
"Company" means the Person named as the "Company" in the
first paragraph of this Indenture until a successor corporation
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor corporation.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the
Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Controller, an Assistant Controller,
its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Corporate Trust Office" means the office of the Trustee in
New York, New York at which at any particular time its corporate
trust business shall be principally administered, which office at
the date hereof is located at 101 Barclay Street, New York, New
York 10286.
"Covenant Defeasance" has the meaning specified in Section
1303.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy
Law.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section
307.
"Defeasance" has the meaning specified in Section 1302.
"Dollars" and "$" means lawful money of the United States of
America.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities and Exchange Act of
1934, as amended from time to time, and the rules and regulations
promulgated thereunder.
"Funded Indebtedness" means indebtedness created, assumed or
guaranteed by a Person for money borrowed which matures by its
terms, or is renewable by the borrower to a date, more than one
year after the date of its original creation, assumption or
guarantee.
"GAAP" means such accounting principles that are generally
accepted in the United States of America as of the date of any
computation required hereunder.
"Holder" or "Security holder" means a Person in whose name a
Security if registered in the Security Register.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of
particular series of Securities established as contemplated by
Section 301.
"Interest," when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.
"Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest
on such Security.
"Maturity," when used with respect to any Security, means
the date on which the principal of such Security or an
installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the Vice Chairman
of the Board, the President, any Executive Vice President, any
Senior Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of the Company.
"Officer's Certificate" means a certificate signed by an
Officer and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company, and who shall
be reasonably acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities or
Securities of any series, means, as of the date of determination,
all such Securities theretofore authenticated and delivered under
this Indenture, except: (i) Securities theretofore cancelled by
the Trustee or delivered to the Trustee for cancellation; (ii)
Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the
Trustee has been made; (iii) Securities which have been paid
pursuant to Section 306 or in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant
to this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of
the Company; and (iv) Securities which have been defeased
pursuant to Section 1302; provided, however, that in determining
whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder,
(a) the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding for such purposes shall be
that portion of the principal amount thereof that could be
declared to be due and payable upon the occurrence of an Event of
Default and the continuation thereof pursuant to the terms of
such Original Issue Discount Security as of the date of such
determination and (b) Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any
Securities on behalf of the Company. The Company may act as
Paying Agent with respect to any Securities issued hereunder.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment," when used with respect to the Securities
of any series, means the place or places where the principal of
(and premium, if any) and interest on the Securities of that
series are payable as specified as contemplated by Section 301.
"Principal Property" means any manufacturing plant or other
manufacturing facility of the Company or any Restricted
Subsidiary, which plant or facility is located within the United
States of America, except any such plant or facility which the
Board of Directors by resolution declares is not of material
importance to the total business conducted by the Company and its
Restricted Subsidiaries.
"Redemption Date," when used with respect to any Security of
any series to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security
of any series to be redeemed, means the price at which it is to
be redeemed pursuant to this Indenture.
"Registered Security" means any Security issued hereunder
and registered in the Security Register.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the
date specified for that purpose as contemplated by Section 301.
"Responsible Officer," when used with respect to the
Trustee, means any officer of the Trustee in its Corporate Trust
Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Subsidiary" means any Subsidiary which owns a
Principal Property excluding, however, any corporation the
greater part of the operating assets of which are located or the
principal business of which is carried on outside the United
States of America.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity," when used with respect to any Security or
any installment of principal thereof or interest thereon, means
the date specified in such Security as the fixed date on which
the principal of such Security or such installment of principal
or interest is due and payable.
"Subsidiary" of a Person means any corporation of which at
least a majority of the outstanding stock having voting power
under ordinary circumstances to elect a majority of the Board of
Directors of said corporation shall at the time be owned by the
Company or by the Company and one or more Subsidiaries or by one
or more Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, as in force at the date as of which this Indenture
was executed; provided, however, that in the event that such Act
is amended after such date, "Trust Indenture Act" means the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time
there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series.
"U.S. Depositary" means, with respect to the Securities of
any series issuable or issued in whole or in part in the form of
one or more permanent global Securities, the Person designated as
U.S. Depositary by the Company pursuant to Section 301, which
must be a clearing agency registered under the Exchange Act until
a successor U.S. Depositary shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "U.S.
Depositary" shall mean or include each Person who is then a U.S.
Depositary hereunder, and if at any time there is more than one
such Person, "U.S. Depositary" shall mean the U.S. Depositary
with respect to the Securities of that series.
"U.S. Government Obligations" means securities which are (i)
direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed by the full
faith and credit of the United States of America which, in either
case, are not callable or redeemable at the option of the issuer
thereof or otherwise subject to prepayment, and shall also
include a depository receipt issued by a New York Clearing House
bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment or interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt or from any amount held by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"Vice President," when used with respect to the Company or
the Trustee, means any vice president, whether or not designated
by a number or a word or words added before or after the title
"vice president".
SECTION 12. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
other than an action permitted by Sections 205 and 704 hereof,
the Company shall furnish to the Trustee an Officer's Certificate
stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall
include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based; (c) a
statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 13. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an Officer may be based,
insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such Officer
knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or
Officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
SECTION 14. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by agents duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein
sometimes referred to as the "ACT" of the Holders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to
Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in
any other manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved
by the Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall
bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such
action is made upon such Security. (e) If the Company shall
solicit from the Holders any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date; provided
that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not
later than six months after the record date.
SECTION 15. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee and received by the
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this
Indenture, attention: Secretary, or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 16. Notice to Holders; Waiver.
Where this Indenture or any Security provides for notice to
Holders of any event, such notice shall be deemed sufficiently
given (unless otherwise herein or in such Security expressly
provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders or the
validity of the proceedings to which such notice relates. Where
this Indenture or any Security provides for notice in any manner,
such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice
by Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
Any request, demand, authorization, direction, notice,
consent or waiver required or permitted under this Indenture
shall be in the English language, except that any published
notice may be in an official language of the country of
publication.
SECTION 17. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act,
such required provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or shall be excluded, as the case may be.
SECTION 18. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
SECTION 19. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto
and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws (other than the choice of
law provisions) of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at
any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made at such Place of
Payment on such date, but may be made on the next succeeding
Business Day or on such other day as may be set out in the
Officer's Certificate pursuant to Section 301 at such Place of
Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity,
provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
SECTION 114. No Recourse Against Others.
No recourse for the payment of the principal of (and
premium, if any) or interest, if any, on any Security, or for any
claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture,
or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor
corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all
such liability is hereby waived and released as a condition of
and as a consideration for, the execution of this Indenture and
the issue of the Securities.
ARTICLE 2
SECURITY FORMS
SECTION 21. Forms Generally.
The Securities of each series shall be in substantially the
form set forth in this Article, or in such other form as shall be
established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, ln each case with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or
as may, consistently herewith, be determined by the Officers
executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified
by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication
and delivery of such Securities.
The Trustee's certificates of authentication shall be in
substantially the form set forth in this Article.
The definitive Securities shall be photocopied, printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the Officers
executing such Securities, as evidenced by their execution of
such Securities.
SECTION 22. Form of Face of Security.
(If the Security is an Original Issue Discount Security,
insert--FOR PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT (AS DEFINED IN SECTION 1273(a)(1) OF THE CODE AND
TREASURY REGULATION SECTION 1.1273-l(a) WITH RESPECT TO THIS
SECURITY IS , THE ISSUE PRICE (AS DEFINED IN TREASURY
REGULATION SECTION 1.1273-2) OF THIS SECURITY IS , THE
ISSUE DATE (AS DEFINED IN SECTION 1275(a)(2) OF THE CODE AND
TREASURY REGULATION SECTION 1.1273-2) OF THIS SECURITY IS
AND THE YIELD TO MATURITY OF THIS SECURITY IS
). INGERSOLL-RAND COMPANY
........................
No. ________ ($)________
INGERSOLL-RAND COMPANY, a corporation duly organized and
existing under the laws of New Jersey (herein called the
"Company," which term includes any successor corporation under
the Indenture hereinafter referred to), for value received,
hereby promises to pay to , or registered assigns, the
principal sum of $ on . (If the Security is
to bear interest prior to Maturity, insert --, and to pay
interest thereon from _______________ or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, (semi-annually) (quarterly) (monthly) on
and in each year, commencing , at the rate
of % per annum, until the principal hereof is paid or made
available for payment (If applicable insert--, and (to the extent
that the payment of such interest shall be legally enforceable)
at the rate of % per annum on any overdue principal and
premium and on any overdue installment of interest). The interest
so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the
of (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided in said Indenture.)
(If the Security is not to bear interest prior to Maturity,
insert--The principal of this Security shall not bear interest
except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such
case the overdue principal of this Security shall bear interest
at the rate of % per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue
from the date of such default in payment to the date payment of
such principal has been made or duly provided for. Interest on
any overdue principal shall be payable on demand. Any such
interest on any overdue principal that is not so paid on demand
shall bear interest at the rate of % per annum (to the extent
that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such demand for payment to
the date payment of such interest has been made or duly provided
for, and such interest shall also be payable on demand.)
Payment of the principal of (and premium, if any) and (if
applicable, insert--any such) interest on this Security will be
made at the office or agency of the Company maintained for that
purpose in , in Dollars (if applicable, insert--;
provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security
Register).
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its corporate seal.
INGERSOLL-RAND COMPANY
By:
By:___________________________
_____________
Attest:
(SEAL)
SECTION 23. Form of Reverse of Security.
This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture,
dated as of March 17, 1998 (herein called the "Indenture"),
between the Company and as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series
designated on the face hereof (limited in aggregate principal
amount to $ ).
(If applicable, insert--The Securities of this series are
subject to redemption upon not less than 30 nor more than 60
days' notice by first class mail to the holders of such
securities, (if applicable, insert--(1) on in any year
commencing with the year and ending with the year
through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and
(2)) at any time (on or after , ), as a whole or in
part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):
If redeemed (on or before , %, and if
redeemed) during the 12-month period beginning of the
years indicated,
Year Redemption Price Year Redemption Price
and thereafter at a Redemption Price equal to _______ of the
principal amount, together in the case of any such redemption (if
applicable, insert -- (whether through operation of the sinking
fund or otherwise)) with accrued and unpaid interest to the
Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in
the Indenture.) (If applicable, insert -- The Securities of this
series are subject to redemption upon not less than 30 nor more
than 60 days' notice by first class mail, (1) on in
any year commencing with the year and ending with the
year through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation
of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below, and (2) at any time (on or
after ____________), as a whole or in part, at the election of
the Company, at the Redemption Prices for redemption otherwise
than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table
below:
If redeemed during a 12-month period beginning of
the years indicated,
Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through
Year Sinking Fund Operation
of the Sinking Fund
and thereafter at a Redemption Price equal to % of the
principal amount, together in the case of any such redemption
(whether through operation of the sinking fund or otherwise) with
accrued and unpaid interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture.)
(Notwithstanding the foregoing, the Company may not, prior
to redeem any Securities of this series as
contemplated by (clause (2) of) the preceding paragraph as a part
of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than % per
annum.)
(The sinking fund for this series provides for the
redemption on in each year beginning with the year
and ending with the year of (not less than)
$ (("mandatory sinking fund") and not more than $
aggregate principal amount of Securities of this
series.) (Securities of this series acquired or redeemed by the
Company otherwise than through (mandatory) sinking fund payments
may be credited against subsequent (mandatory) sinking fund
payments otherwise required to be made--in the (inverse) order in
which they become due.)
(In the event of redemption of this Security in part only a
new Security or Securities of this series for the unredeemed
portion hereof will be issued ln the name of the Holder hereof
upon the cancellation hereof.)
(If the Security is not an Original Issue Discount Security,
insert -- If any Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.) (If the
Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities
of this series may be declared due and payable in the manner and
with the effect provided in the Indenture. Such amount shall be
equal -- insert formula for determining the amount.) Upon
payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal and overdue
interest (in each case to the extent that the payment of such
interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall
terminate.
This Security is a senior unsecured obligation of the
Company and will rank pari passu in right of payment with all
other senior unsecured obligations of the Company.
This Security is subject to Defeasance as described in the
Indenture.
The Indenture may be modified by the Company and the Trustee
without consent of any Holder with respect to certain matters as
described in the Indenture. In addition, the Indenture permits,
with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each
series to be affected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by
the Holder of this Security shall bind such Holder and all future
Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of
the Company in any place where the principal of (and premium, if
any) and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same Stated Maturity and
aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in
registered form without coupons in denominations of ($1,000) and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture imposes certain limitations on the ability of
the Company to, among other things, merge or consolidate with any
other Person or sell, assign, transfer or lease all or
substantially all of its properties or assets (If other covenants
are applicable pursuant to the provisions of Section 301, insert
here). All such covenants and limitations are subject to a number
of important qualifications and exceptions. The Company must
report periodically to the Trustee on compliance with the
covenants in the Indenture.
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under this Security or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or
their creation. Each Holder, by accepting a Security, waives and
releases all such liability. The waiver and release are part of
the consideration for the issuance of this Security.
(If applicable, insert -- Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures ("CUSIP"), the Company has caused CUSIP numbers to be
printed on the Securities of this series as a convenience to the
Holders of the Securities of this series. No representation is
made as to the correctness or accuracy of such numbers as printed
on the Securities of this series and reliance may be placed only
on the other identification numbers printed hereon.)
All capitalized terms used in this Security without
definition which are defined in the Indenture shall have the
meanings assigned to them in the Indenture. ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we)
assign and transfer this Security to
(Insert assignee's social security or tax I.D. number)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The
agent may substitute another to act for him.
Dated:_________ Your Signature:___________________
(Sign exactly as your
name appears on the other
side of this Security)
Signature Guaranty:_______________________________
(Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Transfer Agent, which
requirements will include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Transfer Agent in addition
to, or in substitution for, STAMP all in
accordance with the Exchange Act.)
Social Security Number or Taxpayer Identification Number:
SECTION 24. Form of Trustee's Certificate of
Authentication.
This is one of the Securities of the series designated
therein referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By:___________________________
Authorized Signatory
Dated:_____________________
SECTION 25. Securities in Global Form.
If Securities of a series are issuable in global form, as
contemplated by Section 301, then, notwithstanding the provisions
of Section 302, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified
therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from time to time endorsed
thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a Security in global form to
reflect the amount, or any increase or decrease in the amount, of
Outstanding Securities represented thereby shall be made in such
manner and upon instructions given by such Person or Persons as
shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 303 or Section 304.
Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions
given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section
303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in
writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of Section 309 shall apply to any Security
represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to
the Trustee the Security in global form together with written
instructions (which need not comply with Section 102 and need not
be accompanied by an Opinion of Counsel) with regard to the
reduction in the principal amount of Securities represented
thereby.
Notwithstanding the provisions of Sections 201 and 307,
unless otherwise specified as contemplated by Section 301,
payment of principal of, premium, if any, and interest on any
Security in permanent global form shall be made to the Person or
Persons specified therein.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Company, the Trustee and
any agent of the Company and the Trustee shall treat a Person as
the Holder of such principal amount of Outstanding Securities
represented by a permanent global Security as shall be specified
in a written statement of the Holder of such permanent global
Security.
SECTION 26. CUSIP Number.
The Company in issuing Securities of any series may use a
"CUSIP" number, and, if so, the Trustee may use the CUSIP number
in notices of redemption or exchange as a convenience to Holders
of such series; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the
CUSIP number printed on the notice or on the Securities of such
series, and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of
any change in the CUSIP number of any series of Securities.
SECTION 27. Form of Legend for the Securities in Global
Form.
Any Security in global form authenticated and delivered
hereunder shall bear a legend in substantially the following
form:
"THIS SECURITY IS IN GLOBAL FORM WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AN IS REGISTERED IN THE NAME OF
A COMMON DEPOSITARY OR A U.S. DEPOSITARY. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED
FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE COMMON DEPOSITARY OR A U.S. DEPOSITARY OR BY A NOMINEE OF THE
COMMON DEPOSITARY OR A NOMINEE OF THE U.S. DEPOSITARY AS THE CASE
MAY BE."
ARTICLE 3
THE SECURITIES
SECTION 31. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or
more series. There shall be established in or pursuant to a Board
Resolution, and set forth in an Officer's Certificate, or
established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for,
or in lieu of, other Securities of the series pursuant to
Sections 304, 305, 306, 906 or 1107);
(3) whether any Securities of the series are to be issuable
in permanent global form with or without coupons and, if so, (i)
whether beneficial owners of interests in any such permanent
global security may exchange such interests for Securities of
such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges
may occur, if other than in the manner provided in Section 305,
and (ii) the name of the Common Depositary (as defined in Section
304) or the U.S. Depositary, as the case may be, with respect to
any global security;
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date for the
interest payable on any Interest Payment Date and, if applicable
to such series of Securities, the basis points and United States
Treasury rate(s) and any other rates to be used in calculating
the reset rate;
(6) the place or places where the principal of (and
premium, if any) and interest on Securities of the series shall
be payable;
(7) the right of the Company, if any, to defer any payment
of principal of or interest on the Securities of the series, and
the maximum length of any such deferral period;
(8) the period or periods within which, the price or prices
at which and the terms and conditions upon which Securities of
the series may be redeemed, in whole or in part, at the option of
the Company, pursuant to any sinking fund or otherwise;
(9) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series
shall be redeemed or purchased, in whole or in part, pursuant to
such obligation, and, where applicable, the obligation of the
Company to select the Securities to be redeemed;
(10) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the
series shall be issuable;
(11) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series which shall
be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(12) additional Events of Default with respect to Securities
of the series, if any, other than those set forth herein;
(13) if either or both of Section 1302 and Section 1303
shall be inapplicable to the Securities of the series (provided
that if no such inapplicability shall be specified, then both
Section 1302 and Section 1303 shall be applicable to the
Securities of the series);
(14) if other than U.S. dollars, the currency or currencies
or units based on or related to currencies in which the
Securities of such series shall be denominated and in which
payments or principal of, and any premium and interest on, such
Securities shall or may by payable;
(15) additional covenants with respect to Securities
of the series, if any, other than those set forth herein;
(16) if other than the Trustee, the identity of the
Registrar and any Paying Agent; and
(17) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided in or pursuant to such Board Resolution and set forth
in such Officer's Certificate or in any such Indenture
supplemental hereto.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate
record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officer's Certificate setting
forth, or providing the manner for determining, the terms of the
Securities of such series.
SECTION 32. Denominations.
The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall be
specified as contemplated by Section 301. In the absence of any
such provisions with respect to the Securities of any series, the
Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
SECTION 33. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its
President, any Executive Vice President, any Senior Vice
President or one of its Vice Presidents and its Treasurer or one
of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on
the Securities may be manual or facsimile. The seal of the
Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the
Securities. Typographical and other minor errors or defects in
any such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any security that has
been duly authenticated and delivered by the Trustee.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of
any series executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee
in accordance with the Company Order shall authenticate and make
such Securities available for delivery. If the form or terms of
the Securities of the series have been established in or pursuant
to one or more Board Resolutions as permitted by Sections 201 and
301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and
(subject to Sections 315(a) through (d) of the Trust Indenture
Act) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(a if the form of such Securities has been
established by or pursuant to Board Resolution as permitted by
Section 201, that such form has been established in conformity
with the provisions of this Indenture;
(b if the terms of such Securities have been
established by or pursuant to Board Resolution as permitted by
Section 301, that such terms have been established in conformity
with the provisions of this Indenture; (c that such
Securities, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in
accordance with their terms, except to the extent enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by the effect of
general principles of equity (regardless of whether
enforceability is considered in a proceeding ln equity or at
law); and
(d that no consent, approval, authorization, order,
registration or qualification of or with any court or any
governmental agency or body having jurisdiction over the Company
is required for the execution and delivery of such Securities by
the Company, except such as have been obtained (except that no
opinion need be expressed as to state securities or Blue Sky
laws).
If such form or terms have been so established, the Trustee
shall not be required to authenticate such Securities if the
issue of such Securities pursuant to this Indenture will affect
the Trustee's own rights, duties or immunities under the
Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee, or in the written
opinion of counsel to the Trustee (which counsel may be an
employee of the Trustee) such authentication may not lawfully be
made or would involve the Trustee in personal liability.
Notwithstanding the provisions of Section 301 and of the
immediately preceding paragraph, if all Securities of a series
are not to be originally issued at one time, it shall not be
necessary to deliver the Officer's Certificate otherwise required
pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to the immediately preceding
paragraph at or prior to the time of authentication of each
security of such series if such documents are delivered at or
prior to the authentication upon original issuance of the first
security of such series to be issued.
If the Company shall establish pursuant to Section 301 that
the Securities of a series are to be issued in the form of one or
more global Securities, then the Company shall execute and the
Trustee shall, in accordance with this Section and the Company
Order with respect to the authentication and delivery of such
series, authenticate and deliver one or more global Securities
that (i) shall be in an aggregate amount equal to the aggregate
principal amount specified in such Company Order, (ii) shall be
registered in the name of the Common Depositary or U.S.
Depositary, as the case may be, therefor or its nominee, and
(iii) shall be made available for delivery by the Trustee to such
depositary or pursuant to such depositary's instruction.
Each depositary designated pursuant to Section 301 must, at
the time of its designation and at all times while it serves as
depositary, be a clearing agency registered under the Exchange
Act and any other applicable statute or regulation.
Unless otherwise provided for in the form of security, each
security shall be dated the date of its authentication.
No security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such security a certificate of authentication
substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any
security shall be conclusive evidence, and the only evidence,
that such security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
SECTION 34. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the
Trustee shall authenticate and make available for delivery,
temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
In the case of Securities of any series, such temporary
Securities may be in global form, representing all or a portion
of the Outstanding Securities of such series.
Except in the case of temporary Securities in global form
(which shall be exchanged in accordance with the provisions of
Section 305), if temporary Securities of any series are issued,
the Company will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of
Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities of any series, the Company shall execute and the
Trustee shall authenticate and make available for delivery in
exchange therefor a like principal amount of definitive
Securities of the same series of authorized denominations and of
like tenor. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
If temporary Securities of any series are issued in global
form, any such temporary global Security shall, unless otherwise
provided therein, be delivered to the office of a depositary or
common depositary (the "COMMON DEPOSITARY") for credit to the
respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct).
SECTION 35. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such
office and in any other office or agency of the Company in a
Place of Payment being herein sometimes collectively referred to
as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of registration of transfers
of Securities. The Trustee is hereby appointed "Security
Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any security
of any series at the office or agency of the Company in Place of
Payment for that series, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in
the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and Stated
Maturity.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount
and Stated Maturity, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, the
Securities which the Holder making the exchange is entitled to
receive.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent global security
shall be exchangeable only as provided in this paragraph. If the
beneficial owners of interests in a permanent global security are
entitled to exchange such interests for Securities of such series
and of like tenor and principal amount of another authorized form
and denomination, as specified and as subject to the conditions
contemplated by Section 301, then without unnecessary delay but
in any event not later than the earliest date on which such
interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in aggregate
principal amount equal to the principal amount of such permanent
global security, executed by the Company. On or after the
earliest date on which such interests may be so exchanged, such
permanent global Securities shall be surrendered from time to
time by the Common Depositary or the U.S. Depositary, as the case
may be, and in accordance with instructions given to the Trustee
and the Common Depositary or the U.S. Depositary, as the case may
be (which instructions shall be in writing but need not comply
with Section 102 or be accompanied by an Opinion of Counsel), as
shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or in part, for definitive Securities of the
same series without charge. The Trustee shall authenticate and
make available for delivery, in exchange for each portion of such
surrendered permanent global security, a like aggregate principal
amount of definitive Securities of the same series of authorized
denominations and of like tenor as the portion of such permanent
global security to be exchanged which shall be in the form of the
Securities of such series; provided, however, that no such
exchanges may occur during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption
under Section 1103 and ending at the close of business on the day
of such mailing. Promptly following any such exchange in part,
such permanent global Security shall be returned by the Trustee
to the Common Depositary or the U.S. Depositary, as the case may
be, or such other Common Depositary or U.S. Depositary referred
to above in accordance with the written instructions of the
Company referred to above. If a Security in the form specified
for such series is issued in exchange for any portion of a
permanent global Security after the close of business at the
office or agency where such exchange occurs on (i) any Regular
Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date, or (ii) any Special
Record Date and before the opening of business at such office or
agency on the related proposed date for payment of interest or
Defaulted Interest, as the case may be, such interest or
Defaulted Interest will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect
of such security in the form specified for such series, but will
be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest
in respect of such portion of such permanent global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligation, of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or
the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
Unless otherwise provided in the Securities to be
transferred or exchanged, no service charge shall be made for any
registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 304, 906 or 1107 not
involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period
beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Securities of that
series selected for redemption under Section 1103 and ending at
the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any security so selected for
redemption in whole or in part, except the unredeemed portion of
any security being redeemed in part.
SECTION 36. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series
and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such Security or indemnity as may
be required by them to save each of them and any agent of either
of them harmless, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute and upon its request
the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same
series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security,
make payment with respect to such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
SECTION 37. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest.
Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1 The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior
to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Section 307 provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at its address as it appears
in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2 The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment
pursuant to this Section 307, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 38. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
None of the Company, the Trustee or any agent of the Company
or the Trustee shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interest of a Security in global form, or
for maintaining, supervising or reviewing any records relating to
such beneficial ownership interest. Notwithstanding the
foregoing, with respect to any Security in global form, nothing
herein shall prevent the Company or the Trustee or any agent of
the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by any
Common Depositary (or its nominee), as a Holder, with respect to
such Security in global form or impair, as between such Common
Depositary and owners of beneficial interests in such Security in
global form, the operation of customary practices governing the
exercise of the right of such Common Depositary (or its nominee)
as holder of such Security in global form.
SECTION 39. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. Upon the written request
of the Company all cancelled Securities shall be held by the
Trustee and may be destroyed (and, if so destroyed, certification
of their destruction shall be delivered to the Company, unless,
by a Company Order, the Company shall direct that cancelled
Securities be returned to it).
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301
for Securities of any series, interest on the Securities of each
series shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 41. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for or in the
form of security for such series), when the Trustee, upon Company
Request and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this
Indenture, when
(1 either
(A all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed,
lost or stolen and which have been replaced or paid as provided
in Section 306 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1009) have
been delivered to the Trustee for cancellation; or
(B all such Securities not theretofore delivered to
the Trustee for cancellation
(i)have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at
the expense, of the Company, and the Company, in the case of (i),
(ii) or (iii) above, has deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or the Stated Maturity or Redemption Date, as the case
may be;
(2 the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3 the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for herein relating to the
satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 607, the obligations of the Company to any Authenticating
Agent under Section 614 and, if money shall have been deposited
with the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1009 shall survive.
SECTION 42. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1009, all money deposited with the Trustee pursuant to Section
401 shall be held in trust and applied by it, in accordance with
the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including
the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has
been deposited with or received by the Trustee.
ARTICLE 5
REMEDIES
SECTION 51. Events of Default.
"EVENT OF DEFAULT," wherever used herein with respect to
Securities of any series, means any one of the following events
(whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or to be effected by operation
of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or
governmental body):
(1 the Company defaults in the payment of interest on
any Security of that series when such interest becomes due and
payable and the default continues for a period of 30 days;
provided, however, that if the Company is permitted by the terms
of the Securities of the applicable series to defer the payment
in question, the date on which such payment is due and payable
shall be the date on which the Company is required to make
payment following such deferral, if such deferral has been
elected pursuant to the terms of the Securities; or
(2 the Company defaults in the payment of the principal
of (or premium, if any, on) any Security of that series when the
same becomes due and payable at Maturity, upon redemption
(including redemptions under Article 11), or otherwise; provided,
however, that if the Company is permitted by the terms of the
Securities of the applicable series to defer the payment in
question, the date on which such payment is due and payable shall
be the date on which the Company is required to make payment
following such deferral, if such deferral has been elected
pursuant to the terms of the Securities; or
(3 The Company defaults in the payment of any sinking
fund installment, when and as due by the terms of a Security and
the default continues for a period of 30 days; or
(4 The Company fails to observe or perform any of its
other covenants, warranties or agreements in the Securities of
that series or this Indenture (other than a covenant, agreement
or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit
of series of Securities other than that series), and the failure
to observe or perform continues for the period and after the
notice specified in the last paragraph of this Section; or(5 the
Company pursuant to or within the meaning of any Bankruptcy Law (A)
commences a voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (B) consents to the entry of a judgment,
decree or order for relief against it in an involuntary case or
proceeding under any Bankruptcy Law, (C) consents to or acquiesces
in the institution of bankruptcy or insolvency proceedings against
it, (D) applies for, consents to or acquiesces in the appointment of
or taking possession by a Custodian of the Company or for any
material part of its property, (E) makes a general assignment for the
benefit of its creditors or (F) takes any corporate action in
furtherance of or to facilitate, conditionally or otherwise, any of
the foregoing; or
(6 (i) a court of competent jurisdiction enters a
judgment, decree or order for relief in respect of the Company in
an involuntary case or proceeding under any Bankruptcy Law which
shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect
of the Company, (B) appoint a Custodian of the Company or for any
material part of its property, or (C) order the winding-up or
liquidation of its affairs, and such judgment, decree or order
shall remain unstayed and in effect for a period of 90
consecutive days; or (ii) any bankruptcy or insolvency petition
or application is filed, or any bankruptcy or insolvency
proceeding is commenced against the Company and such petition,
application or proceeding is not dismissed within 90 days; or
(iii) a warrant of attachment is issued against any material
portion of the property of the Company which is not released
within 90 days of service; or
(7 any other Event of Default provided with respect to
Securities of that series.
A Default under clause (4) above is not an Event of Default
until the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities of that series
notify the Company and the Trustee of the Default and the Company
does not cure the Default within 90 days after receipt of the
notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
When a Default under clause (4) above is cured within such 90-day
period, it ceases.
SECTION 52. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default with respect to Securities of any
series (other than an Event of Default specified in clause (5) or
(6) of Section 501) occurs and is continuing, the Trustee by
notice in writing to the Company, or the Holders of at least 25%
in aggregate principal amount of the Outstanding Securities of
that series by notice in writing to the Company and the Trustee,
may declare the unpaid principal of and accrued interest to the
date of acceleration (or, if the Securities of that series are
Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) on all
the Outstanding Securities of that series to be due and payable
immediately and, upon any such declaration, the Outstanding
Securities of that series (or specified principal amount) shall
become and be immediately due and payable.
If an Event of Default specified in clause (5) or (6) of
Section 501 occurs, all unpaid principal of and accrued interest
on the Outstanding Securities of that series (or specified
principal amount) shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Trustee or any Holder of any Security of that series.
Upon payment of all such principal and interest, all of the
Company's obligations under the Securities of that series and
(upon payment of the Securities of all series) this Indenture
shall terminate, except obligations under Section 607.
The Holders of a majority in principal amount of the
Outstanding Securities of that series by notice to the Trustee
may rescind an acceleration and its consequences if (i) all
existing Events of Default, other than the nonpayment of the
principal and interest of the Securities of that series that has
become due solely by such declaration of acceleration, have been
cured or waived, (ii) to the extent the payment of such interest
is lawful, interest on overdue installments of interest and
overdue principal that has become due otherwise than by such
declaration of acceleration have been paid, (iii) the rescission
would not conflict with any judgment or decree of a court of
competent jurisdiction and (iv) all payments due to the Trustee
and any predecessor Trustee under Section 607 have been made.
SECTION 53.Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if:
(1 default is made in the payment of any interest on any
Security of any series when such interest becomes due and payable
and such default continues for a period of 30 days, or
(2 default is made in the payment of the principal of
(or premium, if any, on) any Security of any series at the
Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if
any) and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at
the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to
cover the reasonable costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor
upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein,
or to secure any other proper remedy.
SECTION 54. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(i0 to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in
such judicial proceedings, and
(ii0 to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any
Holder thereof or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
SECTION 55.Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 56. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
in respect of the Securities of any series shall be applied in
the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of
the Securities in respect of which moneys have been collected and
the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 607 applicable to such series;
Second: To the payment of the amounts then due and unpaid
for principal of (and premium, if any) and interest on the
Securities of such series in respect of which or for the benefit
of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due
and payable on such Securities of such series for principal (and
premium, if any) and interest, respectively; and
Third: To the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 506. At least fifteen
(15) days before such record date, the Trustee shall mail to each
Holder and the Company a notice that states the record date, the
payment date and the amount to be paid.
SECTION 57. Limitation on Suits.
No Holder of any Security of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(1 such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2 the Holders of not less than 25% in principal amount
of the Outstanding Securities of that series shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder;
(3 such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request;
(4 the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and
(5 no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities of that series;
it being understood and intended that no one or more of Holders
of Securities of any series shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other
of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all Holders of Securities of
the affected series.
SECTION 58. Unconditional Right of Holders to
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 307) interest on such
Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
SECTION 59. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or
has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be
restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding has
been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in
the last paragraph of Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities
of such series, provided that:
(1 such direction shall not be in conflict with any rule
of law or with this Indenture;
(2 the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; and
(3 subject to Section 601, the Trustee need not take any
action which might involve the Trustee in personal liability or
be unduly prejudicial to the Holders not joining therein.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount
of the Outstanding Securities of any series may by written notice
to the Trustee on behalf of the Holders of all the Securities of
such series waive any Default or Event of Default with respect to
such series and its consequences, except a Default or Event of
Default (1 in respect of the payment of the principal of (or
premium, if any) or interest on any Security of such series, or
(2 in respect of a covenant or other provision hereof
which under Article Nine cannot be modified or amended without
the consent of the Holder of each Outstanding Security of such
series affected.
Upon any such waiver, such Default or Event of Default shall
cease to exist and shall be deemed to have been cured, for every
purpose of this Indenture and the Securities of such series; but
no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or to any suit instituted
by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Security on or after
the Stated Maturity or Maturities expressed in such Security (or,
in the case of redemption, on or after the Redemption Date).
ARTICLE 6
THE TRUSTEE
SECTION 61. Certain Duties and Responsibilities of
the Trustee.
(a Except during the continuance of an Event of Default,
the Trustee's duties and responsibilities under this Indenture
shall be governed by Section 315(a) of the Trust Indenture Act.
(b In case an Event of Default has occurred and is
continuing, and is known to the Trustee, the Trustee shall
exercise the rights and powers vested in it by this Indenture,
and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c None of the provisions of Section 315(d) of the Trust
Indenture Act shall be excluded from this Indenture.
SECTION 62. Notice of Defaults.
Within 90 days after the occurrence of any Default or Event
of Default with respect to the Securities of any series, the
Trustee shall give to all Holders of Securities of such series,
as their names and addresses appear in the Security Register,
notice of such Default or Event of Default known to the Trustee,
unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default
or Event of Default in the payment of the principal of (or
premium, if any) or interest on any Security of such series or in
the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or directors or Responsible Officers of
the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such
series.
SECTION 63. Certain Rights of Trustee.
Subject to the provisions of the Trust Indenture Act:
(a the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party
or parties;
(b any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(d the Trustee may consult with counsel of its selection
and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
security or indemnity to its reasonable satisfaction against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f prior to the occurrence of an Event of Default with
respect to the Securities of any series and after the curing or
waiving of all such Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, approval or other paper or document,
or the books and records of the Company, unless requested in
writing to do so by the Holders of a majority in principal amount
of the Outstanding Securities of any series; provided, however,
that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is not, in the opinion of the
Trustee, reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding; the reasonable
expense of every such investigation shall be paid by the Company
or, if paid by the Trustee, shall be repaid by the Company upon
demand;
(g the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and
(h the Trustee shall not be required to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of
its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
SECTION 64. Not Responsible for Recitals or Issuance
of Securities.
The recitals herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee or any Authenticating
Agent assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of Securities or the proceeds
thereof.
SECTION 65. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee
of Securities and, subject to Sections 608 and 613, may otherwise
deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 66. Money Held in Trust.
Money held by the Trustee in trust hereunder (including
amounts held by the Trustee as Paying Agent) need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed upon in
writing with the Company.
SECTION 67. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such
compensation for all services rendered by it hereunder as the
parties shall agree from time to time (which compensation shall
not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability, damage, claim or expense, including
taxes (other than taxes based upon or determined or measured by
the income of the Trustee), incurred without gross negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(5)
or Section 501(6), the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration
under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section 607 shall survive this
Indenture.
SECTION 68. Disqualification; Conflicting Interests.
The Trustee shall be disqualified only where such
disqualification is required by Section 310(b) of the Trust
Indenture Act. Nothing shall prevent the Trustee from filing with
the Commission the application referred to in the second to last
paragraph of Section 310(b) of the Trust Indenture Act.
SECTION 69. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
be eligible to act as Trustee under Section 310(a)(1) of the
Trust Indenture Act having a combined capital and surplus of at
least $50,000,000 subject to supervision or examination by
federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. Neither the Company nor any Person directly or
indirectly controlling, controlled by, or under common control
with the Company may serve as Trustee. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 611.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series, delivered to the Trustee and to the Company. If the
instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(d) If at any time:
(1)the Trustee shall fail to comply with Section 310(b)
of the Trust Indenture Act after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months; or
(2)the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request herefor by the
Company or by any such Holder of a Security who has been a bona
fide Holder of a Security for at least six months; or
(3)the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or (ii)
subject to Section 315(e) of the Trust Indenture Act, any Holder
who has been a bona fide Holder of a security for at least six
months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or
more series, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with
respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company with
respect to such Securities. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by
the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide
Holder of a security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect
to the Securities of any series by mailing written notice of such
event by first-class mail, postage prepaid, to all Holders of
Securities of such series as their names and addresses appear in
the security Register. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor
Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more series
shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect
to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in
such supplemental Indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under the Trust Indenture Act.
SECTION 612. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of
the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver
the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims
Against Company.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship listed in
Section 311(b) of the Trust Indenture Act. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding
the Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be
authorized to act on behalf of, and subject to the direction of,
the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption thereof
or pursuant to Section 306, and Securities so authenticated shall
be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture
to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States
of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having
a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or State
authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of
such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of
this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The
Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be
acceptable to the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders
of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses
appear in the security Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the
following form:
Form of Authenticating Agent's
Certificate of Authentication
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK
As Trustee
By: __________________________
As Authenticating Agent
By: __________________________
Authorized Signatory
Dated: ______________
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 71. Company to Furnish Trustee Names and
Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee:
(a) semi-annually, not later than January 1 and July 1 in
each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of the
preceding December 15 or June 15, as the case may be; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any
such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
SECTION 72. Preservation of Information;
Communications to Holders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 701 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar.
The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a
Security for a period of at least six months preceding the date
of such application, and such application states that the
applicants desire to communicate with other Holders with respect
to their rights under this Indenture or under the Securities and
is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit then the
Trustee shall, within five Business Days after the receipt of
such application, at its election, either
(i)afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
702(a); or
(ii) inform such applicants as to the approximate
number of Holders whose names and addresses appear in the
information preserved at the time by the Trustee in accordance
with Section 702(a), and as to the approximate cost of mailing to
such Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Holder whose name and
address appears in the information preserved at the time by the
Trustee in accordance with Section 702(a) a copy of the form of
proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such
applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be
contrary to the best interest of the Holders or would be in
violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining
one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all objections so
sustained have been met and shall enter an order so declaring,
the Trustee shall mail copies of such material to all such
Holders with reasonable promptness after the entry of such order
and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting
their application.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither
the Company nor the Trustee nor any agent of either of them shall
be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in
accordance with Section 702(b), regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Section 702(b).
SECTION 73. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing
with the year 1998, the Trustee shall transmit by mail to all
Holders of Securities as provided in Section 313(c) of the Trust
Indenture Act, a brief report dated as of May 15, if required by
and in compliance with Section 313(a) of the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are listed, with the
Commission and with the Company. The Company will notify the
Trustee when any Securities are listed on any stock exchange.
SECTION 74. Reports by Company.
The Company shall:
(1) file with the Trustee, within 30 days after the
Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission,
in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information, documents
and reports with respect to compliance by the Company with the
conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, (a) concurrently with
furnishing the same to its shareholders, the Company's annual
report to shareholders, containing certified financial
statements, and any other financial reports which the Company
generally furnishes to its shareholders, and (b) within 30 days
after the filing thereof with the Trustee, such summaries of any
other information, documents and reports required to be filed by
the Company pursuant to paragraphs (1) and (2) of this Section as
may be required by rules and regulations prescribed from time to
time by the Commission; and
ARTICLE 8
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER
SECTION 81. When Company May Merge, Etc.
The Company shall not consolidate with, or merge with or
into any other corporation (whether or not the Company shall be
the surviving corporation), or sell, assign, transfer or lease
all or substantially all of its properties and assets as an
entirety or substantially as an entirety to any Person or group
of affiliated Persons, in one transaction or a series of related
transactions, unless:
(1) either the Company shall be the continuing Person or
the Person (if other than the Company) formed by such
consolidation or with which or into which the Company is merged
or the Person (or group of affiliated Persons) to which all or
substantially all the properties and assets of the Company as an
entirety or substantially as an entirety are sold, assigned,
transferred or leased shall be a corporation (or constitute
corporations) organized and existing under the laws of the United
States of America or any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture; and
(2) immediately before and after giving effect to such
transaction or series of related transactions, no Event of
Default, and no Default, shall have occurred and be continuing.
SECTION 82. Opinion of Counsel.
The Company shall deliver to the Trustee prior to the
proposed transaction(s) covered by Section 801 an Officer's
Certificate and an Opinion of Counsel stating that the
transaction(s) and such supplemental indenture comply with this
Indenture and that all conditions precedent to the consummation
of the transaction(s) under this Indenture have been met.
SECTION 83. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the
Company into an other corporation or any lease, sale, assignment,
or transfer of all or substantially all of the property and
assets of the Company in accordance with Section 801, the
successor corporation formed by such consolidation or into which
the Company is merged or the successor corporation or affiliated
group of corporations to which such lease, sale, assignment, or
transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
or corporations had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor
corporation or corporations shall be relieved of all obligations
and covenants under this Indenture and the Securities and in the
event of such conveyance or transfer, except in the case of a
lease, any such predecessor corporation may be dissolved and
liquidated. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of
Ingersoll-Rand Company any or all of the Securities of any series
issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee; and, upon the order
of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver
Securities of any series which previously shall have been signed
and delivered by the officers of the Company to the Trustee for
authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to
the Trustee for that purpose. All the Securities of any series
so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities of such series
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance
or lease such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 91. Supplemental Indentures Without Consent
of Holders.
Without notice to or the consent of any Holders, the
Company, when authorized by a Board Resolution, and the Trustee,
at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being
included solely for the benefit of series) or to surrender any
right or power herein conferred upon the Company; or
(3) to add any additional Events of Default with respect to
all or any series of Securities; or
(4) to add or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in bearer form, registrable
or not registrable as to principal, and with or without interest
coupons; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall
become effective only when there is no Security Outstanding of
any series created prior to the execution of such supplemental
Indenture which is entitled to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section
611(b); or
(9) to cure any ambiguity, defect or inconsistency or to
correct or supplement any provision herein which may be
inconsistent with any other provision herein; or
(10) to make any change that does not materially adversely
affect the interests of the Holders of Securities of any series.
Upon request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental
indenture, and upon receipt by the Trustee of the documents
described in (and subject to the last sentence of) Section 903,
the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of
this Indenture.
SECTION 92. Supplemental Indentures with Consent of
Holders.
With the written consent of the Holders of a majority in
principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders
delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee shall, subject
to Section 903, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture;
provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any security, or
reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof or
extend the time for payment thereof, or reduce the amount of the
principal of an Original Issue Discount security that would be
due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502, or change any Place of
Payment where, or the coin or currency in which, any security or
any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver of compliance
with certain provisions of this Indenture or Defaults or Events
of Default hereunder and their consequences provided for in this
Indenture; or
(3) change the redemption provisions (including Article
Eleven) hereof in a manner adverse to such Holder; or
(4) modify any of the provisions of this Section or Section
513, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and
concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b)
and 901(8).
A supplemental indenture which changes or eliminates any
covenant or other provisions of this Indenture which as expressly
been included solely for the benefit of one or more particular
series of Securities, or which modifies the rights of the Holders
of Securities of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
SECTION 93. Execution of Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized
pursuant to this Article, subject to the last sentence of this
Section 903. In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article
or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject
to Section 601) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 94. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance
therewith, and such supplemental Indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 95. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
SECTION 96. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after
the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to
conform, ln the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the
Company and authenticate and delivered by the Trustee in exchange
for Outstanding Securities of such series.
ARTICLE 10
COVENANTS
SECTION 101. Payments of Securities.
With respect to each series of Securities, the Company will
duly and punctually pay the principal of (and premium, if any)
and interest on such Securities in accordance with their terms
and this Indenture, and will duly comply with all the other
terms, agreements and conditions contained in, or made in the
Indenture for the benefit of, the Securities of such series.
SECTION 102. Maintenance of Office or Agency.
The Company will maintain an office or agency in each Place
of Payment where Securities may be surrendered for registration
of transfer or exchange or for presentation for payment, where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and
any change ln location, of such office or agency. If at any time
the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the address of the Trustee as set forth in
Section 105 hereof and the Company hereby appoints the Trustee as
its agent to receive all presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations. The Company will give prompt
written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
SECTION 103. Compliance Certificates.
The Company will deliver to the Trustee on or before May 15
in each year ending after the date hereof, an Officers'
Certificate stating that in the course of the performance by each
signer of his duties as an officer of the Company he would
normally have knowledge of any default by the Company in the
performance and observance of any of the covenants contained in
Sections 1005 and 1006, stating whether or not he has knowledge
of any such default and, if so, specifying each such default of
which such signer has knowledge and the nature thereof.
SECTION 104. Money for Securities Payments to Be Held
in Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before
each due date of the principal of (and premium, if any) or
interest on any of the Securities of that series, segregate and
hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents
for any series of Securities, it will, prior to each due date of
the principal of (and premium, if any) or interest on any
Securities of that series, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure to so act.
The Company will cause each Paying Agent for any series of
Securities (other than the Trustee) to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Section, that such
Paying Agent will:
(i) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities of
that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities of that series) in the
making of any payment of principal (and premium, if any) or
interest on the Securities of that series; and
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the
principal of (and premium, if any) or interest on any security of
any series and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that
the Trustee of such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language,
customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to
the Company.
SECTION 105. Limitation on Liens.
