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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1997
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Aeroquip-Vickers, Inc.
(Exact Name of Registrant as Specified in Charter)
Ohio 1-924 36-4288310
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3000 Strayer, Maumee, Ohio 43537
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (419) 867-2200
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN REPORT
The Registrant, Aeroquip-Vickers, Inc., is referred to
herein as the "Corporation."
ITEM 5. OTHER EVENTS.
On September 30, 1997, the Corporation entered into a
Distribution Agreement (the "Distribution Agreement") dated as of September 30,
1997 with Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc., in
connection with the issuance and sale of $250,000,000 aggregate amount of its
Medium-Term Notes Due Nine Months or More From Date of Issue (the "Notes"). The
Notes are to be issued from time to time on or after September 30, 1997 in
accordance with the terms of the Indenture, dated as of May 1, 1996, as
supplemented as of April 17, 1997, between the Corporation and The First
National Bank of Chicago (as successor-in-interest to NBD Bank), as trustee (the
"Indenture"), the Distribution Agreement and the Administrative Procedures
attached as an exhibit to the Distribution Agreement.
ITEM. 7 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibits are filed as part of this
report:
(1) Distribution Agreement;
(2) Form of Fixed Rate Note; and
(3) Form of Floating Rate Note.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AEROQUIP-VICKERS, INC.
Date: September 30, 1997 By: /s/ James E. Kline
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James E. Kline
Vice President and
General Counsel
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
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(4)-1 Distribution Agreement;
(4)-2 Form of Fixed Rate Note; and
(4)-3 Form of Floating Rate Note.
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Exhibit (4)-1
Aeroquip-Vickers, Inc.
$250,000,000
Medium-Term Notes
Due Nine Months or More from Date of Issue
U.S. DISTRIBUTION AGREEMENT
September 30, 1997
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
J.P. Morgan Securities Inc.
60 Wall Street, 3rd Floor
New York, New York 10260
Ladies and Gentlemen:
Aeroquip-Vickers, Inc., an Ohio corporation (the "Company"), confirms
its agreement with each of you with respect to the issue and sale from time to
time by the Company of up to $250,000,000 (or the equivalent thereof in one or
more foreign currencies or composite currencies) aggregate initial public
offering price of its medium-term notes due nine months or more from date of
issue (the "Notes"). The Notes will be issued under an Indenture dated as of
May 1, 1996 as supplemented as of April 17, 1997 (the "Indenture") between the
Company and The First National Bank of Chicago (as successor-in-interest to NBD
Bank), as trustee (the "Trustee"), and will have the maturities, interest
rates, redemption provisions, if any, and other terms as set forth in
supplements to the Base Prospectus referred to below.
The Company hereby appoints Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and J.P. Morgan Securities Inc. ("J.P Morgan") (individually, an
"Agent" and collectively, the "Agents") as its agents, subject to Section 10
hereof, for the purpose of soliciting and
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receiving offers to purchase Notes from the Company by others and, on the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, each Agent agrees to use reasonable efforts to
solicit and receive offers to purchase Notes upon terms acceptable to the
Company at such times and in such amounts as the Company shall from time to time
specify. In addition, any Agent also may purchase Notes as principal pursuant to
the terms of a written terms agreement relating to such sale substantially in
the form of Exhibit A hereto (a "Terms Agreement") in accordance with the
provisions of Section 2(b) hereof.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to its
debt securities, including the Notes. Such registration statement, including the
exhibits thereto, as amended at the Commencement Date (as hereinafter defined),
is hereinafter referred to as the "Registration Statement." The Company proposes
to file with the Commission from time to time, pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Securities Act"), supplements to the
prospectus included in the Registration Statement that will describe certain
terms of the Notes. The prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "Base Prospectus." The
term "Prospectus" means the Base Prospectus together with the prospectus
supplement or supplements (each a "Prospectus Supplement") specifically relating
to Notes, as filed with, or transmitted for tiling to, the Commission pursuant
to Rule 424. As used herein, the terms "Base Prospectus" and "Prospectus" shall
include in each case the documents, if any, incorporated by reference therein.
The terms "supplement, " "amendment" and "amend" as used herein shall include
all documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Base Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to and agrees with each Agent as of the Commencement Date, as of each date on
which an Agent solicits offers to purchase Notes, as of each date on which the
Company accepts an offer to purchase Notes (including any purchase by an Agent
pursuant to a Terms Agreement, if any), as of each date the Company issues and
delivers Notes and as of each date the Registration Statement or the Base
Prospectus is amended or supplemented, as follows (it being understood that such
representations, warranties and agreements shall be deemed to relate to the
Registration
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Statement, the Base Prospectus and the Prospectus, each as
amended or supplemented to each such date):
(a) the Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission; and the Registration
Statement (as amended if the Company shall have filed any amendments
thereto) complies, or will comply, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"), and does not and will not, as of the applicable
effective date, contain any untrue statement or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; except that the foregoing representations
and warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee,
and (ii) statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to any Agent furnished to the Company in writing by such Agent
expressly for use therein;
(b) the documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission, will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
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(c) the financial statements, and the related notes thereto
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations and the changes in their
consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change, or any development involving a prospective change,
which could reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth or;
contemplated in the Prospectus; and except as set forth or contemplated
in the Prospectus neither the Company nor any of its subsidiaries has,
since January 1, 1997, entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the
Company and its subsidiaries taken as a whole;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have material adverse effect on the Company and
its subsidiaries taken as a whole;
(f) each of Aeroquip Corporation and Vickers, Incorporated
(collectively, the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation, with corporate power and
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authority to own its properties and to conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the Company
and its subsidiaries taken as a whole; and all of the outstanding
shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully-paid and non-assessable, and are owned by
the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims;
(g) this Agreement and any applicable Terms Agreement has been
duly authorized, executed and delivered by the Company and constitutes
the valid and binding agreement of the Company, except as rights to
indemnity and contribution may be limited by applicable law;
(h) the Notes have been duly authorized by the Company, and,
when issued, delivered and authenticated pursuant to this Agreement and
the Indenture, will have been duly executed, issued an delivered and
will constitute valid and binding obligations of the Company entitled
to the benefits provided by the Indenture; the Indenture has been duly
authorized, executed and delivered by the Company, qualified under the
Trust Indenture Act and constitutes a valid and binding instrument of
the Company; and the Notes and the Indenture conform to the
descriptions thereof in the Prospectus;
(i) neither the Company nor either Subsidiary is, or with
the giving of notice or the lapse of time or both would be, in
violation of or in default under its Articles of Incorporation or its
Code of Regulations (or other organizational documents, as the case may
be) or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or either of the
Subsidiaries is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults
which individually and in the aggregate are not material to the Company
and the Subsidiaries taken as a whole; the issue and sale of the Notes
and the performance by the Company of all of its obligations under the
Notes, the Indenture, this Agreement and any applicable Terms Agreement
and the consummation of the transactions herein and therein
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contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or either of the Subsidiaries is a
party or by which the Company or either of the Subsidiaries is bound or
to which any of the property or assets of the Company or either of the
Subsidiaries is subject, nor will any such action result in any
violation of the provisions of the Articles of Incorporation or the
Code of Regulations (or other organizational documents, as the case may
be) of the Company or either of the Subsidiaries or any applicable law
or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the
Subsidiaries or any of their respective properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Notes or the consummation by the Company of the
transactions contemplated by this Agreement, any applicable Terms
Agreement or the Indenture, except such consents, approvals,
authorizations, registrations or qualifications as have been obtained
under the Securities Act and the Trust Indenture Act; and
(j) other than as set forth or contemplated in the Prospectus
as amended or supplemented, if applicable, there are no legal or
governmental proceedings pending or, to the knowledge of the Company,
threatened to which the Company or either of the Subsidiaries is or may
be a party or to which any property of the Company or either of the
Subsidiaries is or may be subject which could individually or in the
aggregate reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
and the Subsidiaries taken as a whole and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required.
Notwithstanding the foregoing, the representations and warranties
set forth in Section 1(a) and (h) (except as to due authorization of the Notes)
and (i), when made as of the Commencement Date, or as of any date on which an
Agent
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solicits offers to purchase Notes, with respect to any Notes the payments of
principal or interest on which will be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other factors,
shall be deemed not to address the application of the Commodity Exchange Act, as
amended, or the rules, regulations or interpretations of the Commodity Futures
Trading Commission.
2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.
(A) SOLICITATIONS AS AGENT. In connection with an Agent's actions as
agent hereunder, such Agent agrees to use reasonable efforts to solicit offers
to purchase Notes upon the terms and conditions set forth in the Prospectus as
then amended or supplemented.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one business
day's prior notice from the Company, the Agents will forthwith suspend
solicitations of offers to purchase Notes from the Company until such time as
the Company has advised the Agents that such solicitation may be resumed. While
such solicitation is suspended, the Company shall not be required to deliver any
certificates, opinions or letters in accordance with Sections 5(a), 5(b) and
5(c); PROVIDED, HOWEVER, that if the Registration Statement or Prospectus is
amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the Notes
or for a change the Agents deem to be immaterial), no Agent shall be required
to resume soliciting offers to purchase Notes until the Company has delivered
such certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the sale
of each Note resulting from a solicitation made or an offer to purchase received
by such Agent, a commission in the form of a discount from the purchase price of
such Note equal to the percentage set forth below of the purchase price of such
Note:
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<TABLE>
<CAPTION>
Term Commission Rate
---- ---------------
<S> <C> <C>
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to less than 30 years .750%
From 30 years and beyond to be negotiated
</TABLE>
Each Agent shall communicate to the Company, orally or in writing, each
offer to purchase Notes received by such Agent as agent that in its judgment
should be considered by the Company. The Company shall have the sole right to
accept offers to purchase Notes and may reject any offer in whole or in part.
Each Agent shall have the right to reject any offer to purchase Notes that it
considers to be unacceptable, and any such rejection shall not be deemed a
breach of its agreements contained herein. The procedural details relating to
the issue and delivery of Notes sold by the Agents as agents and the payment
therefor shall be as set forth in the Administrative Procedures (as hereinafter
defined).