(a) The Company covenants and agrees for the benefit of
each series of Securities, other than any series established by
or pursuant to a Board Resolution or in one or more supplemental
indentures hereto which specifically provides otherwise, that it
will not, and will not permit any Restricted Subsidiary to,
create, assume or guarantee any indebtedness for money borrowed
secured by a Mortgage (i) on any Principal Property of the
Company or of a Restricted Subsidiary or (ii) on any shares or
Funded Indebtedness of a Restricted Subsidiary or (ii) on any
shares or Funded Indebtedness of a Restricted Subsidiary (whether
such Principal Property, shares or Funded Indebtedness are now
owned or hereafter acquired), without, in any such case,
effectively providing concurrently with the creation, assumption
or guaranteeing of such indebtedness that the Securities
(together, if the Company shall so determine, with any other
indebtedness then or thereafter existing, created, assumed or
guaranteed by the Company or such Restricted Subsidiary ranking
equally with the Securities) shall be secured equally and ratably
with (or prior to) such indebtedness; excluding, however, from
the foregoing any indebtedness secured by a Mortgage (including
any extension, renewal or replacement, or successive extensions,
renewals or replacements, of any Mortgage hereinafter specified
or any indebtedness secured thereby, without increase of the
principal of such indebtedness)
(1) on property, shares or Funded Indebtedness of any
corporation existing at the time such corporation becomes a
Restricted Subsidiary; or
(2) on property existing at the time of acquisition thereof
by the Company or a Restricted Subsidiary, or to secure any
indebtedness incurred by the Company or a Restricted Subsidiary
prior to, at the time of, or within 180 days after the later of
the acquisition, the completion of construction (including any
improvements on an existing property) or the commencement of
commercial operation of such property, which indebtedness is
incurred for the purpose of financing all or any part of the
purchase price thereof or construction or improvements thereon;
provided, however, that in the case of any such acquisition,
construction or improvement the Mortgage shall not apply to any
property theretofore owned by the Company or a Restricted
Subsidiary, other than, in the case of any such construction or
improvement, any theretofore unimproved real property on which
the property so constructed, or the improvement, is located; or
(3) on property, shares or Funded Indebtedness of a
corporation existing at the time such corporation is merged into
or consolidated with the Company or a Restricted Subsidiary, or
at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an
entirety to the Company or a Restricted Subsidiary; or
(4) on property of a Restricted Subsidiary to secure
indebtedness of such Restricted Subsidiary to the Company or
another Restricted Subsidiary; or
(5) on property of the Company or a Restricted Subsidiary
in favor of the United States of America or any State thereof, or
any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof,
to secure partial, progress, advance or other payments pursuant
to any contract or statute or to secure any indebtedness incurred
for the purpose of financing all or any part of the purchase
price or the cost of constructing or improving the property
subject to such Mortgage; or
(6) existing at the date of this Indenture;
provided, however, that any Mortgage permitted by any of the
foregoing clauses (1), (2), (3) and (5) of this Section 1005 (a)
shall not extend to or cover any property of the Company or such
Restricted Subsidiary, as the case may be, other than the
property specified in such clauses and improvements thereto.
(b) Notwithstanding the provisions of subsection (a) of
this Section, the Company or any Restricted Subsidiary may
create, assume or guarantee secured indebtedness for money
borrowed which would otherwise be prohibited in said subsection
(a) in an aggregate amount which, together with all other such
indebtedness for money borrowed of the Company and its Restricted
Subsidiaries and the Attributable Debt of the Company and its
Restricted Subsidiaries in respect of Sale and Leaseback
Transactions (as defined in Section 1006) existing at such time
(other than Sale and Leaseback Transactions entered into prior to
the date of this Indenture and Sale and Leaseback Transactions
the proceeds of which have been applied in accordance with clause
(b) of Section 1006), does not at the time exceed 5% of the
shareholders' equity in the Company and its consolidated
Subsidiaries, as shown on the audited consolidated balance sheet
contained in the latest annual report to shareholders of the
Company.
(c) For the purposes of this Article Ten,
(1) the term "Attributable Debt" shall mean, as of any
particular time, the then present value of the total net amount
of rent required to be paid under such lease during the remaining
term thereof (excluding any renewal term unless the renewal is at
the option of the lessor) computed by discounting from the
respective due dates to such date such total net amount of rent
at the actual interest factor included in such rent, or, if such
interest factor cannot readily be determined, at the rate per
annum borne by the initial series of Securities, except that if
no interest is payable in respect of the initial series of
Securities or if such rate is not fixed then at the rate of %
per annum. The net amount of rent required to be paid for any
such period shall be the aggregate amount of the rent payable by
the lessee with respect to such period after excluding amounts
required to be paid on account of, or measured or determined by,
any variable factor, including, without limitation, the cost-of-
living index and costs of maintenance and repairs, insurance,
taxes, assessments, water rates and similar charges and after
excluding any portion of rentals based on a percentage of sales
made by the lessee. In the case of any lease which is terminable
by the lessee upon the payment of a penalty, such net amount
shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent
to the first date upon which it may be so terminated;
(2) the term "shareholders' equity in the Company and its
consolidated Subsidiaries" shall mean the consolidated capital
and surplus (including retained earnings) of the Company and its
consolidated Subsidiaries, excluding the cost of shares of the
Company held in treasury; and
(3) the term "Mortgage" on any specified property shall
mean any mortgage, lien, pledge, charge or other security
interest or encumbrance of any kind in respect of such property.
SECTION 106 Limitation on Sale and Leaseback
Transactions.
The Company covenants and agrees for the benefit of each
series of Securities, other than any series established by or
pursuant to a Board Resolution or in one or more supplemental
indentures hereto which specifically provides otherwise, that it
will not, and will not permit any Restricted Subsidiary to, enter
into any arrangement with any person for the leasing by the
Company or a Restricted Subsidiary (except for leases for a term
of not more than three years and for leases of a part of a
Principal Property, which has been sold, for use in connection
with the winding up or termination of the business conducted on
such Principal Property, and except, in the case of a Restricted
Subsidiary, a lease to the Company or another Restricted
Subsidiary) of any Principal Property (whether now owned or
hereafter acquired), which Principal Property has been or is
intended to be sold or transferred by the Company or such
Restricted Subsidiary to such person (herein referred to as a
"Sale and Leaseback Transaction"), unless (a) the Company or such
Restricted Subsidiary would be entitled, pursuant to the
provisions of Section 1005, to incur indebtedness secured by a
Mortgage on such Principal Property without equally and ratably
securing the Securities, or (b) the Company shall (and in any
such case the Company covenants that it will) apply an amount
equal to the fair value of such Principal Property so leased (as
determined by the Board of Directors) to the retirement (other
than by payment at maturity or to satisfy the mandatory
requirements of any sinking, purchase or analogous fund or
prepayment provision), within 180 days of the effective date of
any such Sale and Leaseback Transaction, of Securities or other
Funded Indebtedness of the Company or any Restricted Subsidiary
ranking on a parity with the Securities, or to the purchase,
improvement or construction of properties which are Principal
Properties; provided, however, that the amount to be applied to
the retirement of such Funded Indebtedness shall be reduced by
(a) the principal amount of any Securities delivered within 180
days after such sale or transfer to the Trustee for retirement
and cancellation and (b) the principal amount of other Funded
Indebtedness ranking on a parity with the Securities voluntarily
retired by the Company within 180 days after such sale or
transfer; and promptly after the expiration of such 180-day
period the Company shall have delivered to the Trustee an
Officers' Certificate setting forth in reasonable detail all
material facts necessary to show compliance with this Subsection.
SECTION 1008 Waiver of Certain Covenants
The Company may omit in any particular instance to comply
with any term, provision or condition set forth in Sections 1004
and 1005 if before the time for such compliance the Holders of at
least 66-_% in principal amount of the Outstanding Securities of
all series affected by such omission (voting as one class) shall,
by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision
or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the trustee in
respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE 11
REDEMPTION OF SECURITIES
SECTION 111. Applicability of Article.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by
Section 301 for Securities of any series) in accordance with this
Article.
SECTION 112. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall
be evidenced by a Board Resolution. In case of any redemption at
the election of the Company of less than all the Securities of
any series, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such
series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere
in this Indenture, the Company shall furnish the Trustee with an
Officer's Certificate evidencing compliance with such
restriction.
SECTION 113. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be
selected not more than 45 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series not
previously called for redemption, substantially pro rata, by lot
or by any other method as the Trustee considers fair and
appropriate and that complies with the requirements of the
principal national securities exchange, if any, on which such
Securities are listed, and which may provide for the selection
for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized
denomination for Securities of that series; provided that in case
the Securities of such series have different terms and
maturities, the Securities to be redeemed shall be selected by
the Company and the Company shall give notice thereof to the
Trustee.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
the Securities shall relate, in the case of any Securities
redeemed or to be redeemed only in part, to the portion of the
principal amount of such Securities which has been or is to be
redeemed.
SECTION 114. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 45 days
prior to the Redemption Date, to each Holder of Securities to be
redeemed, at this address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case
of partial redemption, the principal amounts) of the particular
Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
be come due and payable upon each such security to be redeemed
and, if applicable, that interest thereon will cease to accrue on
and after said date;
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(6) that the redemption is for a sinking fund, if such is
the case;
(7) the CUSIP number, if any, of the Securities to be
redeemed; and
(8) unless otherwise provided as to a particular series of
Securities, if at the time of publication or mailing of any
notice of redemption the Company shall not have deposited with
the Trustee or Paying Agent and/or irrevocably directed the
Trustee or Paying Agent to apply, from money held by it available
to be used for the redemption of Securities, an amount in cash
sufficient to redeem all of the Securities called for redemption,
including accrued interest to the Redemption Date, such notice
shall state that it is subject to the receipt of the redemption
moneys by the Trustee or Paying Agent before the Redemption Date
(unless such redemption is mandatory) and such notice shall be of
no effect unless such moneys are so received before such date.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense
of the Company.
SECTION 115. Deposit of Redemption Price.
Prior to 10:00 a.m. any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1009) an amount of money sufficient
to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all
the Securities which are to be redeemed on that date.
SECTION 116. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified,
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such security for redemption in accordance with said notice, such
security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the
relevant Regular or Special Record Dates according to their terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate prescribed thereof or in the
security.
SECTION 117. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company at a Place of
Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such security without
service charge, a new Security or Securities of the same series
and Stated Maturity, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the
security so surrendered.
ARTICLE 12
SINKING FUNDS
SECTION 121. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series, except
as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for
by the terms of Securities of any series is herein referred to as
a "Mandatory Sinking Fund Payment," and any payment in excess of
such minimum amount provided for by the terms of Securities of
any series is herein referred to as an "Optional Sinking Fund
Payment." If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be
subject to redemption as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities of
any series as provided for by the terms of Securities of such
series.
SECTION 122. Satisfaction of Sinking Fund Payments
with Securities.
The Company (1) may deliver Securities of a series (other
than any Securities previously called for redemption) and (2) may
apply as a credit Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of
such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities,
in each case in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of such series
required to be made pursuant to the terms of such Securities as
provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at
the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
SECTION 123. Redemption of Securities for Sinking
Fund.
Not less than 45 days prior to each sinking fund payment
date for any series of Securities, the Company will deliver to
the Trustee an Officer's Certificate specifying the amount of the
next ensuing sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities
of that series pursuant to Section 1202 and will also deliver to
the Trustee any Securities to be so delivered. Not less than 30
days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section
1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated
in Sections 1106 and 1107.
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 131. Applicability of Article; Company's
Option to Effect Defeasance or Covenant Defeasance.
Unless pursuant to Section 301 provision is made for the
inapplicability of either or both of (a) Defeasance of the
Securities of a series under Section 1302 or (b) Covenant
Defeasance of the Securities of a series under Section 1303, then
the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article, shall be
applicable to the Securities of such series, and the Company may
at its option by Board Resolution, at any time, with respect to
the Securities of such series, elect to have either Section 1302
(unless inapplicable) or Section 1303 (unless inapplicable) be
applied to the Outstanding Securities of such series upon
compliance with the applicable conditions set forth below in this
Article.
SECTION 132. Defeasance and Discharge.
Upon the Company's exercise of the option provided in
Section 1301 to defease the Outstanding Securities of a
particular series, the Company shall be discharged from its
obligations with respect to the Outstanding Securities of such
series on the date the applicable conditions set forth in Section
1304 are satisfied (hereinafter, "Defeasance"). Defeasance shall
mean that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities
of such series and to have satisfied all its other obligations
under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the
same); provided, however, that the following rights, obligations,
powers, trusts, duties and immunities shall survive until
otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive,
solely from the trust fund provided for in Section 1304, payments
in respect of the principal of (and premium, if any) and interest
on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1009, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (D) this Article.
Subject to compliance with this Article, the Company may exercise
its option with respect to Defeasance under this Section 1302
notwithstanding the prior exercise of its option with respect to
Covenant Defeasance under Section 1303 in regard to the
Securities of such series.
SECTION 133. Covenant Defeasance.
Upon the Company's exercise of the option provided in
Section 1301 to obtain a Covenant Defeasance with respect to the
Outstanding Securities of a particular series, the Company shall
be released from its obligations under this Indenture (except its
obligations under Sections 304, 305, 306, 506, 509, 610, 1001,
1002, 1006, 1008 and 1009) with respect to the Outstanding
Securities of such series on and after the date the applicable
conditions set forth in Section 1304 are satisfied (hereinafter,
"Covenant Defeasance"). Covenant Defeasance shall mean that, with
respect to the Outstanding Securities of such series, the Company
may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in this Indenture
(except its obligations under Sections 304, 305, 306, 506, 509,
610, 1001, 1002, 1006, 1008 and 1009), whether directly or
indirectly by reason of any reference elsewhere herein or by
reason of any reference to any other provision herein or in any
other document, and such omission to comply shall not constitute
an Event of Default under Section 501(4) with respect to
Outstanding Securities of such series, and the remainder of this
Indenture and of the Securities of such series shall be
unaffected thereby.
SECTION 134. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to Defeasance under
Section 1302 and Covenant Defeasance under Section 1303 with
respect to the Outstanding Securities of a particular series:
(1) the Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 609 who shall agree to comply with
the provisions of this Article applicable to it), under the terms
of an irrevocable trust agreement in form and substance
reasonably satisfactory to such Trustee, as trust funds in trust
for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities, (A) Dollars in an amount, or (B)
U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with
their terms will provide, not later than the due date of any
payment, money in an amount, or (C) a combination thereof, in
each case sufficient, after payment of all federal, state and
local taxes or other charges or assessments in respect thereof
payable by the Trustee, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal of
(and premium, if any, on) and each installment of principal of
(and premium, if any) and interest on the Outstanding Securities
of such series on the Stated Maturity of such principal or
installment of principal or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to the
Outstanding Securities of such series on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and of such Securities.
(2) No Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing
on the date of such deposit or shall occur as a result of such
deposit, and no Default or Event of Default under clause (5) or
(6) of Section 501 hereof shall occur and be continuing, at any
time during the period ending on the 31st day after the date of
such deposit (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(3) Such deposit, Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default
under, any other agreement or instrument to which the Company is
a party or by which it is bound.
(4) Such Defeasance or Covenant Defeasance shall not cause
any Securities of such series then listed on any national
securities exchange registered under the Exchange Act to be
delisted.
(5) In the case of an election with respect to Section
1302, the Company shall have delivered to the Trustee either (A)
a ruling directed to the Trustee received from the Internal
Revenue Service to the effect that the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such Defeasance
and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case
if such Defeasance had not occurred or (B) an Opinion of Counsel,
based on such ruling or on a change in the applicable federal
income tax law since the date of this Indenture, in either case
to the effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Securities of such series
will not recognize income, gain or loss for federal income tax
purposes as a result of such Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Defeasance had
not occurred.
(6) In the case of an election with respect to Section
1303, the Company shall have delivered to the Trustee an Opinion
of Counsel or a ruling directed to the Trustee received from the
Internal Revenue Service to the effect that the Holders of the
Outstanding Securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not
occurred.
(7) Such Defeasance or Covenant Defeasance shall be
effected in compliance with any additional terms, conditions or
limitations which may be imposed on the Company in connection
therewith pursuant to Section 301.
(8) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for relating to either the
Defeasance under Section 1302 or the Covenant Defeasance under
Section 1303 (as the case may be) have been complied with.
SECTION 135. Deposited Money and Government
Obligations To Be Held In Trust.
Subject to the provisions of the last paragraph of Section
1009, all money and Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying
trustee--collectively for purposes of this Section 1305, the
"Trustee") pursuant to Section 1304 in respect of the Outstanding
Securities of a particular series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the
Government Obligations deposited pursuant to Section 1304 or the
principal and interest received in respect thereof, other than
any such tax, fee or other charge which by law is for the account
of the Holders of the Outstanding Securities of such series.
Anything in this Article to the contrary notwithstanding,
the Trustee shall deliver to pay to the Company from time to time
upon Company Request any money or Government Obligations held by
it as provided ln Section 1304 which, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be
required to be deposited for the purpose for which such money or
Government Obligations were deposited.
ARTICLE 14
MISCELLANEOUS
SECTION 141. Miscellaneous.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
INGERSOLL-RAND COMPANY
By ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
Attest:
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By __________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 23, 1998
between
INGERSOLL-RAND COMPANY
AS ISSUER
and
THE BANK OF NEW YORK
AS TRUSTEE
TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS 1
SECTION 1.1. Definition of Terms 1
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES 3
SECTION 2.1. Designation and Principal Amount 3
SECTION 2.2. Maturity 3
SECTION 2.3. Form and Payment 3
SECTION 2.4. Global Debenture 3
SECTION 2.5. Interest 4
ARTICLE III
REDEMPTION OF THE DEBENTURES 5
SECTION 3.1. Tax Event Redemption 5
SECTION 3.2. Redemption Procedure for Debentures 5
SECTION 3.3. No Sinking Fund 6
SECTION 3.4. Option to Put Debentures upon a Failed Remarketing 6
SECTION 3.5. Repurchase Procedure for Debentures 6
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD 6
SECTION 4.1. Extension of Interest Payment Period 6
SECTION 4.2. Notice of Extension 7
ARTICLE V
EXPENSES 8
SECTION 5.1. Payment of Expenses 8
SECTION 5.2. Payment Upon Resignation or Removal 8
ARTICLE VI
NOTICE 8
SECTION 6.1. Notice by the Company 8
ARTICLE VII
FORM OF DEBENTURE 9
SECTION 7.1. Form of Debenture 9
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES 17
SECTION 8.1. Original Issue of Debentures 17
ARTICLE IX
MISCELLANEOUS 17
SECTION 9.1. Ratification of Indenture 17
SECTION 9.2. Trustee Not Responsible for Recitals 17
SECTION 9.3. Governing Law 17
SECTION 9.4. Separability 17
SECTION 9.5. Counterparts. 17
SECTION 9.6. Guarantee and Declaration 18
ARTICLE X
REMARKETING 18
SECTION 10.1. Effectiveness of this Article. 18
SECTION 10.2. Remarketing Procedures. 18
FIRST SUPPLEMENTAL INDENTURE, dated as of March 23, 1998
(the "First Supplemental Indenture"), between INGERSOLL-RAND
COMPANY, a corporation duly organized and existing under the laws
of the State of New Jersey, (the "Company"), and The Bank of New
York, as trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture
dated as of March 23, 1998 (the "Base Indenture"), to the Trustee
to provide for the future issuance of the Company's senior
unsecured debentures, notes or other evidence of indebtedness
(the "Securities"), to be issued from time to time in one or more
series as might be determined by the Company under the Base
Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the
Company desires to provide for the establishment of a new series
of its Securities to be known as its 6.22% Debentures due May 16,
2003 (the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be
set forth as provided in the Base Indenture and this First
Supplemental Indenture (together, the "Indenture");
WHEREAS, Ingersoll-Rand Financing I, a Delaware statutory
business trust (the "Trust"), has offered to the public its 6.22%
Capital Securities (the "Capital Securities"), representing,
undivided beneficial ownership interests in the assets of the
Trust, and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust
to the Company of its 6.22% Common Securities (the "Common
Securities" and together with the Capital Securities, the "Trust
Securities"), in the Debentures; and
WHEREAS, the Company has requested that the Trustee execute
and deliver this First Supplemental Indenture and all
requirements necessary to make this First Supplemental Indenture
a valid instrument in accordance with its terms, and to make the
Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company
and all acts and things necessary have been done and performed to
make this First Supplemental Indenture enforceable in accordance
with its terms, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and
acceptance of the Debentures by the Holders thereof, and for the
purpose of setting forth, as provided in the Indenture, the form
and substance of the Debentures and the terms, provisions and
conditions thereof, the Company covenants and agrees with the
Trustee as follows:
ARTICLE I.
DEFINITIONS
SECTION I.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning
when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental
Indenture has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do
not affect interpretation;
(e) the following terms have the meanings given to them in
the Declaration: (i) Applicable Principal Amount; (ii)Authorized
Newspaper; (iii) Business Day; (iv) Clearing Agency; (v) Delaware
Trustee; (vi) DTC; (vii) FELINE PRIDES; (viii) Growth PRIDES;
(ix) Income PRIDES; (x) Institutional Trustee; (xi) Investment
Company Event; (xii) Capital Security Certificate; (xiii) Pricing
Agreement; (xiv) Purchase Agreement; (xv) Put Option (xvi)
Quotation Agent; (xvii) Regular Trustees; (xviii) Redemption
Amount, (xix) Reset Agent; (xx) Reset Announcement Date; (xxi)
Reset Spread;(xxii) Tax Event; (xxiii) Tax Event Redemption Date;
(xxvi) Treasury Portfolio Purchase Price; (xxv) Treasury
Portfolio; and (xxvi) Treasury Securities and (xxvii) Two-Year
Benchmark Treasury.
(f) the following terms have the meanings given to them in
this Section 1.11(f):
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section
2.5.
"Custodial Agent" means Chase Manhattan Bank, as Custodial
Agent.
"Debenture Repayment Price" shall have the meaning set forth
in Section 3.4.
"Declaration" means the Amended and Restated Declaration of
Trust of Ingersoll-Rand Financing I, a Delaware statutory
business trust, dated as of March 23, 1998.
"Deferred Interest" shall have the meaning set forth in
Section 4.1 hereof.
"Dissolution Event" means that, as a result of the
occurrence and continuation of a Tax Event, an Investment Company
Event or otherwise, the Trust is to be dissolved in accordance
with the Declaration, and, except in the case of a Tax Event
Redemption, the Debentures held by the Institutional Trustee are
to be distributed to the holders of the Trust Securities issued
by the Trust pro rata in accordance with the Declaration.
"Exchange Agent" means the Institutional Trustee.
"Extended Interest Payment Period" shall have the meaning
set forth in Section 4.1.
"Failed Remarketing" shall have the meaning set forth in
Section 5.4(b) of the Purchase Contract Agreement.
"Global Debentures" shall have the meaning set forth in
Section 2.4.
"Non Book-Entry Capital Securities" shall have the meaning
set forth in Section 2.4 .
"Pledge Agreement" means the Pledge Agreement dated as of
March 23, 1998, among the Company, the Trust, Chase Manhattan
Bank, as collateral agent and The Bank of New York, as purchase
contract agent.
"Purchase Contract" shall have the meaning set forth in the
Purchase Contract Agreement, dated as of March 23, 1998, between
the Company and The Bank of New York, as purchase contract agent.
"Purchase Contract Settlement Date" means May 16, 2001.
"Remarketing Agent" means Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
"Remarketing Agreement" means the Remarketing Agreement,
dated as of March 23, 1998, among the Company, the Trust, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as remarketing agent and The Bank of New York, as purchase
contract agent.
"Remarketing Date" shall have the meaning set forth in the
Remarketing Agreement.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION II.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated
the 6.22% Debentures (the "Debentures") due May 16, 2003,
limited in aggregate principal amount to $414,948,475, which
amount shall be as set forth in any written order of the Company
for the authentication and delivery of Debentures pursuant to
Section 303 of the Base Indenture.
SECTION II.2. Maturity. The Maturity Date will be May 16, 2003.
SECTION II.3. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be
issued in fully registered certificated form without interest
coupons, bearing identical terms. Principal and interest on the
Debentures issued in certificated form will be payable, the
transfer of such Debentures will be registrable and such
Debentures will be exchangeable for Debentures bearing identical
terms and provisions at the office or agency of the Institutional
Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Holder at
such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of any
Debentures is the Institutional Trustee, the payment of the
principal of and interest (including Compounded Interest and
expenses and taxes of the Trust set forth in Section 4.1 hereof,
if any) on such Debentures held by the Institutional Trustee will
be made at such place and to such account as may be designated by
the Institutional Trustee.
SECTION II.4. Global Debenture.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be
presented to the Trustee by the Institutional Trustee in exchange
for a global Debenture in an aggregate principal amount equal to
the aggregate principal amount of all outstanding Debentures (a
"Global Debenture"), to be registered in the name of the Clearing
Agency, or its nominee, and delivered by the Institutional
Trustee to the Clearing Agency for crediting to the accounts of
its participants pursuant to the instructions of the Regular
Trustees. The Company upon any such presentation shall execute
a Global Debenture in such aggregate principal amount and deliver
the same to the Trustee for authentication and delivery in
accordance with the Indenture. Payments on the Debentures issued
as a Global Debenture will be made to the Clearing Agency; and
(ii) if any Capital Securities are held in non book-
entry certificated form, the Debentures in certificated form may
be presented to the Trustee by the Institutional Trustee and any
Capital Security Certificate which represents Capital Securities
other than Capital Securities held by the Clearing Agency or its
nominee ("Non Book-Entry Capital Securities") will be deemed to
represent beneficial interests in the Debentures presented to the
Trustee by the Institutional Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the
Non Book-Entry Capital Securities until such Capital Security
Certificates are presented to the Security Registrar for transfer
or reissuance at which time such Capital Security Certificates
will be cancelled and a Debenture, registered in the name of the
holder of the Capital Security Certificate or the transferee of
the holder of such Capital Security Certificate, as the case may
be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Security Certificate
cancelled, will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with the
Indenture to such holder. On issue of such Debentures,
Debentures with an equivalent aggregate principal amount that
were presented by the Institutional Trustee to the Trustee will
be deemed to have been cancelled.
(b) Unless and until it is exchanged for the Debentures in
registered form, a Global Debenture may be transferred, in whole
but not in part, only to another nominee of the Clearing Agency,
or to a successor Clearing Agency selected or approved by the
Company or to a nominee of such successor Clearing Agency.
(c) If at any time the Clearing Agency notifies the Company
that it is unwilling or unable to continue as a Clearing Agency
or if at any time the Clearing Agency for such series shall no
longer be registered or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or
regulation, and a successor Clearing Agency for such series is
not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the
case may be, the Company will execute, and, subject to Article
III of the Indenture, the Trustee, upon written notice from the
Company, will authenticate and deliver the Debentures in
definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such
Global Debenture. In addition, the Company may at any time
determine that the Debentures shall no longer be represented by a
Global Debenture. In such event the Company will execute, and
subject to Section 3.3 of the Base Indenture, the Trustee, upon
receipt of an Officer's Certificate evidencing such determination
by the Company, will authenticate and deliver the Debentures in
definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such
Global Debenture. Upon the exchange of the Global Debenture for
such Debentures in definitive registered form without coupons, in
authorized denominations, the Global Debenture shall be cancelled
by the Trustee. Such Debentures in definitive registered form
issued in exchange for the Global Debenture shall be registered
in such names and in such authorized denominations as the
Clearing Agency, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Securities to the Clearing Agency
for delivery to the Persons in whose names such Securities are so
registered.
SECTION II.5. Interest.
(a) Each Debenture will bear interest initially at the rate
of 6.22% per annum (the "Coupon Rate") from the original date of
issuance until May 15, 2001, and at the Reset Rate thereafter
until the principal thereof becomes due and payable, and on any
overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate until May 15, 2001 and
at the Reset Rate thereafter, compounded quarterly, payable
(subject to the provisions of Article IV herein) quarterly in
arrears on February 16, May 16, August 16 and November 16 of
each year (each, an "Interest Payment Date") commencing on May
16, 1998, to the Person in whose name such Debenture or any
predecessor Debenture is registered, at the close of business on
the Regular Record Date for such interest installment, which, in
respect of (i) Debentures of which the Institutional Trustee is
the Holder and the Capital Securities are in book-entry only form
or (ii) a Global Debenture, shall be the close of business on the
Business Day next preceding that Interest Payment Date.
Notwithstanding the foregoing sentence, if (i) the Debentures are
held by the Institutional Trustee and the Capital Securities are
no longer in book-entry only form or (ii) the Debentures are not
represented by a Global Debenture, the Company may select a
Regular Record Date for such interest installment which shall be
more than one Business Day but less than 60 Business Days prior
to an Interest Payment Date.
(b) The Coupon Rate on the Debentures will be reset on the
third Business Day immediately preceding the Purchase Contract
Settlement Date to the Reset Rate (which Reset Rate will become
effective on and after the Purchase Contract Settlement Date).
On the tenth (10) Business Day immediately preceding the Purchase
Contract Settlement Date, the Reset Announcement Date, the Reset
Spread and the relevant Two-Year Benchmark Treasury will be
announced by the Company. On the Business Day immediately
following such Reset Announcement Date, the Holders of Debentures
will be notified of such Reset Spread and Two-Year Benchmark
Treasury by the Company. Such notice shall be sufficiently given
to such Holders of Debentures if published in an Authorized
Newspaper.
(c) Not later than seven calendar days nor more than 15
calendar days immediately preceding the Reset Announcement Date,
the Company will request that the Clearing Agency or its nominee
(or any successor Clearing Agency or its nominee) or the
Institutional Trustee, notify the Holders of Debentures of such
Reset Announcement Date and the procedures to be followed by such
holders of Debentures wishing to settle the related Purchase
Contract with separate cash on the Business Day immediately
preceding the Purchase Contract Settlement Date.
(d) The amount of interest payable for any period will be
computed on the basis of a 360-day year consisting of twelve
30-day months. Except as provided in the following sentence, the
amount of interest payable for any period shorter than a full
quarterly period for which interest is computed, will be computed
on the basis of the actual number of days elapsed in such a
90-day period. In the event that any date on which interest is
payable on the Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such
date.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION III.1. Tax Event Redemption.
If a Tax Event shall occur and be continuing, the Company
may, at its option, redeem the Debentures in whole (but not in
part) at any time at a Redemption Price per Debenture equal to
the Redemption Amount plus accrued and unpaid interest thereon,
including Compounded Interest and the expenses and taxes of the
Trust set forth in Section 4.1 hereof, if any, to the date of
such redemption (the "Tax Event Redemption Date"). If, following
the occurrence of a Tax Event, the Company exercises its option
to redeem the Debentures, then the proceeds of such redemption,
if distributed to the Institutional Trustee as the sole Holder of
such Debentures, will be applied by the Institutional Trustee to
redeem Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so
redeemed, at the Redemption Price. If, following the occurrence
of a Tax Event prior to the Purchase Contract Settlement Date,
the Company exercises its option to redeem the Debentures, the
Company shall appoint the Quotation Agent to assemble the
Treasury Portfolio in consultation with the Company. Notice of
any redemption will be mailed at least 30 days but not more than
60 days before the Tax Event Redemption Date to each registered
Holder of the Debentures to be prepaid at its registered address.
Unless the Company defaults in payment of the Redemption Price,
on and after the redemption date interest shall cease to accrue
on such Debentures.
SECTION III.2. Redemption Procedure for Debentures.
Payment of the Redemption Price to each Holder of Debentures
shall be made by the Paying Agent, no later than 12:00 noon, New
York City time, on the Tax Event Redemption Date, by check or
wire transfer in immediately available funds at such place and to
such account as may be designated by each such Holder of
Debentures, including the Institutional Trustee or the Collateral
Agent, as the case may be. If the Trustee holds immediately
available funds sufficient to pay the Redemption Price of the
Debentures (or, if the Company is acting as Paying Agent or the
Institutional Trustee has received the Redemption Price), then,
on such Tax Event Redemption Date, such Debentures will cease to
be outstanding and interest thereon will cease to accrue, whether
or not such Debentures have been received by the Company, and all
other rights of the Holder in respect of the Debentures shall
terminate and lapse (other than the right to receive the
Redemption Price upon delivery of such Debentures but without
interest on such Redemption Price).
SECTION III.3. No Sinking Fund.
The Debentures are not entitled to the benefit of any
sinking fund.
SECTION III.4. Option to Put Debentures upon a Failed
Remarketing.
If a Failed Remarketing (as described in Section 5.4(b) of
the Purchase Contract Agreement and incorporated herein by
reference) has occurred, each holder of Securities who holds such
Securities on the day immediately following the Purchase Contract
Settlement Date, shall, upon at least three Business Days' prior
notice, have the right (the "Put Option") on the Business Day
immediately following May 16, 2001, to require the Trust to
distribute their pro rata share of Debentures to the Exchange
Agent and to require the Exchange Agent to put such Debentures,
on behalf of such holders on June 1, 2001 (the "Put Option
Exercise Date") at a repayment price of $25 per Security plus an
amount equal to the accrued and unpaid Distributions (including
deferred distributions, if any) thereon to the date of payment
(the "Debenture Repayment Price").
SECTION III.5. Repurchase Procedure for Debentures.
(a) In order for the Debentures to be repurchased on
the Put Option Exercise Date, the Company must receive on or
prior to 5:00 p.m. New York City time on the third Business Day
immediately preceding the Put Option Exercise Date, at the
principal executive offices of Ingersoll-Rand Company in
Woodcliff Lake, New Jersey, the Debentures to be repurchased with
the form entitled "Option to Elect Repayment" on the reverse of
or otherwise accompanying such Debentures duly completed. Any
such notice received by the Trustee shall be irrevocable. All
questions as to the validity, eligibility (including time of re
ceipt) and acceptance of the Debentures for repayment shall be
determined by the Company, whose determination shall be final and
binding.
(b) Payment of the Debenture Repayment Price to the
Exchange Agent shall be made through the Trustee, subject to the
Trustee's receipt of payment from the Company in accordance with
the terms of the Indenture either through the Trustee or the
Company acting as Paying Agent, no later than 12:00 noon, New
York City time, on the Put Option Exercise Date, and to such ac
count as may be designated by the Exchange Agent. If the Trustee
holds immediately available funds sufficient to pay the Debenture
Repayment Price of the Debentures presented for repayment (or, if
the Company is acting as Paying Agent and the Institutional
Trustee has received the Debenture Repayment Price), then,
immediately prior to the close of business on the Business Day
immediately preceding the Put Option Exercise Date, such
Debentures will cease to be outstanding and interest thereon will
cease to accrue, whether or not such Debentures have been
received by the Company, and all other rights of the Holder in
respect of the Debentures, including the Holder's right to
require the Company to repay such Debentures, shall terminate and
lapse (other than the right to receive the Debenture Repayment
Price upon delivery of such Debentures but without interest on
such Debenture Repayment Price). Neither the Trustee nor the
Company will be required to register or cease to be registered
the transfer of any Debenture for which repayment has been elect
ed.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION IV.1. Extension of Interest Payment Period.
The Company shall have the right at any time, and from time
to time, during the term of the Debentures, to defer payments of
interest by extending the interest payment period of such
Debentures for a period not extending, in the aggregate, beyond
the Maturity Date of the Debentures (the "Extended Interest
Payment Period"), during which Extended Interest Payment Period
no interest shall be due and payable. To the extent permitted by
applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant
to this Section 4.1, will bear interest thereon at the rate of
6.22% until May 15, 2001, and at the Reset Rate thereafter
compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the
Extended Interest Payment Period, the Company shall pay all
interest accrued and unpaid on the Debentures, including any
expenses and taxes of the Trust set forth in Section 5.1 hereof
and Compounded Interest (together, "Deferred Interest") that
shall be payable to the Holders of the Debentures in whose names
the Debentures are registered in the Security Register on the
first record date after the end of the Extended Interest Payment
Period; provided, however, that during any such Extended Interest
Payment Period, (a) the Company shall not declare or pay
dividends on or make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or
acquisitions of capital stock of the Company in connection with
the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on
the date of such event requiring the Company to purchase capital
stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one
class or series of the Company's capital stock for another class
or series of the Company capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan or the declaration thereunder of
a dividend of rights in the future), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the
Company that rank junior to the Debentures, and (c) the Company
shall not make any guarantee payments with respect to the
foregoing (other than payments pursuant to the Guarantee). Prior
to the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided that such period
together with all such previous and further extensions thereof
shall not extend beyond the Maturity Date of the Debentures.
Upon the termination of any Extended Interest Payment Period and
the payment of all Deferred Interest then due, the Company may
commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable
during an Extended Interest Payment Period, except at the end
thereof, but the Company, at its option, may prepay on any
Interest Payment Date all or any portion of the interest accrued
during the then elapsed portion of an Extended Interest Payment
Period.
SECTION IV.2. Notice of Extension.
(a) If the Institutional Trustee is the only registered
Holder of the Debentures at the time the Company selects an
Extended Interest Payment Period, the Company shall give written
notice to the Regular Trustees, the Institutional Trustee and the
Trustee of its selection of such Extended Interest Payment Period
one Business Day before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the
Trust are payable, or (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are
payable, to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Capital
Securities issued by the Trust, but in any event at least one
Business Day before such record date.
(b) If the Institutional Trustee is not the only Holder of
the Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give the Holders of
the Debentures and the Trustee written notice of its selection of
such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of
the record or payment date of such interest payment to the New
York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Debentures.
ARTICLE V
EXPENSES
SECTION V.1. Payment of Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with
the sale of the Trust Securities by the Trust, the Company, in
its capacity as borrower with respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Debentures, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and
the Pricing Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 607 of the
Base Indenture;
(b) pay all costs and expenses of the Trust including, but
not limited to, costs and expenses relating to the organization
of the Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the underwriters in
connection therewith), the fees and expenses of the Institutional
Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of
Trust assets) to which the Trust might become subject;
(c) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and
all liabilities, costs and expenses with respect to such taxes of
the Trust.
SECTION V.2. Payment Upon Resignation or Removal.
Upon termination of this First Supplemental Indenture or the
Base Indenture or the removal or resignation of the Trustee, the
Company shall pay to the Trustee all amounts accrued to the date
of such termination, removal or resignation. Upon termination of
the Declaration or the removal or resignation of the Delaware
Trustee or the Institutional Trustee, as the case may be, the
Company shall pay to the Delaware Trustee or the Institutional
Trustee, as the case may be, all amounts accrued to the date of
such termination, removal or resignation.
ARTICLE VI
NOTICE
SECTION VI.1. Notice by the Company.
The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the
Company that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Debentures pursuant to the
provisions of this Article VI. Notwithstanding any of the
provisions of the Base Indenture and this First Supplemental
Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of the Base Indenture;
provided, however, that if the Trustee shall not have received
the notice provided for in this Article VI at least two Business
Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any)
or interest on any Debenture), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the
purposes for which they were received, and shall not be affected
by any notice to the contrary that may be received by it within
two Business Days prior to such date.
ARTICLE VII
FORM OF DEBENTURE
SECTION VII.1. Form of Debenture.
The Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in
the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - THIS
DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF THE CLEARING AGENCY OR A NOMINEE OR THE CLEARING AGENCY. THIS
DEBENTURE IS EXCHANGEABLE FOR DEBENTURES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS DEBENTURE (OTHER THAN A TRANSFER OF THIS
DEBENTURE AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE
CLEARING AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE
CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE
REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT AND ANY DEBENTURE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
No.__________________________________
$ __________________________________
INGERSOLL-RAND COMPANY
6.22% DEBENTURE
DUE May 16, 2003
INGERSOLL-RAND COMPANY, a New Jersey corporation (the
"Company", which term includes any successor corporation under
the Indenture hereinafter referred to), for value received,
hereby promises to pay to______________________________, the
principal sum of _______________________________________________
($______________) on May 16, 2003 (such date is hereinafter
referred to as the "Maturity Date"), and to pay interest on said
principal sum from March 23, 1998, or from the most recent
interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on
February 16, May 16, August 16 and November 16 of each year,
commencing on May 16, 1998, initially at the rate of 6.22% per
annum until May 15, 2001, and at the Reset Rate thereafter until
the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the rate of 6.22% until May 15, 2001, and at the
Reset Date thereafter, compounded quarterly. The interest rate
will be reset on the third business day preceding May 16, 2001 to
the Reset Rate (as determined by the Reset Agent). The amount of
interest payable on any Interest Payment Date shall be computed
on the basis of a 360-day year consisting of twelve 30-day
months. In the event that any date on which interest is payable
on this Debenture is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Debenture (or one or
more Predecessor Securities, as defined in said Indenture) is
registered at the close of business on the regular record date
for such interest installment which in the case of a Global
Debenture shall be the close of business on the business day next
preceding such Interest Payment Date; provided, however, if
pursuant to the terms of the Indenture the Debentures are no
longer represented by a Global Debenture, the Company may select
such regular record date for such interest installment which
shall be more than one Business Day but less than 60 Business
Days prior to an Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such
regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders
of this series of Debentures not less than 10 days prior to such
special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and
upon such notice as may be required by such exchange all as more
fully provided in the Indenture. The principal of (and premium,
if any) and the interest on this Debenture shall be payable at
the office or agency of the Trustee maintained for that purpose
in any coin or currency of the United States of America that at
the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the
registered Holders at such address as shall appear in the
Security Register or by wire transfer to an account appropriately
designated by the Holders entitled thereto. Notwithstanding the
foregoing, so long as the Holder of this Debenture is the
Institutional Trustee or the Collateral Agent, the payment of the
principal of (and premium, if any) and interest on this Debenture
will be made at such place and to such account as may be
designated in writing by the Institutional Trustee or the
Collateral Agent.
The indebtedness evidenced by this Debenture is, to the
extent provided in the Indenture, senior and unsecured and will
rank in right of payment on parity with all other senior
unsecured obligations of the Company.
This Debenture shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this instrument
to be executed.
Dated: March 23, 1998
INGERSOLL-RAND COMPANY
By: __________________________
Name:
Title:
By: ____________________
Name:
Title:
Attest:
By: _________________________________________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures
described in the within-mentioned Indenture.
Dated ______________________________________________________
The Bank of New York
as Trustee
By ________________________________________________________
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities
of the Company (herein sometimes referred to as the
"Securities"), specified in the Indenture, all issued or to be
issued in one or more series under and pursuant to an Indenture
dated as of March 23, 1998 (the "Base Indenture"), duly executed
and delivered between the Company and The Bank of New York, as
Trustee (the "Trustee") (as supplemented by a First Supplemental
Indenture, dated March 23, 1998), (the Base Indenture as so
supplemented, the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and
the Holders of the Securities. By the terms of the Indenture,
the Securities are issuable in series that may vary as to amount,
date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Securities is limited
in aggregate principal amount as specified in said First
Supplemental Indenture.
If a Tax Event shall occur and be continuing, the Company may,
at its option, redeem Debentures in whole (but not in part) at
any time at a Redemption Price per Debenture equal to the
Redemption Amount plus accrued and unpaid interest thereon,
including Compounded Interest and expenses and taxes of the Trust
(each as defined herein), if any, to the Tax Event Redemption
Date. The Redemption Price shall be paid to each Holder of the
Debenture by the Company, no later than 12:00 noon, New York City
time, on the Tax Event Redemption Date, by check or wire transfer
in immediately available funds, at such place and to such account
as may be designated by each such Holder.
The Debentures are not entitled to the benefit of any sinking
fund.
If a Failed Remarketing (as described in Section 5.4(b) of the
Purchase Contract Agreement and incorporated herein by reference)
has occurred, each holder of Securities who holds such Securities
on the day immediately following The Purchase Contract Settlement
Date, shall, upon at least three Business Days' prior notice,
have the right (the "Put Option") on the Business Day immediately
following May 16, 2001, to require the Trust to distribute their
pro rata share of Debentures to the Exchange Agent and to require
the Exchange Agent to put such Debentures, on behalf of such
holders on June 1, 2001 (the "Put Option Exercise Date") at a
repayment price of $25 per Security plus an amount equal to the
accrued and unpaid Distributions (including deferred
distributions, if any) thereon to the date of payment (the
"Debenture Repayment Price").
In order for the Debentures to be so repurchased, the Company
must receive, on or prior to 5:00 p.m. New York City Time on the
third Business Day immediately preceding the Put Option Exercise
Date, at the principal executive offices of Ingersoll-Rand
Company in Woodcliff Lake, New Jersey, the Debentures to be
repurchased with the form entitled "Option to Elect Repayment" on
the reverse of or otherwise accompanying such Debentures duly
completed. Any such notice received by the Trustee shall be
irrevocable. All questions as to the validity, eligibility
(including time of receipt) and acceptance of the Debentures for
repayment shall be determined by the Company, whose determination
shall be final and binding. The payment of the Debenture
Repayment Price in respect of such Debentures shall be made,
either through the Trustee or the Company acting as Paying Agent,
no later than 12:00 noon, New York City time, on the Put Option
Exercise Date.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the
Debentures may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture. The
Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures of each
series affected at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of,
among other things, adding any provisions to or changing or
eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying the rights of the Holders
of the Debentures; provided, however, that, among other things,
no such supplemental indenture shall (i) reduce the principal
amount thereof, or reduce the rate or extend the time of payment
of interest thereon (subject to the Company's right to defer such
payments in the manner set forth herein), or reduce any premium
payable upon the redemption thereof, without the consent of the
Holder of each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debentures, the Holders of which are
required to consent to any such supplemental indenture, without
the consent of the Holders of each Debenture then outstanding
and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal
amount of the Securities of any series at the time outstanding
affected thereby, on behalf of all of the Holders of the
Debentures of such series, to waive a Default or Event of Default
with respect to such series, and its consequences, except a
Default or Event of Default in the payment of the principal of or
premium, if any, or interest on any of the Securities of such
series. Any such consent or waiver by the registered Holder of
this Debenture (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture
issued in exchange for or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and premium, if any, and interest on this
Debenture at the time and place and at the rate and in the money
herein prescribed.
So long as the Company is not in default in the payment of
interest on the Debenture, the Company shall have the right at
any time during the term of the Debentures from time to time to
extend the interest payment period of such Debentures for a
period not extending, in the aggregate, beyond the Maturity Date
of the Debentures (an "Extended Interest Payment Period"). At
the end of an Extended Interest Payment Period, the Company shall
pay all interest then accrued and unpaid (together with the
interest thereon at the rate of 6.22% until May 15, 2001 and at
the Reset Rate thereafter to the extent that payment of such
interest is enforceable under applicable law). In the event that
the Company exercises this right, then (a) the Company shall not
declare or pay dividends or make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in
connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction
by the Company of its obligations pursuant to any contract or
security outstanding on the date of such event requiring the
Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company (or rights to
acquire capital stock) or repurchases or redemptions of capital
stock solely from the issuance or exchange of capital stock or
(v) redemptions or purchases of any rights outstanding under a
shareholder rights plan or the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make
any payment of interest, principal or premium, if any, or repay,
repurchase or redeem any debt securities issued by the Company
that rank junior to the Debentures, and (c) the Company shall not
make any guarantee payments with respect to the foregoing (other
than payments pursuant to the Guarantee). Prior to the
termination of any such Extended Interest Payment Period, the
Company may further extend the interest payment period; provided,
that such Extended Interest Payment Period, together with all
such previous and further extensions thereof, may not extend
beyond the Maturity Date of the Debenture. At the termination of
any such Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any additional amount then
due, the Company may commence a new Extended Interest Payment
Period, subject to the above requirements.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by
the registered Holder hereof on the Security Register of the
Company, upon surrender of this Debenture for registration of
transfer at the office or agency of the Trustee in The City of
New York and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to
the Company or the Trustee duly executed by the registered Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Debentures of authorized denominations and for
the same aggregate principal amount and series will be issued to
the designated transferee or transferees. No service charge will
be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Paying Agent and the
Security Registrar may deem and treat the registered holder
hereof as the absolute owner hereof (whether or not this
Debenture shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the
Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest
due hereon and for all other purposes, and neither the Company
nor the Trustee nor any Paying Agent nor any Security Registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, shareholder, officer or
director, past, present or future, as such, of the Company or of
any predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, merge or consolidate with any
other Person or sell, assign, transfer or lease all or
substantially all of its properties or assets. All such covenants
and limitations are subject to a number of important
qualifications and exceptions. The Company must report
periodically to the Trustee on compliance with the covenants in
the Indenture.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $25 and any integral
multiple thereof. This Global Debenture is exchangeable for
Debentures in definitive form only under certain limited
circumstances set forth in the Indenture. As provided in the
Indenture and subject to certain limitations therein set forth,
Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series of a
different authorized denomination, as requested by the Holder
surrendering the same.
All terms used in this Debenture that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Company to repay $_____ principal amount of the within
Debenture, pursuant to its terms, on the "Put Option Exercise
Date," together with any interest thereon accrued but unpaid to
the date of repayment, to the undersigned at:
(Please print or type name and address of the undersigned)
and to issue to the undersigned, pursuant to the terms of the
Debenture, a new Debenture or Debentures representing the
remaining aggregate principal amount of this Debenture.
For this Option to Elect Repayment to be effective, this
Debenture with the Option to Elect Repayment duly completed must
be received by the Company at Ingersoll-Rand Company, Attn:
Corporate Secretary, 200 Chestnut Ridge Road, Woodcliff Lake, New
Jersey 07679, no later than 5:00 p.m. on June 1, 2001.
Dated: Signature:_______________________________
Signature Guarantee:_______________________________
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Debenture without alternation or enlargement or any change
whatsoever.
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Debenture to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
__________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
__________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
____________________________________________________________
agent to transfer this Debenture on the books of the Trust. The
agent may substitute another to act for him or her.
Date: ____________________________________
Signature: _____________________________
Signature Guarantee: ___________________
(Sign exactly as your name appears on the other side of this Deb
enture)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION VIII.1. Original Issue of Debentures.
Debentures in the aggregate principal amount of $414,948,475
may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the
Company, signed by its Chairman, its Vice Chairman, its
President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
The Company shall file with the Trustee promptly at the end
of each calendar year (i) a written notice specifying the amount
of original issue discount (including daily rates and accrual
periods) accrued on Outstanding Securities as of the end of the
year and (ii) such other specific information relating to such
original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.
ARTICLE IX
MISCELLANEOUS
SECTION IX.1. Ratification of Indenture.
The Indenture as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this
First Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein
provided.
SECTION IX.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and
not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as
to the validity or sufficiency of this First Supplemental
Indenture.
SECTION IX.3. Governing Law.
This First Supplemental Indenture and each Debenture shall
be deemed to be a contract made under the internal laws of the
State of New York, and for all purposes shall be construed in
accordance with the laws of said State.
SECTION IX.4. Separability.
In case any one or more of the provisions contained in this
First Supplemental Indenture or in the Debentures shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this First Supplemental
Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such
invalid or illegal or unenforceable provision had never been
contained herein or therein.
SECTION IX.5. Counterparts.
This First Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same
instrument.
SECTION IX.6. Guarantee and Declaration
The Guarantee and the Declaration shall be deemed to be
specifically described in this First Supplemental Indenture for
purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
ARTICLE X
REMARKETING
SECTION X.1. Effectiveness of this Article.
This Article Ten shall only become effective upon a
Dissolution Event which occurs prior to the Remarketing of the
Capital Securities pursuant to this Agreement. Until such
Dissolution Event, this Article Ten shall have no effect.
SECTION X.2. Remarketing Procedures.
(a) The Company shall request, not later than 15 nor
more than 30 calendar days prior to the Remarketing Date that the
Depositary notify the Holders of the Debentures and the holders
of FELINE PRIDES of the Remarketing and of the procedures that
must be followed if a Holder of Debentures wishes to exercise
such Holder's rights with respect to the Put Option if there is a
Failed Remarketing.
(b) Not later than 5:00 P.M., New York City time, on
the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, each Holder of the Debentures may elect
to have Debentures held by such Holder remarketed. Under Section
5.4 of the Purchase Contract Agreement, Holders of Income PRIDES
that do not give notice of their intention to make a Cash
Settlement of their related Purchase Contracts in the manner
specified in such Section shall be deemed to have consented to
the tender for purchase of the Debentures comprising a component
of such Income PRIDES. Holders of Debentures that are not a
component of Income PRIDES shall give notice of their election to
have such Securities remarketed to the Custodial Agent pursuant
to the Pledge Agreement. Any such notice shall be irrevocable
after 5:00 P.M., New York City time, on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date and
may not be conditioned upon the level at which the Reset Rate is
established. Promptly after 5:30 P.M., New York City time, on
such fifth Business Day, the Trustee, based on the notices
received by it prior to such time (including notices from the
Purchase Contract Agent as to Purchase Contracts as to which Cash
Settlement has been elected), shall notify the Trust, the Company
and the Remarketing Agent of the number of Debentures to be
tendered for purchase.
(c) If any Holder of Income PRIDES does not give a
notice of intention to make a Cash Settlement or gives a notice
of election to tender Debentures as described in Section 10.2(b),
the Debentures of such Holder shall be deemed tendered,
notwithstanding any failure by such Holder to deliver or properly
deliver such Debentures to the Remarketing Agent for purchase.
(d) The right of each Holder to have Debentures
tendered for purchase shall be limited to the extent that (i) the
Remarketing Agent conducts a remarketing pursuant to the terms of
the Remarketing Agreement, (ii) Debentures tendered have not been
called for redemption, (iii) the Remarketing Agent is able to
find a purchaser or purchasers for tendered Debentures and (iv)
such purchaser or purchasers deliver the purchase price therefor
to the Remarketing Agent.
(e) On the Remarketing Date, the Remarketing Agent
shall use commercially reasonable efforts to remarket, at a price
equal to 100% of the aggregate principal amount thereof,
Debentures tendered or deemed tendered for purchase.
(f) If none of the Holders elect to have Debentures
held by them remarketed, the Reset Rate shall be the rate
determined by the Remarketing Agent, in its sole discretion, as
the rate that would have been established had a remarketing been
held on the Remarketing Date.
(g) If the Remarketing Agent has determined that it
will be able to remarket all Debentures tendered or deemed
tendered for purchase at a price of at least 100% of the
aggregate principal amount thereof prior to 4:00 P.M., New York
City time, on the Remarketing Date, the Remarketing Agent shall
determine the Reset Rate, which shall be the rate per annum
(rounded to the nearest one-thousandth (0.001) of one percent per
annum) which the Remarketing Agent determines, in its sole
judgment, to be the lowest rate per annum that will enable it to
remarket all Debentures tendered or deemed tendered for
remarketing.
(h) If, by 4:00 P.M., New York City time, on the
Remarketing Date, the Remarketing Agent is unable to remarket all
Debentures tendered or deemed tendered for purchase, a Failed
Remarketing shall be deemed to have occurred and the Remarketing
Agent shall so advise by telephone the Clearing Agency, the
Trustee, the Company and the Collateral Agent.
(i) By approximately 4:30 P.M., New York City time, on
the Remarketing Date, provided that there has not been a Failed
Remarketing, the Remarketing Agent shall advise, by telephone (i)
the Clearing Agency, the Trustee, the Company and the Collateral
Agent of the Reset Rate determined in the Remarketing and the
number of Debentures sold in such remarketing, (ii) each
purchaser (or the Depositary Participant thereof) of the Reset
Rate and the number of Debentures such purchaser is to purchase
and (iii) each purchaser to give instructions to its Clearing
Agency Participant to pay the purchase price on the Purchase
Contract Settlement Date in same day funds against delivery of
the Debentures purchased through the facilities of the Clearing
Agency.
(j) In accordance with the Clearing Agency's normal
procedures, on the Purchase Contract Settlement Date, the
transactions described above with respect to each Debenture
tendered for purchase and sold in the remarketing shall be
executed through the Clearing Agency, and the accounts of the
respective Clearing Agency, Participants shall be debited and
credited and such Debentures delivered by book entry as necessary
to effect purchases and sales of such Debentures. The Clearing
Agency shall make payment in accordance with its normal
procedures.
(k) If any holder selling Debentures in the
remarketing fails to deliver such Debentures, the Participant of
such selling holder and of any other person that was to have
purchased Debentures in the remarketing may deliver to any such
other person a number of Debentures that is less than the number
of Debentures that otherwise was to be purchased by such person.
In such event, the number of Debentures to be so delivered shall
be determined by such Clearing Agency Participant, and delivery
of such lesser number of Debentures shall constitute good
delivery.
(l) The Remarketing Agent is not obligated to purchase
any Debentures that would otherwise remain unsold in a
remarketing. Neither the Trust, any Trustee, the Company nor the
Remarketing Agent shall be obligated in any case to provide funds
to make payment upon tender of Debentures for remarketing.
(m) The tender and settlement procedures set in this
Section 10.02, including provisions for payment by purchasers of
Securities in the Remarketing, shall be subject to modification,
notwithstanding any provision to the contrary set forth herein,
to the extent required by the Clearing Agency or if the book-
entry system is no longer available for the Debentures at the
time of the remarketing, to facilitate the tendering and
remarketing of Debentures in certificated form. In addition, the
Remarketing Agent may, notwithstanding any provision to the
contrary set forth herein, modify the settlement procedures set
forth herein in order to facilitate the settlement process.
IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed by their
respective officers thereunto duly authorized, on the date or
dates indicated in the acknowledgments and as of the day and year
first above written.
INGERSOLL-RAND COMPANY,
as Issuer
By:________________________
Name:
Title:
By: _______________________
Name:
Title:
THE BANK OF NEW YORK
___________________________
____________________
as Trustee
By: _______________________
Name:
Title:
AMENDED AND RESTATED DECLARATION
OF TRUST
Ingersoll-Rand Financing I
Dated as of March 23, 1998
TABLE OF CONTENTS
Page
ARTICLE I INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS 1
ARTICLE II TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION 10
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES 10
SECTION 2.3 REPORTS BY THE INSTITUTIONAL TRUSTEE 11
SECTION 2.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE 11
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT 11
SECTION 2.6 EVENTS OF DEFAULT; WAIVER 11
SECTION 2.7 EVENT OF DEFAULT; NOTICE 13
ARTICLE III ORGANIZATION
SECTION 3.1 NAME 13
SECTION 3.2 OFFICE 13
SECTION 3.3 PURPOSE 13
SECTION 3.4 AUTHORITY 14
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST 14
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES 14
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND
THE TRUSTEES 17
SECTION 3.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE 17
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
INSTITUTIONAL TRUSTEE 19
SECTION 3.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE 21
SECTION 3.11 DELAWARE TRUSTEE 22
SECTION 3.12 EXECUTION OF DOCUMENTS 22
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF SECURITIES 23
SECTION 3.14 DURATION OF TRUST 23
SECTION 3.15 MERGERS 23
ARTICLE IV SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES 24
SECTION 4.2 RIGHTS AND RESPONSIBILITIES OF THE SPONSOR 25
SECTION 4.3 RIGHT TO PROCEED 25
SECTION 4.4 EXPENSES 25
ARTICLE V TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES 26
SECTION 5.2 DELAWARE TRUSTEE 26
SECTION 5.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY 27
SECTION 5.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND
DELAWARE TRUSTEE GENERALLY 28
SECTION 5.5 REGULAR TRUSTEES 28
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF
TRUSTEES 28
SECTION 5.7 VACANCIES AMONG TRUSTEES 30
SECTION 5.8 EFFECT OF VACANCIES 30
SECTION 5.9 MEETINGS 30
SECTION 5.10 DELEGATION OF POWER 30
SECTION 5.11 MERGER, CONVERSION. CONSOLIDATION OR
SUCCESSION TO BUSINESS 31
ARTICLE VI THE SECURITIES
SECTION 6.1 DESIGNATION AND NUMBER. 31
SECTION 6.2 DISTRIBUTIONS. 31
SECTION 6.3 LIQUIDATION DISTRIBUTION UPON DISSOLUTION. 33
SECTION 6.4 REDEMPTION AND DISTRIBUTION 33
SECTION 6.5 REDEMPTION OR DISTRIBUTION PROCEDURES. 34
SECTION 6.6 REPAYMENT AT OPTION OF HOLDERS. 35
SECTION 6.7 VOTING RIGHTS - CAPITAL SECURITIES. 36
SECTION 6.8 VOTING RIGHTS - COMMON SECURITIES. 38
SECTION 6.9 AMENDMENTS TO DECLARATION AND INDENTURE. 39
SECTION 6.10 REFERENCE TO PRO RATA. 39
SECTION 6.11 RANKING. 40
SECTION 6.12 ACCEPTANCE OF SECURITIES GUARANTEE AND
INDENTURE. 40
SECTION 6.13 NO PREEMPTIVE RIGHTS 40
SECTION 6.14 MISCELLANEOUS 40
SECTION 6.15 PAYING AGENT 41
ARTICLE VII TERMINATION OF TRUST
SECTION 7.1 TERMINATION OF TRUST 41
ARTICLE VIII TRANSFER OF INTERESTS
SECTION 8.1 TRANSFER OF SECURITIES 42
SECTION 8.2 TRANSFER OF CERTIFICATES 42
SECTION 8.3 DEEMED SECURITY HOLDERS 43
SECTION 8.4 BOOK ENTRY INTERESTS 43
SECTION 8.5 NOTICES TO CLEARING AGENCY 43
SECTION 8.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY 44
SECTION 8.7 DEFINITIVE CAPITAL SECURITY CERTIFICATES 44
SECTION 8.8 MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES 44
ARTICLE IXLIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS
SECTION 9.1 LIABILITY 45
SECTION 9.2 EXCULPATION 45
SECTION 9.3 FIDUCIARY DUTY 46
SECTION 9.4 INDEMNIFICATION 46
SECTION 9.5 OUTSIDE BUSINESSES 49
ARTICLE X ACCOUNTING
SECTION 10.1 FISCAL YEAR 49
SECTION 10.2 CERTAIN ACCOUNTING MATTERS 49
SECTION 10.3 BANKING 50
SECTION 10.4 WITHHOLDING 50
ARTICLE XI AMENDMENTS AND MEETINGS
SECTION 11.1 AMENDMENTS 50
SECTION 11.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION
BY WRITTEN CONSENT 52
ARTICLE XIIREPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND
DELAWARE TRUSTEE
SECTION 12.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL
TRUSTEE 53
SECTION 12.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE
TRUSTEE 54
ARTICLE XIII MISCELLANEOUS
SECTION 13.1 NOTICES 55
SECTION 13.2 GOVERNING LAW 56
SECTION 13.3 INTENTION OF THE PARTIES 56
SECTION 13.4 HEADINGS 56
SECTION 13.5 SUCCESSORS AND ASSIGNS 56
SECTION 13.6 PARTIAL ENFORCEABILITY 56
SECTION 13.7 COUNTERPARTS 56
SECTION 13.8 REMARKETING 56
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
Ingersoll-Rand Financing I
March 23, 1998
AMENDED AND RESTATED DECLARATION OF TRUST (the
"Declaration") dated and effective as of March 23, 1998, by the
Trustees (as defined herein), the Sponsor (as defined herein) and
by the Holders (as defined herein), from time to time, of the
securities representing undivided beneficial interests in the
assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established
Ingersoll-Rand Financing I (the "Trust"), a trust under the
Business Trust Act (as defined herein) pursuant to a trust
agreement dated as of August 18, 1997 (the "Original
Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on August 18, 1997,
for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (as defined herein);
WHEREAS, prior to the date hereof, the Sponsor removed a
trustee of the Trust and substituted First Chicago Delaware Inc.
as a trustee of the Trust;
WHEREAS, in connection with such removal and substitution of
trustees, a Restated Certificate of Trust was filed with the
Secretary of State of Delaware on March 19, 1998;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision
of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business
Trust Act and that this Declaration constitute the governing
instrument of such business trust, the Trustees declare that all
assets contributed to the Trust will be held in trust for the
benefit of the Trust and the Holders, from time to time, of the
securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION I.1 DEFINITIONS
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of
and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term
in Rule 405 of the Securities Act or any successor rule
thereunder.
"Agent" means any Paying Agent.
"Applicable Ownership Interest" means, with respect to
an Income PRIDES and the U.S. Treasury Securities in the Treasury
Portfolio, (A) a 1/40, or 2.5%, undivided beneficial ownership
interest in a $1,000 principal or interest amount of a principal
or interest strip in a U.S. Treasury Security included in such
Treasury Portfolio which matures on or prior to May 15, 2001 and
(B) for each scheduled interest payment date on the Debentures
that occurs after the Tax Event Redemption Date, a .038875%
undivided beneficial ownership interest in a $1,000 face amount
of such U.S. Treasury Security which is a principal or interest
strip maturing on such date.
"Applicable Principal Amount" means either (i) if the
Tax Event Redemption Date occurs prior to May 16, 2001, the
aggregate principal amount of the Debentures corresponding to the
aggregate stated liquidation amount of the Capital Securities
which are components of Income PRIDES on the Tax Event Redemption
Date or (ii) if the Tax Event Redemption occurs on or after May
16, 2001, the aggregate principal amount of the Debentures corre
sponding to the aggregate stated liquidation amount of the
Capital Securities outstanding on such Tax Event Redemption Date.
"Authorized Newspaper" means a daily newspaper, in the
English language, customarily published on each day that is a
Business Day in The City of New York, whether or not published on
days that are Legal Holidays, and of general circulation in The
City of New York. The Authorized Newspaper for the purposes of
the Reset Announcement Date, is currently anticipated to be The
Wall Street Journal.
"Authorized Officer" of a Person means any Person that
is authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be
maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
"Business Day" means any day other than Saturday,
Sunday or any day on which banking institutions in New York City,
in the State of New York, are permitted or required by any
applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code 3801 et seq., as it may be
amended from time to time, or any successor legislation.
"Capital Security" means the 6.22% Capital Securities.
"Capital Security Beneficial Owner" means, with
respect to a Book Entry Interest, a Person who is the beneficial
owner of such Book Entry Interest, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Security Certificate" means a certificate
representing a Capital Security substantially in the form of
Exhibit A-1.
"Certificate" means a Common Security Certificate or a
Capital Security Certificate.
"Clearing Agency" means an organization registered as
a "Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall
be registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time the Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date
of Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation.
"Commission" means the Securities and Exchange
Commission.
"Common Security" means the 6.22% Common Securities.
"Common Security Certificate" means a definitive
certificate in fully registered form representing a Common
Security substantially in the form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular
Trustee; (b) any Affiliate of any Regular Trustee; (c) any
officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any
officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the
Institutional Trustee at which the corporate trust business of
the Institutional Trustee shall, at any particular time, be
principally administered, which office at the date of execution
of this Declaration is located at One First National Plaza, Suite
0126, Chicago, IL 60670-0126.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
of (i) the Trust or (ii) the Trust's Affiliates; and (b) any
Holder of Securities.
"Debenture Issuer" means Ingersoll-Rand Company, a New
Jersey corporation, in its capacity as issuer of the Debentures
under the Indenture.
"Debenture Trustee" means The Bank of New York, as
trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the series of 6.22% Debentures to
be issued by the Debenture Issuer under the Indenture.
"Debenture Repayment Price" means, with respect to any
Debentures put to the Sponsor on June 1, 2001, an amount per
Debenture equal to $25, plus accumulated and unpaid interest
(including deferred interest, if any).
"Definitive Capital Security Certificates" has the
meaning set forth in Section 8.4.
"Delaware Trustee" has the meaning set forth in
Section 5.2.
"Direction" by a Person means a written direction
signed:
(a) if the Person is a natural person, by that
Person; or
(b) in any other case, in the name of such
Person by one or more Authorized Officers of that Person.
"Direct Action" has the meaning specified in Section
3.8(e).
"Distribution" means a distribution payable to Holders
of Securities in accordance with Section 6.2.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Event of Default" in respect of the Securities means
an Event of Default (as defined in the Indenture) has occurred
and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor legislation.
"Exchange Agent" shall mean the Person acting as
Institutional Trustee.
"Failed Remarketing" has the meaning specified in
Section 5.4(b) of the Purchase Contract Agreement.
"FELINE PRIDES"_ means (A) 14,490,000 units referred
to as Income PRIDES_ with a Stated Amount, per Income PRIDES, of
$25 and (B) at least 1,610,000 units referred to as Growth
PRIDES_ with a face amount, per Growth PRIDES, of $25.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 9.4(b).
"Global Certificate" has the meaning set forth in
Section 8.4.
"Guarantee" means the guarantee agreement to be dated
as of March 23, 1998 of the Sponsor in respect of the Common
Securities and the Capital Securities.
"Holder" or "holder" means a Person in whose name a
Certificate representing a Security is registered, such Person
being a beneficial owner within the meaning of the Business Trust
Act.
"Indemnified Person" means a Company Indemnified
Person or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of March 23,
1998, among the Debenture Issuer and the Debenture Trustee, and
any indenture supplemental thereto pursuant to which the
Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set
forth in Section 3.8(c).
"Investment Company" means an investment company as
defined in the Investment Company Act.
"Investment Company Act" means the Investment Company
Act of 1940, as amended from time to time, or any successor
legislation.
"Investment Company Event" means that the Regular
Trustees shall have received an opinion of independent counsel
experienced in practice under the Investment Company Act (an
"Investment Company Event Opinion") to the effect that, as a
result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), which Change
in 1940 Act Law becomes effective on or after the date of the
Prospectus, there is a more than an insubstantial risk that the
Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act.
"Legal Action" has the meaning set forth in Section
3.6(g).
"Majority in liquidation amount of the Securities"
means, except as provided in the terms and conditions of the
Capital Securities set forth in Article VI hereto or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require,
Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who
are the record owners of more than 50% of the aggregate
liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the
relevant class.
"Ministerial Action" means the taking of an action,
such as filing a form or making an election, or pursuing some
other similar reasonable measure that will have no adverse effect
on the Trust, the Debenture Issuer, the Sponsor or the Holder of
the Securities and will involve no material cost.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by two Authorized Officers of such
Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that the officers signing the
Officers' Certificate have read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by the officer in
rendering the Officers' Certificate;
(c) a statement that such officers have made such
examination or investigation as, in such officers' opinion, is
necessary to enable such officers to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of
such officers, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section
6.15.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Pledge Agreement" means the Pledge Agreement dated as
of March 23, 1998 among the Sponsor, The Chase Manhattan Bank, as
collateral agent (the "Collateral Agent") and Custodial Agent
(the "Custodial Agent") and securities intermediary (the
"Securities Intermediary"), and The Bank of New York, as purchase
contract agent (the "Purchase Contract Agent").
"Pricing Agreement" means the pricing agreement
between the Trust, the Debenture Issuer, and the underwriters
designated by the Regular Trustees with respect to the offer and
sale of the Capital Securities.
"Primary Treasury Dealer" means a primary U.S.
government securities dealer in The City of New York.
"Purchase Contract Agreement" means the Purchase
Contract Agreement dated as of March 23, 1998 among The Bank of
New York, as Purchase Contract Agent, and the Sponsor.
"Purchase Contract Settlement Date" means May 16,
2001.
"Put Option" has the meaning specified in Section 6.6.
"Quorum" means a majority of the Regular Trustees or,
if there are only two Regular Trustees, both of them.
"Quotation Agent" means (i) Merrill Lynch Government
Securities, Inc. and its respective successors, provided,
however, that if the foregoing shall cease to be a Primary
Treasury Dealer, the Sponsor shall substitute therefor another
Primary Treasury Dealer and (ii) any other Primary Treasury
Dealer selected by the Sponsor.
"Redemption Amount" means for each Debenture, the
product of (i) the principal amount of such Debenture and (ii) a
fraction whose numerator is the Treasury Portfolio Purchase Price
and whose denominator is the Applicable Principal Amount.
"Redemption Price" means the redemption price per
security equal to the Redemption Amount plus any accrued and
unpaid distributions to the date of redemption.
"Regular Trustee" has the meaning set forth in Section
5.1.
"Related Party" means, with respect to the Sponsor,
any direct or indirect wholly owned subsidiary of the Sponsor or
any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Remarketing Agent" means Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
"Remarketing Agreement" means the Remarketing
Agreement among the Debenture Issuer, the Trust and The Bank of
New York as Purchase Contract Agent.
"Remarketing Date" shall have the meaning set forth in
the Remarketing Agreement.
"Remarketing Underwriting Agreement" means the
agreement to be dated as of the third Business Day immediately
preceding the Purchase Contract Settlement Date among the Compa
ny, the Trust, The Bank of New York, and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Reset Agent" means a nationally recognized investment
banking firm chosen by the Sponsor to determine the Reset Rate.
It is currently anticipated that Merrill Lynch & Co. will act in
such capacity.
"Reset Announcement Date" means the tenth (10)
Business Day immediately preceding the Purchase Contract
Settlement Date.
"Reset Rate" means the distribution rate per annum (to
be determined by the Reset Agent), equal to the sum of (X) the
Reset Spread and (Y) the rate of interest on the Two-Year
Benchmark Treasury in effect on the third Business Day
immediately preceding the Purchase Contract Settlement Date, that
the Capital Securities should bear in order for the Capital
Securities to have an approximate market value of 100.5% of their
aggregate liquidation amount on the third Business Day
immediately preceding the Purchase Contract Settlement Date;
provided, that the Sponsor may limit such Reset Spread to be no
higher than 200 basis points (2%).
"Reset Spread" means a spread amount to be determined
by the Reset Agent on the tenth (10) Business Day immediately
preceding the Purchase Contract Settlement Date.
"Responsible Officer" means, with respect to the
Institutional Trustee, any officer within the Corporate Trust
Office of the Institutional Trustee, including, without
limitation, any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Institutional
Trustee assigned by the Institutional Trustee to administer its
corporate trust matters and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment
Company Act.
"Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Sponsor" means Ingersoll-Rand Company, a New Jersey
corporation, or any successor entity in a merger or
consolidation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" means the receipt by the Regular Trustees
of an opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of
(a) any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority
thereof or therein affecting taxation, (b) any amendment to or
change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency
or regulatory authority or (c) any interpretation or
pronouncement that provides for a position with respect to such
laws or regulations that differs from the generally accepted
position on the date the Securities are issued, which amendment
or change is effective or which interpretation or pronouncement
is announced on or after the date of issuance of the Securities
under the Declaration, there is more than an insubstantial risk
that (i) interest payable by the Debenture Issuer on the
Debentures would not be deductible, in whole or in part, by the
Debenture Issuer for federal income tax purposes or (ii) the
Trust would be subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Tax Event Redemption" means, if a Tax Event shall
occur and be continuing, the redemption of the Debentures, at the
option of the Debenture Issuer, in whole but not in part, on not
less than 30 days nor more than 60 days notice.
"Tax Event Redemption Date" means the date upon which
a Tax Event Redemption is to occur.
"10% in liquidation amount of the Securities" means,
except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require,
Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who
are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on
repayment, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Termination Event" has the meaning set forth in
Section 1 of the Purchase Contract Agreement.
"Treasury Portfolio" means, with respect to the
Applicable Principal Amount of Debentures (a) if the Tax Event
Redemption Date occurs prior to May 16, 2001, a portfolio of zero-
coupon U.S. Treasury Securities consisting of (i) principal or
interest strips of U.S. Treasury Securities which mature on or
prior to May 15, 2001 in an aggregate amount equal to the
Applicable Principal Amount and (ii) with respect to each
scheduled interest payment date on the Debentures that occurs
after the Tax Event Redemption Date, principal or interest strips
of U.S. Treasury Securities which mature on or prior to such date
in an aggregate amount equal to the aggregate interest payment
that would be due on the Applicable Principal Amount of the
Debentures on such date, and (b) if the Tax Event Redemption Date
occurs after May 16, 2001, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) principal or interest
strips of U.S. Treasury Securities which mature on or prior to
May 15, 2003 in an aggregate amount equal to the Applicable
Principal Amount and (ii) with respect to each scheduled interest
payment date on the Debentures that occurs after the Tax Event
Redemption Date, principal or interest strips of such U.S. Trea
sury Securities which mature on or prior to such date in an
aggregate amount equal to the aggregate interest payment that
would be due on the Applicable Principal Amount of the Debentures
on such date.
"Treasury Portfolio Purchase Price" means the lowest
aggregate price quoted by the Primary Treasury Dealer to the
Quotation Agent on the third Business Day immediately preceding
the Tax Event Redemption Date for the purchase of the Treasury
Portfolio for settlement on the Tax Event Redemption Date.
"Treasury Regulations" means the income tax
regulations, including temporary and proposed regulations,
promulgated under the Code by the United States Treasury, as such
regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Treasury Securities" has the meaning set forth in
Section 1 of the Purchase Contract Agreement.
"Trustee" or "Trustees" means each Person who has
signed this Declaration as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended from time to time, or any successor legislation.
"Two-Year Benchmark Treasury" means direct obligations
of the United States (which may be obligations traded on a when-
issued basis only) having a maturity comparable to the remaining
term to maturity of the Trust Securities, as agreed upon by the
Sponsor and the Reset Agent. The rate for the Two-Year Benchmark
Treasury will be the bid side rate displayed at 10:00 A.M., New
York City time, on the third Business Day immediately preceding
the Purchase Contract Settlement Date in the Telerate system (or
if the Telerate system is (a) no longer available on the third
Business Day immediately preceding the Purchase Contract
Settlement Date or (b) in the opinion of the Reset Agent (after
consultation with the Sponsor) no longer an appropriate system
from which to obtain such rate, such other nationally recognized
quotation system as, in the opinion of the Reset Agent (after
consultation with the Sponsor) is appropriate). If such rate is
not so displayed, the rate for the Two-Year Benchmark Treasury
shall be, as calculated by the Reset Agent, the yield to maturity
for the Two-Year Benchmark Treasury, expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking
the arithmetic mean of the secondary market bid rates, as of
10:30 A.M., New York City time, on the third Business Day
immediately preceding the Purchase Contract Settlement Date of
three leading United States government securities dealers
selected by the Reset Agent (after consultation with the Sponsor)
(which may include the Reset Agent or an Affiliate thereof).
"Underwriting Agreement" means the Underwriting
Agreement for the offering and sale of Capital Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION II.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this
Declaration and shall, to the extent applicable, be governed by
such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties
imposed by 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
(d) Any application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as
equity securities representing undivided beneficial interests in
the assets of the Trust.
SECTION II.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Regular Trustees, on
behalf of the Trust, shall provide the Institutional Trustee (i)
within 14 days after each record date for payment of
Distributions, a list, in such form as the Institutional Trustee
may reasonably require, of the names and addresses of the Holders
of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees, on
behalf of the Trust, shall be obligated to provide such List of
Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Institutional Trustee by
the Sponsor and the Regular Trustees on behalf of the Trust, and
(ii) at any other time, within 30 days of receipt by the Trust of
a written request by the Institutional Trustee for a List of
Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in the Lists of Holders
given to it or which it receives in the capacity as Paying Agent
(if acting in such capacity), provided that the Institutional
Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its
obligations under 311(a), 310(b) and 312(b) of the Trust
Indenture Act.
SECTION II.3 REPORTS BY THE INSTITUTIONAL TRUSTEE.
Within 60 days after May 15 of each year, commencing May 15,
1999, the Institutional Trustee shall provide to the Holders of
the Trust Securities such reports as are required by 313 of the
Trust Indenture Act, if any, in the form and in the manner
provided by 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of 313(d) of the
Trust Indenture Act.
SECTION II.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE.
Each of the Sponsor and the Regular Trustees, on behalf of
the Trust, shall provide to the Institutional Trustee such
documents, reports and information as required by 314 (if any)
and the compliance certificate required by 314 of the Trust
Indenture Act in the form, in the manner and at the times
required by 314 of the Trust Indenture Act.
SECTION II.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees, on behalf of
the Trust, shall provide to the Institutional Trustee such
evidence of compliance with any conditions precedent, if any,
provided for in this Declaration that relate to any of the
matters set forth in 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer
pursuant to 314(c) (1) may be given in the form of an Officers'
Certificate.
SECTION II.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of
Capital Securities may, by vote, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default in
respect of the Capital Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable;
or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the
Debentures (a "Super Majority") to be waived under the
Indenture, the Event of Default under this Declaration may
only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Capital Securities
that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of 316(a) (1)(B) of the Trust Indenture Act and such 316(a)
(1) (B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Capital Securities, as permitted by
the Trust Indenture Act. Upon such waiver, any such default shall
cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or an Event of
Default with respect to the Capital Securities or impair any
right consequent thereon. Any waiver by the Holders of the
Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by
the Holders of the Common Securities of any such Event of Default
with respect to the Common Securities for all purposes of this
Declaration without any further act, vote, or consent of the
Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all
of the Common Securities, waive any past Event of Default with
respect to the Common Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have
waived such Event of Default under this Declaration as
provided below in this Section 2.6(b), the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority
to be waived, except where the Holders of the Common
Securities are deemed to have waived such Event of Default
under this Declaration as provided below in this Section
2.6(b), the Event of Default under this Declaration may only
be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Common Securities
that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed
to have waived any such Event of Default and all Events of
Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured,
waived or otherwise eliminated, the Institutional Trustee will be
deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities
will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to
the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or
other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by
the Institutional Trustee at the direction of the Holders of the
Capital Securities constitutes a waiver of the corresponding
Event of Default with respect to the Capital Securities under
this Declaration. Any waiver of an Event of Default under the
Indenture by the Institutional Trustee at the direction of the
Holders of the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of
the corresponding Event of Default under this Declaration with
respect to the Common Securities for all purposes of this
Declaration without further act, vote or consent of the Holders
of the Common Securities. The foregoing provisions of this
Section 2.6(c) shall be in lieu of 316(a)(1)(B) of the Trust
Indenture Act and such 316(a)(1)(B) of the Trust Indenture Act
is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION II.7 EVENT OF DEFAULT; NOTICE.
(a) The Institutional Trustee shall, within 90 days after
the occurrence of an Event of Default, actually known to a
Responsible Officer of the Institutional Trustee, transmit by
mail, first class postage prepaid, to the Holders of the
Securities, notices of all such defaults with respect to the
Securities, unless such defaults have been cured before the
giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of
Default as defined in the Indenture, not including any periods of
grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on
any of the Debentures, the Institutional Trustee shall be
protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 501 and 503 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible
Officer of the Institutional Trustee charged with the
administration of this Declaration shall have actual
knowledge.
ARTICLE III
ORGANIZATION
SECTION III.1 NAME.
The Trust is named "Ingersoll-Rand Financing I," as such
name may be modified from time to time by the Regular Trustees
following written notice to the Holders of the Securities. The
Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION III.2 OFFICE.
The address of the principal office of the Trust is c/o
Ingersoll-Rand Company, 200 Chestnut Ridge Road, Woodcliff Lake,
New Jersey 07675. On ten Business Days written notice to the
Institutional Trustee and Holders of the Securities, the Regular
Trustees may designate another principal office.
SECTION III.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to
issue and sell the Securities and use the gross proceeds from
such sale to acquire the Debentures, and (b) except as otherwise
set forth herein, to engage in only those other activities
necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would
cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust. It is the intent of the
parties to this Declaration for the Trust to be classified as a
grantor trust for United States federal income tax purposes under
Subpart E of Subchapter J of the Code, pursuant to which the
beneficial owners of the Capital Securities and the Common
Securities will be the owners of the Trust for United States
federal income tax purposes, and such owners will include
directly in their gross income the income, gain, deduction or
loss of the Trust as if the Trust did not exist. By the
acceptance of this Trust, neither the Trustees, the Sponsor nor
the Holders of the Capital Securities or Common Securities will
take any position for United States federal income tax purposes
which is contrary to the classification of the Trust as a grantor
trust.
SECTION III.4 AUTHORITY.
Subject to the limitations provided in this Declaration and
to the specific duties of the Institutional Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Regular
Trustees in accordance with their powers shall constitute the act
of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with
its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the
Trust, no Person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION III.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise
provided in this Declaration, legal title to all assets of the
Trust shall be vested in the Trust. A Holder shall not have legal
title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION III.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following
activities:
(a) to issue and sell the Capital Securities and the
Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of
Capital Securities and no more than one series of Common
Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to a simultaneous
issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital
Securities to:
(i) assist and filing with the Commission the
registration statement and the prospectus relating to the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments or supplements, thereto, pertaining
to the Capital Securities and to take any other action
relating to the registration and sale of the Capital
Securities under federal and state securities laws;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register all or part of the
FELINE PRIDES in any State in which the Sponsor has
determined to qualify or register such FELINE PRIDES for
sale;
(iii)assist in filing an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other
national stock exchange or the Nasdaq Stock National Market
for listing upon notice of issuance of any Capital
Securities;
(iv) assist in filing with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the
registration of the Capital Securities under Section 12(b)
of the Exchange Act; and
(v) execute and enter into the Remarketing Agreement
and Remarketing Underwriting Agreement providing for the
sale of the FELINE PRIDES;
(c) to acquire the Debentures with the proceeds of the
sale of the Capital Securities and the Common Securities;
provided, however, that the Regular Trustees shall cause legal
title to the Debentures to be held of record in the name of the
Institutional Trustee for the benefit of the Trust and the
Holders of the Capital Securities and the Holders of Common
Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Tax Event or an
Investment Company Event; provided that the Regular Trustees
shall consult with the Sponsor before taking or refraining from
taking any Ministerial Action in relation to a Tax Event or
Investment Company Event;
(e) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of 316(c) of the
Trust Indenture Act, Distributions, voting rights, repayments,
redemptions and exchanges, and to issue relevant notices to the
Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the
Securities and this Declaration;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant
to Section 3.8(e) the Institutional Trustee has the exclusive
power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable
compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by 314(a)(4) of the
Trust Indenture Act to the Institutional Trustee, which
certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of
its election to defer payments of interest on the Debentures by
extending the interest payment period under the Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the
Capital Securities or to enable the Trust to effect the purposes
for which the Trust was created;
(o) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in
carrying out the activities of the Trust, including, but not
limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for United
States federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax
purposes, provided that such action relating to this clause
(iii) does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust;
(q) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the
Trust in all matters necessary, appropriate, convenient or
incidental to the foregoing; and
(r) if applicable, to solicit holders of Securities which
form a part of the Income PRIDES to timely instruct the Purchase
Contract Agent in order to enable the Purchase Contract Agent to
vote such Securities.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes
and functions of the Trust set out in Section 3.3, and the
Regular Trustees shall not take any action that is inconsistent
with the purposes and functions of the Trust set forth in Section
3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee
set forth in Section 3.8. No permissive power or authority
available to the Regular Trustees shall be construed to be a
duty.
Any expenses incurred by the Regular Trustees pursuant to
this Section 3.6 shall be reimbursed by the Sponsor.
SECTION III.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE
TRUSTEES.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall cause the Trust not to, engage in
any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Trustees
(including the Institutional Trustee) shall cause the Trust not
to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such
proceeds to Holders of Securities pursuant to the terms of
this Declaration and of the Securities;
(ii) acquire any assets other than the Debentures and
any cash proceeds received with respect thereto;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness for
borrowed money, other than loans represented by the
Debentures;
(v) possess any power or otherwise act in such a way
as to vary the assets of the Trust or the terms of the
Securities in any way whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the
Trust other than the Securities; or
(vii) other than as provided in this Declaration, (A)
direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to
the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or
annul any declaration that the principal of all the
Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or
the Debentures unless the Trust shall have received an
opinion of counsel to the effect that such modification will
not cause the Trust to be classified as other than a grantor
trust for United States federal income tax purposes.
SECTION III.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in
trust for the benefit of the Trust and the Holders of the
Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in
accordance with Section 5.6. Such vesting and cessation of title
shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular
Trustees or to the Delaware Trustee (if the Institutional Trustee
does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account")
in the name of and under the exclusive control of the
Institutional Trustee on behalf of the Trust and the Holders
of the Securities and, upon the receipt of payments of funds
made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Institutional Trustee
Account and make payments to the Holders of the Capital
Securities and Holders of the Common Securities from the
Institutional Trustee Account in accordance with Section
6.1. Funds in the Institutional Trustee Account shall be
held uninvested until disbursed in accordance with this
Declaration. The Institutional Trustee Account shall be an
account that is maintained with a banking institution the
rating on whose long-term unsecured indebtedness is rated at
least "A" or above by a "nationally recognized statistical
rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary, appropriate, convenient or incidental to effect
the repayment of the Capital Securities and the Common
Securities to the extent the Debentures mature or are
redeemed or the Put Option is exercised; and
(iii)upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall
be necessary, appropriate, convenient or incidental to
effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as
may be defined in the terms of the Securities) arising from
a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the
Securities.
(d) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the
Institutional Trustee pursuant to the terms of the Securities and
this Declaration.
(e) The Institutional Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Institutional Trustee has
actual knowledge or the Institutional Trustee's duties and
obligations under this Declaration, the Business Trust Act or the
Trust Indenture Act; provided, however, that if the Institutional
Trustee fails to enforce its rights under the Debentures after a
Holder of Capital Securities has made a written request, such
Holder of Capital Securities may, to the fullest extent permitted
by applicable law, institute a legal proceeding against the
Debenture Issuer without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest on or principal
of the Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Capital Securities may
directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder (a "Direct
Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of
the Holders of Common Securities will be subrogated to the rights
of such Holders of Capital Securities. In connection with such
Direct Action, the Debenture Issuer shall be subrogated to the
rights of such Holder of Capital Securities with respect to
payments on the Capital Securities under this Declaration to the
extent of any payment made by the Debenture Issuer to such Holder
of Capital Securities in such Direct Action. Except as provided
in the preceding sentences, the Holders of Capital Securities
will not be able to exercise directly any other remedy available
to the Holders of the Debentures.
(f) The Institutional Trustee shall continue to serve as a
Trustee until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of
Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance
with Section 5.6.
(g) The Institutional Trustee shall have the legal power
to exercise all of the rights, powers and privileges of a holder
of Debentures under the Indenture and, if an Event of Default
actually known to a Responsible Officer of the Institutional
Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its
rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities and this
Declaration.
(h) Subject to this Section 3.8, the Institutional Trustee
shall have none of the duties, liabilities, powers or the
authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the
purposes and functions of the Trust set out in Section 3.3, and
the Institutional Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION III.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
INSTITUTIONAL TRUSTEE.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events
of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event
of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) of which a Responsible Officer of the
Institutional Trustee has actual knowledge, the Institutional
Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Institutional Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of an Event of Default
and after the curing or waiving of all such Events of
Default that may have occurred:
(A the duties and obligations of the
Institutional Trustee shall be determined solely by
the express provisions of this Declaration and the
Institutional Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into
this Declaration against the Institutional Trustee;
and
(B in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming
to the requirements of this Declaration; but in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Declaration;
(ii the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Institutional Trustee, unless it shall be
proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii the Institutional Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this
Declaration;
(iv no provision of this Declaration shall require
the Institutional Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any
of its rights or powers, if it shall have reasonable grounds
for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the
Institutional Trustee against such risk or liability is not
reasonably assured to it;
(v the Institutional Trustee's sole duty with
respect to the custody, safe keeping and physical
preservation of the Debentures and the Institutional Trustee
Account shall be to deal with such property in a similar
manner as the Institutional Trustee deals with similar
property for its fiduciary accounts generally, subject to
the protections and limitations on liability afforded to the
Institutional Trustee under this Declaration, the Business
Trust Act and the Trust Indenture Act;
(vi the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Debentures or the payment of
any taxes or assessments levied thereon or in connection
therewith;
(vii the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may
otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other
funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii the Institutional Trustee shall not be
responsible for monitoring the compliance by the Regular
Trustees or the Sponsor with their respective duties under
this Declaration, nor shall the Institutional Trustee be
liable for any default or misconduct of the Regular Trustees
or the Sponsor.
SECTION III.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE.
(a Subject to the provisions of Section 3.9:
(i the Institutional Trustee may conclusively rely
and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties;
(ii any direction or act of the Sponsor or the
Regular Trustees contemplated by this Declaration shall be
sufficiently evidenced by a Direction or an Officers'
Certificate;
(iii whenever in the administration of this
Declaration, the Institutional Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv the Institutional Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v the Institutional Trustee may consult with
counsel or other experts and the advice or opinion of such
counsel and experts with respect to legal matters or advice
within the scope of such experts' area of expertise shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The
Institutional Trustee shall have the right at any time to
seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Declaration at the request or direction of any
Holder, unless such Holder shall have provided to the
Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the
costs, expenses (including attorneys' fees and expenses and
the expenses of the Institutional Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such
reasonable advances as may be requested by the Institutional
Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Institutional
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Declaration;
(vii the Institutional Trustee shall be under no
obligation to conduct an investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Institutional Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters
as it may see fit;
(viii the Institutional Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(ix any action taken by the Institutional Trustee or
its agents hereunder shall bind the Trust and the Holders of
the Securities, and the signature of the Institutional
Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party
shall be required to inquire as to the authority of the
Institutional Trustee to so act or as to its compliance with
any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x whenever in the administration of this
Declaration the Institutional Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder,
the Institutional Trustee (i) may request instructions from
the Holders of the Securities which instructions may only be
given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall
be protected in conclusively relying on or acting in
accordance with such instructions; and
(xi except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under
any obligation to take any action that is discretionary
under the provisions of this Declaration.