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as principal
shall be made in accordance with the terms of this Agreement. In connection with
each such sale, the Company will enter into a Terms Agreement that will provide
for the sale of such Notes to and the purchase thereof by such Agent. Each Terms
Agreement will take the form of either (i) a Terms Agreement, or (ii) an oral
agreement between such Agent and the Company confirmed in writing by such Agent
to the Company.
An Agent's commitment to purchase Notes pursuant to a Terms Agreement
shall be deemed to have been made on the basis of the representations and
warranties of the Company herein contained and shall be subject to the terms and
conditions herein set forth. Each Terms Agreement shall specify the principal
amount of Notes to be purchased by such Agent pursuant thereto, the maturity
date of such Notes, the price to be paid to the Company for such Notes, the
interest rate and interest rate formula, if any, applicable to such Notes and
any other terms of such Notes. Each such Terms Agreement may also specify any
requirements for officers' certificates, opinions of counsel and letters from
the independent public accountants of the Company
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pursuant to Section 4 hereof. A Terms Agreement may also specify certain
provisions relating to the reoffering of such Notes by such Agent.
Each Terms Agreement shall specify the time and place of delivery of
and payment for such Notes. Unless otherwise specified in a Terms Agreement, the
procedural details relating to the issue and delivery of Notes purchased by an
Agent as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to be
purchased by an Agent pursuant to a Terms Agreement is referred to herein as a
"Settlement Date."
Unless otherwise specified in a Terms Agreement, if you are purchasing
Notes as principal you may resell such Notes to other dealers. Any such sales
may be at a discount, which shall not exceed the amount set forth in the
Prospectus Supplement relating to such Notes.
(C) ADMINISTRATIVE PROCEDURES. The Agents and the Company agree to
perform the respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures (attached hereto as
Exhibit B) (the "Administrative Procedures"), as amended from time to time. The
Administrative Procedures may be amended only by written agreement of the
Company and the Agents.
(D) DELIVERY. The documents required to be delivered by Section 4 of
this Agreement as a condition precedent to each Agent's obligation to begin
soliciting offers to purchase Notes as an agent of the Company shall be
delivered at the office of Brown & Wood LLP, counsel for the Agents, not later
than 12 Noon, New York time, on the date hereof, or at such other time and/or
place as the Agents and the Company may agree upon in writing, but in no event
later than the day prior to the earlier of (i) the date on which the Agents
begin soliciting offers to purchase Notes and (ii) the first date on which the
Company accepts any offer by an Agent to purchase Notes pursuant to a Terms
Agreement. The date of delivery of such documents is referred to herein as the
"Commencement Date."
(e) OBLIGATIONS SEVERAL. The Company acknowledges that the obligations
of the Agents under this Agreement are several and not joint.
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3. AGREEMENTS. The Company agrees with each Agent that:
(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement or any Terms Agreement, the Company will not tile any Prospectus
Supplement relating to the Notes or any amendment to the Registration Statement
unless the Company has previously furnished to the Agents copies thereof for
their review and will not file any such proposed supplement or amendment to
which the Agents reasonably object; PROVIDED, HOWEVER, that (i) the foregoing
requirement shall not apply to any of the Company's periodic filings with the
Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, copies of which filings the Company will cause to be delivered
to the Agents promptly after being transmitted for filing with the Commission
and (ii) any Prospectus Supplement that merely sets forth the terms or a
description of particular Notes shall only be reviewed and approved by the Agent
or Agents offering such Notes. Subject to the foregoing sentence, the Company
will promptly cause each Prospectus Supplement to be filed with or transmitted
for filing to the Commission in accordance with Rule 424(b) under the Securities
Act. The Company will promptly advise the Agents (i) of the filing of any
amendment or supplement to the Base Prospectus (except that notice of the filing
of an amendment or supplement to the Base Prospectus that merely sets forth the
terms or a description of particular Notes shall only be given to the Agent or
Agents offering such Notes), (ii) of the filing and effectiveness of any
amendment to the Registration Statement, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement
to the Base Prospectus or for any additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or notice of suspension of qualification and, if issued, to
obtain as soon as possible the withdrawal thereof. If the Base Prospectus is
amended or supplemented as a result of the filing under the Exchange Act of any
document incorporated by reference in the Prospectus, no Agent shall be
obligated to solicit offers to purchase Notes so long as it is not reasonably
satisfied with such document.
(b) If, at any time when a prospectus relating to the Notes is required
to be delivered under the Securities
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Act, any event occurs or condition exists as a result of which the Prospectus,
as then amended or supplemented, would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances when the Prospectus, as then amended
or supplemented, is delivered to a purchaser, not misleading, or if, in the
opinion of the Agents or in the opinion of the Company, it is necessary at any
time to amend or supplement the Prospectus, as then amended or supplemented, to
comply with applicable law, the Company will immediately notify the Agents by
telephone (with confirmation in writing) to suspend solicitation of offers to
purchase Notes and, if so notified by the Company, the Agents shall forthwith
suspend such solicitation and cease using the Prospectus, as then amended or
supplemented. If the Company shall decide to amend or supplement the
Registration Statement or Prospectus, as then amended or supplemented, it shall
so advise the Agents promptly by telephone (with confirmation in writing) and,
at its expense, shall prepare and cause to be filed promptly with the Commission
an amendment or supplement to the Registration Statement or Prospectus, as then
amended or supplemented, satisfactory in all respects to the Agents, that will
correct such statement or omission or effect such compliance and will supply
such amended or supplemented Prospectus to the Agents in such quantities as they
may reasonably request. If any documents, certificates, opinions and letters
furnished to the Agents pursuant to paragraph (f) below and Sections 5(a), 5(b)
and 5(c) in connection with the preparation and filing of such amendment or
supplement are satisfactory in all respects to the Agents, upon the filing with
the Commission of such amendment or supplement to the Prospectus or upon the
effectiveness of an amendment to the Registration Statement, the Agents will
resume the solicitation of offers to purchase Notes hereunder. Notwithstanding
any other provision of this Section 3(b), until the distribution of any Notes
an Agent may own as principal has been completed, if any event described above
in this paragraph (b) occurs, the Company will, at its own expense, forthwith
prepare and cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or Prospectus, as then amended or
supplemented, satisfactory in all respects to such Agent, will supply such
amended or supplemented Prospectus to such Agent in such quantities as it may
reasonably request and shall furnish to such Agent pursuant to paragraph (f)
below and Sections 5(a), 5(b) and 5(c) such documents, certificates, opinions
and letters as it may request in connection with the preparation and filing of
such amendment or supplement.
(c) The Company will make generally available to its security holders
and to the Agents as soon as
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practicable earning statements that satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
covering twelve month periods beginning, in each case, not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in Rule 158 under the Securities Act) of the Registration Statement with
respect to each sale of Notes. If such fiscal quarter is the last fiscal quarter
of the Company's fiscal year, such earning statement shall be made available not
later than 90 days after the close of the period covered thereby and in all
other cases shall be made available not later than 45 days after the close of
the period covered thereby.
(d) The Company will furnish to each Agent, without charge, a signed
copy of the Registration Statement, including exhibits and all amendments
thereto, and as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto as such Agent may
reasonably request.
(e) The Company shall furnish to the Agents such relevant documents and
certificates of officers of the Company relating to the business, operations and
affairs of the Company, the Registration Statement, the Base Prospectus, any
amendments or supplements thereto, the Indenture, the Notes, this Agreement, the
Administrative Procedures, any Terms Agreement and the performance by the
Company of its obligations hereunder or thereunder as the Agents may from time
to time reasonably request.
(f) The Company shall notify the Agents promptly in writing of any
downgrading, or of its receipt of any notice of any intended or potential
downgrading or of any review for possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(g) The Company will, whether or not any sale of Notes is consummated,
pay all expenses incident to the performance of its obligations under this
Agreement and any Terms Agreement, including: (i) the preparation and filing of
the Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of the Company's counsel and accountants and of the
Trustee and its counsel, (iv) the printing and delivery to the Agents in
quantities as hereinabove stated of copies of the Registration Statement and all
amendments thereto and of the Prospectus and any amendments or supplements
thereto, (v) any fees charged by rating agencies
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for the rating of the Notes, (vi) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors and (vii) the
fees and disbursements of counsel for the Agents incurred in connection with the
offering and sale of the Notes, including any opinions to be rendered by such
counsel hereunder.
(h) During the period beginning the date of any Terms Agreement and
continuing to and including the Settlement Date with respect to such Terms
Agreement, the Company will not, without such Agent's prior written consent,
offer, sell, contract to sell or otherwise dispose of any debt securities of the
Company or warrants to purchase debt securities of the Company substantially
similar to such Notes (other than (i) the Notes that are to be sold pursuant to
such Terms Agreement, (ii) Notes previously agreed to be sold by the Company and
(iii) commercial paper issued in the ordinary course of business), except as
may otherwise be provided in such Terms Agreement.
4. CONDITIONS OF THE OBLIGATIONS OF THE AGENTS. Each Agent's obligation
to solicit offers to purchase Notes as agent of the Company, each Agent's
obligation to purchase Notes pursuant to any Terms Agreement and the obligation
of any other purchaser to purchase Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of the Company's officers made in each certificate
furnished pursuant to the provisions hereof and to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed (in the case of an Agent's obligation to
solicit offers to purchase Notes, at the time of such solicitation, and, in the
case of an Agent's or any other purchaser's obligation to purchase Notes, at the
time the Company accepts the offer to purchase such Notes and at the time of
issuance and delivery) and (in each case) to the following additional conditions
precedent when and as specified:
(a) Prior to such solicitation or purchase, as the case may be:
(i) since the respective dates as of which information is given in the
Prospectus there shall not have been any change or any development
involving a change, which could reasonably be expected to have a material
adverse effect on the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company and the Subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus as
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<PAGE> 14
amended or supplemented at the time of such solicitation or at the time
such offer to purchase was made, the effect of which in the judgment of the
relevant Agent makes it impracticable to market the Notes on the terms and
in the manner contemplated in the Prospectus;
(ii) trading generally shall not have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange,
the American Stock Exchange, or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of or guaranteed by the
Company shall not have been suspended on any exchange or in any over-the-
counter market, (iii) a general moratorium on commercial banking activities
in New York shall not have been declared by either Federal or New York
State authorities, or (iv) there shall not have occurred any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the relevant Agent, is material
and adverse and which, in the judgment of such Agent, makes it
impracticable to market the Notes on the terms and in the manner
contemplated in the Prospectus.