(b No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Institutional Trustee shall be
construed to be a duty.
SECTION III.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration
other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities of the Trustees
(except as required under the Business Trust Act) described in
this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of 3807 of the Business
Trust Act.
SECTION III.12 EXECUTION OF DOCUMENTS.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a
majority of or, if there are only two, any Regular Trustee or, if
there is only one, such Regular Trustee is authorized to execute
on behalf of the Trust any documents that the Regular Trustees
have the power and authority to execute pursuant to Section 3.6.
SECTION III.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of
the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION III.14 DURATION OF TRUST.
The Trust, unless dissolved pursuant to the provisions of
Article VIII hereof, shall dissolve on March , 2005.
SECTION III.15 MERGERS.
(a The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any
corporation or other body, except as described in Section 3.15(b)
and (c) or Section 6.3
(b The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the
Regular Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Institutional Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any State; provided
that if the Trust is not the surviving entity:
(i such successor entity (the "Successor Entity")
either:
(A expressly assumes all of the obligations of
the Trust under the Securities; or
(B substitutes for the Capital Securities other
securities having substantially the same terms as the
Capital Securities (the "Successor Securities"), so
long as the Successor Securities rank the same as the
Capital Securities rank with respect to Distributions
and payments upon liquidation, redemption, repayment
and otherwise and substitutes for the Common
Securities other securities having substantially the
same terms as the Common Securities (the "Successor
Common Securities"), so long as the Successor Common
Securities rank the same as the Common Securities rank
with respect to Distributions and payments upon
liquidation, redemption, repayment and otherwise;
(ii the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same
powers and duties as the Institutional Trustee as the holder
of the Debentures;
(iii if necessary, the Capital Securities or any
Successor Securities will be listed, or any Successor
Securities will be listed upon notification of issuance, on
any national securities exchange or with another
organization on which the Capital Securities are then listed
or quoted;
(iv such merger, consolidation, amalgamation or
replacement does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the Securities
(including any Successor Securities and any Successor Common
Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the successor
entity);
(vi such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities and
Successor Common Securities) in any material respect
(other than with respect to any dilution of the
Holders' interest in the successor entity);
(B following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
(C following such merger, consolidation,
amalgamation or replacement, the Trust (or the
Successor Entity) will continue to be classified as a
grantor trust for United States federal income tax
purposes; and
(viii the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities and
Successor Common Securities at least to the extent provided
by the Guarantee.
(c Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount
of the Securities, consolidate, amalgamate, merge with or into,
or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax
purposes.
ARTICLE IV
SPONSOR
SECTION IV.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least
equal to 3.0% of the total capital of the Trust, at the same time
as the Capital Securities are sold.
SECTION IV.2 RIGHTS AND RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue, sale and, if necessary, the
remarketing of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following
activities:
(a to prepare, execute and file with the Commission a
registration statement on Form S-3 in relation to the Capital
Securities, including any amendments thereto;
(b if necessary, to determine the States in which to take
appropriate action to qualify or register for sale all or part of
the FELINE PRIDES and to do any and all such acts, other than
actions which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c if necessary, to prepare, execute and file an
application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing upon
notice of issuance of any Capital Securities;
(d if necessary, to prepare, execute and file with the
Commission of a registration statement on Form 8-A relating to
the registration of the Capital Securities under Section 12(b) of
the Exchange Act, including any amendments thereto;
(e to negotiate the terms of the Remarketing Agreement,
the Remarketing Underwriting Agreement, the Underwriting
Agreement and the Pricing Agreement providing for the sale of the
FELINE PRIDES; and
(f) execute and enter into the Underwriting Agreement
and Pricing Agreement.
SECTION IV.3 RIGHT TO PROCEED.
The Sponsor acknowledges the rights of Holders to institute
a Direct Action as set forth in Section 3.8(e) hereto.
SECTION IV.4 EXPENSES.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with
the sale of the Securities by the Trust, the Debenture Issuer, in
its capacity as borrower with respect to the Debentures, is
required under Section 5.1 of the First Supplemental Indenture
to:
(a pay all costs and expenses relating to the offering,
sale and issuance of the Debentures, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and
Pricing Agreement and compensation of the Debenture Trustee under
the Indenture in accordance with the provisions of the Indenture;
(b be responsible for and shall pay all debts and
obligations (other than with respect to the Securities) and all
costs and expenses of the Trust (including, but not limited to,
costs and expenses relating to the organization, maintenance and
dissolution of the Trust, the offering, sale and issuance of the
Securities (including commissions to the underwriters in
connection therewith), the fees and expenses (including
reasonable counsel fees and expenses) of the Institutional
Trustee, the Delaware Trustee and the Regular Trustees (including
any amounts payable under Article IX of this Declaration), the
costs and expenses relating to the operation of the Trust,
including, without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets and the enforcement by
the Institutional Trustee of the rights of the Holders of the
Securities;
(c be primarily liable for any indemnification
obligations arising under Section 9.4 with respect to this
Declaration; and
(d pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and
all liabilities, costs and expenses with respect to such taxes of
the Trust.
The Sponsor's obligations under this Section 4.4 shall be
for the benefit of, and shall be enforceable by, any person to
whom such debts, obligations, costs, expenses and taxes are owed
(a "Creditor") whether or not such Creditor has received notice
hereof. Any such Creditor may enforce the Sponsor's obligations
under this Section 4.4 directly against the Sponsor and the
Sponsor irrevocably waives any right or remedy to require that
any such Creditor take any action against the Trust or any other
Person before proceeding against the Sponsor. The Debenture
Issuer agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the
provisions of this Section 4.4.
ARTICLE V
TRUSTEES
SECTION V.1 NUMBER OF TRUSTEES.
The number of Trustees initially shall be five (5), and:
(a at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the holders of
a majority in liquidation amount of the Common Securities voting
as a class at a meeting of the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event
be less than two (2), provided further that (1) one Trustee,
shall meet the requirements of Section 5.2 (a) or (b); (2) there
shall be at least one Trustee who is an employee or officer of,
or is affiliated with the Sponsor (a "Regular Trustee"); and (3)
one Trustee shall be the Institutional Trustee for so long as
this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Institutional Trustee may also
serve as Delaware Trustee if it meets the applicable
requirements.
SECTION V.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a a natural person who is a resident of the State of
Delaware; or
(b if not a natural person, an entity which has its
principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, provided
that, if the Institutional Trustee has its principal place of
business in the State of Delaware and otherwise meets the
requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no
application.
(c The initial Delaware Trustee shall be:
First Chicago Delaware Inc.
300 King Street
Wilmington, DE 19801
SECTION V.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY.
(a There shall at all times be one Trustee which shall
act as Institutional Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture
Act, which shall:
(i not be an Affiliate of the Sponsor; and
(ii be a corporation organized and doing business
under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a
Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
750 million U.S. dollars ($750,000,000), and subject to
supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes
of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report
of condition so published.
(b If at any time the Institutional Trustee shall cease
to be eligible to so act under Section 5.3(a), the Institutional
Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of 310(b) of the
Trust Indenture Act, the Institutional Trustee and the Holder of
the Common Securities (as if it were the obligor referred to in
310(b) of the Trust Indenture Act) shall in all respects comply
with the provisions of 310(b) of the Trust Indenture Act.
(d The Guarantee and the Indenture shall be deemed to be
specifically described in this Declaration and the Indenture for
purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
(e The initial Institutional Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
SECTION V.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND
DELAWARE TRUSTEE GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be
either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized
Officers.
SECTION V.5 REGULAR TRUSTEES.
The initial Regular Trustees shall be:
Nancy Casablanca
Ronald Heller
Patricia Nachtigal
(a Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with
respect to any matter over which the Regular Trustees have power
to act, any power of the Regular Trustees may be exercised by, or
with the consent of, any one such Regular Trustee.
(b Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on
behalf of the Trust any documents which the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to
Section 3.6; and
(c a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over
the age of 21 his or her power for the purposes of signing any
documents that the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 3.6.
SECTION V.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a Subject to Section 5.6(b), Trustees may be appointed
or removed without cause at any time:
(i until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the
Common Securities voting as a class at a meeting of the
Holders of the Common Securities.
(b (i The Trustee that acts as Institutional Trustee
shall not be removed in accordance with Section 5.6(a) until
a successor Institutional Trustee possessing the
qualifications to act as Institutional Trustee under
Sections 5.2 and 5.3 (a "Successor Institutional Trustee")
has been appointed and has accepted such appointment by
written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the
Sponsor; and
(ii The Trustee that acts as Delaware Trustee shall
not be removed in accordance with Section 5.6(a) until a
successor Trustee possessing the qualifications to act as
Delaware Trustee under Sections 5.2 and 5.4 (a "Successor
Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor
Delaware Trustee and delivered to the Regular Trustees and
the Sponsor.
(c A Trustee appointed to office shall hold office until
such Trustee's successor shall have been appointed or until such
Trustee's death, bankruptcy, dissolution, termination, removal or
resignation. Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Sponsor and the Trust,
which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i no such resignation of the Trustee that acts as
the Institutional Trustee shall be effective:
(A until a Successor Institutional Trustee has
been appointed and has accepted such appointment by
instrument executed by such Successor Institutional
Trustee and delivered to the Trust, the Sponsor and
the resigning Institutional Trustee; or
(B until the assets of the Trust have been
completely liquidated and the proceeds thereof
distributed to the holders of the Securities; and
(ii no such resignation of the Trustee that acts as
the Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
(d The Holders of the Common Securities shall use all
reasonable efforts to promptly appoint a Successor Delaware
Trustee or Successor Institutional Trustee, as the case may be,
if the Institutional Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted
appointment as provided in this Section 5.6 within 60 days after
delivery to the Sponsor and the Trust of an instrument of
resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee
or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f No Institutional Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor
Institutional Trustee or Successor Delaware Trustee, as the case
may be.
SECTION V.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if
the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by the Regular Trustees or, if there are more than
two Regular Trustees, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance with
Section 5.6.
SECTION V.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform
the duties of a Trustee shall not operate to annul, dissolve or
terminate the Trust or terminate this Declaration. Whenever a
vacancy among the Regular Trustees shall occur, until such
vacancy is filled by the appointment of a Regular Trustee in
accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to
the Regular Trustees and shall discharge all the duties imposed
upon the Regular Trustees by this Declaration.
SECTION V.9 MEETINGS.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of
any Regular Trustee. Regular meetings of the Regular Trustees may
be held at a time and place fixed by resolution of the Regular
Trustees. Notice of any in-person meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of
any telephonic meetings of the Regular Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier)
not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of
the meeting. The presence (whether in person or by telephone) of
a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction
of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at
(i) a meeting by vote of a majority of the Regular Trustees
present (whether in person or by telephone) and eligible to vote
with respect to such matter, provided that a Quorum is present,
or (ii) without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee,
any and all action of such Regular Trustee shall be evidenced by
a written consent of such Regular Trustee.
SECTION V.10 DELEGATION OF POWER.
(a Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of
executing any documents contemplated in Section 3.6; and
(b the Regular Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust
the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law
or contrary to the provisions of the Trust, as set forth herein.
SECTION V.11 MERGER, CONVERSION. CONSOLIDATION OR SUCCESSION
TO BUSINESS.
Any corporation into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted
or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which
the Institutional Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may
be, shall be the successor of the Institutional Trustee or the
Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
THE SECURITIES
SECTION VI.1 DESIGNATION AND NUMBER.
(a Capital Securities. Capital Securities, with an
aggregate liquidation amount with respect to the assets of the
Trust of $402,500,000 and a liquidation amount with respect to
the assets of the Trust of $25 per capital security will be
issued by the Trust. The Capital Security Certificates evidencing
the Capital Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by applicable
law or the rules of any stock exchange on which the Capital
Securities are listed or to conform to ordinary usage, custom or
practice.
(b Common Securities. Common Securities with an
aggregate liquidation amount with respect to the assets of the
Trust of $12,448,475 and a liquidation amount with respect to the
assets of the Trust of $25 per common security will be issued by
the Trust. The Common Security Certificates evidencing the
Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by applicable law or to
conform to ordinary usage, custom or practice.
SECTION VI.2 DISTRIBUTIONS.
(a Distributions payable on each Security will be fixed
initially at a rate per annum of 6.22% (the "Coupon Rate") of the
stated liquidation amount of $25 per Security until May 15, 2001,
and at the Reset Rate thereafter, such rates being the rates of
interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears for more than one
quarter will accumulate and compound quarterly at the rate of
6.22% until May 15, 2001, and at the Reset Rate thereafter (to
the extent permitted by applicable law). The term "Distributions"
as used herein includes such cash distributions and any such
accumulated distribution that are payable unless otherwise
stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable
for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year consisting of
twelve 30-day months, and for any period shorter than a full
quarterly Distribution period for which Distributions are
computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
(b Distributions on the Securities will be cumulative,
will accrue from March 23, 1998, and will be payable quarterly in
arrears, on February 16, May 16, August 16 and November 16 of
each year, commencing on May 16, 1998, except as otherwise
described below. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest
payment period from time to time on the Debentures for a period
not extending, in the aggregate, beyond the maturity date of the
Debentures (each an "Extension Period"). During such Extension
Period no interest shall be due and payable on the Debentures. As
a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will
continue to accumulate at the rate of 6.22% until May 15, 2001,
and at the Reset Rate thereafter, compounded quarterly during any
such Extension Period (to the extent permitted by applicable
law). Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon
the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new
Extension Period; provided that such Extension Period together
with all such previous and further extensions thereof may not
exceed beyond the maturity date of the Debentures.
(c Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the
Trust at the close of business on the Business Day immediately
preceding each of the relevant payment dates on the Securities.
Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Capital
Securities will be made as described under the heading
"Description of the Capital Securities -- Book Entry Only
Issuance -The Depository Trust Company" in the Prospectus
Supplement dated March 17, 1998 to the Prospectus dated March 17,
1998 (collectively, the "Prospectus") of the Trust relating to
the Registration Statement on Form S-3 (file no. 333-38367) of
the Sponsor and the Trust. The relevant record dates for the
Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue
to remain in book-entry only form or are not in book-entry only
form at issuance, the relevant record dates for the Capital
Securities, shall conform to the rules of any securities exchange
on which the securities are listed and, if none, as shall be
selected by the Regular Trustees, which dates shall be at least
more than one, but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the
interest payment dates on the Debentures. Distributions payable
on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease
to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name
such Securities are registered on the special record date or
other specified date determined in accordance with the Indenture.
If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. So long as the
Holder of any Capital Securities is the Collateral Agent, the
payment of Distributions on such Capital Securities held by the
Collateral Agent will be made at such place and to such account
as may be designated by the Collateral Agent.
(d The Coupon Rate on the Securities (as well as the
interest rate on the Debentures) will be reset on the third
Business Day immediately preceding the Purchase Contract
Settlement Date to the Reset Rate (which Reset Rate will be in
effect on and after the Purchase Contract Settlement Date). On
the Reset Announcement Date, the Reset Spread and the Two-Year
Benchmark Treasury to be used to determine the Reset Rate will be
announced by the Sponsor. On the Business Day immediately
following the Reset Announcement Date, the Holders of Securities
will be notified of such Reset Spread and Two-Year Benchmark
Treasury by the Sponsor. Such notice shall be sufficiently given
to Holders of Securities if published in an Authorized Newspaper.
(e Not later than seven calendar days nor more than 15
calendar days prior to the Reset Announcement Date, the Sponsor
will notify DTC or its nominee (or any successor Clearing Agency
or its nominee) by first-class mail, postage prepaid, to notify
the Capital Security Beneficial Owners or Clearing Agency
Participants holding Capital Securities, Income PRIDES or Growth
PRIDES, of such Reset Announcement Date and the procedures to be
followed by such Holders of Income PRIDES who intend to settle
their obligation under the Purchase Contract with separate cash.
(f In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder,
such property shall be distributed Pro Rata (as defined in
Section 6.10 of this Agreement) among the Holders of the
Securities.
SECTION VI.3 LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary dissolution of
the Trust (unless a Tax Event Redemption has occurred), the
Holders of the Securities on the date of the dissolution will be
entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors, Debentures in an
aggregate principal amount equal to the aggregate stated
liquidation amount of such Securities, with an interest rate
equal to the rate of 6.22%, if on or prior to May 15, 2001, and
the Reset Rate thereafter, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid
Distributions on such Securities and which shall be distributed
on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities (such amount being a "Liquidation
Distribution").
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation
Distribution, then, except as otherwise provided in Section 6.11
hereof, the amounts payable directly by the Trust on the
Securities shall be paid on a Pro Rata basis.
SECTION VI.4 REDEMPTION AND DISTRIBUTION.
(a) Upon the redemption of the Debentures in whole (but
not in part), at maturity, the proceeds from such redemption
shall, after satisfaction of liabilities to creditors, be
simultaneously applied to redeem Securities (on a Pro Rata basis)
having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so redeemed at a redemption
price of $25 per Security plus an amount equal to accrued and
unpaid Distributions thereon at the date of the repayment,
payable in cash.
(b) If an Investment Company Event shall occur and be
continuing the Regular Trustees shall dissolve the Trust and,
after satisfaction of liabilities to creditors, cause Debentures
held by the Institutional Trustee, having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with
an interest rate the rate of 6.22%, if on or prior to May 15,
2001, and the Reset Rate thereafter, and accrued and unpaid
interest equal to accrued and unpaid Distributions on, and having
the same record date for payment as the Securities, to be
distributed to the Holders of the Securities in liquidation of
such Holders' interests in the Trust on a Pro Rata basis, within
90 days following the occurrence of such Investment Company Event
(the "90 Day Period"); provided, however, that, if at the time
there is available to the Trust the opportunity to eliminate,
within the 90 Day Period, the Investment Company Event by taking
some Ministerial Action, the Regular Trustees will pursue such
Ministerial Action in lieu of dissolution.
(c) If a Tax Event shall occur and be continuing, the
Debentures are, at the option of the Debenture Issuer, redeemable
pursuant to a Tax Event Redemption. If the Debenture Issuer
redeems the Debentures upon the occurrence and continuance of a
Tax Event, the proceeds from such redemption shall simultaneously
be applied by the Institutional Trustee to redeem the Securities
(on a Pro Rata basis) having an aggregate stated liquidation
amount equal to the aggregate principal amount of the Debentures
so redeemed at the Redemption Price. If, following the
occurrence of a Tax Event, the Debenture Issuer exercises its
option to redeem the Debentures prior to May 15, 2001, the
Debenture Issuer shall appoint the Quotation Agent to assemble
the Treasury Portfolio in consultation with the Company. The
Institutional Trustee will distribute, to the record Holder of
the Securities the Redemption Price payable in liquidation of
such Holder's interests in the Trust.
On and from the date fixed by the Regular Trustees for a Tax
Event Redemption or any distribution of Debentures and
dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding and (ii) DTC or its nominee (or any
successor Clearing Agency or its nominee) or the record Holder of
the Capital Securities, will receive a registered global
certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates
representing Securities, except for certificates representing
Capital Securities held by DTC or its nominee (or any successor
Clearing Agency or its nominee), will be deemed to represent
beneficial interests in the Debentures having an aggregate
principal amount equal to the aggregate stated liquidation amount
of $25, with an interest rate of 6.22% if on or prior to May 15,
2001, and at the Reset Rate thereafter, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such
Securities until such certificates are presented to the Debenture
Issuer or its agent for transfer or reissue.
SECTION VI.5 REDEMPTION OR DISTRIBUTION PROCEDURES.
(a) Notice of any redemption (other than in connection
with the maturity of the Debentures) of, or notice of
distribution of Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a
redemption, will be the Tax Event Redemption Date. For purposes
of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 6.5(a),
a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the
address of each such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange proceedings
with respect to any other Holder.
(b) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued
if the Debentures are redeemed as set out in this Section 6.5(a)
(such notice will be irrevocable), then (A) while the Capital
Securities are in book-entry only form, with respect to the
Capital Securities, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with DTC or its
nominee (or any successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to
the Capital Securities and will give DTC irrevocable instructions
and authority to pay the Redemption Price to the Holders of the
Capital Securities so called for redemption, and (B) with respect
to Capital Securities issued in definitive form and Common
Securities, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to
the Holders of such Securities by check mailed to the address of
the relevant Holder appearing on the books and records of the
Trust. Notwithstanding the foregoing, so long as the Holder of
any Capital Securities is the Collateral Agent or the Purchase
Contract Agent, the payment of the Redemption Price in respect of
such Capital Securities held by the Collateral Agent or the
Purchase Contract Agent shall be made no later than 12:00 noon,
New York City time, on the Tax Event Redemption Date by check or
wire transfer in immediately available funds at such place and to
such account as may be designated by the Collateral Agent or the
Purchase Contract Agent. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on
the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities
so redeemed and all rights of Holders of such Securities so
called for redemption will cease, except the right of the Holders
of such Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Regular Trustees
nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so
called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding
day that is a Business Day (without any interest or other payment
in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for repayment. If
payment of the Redemption Price in respect of any Securities is
improperly withheld or refused and not paid either by the
Institutional Trustee or by the Sponsor as guarantor pursuant to
the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue from the original redemption
date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for repayment for
purposes of calculating the Redemption Price.
(c) Redemption/Distribution Notices shall be sent by the
Trust to (A) in respect of the Capital Securities, DTC or its
nominee (or any successor Clearing Agency or its nominee) if the
Global Certificates have been issued or, if Definitive Capital
Security Certificates have been issued, to the Holders thereof,
and (B) in respect of the Common Securities, to the Holder
thereof.
(d) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws) the Sponsor or any of its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
SECTION VI.6 REPAYMENT AT OPTION OF HOLDERS.
(a) If a Failed Remarketing (as described in Section
5.4(b) of the Purchase Contract Agreement and incorporated herein
by reference) has occurred, each holder of Securities who holds
such Securities on the day immediately following the Purchase
Contract Settlement Date, shall have the right on the Business
Day immediately following May 16, 2001 to require the Trust to
distribute their pro rata share of the Debentures to the Exchange
Agent and to require the Exchange Agent to put such Debentures to
the Company on behalf of such holders on June 1, 2001, upon at
least three Business Days' prior notice (the "Put Option Exercise
Date"), at a repayment price of $25 per Security plus an amount
equal to the accrued and unpaid Distributions (including deferred
distributions if any) thereon to the date of payment (the "Put
Option Repayment Price"). Pursuant to such Put Option.
(b) The Exchange Agent shall obtain funds to pay the Put
Option Repayment Price of Securities being repaid under the Put
Option through presentation by it to the Debenture Issuer of
Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Securities for
repayment on the Put Option Exercise Date at the Debenture
Repayment Price.
(c) In order for the Securities to be repaid on the Put
Option Exercise Date, the Trust must receive on or prior to 4:00
p.m. on the third Business Day immediately preceding the Put
Option Exercise Date, at the Corporate Trust Office of the
Institutional Trustee (who will in turn notify the Exchange
Agent), the Securities to be repaid with the form entitled
"Option to Elect Repayment" on the reverse thereof or otherwise
accompanying such Security duly completed. Any such notice
received by the Trust shall be irrevocable. All questions as to
the validity, eligibility (including time of receipt) and
acceptance of the Securities for repayment shall be determined by
the Trust, whose determination shall be final and binding.
(d) Payment of the Put Option Repayment Price to Holders
of Securities shall be made at the Corporate Trust Office of the
Exchange Agent, provided that the Debenture Issuer has paid the
Exchange Agent a sufficient amount of cash in connection with the
related repayment of the Debenture no later than 1:00 p.m., New
York City time, on the Put Option Exercise Date by check or wire
transfer in immediately available funds at such place and to such
account as may be designated by such Holders. If the Exchange
Agent holds immediately available funds sufficient to pay the Put
Option Repayment Price of such Securities, then, immediately
prior to the close of business on the Put Option Exercise Date,
such Securities will cease to be outstanding and distributions
thereon will cease to accrue, whether or not Securities are
delivered to the Institutional Trustee, and all other rights of
the Holder in respect of the Securities, including the Holder's
right to require the Trust to repay such Securities, shall
terminate and lapse (other than the right to receive the Put
Option Repayment Price but without interest on such Put Option
Repayment Price). Neither the Regular Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of any Securities for which repayment has been elected.
If payment of the Put Option Repayment Price in respect of
Securities is (i) improperly withheld or refused and not paid
either by the Exchange Agent or by the Sponsor as guarantor
pursuant to the Securities Guarantee, or (ii) not paid by the
Exchange Agent as the result of an Event of Default with respect
to the Debentures presented for repayment as described in Section
6.6(b), Distributions on such Securities will continue to accrue,
from the original Put Option Exercise Date to the actual date of
payment, in which case the actual payment date will be considered
the Put Option Exercise Date for purposes of calculating the Put
Option Repayment Price.
(e) The Debenture Issuer will request, not later than
seven nor more than 15 calendar days prior to May 16, 2001 (the
date on which some or all of the Capital Securities could be
remarketed in the manner described in Section 5.4(b) of the
Purchase Contract Agreement and incorporated herein by reference)
that DTC notify the Capital Securities Beneficial Owner as well
as the Income PRIDES and Growth PRIDES holders of such
remarketing and of the procedures that must be followed if a
Capital Securities Beneficial Owner wishes to exercise such
holder's rights with respect to the Put Option.
SECTION VI.7 VOTING RIGHTS - CAPITAL SECURITIES.
(a) Except as provided under Sections 6.7(b) and 6.8 and
as otherwise required by law and the Declaration, the Holders of
the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the
Capital Securities, voting separately as a class may direct the
time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or the exercise of
any trust or power conferred upon the Institutional Trustee under
the Declaration, including (i) directing the time, method and
place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii)
waiving any past default and its consequences that is waivable
under the Indenture, (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures
shall be due and payable, or (iv) consenting to any amendment,
modification or termination of the Indenture or the Debentures
where such consent shall be required, provided, however, that,
where a consent under the Indenture would require the consent or
act of the Holders of greater than a Super Majority, the
Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the
proportion in liquidation amount of the Capital Securities which
the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding. The Institutional Trustee
shall not revoke any action previously authorized or approved by
a vote of the Holders of the Capital Securities. Other than with
respect to directing the time, method and place of conducting any
remedy available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall not
take any action in accordance with the directions of the Holders
of the Capital Securities under this paragraph unless the
Institutional Trustee has obtained an opinion of tax counsel to
the effect that for the purposes of United States federal income
tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee
fails to enforce its rights under the Debentures after a Holder
of Capital Securities has made a written request, such Holder of
Capital Securities may, to the fullest extent permitted by
applicable law, institute a legal proceeding directly against the
Debenture Issuer to enforce the Institutional Trustee's rights
under the Debentures without first instituting a legal proceeding
against the Institutional Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on
the Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Capital Securities may
directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such Holder on or after the
respective due date specified in the Debentures. Except as
provided in the preceding sentence, the Holders of Capital
Securities shall not exercise directly any other remedy available
to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities
may be given at a separate meeting of Holders of Capital
Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting
at which Holders of Capital Securities are entitled to vote, or
of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of
Capital Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which
such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Capital Securities
will be required for the Trust to repay and cancel Capital
Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities. Notwithstanding that
Holders of Capital Securities are entitled to vote or consent
under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate
of the Sponsor shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
SECTION VI.8 VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under Sections 6.8(b) and (c) and
Section 6.9 and as otherwise required by law and the Declaration,
the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V hereof, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of
Trustees.
(c) Subject to Section 2.6 hereof and only after any Event
of Default with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of
a Majority in liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred
upon the Institutional Trustee under the Declaration, including
(i) directing the time, method, and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waive any past default and
its consequences that is waivable under the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable,
provided that, where a consent or action under the Indenture
would require the consent or act of the Holders of a Super
Majority, the Institutional Trustee may only give such consent or
take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6.8(c), the Institutional Trustee shall
not revoke any action previously authorized or approved by a vote
of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any remedy
available to the Institutional Trustee or the Debenture Trustee
as set forth above, the Institutional Trustee shall not take any
action in accordance with the directions of the Holders of the
Common Securities under this paragraph unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that
for United States federal income tax purposes the Trust will not
be classified as other than a grantor trust on account of such
action. If the Institutional Trustee fails to enforce its rights
under the Declaration, any Holder of Common Securities may
institute a legal proceeding directly against any Person to
enforce the Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the
Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities
may be given at a separate meeting of Holders of Common
Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Common
Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common
Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
SECTION VI.9 AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 11.1
hereof, if any proposed amendment to the Declaration provides
for, or the Regular Trustees otherwise propose to effect, (i) any
action that would materially adversely affect the powers,
preferences or special rights of the Securities, whether by way
of amendment to the Declaration or otherwise, or (ii) the
dissolution of the Trust, other than as described in Section 7.1
or Section 3.14 hereof, then the Holders of outstanding
Securities as a class will be entitled to vote on such amendment
or proposal (but not on any other amendment or proposal) and such
amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation
amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the
approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture
with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall
request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of
the Securities voting together as a single class; provided,
however, that where a consent under the Indenture would require a
Super Majority, the Institutional Trustee may only give such
consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the
relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding; provided, further, that the
Institutional Trustee shall not take any action in accordance
with the directions of the Holders of the Securities under this
Section 6.9(b) unless (i) the Institutional Trustee has obtained
an opinion of tax counsel to the effect that for United States
federal income tax purposes, the Trust will not be classified as
other than a grantor trust on account of such action or (ii) such
action would not reduce or otherwise adversely affect powers of
the Institutional Trustee or cause the Trust to be deemed an
"investment company" which is required to be registered under the
Investment Company Act of 1940.
SECTION VI.10 REFERENCE TO PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities
outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to
each Holder of the Capital Securities pro rata according to the
aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of
all Capital Securities outstanding, and only after satisfaction
of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of
all Common Securities outstanding.
SECTION VI.11 RANKING.
The Capital Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that,
where an Event of Default occurs and is continuing under the
Indenture in respect of the Debentures held by the Institutional
Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the
rights to payment of the Holders of the Capital Securities.
SECTION VI.12 ACCEPTANCE OF SECURITIES GUARANTEE AND
INDENTURE.
Each Holder of Capital Securities and Common Securities by
the acceptance thereof, agrees to the provisions of the Indenture
and the Guarantee, respectively.
SECTION VI.13 NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive
rights to subscribe for any additional securities.
SECTION VI.14 MISCELLANEOUS.
(a) The Sponsor will provide a copy of the
Declaration, the Guarantee and the Indenture to a Holder without
charge on written request to the Sponsor at its principal place
of business.
(b) The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital
Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of
the Trust by a Regular Trustee. Such signature shall be the
manual or facsimile signature of any present or any future
Regular Trustee. In case any Regular Trustee who shall have
signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by
the Trust, such Certificates nevertheless may be delivered as
though the person who signed such Certificates had not ceased to
be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of
execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of
the Declaration any such person was not such a Regular Trustee.
Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification
or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation of any stock exchange
on which Securities may be listed, or to conform to usage.
(d) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
capital of the Trust and shall not constitute a loan to the
Trust.
(e) Upon issuance of the Securities as provided in
this Declaration, the Securities so issued shall be deemed to be
validly issued, fully paid and non-assessable.
Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
SECTION VI.15 PAYING AGENT.
In the event that the Capital Securities are not in
book-entry only form, the Trust shall maintain in the Borough of
Manhattan, City of New York, State of New York, an office or
agency where the Capital Securities may be presented for payment
("Paying Agent"), and any such Paying Agent shall comply with
Section 317(b) of the Trust Indenture Act. The Trust may appoint
the Paying Agent and may appoint one or more additional paying
agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent. The Trust
may change any Paying Agent without prior notice to any Holder.
The Trust shall notify the Institutional Trustee of the name and
address of any Paying Agent not a party to this Declaration. If
the Trust fails to appoint or maintain another entity as Paying
Agent, the Institutional Trustee shall act as such. The Trust or
any of its Affiliates (including the Sponsor) may act as Paying
Agent. The Bank of New York shall initially act as Paying Agent
for the Capital Securities and the Common Securities.
ARTICLE VII
TERMINATION OF TRUST
SECTION VII.1 TERMINATION OF TRUST.
(a) The Trust shall dissolve:
(i) upon a Termination Event;
(ii) upon the filing of a certificate of dissolution
or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90
days after the date of revocation without a reinstatement
thereof;
(iii)upon the entry of a decree of judicial
dissolution of the Holder of the Common Securities, the
Sponsor or the Trust;
(iv)upon the occurrence and continuation of an
Investment Company Event pursuant to which the Trust shall
have been dissolved in accordance with the terms of the
Securities and all of the Debentures endorsed thereon shall
have been distributed to the Holders of Securities in
exchange for all of the Securities;
(v) when all the Securities shall have been called
for redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in accordance
with the terms of the Securities; or
(vi)with the consent of all of the Regular Trustees
and the Sponsor.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 7.1(a) or a dissolution pursuant to
Section 3.14 and upon completion of the winding-up of the Trust,
the Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.
(c) The provisions of Section 4.4 and Article IX shall
survive the termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION VIII.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in
this Declaration and in the terms of the Securities. Any transfer
or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(b) Subject to this Article VIII, Capital Securities shall
be freely transferable.
(c) Subject to this Article VIII, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor
or a Related Party of the Sponsor; provided that any such
transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would be classified for United States
federal income tax purposes as other than a grantor trust;
and
(ii) the Trust would be an Investment Company or the
transferee to be an Investment Company.
SECTION VIII.2 TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be
effected without charge but only upon payment (with such
indemnity as the Regular Trustees may require) in respect of any
tax or other government charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular
Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Certificate. By acceptance of
a Certificate, each transferee shall be deemed to have agreed to
be bound by this Declaration.
SECTION VIII.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the
Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of
receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any
Person, whether or not the Trust shall have actual or other
notice thereof.
SECTION VIII.4 BOOK ENTRY INTERESTS.
The Capital Securities Certificates, on original issuance,
in addition to being issued in the form of one or more
definitive, fully registered Capital Securities Certificate (each
a "Definitive Capital Securities Certificate") will be issued in
the form of one or more, fully registered, global Capital
Security Certificates (each a "Global Certificate"), to be
delivered to DTC, the initial Clearing Agency, by, or on behalf
of, the Trust. Such Global Certificate(s) shall initially be
registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Capital Security
Beneficial Owner will receive a definitive Capital Security
Certificate representing such Capital Security Beneficial Owner's
interests in such Global Certificate(s), except as provided in
Section 8.7. Except for the Definitive Capital Security
Certificates as specified herein and the definitive, fully
registered Capital Securities Certificates that have been issued
to the Capital Security Beneficial Owners pursuant to Section
8.7:
(a) the provisions of this Section 8.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global
Certificate(s) and receiving approvals, votes or consents
hereunder) as the Holder of the Capital Securities and the sole
holder of the Global Certificate(s) and shall have no obligation
to the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 8.4
conflict with any other provisions of this Declaration, the
provisions of this Section 8.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants to receive and transmit payments
of Distributions on the Global Certificates to such Clearing
Agency Participants. DTC will make book entry transfers among the
Clearing Agency Participants; provided, that, solely for the
purposes of determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided
for in this Declaration, so long as Definitive Capital Security
Certificates have not been issued, the Trustees may conclusively
rely on, and shall be protected in relying on, any written
instrument (including a proxy) delivered to the Trustees by the
Clearing Agency setting forth the Capital Security Beneficial
Owners' votes or assigning the right to vote on any matter to any
other Persons either in whole or in part.
SECTION VIII.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, unless and
until definitive fully registered Capital Security Certificates
shall have been issued to the Capital Security Beneficial Owners
pursuant to Section 8.7 or otherwise, the Regular Trustees shall
give all such notices and communications specified herein to be
given to the Capital Security Holders to the Clearing Agency, and
shall have no notice obligations to the Capital Security
Beneficial Owners.
SECTION VIII.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital
Securities.
SECTION VIII.7 DEFINITIVE CAPITAL SECURITY CERTIFICATES.
If:
(a) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Capital Securities
and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 8.6; or
(b) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Capital Securities, then:
(c) definitive fully registered Capital Security
Certificates shall be prepared by the Regular Trustees on behalf
of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the
Regular Trustees shall cause definitive fully registered Capital
Securities Certificates to be delivered to Capital Security
Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of
them may conclusively rely on and shall be protected in relying
on, said instructions of the Clearing Agency. The definitive
fully registered Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Regular Trustees, as evidenced
by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as
may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Capital Securities may be listed,
or to conform to usage.
SECTION VIII.8 MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES.
If:
(a) any mutilated Certificate should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft
of any Certificate; and
(b) there shall be delivered to the Regular Trustees and
Institutional Trustee such security or indemnity as may be
required by them to keep each of them and the Trust harmless,
then, in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, any Regular Trustee on
behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In
connection with the issuance of any new Certificate under this
Section 8.8, the Regular Trustees may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the relevant Securities, as
if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
ARTICLE IX
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR
OTHERS
SECTION IX.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Debentures, the Guarantee and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the
Holders of the Securities, which shall be made solely from
assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or
otherwise.
(b) Under Section 5.1 of the First Supplemental Indenture,
the Debenture Issuer, in its capacity as Borrower, shall be
liable for all of the debts and obligations of the Trust (other
than with respect to the Securities) to the extent not satisfied
out of the Trust's assets.
(c) Pursuant to 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same
limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION IX.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person
in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION IX.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Declaration shall
not be liable to the Trust or to any other Covered Person for its
good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity (other than the duties imposed on
the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Person or any Indemnified Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of
Securities,
the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case
the relative interest of each party (including its own interest)
to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence of
bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall
not constitute a breach of this Declaration or any other
agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION IX.4 INDEMNIFICATION.
(a)
(i) Under Section 5.1 of the First Supplemental
Indenture, the Debenture Issuer shall be required to
indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or
in the right of the Trust) by reason of the fact that he is
or was a Company Indemnified Person against expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) Under Section 5.1 of the First Supplemental
Indenture, the Debenture Issuer shall be required to
indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem
proper.
(iii)Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be
made by the Debenture Issuer only as authorized in the
specific case upon a determination that indemnification of
the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular
Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even
if obtainable, if a quorum of disinterested Regular Trustees
so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holders of the Trust.
(iv) Expenses (including attorneys' fees) incurred by
a Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section
10.4(a) shall be paid by the Debenture Issuer in advance of
the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall
ultimately be determined that such person is not entitled
to be indemnified by the Debenture Issuer as authorized in
this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the
Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent
legal counsel in a written opinion or (iii) by the Common
Security Holders of the Trust, that, based upon the facts
known to the Regular Trustees, independent legal counsel or
Common Security Holder at the time such determination is
made, such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or
Common Security Holders reasonably determine that such
person deliberately breached such person's duty to the Trust
or its Common or Capital Security Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of
this Section 9.4(a) shall not be deemed exclusive of any
other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement,
vote of shareholders or disinterested directors of the
Sponsor or Capital Security Holders of the Trust or
otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All
rights to indemnification under this Section 9.4(a) shall be
deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 9.4(a) is in
effect. Any repeal or modification of this Section 9.4(a)
shall not affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase
and maintain insurance on behalf of any person who is or was
a Company Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him
against such liability under the provisions of this Section
9.4(a).
(vii) For purposes of this Section 9.4(a), references
to "the Trust" shall include, in addition to the resulting
or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the
provisions of this Section 9.4(a) with respect to the
resulting or surviving entity as such person would have with
respect to such constituent entity if its separate existence
had continued.
(viii)The indemnification and advancement of
expenses provided by, or granted pursuant to, this Section
9.4(a) shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of
the successors, heirs, executors and administrators of such
a person.
(b) Under Section 5.1 of the First Supplemental Indenture,
the Debenture Issuer also shall be required to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Institutional Trustee or the Delaware Trustee,
and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or
agents of the Institutional Trustee or the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary
Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence and, in the case of the
Institutional Trustee, pursuant to Section 3.9, negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against or investigating any
claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The provisions of this
Section 10.4(b) shall survive the satisfaction and discharge of
this Declaration or the resignation or removal of the
Institutional Trustee or the Delaware Trustee, as the case may
be.
SECTION IX.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and
the Institutional Trustee may engage in or possess an interest in
other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate
of the Sponsor, or may act as depositary for, trustee or agent
for, or act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
ARTICLE X
ACCOUNTING
SECTION X.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION X.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the
Trust shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting,
in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of
the Trust shall be examined by and reported upon as of the end of
each Fiscal Year of the Trust by a firm of independent certified
public accountants selected by the Regular Trustees.
(b) The Trust shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United
States federal income tax information statement required by the
Code, containing such information with regard to the Securities
held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Trust shall endeavor to
deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Trust shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States
federal income tax return, on a Form 1041 or such other form or
statement as may be required under United States federal income
tax law, and any other annual income tax returns required to be
filed by the Trust on behalf of the Trust with any state or local
taxing authority. A copy of such returns as filed will be
delivered to the Institutional Trustee promptly after filing.
SECTION X.3 BANKING.
The Trust shall maintain one or more bank accounts in the
name and for the sole benefit of the Trust; provided however,
that all payments of funds in respect of the Debentures held by
the Institutional Trustee shall be made directly to the
Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular
Trustees; provided, however, that the Institutional Trustee shall
designate the signatories for the Institutional Trustee Account.
SECTION X.4 WITHHOLDING.
The Trust shall comply with all withholding requirements
under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations
and forms as shall reasonably be requested by the Trust to assist
it in determining the extent of, and in fulfilling, its
withholding obligations. The Trust shall file required forms with
applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect
to distributions or allocations to any Holder, the amount
withheld shall be deemed to be a distribution in the amount of
the withholding to the Holder. In the event of any claimed over
withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld
was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION XI.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by
any applicable terms of the Securities, this Declaration may only
be amended by a written instrument approved and executed by the
Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees); and
(i) if the amendment affects the rights, powers,
duties, obligations or immunities of the Institutional
Trustee, also by the Institutional Trustee; and
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee,
also by the Delaware Trustee;
(b) no amendment shall be made:
(i) unless, in the case of any proposed amendment,
the Institutional Trustee shall have first received an
Officers' Certificate from each of the Trust and the Sponsor
that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment
which affects the rights, powers, duties, obligations or
immunities of the Institutional Trustee, the Institutional
Trustee shall have first received:
(A)an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(B)an opinion of counsel (who may be counsel to
the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
and
(iii)to the extent the result of such amendment would
be to:
(A)cause the Trust to fail to continue to be
classified for purposes of United States federal
income taxation as a grantor trust;
(B)reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention
of the Trust Indenture Act; or
(C)cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) at such time after the Trust has issued any Securities
that remain outstanding, any amendment that would materially and
adversely affect the rights, privileges or preferences of any
Holder of Securities may be effected only with such additional
requirements as may be set forth in the terms of such Securities;
(d) Section 8.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the
Securities;
(e) Article IV shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the Common
Securities;
(f) the rights of the Holders of the Common Securities
under Article V to increase or decrease the number of, and
appoint and remove Trustees shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the
Common Securities; and
(g) notwithstanding Section 11.1(c), this Declaration may
be amended without the consent of the Holders of the Securities
to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any
other provision of this Declaration;
(iii)add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse
effect on the right, preferences or privileges of the
Holders;
(v) to modify, eliminate and add to any provision of
the Declaration to such extent as may be necessary; and
(vi) cause the Trust to continue to be classified for
United States federal income tax purposes as a grantor
trust.
SECTION XI.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT.
(a) Meetings of the Holders of any class of Securities may
be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on
which Holders of such class of Securities are entitled to act
under the terms of this Declaration, the terms of the Securities
or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular
Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given
by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for
which the meeting is to be called. Any Holders of Securities
calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the
right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms
of the Securities, the following provisions shall apply to
meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at
least 7 days and not more than 60 days before the date of
such meeting. Whenever a vote, consent or approval of the
Holders of Securities is permitted or required under this
Declaration, the terms of the Securities or the rules of any
stock exchange on which the Capital Securities are listed or
admitted for trading, such vote, consent or approval may be
given at a meeting of the Holders of Securities. Any action
that may be taken at a meeting of the Holders of Securities
may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders
of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all
Holders of Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written
ballot submitted to the Security Holder for the purpose of
taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a
Holder of Securities is entitled to participate, including
waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of
11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of
the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting
or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii)each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the
listing rules of any stock exchange on which the Capital
Securities are then listed or trading otherwise provides,
the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted
on by any Holders of Securities, waiver of any such notice,
action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of
any such right to vote.
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION XII.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL
TRUSTEE.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at
the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a national banking
association with trust powers, duly organized, validly existing
and in good standing under the laws of the United States of
America, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of,
the Declaration;
(b) the Institutional Trustee satisfies the requirements
set forth in Section 5.3(a);
(c) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized
by all necessary corporate action on the part of the
Institutional Trustee. The Declaration has been duly executed and
delivered by the Institutional Trustee, and it constitutes a
legal, valid and binding obligation of the Institutional Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency,
and other similar laws affecting creditors' rights generally and
to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with
or constitute a breach of the Articles of Organization or By-laws
of the Institutional Trustee; and
(e) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking
authority is required for the execution, delivery or performance
by the Institutional Trustee, of the Declaration.
SECTION XII.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE
TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the
Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that:
(a) The Delaware Trustee is a Delaware corporation, duly
organized, validly existing and in good standing under the laws
of the State of Delaware, with power and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of, the Declaration;
(b) the execution, delivery and performance by the
Delaware Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Delaware
Trustee. The Declaration has been duly executed and delivered by
the Delaware Trustee, and it constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against
it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking
authority is required for the execution, delivery or performance
by the Delaware Trustee of the Declaration; and
(d) the execution, delivery and performance of the
Declaration by the Delaware Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of
the Delaware Trustee; and
(e) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIII
MISCELLANEOUS
SECTION XIII.1 NOTICES.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall
be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees
at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
Ingersoll-Rand Financing I
c/o Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attn: Corporate Secretary
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware
Trustee may give notice of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, DE 19801
Attention: Corporate Trust Services
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional
Trustee may give notice of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to
the Trust):
Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attn: Corporate Secretary
(e) if given to any other Holder, at the address set forth
on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed
by first class mail, postage prepaid except that if a notice or
other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION XIII.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder
shall be governed by and interpreted in accordance with the laws
of the State of Delaware and all rights and remedies shall be
governed by such laws without regard to principles of conflict of
laws.
SECTION XIII.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a
grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION XIII.4 HEADINGS.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION XIII.5 SUCCESSORS AND ASSIGNS.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party
shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind
and inure to the benefit of their respective successors and
assigns, whether so expressed.
SECTION XIII.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held
invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
SECTION XIII.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of
the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same
force and effect as though all of the signers had signed a single
signature page.
SECTION XIII.8 REMARKETING
(a) The Debenture Issuer will request, not later
than 15 nor more than 30 calendar days prior to the Remarketing
Date that the Clearing Agency notify the Holders of Capital
Securities and the Holders of Income PRIDES and Growth PRIDES of
the Remarketing and of the procedures that must be followed if a
Holder of Capital Securities wishes to exercise such Holder's
rights with respect to the Put Option if there is a Failed
Remarketing.
(b) Not later than 5:00 P.M., New York City time, on
the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, each Holder of the Capital Securities
may elect to have Capital Securities held by such Holder
remarketed. Under Section 5.4 of the Purchase Contract
Agreement, Holders of Income PRIDES that do not give notice of
intention to make a Cash Settlement of their related Purchase
Contract shall be deemed to have consented to the disposition of
the Capital Securities comprising a component of such Income
PRIDES. Holders of Capital Securities that are not a component
Income PRIDES shall give notice of their election to have such
Capital Securities remarketed to the Custodial Agent pursuant to
the Pledge Agreement. Any such notice shall be irrevocable after
5:00 p.m. New York City time on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date and
may not be conditioned upon the level at which the Reset Rate is
established. Promptly after 5:30 P.M., New York City time, on
such fifth Business Day, the Institutional Trustee, based on the
notices received by it prior to such time (including notices from
the Purchase Contract Agent as to Purchase Contracts for which
cash settlement has been elected), shall notify the Trust, the
Sponsor and the Remarketing Agent of the number of Capital
Securities to be tendered for purchase.
(c) If any Holder of Income PRIDES, does not give a
notice of its intention to make a Cash Settlement or gives a
notice of election to tender Capital Securities, as described in
Section 13.8(b), the Capital Securities of such Holder shall be
deemed tendered, notwithstanding any failure by such Holder to
deliver or properly deliver such Capital Securities to the
Remarketing Agent for purchase.
(d) The right of each Holder to have Capital
Securities tendered for purchase shall be limited to the extent
that (i) the Remarketing Agent conducts a remarketing pursuant to
the terms of the Remarketing Agreement, (ii) Capital Securities
tendered have not been called for redemption, (iii) the
Remarketing Agent is able to find a purchaser or purchasers for
tendered Capital Securities and (iv) such purchaser or purchasers
deliver the purchase price therefor to the Remarketing Agent.
(e) On the Remarketing Date, the Remarketing Agent
shall use commercially reasonable efforts to remarket at a price
equal to 100.5% of the aggregate liquidation amount thereof,
Capital Securities tendered or deemed tendered for purchase.
(f) If none of the Holders elect to have Capital
Securities held by them remarketed, the Reset Rate shall be the
rate determined by the Remarketing Agent, subject to the terms of
the Remarketing Agreement, as the rate that would have been
established had a remarketing been held on the Remarketing Date.
(g) If the Remarketing Agent has determined that it
will be able to remarket all Capital Securities, tendered or
deemed tendered prior to 4:00 P.M., New York City time, on the
Remarketing Date, the Remarketing Agent shall determine the Reset
Rate, which shall be the rate per annum (rounded to the nearest
one-thousandth (0.001) of one percent per annum) which the
Remarketing Agent determines, subject to the term of the
Remarketing Agreement, to be the lowest rate per annum that will
enable it to remarket all Capital Securities tendered or deemed
tendered for remarketing.
(h) If, by 4:00 P.M., New York City time, on the
Remarketing Date, the Remarketing Agent is unable to remarket all
Capital Securities tendered or deemed tendered for purchase, a
failed remarketing ("Failed Remarketing") shall be deemed to have
occurred and the Remarketing Agent shall so advise by telephone
the Collateral Agent, Debenture Issuer, Institutional Trustee,
Delaware Trustee and Clearing Agency.
(i) By approximately 4:30 P.M., New York City time,
on the Remarketing Date, provided that there has not been a
Failed Remarketing, the Remarketing Agent shall advise, by
telephone (i) the Collateral Agent, Debenture Issuer,
Institutional Trustee, Delaware Trustee and Clearing Agency of
the Reset Rate determined in the Remarketing and the number of
Capital Securities sold in the remarketing, (ii) each purchaser
(or the Clearing Agency Participant thereof) of the Reset Rate
and the number of Capital Securities such purchaser is to
purchase and (iii) each purchaser to give instructions to its
Clearing Agency Participant to pay the purchase price on the
Purchase Contract Settlement Date in same day funds against
delivery of the Capital Securities purchased through the
facilities of the Clearing Agency.
(j) In accordance with the Clearing Agency's normal
procedures, on the Purchase Contract Settlement Date, the
transactions described above with respect to each Capital
Security tendered for purchase and sold in the remarketing shall
be executed through the Clearing Agency, and the accounts of the
respective Clearing Agency Participants shall be debited and
credited and such Capital Securities delivered by book entry as
necessary to effect purchases and sales of such Capital
Securities. The Clearing Agency shall make payment in accordance
with its normal procedures.
(k) If any Holder selling Capital Securities in the
remarketing fails to deliver such Capital Securities, the
Clearing Agency Participant of such selling Holder and of any
other person that was to have purchased Capital Securities in the
remarketing may deliver to any such other person a number of
Capital Securities that is less than the number of Capital
Securities that otherwise was to be purchased by such person. In
such event, the number of Capital Securities to be so delivered
shall be determined by such Clearing Agency Participant, and
delivery of such lesser number of Capital Securities shall
constitute good delivery.
(l) The Remarketing Agent is not obligated to
purchase any Capital Securities that would otherwise remain
unsold in a remarketing. Neither the Trust, any Trustee, the
Sponsor nor the Remarketing Agent shall be obligated in any case
to provide funds to make payment upon tender of Capital
Securities for remarketing.
(m) The tender and settlement procedures set forth
in this Section 13.8, including provisions for payment by
purchasers of Capital Securities in the remarketing, shall be
subject to modification, notwithstanding any provision to the
contrary set forth in Article 11, to the extent required by the
Clearing Agency or if the book-entry system is no longer
available for the Capital Securities at the time of the
remarketing, to facilitate the tendering and remarketing of
Capital Securities in certificated form. In addition, the
Remarketing Agent may, notwithstanding any provision to the
contrary set forth in Article 11, modify the settlement
procedures set forth herein in order to facilitate the settlement
process.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above
written.
___________________________________
__________
Ronald G. Heller,
as Regular Trustee
___________________________________
__________
Patricia Nachtigal,
as Regular Trustee
___________________________________
__________
Nancy Casablanca,
as Regular Trustee
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
By ________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Institutional Trustee
By ________________________________
Name:
Title:
INGERSOLL-RAND COMPANY,
as Sponsor
By _______________________________
Name:
Title:
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[IF THE Capital Security IS TO BE A GLOBAL CERTIFICATE
INSERT - This
Capital Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the
name of The Depository Trust Company (the "Depositary") or a
nominee of the Depositary. This Capital Security is exchangeable
for Capital Securities registered in the name of a person other
than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of
this Capital Security (other than a transfer of this Capital
Security as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Capital Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York, New York) to the Trust or its agent for registration of
transfer, exchange or payment, and any Capital Security issued is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.]
Certificate Number _________ Number of Capital Securities
CUSIP NO. ___________
Certificate Evidencing Capital Securities
of
Ingersoll-Rand Financing I
____% Capital Securities
(liquidation amount $25 per Capital Security)
Ingersoll-Rand Financing I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that __________ (the "Holder") is the registered
owner of__________ Capital Securities of the Trust
representing undivided beneficial ownership interests in the
assets of the Trust designated as the 6.22% Capital Securities
(liquidation amount $25 per capital security) (the "Capital
Securities"). The Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the
Capital Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of March 23, 1998, as
the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to
the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and
the Indenture to a Holder without charge upon written request to
the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of indirect beneficial
ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
23rd day of March, 1998.
INGERSOLL-RAND FINANCING I
By: ___________________________
Name: _________________________
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed
at a rate per annum of 6.22% until May 15, 2001, and at the Reset
Rate thereafter (the "Coupon Rate") of the stated liquidation
amount of $25 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the
rate of 6.22% until May 15, 2001, and at the Reset Rate
thereafter (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made
in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional Trustee has funds available
therefor. The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on the
basis of a 360-day year consisting of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period
for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per
30-day month.
Except as otherwise described below, Distributions on the
Capital Securities will be cumulative, will accrue from the date
of original issuance and will be payable quarterly in arrears, on
February 16, May 16, August 16 and November 16 of each year,
commencing on May 16, 1998, to holders of record, if in
book-entry only form, one Business Day prior to such payment
date, which payment dates shall correspond to the interest
payment dates on the Debentures. In the event that the Capital
Securities are not in book-entry form, the Regular Trustees will
have the right to select relevant record dates, which will be
more than one Business Day but less than 60 Business Days prior
to the relevant payment dates. The Debenture Issuer has the
right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the
Debentures for a period not exceeding beyond the date of maturity
of the Debentures (each an "Extension Period") and, as a
consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will
continue to accrue with interest thereon at the rate of 6.22%
until May 15, 2001, and at the Reset Rate thereafter, compounded
quarterly during any such Extension Period (to the extent
permitted by applicable law). Payments of accrued Distributions
will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period; provided that such
Extension Period together with all such previous and further
extensions thereof may not exceed beyond the maturity date of the
Debenture.
The Capital Securities shall be redeemable as provided in
the Declaration.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Trust to repay $_____ stated liquidation amount of the within
Capital Security, pursuant to its terms, on the "Put Option
Exercise Date," together with distributions thereon accrued but
unpaid to the date of repayment, to the undersigned at:
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the
Declaration, a new Capital Security or Capital Securities
representing the remaining stated liquidation amount of this
Capital Security.
For this Option to Elect Repayment to be effective, the within
Capital Security with this Option to Elect Repayment duly
completed must be received by the Trust at the Corporate Trust
Office of the Institutional Trustee at The First National Bank of
Chicago, One First National Plaza, Suite 0126, Chicago, IL 60670-
0126, Attention: Corporate Trust Administration.
Dated: Signature:_________________________
Signature Guarantee: ______________
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Capital Security in every particular without alternation or
enlargement or any change whatsoever.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Insert assignee's social security or tax identification number)
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
agent to transfer this Capital Security Certificate on the books
of the Trust. The agent may substitute another to act for him or
her.
Date: ____________________________________
Signature: __________________________
Signature Guarantee: ________________
(Sign exactly as your name appears on the other side of this Cap
ital Security Certificate)
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THE COMMON SECURITIES MAY ONLY BE TRANSFERRED BY THE
DEBENTURE ISSUER AND ANY RELATED PARTY TO THE DEBENTURE ISSUER OR
A RELATED PARTY OF THE DEBENTURE ISSUER; PROVIDED THAT, ANY SUCH
TRANSFER IS SUBJECT TO THE CONDITION PRECEDENT THAT THE
TRANSFEROR OBTAIN THE WRITTEN OPINION OF NATIONALLY RECOGNIZED
INDEPENDENT COUNSEL EXPERIENCED IN SUCH MATTERS THAT SUCH
TRANSFER WOULD NOT CAUSE:
(I) THE TRUST TO BE CLASSIFIED FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES AS OTHER THAN A GRANTOR TRUST;
AND
(II) THE TRUST TO BE AN INVESTMENT COMPANY OR THE
TRANSFEREE TO BECOME AN INVESTMENT COMPANY.
Certificate Number________________ Number of Common Securities
Certificate Evidencing Common Securities
of
Ingersoll-Rand Financing I
6.22% Common Securities
(liquidation amount $25 per Common Security)
Ingersoll-Rand Financing I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that Ingersoll-Rand Company (the "Holder") is
the registered owner of 497,939 common securities of the Trust
representing undivided beneficial ownership interests in the
assets of the Trust designated as the 6.22% Common Securities
(liquidation amount $25 per common security) (the "Common
Securities"). The Common Securities are transferable on the books
and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of March 23_, 1998, as
the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to
the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and
the Indenture to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by
the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of indirect beneficial
ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 23rd day of March, 1998.
INGERSOLL-RAND FINANCING I
By: ________________________
Name: ______________________
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed
at a rate per annum of 6.22% until ________, 2001, and at the
Reset Rate thereafter (the "Coupon Rate") of the stated
liquidation amount of $25 per Common Security, such rate being
the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the
rate of 6.22% until May 15, 2001, and at the Reset Rate
thereafter (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made
in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional Trustee has funds available
therefor. The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed
on the basis of the actual number of days elapsed per 30-day
month.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date
of original issuance and will be payable quarterly in arrears, on
February 16, May 16, August 16 and November 16, of each year,
commencing on May 16, 1998, to Holders of record one Business Day
prior to such payment dates, which payment dates shall correspond
to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding beyond the date
of maturity of the Debentures (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted
by applicable law) at the rate of 6.22% until May 15, 2001, and
at the Reset Rate thereafter, compounded quarterly during any
such Extension Period. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period; provided, that such Extension
Period together with all such previous and further extensions
thereof may not exceed beyond the maturity date of the
Debentures.
The Common Securities shall be redeemable as provided in the
Declaration.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Trust to repay $_____ stated liquidation amount of the within
Common Security, pursuant to its terms, on the "Put Option
Exercise Date," together with distributions thereon accrued and
unpaid to the date of repayment, to the undersigned at:
_________________________________________________
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the
Declaration, a new Common Security or Common Securities
representing the remaining stated liquidation amount of this
Common Security.
For this Option to Elect Repayment to be effective, the within
Common Security with this Option to Elect Repayment duly
completed must be received by the Trust at the Corporate Trust
Office of the Institutional Trustee at The First National Bank of
Chicago, One First National Plaza, Suite 0126, Chicago, IL 60670-
0126, Attention: Corporate Trust Administration.
Dated:_______________ Signature: ________________________
Signature Guarantee: ________________
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Common Security in every particular without alternation or
enlargement or any change whatsoever.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
agent to transfer this Common Security Certificate on the books
of the Trust. The agent may substitute another to act for him or
her.
Date: ____________________________________
Signature: ________________________
Signature Guarantee: _______________
(Sign exactly as your name appears on the other side of this Com
mon Security Certificate)
EXHIBIT B
SPECIMEN OF DEBENTURE
EXHIBIT C
UNDERWRITING AGREEMENT
___________________________________________
GUARANTEE AGREEMENT
INGERSOLL-RAND FINANCING I
Dated as of March 23, 1998
___________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1Definitions and Interpretation 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1Trust Indenture Act: Application 4
SECTION 2.2List of Holders of Securities 4
SECTION 2.3Reports by the Guarantee Trustee 4
SECTION 2.4Periodic Reports to Guarantee Trustee 4
SECTION 2.5Evidence of Compliance with Conditions Precedent 5
SECTION 2.6Events of Default; Waiver 5
SECTION 2.7Event of Default; Notice 5
SECTION 2.8Conflicting Interests 5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1Powers and Duties of the Guarantee Trustee 5
SECTION 3.2Certain Rights of the Guarantee Trustee 7
SECTION 3.3Not Responsible for Recitals or Issuance
of Guarantee 8
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1Guarantee Trustee; Eligibility 8
SECTION 4.2Appointment, Removal and Resignation of
Guarantee Trustees 9
ARTICLE V
GUARANTEE
SECTION 5.1Guarantee 9
SECTION 5.2Waiver of Notice and Demand 10
SECTION 5.3Obligations Not Affected 10
SECTION 5.4Rights of Holders 10
SECTION 5.5Guarantee of Payment 11
SECTION 5.6Subrogation 11
SECTION 5.7Independent Obligations 11
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING
SECTION 6.1Limitation of Transactions 11
SECTION 6.2Ranking 12
ARTICLE VII
TERMINATION
SECTION 7.1Termination 12
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1Exculpation 12
SECTION 8.2Indemnification 13
ARTICLE IX
MISCELLANEOUS
SECTION 9.1Successors and Assigns 13
SECTION 9.2Amendments 13
SECTION 9.3Notices 14
SECTION 9.4Benefit 14
SECTION 9.5Governing Law. 14
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of
March 23, 1998, is executed and delivered by Ingersoll-Rand
Company, a New Jersey corporation (the "Guarantor"), and "The
First National Bank of Chicago", as trustee (the " Guarantee
Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Securities (as defined herein) of
Ingersoll-Rand Financing I, a Delaware business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of March 23, 1998, among the
trustees of the Issuer named therein, the Guarantor, as sponsor,
and the holders from time to time of undivided beneficial
ownership interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 16,100,000 Capital Securities,
liquidation amount $25 per capital security, having an aggregate
liquidation amount of $402,500,000 designated the 6.22% Capital
Securities (the "Capital Securities") and 497,939 common
securities, liquidation amount $25 per common security, having an
aggregate liquidation amount $12,448,475, designated the 6.22%
Common Securities (the "Common Securities" and, together with the
FELINE PRIDES, the "Securities");
WHEREAS, as incentive for the Holders to purchase the
Securities, the Guarantor desires irrevocably and unconditionally
to agree, to the extent set forth in this Guarantee, to pay to
the Holders the Guarantee Payments (as defined herein) and to
make certain other payments on the terms and conditions set forth
herein; and
WHEREAS, if an Event of Default (as defined in the
Declaration), has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments
under this Guarantee are subordinated to the rights of the
holders of the Capital Securities to receive Guarantee Payments
under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1 Definitions and Interpretation
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all reference to "the Guarantee" or "this Guarantee"
are to this Guarantee as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee to Articles and
Sections are to Articles and Sections of this
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee, unless otherwise
defined in this Guarantee or unless the context
otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than Saturday, Sunday or
any day on which banking institutions in the City of New York,
New York are authorized or required by any applicable law to
close.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee
Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this
Agreement is located at The First National Bank of Chicago, One
First National Plaza, Suite 0126, Chicago, IL 60670-0126,
Attention: Corporate Services Division
"Covered Person" means any Holder or beneficial owner of
Securities.
"Debentures" means the series of debt securities of the
Guarantor designated the % Debentures due , 2003
held by the Institutional Trustee (as defined in the Declaration)
of the Issuer.
"Direction" by a person means a written direction signed:
(a) if the Person is a natural person, by that Person; or (b) in
any other case in the name of such Person by one or more
Authorized Officers of that Person.
"Event of Default" means a default by the Guarantor on any
of its payment or other obligations under this Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the
Securities, to the extent not paid or made by the Issuer: (i) any
accrued and unpaid Distributions (as defined in the Declaration)
that are required to be paid on such Securities to the extent
the Issuer shall have funds available therefor, (ii) the
redemption price, including all accrued and unpaid distributions
to the date of redemption (the "Redemption Price") with respect
to Securities in respect of which the related Debentures have
been redeemed by the Company upon the occurrence of a Tax Event
Redemption, to the extent the Issuer has funds available
therefor, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange
for the Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Securities to the date of payment, to
the extent the Issuer shall have funds available therefor, and
(b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an event of default
under the Indenture has occurred and is continuing, the rights of
holders of the Common Securities to receive payments under this
Guarantee Agreement are subordinated to the rights of holders of
Capital Securities to receive Guarantee Payments under this
Guarantee.
"Holder" shall mean any holder, as registered on the books
and records of the Issuer, of any Securities; provided, however,
that, in determining whether the holders of the requisite
percentage of Securities have given any request, notice, consent
or waiver hereunder, "Holder" shall not include the Guarantor or
any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of March 23, 1998,
among the Guarantor (the "Debenture Issuer") and The Bank of New
York, as trustee, and any indenture supplemental thereto pursuant
to which certain debt securities of the Debenture Issuer are to
be issued to the Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by
Holder(s) of Securities, voting separately as a class, of more
than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any
Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Guarantee shall
include:
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and
the definition relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association,
joint stock company, limited liability company, trust,
unincorporated association or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Guarantee Trustee" means The First National Bank of
Chicago, until a Successor Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this
Guarantee and thereafter means each such Successor Guarantee
Trustee.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust office of the
Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust
Office of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee
Trustee under Section 4.1.
"Tax Event Redemption" has the same meaning as defined in
Annex I to the Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application
(a) This Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this
Guarantee and shall, to the extent applicable, be governed by
such provisions; and
(b) If and to the extent that any provision of this
Guarantee limits, qualifies or conflicts with the duties imposed
by Section 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
SECTION 2.2 List of Holders of Securities
(a) The Guarantor shall provide the Guarantee Trustee with
a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of
Holders") as of such date, (i) within 1 Business Day after
January 1 and July 1 of each year, and (ii) at any other time
within 30 days of receipt by the Guarantor of a written request
for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Guarantee Trustee provided,
that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Guarantee Trustee by
the Guarantor. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of
the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee
Within 60 days after May 15 of each year, the Guarantee
Trustee shall provide to the Holders such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture
Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with any conditions precedent, if any,
provided for in this Securities Guarantee that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of
Securities may, by vote, on behalf of all Holders, waive any past
Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, actually known to a
Responsible Officer of the Guarantee Trustee transmit by mail,
first class postage prepaid, to the Holders, notices of all such
Events of Default, unless such defaults have been cured or waived
before the giving of such notice, provided, that, the Guarantee
Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Guarantee Trustee in good
faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee
shall have received written notice thereof, or a Responsible
Officer of the Guarantee Trustee charged with the administration
of the Declaration shall have obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests
The Declaration and the Indenture shall be deemed to be
specifically described in this Guarantee for the purposes of
clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee
(a) This Guarantee shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall
not transfer this Guarantee to any Person except a Holder
exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall
be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing,
the Guarantee Trustee shall enforce this Guarantee for the
benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any
Event of Default and after the curing or waiver of all Events of
Default that may have occurred, shall undertake to perform only
such duties as are specifically set forth in this Guarantee, and
no implied covenants shall be read into this Guarantee against
the Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and
is actually known to a Responsible Officer of the Guarantee
Trustee, the Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of such Events of Default
that may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee,
and no implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee; but in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders
of not less than a Majority in liquidation amount of the
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee;
and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any
of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it
under the terms of this Guarantee or indemnity, reasonably
satisfactory to the Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of the Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated
by this Guarantee shall be sufficiently evidenced by a
Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this
Guarantee, the Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Guarantee
Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument
(or any rerecording, refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with competent
legal counsel, and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee
from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the
Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustees, agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee
Trustee; provided that, nothing contained in this Section
3.2 (a) (vi) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee.
(vii) The Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it
hereunder.
(ix) Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders, and the signature
of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority
of the Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Guarantee, both
of which shall be conclusively evidenced by the Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Guarantee
the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Guarantee Trustee
(i) may request instructions from the Holders of a Majority
in liquidation amount of the Securities, (ii) may refrain
from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall
be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Guarantee shall be deemed to
impose any duty or obligation on the Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Guarantee Trustee shall be construed
to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
Guarantee
The recitals contained in this Guarantee shall be taken as
the statements of the Guarantor, and the Guarantee Trustee does
not assume any responsibility for their correctness. The
Guarantee Trustee makes no representation as to the validity or
sufficiency of this Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital
and surplus of at least 750 million U.S. dollars
($750,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section
4.1 (a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set
out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of
the Trust Indenture Act, the Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustees
(a) Subject to Section 4.2(b), the Guarantee Trustee may
be appointed or removed without cause at any time by the
Guarantor.
(b) The Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee
Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Guarantee Trustee may
petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section
4.2, the Guarantor shall pay to the Guarantee Trustee all
amounts accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as and
when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices
and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of
the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition
relating to the to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the
terms of the Securities or the extension of time for the
performance of any other obligation under, arising out of, or in
connection with, the Securities (other than an extension of time
for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to
the terms of the Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice
to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee or exercising any
trust or power conferred upon the Guarantee Trustee under this
Guarantee.
(b) If the Guarantee Trustee fails to enforce this
Guarantee, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee,
without first instituting a legal proceeding against the Issuer,
the Guarantee Trustee or any other Person. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee
Payment, a Holder may directly institute a proceeding against the
Guarantor for enforcement of the Guarantee for such payment. The
Guarantor waives any right or remedy to require that any action
on this Guarantee be brought first against the Issuer or any
other person or entity before proceeding directly against the
Guarantor.
SECTION 5.5 Guarantee of Payment
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all rights, if any, of
the Holders against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce
or exercise any right that it may acquire by way of subrogation
or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, at the time of
any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder
are independent of the obligations of the Issuer with respect to
the Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through
(g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING
SECTION 6.1 Limitation of Transactions
So long as any Securities remain outstanding, if there
shall have occurred an Event of Default or an Event of Default
under the Declaration and written notice of such Event of Default
has been given to the Guarantor, then (a) the Guarantor shall not
declare or pay any dividend on, make any distribution with
respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Guarantor in
connection with the satisfaction by the Guarantor of its
obligations under any employee or agent benefit plans or the
satisfaction by the Guarantor of its obligations pursuant to any
contract or security outstanding on the date of such event
requiring the Guarantor to purchase capital stock of the
Guarantor, (ii) as a result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one
class or series of the Guarantor's capital stock for another
class or series of the Guarantor's capital stock, (iii) the
purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of
the Guarantor (or rights to acquire capital stock) or repurchases
or redemptions of capital stock solely from the issuance or
exchange of capital stock or (v) redemptions or purchases of any
rights outstanding under a shareholder rights plan (or the
declaration thereunder of a dividend of rights in the future),
(b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem
any debt securities issued by the Guarantor that rank junior to
the Debentures, and (c) the Guarantor shall not make any
guarantee payments with respect to the foregoing (other than
payments pursuant to the Guarantee).
SECTION 6.2 Ranking
This Guarantee will constitute a senior unsecured obligation
of the Guarantor and, at all times when an Event of Default has
occurred and is continuing under the Declaration, will rank:
(i) pari passu with all of the Guarantor's senior
unsecured obligations except those made subordinate hereto
by their terms; and
(ii) senior to the Guarantor's common stock.
If an event of default under the Indenture has occurred and
is continuing, the rights of the holders of the Common Securities
will be subordinate and junior in right of payment and shall not
be paid until the prior payment in full of, all amounts due and
owing to the holders of the Capital Securities.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Guarantee shall terminate upon (i) full payment of the
Repayment Price of all Securities, (ii) upon the distribution of
the Debentures to all Holders or (iii) upon full payment of the
amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this
Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment
of any sums paid under the Securities or under this Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified
Person by this Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee and in a manner such Indemnified
Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Guarantee, except
that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
reasonable out-of-pocket expenses (including legal fees) incurred
by an Indemnified Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person
is not entitled to be indemnified as authorized in Section
8.2(a).
(c) The provisions set forth in this Section 8.2 shall
survive the termination of the Guarantee or the resignation or
removal of the Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit
of the Holders of the Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders
will be required), this Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in
liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Securities.
The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall
be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address
as the Guarantee Trustee may give notice of to the Holders of
the Securities):
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust
Services Division
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor
may give notice of to the Holders):
Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attn: Corporate Secretary
(c) If given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed
by first class mail, postage prepaid except that if a notice or
other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Guarantee is solely for the benefit of the Holders and,
subject to Section 3.1(a), is not separately transferable from
the Securities.
SECTION 9.5 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
THIS GUARANTEE is executed as of the day and year first
above written.
INGERSOLL-RAND COMPANY,
as Guarantor
By:_____________________________
Name:
Title:
By: ____________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
By: _____________________________
Name:
Title:
EXHIBIT 10(iii)(c)
TO: VICE PRESIDENT AND/OR GROUP PRESIDENT
1. Worldwide Operating Income
If the Worldwide Operating Income (WWOI) of your operating Group
exceeds the initial threshold of $________, which is ____% above the
1998 actual for your Group and is your PGP target for 1999, you
will receive a bonus of ____% of your annual salary rate in effect
on December 31, 1999.
For each additional $________ of WWOI above that level, up to
$________ (which is ____% above last year's actual) you will receive
additional ____% of your annual salary rate.
For each additional $_______ of WWOI above $__________, up to
$_________, you will receive an additional ___% of your annual
salary rate, resulting in a maximum bonus opportunity of ___%
of your salary for operating income results.
2. Operating Productivity
For improvement in operational proudctivity of ____%, you will
receive an additional ___% of your annual salary rate.
3. Asset Management
If you attain _____% of accounts receivable and inventory as a
percent of sales, you will receive ___% of your salary rate.
For each additional ___% reduction, you will receive an
additional ____% of your annual salary rate, up to a maximum of
____% of your salary for improvements in accounts receivable and
inventory as a percent of sales of ___%. This represents a ____%
improvement over your 1999 PGP target of ____%.
4. Achievement of Individual Objectives
You will receive an additional award of up to __% of your salary rate,
based on the achievement of individual and unit objectives, such as
process reengineering objectives, strategic sourcing initiatives and
other assigned objectives specific to your business unit. Awards
in this category are also dependent upon the company's overall
performance.
5. Corporate Performance
Your are elgible for an additional award based on Company performance
measured by earnings per share (EPS). If the comapny achieves or
exceeds an EPS level of $______, the total bonus percentage earned by
you under the previous paragraphs (1 through 4) will be increased
according to the following table:
EPS Performance Bonus Increase Factor
____ 10%
____ 15%
____ 20%
____ 25%
6. Scorecard Adjustments
Acquisitions, divestitures, changes in assignment, changes in
accounting procedures or tax law, abnormal deviations to plan
in other income and expenses in your financial income
statements, and/or corrections in historical data during 1999
may necessitate pro rata adjustments in the above goals and/or
actual operating results. Any such changes will be advised as
soon as possible.
7. Calculation Authority
The results will be tabulated by the Corporate Controller's
Office and reflected on Operating Income and Accounts
Receivable and Inventory Reports. It is the present intention
of the Company to decide the amount of bonus for 1999 in
February 2000. If the above objectives are not attained, any
bonus award made will be at the sole discretion of the Company.
The Company will be the final arbiter of interpretation of the
above arrangements.
J. E. Perrella
Chairman, President and
Chief Executive Officer
EXHIBIT 10(iii)(d)
TO: EXECUTIVE VICE PRESIDENT
1. Worldwide Operating Income
If the Worldwide Operating Income (WWOI) of your operating Segments
exceeds the initial threshold of $_________, which is ____% above
the 1998 actual for your Segments, you will receive a bonus of ____%
of your annual salary rate in effect on December 31, 1999.
For each additional $______ of WWOI above that level, up to $_______,
(which is ___% above last year's actual) you will receive an
additional ___% of your annual salary rate.
For each additional $______ of WWOI above $_______, up to $________,
you wil receive an additional ____% of your annual salary rate,
resulting in a maximum bonus opportunity of ____% of your salary
for operating income results.
2. Operational Productivity
For improvement in operational productivity of ___%, you will receive
an additional ____% of your annual salary rate.
3. Asset Management
If you attain ____% of accounts receivable and inventory as a
percent of sales, you will receive____% of your salary rate.
For each additional ____% reduction, you will receive an
additional ____% of your annual salary rate, up to a maximum of
___% of your salary for improvements in accounts receivable and
inventory as a percent of sales of ___%. This represents a ____%
improvement over our 1999 PGP target of ____%
4. Achievement of Individual Objectives
You will receive an additional award of up to ___% of your annual
salary rate, based on the achievement of individual and unit
objectives, such as process reengineering objectives, strategic
sourcing initiatives and other assigned objectives specific to
your business unit. Awards in this category are also dependent
upon the company's overall perforance.
5. Corporate Performance
You are eligible for an additional award based on Company
performance measured by earnings per share (EPS). If the
company achieves or exceeds an EPS level of $_____, the total
bonus percentage earned by you under the previous paragraphs
(1 through 4) will be increased according to the following table:
EPS Performance Bonus Increase Factor
____ 10%
____ 15%
____ 20%
____ 25%
6. Scorecard Adjustments
Acquisitions, divestitures, changes in assignment, changes in
accounting procedures or tax law, abnormal deviations to plan
in other income and expenses in your financial income
statements, and/or corrections in historical data during 1999
may necessitate pro rata adjustments in the above goals and/or
actual operating results. Any such changes will be advised as
soon as possible.
7. Calculation Authority
The results will be tabulated by the Corporate Controller's
Office and reflected on Operating Income and Accounts
Receivable and Inventory Reports. It is the present intention
of the Company to decide the amount of bonus for 1999 in
February 2000. If the above objectives are not attained, any
bonus award will be made at the sole discretion of the Company.
The Company will be the final arbiter of interpretation of the
above arrangements.
J. E. Perrella
Chairman, President and
Chief Executive Officer
AMENDED AND RESTATED FORM OF CHANGE OF
CONTROL WITH CHAIRMAN AND CHIEF EXECUTIVE OFFICER
This AMENDED AND RESTATED AGREEMENT is made as of March 1,
1999, between INGERSOLL-RAND COMPANY, a New Jersey corporation
(the "Company"), and ________________ (the "Employee"). Unless
otherwise indicated, terms used herein and defined in Schedule A
hereto shall have the meanings assigned to them in said Schedule.
WHEREAS, the Company and the Employee have previously
entered into an Agreement, dated as of January 1, 1996, and
hereby wish to amend and restate in its entirety such Agreement;
NOW, THEREFORE, the Company and the Employee agree as
follows:
1. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its
execution and shall continue thereafter from year to year prior
to a Change of Control Event unless terminated as of any
anniversary of the date hereof by either party upon written
notice to the other party given at least 60 days, but not more
than 90 days, prior to such anniversary date. Notwithstanding
the foregoing, this Agreement may not be terminated after the
occurrence of a Change of Control Event.
2. AGREEMENT TERM.
The term of this Agreement shall begin on the date
hereof and, unless terminated pursuant to paragraph 1 prior to a
Change of Control Event, shall end on the fifth anniversary of
the occurrence of a Change of Control Event.
3. EMPLOYEE'S POSITION AND RESPONSIBILITIES.
(a) The Employee will continue to serve the Company
upon the occurrence of a Change of Control Event as the Chief
Executive Officer of the Company. In addition, the Company
shall, upon the occurrence of such event, make its best efforts
to insure the election and retention of the Employee as Chairman
of the Board of the Company and any successor or parent company.
(b) During the term of this Agreement the Employee
shall devote his entire business time and attention exclusively
to the business and affairs of the Company and shall use his best
efforts to promote the interests of the Company. The partici-
pation of the Employee in outside directorships and civic
activities not otherwise inconsistent with Company policy and the
management of the Employee's personal investments in public
companies in which the Employee holdings do not exceed 5% of the
voting power or value of such companies shall not be deemed a
violation of this paragraph 3.
4. COMPENSATION AND OTHER BENEFITS UPON CHANGE OF
CONTROL EVENT.
The Company and the Employee agree that, upon the
occurrence of any Change of Control Event, the Employee shall
receive basic annual salary, bonus and fringe and other benefits
as follows:
(a) Basic Annual Salary and Bonus. The
Employee's basic annual salary shall be at a rate not less
than the rate of annual salary, which has been paid to the
Employee immediately prior to the Change of Control Event,
with such annual increases (but not decreases) equal to the
greater of (i) salary increases as may be contemplated by
any salary adjustment programs of the Company in effect
immediately prior to the Change of Control Event and
applicable to the Employee and such further increases as
shall be determined from time to time by the Board or (ii) a
percentage equal to the percentage increase (if any) in the
"Consumer Price Index for All Urban Consumers" published by
the United States Department of Labor's Bureau of Labor
Statistics for the then most recently ended 12-month period.
In addition, the Employee shall be entitled to receive an
annual bonus in an amount not less than the highest annual
bonus received by, or accrued on behalf of, the Employee
during the lesser of (i) the five full Fiscal Years
immediately preceding the Change of Control Event, or (ii)
the number of full Fiscal Years immediately preceding the
Change of Control Event during which the Employee has been
employed by the Company (whether such bonus is paid to, is
accrued on behalf of, is a Deferral Amount (as such term is
defined in the Ingersoll-Rand Executive Deferred
Compensation and Stock Bonus Plan) or is foregone by the
Employee pursuant to the Ingersoll-Rand Company Estate
Enhancement Program).
(b) Fringe Benefits; Business Expenses. The
Employee shall be entitled to receive benefits, including
but not limited to pension (and supplemental pension),
savings and stock investment plan (and supplemental savings
and stock investment and retirement account plans),
leveraged employee stock ownership plan, stock award, stock
option, deferred compensation, and welfare benefit plans and
programs including, but not limited to, life, medical,
prescription drugs, dental, disability, accidental death and
travel accident coverage plans, post-retirement welfare
benefits, and an estate enhancement program on terms no less
favorable than those in effect under each such plan
immediately prior to the Change of Control Event, and at no
less than the same benefit levels (and no more than the same
employee contribution levels) then in effect under each such
plan and to receive all other fringe benefits and
perquisites (or their equivalent) from time to time in
effect for the benefit of any executive, management or
administrative group for which the employment position then
held by the Employee entitles the Employee to participate.
The Company shall provide for the payment of, or reimburse
the Employee for, all travel and other out-of-pocket
expenses reasonably incurred by him in the performance of
his duties hereunder.
(c) Management Incentive Unit Award Plan. The
Company and the Employee further agree that immediately upon
the occurrence of any Change of Control Event, all amounts
theretofore credited to the Employee under the Company's
Management Incentive Unit Award Plan, as amended (the "MIU
Plan"), shall become fully vested and all such amounts
thereafter credited shall become fully vested immediately
upon such crediting.
5. PAYMENTS AND BENEFITS UPON TERMINATION.
The Employee shall be entitled to the following
payments and benefits upon Termination:
(a) Salary and Bonus. The Company shall pay to
the Employee, in a cash lump sum on the Termination Date, an
amount equal to the sum of (i) the basic annual salary and
any annual bonus in respect of a completed fiscal year,
which have not yet been paid to, the Employee through the
Termination Date; (ii) an amount equal to the last annual
bonus received by, or awarded to, the Employee for the full
Fiscal Year immediately preceding the Termination Date
multiplied by a fraction the numerator of which shall be the
number of full months the Employee was employed by the
Company during the Fiscal Year containing the Employee's
Termination Date and the denominator of which shall be 12;
and (iii) an amount equal to the number of unused vacation
days to which the Employee is entitled as of the Termination
Date and any other amounts normally paid to an employee by
the Company upon termination of employment. For these
purposes, any partial month during which the Employee is
employed shall be deemed a full month.
(b) Severance. The Company shall pay to the
Employee, in a cash lump sum not more than 30 days following
the Termination Date, an amount equal to three times the sum
of (i) the highest basic annual salary in effect at any time
during the period beginning immediately prior to the Change
of Control Event and ending on the Termination Date; and
(ii) the highest annual bonus received by, or accrued on
behalf of, the Employee during the period beginning five
full Fiscal Years immediately preceding the Change of
Control Event and ending on the Termination Date (whether
such bonus is paid to, is accrued on behalf of, is a
Deferral Amount (as such term is defined in the Ingersoll-
Rand Executive Deferred Compensation and Stock Bonus Plans)
or is foregone by the Employee pursuant to the Ingersoll-
Rand Company Estate Enhancement Program).
(c) Employee Benefit Plans. For the three-year
period following the Termination Date (or, if sooner, until
the Employee is covered under a comparable plan offered by a
subsequent employer), the Company shall continue to cover
the Employee under those employee welfare benefit plans and
programs (including, but not limited to, life, medical,
prescription drugs, dental, accidental death and travel
accident and disability coverage, but not including any
severance pay plan or program other than that provided
pursuant to this Agreement or any pension plan) applicable
to the Employee on the Termination Date at the same benefit
levels then in effect (or shall provide their equivalent);
provided, however, that if the Employee becomes employed by
a new employer that maintains any welfare plan that either
(i) does not cover the Employee with respect to a pre-
existing condition which was covered under the applicable
Company welfare plan, or (ii) does not cover the Employee
for a designated waiting period, the Employee's coverage
hereunder under the applicable Company welfare plan (or the
equivalent) shall continue (but shall be limited in the
event of noncoverage due to a preexisting condition, to the
preexisting condition itself) until the earlier of the end
of the applicable period of noncoverage under the new
employer's plan or the third anniversary of the Termination
Date.
(d) Deferred Compensation,Savings and Leveraged
Employee Stock Ownership Plans. As soon as practicable
following the determination thereof (but in any event no
later than 30 days following the Termination Date), the
Company shall pay the Employee an amount (in one lump sum
cash payment) equal to the value of the sum of: (i) the
number of stock units credited to the Employee's Deferred
Compensation Accounts under the Ingersoll-Rand Executive
Deferred Compensation and Stock Bonus Plan at the
Termination Date multiplied by the Company Stock Value (as
defined in Section 5(g) below; (ii) the number of Common
Stock equivalents credited to the Employee's account under
the Supplemental Savings and Stock Investment Plan at the
Termination Date multiplied by the Company Stock Value (as
defined in Section 5(g) below); (iii) the amount credited to
the Employee's account under the Supplemental Retirement
Account Plan at the Termination Date; (iv) all contributions
to, or amounts credited to, the Company's Savings and Stock
Investment Plan, IR/Clark Leveraged Employee Stock Ownership
Plan, Supplemental Savings and Stock Investment Plan and
Supplemental Retirement Account Plan (and earnings and
appreciation attributable thereto) that theretofore were
made by the Company on behalf of the Employee and are
forfeited as a result of the Employee's Termination; and
(v) three percent of the aggregate amount payable pursuant
to subparagraphs 5(a) and 5(b) for each of the Savings and
Stock Investment Plan and the Supplemental Savings and Stock
Investment Plan and two percent for the Supplemental
Retirement Account Plan.
(e) Pension Benefits.
(i) No later than 30 days following the
Termination Date, the Company shall pay the Employee an
amount (in one lump sum cash payment) equal to the Present
Value of the sum of the pension benefits the Employee is
entitled to receive under (A) the Restated Ingersoll-Rand
Company Supplemental Pension Plan (the "Section 415 Excess
Plan"), (B) the Ingersoll-Rand Company Elected Officers
Supplemental Program (the "Elected Officer Supplemental
Program" or the "Program"), and (C) the Executive
Supplementary Retirement Agreement (the "Ten Year Annuity"),
all as in effect immediately prior to the Change of Control
Event (collectively the "Pension Benefit").
(ii) In calculating the portion of the
Pension Benefit under section 1.1 of the Section 415 Excess
Plan the Company shall credit the Employee with five
additional years of Credited Service (within the meaning of
the Plan and including wage, vesting and age credit) and
five additional years of age for purposes of the Section 415
Excess Plan but not the Qualified Pension Plan. (If, after
crediting five years of age, the Employee is less than fifty-
five years old, it will be assumed that the benefit
commencement age is fifty-five).
(iii) In calculating the portion of the
Pension Benefit under the Elected Officer Supplemental
Program, the Company shall: (A) credit the Employee with an
additional five Years of Service and an additional five
years of age for purposes of computing the amount of the
Pension Benefit; and (B) define "Final Average Salary" in
Section 1.8 of the Program as 1/3 of the severance amount
determined pursuant to Section 5(b) of this Agreement.
(iv) In calculating the portion of the
Pension Benefit under the Ten-Year Annuity the Company shall
credit the Employee with five additional years of age but to
an age no greater than 65.
(v) The Present Value of the Pension Benefit
shall be calculated using (A) an interest rate equal to the
product of (I) the 10-year Treasury Note rate as used in the
Elected Officer Supplemental Program's definition of
Actuarial Equivalent and (II) 1 minus the federal income tax
rate at the highest bracket of income for individuals in
effect for the year containing the date of payment, (B) the
mortality rate used to determine lump sum values in the
Elected Officer Supplemental Program, and (C) actual age
without the five year addition to age except that the Ten-
Year Annuity Present Value shall be calculated using no
mortality assumption and actual age plus the additional five
years but to an age no greater than 65.
(vi) Calculation of all pension benefits
amounts hereunder shall be made, at the expense of the
Company, by the Wellesley Hills, Massachusetts office of
Watson Wyatt (or the Company's then actuary immediately
prior to the Change of Control Event).
(f) Retiree Welfare Benefits. For purposes of
determining the Employee's eligibility for post-retirement
benefits under any welfare benefit plan (as defined in
Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended) maintained by the Company prior to the
occurrence of a Change of Control Event, the Employee shall
be credited with an additional five years of service and
five years of age (or any combination of years of service
and age not exceeding 10 years, to the extent necessary to
qualify for benefits). If, after taking into account such
additional age and service, the Employee is eligible for the
Company's post-retirement welfare benefits (or would have
been eligible under the terms of such plans as in effect
prior to the occurrence of the Change of Control Event), the
Employee shall receive, commencing on the third anniversary
of the Termination Date, post-retirement welfare benefits no
less favorable than the benefits the Employee would have
received under the terms and conditions of the applicable
plans in effect immediately prior to the occurrence of the
Change of Control Event.
(g) Employee Stock Awards, Options, SARs and
MIUs. No later than 30 days following the Termination Date,
the Company shall pay the Employee an amount (in one lump
sum cash payment) equal to the aggregate Company Stock Value
(defined below) of 100% of the Employee's then outstanding
and unpaid stock and stock based awards under the Company's
Incentive Stock Plans, the MIU Plan and any similar plans of
the Company (or any other company) hereafter adopted (at
which time such stock and stock based awards shall be
cancelled and be of no further force or effect). In
addition, all options to purchase shares of Common Stock of
the Company (or the stock of any company in respect of which
options have been granted to the Employee) ("Company Stock")
and all stock appreciation rights held by the Employee
immediately prior to Termination shall become exercisable at
any time on and after the Termination Date, whether or not
otherwise exercisable in accordance with the terms of the
employee benefit plans pursuant to which such options and
stock appreciation rights were granted. For purposes of
this Agreement, Company Stock Value shall be deemed to be
the highest of: (i) the closing sale price of the Company
Stock on the New York Stock Exchange on the Change of
Control Event; (ii) the closing sale price of the Company
Stock on the New York Stock Exchange on the Termination
Date; and (iii) the highest closing sale price of the
Company Stock on the New York Stock Exchange during the 30
trading days immediately preceding the acquisition of more
than 50% of the outstanding Company Stock by any person or
group (including affiliates of such person or group). If,
as of any valuation date, the Company Stock is not traded on
the New York Stock Exchange, the Company Stock Value shall
be the closing sale price of the Company Stock on the
principal national securities exchange on which the Common
Stock is traded or, if the Common Stock is not traded on any
national securities exchange, the closing bid price of the
Common Stock in the over-the-counter market.