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of (i) any intended or potential downgrading or (ii)
any review for possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(A) except, in each case described in paragraph (i), (ii) or (iii)
above, as disclosed to the relevant Agent in writing by the Company prior to
such solicitation or, in the case of a purchase of Notes, as disclosed to the
relevant Agent before the offer to purchase such Notes was made or (B) unless in
each case described in (ii) above, the relevant event shall have occurred and
been known to the relevant Agent before such solicitation or, in the case of a
purchase of Notes, before the offer to purchase such Notes was made.
(b) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, the relevant Agents shall have received:
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<PAGE> 15
(i) The opinion, dated as of such date, of James E. Kline, general
counsel of the Company, to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus;
(B) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a material adverse effect on the Company and its Subsidiaries
taken as a whole;
(C) each Subsidiary has been duly incorporated and is validly
existing as a corporation under the law of its jurisdiction of
incorporation with corporate power and authority to own its properties
and conduct its business as described in the Prospectus, as then
amended or supplemented, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified and in
good standing would not have a material adverse effect on the Company
and the Subsidiaries taken as a whole; and all of the issued shares of
capital stock of each Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(D) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the best
of such counsel's knowledge, threatened to which the Company or either
of the Subsidiaries is or may be a party or to which any property of
the Company or the Subsidiaries is or may be the subject which could
individually or in the aggregate reasonably be expected to have a
material adverse effect on the general affairs,
15
<PAGE> 16
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and the Subsidiaries
taken as a whole; to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others; and such counsel does not know of any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required;
(E) neither the Company nor either of the Subsidiaries is, or
with the giving of notice or the lapse of time or both would be, in
violation of its Articles of Incorporation or its Code of Regulations
(or other organizational documents, as the case may be), except for
violations which individually or in the aggregate could not reasonably
be expected to have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and the Subsidiaries
taken as a whole, and the issue and sale of the Notes and the
performance by the Company of its obligations under the Notes, the
Indenture and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to which the
Company or either of the Subsidiaries is a party or by which the
Company or either of the Subsidiaries is bound or to which any of the
property or assets of the Company or either of the Subsidiaries is
subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the Code of Regulations
(or other organizational documents, as the case may be) of the Company
or either of the Subsidiaries or any applicable law or statute (except
as rights to indemnity and contribution hereunder may be limited by
applicable law) or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the
Subsidiaries or any of their respective properties;
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<PAGE> 17
(F) the statements incorporated by reference in the Prospectus
from Item 3 of Part 1 of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and in the Registration
Statement in Item 15, in so far as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents or proceedings; and
(G) such counsel (1) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Prospectus, as then amended or supplemented (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) complied when so filed as to
form in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (2) is of the
opinion that the Registration Statement and Prospectus, as then
amended or supplemented, if applicable (except for financial
statements and schedules included therein as to which such counsel
need not express any opinion) comply as to form in all material
respects with the Securities Act and the Trust Indenture Act and the
applicable rules and regulations of the Commission thereunder, (3) has
no reason to believe that (except for financial statements and
schedules as to which such counsel need not express any belief and
except for that part of the Registration Statement that constitutes
the Form T-l heretofore referred to) each part of the Registration
Statement, as then amended, if applicable, when such part became
effective, contained and as of the date such opinion is delivered,
contains any untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (4) has no reason to
believe that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus, as
then amended or supplemented, if applicable, as of the date such
opinion is delivered contains any untrue statement of a material fact
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; PROVIDED that in the case of an opinion
delivered on the Commencement Date or
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<PAGE> 18
pursuant to Section 5(b), the opinion and belief set forth in clauses
(3) and (4) above shall be deemed not to cover information concerning
an offering of particular Notes to the extent such information will be
set forth in a supplement to the Base Prospectus.
(ii) The opinion, dated as of such date, of Jones, Day, Reavis &
Pogue, outside counsel for the Company (or such other counsel as is
acceptable to the Agents), to the effect that:
(A) each of this Agreement and any applicable Terms Agreement has been
duly authorized, executed and delivered by the Company;
(B) the Notes have been duly authorized and, if executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the purchasers thereof on the date of such
opinion, would be valid and binding obligations of the Company and would be
entitled to the benefits of the Indenture;
(C) the Indenture has been duly authorized, executed and delivered by
the Company and duly qualified under the Trust Indenture Act and
constitutes a valid and binding instrument of the Company;
(D) no consent, approval or authorization or order of any governmental
agency or body is required for the issue and sale of the Notes, except such
as have been obtained under the Securities Act and the Trust Indenture Act;
(E) the statements in the Prospectus, under the captions "Description
of Notes" and "Description of Securities", in each case insofar as such
statements purport to summarize the provisions of the documents referred to
therein, present fair summaries of such provisions;
(F) such counsel is of the opinion ascribed to it in the Prospectus,
as then amended or supplemented, under the caption "United States
Taxation"; and
(G) (1) such counsel is of the opinion that the Registration Statement
and the Prospectus and any amendments and supplements thereto (except for
the financial statements and supporting schedules included therein and that
part of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-l) under the Trust Indenture Act
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<PAGE> 19
of the Trustee as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities
Act and the Trust Indenture Act, (2) no facts have come to the attention of
such counsel to cause them to believe that the Registration Statement
(except for the financial statements and supporting schedules included
therein and that part of the Registration Statement which constitutes the
Statement of Eligibility and Qualification (Form T-l) under the Trust
Indenture Act of the Trustee as to which such counsel need express no
belief), on the date of this Agreement, contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (3)
no facts have come to the attention of such counsel to cause them to
believe that the Prospectus (except for the financial statements and
supporting schedules included therein as to which counsel need express no
belief) as amended or supplemented, if applicable, to the Closing Date
contains an untrue statement of a material fact 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 rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the States of Ohio and New York, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Agents' counsel) of other counsel reasonably acceptable to Agents' counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers
of the Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The opinions of such counsel for
the Company shall state that the opinion of any such other counsel is in
form satisfactory to such counsel and, in such counsel's opinion, he or
they, as the case may be, and the Agents are justified in relying thereon.
With respect to the matters to be covered in subparagraphs (b)(i)(G) and
(b)(ii)(G), respectively, above, James E. Kline and Jones, Day, Reavis &
Pogue (or such other counsel as is acceptable to the Agents) may state that
their opinions and beliefs are based upon their participation in the
preparation of the Prospectus and any amendment or supplement thereto and
review and
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<PAGE> 20
discussion of the contents of the Registration Statement and the Prospectus
and that, except as specified, they have not independently verified and are
not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the information contained in the Registration
Statement and the Prospectus;
(iii) The opinion, dated as of such date, of Brown & Wood LLP, counsel
for the Agents, covering the matters in subparagraphs (A), (B), (C), (E)
and (G) in paragraph (b) (ii) above. With respect to subparagraph (G) of
paragraph (b)(ii) above, Brown & Wood LLP may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (but not including documents incorporated therein by reference) and
review and discussion of the contents thereof (including documents
incorporated therein by reference), but are without independent check or
verification, except as specified.
(c) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, the relevant Agents shall have received a
certificate, dated the Commencement Date or such Settlement Date, as the case
may be, and signed by an executive officer of the Company, to the effect set
forth in subparagraph (a)(iii) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of such date and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied on or
before such date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(d) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, Ernst & Young LLP, independent public
accountants, shall have furnished to the relevant Agents a letter or letters,
dated the Commencement Date or such Settlement Date, as the case may be, in form
and substance satisfactory to such Agents containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus, as
then amended or supplemented.
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<PAGE> 21
(e) On the Commencement Date and on each Settlement Date, the Company
shall have furnished to the relevant Agents such appropriate further
information, certificates and documents as they may reasonably request.
5. ADDITIONAL AGREEMENTS OF THE COMPANY. (a) Each time that the
Registration Statement or Prospectus is amended or supplemented (other than by
an amendment or supplement (i) solely setting forth the terms of any Securities
other than the Notes or (ii) providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities offered on
the Notes or for a change the Agents deem to be immaterial), the Company will
deliver or cause to be delivered forthwith to each Agent a certificate signed by
an executive officer of the Company, dated the date of such amendment or
supplement, as the case may be, in form reasonably satisfactory to the Agents,
of the same tenor as the certificate referred to in Section 4(c) relating to the
Registration Statement or the Prospectus as amended or supplemented to the time
of delivery of such certificate.
(b) Each time that the Company furnishes a certificate pursuant to
Section 5(a), the Company will furnish or cause to be furnished forthwith to
each Agent the written opinions of James E. Kline, Esq. and Jones, Day, Reavis &
Pogue (or such other counsel as is acceptable to the Agents). Any such opinions
shall be dated the date of such amendment or supplement, as the case may be,
shall be in a form satisfactory to the Agents and shall be of the same tenor as
the respective opinions referred to in Sections 4(b)(i) and (ii), but modified
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion. In lieu of such opinions,
each such counsel last furnishing such opinion to an Agent may furnish to each
Agent a letter to the effect that such Agent may rely on such last opinion to
the same extent as though it were dated the date of such letter (except that
statements in such last opinion will be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented to the time of delivery
of such letter.)
(c) Each time that the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information or such amended or supplemental information is incorporated by
reference in the Prospectus, the Company shall cause its independent public
accountants forthwith to furnish each Agent with a letter, dated the date of
such amendment or supplement, as the case may be, in form satisfactory to the
Agents, of the same tenor as the letter referred to in Section 4(d), with
regard to the amended or supplemental
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<PAGE> 22
financial information included or incorporated by reference in the Registration
Statement or the Prospectus as amended or supplemented to the date of such
letter.
6. INDEMNITY AND CONTRIBUTION. The Company agrees to indemnify and hold
harmless each Agent and each person, if any, who controls any Agent within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including without limitation the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Agent furnished
to the Company in writing by such Agent expressly for use therein;
Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Agent, but only with
reference to information relating to such Agent furnished to the Company in
writing by such Agent expressly for use in the Registration Statement or the
Prospectus or any amendment or supplement thereto.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such
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<PAGE> 23
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties)include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for any Agent and such control persons
of an Agent shall be designated in writing by Morgan Stanley or, if Morgan
Stanley is not an Indemnified Person, by the Agents that are Indemnified Persons
and any such separate firm for the Company, its directors, its officers who sign
the Registration Statement and such control persons of the Company or authorized
representatives shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 6 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and each Agent on the other
hand from the offering of the Notes or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
23
<PAGE> 24
confirmed to Morgan Stanley at 1585 Broadway, New York, New York 10036,
Attention: Manager, Credit Department (telefax number: 212-761-0687), with a
copy to 1585 Broadway, New York, New York 10036, Attention: Managing Director,
Debt Syndicate (telefax number: 212-761-0785); (ii) if sent to J.P. Morgan, will
be mailed, delivered or telefaxed and confirmed to J.P. Morgan Securities Inc.,
60 Wall Street, 3rd Floor, New York, New York 10260, Attention: Manager, Credit
Department (telefax number: 212-761-0687); or (iii) if sent to the Company, will
be mailed, delivered or telefaxed and confirmed to the Company at
Aeroquip-Vickers, Inc., 3000 Strayer, Maumee, Ohio 43537-0050, Attention: James
E. Kline, Vice President and General Counsel (telefax number: (419) 867-2209).
10. SUCCESSORS. This Agreement and any Terms Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Section 6 and the purchasers of Notes (to the extent expressly provided in
Section 4), and no other person will have any right or obligation hereunder.
11. AMENDMENTS. This Agreement may be amended or supplemented if, but
only if, such amendment or supplement is in writing and is signed by the Company
and each Agent; PROVIDED that the Company may from time to time, upon notice to
the Agents but without the consent of any Agent, amend this Agreement to add as
a party hereto one or more additional firms registered under the Exchange Act,
whereupon each such firm shall become an Agent hereunder on the same terms and
conditions as the other Agents that are parties hereto. The Agents shall sign
any amendment or supplement giving effect to the addition of any such firm as an
Agent under this Agreement.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
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<PAGE> 25
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and each Agent
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Agent on the other shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such Notes
(before deducting expenses) received by the Company and the total discounts and
commissions received by each Agent bear to the aggregate public offering price
of the Notes. The relative fault of the Company on the one hand and each Agent
on the other 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
Company or by each Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by PRO RATA
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitation set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, in no event shall an Agent be required to
contribute any amount in excess of the amount by which the total price at which
the Notes referred to in the immediately preceding paragraph that were offered
and sold to the public through such Agent exceeds the amount of any damages that
such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6
are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
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<PAGE> 26
The indemnity and contribution agreements contained in this Section 6
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Agent or any person controlling any Agent or by or on behalf of the
Company, its officers or directors or any other person controlling the Company
and (iii) acceptance of and payment for any of the Notes.
7. POSITION OF THE AGENTS. In acting under this Agreement and in
connection with the sale of any Notes by the Company (other than Notes sold to
an Agent pursuant to a Terms Agreement), each Agent is acting solely as agent of
the Company and does not assume any obligation towards or relationship of agency
or trust with any purchaser of Notes. An Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company, but
such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company shall default in its
obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall hold the relevant Agent harmless against any loss, claim, damage
or liability arising from or as a result of such default and shall, in
particular, pay to such Agent the commission it would have received had such
sale been consummated.
8. TERMINATION. This Agreement may be terminated at any time by the
Company or, as to any Agent, by the Company or such Agent upon the giving of
written notice of such termination to the other parties hereto, but without
prejudice to any rights, obligations or liabilities of any party hereto accrued
or incurred prior to such termination. The termination of this Agreement shall
not require termination of any Terms Agreement, and the termination of any such
Terms Agreement shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third paragraph of Section 2(a),
Section 2(e), the last sentence of Section 3(b) and Sections 3(c), 3(g), 6, 7,
9, 11 and 14 shall survive; PROVIDED that if at the time of termination an offer
to purchase Notes has been accepted by the Company but the time of delivery to
the purchaser or its agent of such Notes has not occurred, the provisions of
Sections 2(b), 2(c), 3(a), 3(e), 3(f), 3(h), 4 and 5 shall also survive
until such delivery has been made.
9. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and (i) if sent to Morgan Stanley, will be mailed,
delivered or telefaxed and
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
AEROQUIP-VICKERS, INC.
By: /s/ W.R. Ammann
---------------------------------------
Title: Vice President - Administration
and Treasurer
The foregoing Agreement
is hereby confirmed
and accepted as of the
date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Jennifer A. Harris
------------------------
Title: Vice President
J.P. MORGAN SECURITIES INC.
By: /s/ Maureen Krim
------------------------
Title: Maureen Krim
Vice President
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EXHIBIT A
Aeroquip-Vickers, Inc.
MEDIUM-TERM NOTES
TERMS AGREEMENT
____________________, 19___
Aeroquip-Vickers, Inc.
3000 Strayer
Maumee, Ohio 43537-0050
Attention: James E. Kline, Vice President
and General Counsel
Re: Distribution Agreement dated September 30, 1997 (the "Distribution
Agreement")
-----------------------------------------------------------------------
We agree to purchase your Medium-Term Notes having the following terms:
[We agree to purchase, severally and not jointly, the principal amount
of Notes set forth below opposite our names:
<TABLE>
<CAPTION>
Principal Amount
Name of Notes
---- ----------------
<S> <C>
Morgan Stanley & Co.
Incorporated
J.P. Morgan Securities Inc.
[Insert syndicate list]1
Total . . . . . . . . $
=============
</TABLE>
The Notes shall have the following terms:
- ------------------
1 Delete if the transaction will not be syndicated.
A-1
<PAGE> 29
<TABLE>
<CAPTION>
All Notes: Fixed Rate Notes: Floating Rate Notes:
- ---------- ----------------- --------------------
<S> <C> <C>
Principal amount: Interest Rate: Base rate:
Purchase price: Applicability Index maturity:
of modified
Price to public: payment upon Spread:
acceleration:
Settlement date Spread multiplier:
and time: If yes, state
issue price: Alternate rate
Place of event spread:
delivery: Amortization
schedule: Initial interest
Specified rate:
currency:
Initial interest
Maturity date: reset date:
Initial accrual Interest reset
period OID: dates:
Total amount Interest reset
of OID: period:
Original yield Maximum interest
to maturity: rate:
Optional repayment Minimum interest
date(s): rate:
Optional redemption Interest payment
date(s): period:
Initial redemption Interest payment
date: dates:
Initial redemption Calculation agent:
percentage:
Annual redemption
percentage
decrease:
Other terms:
</TABLE>
A-2
<PAGE> 30
The provisions of Sections 1, 2(b) and 2(c) and 3 through 6, 9, 10, 11
and 14 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
[If on the Settlement Date any one or more of the Agents shall fail or
refuse to purchase Notes that it has or they have agreed to purchase on such
date, and the aggregate amount of Notes which such defaulting Agent or Agents
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate amount of the Notes to be purchased on such date, the other Agents
shall be obligated severally in the proportions that the amount of Notes set
forth opposite their respective names above bears to the aggregate amount of
Notes set forth opposite the names of all such non-defaulting Agents, or in such
other proportions as Morgan Stanley & Co. Incorporated may specify, to purchase
the Notes which such defaulting Agent or Agents agreed but failed or refused to
purchase on such date; provided that in no event shall the amount of Notes that
any Agent has agreed to purchase pursuant to this Agreement be increased
pursuant to this paragraph by an amount in excess of one-ninth of such amount of
Notes without the written consent of such Agent. If on the Settlement Date any
Agent or Agents shall fail or refuse to purchase Notes and the aggregate amount
of Notes with respect to which such default occurs is more than one-tenth of the
aggregate amount of Notes to be purchased on such date, and arrangements
satisfactory to Morgan Stanley & Co. Incorporated and the Company for the
purchase of such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Agent or the Company. In any such case either Morgan Stanley & Co. Incorporated
or the Company shall have the right to postpone the Settlement Date but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Agent from liability in respect of any default of such
Agent under this Agreement.] 2
This Agreement is subject to termination on the terms incorporated by
reference herein. If this Agreement is so terminated, the provisions of Sections
3(g), 6, 9, 11 and 14 of the Distribution Agreement shall survive for the
purposes of this Agreement.
- ---------------------------
2 Delete if the transaction will not be syndicated.
A-3
<PAGE> 31
The following information, opinions, certificates, letters and
documents referred to in Section 4 of the Distribution Agreement will be
required:
A. The officers' certificate referred to in Section 4(c).
B. The opinion or opinions of the general counsel of the Company referred
to in Section 4(b)(i).
C. The opinion or opinions of outside counsel for the Company referred to
in Section 4(b)(ii).
D. The opinion of Agents' counsel referred to in Section 4(b)(iii).
E. The accountants' letter referred to in Section 4(d).
MORGAN STANLEY & CO. INCORPORATED
By: ____________________
Title:
J.P. MORGAN SECURITIES INC.
By: ____________________
Title:
Accepted:
AEROQUIP-VICKERS, INC.
By: _____________________
Title:
A-4
<PAGE> 32
EXHIBIT B
AEROQUIP-VICKERS, INC.