(h) Valuation of MIU Plan Common Stock
Equivalents. The Employee's Common Stock Equivalents under
the MIU Plan shall, for purposes of payments pursuant
thereto, be valued at the Company Stock Value.
(i) Estate Enhancement Program. If the Employee
participates in the Ingersoll-Rand Estate Enhancement
Program, the terms of the Program shall apply.
(j) Outplacement Expenses. For the three year
period following the Termination Date, the Company shall
reimburse the Employee for all reasonable expenses (up to a
maximum of $15,000 per 12 month period) incurred by the
Employee for professional outplacement services by qualified
consultants selected by the Employee.
6. PARACHUTE EXCISE TAX GROSS-UP.
(a) If, as a result of any payment or benefit
provided under this Agreement, either alone or together with
other payments and benefits which the Employee receives or
is then entitled to receive from the Company, the Employee
becomes subject to the excise tax imposed under Section 4999
of the Internal Revenue Code of 1986, as amended (the
"Code"), (together with any income, employment or other
taxes, interest and penalties thereon an "Excise Tax"), the
Company shall pay the Employee an amount (the "Gross-Up
Payment") sufficient to place the Employee in the same after-
tax financial position that he would have been in if he had
not incurred any tax liability under Section 4999 of
the Code. For purposes of determining whether the Employee
is subject to an Excise Tax, (i) any payments or benefits
received by the Employee (whether pursuant to the terms
hereof or pursuant to any plan, arrangement or other
agreement with the Company or any entity affiliated with the
Company) which payments ("Contingent Payments") are deemed
to be contingent on a change described in Section
280G(b)(2)(A)(i) of the Code shall be taken into account,
(ii) the amount of payments or benefits under this Agreement
treated as subject to the Excise Tax shall be equal to the
lesser of (A) the total amount of all such payments and
benefits hereunder as are Contingent Payments and (B) the
amount of excess parachute payments within the meaning of
280G(b)(1) of the Code payable to the Employee, and (iii)
the Employee shall be deemed to pay the taxes at the highest
marginal applicable rates of such taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the
maximum deduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(b) The determination of whether the Employee
is subject to Excise Tax and the amounts of such Excise Tax
and Gross-Up Payment, as well as other calculations
hereunder, shall be made at the expense of the Company by
the independent auditors of the Company immediately prior to
the Change of Control Event, which shall provide the
Employee with prompt written notice (the "Company Notice")
setting forth their determinations and calculations. Within
30 days following the receipt by the Employee of the Company
Notice, the Employee may notify the Company in writing (the
"Employee Notice") if the Employee disagrees with such
determinations or calculations, setting forth the reasons
for any such disagreement. If the Company and the Employee
do not resolve such disagreement within 10 business days
following receipt by the Company of the Employee Notice, the
Company and the Employee shall agree upon a nationally
recognized accounting or compensation firm (the "Resolving
Firm") to make a determination with respect to such
disagreement. If the Employee and the Company are unable to
agree upon the Resolving Firm within 20 business days
following the Employee Notice, the New York office of
Towers, Perrin shall be the Resolving Firm. Within 30
business days following the Employee Notice, if the
disagreement is not resolved by such time, each of the
Employee and the Company shall submit its position to the
Resolving Firm, which shall make a determination as to all
such disagreements within 30 days following the last of such
submissions, which determination shall be binding upon the
Employee and the Company. The Company shall pay all
reasonable expenses incurred by either party in connection
with the determinations, calculations, disagreements or
resolutions pursuant to this paragraph, including, but not
limited to, reasonable legal, consulting or other similar
fees.
(c) The Employee shall notify the Company in
writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the
Employee is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30
day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to
the Employee;
(iii)cooperate with the Company in good
faith in order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited
to, additional interest and penalties and related consulting
or other similar fees) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or other tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses.
(d) The Company shall control all proceedings
taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Employee agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Employee
to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee on an
interest-free basis, and shall indemnify and hold the
Employee harmless, on an after-tax basis, from any Excise
Tax or other tax (including interest or penalties with
respect thereto) imposed with respect to such advance or
with respect to any imputed income with respect to such
advance; and provided, further, that if the Employee is
required to extend the statute of limitations to enable the
Company to contest such claim, the Employee may limit this
extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution
be agreed to by the Company without the Employee's consent
if such position or resolution could reasonably be expected
to adversely affect the Employee (including any other tax
position of the Employee unrelated to the matters covered
hereby).
(e) As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Company or the Resolving Firm
hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies and the Employee thereafter is
required to pay to the Internal Revenue Service an
additional amount in respect of any Excise Tax, the Company
or the Resolving Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall promptly be paid by the Company to or for the benefit
of the Employee.
(f) If, after the receipt by Employee of an
amount advanced by the Company in connection with the
contest of Excise Tax claim, the Employee becomes entitled
to receive any refund with respect to such claim, the
Employee shall promptly pay to the Company the amount of
such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by the Company
in connection with an Excise Tax claim, a determination is
made that Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Employee in writing of its intent to contest the denial of
such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance
shall be offset, to the extent thereof, by the amount of the
Gross-Up Payment.
7. EFFECT ON OTHER ARRANGEMENTS.
Except to the extent expressly provided herein, no
provision of this Agreement shall affect or limit any interests
or rights vested in the Employee under any other agreement or
arrangement with the Employee or under any pension, profit-
sharing, medical or other insurance or other benefit plans of the
Company which may be in effect and in which the Employee may be
participating at any time.
8. CONFIDENTIALITY.
The Employee agrees to hold in confidence any and all
confidential information known to him concerning the Company and
its businesses so long as such information is not otherwise
publicly disclosed.
9. MISCELLANEOUS.
(a) Legal Expenses. The Company shall pay all
costs and expenses, including attorneys' fees, of the
Company and, at least quarterly, the Employee, in connection
with any legal proceedings, whether or not instituted by the
Company, relating to the interpretation or enforcement of
this Agreement. In the event that the provisions of this
paragraph shall be determined to be invalid or unenforceable
in any respect, such declaration shall not affect the
remaining provisions of this Agreement, which shall continue
in full force and effect.
(b) Mitigation. All payments or benefits
required by the terms of this Agreement shall be made or
provided without offset, deduction, or mitigation on account
of income the Employee may receive from other employment or
otherwise and the Employee shall not have any obligation or
duty to seek any other employment or otherwise earn any
amounts to reduce or mitigate any payments required
hereunder.
(c) Death of the Employee. In the event of the
Employee's death subsequent to Termination, all payments
called for hereunder shall be paid to the Employee's
designated beneficiary or beneficiaries, or to his estate if
he has not designated a beneficiary or beneficiaries.
(d) Notices. Any notice or other communication
provided for in this Agreement or contemplated hereby shall
be sufficiently given if given in writing and delivered by
certified mail, return receipt requested, and addressed, in
the case of the Company, to the Company at:
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attention: Chairman of the Board
of Directors
and, in the case of the Employee, to the Employee at:
_______________________
_______________________
Either party may designate a different address by giving
notice of change of address in the manner provided above.
(e) Waiver. No waiver or modification in whole
or in part of this Agreement, or any term or condition
hereof, shall be effective against any party unless in
writing and duly signed by the party sought to be bound.
Any waiver of any breach of any provision hereof or any
right or power by any party on one occasion shall not be
construed as a waiver of, or a bar to, the exercise of such
right or power on any other occasion or as a waiver of any
subsequent breach.
(f) Binding Effect; Successors. This Agreement
shall be binding upon and shall inure to the benefit of the
Company and the Employee and their respective heirs, legal
representatives, successors and assigns. If the Company
shall be merged into or consolidated with another entity,
the provisions of this Agreement shall be binding upon and
inure to the benefit of the entity surviving such merger or
resulting from such consolidation. The Company will require
any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken
place. The provisions of this paragraph shall continue to
apply to each subsequent employer of the Employee hereunder
in the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
(g) Plan Limitations. In the event the Company
is unable to provide any benefit required to be provided
under this Agreement through a plan sponsored by the Company
or its Affiliates, the Company shall, at its own cost and
expense, take appropriate actions to insure that alternative
arrangements are made so that equivalent benefits can be
provided to the Employee, including to the extent
appropriate purchasing for the benefit of the Employee (and
if applicable the Employee's dependents) individual policies
of insurance providing benefits, which on an after-tax
basis, are equivalent to the benefits required to be
provided hereunder.
(h) Controlling Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts made and to be
performed therein.
10. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding
between the parties hereto and supersedes in all respects any
prior employment or severance agreement or understanding between
the Company (or any affiliate thereof) and the Employee.
IN WITNESS WHEREOF, the Company and the Employee have
executed this Agreement as of the day and year first above
written.
INGERSOLL-RAND COMPANY
By
_______________________
Employee
Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Affiliate", used to indicate a relationship with a
specified person, means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, such a specified person.
"Associate", used to indicate a relationship with a
specified person, means (i) any corporation, partnership, or
other organization of which such specified person is an officer
or partner; (ii) any trust or other estate in which such
specified person has a substantial beneficial interest or as to
which such specified person serves as trustee or in a similar
fiduciary capacity; (iii) any relative or spouse of such
specified person, or any relative of such spouse who has the same
home as such specified person, or who is a director or officer of
the Company or any of its parents or subsidiaries; and (iv) any
person who is a director, officer, or partner of such specified
person or of any corporation (other than the Company or any
wholly-owned subsidiary of the Company), partnership or other
entity which is an Affiliate of such specified person.
"Beneficial Owner" means the same as such term is
defined by Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (or any successor provision at the time in effect);
provided, however, that any individual, corporation, partnership,
group, association, or other person or entity which has the right
to acquire any of the Company's outstanding securities entitled
to vote generally in the election of directors at any time in the
future, whether such right is contingent or absolute, pursuant to
any agreement, arrangement, or understanding or upon exercise of
conversion rights, warrants or options, or otherwise, shall be
deemed the Beneficial Owner of such securities.
"Board" means the Board of Directors of the Company
(or, if the Company is then a subsidiary of any other company, of
the ultimate parent company).
"Cause" means (i) any action by the Employee involving
willful malfeasance or willful gross misconduct having a
demonstrable adverse effect on the Company; (ii) substantial and
continuing refusal by the Employee in willful breach of this
Agreement to perform his employment duties hereunder; or
(iii) the Employee being convicted of a felony under the laws of
the United States or any state.
Termination of the Employee for Cause shall be
communicated by a Notice of Termination given within one year
after the Board (i) has knowledge of conduct or an event
allegedly constituting Cause; and (ii) has reason to believe that
such conduct or event could be grounds for Cause. For purposes
of this Agreement a "Notice of Termination" shall mean delivery
to the Employee of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Company's Board at a meeting of that Board
called and held for the purpose (after reasonable notice to the
Employee ("Preliminary Notice") and reasonable opportunity for
the Employee, together with the Employee's counsel, to be heard
before the Board prior to such vote) of finding, in the good
faith opinion of the Board, that the Employee has engaged in the
conduct constituting Cause and specifying the particulars thereof
in detail. Upon the receipt of the Preliminary Notice, the
Employee shall have 30 days in which to appear with counsel or
take such other action as he desires on his behalf, and such 30-
day period is hereby agreed to by the parties as a reasonable
opportunity for the Employee to be heard. The Board shall no
later than 45 days after the receipt of the Preliminary Notice by
the Employee communicate its findings to Employee. A failure by
the Board to make its finding of Cause or to communicate its
conclusion within such 45-day period shall be deemed to be a
finding that the Employee has not engaged in the conduct
described herein. Any termination of the Employee's employment
(other than by death or Permanent Disability) within 45 days
after the date that the Preliminary Notice has been given to the
Employee shall be deemed to be a termination for Cause; provided,
however, that if during such period the Employee voluntarily
terminates other than for Good Reason or the Company terminates
the Employee other than for Cause, and the Employee is found (or
is deemed to be found) not to have engaged in the conduct
described herein, such termination shall not be deemed to be for
Cause.
"Change of Control Event" means the date (i) any
individual, corporation, partnership, group, association or other
person or entity, together with its Affiliates and Associates
(other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company), is or becomes the
Beneficial Owner of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election
of directors; (ii) the Continuing Directors fail to constitute a
majority of the members of the Board; (iii) of consummation of
any transaction or series of transactions under which the Company
is merged or consolidated with any other company, other than a
merger or consolidation which would result in the shareholders of
the Company immediately prior thereto continuing to own (either
by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 70% of the combined
voting power of the voting securities of the Company or such
surviving entity or its parent corporation outstanding
immediately after such merger or consolidation; or (iv) of any
sale, lease, exchange or other transfer, in one transaction or a
series of related transactions, of all, or substantially all, of
the assets of the Company, other than any sale, lease, exchange
or other transfer to any person or entity where the Company owns,
directly or indirectly, at least 80% of the outstanding voting
securities of such person or entity or its parent corporation
after any such transfer.
"Continuing Director" means a director who either was a
member of the Board on the date hereof or who became a member of
the Board subsequent to such date and whose election, or
nomination for election by the Company's shareholders, was Duly
Approved by the Continuing Directors on the Board at the time of
such nomination or election, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf
of the Board in which such person is named as nominee for
director, without due objection to such nomination, but ex-
cluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person or entity
other than the Board.
"Duly Approved by the Continuing Directors" means an
action approved by the vote of at least two-thirds of the
Continuing Directors then on the Board.
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means (i) a material adverse change in
the Employee's job responsibilities, title or status from those
in effect prior to the Change of Control Event which change
continues for a period of at least 15 days after written notice
from the Employee; (ii) a reduction of the Employee's base salary
or target bonus, the failure to pay Employee's salary or bonus
when due, or the failure to maintain on behalf of the Employee
(and his or her dependents) benefits which are at least as
favorable in the aggregate to those provided for in paragraph
4(b); (iii) the relocation of the principal place of the
Employee's employment to a location that is more than 35 miles
further from the Employee's residence than such principal place
of employment immediately prior to the Change of Control Event,
or the imposition of travel requirements on the Employee not
substantially consistent with such travel requirements existing
immediately prior to the Change of Control Event; (iv) the
failure of the Company to obtain the assumption of, and the
agreement to perform, this Agreement by any successor as
contemplated in paragraph 8(f); (v) any voluntary resignation of
employment by Employee following a Change of Control Event or
(vi) the failure of the Company to perform any of its other
material obligations under this Agreement and the continuation of
such failure for a period of 15 days after written notice from
the Employee.
"Permanent Disability", as applied to the Employee,
means that (i) he has been totally incapacitated by bodily injury
or disease so as to be prevented thereby from performing his
duties hereunder; (ii) such total incapacity shall have continued
for a period of six consecutive months; and (iii) such total
incapacity will, in the opinion of a qualified physician, be
permanent and continuous during the remainder of the Employee's
life.
"Termination" means (i) following the occurrence of a
Change of Control Event, (A) the termination of the Employee's
employment without Cause or (B) the resignation by an Employee
for Good Reason upon ten days' prior written notice (or such
shorter period as may be agreed upon between the Employee and the
Company), and (ii) prior to the occurrence of a Change of Control
Event, the termination of the Employee's employment or a material
adverse change in the Employee's job responsibilities, title or
status, at the request of any individual or entity acquiring
ownership and control of the Company; provided, that such term
shall not include any termination of employment for Cause, any
resignation without Good Reason, or any termination of employment
on account of an Employee's death or Permanent Disability.
"Termination Date" shall mean the effective date of an
Employee's Termination; provided, that with respect to a
Termination that occurs prior to a Change of Control Event, the
effective date of such Termination shall be deemed to be the date
immediately following the Change of Control Event.
AMENDED AND RESTATED FORM OF CHANGE OF
CONTROL AGREEMENT WITH SELECTED EXECUTIVE OFFICERS
This AMENDED AND RESTATED AGREEMENT is made as of
March 1, 1999, between INGERSOLL-RAND COMPANY, a New Jersey
corporation (the "Company"), and , the "Employee").
Unless otherwise indicated, terms used herein and defined in
Schedule A hereto shall have the meanings assigned to them in
said Schedule.
WHEREAS, the Company and the Employee have previously
entered into an Agreement, dated December 3, 1997, and hereby
wish to amend and restate in its entirety such Agreement;
NOW, THEREFORE, the Company and the Employee agree as
follows:
1. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its
execution and shall continue thereafter from year to year prior
to a Change of Control Event unless terminated as of any
anniversary of the date hereof by either party upon written
notice to the other party given at least 60 days, but not more
than 90 days, prior to such anniversary date. Notwithstanding
the foregoing, this Agreement may not be terminated after the
occurrence of a Change of Control Event.
2. AGREEMENT TERM.
The term of this Agreement shall begin on the date
hereof and, unless terminated pursuant to paragraph 1 prior to a
Change of Control Event, shall end on the fifth anniversary of
the occurrence of a Change of Control Event.
3. EMPLOYEE'S POSITION AND RESPONSIBILITIES.
(a) The Employee will continue to serve the Company
upon the occurrence of a Change of Control Event in the same
capacity as he serves the Company immediately prior thereto, or
in such other comparable executive, administrative or management
capacities, requiring substantially equivalent expertise and
responsibility, as the Board or Chief Executive Officer of the
Company shall determine and deem suitable and in the best
interests of the Company in accordance with the Employee's
experience, expertise and capabilities.
(b) During the term of this Agreement the Employee
shall devote his entire business time and attention exclusively
to the business and affairs of the Company and shall use his best
efforts to promote the interests of the Company. The partici-
pation of the Employee in outside directorships and civic
activities not otherwise inconsistent with Company policy and the
management of the Employee's personal investments in public
companies in which the Employee holdings do not exceed 5% of the
voting power or value of such companies shall not be deemed a
violation of this paragraph 3.
4. COMPENSATION AND OTHER BENEFITS UPON CHANGE OF
CONTROL EVENT.
The Company and the Employee agree that, upon the
occurrence of any Change of Control Event, the Employee shall
receive basic annual salary, bonus and fringe and other benefits
as follows:
(a) Basic Annual Salary and Bonus. The Employee's
basic annual salary shall be at a rate not less than the
rate of annual salary, which has been paid to the Employee
immediately prior to the Change of Control Event, with such
annual increases (but not decreases) equal to the greater of
(i) salary increases as may be contemplated by any salary
adjustment programs of the Company in effect immediately
prior to the Change of Control Event and applicable to the
Employee and such further increases as shall be determined
from time to time by the Board or (ii) a percentage equal to
the percentage increase (if any) in the "Consumer Price
Index for All Urban Consumers" published by the United
States Department of Labor's Bureau of Labor Statistics for
the then most recently ended 12-month period. In addition,
the Employee shall be entitled to receive an annual bonus in
an amount not less than the highest annual bonus received
by, or accrued on behalf of, the Employee during the lesser
of (i) the five full Fiscal Years immediately preceding the
Change of Control Event, or (ii) the number of full Fiscal
Years immediately preceding the Change of Control Event
during which the Employee has been employed by the Company
(whether the bonus is paid to, is accrued on behalf of, is a
Deferral Amount (as such term is defined in the Ingersoll-
Rand Executive Deferred Compensation and Stock Bonus Plan)
or is foregone by the Employee pursuant to the Ingersoll-
Rand Company Estate Enhancement Program).
(b) Fringe Benefits; Business Expenses. The Employee
shall be entitled to receive benefits, including but not
limited to pension (and supplemental pension), savings and
stock investment plan (and supplemental savings and stock
investment and retirement plans), leveraged employee stock
ownership plan, stock award, stock option, deferred
compensation, and welfare benefit plans and programs
including, but not limited to, life, medical, prescription
drugs, dental, disability, accidental death and travel
accident coverage plans, post-retirement welfare benefits,
and an estate enhancement program on terms no less favorable
than those in effect under each such plan immediately prior
to the Change of Control Event, and at no less than the same
benefit levels (and no more than the same employee
contribution levels) then in effect under each such plan and
to receive all other fringe benefits and perquisites (or
their equivalent) from time to time in effect for the
benefit of any executive, management or administrative group
for which the employment position then held by the Employee
entitles the Employee to participate. The Company shall
provide for the payment of, or reimburse the Employee for,
all travel and other out-of-pocket expenses reasonably
incurred by him in the performance of his duties hereunder.
(c) Management Incentive Unit Award Plan. The Company
and the Employee further agree that immediately upon the
occurrence of any Change of Control Event, all amounts
theretofore credited to the Employee under the Company's
Management Incentive Unit Award Plan, as amended (the "MIU
Plan"), shall become fully vested and all such amounts
thereafter credited shall become fully vested immediately
upon such crediting.
5. PAYMENTS AND BENEFITS UPON TERMINATION.
The Employee shall be entitled to the following
payments and benefits upon Termination:
(a) Salary and Bonus. The Company shall pay to the
Employee, in a cash lump sum on the Termination Date, an
amount equal to the sum of (i) the basic annual salary and
any annual bonus in respect of a completed fiscal year,
which have not yet been paid to the Employee through the
Termination Date; (ii) an amount equal to the last annual
bonus received by, or awarded to, the Employee for the full
Fiscal Year immediately preceding the Termination Date
multiplied by a fraction the numerator of which shall be the
number of full months the Employee was employed by the
Company during the Fiscal Year containing the Employee's
Termination Date and the denominator of which shall be 12;
and (iii) an amount equal to the number of unused vacation
days to which the Employee is entitled as of the Termination
Date and any other amounts normally paid to an employee by
the Company upon termination of employment. For these
purposes, any partial month during which the Employee is
employed shall be deemed a full month.
(b) Severance. The Company shall pay to the Employee,
in a cash lump sum not more than 30 days following the
Termination Date, an amount equal to three times the sum of
(i) the highest basic annual salary in effect at any time
during the period beginning immediately prior to the Change
of Control Event and ending on the Termination Date; and
(ii) the highest annual bonus received by, or accrued on
behalf of, the Employee during the period beginning five
full Fiscal Years immediately preceding the Change of
Control Event and ending on the Termination Date (whether
the bonus is paid to, is accrued on behalf of, is a Deferral
Amount (as such term is defined in the Ingersoll-Rand
Executive Deferred Compensation and Stock Bonus Plan) or is
foregone by the Employee pursuant to the Ingersoll-Rand
Company Estate Enhancement Program).
(c) Employee Benefit Plans. For the three-year period
following the Termination Date (or, if sooner, until the
Employee is covered under a comparable plan offered by a
subsequent employer), the Company shall continue to cover
the Employee under those employee welfare benefit plans and
programs (including, but not limited to, life, medical,
prescription drugs, dental, accidental death and travel
accident and disability coverage, but not including any
severance pay plan or program other than that provided
pursuant to this Agreement or any pension plan) applicable
to the Employee on the Termination Date at the same benefit
levels then in effect (or shall provide their equivalent);
provided, however, that if the Employee becomes employed by
a new employer that maintains any welfare plan that either
(i) does not cover the Employee with respect to a pre-
existing condition which was covered under the applicable
Company welfare plan, or (ii) does not cover the Employee
for a designated waiting period, the Employee's coverage
hereunder under the applicable Company welfare plan (or the
equivalent) shall continue (but shall be limited in the
event of noncoverage due to a preexisting condition, to the
preexisting condition itself) until the earlier of the end
of the applicable period of noncoverage under the new
employer's plan or the third anniversary of the Termination
Date.
(d) Deferred Compensation, Savings and Leveraged
Employee Stock Ownership Plans. As soon as practicable
following the determination thereof (but in any event no
later than 30 days following the Termination Date), the
Company shall pay the Employee an amount (in one lump sum
cash payment) equal to the value of the sum of: (i) the
number of stock units credited to the Employee's Deferred
Compensation Accounts under the Executive Deferred
Compensation and Stock Bonus Plan at the Termination Date
multiplied by the Company Stock Value (as defined in Section
5(g) below); (ii) the number of Common Stock equivalents
credited to the Employee's account under the Supplemental
Savings and Stock Investment Plan at the Termination Date
multiplied by the Company Stock Value (as defined in Section
5(g) below); (iii) the amount credited to the Employee's
account under the Supplemental Retirement Account Plan at
the Termination Date; (iv) all contributions to, or amounts
credited to, the Company's Savings and Stock Investment
Plan, IR/Clark Leveraged Employee Stock Ownership Plan,
Supplemental Savings and Stock Investment Plan, and
Supplemental Retirement Account Plan (and earnings and
appreciation attributable thereto) that theretofore were
made by the Company on behalf of the Employee and are
forfeited as a result of the Employee's Termination; and
(v) five percent of the aggregate amount payable pursuant to
subparagraphs 5(a) and 5(b) for the Savings and Stock
Investment Plan, three percent of such amount for the
Supplemental Savings and Stock Investment Plan and two
percent of such amount for the Supplemental Retirement
Account Plan.
(e) Pension Benefits.
(i) No later than 30 days following the
Termination Date, the Company shall pay the Employee an
amount (in one lump sum cash payment) equal to the Present
Value of the sum of the pension benefits the Employee is
entitled to receive under (A) the Restated Ingersoll-Rand
Company Supplemental Pension Plan (the "Section 415 Excess
Plan"), (B) the Ingersoll-Rand Company Elected Officers
Supplemental Program (the "Elected Officer Supplemental
Program" or the "Program"), and (C) the Executive
Supplementary Retirement Agreement (the "Ten Year Annuity),
all as in effect immediately prior to the Change of Control
Event (collectively the "Pension Benefit").
(ii) In calculating the portion of the
Pension Benefit under section 1.1 of the Section 415 Excess
Plan the Company shall credit the Employee with five
additional years of Credited Service (within the meaning of
the Plan and including wage, vesting and age credit) and
five additional years of age for purposes of the Section 415
Excess Plan but not the Qualified Pension Plan. (If, after
crediting five years of age, the Employee is less than fifty-
five years old, it will be assumed that the benefit
commencement date is the first date on which the Employee
becomes eligible to begin receiving payment of benefits
under the Qualified Pension Plan).
(iii) In calculating the portion of
the Pension Benefit under the Elected Officer Supplemental
Program, the Company shall: (A) credit the Employee with an
additional five Years of Service and an additional five
years of age for purposes of computing the amount of the
Pension Benefit; and (B) define "Final Average Salary" in
Section 1.8 of the Program as 1/3 of the severance amount
determined pursuant to Section 5(b) of this Agreement.
(iv) In calculating the portion of
the Pension Benefit under the Ten-Year Annuity the Company
shall credit the Employee with five additional years of age
but to an age no greater than 62.
(v) The Present Value of the
Pension Benefit shall be calculated using (A) an interest
rate equal to the product of (I) the 10-year Treasury Note
rate as used in the Elected Officer Supplemental Program's
definition of Actuarial Equivalent and (II) 1 minus the
federal income tax rate at the highest bracket of income for
individuals in effect for the year containing the date of
payment, (B) the mortality rate used to determine lump sum
values in the Elected Officer Supplemental Program, and
(C) actual age without the five year addition to age except
that the Ten-Year Annuity Present Value shall be calculated
using no mortality assumption and actual age plus the
additional five years but to an age no greater than 62.
(vi) Calculation of all pension benefits
amounts hereunder shall be made, at the expense of the
Company, by the Wellesley Hills, Massachusetts office of
Watson Wyatt (or the Company's then actuary immediately
prior to the Change of Control Event).
(f) Retiree Welfare Benefits. For purposes of
determining the Employee's eligibility for post-retirement
benefits under any welfare benefit plan (as defined in
section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended) maintained by the Company prior to the
occurrence of a Change of Control Event, the Employee shall
be credited with an additional five years of service and
five years of age (or any combination of years of service
and age not exceeding 10 years, to the extent necessary to
qualify for benefits). If, after taking into account such
additional age and service, the Employee is eligible for the
Company's post-retirement welfare benefits (or would have
been eligible under the terms of such plans as in effect
prior to the occurrence of the Change of Control Event), the
Employee shall receive, commencing on the third anniversary
of the Termination Date, post-retirement welfare benefits no
less favorable than the benefits the Employee would have
received under the terms and conditions of the applicable
plans in effect immediately prior to the occurrence of the
Change of Control Event.
(g) Employee Stock Awards, Options, SARs and MIUs. No
later than 30 days following the Termination Date, the
Company shall pay the Employee an amount (in one lump sum
cash payment) equal to the aggregate Company Stock Value
(defined below) of 100% of the Employee's then outstanding
and unpaid stock and stock based awards under the Company's
Incentive Stock Plans, the MIU Plan and any similar plans of
the Company (or any other company) hereafter adopted (at
which time such stock and stock based awards shall be
cancelled and be of no further force or effect). In
addition, all options to purchase shares of Common Stock of
the Company (or the stock of any company in respect of which
options have been granted to the Employee) ("Company Stock")
and all stock appreciation rights held by the Employee
immediately prior to Termination shall become exercisable at
any time on and after the Termination Date, whether or not
otherwise exercisable in accordance with the terms of the
employee benefit plans pursuant to which such options and
stock appreciation rights were granted. For purposes of
this Agreement, Company Stock Value shall be deemed to be
the highest of: (i) the closing sale price of the Company
Stock on the New York Stock Exchange on the Change of
Control Event; (ii) the closing sale price of the Company
Stock on the New York Stock Exchange on the Termination
Date; and (iii) the highest closing sale price of the
Company Stock on the New York Stock Exchange during the 30
trading days immediately preceding the acquisition of more
than 50% of the outstanding Company Stock by any person or
group (including affiliates of such person or group). If,
as of any valuation date, the Company Stock is not traded on
the New York Stock Exchange, the Company Stock Value shall
be the closing sale price of the Company Stock on the
principal national securities exchange on which the Common
Stock is traded or, if the Common Stock is not traded on any
national securities exchange, the closing bid price of the
Common Stock in the over-the-counter market.
(h) Valuation of MIU Common Stock Equivalents. The
Employee's Common Stock Equivalents under the MIU Plan
shall, for purposes of payments pursuant thereto, be valued
at the Company Stock Value.
(i) Estate Enhancement Program. If the Employee
participates in the Ingersoll-Rand Estate Enhancement
Program, the terms of the Program shall apply.
(j) Outplacement Expenses. For the three year period
following the Termination Date, the Company shall reimburse
the Employee for all reasonable expenses (up to a maximum of
$15,000 per 12 month period) incurred by the Employee for
professional outplacement services by qualified consultants
selected by the Employee.
6. PARACHUTE EXCISE TAX GROSS-UP.
(a) If, as a result of any payment or benefit provided
under this Agreement, either alone or together with other
payments and benefits which the Employee receives or is then
entitled to receive from the Company, the Employee becomes
subject to the excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
(together with any income, employment or other taxes,
interest and penalties thereon an "Excise Tax"), the Company
shall pay the Employee an amount (the "Gross-Up Payment")
sufficient to place the Employee in the same after-tax
financial position that he would have been in if he had not
incurred any tax liability under Section 4999 of the Code.
For purposes of determining whether the Employee is subject
to an Excise Tax, (i) any payments or benefits received by
the Employee (whether pursuant to the terms hereof or
pursuant to any plan, arrangement or other agreement with
the Company or any entity affiliated with the Company) which
payments ("Contingent Payments") are deemed to be contingent
on a change described in Section 280G(b)(2)(A)(i) of the
Code shall be taken into account, (ii) the amount of
payments or benefits under this Agreement treated as subject
to the Excise Tax shall be equal to the lesser of (A) the
total amount of all such payments and benefits hereunder as
are Contingent Payments and (B) the amount of excess
parachute payments within the meaning of 280G(b)(1) of the
Code payable to the Employee, and (iii) the Employee shall
be deemed to pay the taxes at the highest marginal
applicable rates of such taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum
deduction in federal income taxes which could be obtained
from deduction of such state and local taxes.
(b) The determination of whether the Employee is
subject to Excise Tax and the amounts of such Excise Tax and
Gross-Up Payment, as well as other calculations hereunder,
shall be made at the expense of the Company by the
independent auditors of the Company immediately prior to the
Change of Control Event, which shall provide the Employee
with prompt written notice (the "Company Notice") setting
forth their determinations and calculations. Within 30 days
following the receipt by the Employee of the Company Notice,
the Employee may notify the Company in writing (the
"Employee Notice") if the Employee disagrees with such
determinations or calculations, setting forth the reasons
for any such disagreement. If the Company and the Employee
do not resolve such disagreement within 10 business days
following receipt by the Company of the Employee Notice, the
Company and the Employee shall agree upon a nationally
recognized accounting or compensation firm (the "Resolving
Firm") to make a determination with respect to such
disagreement. If the Employee and the Company are unable to
agree upon the Resolving Firm within 20 business days
following the Employee Notice, the New York office of
Towers, Perrin shall be the Resolving Firm. Within 30
business days following the Employee Notice, if the
disagreement is not resolved by such time, each of the
Employee and the Company shall submit its position to the
Resolving Firm, which shall make a determination as to all
such disagreements within 30 days following the last of such
submissions, which determination shall be binding upon the
Employee and the Company. The Company shall pay all
reasonable expenses incurred by either party in connection
with the determinations, calculations, disagreements or
resolutions pursuant to this paragraph, including, but not
limited to, reasonable legal, consulting or other similar
fees.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the
Employee is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30
day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to
the Employee;
(iii) cooperate with the Company in
good faith in order to effectively contest such claim;
and
(iv) permit the Company to participate
in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited
to, additional interest and penalties and related legal,
consulting or other similar fees) incurred in connection
with such contest and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or other
tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses.
(d) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible
manner, and the Employee agrees to prosecute such contest to
a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however,
that if the Company directs the Employee to pay such claim
and sue for a refund, the Company shall advance the amount
of such payment to the Employee on an interest-free basis,
and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or other tax (including
interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further,
that if the Employee is required to extend the statute of
limitations to enable the Company to contest such claim, the
Employee may limit this extension solely to such contested
amount. The Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other
taxing authority. In addition, no position may be taken nor
any final resolution be agreed to by the Company without the
Employee's consent if such position or resolution could
reasonably be expected to adversely affect the Employee
(including any other tax position of the Employee unrelated
to the matters covered hereby).
(e) As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Company or the Resolving Firm
hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies and the Employee thereafter is
required to pay to the Internal Revenue Service an
additional amount in respect of any Excise Tax, the Company
or the Resolving Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall promptly be paid by the Company to or for the benefit
of the Employee.
(f) If, after the receipt by Employee of an amount
advanced by the Company in connection with the contest of
Excise Tax claim, the Employee becomes entitled to receive
any refund with respect to such claim, the Employee shall
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company in connection
with an Excise Tax claim, a determination is made that
Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify the Employee in
writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination,
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall be offset, to
the extent thereof, by the amount of the Gross-Up Payment.
7. EFFECT ON OTHER ARRANGEMENTS.
Except to the extent expressly provided herein, no
provision of this Agreement shall affect or limit any interests
or rights vested in the Employee under any other agreement or
arrangement with the Employee or under any pension, profit-
sharing, medical or other insurance or other benefit plans of the
Company which may be in effect and in which the Employee may be
participating at any time.
8. CONFIDENTIALITY.
The Employee agrees to hold in confidence any and all
confidential information known to him concerning the Company and
its businesses so long as such information is not otherwise
publicly disclosed.
9. MISCELLANEOUS.
(a) Legal Expenses. The Company shall pay all costs
and expenses, including attorneys' fees, of the Company and, at
least quarterly, the Employee, in connection with any legal
proceedings, whether or not instituted by the Company, relating
to the interpretation or enforcement of this Agreement. In the
event that the provisions of this paragraph shall be determined
to be invalid or unenforceable in any respect, such declaration
shall not affect the remaining provisions of this Agreement,
which shall continue in full force and effect.
(b) Mitigation. All payments or benefits required by
the terms of this Agreement shall be made or provided without
offset, deduction, or mitigation on account of income the
Employee may receive from other employment or otherwise and the
Employee shall not have any obligation or duty to seek any other
employment or otherwise earn any amounts to reduce or mitigate
any payments required hereunder.
(c) Death of the Employee. In the event of the
Employee's death subsequent to Termination, all payments called
for hereunder shall be paid to the Employee's designated
beneficiary or beneficiaries, or to his estate if he has not
designated a beneficiary or beneficiaries.
(d) Notices. Any notice or other communication
provided for in this Agreement or contemplated hereby shall be
sufficiently given if given in writing and delivered by certified
mail, return receipt requested, and addressed, in the case of the
Company, to the Company at:
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attention: Chairman of the Board
of Directors
and, in the case of the Employee, to the Employee at:
Either party may designate a different address by giving notice
of change of address in the manner provided above.
(e) Waiver. No waiver or modification in whole or in
part of this Agreement, or any term or condition hereof, shall be
effective against any party unless in writing and duly signed by
the party sought to be bound. Any waiver of any breach of any
provision hereof or any right or power by any party on one
occasion shall not be construed as a waiver of, or a bar to, the
exercise of such right or power on any other occasion or as a
waiver of any subsequent breach.
(f) Binding Effect; Successors. This Agreement shall
be binding upon and shall inure to the benefit of the Company and
the Employee and their respective heirs, legal representatives,
successors and assigns. If the Company shall be merged into or
consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of the
entity surviving such merger or resulting from such
consolidation. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets
of the Company, by agreement in form and substance satisfactory
to the Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. The provisions of this paragraph shall continue to
apply to each subsequent employer of the Employee hereunder in
the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
(g) Plan Limitations. In the event the Company is
unable to provide any benefit required to be provided under this
Agreement through a plan sponsored by the Company or its
Affiliates, the Company shall, at its own cost and expense, take
appropriate actions to insure that alternative arrangements are
made so that equivalent benefits can be provided to the Employee,
including to the extent appropriate purchasing for the benefit of
the Employee (and if applicable the Employee's dependents)
individual policies of insurance providing benefits, which on an
after-tax basis, are equivalent to the benefits required to be
provided hereunder.
(h) Controlling Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey applicable to contracts made and to be performed therein.
10. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding
between the parties hereto and supersedes in all respects any
prior employment or severance agreement or understanding between
the Company (or any affiliate thereof) and the Employee.
IN WITNESS WHEREOF, the Company and the Employee have
executed this Agreement as of the day and year first above
written.
INGERSOLL-RAND COMPANY
By
Employee
Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Affiliate", used to indicate a relationship with a
specified person, means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, such a specified person.
"Associate", used to indicate a relationship with a
specified person, means (i) any corporation, partnership, or
other organization of which such specified person is an officer
or partner; (ii) any trust or other estate in which such
specified person has a substantial beneficial interest or as to
which such specified person serves as trustee or in a similar
fiduciary capacity; (iii) any relative or spouse of such
specified person, or any relative of such spouse who has the same
home as such specified person, or who is a director or officer of
the Company or any of its parents or subsidiaries; and (iv) any
person who is a director, officer, or partner of such specified
person or of any corporation (other than the Company or any
wholly-owned subsidiary of the Company), partnership or other
entity which is an Affiliate of such specified person.
"Beneficial Owner" means the same as such term is
defined by Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (or any successor provision at the time in effect);
provided, however, that any individual, corporation, partnership,
group, association, or other person or entity which has the right
to acquire any of the Company's outstanding securities entitled
to vote generally in the election of directors at any time in the
future, whether such right is contingent or absolute, pursuant to
any agreement, arrangement, or understanding or upon exercise of
conversion rights, warrants or options, or otherwise, shall be
deemed the Beneficial Owner of such securities.
"Board" means the Board of Directors of the Company
(or, if the Company is then a subsidiary of any other company, of
the ultimate parent company).
"Cause" means (i) any action by the Employee involving
willful malfeasance or willful gross misconduct having a
demonstrable adverse effect on the Company; (ii) substantial and
continuing refusal by the Employee in willful breach of this
Agreement to perform his employment duties hereunder; or
(iii) the Employee being convicted of a felony under the laws of
the United States or any state.
Termination of the Employee for Cause shall be
communicated by a Notice of Termination given within one year
after the Board (i) has knowledge of conduct or an event
allegedly constituting Cause; and (ii) has reason to believe that
such conduct or event could be grounds for Cause. For purposes
of this Agreement a "Notice of Termination" shall mean delivery
to the Employee of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Company's Board at a meeting of that Board
called and held for the purpose (after reasonable notice to the
Employee ("Preliminary Notice") and reasonable opportunity for
the Employee, together with the Employee's counsel, to be heard
before the Board prior to such vote) of finding, in the good
faith opinion of the Board, that the Employee has engaged in the
conduct constituting Cause and specifying the particulars thereof
in detail. Upon the receipt of the Preliminary Notice, the
Employee shall have 30 days in which to appear with counsel or
take such other action as he desires on his behalf, and such 30-
day period is hereby agreed to by the parties as a reasonable
opportunity for the Employee to be heard. The Board shall no
later than 45 days after the receipt of the Preliminary Notice by
the Employee communicate its findings to Employee. A failure by
the Board to make its finding of Cause or to communicate its
conclusion within such 45-day period shall be deemed to be a
finding that the Employee has not engaged in the conduct
described herein. Any termination of the Employee's employment
(other than by death or Permanent Disability) within 45 days
after the date that the Preliminary Notice has been given to the
Employee shall be deemed to be a termination for Cause; provided,
however, that if during such period the Employee voluntarily
terminates other than for Good Reason or the Company terminates
the Employee other than for Cause, and the Employee is found (or
is deemed to be found) not to have engaged in the conduct
described herein, such termination shall not be deemed to be for
Cause.
"Change of Control Event" means the date (i) any
individual, corporation, partnership, group, association or other
person or entity, together with its Affiliates and Associates
(other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company), is or becomes the
Beneficial Owner of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election
of directors; (ii) the Continuing Directors fail to constitute a
majority of the members of the Board; (iii) of consummation of
any transaction or series of transactions under which the Company
is merged or consolidated with any other company, other than a
merger or consolidation which would result in the shareholders of
the Company immediately prior thereto continuing to own (either
by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 70% of the combined
voting power of the voting securities of the Company or such
surviving entity or its parent corporation outstanding
immediately after such merger or consolidation; or (iv) of any
sale, lease, exchange or other transfer, in one transaction or a
series of related transactions, of all, or substantially all, of
the assets of the Company, other than any sale, lease, exchange
or other transfer to any person or entity where the Company owns,
directly or indirectly, at least 80% of the outstanding voting
securities of such person or entity or its parent corporation
after any such transfer.
"Continuing Director" means a director who either was a
member of the Board on the date hereof or who became a member of
the Board subsequent to such date and whose election, or
nomination for election by the Company's shareholders, was Duly
Approved by the Continuing Directors on the Board at the time of
such nomination or election, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf
of the Board in which such person is named as nominee for
director, without due objection to such nomination, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person or entity
other than the Board.
"Duly Approved by the Continuing Directors" means an
action approved by the vote of at least two-thirds of the
Continuing Directors then on the Board.
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means (i) a material adverse change in
the Employee's job responsibilities, title or status from those
in effect on the date hereof or as enhanced from time to time
which change continues for a period of at least 15 days after
written notice from the Employee; (ii) a reduction of the
Employee's base salary or target bonus, the failure to pay
Employee's salary or bonus when due, or the failure to maintain
on behalf of the Employee (and his or her dependents) benefits
which are at least as favorable in the aggregate to those
provided for in paragraph 4(b); (iii) the relocation of the
principal place of the Employee's employment to a location that
is more than 35 miles further from the Employee's residence than
such principal place of employment immediately prior to the
Change of Control Event, or the imposition of travel requirements
on the Employee not substantially consistent with such travel
requirements existing immediately prior to the Change of Control
Event; (iv) the failure of the Company to obtain the assumption
of, and the agreement to perform, this Agreement by any successor
as contemplated in paragraph 8(f); or (v) the failure of the
Company to perform any of its other material obligations under
this Agreement and the continuation of such failure for a period
of 15 days after written notice from the Employee.
"Permanent Disability", as applied to the Employee,
means that (i) he has been totally incapacitated by bodily injury
or disease so as to be prevented thereby from performing his
duties hereunder; (ii) such total incapacity shall have continued
for a period of six consecutive months; and (iii) such total
incapacity will, in the opinion of a qualified physician, be
permanent and continuous during the remainder of the Employee's
life.
"Termination" means (i) following the occurrence of a
Change of Control Event, (A) the termination of the Employee's
employment without Cause or (B) the resignation by an Employee
for Good Reason upon ten days' prior written notice (or such
shorter period as may be agreed upon between the Employee and the
Company), and (ii) prior to the occurrence of a Change of Control
Event, the termination of the Employee's employment or a material
adverse change in the Employee's job responsibilities, title or
status at the request of any individual or entity acquiring
ownership and control of the Company; provided, that such term
shall not include any termination of employment for Cause, any
resignation without Good Reason, or any termination of employment
on account of an Employee's death or Permanent Disability.
"Termination Date" shall mean the effective date of an
Employee's Termination; provided, that with respect to a
Termination that occurs prior to a Change of Control Event, the
effective date of such Termination shall be deemed to be the date
immediately following the Change of Control Event.
INGERSOLL-RAND COMPANY
ELECTED OFFICERS SUPPLEMENTAL PROGRAM
(As Amended and Restated Effective March 3, 1999)
Introduction
Ingersoll-Rand Company (the "Company") adopted the Ingersoll-Rand
Company Elected Officers Supplemental Program (the "Program")
effective June 30, 1995 to provide retirement benefits to certain
individuals employed by the Company in addition to the benefits
provided from other qualified and non-qualified plans maintained
by the Company. This amendment and restatement of the Program is
effective as of March 3, 1999 and supersedes the prior provisions
of the Program.
The Program is intended to be treated as a plan which is unfunded
and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees within the meaning of the Employee
Retirement Income Security Act of 1974, as amended.
Generally, the provisions of the Program as set forth herein
shall apply only to an Employee who terminates employment on or
after March 3, 1999. The rights and benefits, if any, of an
Employee who terminated employment prior to March 3, 1999 shall
be determined in accordance with the provisions of the Program in
effect on the date he terminated employment.