$250,000,000
MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
------------------------------------
Explained below are the administrative procedures and specific terms of
the offering of Medium-Term Notes (the "Notes"), on a continuous basis by
Aeroquip-Vickers, Inc. (the "Company") pursuant to the Distribution Agreement,
dated as of September 30, 1997 (the "Distribution Agreement") among the Company
and Morgan Stanley & Co. Incorporated ("Morgan Stanley") and J.P. Morgan
Securities Inc. ("J.P. Morgan") (the "Agents"). The Notes will be issued under
an Indenture dated as of May 1, 1996 as supplemented as of April 17, 1997 (the
"Indenture") between the Company and The First National Bank of Chicago (as
successor-in-interest to NBD Bank), as trustee (the "Trustee"). In the
Distribution Agreement, the Agents have agreed to use reasonable efforts to
solicit purchases of the Notes, and the administrative procedures explained
below will govern the issuance and settlement of any Notes sold through an
Agent, as agent of the Company. An Agent, as principal, may also purchase Notes
for its own account, and if requested by such Agent, the Company and such Agent
will enter into a terms agreement (a "Terms Agreement"), as contemplated by the
Distribution Agreement. The administrative procedures explained below will
govern the issuance and settlement of any Notes purchased by an Agent, as
principal, unless otherwise specified in the applicable Terms Agreement.
The Trustee will be the Registrar, Calculation Agent, Authenticating
Agent and Paying Agent for the Notes and will perform the duties specified
herein. Each Note will be represented by either a Global Security (as defined
below) delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry
Note") or a certificate delivered to the holder thereof or a person
B-1
<PAGE> 33
designated by such holder (a "Certificated Note"). Except as set forth in the
Indenture, an owner of a Book-Entry Note will not be entitled to receive a
Certificated Note.
Book-Entry Notes, which may be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures. Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof. Unless otherwise defined
herein, terms defined in the Indenture, the Notes or any prospectus supplement
relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of the employees of the
Company with whom the Agents are to communicate regarding offers to purchase
Notes and the related settlement details.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of September 30, 1997, and a
Medium-Term Note Certificate Agreement between the Trustee and DTC, dated as of
May 26, 1989 (the "MTN Certificate Agreement"), and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry
Notes, the Company will issue a single global
security in fully registered form without coupons
(a "Global Security") representing up to U.S.
$200,000,000 principal amount of all such Notes
that have the same Original Issue Date, Maturity
Date and other terms. Each Global Security will be
dated and issued as of the date of its
authentication by the Trustee. Each Global
Security will bear an "Interest Accrual Date,"
which will be (i) with respect to an original
Global Security (or any portion thereof), its
original issuance date and (ii) with respect to
any Global Security (or any portion thereof)
issued subsequently upon
B-2
<PAGE> 34
exchange of a Global Security, or in lieu of a
destroyed, lost or stolen Global Security, the
most recent Interest Payment Date to which
interest has been paid or duly provided for on the
predecessor Global Security (or if no such payment
or provision has been made, the original issuance
date of the predecessor Global Security),
regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry
Notes may be payable only in U.S. dollars. No
Global Security will represent any Certificated
Note.
Denominations: Book-Entry Notes will be issued in principal
amounts of U.S. $100,000 or any amount in excess
thereof that is an integral multiple of U.S.
$1,000. Global Securities will be denominated in
principal amounts not in excess of U.S.
$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of
$200,000,000 would, but for the preceding
sentence, be represented by a single Global
Security, then one Global Security will be issued
to represent each U.S. $200,000,000 principal
amount of such Book-Entry Note or Notes and an
additional Global Security will be issued to
represent any remaining principal amount of such
Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry
Note or Notes shall be assigned the same CUSIP
number.
Preparation If any offer to purchase a Book-Entry Note is
of Pricing accepted by or on behalf of the Company, the
Supplement: Company will prepare a pricing supplement (a
"Pricing Supplement") reflecting the terms of such
Note. The Company (i) will arrange to file 10
copies of such Pricing Supplement with the
Commission in accordance with the applicable
paragraph of Rule 424(b) under the Securities Act
and (ii) will, as soon as possible and in any
event not later than the date on which such
Pricing Supplement is filed with the Commission,
B-3
<PAGE> 35
deliver the number of copies of such Pricing
Supplement to the relevant Agent as such Agent
shall request.
In each instance that a Pricing Supplement is
prepared, the relevant Agent will affix the
Pricing Supplement to Prospectuses prior to their
use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other
than those retained for files), will be
destroyed.
Settlement: The receipt by the Company of immediately
available funds in payment for a Book-Entry Note
and the authentication and issuance of the Global
Security representing such Note shall constitute
"settlement" with respect to such Note. All offers
accepted by the Company will be settled on the
third Business Day next succeeding the date of
acceptance pursuant to the timetable for
settlement set forth below, unless the Company and
the purchaser agree to settlement on another day,
which shall be no earlier than the next Business
Day.
Settlement Settlement Procedures with regard to each
Procedures: Book-Entry Note sold by the Company to or through
an Agent (unless otherwise specified pursuant to a
Terms Agreement) shall be as follows:
A. The relevant Agent will advise the
Company by telephone that such Note is a
Book-Entry Note and of the following
settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed
Rate Book-Entry Note, the
Interest Rate, whether such
Note will pay interest
annually or semiannually and
whether such Note is an
Amortizing Note, and, if so,
the amortization schedule,
or, in the case of a
Floating Rate
B-4
<PAGE> 36
Book-Entry Note, the Initial
Interest Rate (if known at
such time), Interest
Payment Date(s), Interest
Payment Period, Calculation
Agent, Base Rate, Index
Maturity, Interest Reset
Period, Initial Interest
Reset Date, Interest Reset
Dates, Spread or Spread
Multiplier (if any),
Minimum Interest Rate (if
any), Maximum Interest Rate
(if any) and the Alternate
Rate Event Spread (if any).
4. Redemption or repayment
provisions (if any).
5. Settlement date and time
(Original Issue Date).
6. Interest Accrual Date.
7. Price.
8. Agent's commission (if any)
determined as provided in the
Distribution Agreement.
9. Whether the Note is an Original
Issue Discount Note (an "OlD Note"),
and if it is an OlD Note, the total
amount of OlD, the yield to
maturity, the initial accrual period
OlD and the applicability of
Modified Payment upon Acceleration
(and, if so, the Issue Price).
10. Whether the Note is a PERLS
Note, and if it is a PERLS Note, the
Denominated Currency, the Indexed
Currency or Currencies, the Payment
Currency, the Exchange Rate Agent,
the Reference Dealers, the Face
Amount, the Fixed Amount of each
Indexed Currency, the Aggregate
Fixed Amount of each Indexed
Currency and the Authorized
B-5
<PAGE> 37
Denominations (if other than U.S.
dollars).
11. Whether the Note is a Renewable
Note, and if it is a Renewable Note,
the Initial Maturity Date and the
Final Maturity Date.
12. Whether the Company has to
extend the Original Maturity Date of
the Note, and, if so, the Final
Maturity Date of such Note.
13. Whether the Company has the
option to reset the Interest Rate,
the Spread or the Spread Multiplier
of the Note.
14. Any other applicable terms.
B. The Company will advise the Trustee
by telephone or electronic transmission
(confirmed in writing at any time on the
same date) of the information set forth
in Settlement Procedure "A" above. The
Trustee will then assign a CUSIP number
to the Global Security representing such
Note and will notify the Company and the
relevant Agent of such CUSIP number by
telephone as soon as practicable.
C. The Trustee will enter a pending
deposit message through DTC's
Participant Terminal System, providing
the following settlement information to
DTC, the relevant Agent and Standard &
Poor's Rating Services:
1. The information set forth in
Settlement Procedure "A".
2. The Initial Interest Payment Date
for such Note, the number of days by
which such
B-6
<PAGE> 38
date succeeds the related DTC Record
Date (which in the case of Floating
Rate Notes which reset daily or
weekly, shall be the date five
calendar days immediately preceding
the applicable Interest Payment Date
and, in the case of all other Notes,
shall be the Record Date as defined
in the Note) and, if known, the
amount of interest payable on such
Initial Interest Payment Date.
3. The CUSIP number of the Global
Security representing such Note.
4. Whether such Global Security will
represent any other Book-Entry Note
(to the extent known at such time).
5. Whether such Note is an
Amortizing Note (by an appropriate
notation in the comments field of
DTC's Participant Terminal System).
6. The number of participant
accounts to be maintained by DTC on
behalf of the relevant Agent and the
Trustee.
D. The Trustee will complete and
authenticate the Global Security
representing such Note.
E. DTC will credit such Note to the
Trustee's participant account at DTC.
F. The Trustee will enter an SDFS
deliver order through DTC's Participant
Terminal System instructing DTC to (i)
debit such Note to the Trustee's
participant account and credit such Note
to the relevant Agent's participant
account
B-7
<PAGE> 39
and (ii) debit such Agent's settlement
account and credit the Trustee's
settlement account for an amount equal
to the price of such Note less such
Agent's commission (if any). The entry
of such a deliver order shall constitute
a representation and warranty by the
Trustee to DTC that (a) the Global
Security representing such Book-Entry
Note has been issued and authenticated
and (b) the Trustee is holding such
Global Security pursuant to the MTN
Certificate Agreement.
G. Unless the relevant Agent is the end
purchaser of such Note, such Agent will
enter an SDFS deliver order through
DTC's Participant Terminal System
instructing DTC (i) to debit such Note
to such Agent's participant account and
credit such Note to the participant
accounts of the Participants with
respect to such Note and (ii) to debit
the settlement accounts of such
Participants and credit the settlement
account of such Agent for an amount
equal to the price of such Note.
H. Transfers of funds in accordance with
SDFS deliver orders described in
Settlement Procedures "F" and "G" will
be settled in accordance with SDFS
operating procedures in effect on the
settlement date.
I. The Trustee will credit to the
account of the Company maintained at The
First National Bank of Chicago,
Aeroquip-Vickers-Account #59-29024,
Chicago, Illinois, in immediately
available funds the amount transferred
to the Trustee in accordance with
Settlement Procedure "F".
J. Unless the relevant Agent is the end
purchaser of such Note, such
B-8
<PAGE> 40
Agent will confirm the purchase of such
Note to the purchaser either by
transmitting to the Participants with
respect to such Note a confirmation
order or orders through DTC's
institutional delivery system or by
mailing a written confirmation to such
purchaser.
K. Monthly, the Trustee will send to the
Company a statement setting forth the
principal amount of Notes outstanding as
of that date under the Indenture and
setting forth a brief description of any
sales of which the Company has advised
the Trustee that have not yet been
settled.
Settlement For sales by the Company of Book-Entry Notes
Procedures to or through an Agent (unless otherwise
Timetable: specified pursuant to a Terms Agreement)
for settlement on the first Business Day
after the sale date, Settlement Procedures
"A" through "J" set forth above shall be
completed as soon as possible but not later
than the respective times in New York City
set forth below:
<TABLE>
<CAPTION>
Settlement
Procedure Time
--------- ----
<S> <C>
A 11:00 A.M. on sale date
B 12:00 Noon on sale date
C 2:00 P.M. on sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
</TABLE>
If a sale is to be settled more than one
Business Day after the sale date, Settlement
procedures "A", "B" and "C" shall be
completed as soon as practicable but no
later than 11:00 A.M., 12:00 Noon and 2:00
P.M., respectively, on the first Business
Day after the sale date. If the Initial
Interest Rate for a Floating Rate
B-9
<PAGE> 41
Book-Entry Note has not been determined at
the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has
been determined but no later than 12:00 Noon
and 2:00 P.M., respectively, on the first
Business Day before the settlement date.
Settlement Procedure "H" is subject to
extension in accordance with any extension
of Fedwire closing deadlines and in the
other events specified in the SDFS operating
procedures in effect on the settlement date.
If settlement of a Book-Entry Note is
rescheduled or canceled, the Trustee, after
receiving notice from the Company or the
relevant Agent, will deliver to DTC, through
DTC's Participant Terminal System, a
cancellation message to such effect by no
later than 2:00 P.M. on the Business Day
immediately preceding the scheduled
settlement date.
Failure If the Trustee fails to enter an SDFS deliver
to Settle: order with respect to a Book-Entry Note
pursuant to Settlement Procedure "F", the
Trustee may deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message instructing
DTC to debit such Note to the Trustee's
participant account, provided that the
Trustee's participant account contains a
principal amount of the Global Security
representing such Note that is at least
equal to the principal amount to be debited.
If a withdrawal message is processed with
respect to all the Book-Entry Notes
represented by a Global Security, the
Trustee will mark such Global Security
"canceled," make appropriate entries in the
Trustee's records and send such canceled
Global Security to the Company. The CUSIP
number assigned to such Global Security
shall, in accordance with the procedures of
the CUSIP Service Bureau of Standard &
Poor's Rating Services, be canceled and not
immediately reassigned. If a withdrawal
message is processed with
B-10
<PAGE> 42
respect to one or more, but not all, of the
Book-Entry Notes represented by a Global
Security, the Trustee will exchange such
Global Security for two Global Securities,
one of which shall represent such Book-Entry
Note or Notes and shall be canceled
immediately after issuance and the other of
which shall represent the remaining
Book-Entry Notes previously represented by
the surrendered Global Security and shall
bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry
Note is not timely paid to the Participants
with respect to such Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such purchaser), such
Participants and, in turn, the relevant
Agent may enter SDFS deliver orders through
DTC's Participant Terminal System reversing
the orders entered pursuant to Settlement
Procedures "F" and "G", respectively.
Thereafter, the Trustee will deliver the
withdrawal message and take the related
actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry Note, DTC may take any actions in
accordance with its SDFS operating
procedures then in effect.
In the event of a failure to settle with
respect to one or more, but not all, of the
Book-Entry Notes to have been represented by
a Global Security, the Trustee will provide,
in accordance with Settlement Procedures "D"
and "F", for the authentication and issuance
of a Global Security representing the
Book-Entry Notes to be represented by such
Global Security and will make appropriate
entries in its records.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the
B-11
<PAGE> 43
Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as
of the date of its authentication by the Trustee.
Each Certificated Note will bear an Original Issue
Date, which will be (i) with respect to an
original Certificated Note (or any portion
thereof), its original issuance date (which will
be the settlement date) and (ii) with respect to
any Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a
Certificated Note or in lieu of a destroyed, lost
or stolen Certificated Note, the original issuance
date of the predecessor Certificated Note,
regardless of the date of authentication of such
subsequently issued Certificated Note.
Preparation If any offer to purchase a Certificated Note
of Pricing is accepted by or on behalf of the Company, the
Supplement: Company will prepare a Pricing Supplement
reflecting the terms of such Note. The Company (i)
will arrange to file 10 copies of such Pricing
Supplement with the Commission in accordance with
the applicable paragraph of Rule 424(b) under the
Securities Act and (ii) will, as soon as possible
and in any event not later than the date on which
such Pricing Supplement is filed with the
Commission, deliver the number of copies of such
Pricing Supplement to the relevant Agent as such
Agent shall request.
In each instance that a Pricing Supplement is
prepared, the relevant Agent will affix the
Pricing Supplement to Prospectuses prior to their
use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other
than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately
available funds in exchange for an authenticated
Certificated Note delivered to the relevant Agent
and such Agent's delivery of such Note against
receipt of
B-12
<PAGE> 44
immediately available funds shall constitute
"settlement" with respect to such Note. All offers
accepted by the Company will be settled on the
third Business Day next succeeding the date of
acceptance pursuant to the timetable for
settlement set forth below, unless the Company and
the purchaser agree to settlement on another date,
which date shall be no earlier than the next
Business Day.
Settlement Settlement Procedures with regard to each
Procedures: Certificated Note sold by the Company to or
through an Agent (unless otherwise specified
pursuant to a Terms Agreement) shall be as
follows:
A. The relevant Agent will advise the Company by
telephone that such Note is a Certificated Note
and of the following settlement information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address for
payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated Note,
the Interest Rate, whether such Note will pay
interest annually or semiannually and whether such
Note is an Amortizing Note and, if so, the
amortization schedule, or, in the case of a
Floating Rate Certificated Note, the Initial
Interest Rate (if known at such time), Interest
Payment Date(s), Interest Payment Period,
Calculation Agent, Base Rate, Index Maturity,
Interest Reset Period, Initial Interest Reset
Date, Interest Reset Dates, Spread or Spread
Multiplier (if any), Minimum Interest Rate (if
any), Maximum Interest
B-13
<PAGE> 45
Rate (if any) and the Alternate Rate Event Spread
(if any).
7. Redemption or repayment provisions (if any).
8. Settlement date and time (Original Issue Date).
9. Interest Accrual Date.
10. Price.
11. Agent's commission (if any) determined as
provided in the Distribution Agreement.
12. Denominations.
13. Specified Currency.
14. Whether the Note is an OlD Note, and if it is
an OlD Note, the total amount of OlD, the yield to
maturity, the initial accrual period OlD and the
applicability of Modified Payment upon
Acceleration (and if so, the Issue Price).
15. Whether the Note is a PERLS Note, and if it is
a PERLS Note, the Denominated Currency, the
Indexed Currency or Currencies, the Payment
Currency, the Exchange Rate Agent, the Reference
Dealers, the Face Amount, the Fixed Amount of each
Indexed Currency, the Aggregate Fixed Amount of
each Indexed Currency and the Authorized
Denominations (if other than U.S. dollars).
16. Whether the Note is a Renewable Note, and if
it is a Renewable Note, the Initial Maturity Date
and the Final Maturity Date.
17. Whether the Company has the option to extend
the Original Maturity Date of the Note, and, if
so, the Final Maturity Date of such Note.
18. Whether the Company has the option to reset
the Interest Rate, the Spread or
B-14
<PAGE> 46
the Spread Multiplier of the Note.
19. Any other applicable terms.
B. The Company will advise the Trustee by
telephone or electronic transmission (confirmed in
writing at any time on the same date) of the
information set forth in Settlement Procedure "A"
above.
C. The Company will have delivered to the Trustee
a pre-printed four-ply packet for such Note, which
packet will contain the following documents in
forms that have been approved by the Company, the
relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Note and
authenticate such Note and deliver it (with the
confirmation) and Stubs One and Two to the
relevant Agent, and such Agent will acknowledge
receipt of the Note by stamping or otherwise
marking Stub One and returning it to the Trustee.
Such delivery will be made only against such
acknowledgment of receipt and evidence that
instructions have been given by such Agent for
payment to the account of the Company at The First
National Bank of Chicago, Aeroquip-Vickers-Account
#59-29024, Chicago, Illinois, or to such other
account as the Company shall have specified to
such Agent and the Trustee, in immediately
available funds, of an amount equal to the price
of such Note less such Agent's commission (if
any). In the event that the instructions given by
such Agent for payment to the account of the
Company are revoked, the Company will as promptly
as possible wire transfer to the account of such
Agent an amount of immediately available funds
equal to the amount of such payment made.
B-15
<PAGE> 47
E. Unless the relevant Agent is the end purchaser
of such Note, such Agent will deliver such Note
(with confirmation) to the customer against
payment in immediately available funds. Such Agent
will obtain the acknowledgment of receipt of such
Note by retaining Stub Two.
F. The Trustee will send Stub Three to the Company
by first-class mail. Monthly, the Trustee will
also send to the Company a statement setting forth
the principal amount of the Notes outstanding as
of that date under the Indenture and setting forth
a brief description of any sales of which the
Company has advised the Trustee that have not yet
been settled.