INGERSOLL-RAND COMPANY
ELECTED OFFICERS SUPPLEMENTAL PROGRAM
TABLE OF CONTENTS
Page
INTRODUCTION i
ARTICLE 1 - DEFINITIONS
1.1 Actuarial Equivalent 1
1.2 Board 1
1.3 Change in Control 1
1.4 Company 1
1.5 Committee 1
1.6 Deferral Plan 1
1.7 Elected Officer 1
1.8 Employee 1
1.9 Estate Program 1
1.10 Final Average Pay 1
1.11 Pension Pla 2
1.12 Program 2
1.13 Year of Service 2
ARTICLE 2 - PARTICIPATION
2.1 Commencement of Participation 3
2.2 Duration of Participation 3
ARTICLE 3 - AMOUNT OF BENEFIT
3.1 Amount of Benefit 4
ARTICLE 4 - VESTING
4.1 Vesting 5
4.2 Forfeiture for Cause 5
ARTICLE 5 - DISTRIBUTIONS
5.1 Retirement 6
5.2 Form of Distribution 7
5.3 Disability 7
5.4 Death 8
5.5 Payment of Benefits 8
ARTICLE 6 - FUNDING
6.1 Funding 9
6.2 Company Obligation 9
ARTICLE 7 - CHANGE IN CONTROL
7.1 Contributions to Trust 10
7.2 Amendments 10
ARTICLE 8 - MISCELLANEOUS
8.1 Amendment and Termination 11
8.2 No Contract of Employment 11
8.3 Withholding 11
8.4 Loans 11
8.5 Compensation and Nominating Committee 11
8.6 Entire Agreement; Successors 12
8.7 Severability 12
8.8 Governing Law 12
8.9 Participant as General Creditor 12
8.10 Nonassignability 12
APPENDIX A 14
ARTICLE 1
DEFINITIONS
1.1 "Actuarial Equivalent" means an amount having equal value
when computed on the basis of the 1983 Group Annuity
Mortality Table (blended) and an interest rate equal to the
average of the monthly rates for ten-year Constant
Maturities for US Treasury Securities for the twelve-month
period immediately preceding the month prior to the month in
which a determination of benefit occurs, such rate as
published in Federal Reserve statistical release H.15(519).
1.2 "Board" means the Board of Directors of Ingersoll-Rand
Company.
1.3 "Change in Control" shall have the same meaning as such term
is defined in the most recent Company Incentive Stock Plan,
unless a different definition is used for purposes of a
change in control event in any severance or employment
agreement between an Employer and an Employee, in which
event as to such Employee such definition shall apply.
1.4 "Company" means Ingersoll-Rand Company, and its successors
or assigns.
1.5 "Committee" means the Compensation and Nominating Committee
of the Board.
1.6 "Deferral Plan" means the Ingersoll-Rand Company Executive
Deferred Compensation and Stock Bonus Plan.
1.7 "Elected Officer" means an individual elected by the Board
as an officer of the Company.
1.8 "Employee" means an individual eligible to participate in
the Program as provided in Section 2.1.
1.9 "Estate Program" means the Ingersoll-Rand Company Estate
Enhancement Program.
1.10 "Final Average Pay" means, except as provided in Section 5.3
for purposes of disability, the sum of the following:
(a) the average of each of the five highest bonus awards
(whether the awards are paid to the Employee, are a
Deferral Amount (as such term is defined in the
Deferral Plan) or the Employee has elected to forego a
bonus award pursuant to the Estate Program) during the
six most recent calendar years, including the year
during which the Employee's retirement or death occurs,
or a Change in Control occurs, but excluding
Supplemental Contributions (as such term is defined in
the Deferral Plan) or any amounts paid from the
Deferred Compensation Account (as such term is defined
in the Deferral Plan) or any other account under the
Deferral Plan including, but not limited to, amounts
paid consisting of Deferral Amounts and Supplemental
Contributions and their earnings, and any amounts paid
by the Company pursuant to the Estate Program, and
(b) the Employee's annualized base salary in effect
immediately prior to the date of determination.
1.11 "Pension Plan" means the Ingersoll-Rand Pension Plan Number
One as in effect on March 3, 1999 and as amended from time
to time.
1.12 "Program" means the Ingersoll-Rand Company Elected Officers
Supplemental Program as stated herein and as may be amended
from time to time.
1.13 "Year of Service" shall be determined in accordance with the
provisions of the qualified defined benefit pension plan(s)
(as defined below) in which an individual participates while
an Employee that are applicable to determining years of
vesting service under such plan. For purposes of this
Section a qualified defined benefit pension plan means a
plan (a) sponsored by the Company, any domestic entity in
which the Company owns (directly or indirectly) a 50% or
more interest, or any other entity designated by the Company
and (b) which is defined in Section 414(j) of the Internal
Revenue Code of 1986, as amended. Notwithstanding any
provision of the Program to the contrary, in the event an
Employee earns one or more hours of service during a
calendar year, he shall be credited with a Year of Service
with respect to such year for purposes of the Program.
Whenever the word "he", "his," or "him" is used in the
Program, such word is intended to embrace within its purview
the word "she" or "her", as may be appropriate.
ARTICLE 2
PARTICIPATION
2.1 Commencement of Participation
An individual employed by the Company shall commence
participation in the Program upon becoming an Elected
Officer of the Company.
2.2 Duration of Participation
An Employee shall continue to participate in the Program
until the earlier of his termination of employment, death,
or election to waive the benefit provided under the Program.
ARTICLE 3
AMOUNT OF BENEFIT
3.1 Amount of Benefit
An Employee shall be entitled to receive a benefit under the
Program equal to (a) minus (b) minus (c) below:
(a) the product of:
(i) his Final Average Pay,
(ii) his Years of Service (up to a maximum of 35 Years of
Service), and
(iii)1.9%
(b)the amount set forth in Appendix A as attached hereto
(c)the benefit he would be entitled to receive under
Section 5.2 of the Program but for his election to
forego such benefit pursuant to the Estate Program.
ARTICLE 4
VESTING
4.1 Vesting
An Employee shall become vested in the benefit provided
under the Program upon the earlier of (i) the attainment of
age 55 and the completion of 15 Years of Service, (ii) the
attainment of age 62, (iii) death, or (iv) a Change in
Control.
4.2 Forfeiture for Cause
All benefits for which an Employee would otherwise be
eligible hereunder may be forfeited, at the discretion of
the Committee, prior to the occurrence of a Change in
Control under the following circumstances:
(a) The Employee is discharged by the Company for cause,
which shall be a breach of the standards set forth in
the Ingersoll-Rand Company Code of Conduct; or
(b) Determination by the Committee no later than 12 months
after termination of employment that the Employee has
engaged in serious or willful misconduct in connection
with his employment with the Company; or
(c) The Employee (whether while employed or for two years
thereafter) without the written consent of the Company
is employed by, becomes associated with, renders
service to, or owns an interest in any business that is
competitive with the Company or with any business in
which the Company has a substantial interest as
determined by the Committee; provided, however, that an
Employee may own up to 1% of the publicly traded equity
securities of any business, notwithstanding the
foregoing.
ARTICLE 5
DISTRIBUTIONS
5.1 Retirement
Employee retirement distributions under the Program shall be
as follows:
(a) Normal Retirement - An Employee shall retire and
receive the benefit under Section 3.1 upon attaining
age 62, provided that the Chief Executive Officer of
the Company (or in the case of the Chief Executive
Officer, the Board) may request an Employee to remain
in the employ of the Company after the Employee has
attained age 62.
(b) Early Retirement - An Employee may retire under the
Program at any time after he becomes vested in
accordance with Section 4.1. In the event he retires
before age 62, he will receive a benefit under the
Program in accordance with Section 5.5. Such benefit
shall be equal to the benefit he would have received at
age 62 under Section 3.1, provided however that:
(i) the amount determined under Section 3.1(a) shall
be reduced by 0.429% for each month that the
benefit commences prior to age 62,
(ii)the benefit offset amount derived from defined
contribution account balances, if any, as
identified in the applicable Appendix, shall be
converted to immediate annuities using the
Actuarial Equivalent as defined in Section 1.1,
and shall be based on the Employee's age at date
of retirement,
(iii)the benefit offset amount derived from defined
benefit plans, as identified in Appendix A and
as adjusted for retirement at the earliest date
on which the Employee may retire and begin
receiving a benefit under such defined benefit
plans and as further adjusted, if necessary, to
the Actuarial Equivalent of the benefit payable
on the date benefits under the Program
commence, shall be as determined under the
applicable plans irrespective of whether the
Employee elects to receive a benefit under such
plans, and
(iv)for years prior to Social Security normal
retirement age, the Social Security Primary
Insurance Amount shall be reduced by the same
factors used by the Social Security
Administration to adjust benefits payable at age
62 or later, and by .3% for each month that
benefits under the Program commence prior to age
62.
(c) Late Retirement - If an Employee retires after age 62
as provided under (a) above, he will receive a benefit
equal to the greater of:
(i) the benefit determined under Section 3.1 as of
his date of retirement, or
(ii)the benefit he would have received had he
retired at age 62, credited with interest from
the date he attained age 62 until his date of
retirement. For purposes of this subsection
(ii), the interest rate will be equal to the
rate of return earned by the Fixed Income Fund
of the Ingersoll-Rand Company Savings and Stock
Investment Plan during such period.
5.2 Form of Distribution
Benefits under the Program shall be payable solely in a
single lump sum. The lump sum amount, determined as of the
Employee's date of retirement, shall be the Actuarial
Equivalent value of a single life annuity of the benefit
under Section 3.1 adjusted, if applicable, to reflect the
provisions of Section 5.1. The lump sum distribution
determined under this Section 5.2 shall be credited with
interest at a rate equal to the rate of return earned by the
Fixed Income Fund of the Ingersoll-Rand Company Savings and
Stock Investment Plan from the Employee's date of retirement
until the date of distribution.
Notwithstanding the foregoing, an Employee who retires under
the Program and receives a lump sum payment under this
Section 5.2 may elect within the 30-day period immediately
preceding his date of retirement to have his benefit
determined as of his date of retirement using an alternative
interest rate. The alternative interest rate used to
determine the Actuarial Equivalent benefit payable in a lump
sum shall be the interest rate equal to the 10-Year Treasury
Note rate as published in The New York Times in the Key Rate
Table under the Credit Market Section, or, if such rate is
unavailable, as provided by Telerate, in both cases as of
the business day immediately preceding the date payment is
made to the Employee. In the event an Employee elects to
have his benefit determined under this paragraph, no
interest will be payable from the Employee's date of
retirement until the date of distribution.
5.3 Disability
An Employee who becomes disabled and who remains
continuously disabled until attaining age 65 shall continue
to accrue benefits under the Program as if he continued to
be employed by the Company. Such Employee shall receive an
immediate lump sum payment determined under Section 5.2 of
the Program as of the Employee's 65th birthday.
Notwithstanding any other provision of the Program to the
contrary, when determining Final Average Pay for an Employee
who is disabled under the provisions of this Section, Final
Average Pay means the sum of:
(a) the average of each of the five highest bonus awards
(whether the awards are paid to the Employee, are a
Deferral Amount (as such term is defined in the
Deferral Plan) or the Employee has elected to forego a
bonus award pursuant to the Estate Program) during the
six most recent calendar years, including the year
during which the Employee's disability occurs, (or, if
the average of the five highest bonus awards would be
greater, the six most recent calendar years prior to
the year in which the Employee's disability occurs),
but excluding Supplemental Contributions (as such term
is defined in the Deferral Plan) or any amounts paid
from the Deferred Compensation Account (as such term is
defined in the Deferral Plan) or any other account
under the Deferral Plan including, but not limited to,
amounts paid consisting of Deferral Amounts and
Supplemental Contributions and their earnings, and any
amounts paid by the Company pursuant to the Estate
Program, and
(b) the Employee's annualized base salary in effect as of
the date he becomes disabled.
An Employee who is no longer disabled under this Section and
who returns to the employ of the Company or an affiliated
company, shall be entitled to accrue benefits under this
Section for the period of his disability.
An Employee who is no longer disabled under this Section and
who does not return to the employ of the Company or an
affiliated company, shall not be entitled to accrue any
benefits under this Section for any portion of the period of
his disability.
For purposes of the Program, an Employee shall be disabled
if he is unable to continue to perform the duties of his
position due to a physical or mental impairment.
5.4 Death
In the event that an Employee dies prior to retirement, his
beneficiary shall receive a lump sum payment determined
under Section 5.2 of the Program as of the date of the
Employee's death as if the Employee retired on the date of
his death; provided that if the Employee's death occurs
prior to his attainment of age 55, his benefit shall be
reduced by .3% for each month that the benefit commences
before the Employee would have reached age 65. The
Employee's beneficiary under the Program shall be the
beneficiary under the Ingersoll-Rand Company Savings and
Stock Investment Plan unless the Employee designates another
beneficiary in writing, and such written designation has
been received by the Committee prior to the date of death.
An Employee may change the designated beneficiary under the
Program at any time by providing such designation in writing
to the Committee.
5.5 Payment of Benefits
The benefit under the Program shall be paid on the later of
(i) the first business day of the sixth month following the
Employee's retirement or death, or (ii) the first business
day of the calendar year following the Employee's
retirement.
In the event an Employee is disabled in accordance with
Section 5.3, his benefit shall be paid on the first day of
the month following the date that the Employee attains age
65.
ARTICLE 6
FUNDING
6.1 Funding
Except as provided in Section 8.9 hereof, the Company shall
have no obligation to fund the benefit that an Employee
earns under the Program.
6.2 Company Obligation
Notwithstanding the provisions of any trust agreement or
similar funding vehicle to the contrary, the Company shall
remain obligated to pay benefits under the Program. Nothing
in the Program or any trust agreement shall relieve the
Company of its liabilities to pay benefits under the Program
except to the extent that such liabilities are met by the
distribution of trust assets.
ARTICLE 7
CHANGE IN CONTROL
7.1 Contributions to Trust
In the event that a Change in Control has occurred, the
Company shall be obligated to establish a trust and to
contribute to the trust an amount necessary to fund the
accrued benefit earned by the Employee under the Program
(assuming immediate benefit commencement) as of the last day
of the calendar month immediately preceding the date the
Board determines that a Change in Control has occurred. If
the Employee shall not have attained age 55, his annual
benefit shall be determined on the same basis used to
determine his accrued benefit in the case of death as
specified in Section 5.4.
7.2 Amendments
Following a Change in Control of the Company, any amendment
modifying or terminating the Program shall have no force or
effect.
ARTICLE 8
MISCELLANEOUS
8.1 Amendment and Termination
Except as provided in Section 7.2 hereof, the Program may,
at any time and from time to time, be amended or terminated
without the consent of any Employee or beneficiary, (a) by
the Board, or (b) in the case of amendments which do not
materially modify the provisions hereof, the Committee or
such other committee appointed by the Board; provided,
however, that no such amendment or termination shall reduce
any benefits accrued under the terms of the Program prior to
the date of termination or amendment.
8.2 No Contract of Employment
The establishment of the Program or any modification hereof
shall not give any Employee or other person the right to
remain in the service of the Company or any of its
subsidiaries, and all Employees and other persons shall
remain subject to discharge to the same extent as if the
Program had never been adopted.
8.3 Withholding
The Company shall be entitled to withhold from any payment
due under the Program any and all taxes of any nature
required by any government to be withheld from such payment.
8.4 Loans
No loans to Employees shall be permitted under the Program.
8.5 Compensation and Nominating Committee
The Program shall be administered by the Committee (or any
successor committee) of the Board. The primary
responsibility of the Committee is to administer the Program
for the exclusive benefit of the Employees and their
beneficiaries, subject to the specific terms of the Program.
The Committee shall administer the Program in accordance
with its terms to the extent consistent with applicable law,
and shall have the power to determine all questions arising
in connection with the administration, interpretation, and
application of the Program. Any such determination by the
Committee shall be conclusive and binding upon all affected
parties. Any denial by the Committee of a claim for benefits
under the Program by an Employee or beneficiary shall be
stated in writing by the Committee and delivered or mailed
to the Employee or beneficiary. Such notice shall set forth
the specific reasons for the Committee's decision. In
addition, the Committee shall afford a reasonable
opportunity to any Employee or beneficiary whose claim for
benefits has been denied for a review of the decision
denying this claim.
8.6 Entire Agreement; Successors
The Program, including any subsequently adopted amendments,
shall constitute the entire agreement or contract between
the Company and any Employee regarding the Program. There
are no covenants, promises, agreements, conditions or
understandings, either oral or written, between the Company
and any Employee relating to the subject matter hereof,
other than those set forth herein. The Program and any
amendment hereof shall be binding on the Company and the
Employees and their respective heirs, administrators,
trustees, successors and assigns, including but not limited
to, any successors of the Company by merger, consolidation
or otherwise by operation of law, and on all designated
beneficiaries of the Employee.
8.7 Severability
If any provisions of the Program shall, to any extent, be
invalid or unenforceable, the remainder of the Program shall
not be affected thereby, and each provision of the Program
shall be valid and enforceable to the fullest extent
permitted by law.
8.8 Governing Law
The laws of the State of New Jersey shall govern the
Program.
8.9 Participant as General Creditor
Benefits under the Program shall be payable by the Company
out of its general funds. The Company shall have the right
to establish a reserve or make any investment for the
purposes of satisfying its obligations hereunder for payment
of benefits at its discretion, provided, however, that no
Employee eligible to participate in the Program shall have
any interest in such investment or reserve. To the extent
that any person acquires a right to receive benefits under
the Program, such rights shall be no greater than the right
of any unsecured general creditor of the Company.
8.10 Nonassignability
To the extent permitted by law, the right of any Employee or
any beneficiary in any benefit hereunder shall not be
subject to attachment or any other legal process for the
debts of such Employee or beneficiary nor shall any such
benefit be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
APPENDIX A
Unless otherwise specified in another Appendix attached hereto,
the sum of the following shall be used for purposes of Section
3.1(b) of the Program:
(a) All employer-paid benefits under any qualified defined
benefit plan (as defined in Section 414(j) of the Internal
Revenue Code of 1986, as amended) and associated supplemental
plans sponsored by the Company, Ingersoll-Dresser Pump Company,
and Dresser Industries, Inc., provided that the Employee's
intervening employment between employment with Dresser
Industries, Inc. and the Company is solely with Ingersoll
-Dresser Pump Company. For purposes of this Paragraph
(a), the amount of any pension payable under the Clark
Equipment Company Retirement Program for Salaried
Employees shall be determined without reduction by the
lifetime pension equivalent of the Employee's vested
interest in his PPOA Account (as such term is defined in
the I-R/Clark Leveraged Employee Stock Ownership Plan).
For purposes of determining the benefit under Section
3.1 of the Program, the Employee's benefit, if any,
under any qualified defined benefit plan and associated
supplemental plans described in the previous paragraph,
shall be determined as a life annuity at the date of
determination.
(b) The Social Security Primary Insurance Amount as defined
in the Pension Plan estimated at age 65, multiplied by a
fraction, the numerator of which is his Years of Service
(up to a maximum of 35 Years of Service), and the
denominator of which is 35.
For purposes of the Program, "Social Security Primary
Insurance Amount" means the amount of the Employee's
annual primary old age insurance determined under the
Social Security Act in effect at the date of
determination and payable in accordance with (i) or
(ii) below.
(i) For benefits determined on or after age 65,
payable for the year following his date of
retirement.
(ii)For benefits determined before the Employee
attains age 65, payable for the year following
his retirement or death (or which would be
payable when he first would have become eligible
if he were then unemployed), assuming he will
not receive after retirement (or death) any
income that would be treated as wages for
purposes of the Social Security Act.
For purposes of determining the Social Security Benefit
under paragraphs (i) and (ii) above, an Employee's
covered earnings under said Act for each calendar year
preceding the Employee's first full calendar year of
employment shall be determined by multiplying his
covered earnings subsequent to the year being
determined by the ratio of the average per worker total
wages as reported by the Social Security Administration
for the calendar year being determined to such average
for the calendar year subsequent to the year being
determined.
(c) An Employee's accrued benefit under any qualified
defined benefit pension plan (as defined in Section
414(j) of the Internal Revenue Code of 1986, as
amended) and any nonqualified pension plan with respect
to any business that was acquired by the Company
("Acquired Business"), (each such pension plan shall be
referred to in this Paragraph (c) as a "Former Plan"),
shall be used for purposes of Section 3.1(b) of the
Program if the Employee:
(i) was an employee of the Acquired Business on the
date it was acquired by the Company,
(ii)became an employee of the Company as a result of
the acquisition of the Acquired Business, and
(iii)was granted vesting service under any qualified
defined benefit pension plan (as defined in
Section 414(j) of the Internal Revenue Code of
1986, as amended) sponsored by the Company, any
domestic entity in which the Company owns
(directly or indirectly) a 50% or more
interest, and any other entity designated by
the Company for service performed while an
employee of the Acquired Business.
The Employee's accrued benefit under the Former Plan
shall be determined as a life annuity payable as of the
date of determination, using the Former Plan's early
retirement factors, if applicable.
Notwithstanding anything to the contrary in this
Paragraph (c), if the Committee determines that the
accrued benefit under a Former Plan cannot reasonably
be calculated due to lack of information about the
Former Plan or otherwise, the provisions of this
Paragraph (c) shall not apply with respect to such
Former Plan.
<TABLE>
EXHIBIT 11
INGERSOLL-RAND COMPANY
COMPUTATION OF EARNINGS PER SHARE
(In millions of dollars except for shares and per share amounts)
Years ended December 31,
<C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net earnings applicable
<S> <C> <C> <C> <C> <C>
to common stock............. $509.1 $380.5 $358.0 $270.3 $211.1
Average number of common
shares outstanding.......... 163,669,777 163,206,932 161,238,547 159,103,617 158,187,174
Number of common shares
issuable assuming exercise
under incentive stock plans.. 1,812,035 1,617,803 1,031,137 495,479 542,153
Average number of outstanding
shares for diluted
earnings per
share calculations........... 165,481,812 164,824,735 162,269,684 159,599,096 158,729,327
Basic earnings per
share....................... $3.11 $2.33 $2.22 $1.70 $1.33
Diluted earnings per
share........................ $3.08 $2.31 $2.21 $1.69 $1.33
Note: All common share and per share amounts have been adjusted for the 3-for-2
stock split which was made in the form of a stock dividend in August of 1997.
</Table)
</TABLE>
<TABLE>
INGERSOLL-RAND COMPANY EXHIBIT 12
COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Millions)
Years Ended December 31,
<S> <C> <C> <C> <C> <C>
Fixed charges: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Interest expense........................... $227.5 $138.8 $ 122.4 $ 90.0 $ 46.9
Amortization of debt discount and expense.. 7.0 2.0 1.5 0.8 0.4
Rentals (one-third of rentals)............. 25.0 25.5 22.4 21.6 18.8
Capitalized interest....................... 4.0 3.3 4.6 3.6 3.2
Equity-linked security charges............ 19.7 -- -- -- --
Total fixed charges.......................... $283.2 $169.6 $150.9 $ 116.0 $ 69.3
Net earnings .......................... $509.1 $380.5 $358.0 $270.3 $211.1
Add: Minority income of majority-
owned subsidiaries.................. 54.2 17.3 18.9 14.5 15.1
Taxes on income....................... 280.1 233.2 210.3 158.9 118.8
Fixed charges......................... 283.2 169.6 150.9 116.0 69.3
Less: Capitalized interest.................. 4.0 3.3 4.6 3.6 3.2
Undistributed earnings (losses) from
less than 50% owned affiliates...... 33.7 16.2 (23.1) 33.3 33.3
Earnings available for fixed charges ....... $1,088.9 $781.1 $756.6 $522.8 $377.8
Ratio of earnings to fixed charges .......... 3.84 4.61 5.01 4.51 5.46
Undistributed earnings (losses) from less
than 50% owned affiliates:
Equity in earnings (losses)............... $ 37.3 $ 19.4 $ 36.4 $ 36.6 $ 36.6
Less: Amounts distributed.............. 3.6 3.2 59.5 3.3 $ 3.3
Undistributed earnings (losses) from
less-than 50% owned affiliates........... $ 33.7 $16.2 $ (23.1) $ 33.3 $ 33.3
</TABLE>
Exhibit 13
<TABLE>
Consolidated Statement of Income
In millions except per share amounts
<S> <C> <C> <C>
For the years ended December 31 1998 1997 1996
<S> <C> <C> <C>
Net sales $8,291.5 $7,103.3 $6,702.9
Cost of goods sold 6,046.6 5,263.7 5,029.9
Administrative, selling and
service engineering
expenses 1,200.5 1,079.3 989.5
Operating income 1,044.4 760.3 683.5
Interest expense (225.8) (136.6) (119.9)
Other income (expense), net (22.0) (21.5) (18.8)
Equity in earnings of
partially-owned affiliates 46.8 28.8 42.4
Minority interests (54.2) (17.3) (18.9)
Earnings before income taxes 789.2 613.7 568.3
Provision for income taxes 280.1 233.2 210.3
Net earnings $ 509.1 $ 380.5 $ 358.0
Basic earnings per share $3.11 $2.33 $2.22
Diluted earnings per share $3.08 $2.31 $2.21
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
Consolidated Balance Sheet
In millions except share amounts
December 31 1998 1997
Assets
Current assets:
Cash and cash equivalents $ 71.9 $ 104.9
Marketable securities 5.7 6.9
Accounts and notes receivable, less
allowance for doubtful accounts of
$42.0 in 1998 and $33.9 in 1997 1,177.1 1,281.5
Inventories 940.8 854.8
Prepaid expenses 88.7 136.0
Deferred income taxes 143.4 160.8
2,427.6 2,544.9
Investments in and advances with
partially-owned equity affiliates 344.7 328.0
Property, plant and equipment, at cost:
Land and buildings 683.3 682.7
Machinery and equipment 1,733.0 1,592.5
2,416.3 2,275.2
Less-accumulated depreciation 1,068.7 992.0
1,347.6 1,283.2
Intangible assets, net 3,774.3 3,833.0
Deferred income taxes 235.9 214.9
Other assets 179.4 211.6
$8,309.5 $8,415.6
Liabilities and Equity
Current liabilities:
Accounts payable and accruals $1,488.6 $1,370.5
Loans payable 318.7 925.1
Customers' advance payments 13.3 14.5
Income taxes 28.2 17.7
1,848.8 2,327.8
Long-term debt 2,166.0 2,528.0
Postemployment liabilities 897.1 937.1
Minority interests 133.6 127.9
Other liabilities 154.0 153.4
5,199.5 6,074.2
Company obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the company 402.5 -
Shareholders' equity:
Common stock, $2 par value, authorized
600,000,000 shares; issued:
1998-168,883,779; 1997-167,410,183 337.8 334.8
Capital in excess of par value 133.4 92.4
Retained earnings 2,567.3 2,156.5
3,038.5 2,583.7
Unallocated LESOP shares, at cost (27.0) (41.4)
Treasury stock, at cost (150.9) (44.5)
Accumulated other comprehensive income (153.1) (156.4)
Shareholders' equity 2,707.5 2,341.4
$8,309.5 $8,415.6
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statement of Shareholders' Equity
In millions
<TABLE>
<S> <S>
Capital in Accumulated
Total excess other
<S> <S> <S> <S> <S> <S> <S> <S> <S>
shareholders' Common stock of par Retained Unallocated Treasury comprehensive Comprehensive
equity Amount Shares value earnings LESOP stock income income
Balance at December 31,
1995
<C> <C> <C> <C> <C> <C> <C> <C>
$1,795.5 $219.4 109.7 $121.6 $1,595.5 $(70.2) $(11.5) $(59.3)
Net earnings 358.0 358.0 $358.0
Foreign currency translation (16.5) (16.5) (16.5)
Reclassification adjustment 6.3
Total comprehensive income $347.8
Exercise of stock options 18.6 1.1 0.5 17.5
Issuance of shares under
stock plans 1.9 0.1 0.1 1.8
Allocation of LESOP shares 17.2 2.6 14.6
Cash dividends (83.9) (83.9)
Balance at December 31,
1996 2,090.8 220.6 110.3 143.5 1,869.6 (55.6) (11.5) (75.8)
Net earnings 380.5 380.5 380.5
Foreign currency translation (80.6) (80.6) (80.6)
Reclassification adjustment 3.1
Total comprehensive income $303.0
Issuance of shares under
stock plans 2.8 0.1 0.1 2.7
Exercise of stock options 52.6 2.7 1.3 49.9
Stock split 3-for-2 - 111.4 55.7 (111.4)
Allocation of LESOP shares 21.9 7.7 14.2
Purchase of treasury shares (33.0) (33.0)
Cash dividends (93.6) (93.6)
Balance at December 31,
1997 2,341.4 334.8 167.4 92.4 2,156.5 (41.4) (44.5) (156.4)
Net earnings 509.1 509.1 509.1
Foreign currency translation 3.3 3.3 3.3
Total comprehensive income $512.4
Issuance of shares under
stock plans 2.2 0.1 0.1 2.1
Exercise of stock options 45.8 2.9 1.4 42.9
Issuance of equity-linked
securities (16.4) (16.4)
Allocation of LESOP shares 26.8 12.4 14.4
Purchase of treasury shares (106.4) (106.4)
Cash dividends (98.3) (98.3)
Balance at December 31,
1998 $2,707.5 $337.8 168.9 $133.4 $2,567.3 $(27.0) $(150.9) $(153.1)
</TABLE>
Consolidated Statement of Cash Flows
In millions
For the years ended December 31 1998 1997 1996
Cash flows from operating activities:
Net earnings $ 509.1 $ 380.5 $ 358.0
Adjustments to arrive at net cash
provided by operating activities:
Depreciation and amortization 282.6 212.3 202.6
Gain on sale of businesses (6.6) (7.7) (58.0)
Gain on sale of property, plant
and equipment (9.6) (3.2) (10.3)
Minority interests, net of dividends 31.4 14.9 18.0
Equity earnings/losses,
net of dividends (38.3) (19.9) (35.6)
Deferred income taxes 1.6 8.2 (4.5)
Other items 26.7 27.1 12.3
Restructure of operations - 38.7 42.4
Changes in assets and liabilities
(Decrease) increase in:
Accounts and notes receivable 98.2 (21.5) (1.0)
Inventories (76.8) 48.7 (5.3)
Other current and noncurrent
assets 22.7 (5.2) (36.8)
(Increase) decrease in:
Accounts payable and accruals 91.7 53.8 (17.8)
Other current and noncurrent
liabilities (33.7) (23.2) (78.3)
Net cash provided by operating
activities 899.0 703.5 385.7
Cash flows from investing activities:
Capital expenditures (221.0) (186.0) (195.0)
Proceeds from sales of property,
plant and equipment 24.6 34.8 33.3
Proceeds from business dispositions 58.0 252.8 183.8
Acquisitions, net of cash* (55.6) (2,891.3) (133.5)
Decrease (increase) in marketable
securities 1.4 (0.4) (3.6)
Cash (invested in) or advances (to)
from equity companies 9.2 47.6 (34.9)
Net cash used in investing
activities (183.4) (2,742.5) (149.9)
Cash flows from financing activities:
(Decrease) increase in short-term
borrowings (712.4) 685.8 (24.3)
Debt issuance costs - (19.1) -
Proceeds from long-term debt 0.2 1,508.6 0.1
Payments of long-term debt (261.2) (133.8) (104.7)
Net change in debt (973.4) 2,041.5 (128.9)
Issuance of equity-linked securities 402.5 - -
Equity-linked securities issuance costs
and fees (12.9) - -
Net proceeds from issuance of equity-
linked securities 389.6 - -
Proceeds from exercise of stock
options 36.1 43.3 16.3
Purchase of treasury stock (106.4) (33.0) -
Dividends paid (98.3) (93.6) (83.9)
Net cash (used in) provided by
financing activities (752.4) 1,958.2 (196.5)
Effect of exchange rate changes on cash
and cash equivalents 3.8 1.6 7.5
Net (decrease) increase in cash
and cash equivalents (33.0) (79.2) 46.8
Cash and cash equivalents-
beginning of year 104.9 184.1 137.3
Cash and cash equivalents-end of year $ 71.9 $ 104.9 $ 184.1
*Acquisitions:
Working capital, other than cash $ (13.5) $ (113.8) $ (22.1)
Property, plant and equipment (14.5) (186.6) (33.1)
Intangibles and other assets (34.9) (2,739.5) (81.7)
Long-term debt and other liabilitie 7.3 148.6 3.4
Net cash used to acquire businesses $ (55.6) $(2,891.3) $(133.5)
Cash paid during the year for:
Interest, net of amounts capitalized $ 207.4 $ 136.1 $ 120.2
Income taxes 272.0 227.0 262.3
See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Ingersoll-Rand is a multinational manufacturer of primarily
nonelectrical industrial equipment and components. The company's
principal lines of business are air compressors, architectural
hardware products, automotive parts and components, construction
equipment, golf cars and utility vehicles, pumps, tools and
transport temperature control systems. The company's broad product
line has applications in numerous industries including automotive,
construction, utilities, housing, recreational and transportation,
as well as the general industrial market. A summary of significant
accounting policies used in the preparation of the accompanying
financial statements follows:
Principles of Consolidation: The consolidated financial statements
include the accounts of all wholly-owned and majority-owned
subsidiaries. Intercompany transactions and balances have been
eliminated. Partially-owned equity affiliates companiesare
accounted for under the equity method. In conformity with
generally accepted accounting principles, management has used
estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities. Actual results could differ
from those estimates.
Reclassifications: Certain amounts in the financial statements and
notes have been reclassified to conform to the 1998 presentation.
Cash Equivalents: The company considers all highly liquid
investments, consisting primarily of time deposits and commercial
paper with maturities of three months or less when purchased, to be
cash equivalents. Cash equivalents were $10.8 million and $16.2
million at December 31, 1998 and 1997, respectively.
Inventories: Inventories are generally stated at cost, which is
not in excess of market. Domestically manufactured inventories of
standard products are valued on the last-in, first-out (LIFO)
method and all other inventories are valued using the first-in,
first-out (FIFO) method.
Property and Depreciation: The company principally uses
accelerated depreciation methods for assets placed in service prior
to December 31, 1994, and the straight-line method for assets
acquired subsequent to that date.
Intangible Assets: Intangible assets primarily represent the
excess of the purchase price of acquisitions over the fair value of
the net assets acquired. Such excess costs are being amortized on
a straight-line basis generally over 40 years. Goodwill at
December 31, 1998 and 1997, was $3.7 billion and $3.8 billion,
respectively. Intangible assets are evaluated for impairment
whenever circumstances indicate that the carrying amounts may not
be recoverable. Intangible assets also represent costs allocated
to patents, tradenames and other specifically identifiable assets
arising from business acquisitions. These assets are amortized on
a straight-line basis over their estimated useful lives.
Accumulated amortization at December 31, 1998 and 1997, was $248.2
million and $137.7 million, respectively. Amortization of
intangible assets was $110.5 million, $54.7 million and $38.0
million in 1998, 1997 and 1996, respectively.
Income Taxes: Deferred taxes are provided on temporary differences
between assets and liabilities for financial reporting and tax
purposes as measured by enacted tax rates expected to apply when
temporary differences are settled or realized. A valuation
allowance is established for deferred tax assets for which
realization is not likely.
Environmental Costs: Environmental expenditures relating to
current operations are expensed or capitalized as appropriate.
Expenditures relating to existing conditions caused by past
operations, which do not contribute to current or future revenues,
are expensed. Costs to prepare environmental site evaluations and
feasibility studies are accrued when the company commits to perform
them. Liabilities for remediation costs are recorded when they are
probable and reasonably estimable, generally no later than the
completion of feasibility studies or the company's commitment to a
plan of action. The assessment of this liability is calculated
based on existing technology, does not reflect any offset for
possible recoveries from insurance companies and is not discounted.
There were no material changes in the liability for all periods
presented.
Revenue Recognition: Sales of products are recorded for financial
reporting purposes generally when the products are shipped.
Research, Engineering and Development Costs: Research and
development expenditures, including engineering costs, are expensed
when incurred and amounted to $258.6 million in 1998, $215.5
million in 1997 and $209.3 million in 1996.
Comprehensive Income: As of January 1, 1998, the company adopted
Statement of Financial Accounting Standards (SFAS) No. 130
"Reporting Comprehensive Income." The statement establishes new
rules for the reporting and display of comprehensive income and its
components. Comprehensive income includes net income, and
currently in the case of the company, only foreign currency
translation adjustments. The amounts shown as reclassification
adjustments relate to the accumulated foreign currency translation
adjustment of entities that had been sold, and thus included in net
earnings of the current period. Prior year financial statements
have been reclassified to conform with the requirements of SFAS
130. These disclosure requirements had no impact on financial
position or results of operations.
Foreign Currency: Assets and liabilities of foreign entities,
where the local currency is the functional currency, have been
translated at year-end exchange rates, and income and expenses have
been translated using weighted average-for-the-year exchange rates.
Adjustments resulting from translation have been recorded in
accumulated other comprehensive income and are included in net
earnings only upon sale or liquidation of the underlying foreign
investment.
For foreign entities where the U.S. dollar is the functional
currency, inventory and property balances and related income
statement accounts have been translated using historical exchange
rates, and resulting gains and losses have been credited or charged
to net earnings.
Foreign currency transactions and translations recorded in the
income statement decreased net earnings by $8.8 million, $0.5
million and $3.5 million in 1998, 1997 and 1996, respectively.
Accumulated other comprehensive income was increased in 1998 by
$3.3 million, and decreased in 1997 and 1996 by $80.6 million and
$16.5 million, respectively, due to foreign currency equity
adjustments related to translation and dispositions.
The company hedges certain foreign currency transactions and firm
foreign currency commitments by entering into forward exchange
contracts (forward contracts). Gains and losses associated with
currency rate changes on forward contracts hedging foreign currency
transactions are recorded currently in income. Gains and losses on
forward contracts hedging firm foreign currency commitments are
deferred off-balance sheet and included as a component of the
related transaction, when recorded; however, a loss is not deferred
if deferral would lead to the recognition of a loss in future
periods. Cash flows resulting from forward contracts accounted for
as hedges of identifiable transactions or events are classified in
the same category as the cash flows from the items being hedged.
During 1998, the company also purchased forward contracts to
mitigate the exposure of forecasted future cash flows of foreign
subsidiaries. These contracts range in duration from one to 12
months. Gains and losses associated with the change in fair market
value of these contracts are recorded in other income.
Earnings Per Share: Basic earnings per share is based on the
weighted average number of common shares outstanding. Diluted
earnings per share is based on the weighted average number of
common shares outstanding as well as dilutive potential common
shares, which in the company's case comprise shares issuable under
stock benefit plans. The weighted average number of common shares
outstanding for basic earnings per share calculations were
163,669,777, 163,206,932 and 161,238,547 for 1998, 1997 and 1996,
respectively. For diluted earnings per share purposes, these
balances increased by 1,812,035, 1,617,803 and 1,031,137 shares for
1998, 1997 and 1996, respectively, due to the effect of common
equivalent shares which were issuable under the company's stock
benefit plans.
Stock-based Compensation: SFAS No. 123, "Accounting for Stock-
Based Compensation," requires companies to measure employee stock
compensation plans based on the fair value method of accounting or
to continue to apply APB No. 25, "Accounting for Stock Issued to
Employees," and provide pro forma footnote disclosures under the
fair value method in SFAS No. 123. The company continues to apply
the principles of APB No. 25 and has provided pro forma fair value
disclosures in Note 13.
New Accounting Standard: In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement will become
effective beginning January 1, 2000. The company is currently
evaluating the impact of adopting the standard and will comply as
required.
NOTE 2 - ACQUISITIONS OF BUSINESSES: In the first quarter of 1998,
the company acquired for approximately $15.4 million in cash,
substantially all the assets of Johnstone Pump Company (Johnstone).
Johnstone manufactures industrial piston pumps, automated
dispensing systems and related products for use primarily in the
automotive industry. Also in the first quarter of 1998, the
company acquired for approximately $18 million in cash, the door
hardware technology and intellectual property relating to
residential door locksets from the Master Lock unit of Fortune
Brands, Inc. The Master Lock transaction covers patents and
certain manufacturing assets used to produce residential locks,
excluding padlocks. In the third quarter of 1998, the company
acquired full ownership of GHH-RAND Schraubenkompressoren GmbH &
Co. KG (GHH-RAND), a manufacturer of air ends for air compressors.
The company previously owned 50 percent of GHH-RAND
Schraubenkompressoren GmbH & Co. KG (GHH-RAND). In addition,
during 1998, the company purchased several smaller businesses. Pro
forma results, assuming the acquisitions had occurred at the
beginning of the year, would not have been significantly different
than those reported.
On October 31, 1997, the company acquired Thermo King Corporation
(Thermo King), from Westinghouse Electric Corporation, for
approximately $2.56 billion in cash. Thermo King is the world
leader in the transport temperature-control business for trailers,
truck bodies, seagoing containers, buses and light-rail cars. The
following unaudited pro forma consolidated results of operations
for the years ended December 31, 1997 and 1996, reflect the
acquisition as though it occurred at the beginning of the periods
after adjustments for the impact of interest on acquisition debt,
depreciation and amortization of assets, including goodwill, to
reflect the purchase price allocation:
(Unaudited)
In millions except per share amounts 1997 1996
Sales $7,965.4 $7,698.4
Net earnings 390.1 342.2
Basic earnings per share $2.39 $2.12
Diluted earnings per share 2.37 2.11
The above pro forma results are not necessarily indicative of what
the actual results would have been had the acquisition occurred at
the beginning of the period. Further, the pro forma results are
not intended to be a projection of future results of the combined
companies.
On April 3, 1997, the company completed the acquisition of Newman
Tonks Group PLC (Newman Tonks), a producer of architectural
hardware, for approximately $370 million. Newman Tonks is a
leading manufacturer, specifier and supplier of branded
architectural hardware products.
On August 27, 1996, the company acquired for $34.3 million in
cash and the assumption of certain liabilities, substantially all
of the assets of Zimmerman International Corporation (Zimmerman).
Zimmerman manufactures equipment and systems that assist in
handling or lifting tools, components and materials for a variety
of industrial operations. On January 31, 1996, the company
acquired for $95.4 million in cash and the assumption of certain
liabilities, the Steelcraft Division of MascoTech, Inc.
Steelcraft manufactures a wide range of cold-rolled and
galvanized steel doors for use primarily in nonresidential
construction.
These transactions have been accounted for as purchases and
accordingly, each purchase price was allocated to the acquired
assets and assumed liabilities based on their estimated fair
values. The company has classified as intangible assets the costs
in excess of the fair value of the net assets of companies
acquired. The results of all acquired operations have been
included in the consolidated financial statements from their
respective acquisition dates.
NOTE 3 - DISPOSITIONS AND RESTRUCTURE OF OPERATIONS: In the first
quarter of 1998, the company completed the sale of Ing. G. Klemm
Bohrtechnik GmbH. Also, during 1998, the company sold certain
assets of Ingersoll-Rand Architectural Hardware Group Limited
(formerly Newman Tonks Group PLC). Sale proceeds approximated the
book value of these assets. In the third quarter of 1998, the
company sold the Spra-Coupe product line, which was reported as
part of the Specialty Vehicles Segment. The sale price of
approximately $35 million resulted in a $9 million gain.
On February 14, 1997, the company sold the Clark-Hurth
Components Group (Clark-Hurth) to Dana Corporation for
approximately $241.5 million of net cash. This group's 1997
results, inclusive of the sale transaction, produced operating
income for the first quarter of approximately $2.7 million, but on
an after-tax basis, reduced net earnings by approximately $3.6
million.
In the fourth quarter of 1997, the company's 51-percent owned joint
venture, Ingersoll-Dresser Pump Company (IDP), recorded a
restructuring charge of $24 million. The charge included the costs
of personnel reductions in administrative and sales support and the
consolidation of repair and service operations. An additional
charge of $14.7 million was recorded in 1997 for the writedown of
assets held for sale by the Specialty Vehicles Segment.
During 1996, the company sold the assets of the Pulp Machinery
Division (the largest unit in the Process Systems Group) for
approximately $122.3 million for a pretax gain of $45 million.
Also, the company sold the remaining assets of the Process Systems
Group. The sale was completed during the fourth quarter of 1996 at
a price of approximately $58 million in cash for a pretax gain of
approximately $10 million.
In the first and fourth quarters of 1996, the company accrued for
the realignment of its foreign operations, principally in Europe.
These accruals were primarily for severance payments and pension
benefits associated with work force reductions. Also in the first
quarter of 1996, accruals were established for the exit or
abandonment of selected European product lines and the closing of a
steel foundry. These accruals totalled $42.4 million and were
charged to operating income.
NOTE 4 - INVENTORIES: At December 31, inventories were as follows:
In millions 1998 1997
Raw materials and supplies $ 186.2 $ 174.1
Work-in-process 246.5 218.6
Finished goods 653.5 613.8
1,086.2 1,006.5
Less-LIFO reserve 145.4 151.7
Total $ 940.8 $ 854.8
Work-in-process inventories are stated after deducting customer
progress payments of $17.8 million in both 1998 and 1997. At
December 31, 1998 and 1997, LIFO inventories comprised
approximately 43 percent and 40 percent, respectively, of
consolidated inventories.
During the current year, there were no liquidations of LIFO layers.
However, during 1997 and 1996 certain inventory quantities were
reduced, resulting in partial liquidations of LIFO layers. This
decreased cost of goods sold by $4.1 million in 1997 and $4.8
million in 1996. These liquidations increased net earnings in 1997
and 1996 by approximately $2.5 million and $2.9 million,
respectively.
NOTE 5 - INVESTMENTS IN PARTIALLY-OWNED EQUITY AFFILIATES: The
company has numerous investments, ranging from 20 percent to 50
percent, in companies that operate in similar lines of business.
The company's investments in and amounts due to partially-owned
equity affiliates amounted to $380.9 million and $36.2 million,
respectively, at December 31, 1998, and $354.2 million and $26.2
million, respectively, at December 31, 1997. The company's equity
in the net earnings of its partially-owned equity affiliates was
$46.8 million, $28.8 million and $42.4 million in 1998, 1997 and
1996, respectively. The company's 1997 earnings were reduced by
$13.9 million due to a restructuring charge at one of its partially-
owned equity affiliates.
The company received dividends based on its equity interests in
these companies of $8.5 million, $8.7 million and $6.8 million in
1998, 1997 and 1996, respectively.
Summarized financial information for these partially-owned equity
affiliates at December 31, and for the years then ended:
In millions 1998 1997
Current assets $ 985.1 $ 959.6
Property, plant and equipment, net 490.5 506.7
Other assets 57.7 73.7
Total assets $1,533.3 $1,540.0
Current liabilities $ 526.5 $ 610.8
Long-term debt 65.9 75.3
Other liabilities 170.0 227.1
Total shareholders' equity 770.9 626.8
Total liabilities and equity $1,533.3 $1,540.0
In millions 1998 1997 1996
Net sales $1,996.2 $2,048.4 $2,070.4
Gross profit 353.6 382.4 391.7
Net earnings 90.6 59.4 89.5
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUALS: Accounts payable and
accruals at December 31, were:
In millions 1998 1997
Accounts payable $ 470.2 $ 411.1
Accrued:
Payrolls and benefits 272.2 253.1
Taxes other than income 48.2 41.4
Insurance and claims 111.0 114.5
Postemployment benefits 70.2 68.7
Warranties 80.7 76.2
Interest 48.6 41.5
Other accruals 387.5 364.0
$1,488.6 $1,370.5
NOTE 7 - FINANCIAL INSTRUMENTS: The company, as a large
multinational company, maintains significant operations in foreign
countries. As a result of these global activities, the company is
exposed to changes in foreign currency exchange rates, which affect
the results of operations and financial condition. The company
manages exposure to changes in foreign currency exchange rates
through its normal operating and financing activities, as well as
through the use of financial instruments.