Settlement For sales by the Company of Certificated Notes to or
Procedures through an Agent (unless otherwise specified
Timetable: pursuant to a Terms Agreement), Settlement
Procedures "A" through "F" set forth above shall be
completed on or before the respective times in New
York City set forth below:
<TABLE>
<CAPTION>
Settlement
Procedure Time
--------- ----
<S> <C>
A 2:00 P.M. on day before
settlement date
B 3:00 P.M. on day before
settlement date
C-D 2:15 P.M. on settlement date
E 3:00 P.M. on settlement date
F 5:00 P.M. on settlement date
</TABLE>
Failure If a purchaser fails to accept delivery of and make
to Settle: payment for any Certificated Note, the relevant
Agent will notify the Company and the Trustee
by telephone and return such Note to the Trustee.
Upon receipt of such notice, the Company will
immediately wire transfer to the account of such
Agent an amount equal to the price of such Note less
such Agent's commission in respect of such Note (if
any). Such wire transfer will be made on the
settlement date, if possible, and in any event not
later than the Business Day following the settlement
date. If the failure shall have
B-16
<PAGE> 48
occurred for any reason other than a default by
such Agent in the performance of its obligations
hereunder and under the Distribution Agreement,
then the Company will reimburse such Agent or the
Trustee, as appropriate, on an equitable basis for
its loss of the use of the funds during the period
when they were credited to the account of the
Company. Immediately upon receipt of the
Certificated Note in respect of which such failure
occurred, the Trustee will mark such Note
"canceled," make appropriate entries in the
Trustee's records and send such Note to the
Company.
B-17
<PAGE> 1
Exhibit (4)-2
[FORM OF FACE OF SECURITY]
Fixed Rate Note
REGISTERED REGISTERED
No. [FXR] [$ ]
CUSIP: *
Unless this certificate 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 certificate 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 is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE
METHOD) SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
AEROQUIP-VICKERS, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
- ------------
* Applies only if this Note is a Registered Global Security.
<PAGE> 2
<TABLE>
<CAPTION>
=======================================================================================================================
ORIGINAL ISSUE DATE: INITIAL REDEMPTION INTEREST ORIGINAL
DATE: RATE: MATURITY
DATE:
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST ACCRUAL INITIAL REDEMPTION APPLICABILITY OPTIONAL
DATE: PERCENTAGE: OF MODIFIED REPAYMENT
PAYMENT UPON DATES(S):
ACCELERATION:
- -------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF OID: ANNUAL REDEMPTION If yes, state
PERCENTAGE Issue Price:
REDUCTION:
- -------------------------------------------------------------------------------------------------------------
ORIGINAL YIELD TO SPECIFIED
MATURITY: CURRENCY:
- -------------------------------------------------------------------------------------------------------------
INITIAL ACCRUAL
PERIOD:
- -------------------------------------------------------------------------------------------------------------
APPLICABILITY OF APPLICABILITY OF
ISSUER's OPTION TO ANNUAL INTEREST
EXTEND ORIGINAL PAYMENTS:
MATURITY DATE:
- -------------------------------------------------------------------------------------------------------------
If yes, state Final
Maturity Date:
- -------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:
=============================================================================================================
</TABLE>
AEROQUIP-VICKERS, INC., an Ohio corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to
, or registered assignees, the principal sum of , on the
Original Maturity Date specified above or, if the maturity hereof is extended in
accordance with the procedures set forth below to an Extended Maturity Date, as
defined below, on such Extended Maturity Date (except to the extent previously
redeemed or repaid) and to pay interest thereon at the Interest Rate per annum
specified above or, if the interest rate hereon is reset or re-established in
connection with an extension of maturity in accordance with the procedures
specified on the reverse hereof, at the interest rate per annum determined
pursuant to such procedures, from the Interest Accrual Date
2
<PAGE> 3
specified above until the principal hereof is paid or duly made available for
payment (except as provided below), semiannually in arrears on the first day of
March and September in each year (each such date an "Interest Payment Date")
commencing on the Interest Payment Date next succeeding the Interest Accrual
Date specified above, and at maturity (or on any redemption or repayment date);
PROVIDED, HOWEVER, that if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Interest Accrual Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and PROVIDED, FURTHER, that
if this Note is subject to "Annual Interest Payments," interest payments shall
be made annually in arrears and the term "Interest Payment Date" shall be deemed
to mean the first day of March in each year.
Interest on this Note will accrue from the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from the Interest Accrual
Date, until the principal hereof has been paid or duly made available for
payment (except as provided below). The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions described herein, be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on the
date 15 calendar days prior to such Interest Payment Date (whether or not a
Business Day) (each such date a "Record Date"); PROVIDED, HOWEVER, that interest
payable at maturity (or on any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions are authorized or required
by law or regulation to close in The City of New York and (i) with respect to
Notes denominated in a Specified Currency other than U.S. dollars, Australian
dollars or European Currency Units ("ECUs"), in the principal financial center
of the country of the Specified Currency, (ii) with respect to Notes denominated
in Australian dollars, in Sydney and (iii) with respect to Notes denominated in
ECUs, that is not a non-ECU clearing day, as determined by the ECU Banking
Association in Paris.
Payment of the principal of this Note, any premium and the
interest due at maturity (or on any redemption or repayment date) will be made
in immediately available funds upon surrender of this Note at the office or
agency of the Paying Agent, as defined on the reverse hereof, maintained for
that purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payment of the principal of and
premium, if any,
3
<PAGE> 4
and interest on this Note will be made in the Specified Currency indicated
above; PROVIDED, HOWEVER, that U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be made
by U.S. dollar check mailed to the address of the person entitled thereto as
such address shall appear in the Note register. A holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date will be entitled to receive payments of interest, other than interest due
at maturity or on any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Paying Agent in writing not less than 15 calendar days prior to
the applicable Interest Payment Date. If this Note is denominated in a Specified
Currency other than U.S. dollars, payments of interest hereon will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing not less
than 15 calendar days prior to the applicable Interest Payment Date. If such
wire transfer instructions are not so received, such interest payments will be
made by check payable in such Specified Currency mailed to the address of the
person entitled thereto as such address shall appear in the Note register.
Reference is hereby made to the further provisions of this
Note 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 Note shall not be entitled to any benefit under the Indenture, as defined
on the reverse hereof, or be valid or obligatory for any purpose.
4
<PAGE> 5
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: AEROQUIP-VICKERS, INC.
By
-----------------------------------
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Indenture.
The First National Bank of Chicago
as Trustee
By
---------------------------------
Authorized Officer
5
<PAGE> 6
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of Medium-Term
Notes, having maturities more than nine months from the date of issue (the
"Notes") of the Issuer. The Notes are issuable under an Indenture, dated as of
May 1, 1996, as supplemented as of April 17, 1997 (the "Indenture"), between the
Issuer and The First National Bank of Chicago, as Trustee (as
successor-in-interest to NBD Bank) (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 of the Issuer, the Trustee
and holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. The Issuer has appointed the Trustee, at its
corporate trust office in The City of New York as the paying agent (the "Paying
Agent," which term includes any additional or successor Paying Agent appointed
by the Issuer) with respect to the Notes. The terms of individual Notes may vary
with respect to interest rates, interest rate formulas, issue dates, maturity
dates, or otherwise, all as provided in the Indenture. To the extent not
inconsistent herewith, the terms of the Indenture are hereby incorporated by
reference herein.
This Note will not be subject to any sinking fund and, unless
otherwise provided on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or subject to repayment at the
option of the holder prior to maturity.
If so indicated on the face of this Note, this Note may be
redeemed in whole or in part at the option of the Issuer on or after the Initial
Redemption Date specified on the face hereof on the terms set forth on the face
hereof, together with interest accrued and unpaid hereon to the date of
redemption (except as provided below). If this Note is subject to "Annual
Redemption Percentage Reduction," the Initial Redemption Percentage indicated on
the face hereof will be reduced on each anniversary of the Initial Redemption
Date by the Annual Redemption Percentage Reduction specified on the face hereof
until the redemption price of this Note is 100% of the principal amount hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). Notice of redemption shall be mailed to the
registered holders of the Notes designated for redemption at their addresses as
the same shall appear on the Note register not less than 30 nor more than 60
days prior to the date fixed for redemption, subject to all the conditions and
provisions of the Indenture. In the event of redemption of this Note in part
only, a new Note or Notes for the amount of the unredeemed portion hereof shall
be issued in the name of the holder hereof upon the cancellation hereof.
6
<PAGE> 7
Notwithstanding the foregoing, this Note may be redeemed in
accordance with the terms of any Extension Notice, as defined below, sent to the
holder hereof as described below.
If so indicated on the face of this Note, this Note will be
subject to repayment at the option of the holder on the Optional Repayment Date
or Dates specified on the face hereof on the terms set forth herein. On any
Optional Repayment Date, this Note will be repayable in whole or in part in
increments of $1,000 or, if this Note is denominated in a Specified Currency
other than U.S. dollars, in increments of 1,000 units of such Specified Currency
(provided that any remaining principal amount hereof shall not be less than the
minimum authorized denomination hereof) at the option of the holder hereof at a
price equal to 100% of the principal amount to be repaid, together with interest
accrued and unpaid hereon to the date of repayment (except as provided below).
For this Note to be repaid at the option of the holder hereof, the Paying Agent
must receive at its corporate trust office in the Borough of Manhattan, The City
of New York, at least 15 but not more than 30 days prior to the date of
repayment, (i) this Note with the form entitled "Option to Elect Repayment"
below duly completed or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust company
in the United States setting forth the name of the holder of this Note, the
principal amount hereof, the certificate number of this Note or a description of
this Note's tenor and terms, the principal amount hereof to be repaid, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note, together with the form entitled "Option to Elect
Repayment" duly completed, will be received by the Paying Agent not later than
the fifth Business Day after the date of such telegram, telex, facsimile
transmission or letter; PROVIDED, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
If so indicated on the face of this Note, the Issuer has the
option to extend the Original Maturity Date hereof for one or more periods of
one or more whole years (each an "Extension Period") up to but not beyond the
Final Maturity Date specified on the face hereof and in connection therewith to
establish a new interest rate and new redemption provisions for the Extension
Period.