Generally, the only financial instruments the company utilizes are
forward exchange contracts.
The purpose of the company's hedging activities is to mitigate the
impact of changes in foreign currency exchange rates. The company
attempts to hedge transaction exposures through natural offsets. To
the extent that this is not practicable, major exposure areas
considered for hedging include foreign currency denominated
receivables and payables, intercompany loans, firm committed
transactions, anticipated sales and purchases, and dividends
relating to foreign subsidiaries. The following table summarizes
by major currency the contractual amounts of the company's forward
contracts in U.S. dollars. Foreign currency amounts are translated
at year-end rates at the respective reporting date. The "buy"
amounts represent the U.S. equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the U.S.
equivalent of commitments to sell foreign currencies. Some of the
forward contracts involve the exchange of two foreign currencies
according to local needs in foreign subsidiaries.
At December 31, the contractual amounts were:
In millions 1998 1997
Buy Sell Buy Sell
Australian dollars $ 2.4 $ 11.5 $ 19.5 $ 0.5
Brazilian reais - 13.8 - -
British pounds 26.3 163.0 37.0 113.7
Canadian dollars 2.0 42.9 20.3 12.4
Czech koruna - 10.9 - 16.2
Danish krona 5.9 5.9 - -
Deutsche marks 17.6 216.4 27.1 194.0
Dutch guilders 1.0 10.3 - 0.8
French francs 7.8 64.9 2.7 64.0
Irish punts 7.6 0.2 71.7 -
Italian lire 68.6 33.9 47.0 32.9
Japanese yen 2.8 20.5 20.4 4.9
New Zealand dollars 3.0 6.4 - -
Singapore dollars - 12.0 4.3 -
Spanish pesetas 10.3 20.2 5.5 18.9
Other 6.0 9.1 6.0 7.5
Total $161.3 $641.9 $261.5 $465.8
Forward contracts utilized by the company have maturities of one to
12 months.
The company's forward contracts that hedge transactions or firm
commitments do not subject the company to risk due to foreign
exchange rate movement, since gains and losses on these contracts
generally offset losses and gains on the assets, liabilities or
other transactions being hedged. Contracts purchased to mitigate
the variability of future cash flows of foreign subsidiaries bear
market risk to the extent actual transacted amounts vary from the
forecasted amounts. All gains and losses on these contracts have
been included in earnings.
The counterparties to the company's forward contracts consist of a
number of major international financial institutions. The credit
ratings and concentration of risk of these financial institutions
are monitored on a continuing basis and present no significant
credit risk to the company.
The carrying value of cash and cash equivalents, marketable
securities, accounts receivable, short-term borrowings and accounts
payable are a reasonable estimate of their fair value due to the
short-term nature of these instruments. The following table
summarizes the estimated fair value of the company's remaining
financial instruments at December 31:
In millions 1998 1997
Long-term debt:
Carrying value $2,166.0 $2,528.0
Estimated fair value 2,299.7 2,587.4
Forward contracts:
Contract (notional) amounts:
Buy contracts $ 161.3 $ 261.5
Sell contracts 641.9 465.8
Fair (market) values:
Buy contracts 164.2 260.9
Sell contracts 649.8 461.6
Fair value of long-term debt was determined by reference to the
December 31, 1998 and 1997, market values of comparably rated debt
instruments. Fair values of forward contracts are based on dealer
quotes at the respective reporting dates.
NOTE 8 - LONG-TERM DEBT AND CREDIT FACILITIES:
At December 31, long-term debt consisted of:
In millions 1998 1997
6 7/8% Notes Due 2003 $100.0 $ 100.0
6.255% Notes Due 2001 400.0 400.0
9% Debentures Due 2021 125.0 125.0
7.20% Debentures Due 2025 150.0 150.0
6.48% Debentures Due 2025 150.0 150.0
6.391% Debentures Due 2027 200.0 200.0
6.443% Debentures Due 2027 200.0 200.0
Medium-term Notes Due 2000-2028, at
an average rate of 6.45% 679.9 1,039.9
9.75% Clark Debentures Due 2001 100.0 100.0
Clark Medium-term Notes Due 2023,
at an average rate of 8.22% 50.2 50.2
Other domestic and foreign
loans and notes, at end-
of-year average interest
rates of 6.278% in 1998
and 7.321% in 1997, maturing
in various amounts to 2013 10.9 12.9
$2,166.0 $2,528.0
Debt retirements for the next five years are as follows:
$251.8 million in 1999, $71.7 million in 2000, $734.8 million in
2001, $82.4 million in 2002 and $196.5 million in 2003.
In December 1998, the company repurchased $110.0 million of its
medium-term notes for $116.9 million including accrued interest.
The average coupon of the notes repurchased was 6.53% with
maturities ranging from 2000 to 2005.
In November 1997, the company issued $400.0 million of notes at
6.255% per annum due 2001. In addition, the company issued two
series of debentures for $200.0 million each at 6.391% per annum
and 6.443% per annum, respectively, due in 2027. The 6.391%
debentures and the 6.443% debentures may be repaid at the option of
the holder on November 15, 2004 and November 15, 2007,
respectively, and each November 15 thereafter. During November and
December 1997, the company also issued medium-term notes totalling
$706.4 million at an average annual rate of 6.30% with maturities
ranging from 1999 to 2028. Some of the medium-term notes may be
repaid at the option of the holder prior to the stated maturity.
The proceeds from these financings were used to refinance short-
term borrowings related to the acquisition of Thermo King.
At December 31, 1998, the company had a 364-day and a five-year
committed revolving credit line totalling $1.0 billion, both of
which were unused. These lines provide support for commercial
paper and indirectly provide support for other financing
instruments, such as letters of credit and comfort letters, as
required in the normal course of business. The company compensates
banks for these lines with fees equal to a weighted average of
0.065% per annum. Available foreign lines of credit were $454.2
million, of which $395.8 million were unused at December 31, 1998.
No major cash balances were subject to withdrawal restrictions. At
December 31, 1998, the average rate of interest for loans payable,
excluding the current portion of long-term debt, was 8.306%.
Capitalized interest on construction and other capital projects
amounted to $4.0 million, $3.2 million and $4.6 million in 1998,
1997 and 1996, respectively. Interest income, included in other
income (expense), net, was $11.8 million, $14.9 million and $10.3
million in 1998, 1997 and 1996, respectively.
NOTE 9 - COMMITMENTS AND CONTINGENCIES: The company is involved in
various litigations, claims and administrative proceedings,
including environmental matters, arising in the normal course of
business. In assessing its potential environmental liability, the
company bases its estimates on current technologies and does not
discount its liability or assume any insurance recoveries. Amounts
recorded for identified contingent liabilities are estimates, which
are reviewed periodically and adjusted to reflect additional
information when it becomes available. Subject to the
uncertainties inherent in estimating future costs for contingent
liabilities, management believes that recovery or liability with
respect to these matters would not have a material effect on the
financial condition, results of operations, liquidity or cash flows
of the company for any year.
During 1997, the company established two wholly-owned special
purpose subsidiaries to purchase accounts and notes receivable at a
discount from the company on a continuous basis. These special
purpose subsidiaries simultaneously sell an undivided interest in
these accounts and notes receivable to a financial institution up
to a maximum of $170 million. The agreements between the special
purpose corporations and the financial institution will expire in
one-year periods. These agreements will be renewed with either the
current or another financial institution. The company is retained
as the servicer of the pooled receivables. Prior to 1997, the
company had sold an undivided interest in the accounts and notes
receivable directly to financial institutions. During 1998, 1997
and 1996, such sales of receivables amounted to $723.7 million,
$614.0 million and $593.7 million, respectively. At December 31,
1998 and 1997, $170 million and $150 million, respectively, of such
sold receivables remained uncollected.
Receivables, excluding the designated pool of accounts and notes
receivable, sold during 1998, 1997 and 1996 with recourse, amounted
to $63.2 million, $56.9 million and $147.4 million, respectively.
At December 31, 1998 and 1997, $13.1 million and $13.3 million,
respectively, of such receivables sold remained uncollected.
As of December 31, 1998, the company had no significant
concentrations of credit risk in trade receivables due to the large
number of customers which comprised its receivables base and their
dispersion across different industries and countries.
In the normal course of business, the company has issued several
direct and indirect guarantees, including performance letters of
credit, totalling approximately $91.7 million at December 31, 1998.
The company has also guaranteed the residual value of leased
product in the aggregate amount of $28.9 million. Upon the
termination of a dealer, a newly selected dealer generally acquires
the assets of the prior dealer and assumes any related financial
obligation. Accordingly, the risk of loss to the company is
minimal, and historically, only immaterial losses have been
incurred relating to these arrangements. Management believes these
guarantees will not adversely affect the consolidated financial
statements.
Certain office and warehouse facilities, transportation vehicles
and data processing equipment are leased. Total rental expense was
$75.0 million in 1998, $76.2 million in 1997 and $66.9 million in
1996. Minimum lease payments required under noncancellable
operating leases with terms in excess of one year
for the next five years and thereafter, are as follows: $42.9
million in 1999, $31.1 million in 2000, $19.0 million in 2001,
$11.8 million in 2002, $8.6 million in 2003 and $6.6 million
thereafter.
NOTE 10 - EQUITY-LINKED SECURITIES: In March 1998, the company,
together with Ingersoll Financing I, a Delaware statutory business
trust of the company (Finance Trust), issued an aggregate of (a)
16,100,000 equity-linked securities, and (b) 1,610,000 Finance
Trust 6.22% capital securities, each with a $25 stated liquidation
amount (the capital securities). The equity-linked securities
consisted of (a) 14,490,000 income equity-linked securities (income
securities), and (b) 1,610,000 growth equity-linked securities
(growth securities).
Each equity-linked security consists of a unit comprised of (a) a
contract to purchase from the company no later than May 16, 2001, a
number of shares of the company's common stock determined in
accordance with a specified formula and to receive an annual
contract adjustment payment until May 15, 2001 of 0.53%, (in the
case of an income security), or 0.78% (in the case of a growth
security), and (b) either beneficial ownership of a capital
security (in the case of an income security), or a 1/40 undivided
beneficial interest in a zero coupon U.S. Treasury Security
maturing May 15, 2001 (in the case of a growth security). Under the
terms of the stock purchase contracts, the company will issue
between 6.9 million and 8.3 million common shares by May 16, 2001.
The capital securities associated with the income securities and
the U.S. Treasury Securities associated with the growth securities
have been pledged as collateral to secure the holders' obligations
in respect of the common stock purchase contracts.
The capital securities were issued by the Finance Trust and are
entitled to a distribution rate of 6.22% per annum of their $25
stated liquidation amount. The Finance Trust utilized the proceeds
from the issuance of the equity-linked and capital securities to
purchase $402.5 million of the company's 6.22% Debentures due May
16, 2003. The Debentures are the sole asset of the Finance Trust.
The interest rate on the 6.22% Debentures and the distribution rate
on the capital securities and common securities of the Finance
Trust are to be reset, subject to certain limitations, effective
May 16, 2001.
The company has recorded the present value of the contract
adjustment payments, totalling $6.4 million, as a liability and a
reduction of shareholders' equity. The liability will be reduced
as the contract adjustment payments are made. The company has the
right to defer the contract adjustment payments and the payment of
interest on the 6.22% Debentures, but any such election will
subject the company to restrictions on the payment of dividends on,
and redemption of, its outstanding shares of common stock, and on
the payment of interest on, or redemption of, debt securities of
the company junior in rank to the 6.22% Debentures.
The company paid costs of approximately $12.9 million in connection
with the issuance of the equity-linked securities and the capital
securities. The portion of such costs which relate to the issuance
of the stock purchase contracts has been recorded as a reduction of
shareholders' equity.
NOTE 11 - COMMON STOCK: In May 1997, the board of directors
authorized the repurchase of up to 15.0 million shares of the
company's common stock at management's discretion. Shares
repurchased will be used to replenish the company's treasury
shares, which were substantially depleted by a transfer of shares
to the Leveraged Employee Stock Ownership Plan, and for general
corporate purposes. The number of treasury shares at December 31,
1998, and December 31, 1997, were 4,494,930 and 2,001,432,
respectively.
In August 1997, the board of directors declared a three-for-two
stock split of the company's common stock. The stock split was
made in the form of a stock dividend, and was paid on September 2,
1997, to shareholders of record on August 19, 1997. All prior year
per share amounts have been restated to reflect the stock split.
In November 1998, the company adopted a new shareholder rights plan
to replace the plan which expired on December 22, 1998. Under the
new plan, one right was distributed for each share of Ingersoll-
Rand common stock outstanding at the close of business on December
22, 1998.
Initially, the rights are attached to the common stock and are not
exercisable. The rights become exercisable and will trade
separately from the common stock 10 days following the first
public announcement that any person or group has acquired at least
15 percent of the company's outstanding common stock, or on the
10th day following the commencement or the announcement of an
intention to commence a tender offer, which would result in that
person or group acquiring beneficial ownership of att least 15
percent of the outstanding shares of common stock. Each right
would entitle the holder to purchase one-thousandth of a share of
Series A Preference Stock at an exercise price of $200.
If any person or group acquires 15 percent or more of the company's
common stock, the rights not held by the 15-percent shareholder
would become exercisable to purchase the company's common stock at
a 50-percent discount. The plan provides that, at any time after a
person or group becomes an acquiring person and prior to the
acquisition by that person or group of 50 percent or more of the
outstanding common stock, the board may exchange the rights (other
than the rights held by the acquiring person, which will have
become void), at an exchange ratio of one share of common stock per
right.
The new rights will expire on December 22, 2008, unless earlier
redeemed or exchanged by the company, as provided in the rights
plan. The company may elect to redeem the rights at $0.01 per
right.
NOTE 12 - LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN: The company's
sponsors a Leveraged Employee Stock Ownership Plan (LESOP) for
eligible employees. The LESOP is used to fund certain employee
benefit plans. At December 31, 1998, and December 31, 1997, the
LESOP held approximately 1.1 million and 1.7 million shares,
respectively, which are unallocated. The carrying value0 offor the
unallocated shares was $27.0 million and $41.4 million at December
31, 1998, and December 31, 1997, respectively, and is classified as
a reduction of shareholders' equity pending allocation to
participants. At December 31, 1998, the LESOP owed the company
$15.6 million payable in monthly installments through 2001.
Company contributions to the LESOP and dividends on unallocated
shares are used to make loan principal and interest payments. With
each principal and interest payment, the LESOP allocates a portion
of the common stock to participating employees.
NOTE 13 - INCENTIVE STOCK PLANS: Under the company's Incentive
Stock Plans, key employees have been granted options to purchase
common shares at prices not less than the fair market value at the
date of the grant. Options become exercisable one year after the
date of the grant and expire at the end of ten years. The plans,
approved in 1985, 1990, 1995 and 1998, also authorize stock
appreciation rights (SARs) and stock awards.
As permitted by SFAS No. 123, "Accounting for Stock-Based
Compensation," the company continues to account for its stock plans
in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and its related
interpretations. Accordingly, compensation expense has been
recognized for SARs (which were generally settled for cash) and for
stock awards. Under SFAS No. 123, compensation cost for the
applicable provisions of the company's incentive stock plans would
be determined based upon the fair value at the grant date for
awards issued since 1996. Applying this methodology would have
reduced net earnings and diluted earnings per share by
approximately $14.7 million and nine cents per share for 1998;
$10.0 million and six cents per share for 1997 and $6.7 million and
four cents per share for 1996. On December 15, 1996, the company
cancelled SARs which were previously attached to 2,758,500 stock
options. Included in the SFAS No. 123 expense figures for 1997 and
1996 were approximately $1.5 million (or one cent per share) and
$2.9 million (or two cents per share), respectively, for the cost
of this revocation. The average fair values of the options granted
during 1998, 1997 and 1996, were estimated at $8.06, $8.55 and
$7.31, respectively, on the date of grant, using the Black-Scholes
option-pricing model, which included the following assumptions:
1998 1997 1996
Dividend yield 1.42% 1.61% 1.86%
Volatility 25.76% 22.59% 22.52%
Risk-free interest rate 5.39% 6.52% 6.17%
Forfeiture rate -- -- --
Expected life 4 years 4 years 4 years
Changes in options outstanding under the plans were as follows:
Shares subject Option price
to option range per share
January 1, 1997 5,955,150 $13.83-31.13
Granted 2,031,000 30.33-41.28
Exercised (1,905,250) 13.83-28.54
Cancelled (37,500) 26.21-26.63
December 31, 1997 6,043,400 $13.83-41.28
Granted 2,280,250 37.03-47.03
Exercised (1,419,525) 13.83-40.47
Cancelled (69,600) 24.08-41.28
December 31, 1998 6,834,525 $13.83-47.03
At December 31, 1998, there were 387,800 SARs outstanding with no
stock options attached. The company has reserved 13,320,672 shares
for future awards at December 31, 1998. In addition, 554,875
654,875 shares of common stock were reserved for future issue,
contingent upon attainment of certain performance goals and future
service.
The following table summarizes information concerning currently outstanding
and exercisable options:
Options Options
outstanding exercisable
Weighted Weighted Weighted
Number average average Number average
Range of outstanding remaining exercise exercisable exercise
exercise price at 12/31/98 life price at 12/31/98 price
$14.77-$15.00 15,750 0.4 $14.77 15,750 $14.77
15.01- 20.00 166,275 2.3 16.32 166,275 16.32
20.01- 25.00 1,749,700 5.2 22.91 1,749,700 22.91
25.01- 30.00 982,500 7.3 26.31 982,500 26.31
30.01- 35.00 1,515,800 8.3 33.62 1,515,800 33.62
35.01- 40.00 30,000 9.0 37.03 - -
40.01- 45.00 2,264,100 9.1 42.23 131,000 40.51
45.01- 47.03 110,400 9.4 46.18 - -
$14.77-$47.03 6,834,525 4,561,025
The company also maintains a shareholder-approved Management
Incentive Unit Award Plan. Under the plan, qualifying executives
are awarded incentive units. When dividends are paid on common
stock, dividends are awarded to unit holders, one-half of which is
paid in cash, the remaining half of which is credited to the
participant's account in the form of so-called common stock
equivalents. The fair value of accumulated common stock
equivalents is paid in cash upon the participant's retirement. The
number of common stock equivalents credited to participants'
accounts at December 31, 1998 and 1997, are 513,470 and
552,828 respectively.
NOTE 14 - INCOME TAXES: Earnings before income taxes for the years
ended December 31, were taxed within the following jurisdictions:
In millions 1998 1997 1996
United States $593.8 $463.2 $467.3
Foreign 195.4 150.5 101.0
Total $789.2 $613.7 $568.3
The provision for income taxes was as follows:
In millions 1998 1997 1996
Current tax expense:
United States $194.0 $179.2 $186.6
Foreign 78.2 66.3 49.5
Total current 272.2 245.5 236.1
Deferred tax expense:
United States 13.1 (0.9) (16.4)
Foreign (5.2) (11.4) (9.4)
Total deferred 7.9 (12.3) (25.8)
Total provision for
income taxes $280.1 $233.2 $210.3
The provision for income taxes differs from the amount of income
taxes determined by applying the applicable U.S. statutory income
tax rate to pretax income, as a result of the following differences:
Percent of pretax income
1998 1997 1996
Statutory U.S. rates 35.0% 35.0% 35.0%
Increase (decrease) in rates
resulting from:
Amortization of goodwill 2.2 2.0 1.7
Foreign operations 0.6 0.4 0.8
Foreign sales corporation (1.8) (0.9) (0.8)
Earnings/losses of equity
companies (0.7) (0.5) (0.8)
State and local income taxes,
net of U.S. tax 2.0 1.3 1.5
Puerto Rico - Sec 936 Credit (2.0) (0.5) --
Other (0.2) 1.2 (0.4)
Effective tax rate 35.5% 38.0% 37.0%
A summary of the deferred tax accounts at December 31, follows:
In millions 1998 1997 1996
Current deferred assets and (liabilities):
Differences between book and tax bases
of inventories and receivables $ 37.8 $ 35.7 $ 37.9
Differences between book and tax
expense for other employee related
benefits and allowances 57.0 44.2 39.3
Provisions for restructure of
operations and plant closings
not yet deductible for tax purposes - 12.5 11.1
Other reserves and valuation
allowances in excess of tax deductions 38.9 60.4 61.6
Other differences between tax and
financial statement values 9.7 8.0 12.5
Gross current deferred net tax assets 143.4 160.8 162.4
Noncurrent deferred tax assets and
(liabilities):
Tax items associated with equity companies 13.0 10.9 10.7
Postretirement and postemployment
benefits other than pensions in
excess of tax deductions 267.0 266.1 246.7
Other reserves in excess of tax expense 106.3 112.2 80.5
Tax depreciation in excess of book
depreciation (67.2) (66.8) (60.2)
Pension contributions in excess of
book expense (35.8) (36.9) (52.0)
Taxes provided for unrepatriated
foreign earnings (22.5) (28.5) (28.5)
Gross noncurrent deferred net tax
assets 260.8 257.0 197.2
Less: deferred tax valuation
allowances (24.9) (42.1) (34.6)
Total net deferred tax assets $379.3 $375.7 $325.0
A total of $22.5 million of deferred taxes have been provided for a portion
of the undistributed earnings of subsidiaries operating outside of the
United States. As to the remainder, these earnings have been, and under
current plans, will continue to be reinvested. Therefore, it is not
practicable to estimate the amount of additional taxes which may be payable
upon repatriation.
NOTE 15 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: The company
sponsors several postretirement plans that cover most domestic
employees. These plans provide for health care benefits and in some
instances, life insurance benefits. Postretirement health plans
are contributory and are adjusted annually. Life insurance plans
are noncontributory. When full-time employees retire from the
company between age 55 and 65, most are eligible to receive, at a
cost to the retiree, certain health care benefits identical to
those available to active employees. After attaining age 65, an
eligible retiree's health care benefit coverage becomes coordinated
with Medicare. The company funds the benefit costs principally on
a pay-as-you-go basis. The following disclosure is provided in
accordance with SFAS No. 132 "Employers Disclosure about Pensions
and other Postretirement Benefits", which was adopted January 1,
1998.
Summary information on the company's plans at December 31, was as
follows:
In millions 1998 1997
Change in benefit obligations:
Benefit obligation at beginning of year $ 597.5 $ 588.3
Service cost 10.4 7.9
Interest cost 41.4 38.3
Plan participants' contributions 3.4 2.8
Acquisitions - 30.0
Actuarial losses/(gains) 36.2 (21.3)
Benefits paid (50.2) (49.0)
Other 9.6 0.5
Benefit obligation at end of year $ 648.3 $ 597.5
Funded status:
Plan assets less than benefit
obligations $(648.3) $(597.5)
Unrecognized:
Prior service gains (66.7) (71.8)
Plan net gains (25.6) (62.0)
Accrued costs in the balance sheet $(740.6) $(731.3)
Weighted-average assumptions:
Discount rate 6.75% 7.00%
Current year medical inflation 7.60% 8.30%
Ultimate inflation rate (2003) 4.50% 4.50%
The components of net periodic postretirement benefits cost for the
years ended December 31, were as follows:
In millions 1998 1997 1996
Service cost $10.4 $ 7.9 $ 6.4
Interest cost 41.4 38.3 40.6
Net amortization of
unrecognized:
Prior service gains (5.1) (5.1) (5.3)
Plan net gains (0.2) (1.6) (0.4)
Net periodic postretirement
benefits cost $46.5 $39.5 $41.3
A 1% change in the medical trend rate assumed for postretirement
benefits would have the following effects at December 31, 1998:
In millions 1% Increase 1% Decrease
Effect on total of service and
interest cost components $ 3.8 $ (3.5)
Effect on postretirement
benefit obligation 49.8 (46.7)
NOTE 16 - PENSION PLANS: The company has noncontributory
pension plans covering substantially all domestic employees. In
addition, certain employees in other countries are covered by
pension plans. The company's domestic salaried plans principally
provide benefits based on a career average earnings formula.
The company's hourly pension plans provide benefits under flat
benefit formulas. Foreign plans provide benefits based on
earnings and years of service. Most of the foreign plans
require employee contributions based on the employee's earnings.
In addition, the company maintains other supplemental benefit
plans for officers and other key employees. The company's
policy is to fund an amount which could be in excess of the
pension cost expensed, subject to the limitations imposed by
current statutes or tax regulations.
Information regarding the company's pension plans in accordance
with SFAS No. 132 is as follows:
In millions 1998 1997
Change in benefit obligations:
Benefit obligation at beginning of year $1,929.3 $1,633.7
Service cost 44.3 39.7
Interest cost 136.3 123.1
Employee contributions 6.3 4.9
Amendments 20.2 3.8
Acquisitions 5.6 215.6
Expenses paid (2.9) (5.0)
Actuarial losses 89.5 50.2
Benefits paid (147.4) (128.9)
Foreign exchange impact (3.4) (8.0)
Other 0.5 0.2
Benefit obligation at end of year $2,078.3 $1,929.3
In millions 1998 1997
Change in plan assets:
Fair value at beginning of year $2,031.5 $1,689.4
Actual return on assets 285.8 316.0
Company contributions 30.1 21.0
Employee contributions 6.3 4.9
Acquisitions 0.8 132.7
Expenses paid (2.9) (5.0)
Benefits paid (143.0) (125.9)
Foreign exchange impact (7.3) (1.6)
Fair value of assets at end of year $2,201.3 $2,031.5
Funded status:
Plan assets in excess of benefit
obligations $ 123.0 $ 102.2
Unrecognized:
Net transition asset 11.8 12.7
Prior service costs 62.9 47.4
Plan net gains (194.3) (170.6)
Net amount recognized $ 3.4 $ (8.3)
Prepaid/(accrued) costs included
in the balance sheet:
Prepaid benefit cost $ 92.8 $ 64.4
Accrued benefit liability (91.0) (75.1)
Intangible asset 1.6 2.4
Net amount recognized $ 3.4 $ (8.3)
Weighted-average assumptions:
Discount rate:
U.S. plans 6.75% 7.00%
International plans 6.75% 8.00%
Rate of compensation increase:
U.S. plans 4.50% 4.75%
International plans 4.50% 5.50%
Expected return on plan assets:
U.S. plans 9.00% 9.00%
International plans 8.00% 8.75%
The components of the company's pension costs for the years ended
December 31, include the following:
In millions 1998 1997 1996
Service cost $ 44.3 $ 39.7 $ 38.7
Interest cost 136.3 123.1 113.5
Expected return on plan assets (175.4) (152.2) (134.3)
Net amortization of unrecognized:
Prior service costs 4.8 4.6 3.5
Transition amount 1.4 1.4 1.4
Plan net losses 2.1 0.8 1.5
Net pension cost $ 13.5 $ 17.4 $ 24.3
The projected benefit obligation, accumulated benefit obligation,
and fair value of plan assets for pension plans with accumulated
benefit obligations more than plan assets were $239.2 million,
$196.7 million and $101.0 million, respectively, as of December 31,
1998, and $286.3 million, $234.7 million and $105.5 million,
respectively, as of December 31, 1997.
Plan investment assets of domestic plans are balanced between
equity securities and cash equivalents or debt securities. Assets
of foreign plans are invested principally in equity securities.
Most of the company's domestic employees are covered by savings and
other defined contribution plans. Employer contributions and costs
are determined based on criteria specific to the individual plans
and amounted to approximately $32.4 million, $28.3 million and
$27.4 million in 1998, 1997, and 1996, respectively.
The company's costs relating to foreign defined contribution plans,
insured plans and other foreign benefit plans were $7.8 million,
$11.0 million and $8.2 million in 1998, 1997 and 1996,
respectively.
NOTE 17 - BUSINESS SEGMENT INFORMATION: Effective January 1, 1998,
the company adopted SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 requires
disclosure of certain financial and descriptive information about
operating segments. In addition, SFAS No. 131 requires disclosures
about products and services, and geographic areas. Operating
segments are defined as components of a company engaging in
business activities for which separate financial information is
available and evaluated regularly by the chief operating decision
maker in assessing performance and allocating resources.
The accounting policies of the operating segments are the same as
those described in the summary of significant accounting policies
except that the operating segments results are prepared on a
management basis that is consistent with the manner in which the
company disaggregates financial information for internal review and
decision making. The company evaluates performance based on
operating income contribution rates. Intercompany sales
transactions are entirely contained within each segment and are
eliminated at the segment level. Segment information from previous
years has been restated to conform to the current year
presentation.
A description of the company's reportable segments and operations
by reportable segment and geographic area for the three years ended
December 31, 1998, follows:
Specialty Vehicles - The Specialty Vehicle Segment designs,
manufactures and markets powered vehicles that play a niche role in
such fields as infrastructure development, commercial construction
and material movement. Specialty Vehicles includes Bobcat skid-
steer loaders and compact hydraulic excavators; Club Car golf
cars; Blaw-Knox pavers; and Ingersoll-Rand compactors, drilling
equipment and rough-terrain material handlers.
Air and Temperature Control
The Air and Temperature Control Segment focuses on markets
requiring air and refrigerant-gas compression technology and
services to provide gas pressure for distribution to end users or
to maintain a refrigeration cycle. Air and Temperature Control
includes Thermo King transport temperature-control equipment and
Ingersoll-Rand air compressors.
Hardware and Tools
The Hardware and Tools Segment concentrates on manufacturing,
marketing, and managing the distribution channels required to reach
end user customers seeking products that enhance productivity and
security in the industrial, construction, and do-it-yourself
markets. Hardware and Tools includes architectural hardware
products, such as Schlage locks, Von Duprin exit devices, door-
control hardware, steel doors, power-operated doors and
architectural columns, and tools and related industrial-production
equipment.
Engineered Products
The Engineered Products Segment is composed of highly engineered
specific application products that are sold on a contract basis.
Engineered Products includes Torrington and Fafnir bearings and
components, and pumps used in industrial, commercial and municipal
applications.
Geographic sales by destination for the years ended December 31
were as follows:
In millions 1998 1997
Sales
United States $5,114.5 $4,295.6
Foreign 3,177.0 2,807.7
Total $8,291.5 $7,103.3
Prior to 1997, sales information by geographic area was maintained
only on an origination basis, whereas management now reviews
geographic sales on a destination basis. Foreign sales on an
origination basis for 1998, 1997 and 1996 were $2,782.9 million,
$2,483.9 million and $2,468.4 million, respectively.
Long-lived asset information by geographic area as of December 31
was as follows:
In millions 1998 1997
Long-lived assets
United States $4,271.9 $4,252.0
Foreign 1,029.4 1,075.8
Total $5,301.3 $5,327.8
A summary of operation by reportable segments for the years ended
December 31, was as follows:
Dollar amounts in millions 1998 1997 1996
Specialty Vehicles
Sales $2,180.4 $2,011.8 $1,883.7
Operating income 333.3 226.7 183.8
Operating income as %
of sales 15.3% 11.3% 9.8%
Depreciation and
amortization 59.7 63.3 63.5
Air and Temperature Control
Sales 2,236.0 1,256.6 1,042.3
Operating income 262.5 133.7 114.3
Operating income as %
of sales 11.7% 10.6% 11.0%
Depreciation and
amortization 105.4 35.7 18.6
Hardware and Tools
Sales 1,724.2 1,652.1 1,245.0
Operating income 288.3 254.8 189.4
Operating income as %
of sales 16.7% 15.4% 15.2%
Depreciation and
amortization 44.8 39.7 28.6
Engineered Products
Sales 2,150.9 2,182.8 2,531.9
Operating income 212.2 193.9 239.8
Operating income as %
of sales 9.9% 8.9% 9.5%
Depreciation and
amortization 70.1 72.2 89.5
Total
Sales $8,291.5 $7,103.3 $6,702.9
Operating income from
reportable segments 1,096.3 809.1 727.3
Unallocated corporate
expenses (51.9) (48.8) (43.8)
Total operating income $1,044.4 $ 760.3 $ 683.5
Total operating income as
% of sales 12.6% 10.7% 10.2%
Depreciation and
amortization from
reportable segments 280.0 210.9 200.2
Unallocated depreciation
and amortization 2.6 1.4 2.4
Total depreciation and
amortization $ 282.6 $ 212.3 $ 202.6
Report of Management
The accompanying consolidated financial statements have been
prepared by the company. They conform with generally accepted
accounting principles and reflect judgments and estimates as to the
expected effects of incomplete transactions and events being
accounted for currently. The company believes that the accounting
systems and related controls that it maintains are sufficient to
provide reasonable assurance that assets are safeguarded,
transactions are appropriately authorized and recorded, and the
financial records are reliable for preparing such financial
statements. The concept of reasonable assurance is based on the
recognition that the cost of a system of internal accounting
controls must be related to the benefits derived. The company
maintains an internal audit function that is responsible for
evaluating the adequacy and application of financial and operating
controls, and for testing compliance with company policies and
procedures.
The Audit Committee of the board of directors is comprised entirely
of individuals who are not employees of the company. This committee
meets periodically with the independent accountants, the internal
auditors and management to consider audit results and to discuss
significant internal accounting controls, auditing and financial
reporting matters. The Audit Committee recommends the selection of
the independent accountants, who are then appointed by the board of
directors, subject to ratification by the shareholders.
The independent accountants are engaged to perform an audit of the
consolidated financial statements in accordance with generally
accepted auditing standards. Their report follows.
/S/ David W. Devonshire
David W. Devonshire
Senior Vice President and Chief Financial Officer
Report of Independent Accountants
PricewaterhouseCoopers LLP
400 Campus Drive
Florham Park, NJ 07932
February 2, 1999
To the Board of Directors and
Shareholders of Ingersoll-Rand Company:
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of shareholders' equity
and of cash flows present fairly, in all material respects, the
financial position of Ingersoll-Rand Company and its subsidiaries
at December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
EXHIBIT 21
LIST OF SUBSIDIARIES OF INGERSOLL-RAND COMPANY
The following list represents the principal subsidiaries of the
company all of which (except as otherwise indicated) are deemed to
be 100% owned, directly or indirectly, and whose financial
statements are included in the consolidated statements. The
subsidiaries of Ingersoll-Dresser Pump Company (IDP), a general
partnership owned 51% by the company, are deemed to be 100% owned
by IDP directly or indirectly. The names of particular
subsidiaries omitted, if considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
SUBSIDIARIES OF INGERSOLL-RAND COMPANY
Aro de Venezuela, C.A. Venezuela
Aro International Corporation Delaware
Clark Equipment Company Delaware
Bobcat Corporation Japan
Blaw-Knox Construction Equipment
Corporation Delaware
Clark Industries Company Delaware
Blaw-Knox Company England
Clark Business Services Corporation Michigan
Clark Distribution Services Inc. Michigan
Clark Foreign Sales Corporation Barbados
Clark-Hurth Components Marketing
Company Delaware
Checker Flag Parts, Inc. Minnesota
Ingersoll-Rand Italiana S.p.A. Italy
Ingersoll-Rand Services &
Engineering Company Switzerland
Ingersoll-Rand Acceptance
Company S.A. Switzerland
Ingersoll-Rand Construction
Services Inc. Delaware
Ingersoll-Rand Investment
Company S.A. Switzerland
Ingersoll-Rand
Melroe Equipment Limited Canada
Melroe Parts Trading GmbH Germany
Club Car Inc. Delaware
Club Car International Inc. Guam
Club Car Limited New Zealand
Compagnie Ingersoll-Rand France
Ingersoll-Rand Equipements de
Construction France
Etablissements Montabert, S.A. France
Montabert GmbH Germany
Montabert Tramac, S.A. Belgium
Ingersoll-Rand Equipements
de Production, S.A. France
S.A. Etablissements Charles Maire France
Torrington France S.A.R.L. France
Compressed Air Magazine Company New Jersey
Crossgar Ireland
Spanashview Ireland
Thermo King Ireland Limited Ireland
Thermo King Czech Republic Czech Republic
Imperial Heights Realty Corporation New York
Improved Machinery, Inc. Delaware
Industria e Comercio Aro do Brasil Ltda. Brazil
Ingersoll-Rand AB Sweden
Ingersoll-Rand Argentina S.A.I.C. Argentina
Ingersoll-Rand Asia Pacific Inc. Delaware
Ingersoll-Rand (Australia) Ltd. Australia
Ingersoll-Rand South East Asia
(Pte.) ltd. Singapore
Ingersoll-Rand Benelux, N.V. Belgium
Thermo King Belgium N.V. Belgium
Ingersoll-Rand Beteiligungs GmbH Germany
ABG Allgemeine Baumaschinen
Gesellschaft mbh Germany
ABG Verwaltungs GmbH Germany
ABG France S.A.R.L. France
ABG Iberica S.A. Spain
I-R Beteiligungs und
Grundstucksverwaltungs GmbH Germany
Ingersoll-Rand GmbH Germany
GHH-Rand Schraubenkompressoren
GmbH & Co. KG Germany
GHH-Rand Schraubenkompressoren
Verwaltungs GmbH Germany
Thermo King Deutschland GmbH Germany
Ingersoll-Rand China Limited Delaware
Ingersoll-Rand China Investment
Company Limited China
Ingersoll-Rand (Wuxi) Road
Machinery Company Limited China
(92% owned by the company)
Thermo King-Dalian Transport China
Refrigeration Company, Limited
(70% owned by the company)
Torrington-Wuxi Bearings Company China
Limited
(78% owned by the company)
Shanghai Ingersoll-Rand Compressor China
Limited (80& owned by the company)
Ingersoll-Rand Company (Chile) y Cia Ltda. Chile
Ingersoll-Rand Company of Peru S.A. Peru
Ingersoll-Rand de Colombia S.A. Colombia
Ingersoll-Rand de Puerto Rico, Inc. Puerto Rico
Ingersoll-Rand Enhanced Recovery Company Delaware
Ingersoll-Rand Europe France
Ingersoll-Rand GesmbH Austria
Ingersoll-Rand (India) Limited India
(74% owned by the company)
Ingersoll-Rand International Foreign
Sales Corporation Guam
Ingersoll-Rand International Holding
Corporation New Jersey
Ingersoll-Rand S.A. Switzerland
Ingersoll-Rand Equipment &
Consulting S.A.R.L. Switzerland
Ingersoll-Rand Machinery &
Services S.A.R.L. Switzerland
Ingersoll-Rand Technical &
Services S.A.R.L. Switzerland
Ingersoll-Rand Trading S.A. Switzerland
Ingersoll-Rand International, Inc. Delaware
Ingersoll-Rand International Sales Inc. Delaware
Ingersoll-Rand Japan Limited Japan
Ingersoll-Rand Manufacturing Co. Delaware
Ingersoll-Rand Nova Scotia Nova Scotia
Ingersoll-Rand Canada Inc. Canada
Torrington Beteiligungs GmbH Germany
Torrington GmbH Germany
Torrington Nadellager GmbH Germany
Ingersoll-Rand (Barbados) Corporation Barbados
Ingersoll-Rand World Trade (Ltd.) Bermuda
Torrington Inc. Canada
Ingersoll-Rand do Brasil Ltda. Brazil
Ingersoll-Rand Philippines, Inc. Philippines
Ingersoll-Rand S.A. de C.V. Mexico
Ingersoll-Rand Sales Company Limited Delaware
Ingersoll-Rand European Sales Ltd. England
Ingersoll-Rand Holdings Limited England
Ingersoll-Rand European Sales
Limited England
Ingersoll-Rand Company Limited England
A/S Parts Limited England
Ingersoll-Rand Company
(Ireland) Limited Ireland
Ingersoll-Rand (New Zealand)
Limited New Zealand
Ingersoll-Rand Company
South Africa (Pty.) Limited South Africa
Longrigg Engineering Limited England
Roconeco Limited England
The Aro Corporation (UK) Limited England
The Torrington Company Limited England
NT Acquisition Limited England
Ingersoll-Rand Architectural
Hardware Group Limited England
Newman Tonks Management
Services Limited England
Newman Tonks (Overseas
Holdings) Limited England
NT Access Limited England
NT Architectural Hardware
Limited England
NT Architectural Products
Limited England
NT Brassart Limited England
NT Door and Window Fittings
Limited England
NT Door Controls Limited England
NT Group Properties Limited England
NT Laidlaw Limited England
NT Legge Limited England
NT Locking Systems Limited England
NT Martin Roberts Limited England
NT Partition Systems Limited England
NT Projects Limited England
NT Railing Systems Limited England
NT Security Limited England
NT Shapland & Petter Limited England
NT Testing Services Limited England
NT Worcester Parsons Limited England
NT Yannedis Limited England
Newman Tonks Investments, Inc. Delaware
Newman Tonks Holdings, Inc. Delaware
Monarch Hardware
and Mfg.Co. Inc. Delaware
MFP,Inc. Kentucky
Newman Tonks, USA, Inc. Delaware
Dixie Pacific Manufacturing
Company, Inc. Alabama
NT Falcon Lock, Inc. California
ARMORO, Inc. California
NT Dor-O-Matic Inc. Illinois
NT Dor-O-Matic Limited England
NT Dor-O-Matic Chicago Inc. Illinois
NT Dor-O-Matic Detroit Inc. Michigan
Dor-O-Matic of Mid
Atlantic States, Inc. New Jersey
NT USA FSC INC. Barbados
NT Randi A/S Denmark
NT South Africa South Africa
Newman Tonks Brussels NV Belgium
Newman Tonks Holdings GmbH Germany
NT Normbau Beschlage and
Ausstattungs GmbH Germany
NT Normbau Iberica Spain
Newman Tonks Europe GmbH Germany
NT Asia (Hong Kong) Limited Hong Kong
NT Asia (Singapore) Limited Singapore
NT Dalco Pty Limited Australia
Newman Tonks France SA France
NT Mustad SA France
Ingersoll-Rand Services Company Delaware
Ingersoll-Rand Transportation Services
Company Delaware
Ingersoll-Rand Wadco Tools Ltd. India
(74% owned by the company)
Ingersoll-Rand Western Hemisphere
Trade Corporation Delaware
Ingersoll-Rand Worldwide, Inc. Delaware
IR Receivables Funding I Corporation Delaware
IR Receivables Funding II Corporation Delaware
McCartney Manufacturing Company, Inc. Kansas
Northern Research and Engineering
Corporation Massachusetts
Roconeco Corporation South Carolina
S&S Corporation Virginia
SBG Holding Corp. Delaware
Schlage Lock Company California
Ingersoll-Rand Architectural
Hardware Limited New Zealand
Touch-Plate International, Inc. California
Von Duprin, Inc. Indiana
Schlage de Mexico S.A. de C.V. Mexico
Silver Holding Corp. Colorado
Woodcliff Insurance Ltd. Bermuda
Sonna B.V. Netherlands
Sonna Rail B.V. Netherlands
Steelcraft Holding Company Delaware
Terry Corporation of Connecticut Connecticut
The Torrington Company (Delaware) Delaware
Industrias del Rodamiento, S.A. Spain
Ingersoll-Rand Iberica S.L. Spain
Reftrans, S.A.(85% owned by the company) Spain
Ingersoll-Rand Liability
Management Company Michigan
Kilian Manufacturing Corp. Delaware
Torrington Holdings, Inc. Delaware
Torrington Sales Limited Switzerland
Thermo King Corporation Delaware
Thermo King Container-Denmark A/S Denmark
Thermo King de Puerto Rico, Inc. Delaware
Thermo King do Brasil, Ltda. Brazil
(99.99% owned by the company)
Thermo King SVC, Inc. Delaware
Thermo King Trading Company Delaware
Tokyo Ryuki Seizo Co. Ltd. Japan
SUBSIDIARIES OF INGERSOLL-DRESSER PUMP COMPANY
Ingersoll-Dresser Pumps de Argentina, S.A. Argentina
Ingersoll-Dresser Pumps (Australia) Pty., Ltd. Australia
Ingersoll-Dresser Pumps GmbH Austria
Ingersoll-Dresser Pumps do Brazil Brazil
Industria e Comercio Ltda. Brazil
Ingersoll-Dresser Pump Canada, Inc. Canada
Ingersoll-Dresser Pumps de Colombia, S.A. Colombia
Worthington Centroamericana Ltda. Costa Rica
Ingersoll-Dresser Pompes France
IDP Pleuger France
IDP International France
Deutsche Ingersoll-Dresser Pumpen GmbH Germany
Ingersoll-Dresser Pump GmbH Germany
Pleuger Worthington GmbH Germany
Deutsche Worthington GmbH Germany
Ingersoll-Dresser Pumps S.p.A. Italy
Worthington S.p.A. Italy
Ingersoll-Dresser Pump (Asia) Pte., Ltd. Singapore
Ingersoll-Dresser Pump, S.A. Switzerland
Ingersoll-Dresser Pump Services Sarl Switzerland
ID Pump AG Switzerland
Ingersoll-Dresser Pump Nederland B.V. Netherlands
Ingersoll-Dresser Pumps (UK), Ltd. England
Ingersoll-Dresser Pumps Newark, Ltd. England
IDP Alternate Energy Company Delaware
Pump Investments, Inc. Delaware
Energy Hydro, Inc. Delaware
Compania Ingersoll-Dresser Pump, S.A. Spain
Ingersoll-Dresser Pumps (Thailand), Ltd. Thailand
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE DECEMBER 31, 1998 FINANCIAL STATMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 72
<SECURITIES> 6
<RECEIVABLES> 1,219
<ALLOWANCES> 42
<INVENTORY> 941
<CURRENT-ASSETS> 2,428
<PP&E> 2,416
<DEPRECIATION> 1,069
<TOTAL-ASSETS> 8,310
<CURRENT-LIABILITIES> 1,849
<BONDS> 2,166
403
0
<COMMON> 338
<OTHER-SE> 2,370
<TOTAL-LIABILITY-AND-EQUITY> 8,310
<SALES> 8,292
<TOTAL-REVENUES> 8,292
<CGS> 6,047
<TOTAL-COSTS> 6,047
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226
<INCOME-PRETAX> 789
<INCOME-TAX> 280
<INCOME-CONTINUING> 509
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 509
<EPS-PRIMARY> 3.11
<EPS-DILUTED> 3.08
</TABLE>