7
<PAGE> 8
The Issuer may exercise such option by notifying the Paying
Agent of such exercise at least 45 but not more than 60 days prior to the
Original Maturity Date or, if the maturity hereof has already been extended,
prior to the maturity date then in effect (an "Extended Maturity Date"), such
notice to be accompanied by the form of the Extension Notice referred to below.
No later than 38 days prior to the Original Maturity Date or an Extended
Maturity Date, as the case may be (each, a "Maturity Date"), the Paying Agent
will mail to the holder hereof a notice (the "Extension Notice") relating to
such Extension Period, first class mail, postage prepaid, setting forth (a) the
election of the Issuer to extend the maturity of this Note; (b) the new Extended
Maturity Date; (c) the interest rate applicable to the Extension Period; and (d)
the provisions, if any, for redemption during the Extension Period, including
the date or dates on which, the period or periods during which and the price or
prices at which such redemption may occur during the Extension Period. Upon the
mailing by the Paying Agent of an Extension Notice to the holder of this Note,
the maturity hereof shall be extended automatically, and, except as modified by
the Extension Notice and as described in the next paragraph, this Note will have
the same terms it had prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 A.M., New
York City time, on the twentieth calendar day prior to the Maturity Date in
effect immediately preceding the mailing of the applicable Extension Notice (or
if such day is not a Business Day, not later than 10:00 A.M., New York City
time, on the immediately succeeding Business Day), the Issuer may, at its
option, revoke the interest rate provided for in such Extension Notice and
establish a higher interest rate for the Extension Period by causing the Paying
Agent to send notice of such higher interest rate to the holder of this Note by
first class mail, postage prepaid, or by such other means as shall be agreed
between the Issuer and the Paying Agent. Such notice shall be irrevocable. All
Notes with respect to which the Maturity Date is extended in accordance with an
Extension Notice will bear such higher interest rate for the Extension Period,
whether or not tendered for repayment.
If the Issuer elects to extend the maturity hereof, the holder
of this Note will have the option to require the Issuer to repay this Note on
the Maturity Date in effect immediately preceding the mailing of the applicable
Extension Notice at a price equal to the principal amount hereof plus any
accrued and unpaid interest to such date. In order for this Note to be so repaid
on such Maturity Date, the holder hereof must follow the procedures set forth
above for optional repayment, except that the period for delivery of this Note
or notification to the Paying Agent shall be at least 25 but not more than 35
days prior to the Maturity Date in effect immediately preceding the mailing of
the applicable Extension
8
<PAGE> 9
Notice and except that if the holder hereof has tendered this Note for repayment
pursuant to this paragraph he may, by written notice to the Paying Agent, revoke
any such tender for repayment until 3:00 P.M., New York City time, on the
twentieth calendar day prior to the Maturity Date then in effect (or, if such
day is not a Business Day, until 3:00 P.M., New York City time, on the
immediately succeeding Business Day).
Interest payments on this Note will include interest accrued
to but excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Interest payments for this
Note will be computed and paid on the basis of a 360-day year of twelve 30-day
months.
In the case where the Interest Payment Date or the Maturity
Date (or any redemption or repayment date) does not fall on a Business Day,
payment of interest, premium, if any, or principal otherwise payable on such
date need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date or on the Maturity Date (or any redemption or repayment date), and no
interest on such payment shall accrue for the period from and after the Interest
Payment Date or the Maturity Date (or any redemption or repayment date) to such
next succeeding Business Day.
This Note and all the obligations of the Issuer hereunder are
direct, unsecured obligations of the Issuer and rank without preference or
priority among themselves and pari passu with all other existing and future
unsecured and unsubordinated indebtedness of the Issuer, subject to certain
statutory exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without coupons,
and, if denominated in U.S. dollars, is issuable only in denominations of U.S.
$1,000 and any integral multiple of U.S. $1,000 in excess thereof. If this Note
is denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable only
in denominations of the equivalent of U.S. $1,000 (rounded to an integral
multiple of 1,000 units of such Specified Currency), or any amount in excess
thereof which is an integral multiple of 1,000 units of such Specified Currency,
as determined by reference to the noon dollar buying rate in New York City for
cable transfers of such Specified Currency published by the Federal Reserve Bank
of New York (the "Market Exchange Rate") on the Business Day immediately
preceding the date of issuance; PROVIDED, HOWEVER, in the case of ECUs, the
Market Exchange Rate shall be the rate of exchange determined by the
9
<PAGE> 10
Commission of the European Communities (or any successor thereto) as published
in the Official Journal of the European Communities, or any successor
publication, on the Business Day immediately preceding the date of issuance.
The Trustee has been appointed registrar for the Notes, and
the Trustee will maintain at its office in The City of New York a register for
the registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; PROVIDED, HOWEVER, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.
In case any Note shall at any time become mutilated, defaced
or be destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or
10
<PAGE> 11
stolen and, if required, upon receipt also of indemnity satisfactory to each of
them. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new Note
shall be borne by the owner of the Note mutilated, defaced, destroyed, lost or
stolen.
The Indenture provides that, (a) if an Event of Default (as
defined in the Indenture) due to the default in payment of principal of (or
premium, if any on), or interest on any series of such debt securities issued
under the Indenture, including the series of Medium-Term Notes of which this
Note forms a part, or due to the default in the performance or breach of any
other covenant or warranty of the Issuer applicable to the debt securities of
such series but not applicable to all outstanding debt securities issued under
the Indenture shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the debt
securities of each affected series (voting as a single class), by notice in
writing to the Issuer may then declare the principal of all debt securities of
all such series and interest accrued thereon to be due and payable immediately
and (b) if an Event of Default due to a default in the performance of any other
of the covenants or agreements in the Indenture applicable to all outstanding
debt securities issued thereunder, including this Note, or due to certain events
of bankruptcy, insolvency and reorganization of the Issuer, shall have occurred
and be continuing, either the Trustee or the holders of not less than 25% in
aggregate principal amount of all debt securities issued under the Indenture
then outstanding (treated as one class), by notice in writing to the Issuer may
declare the principal of all such debt securities and interest accrued thereon
to be due and payable immediately, but upon certain conditions such declarations
may be annulled and past defaults may be waived (except a continuing default in
payment of principal (or premium, if any) or interest on such debt securities)
by the holders of a majority in principal amount of the debt securities of all
affected series then outstanding.
If the face hereof indicates that this Note is subject to
"Modified Payment upon Acceleration," then (i) if the principal hereof is
declared to be due and payable as described in the preceding paragraph, the
amount of principal due and payable with respect to this Note shall be limited
to the aggregate principal amount hereof multiplied by the sum of the Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Indenture prior to
the
11
<PAGE> 12
acceleration of payment of this Note, the principal amount hereof shall equal
the amount that would be due and payable hereon, calculated as set forth in
clause (i) above, if this Note were declared to be due and payable on the date
of any such vote and (iii) for the purpose of any vote of securityholders taken
pursuant to the Indenture following the acceleration of payment of this Note,
the principal amount hereof shall equal the amount of principal due and payable
with respect to this Note, calculated as set forth in clause (i) above.
The Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the debt securities of all series issued under the Indenture then outstanding
and affected (voting as one class), to execute supplemental indentures adding
any provisions to or changing in any manner the rights of the holders of each
series so affected; PROVIDED that the Issuer and the Trustee may not, without
the consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the principal
amount thereof or premium, if any, or reduce the rate or extend the time of
payment of interest or Additional Amounts (as defined in the Indenture) thereon,
or reduce the amount due and payable on redemption or repayment thereof, or
change the currency of payment thereof, or impair or affect the rights of any
holder to institute suit for the payment thereof without the consent of the
holder of each debt security so affected; or (b) reduce the aforesaid percentage
in principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture, without the consent of the holders
of each debt security so affected.
Except as set forth below, if the principal of, premium, if
any, or interest on, this Note is payable in a Specified Currency other than
U.S. dollars and such Specified Currency is not available to the Issuer for
making payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is not
available on such date, as of the most recent practicable date; provided,
however, that if such Specified Currency is replaced by the Euro, the payment of
principal of, premium, if any, or interest on this Note denominated in such
currency shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the treaty establishing the
European Community (the "EC"), as amended by the Treaty on European
12
<PAGE> 13
Union (as so amended, the "Treaty"). Any payment made under such circumstances
in U.S. dollars (or, if applicable, Euro) where the required payment is in a
Specified Currency other than U.S. dollars will not constitute an Event of
Default.
The value of the ECU, in which this Note may be denominated or
may be payable, is equal to the value of the ECU that is from time to time used
as the unit of account of the EC and which is valued on the basis of specified
amounts of the currencies of 12 of the 15 member states of the EC. Under Article
109G of the Treaty, the currency composition of the ECU may not be changed.
Other changes to the ECU may be made by the EC in conformity with EC law, in
which event the ECU will change accordingly. From the start of the third stage
of European monetary union, the value of the ECU as against the currencies of
member states participating in the third stage will be irrevocably fixed and the
ECU will become a currency in its own right, replacing all or some of the
currencies of the 15 member states of the EC. In contemplation of the third
stage, the European Council meeting in Madrid on December 16, 1995 decided that
the name of the new currency will be the Euro and that, in accordance with the
Treaty, substitution of the Euro for the ECU will be at the rate of one Euro for
one ECU. From the start of the third stage of European monetary union, all
payments in respect of this Note denominated or payable in ECU will be payable
in Euro at the rate then established in accordance with the Treaty.
If payment in respect of this Note is required to be made in
ECUs and ECUs are unavailable due to the imposition of exchange controls or
other circumstances beyond the Issuer's control, or are no longer used as the
unit of account of the European Community, or have not become a currency
replacing all or some of the currencies of the member states of the EC, then the
Issuer shall choose a substitute currency (the "Chosen Currency"), which may be
any currency which was, on the last day on which the ECU was used as the unit of
account of the EC, a component currency of the ECU or U.S. dollars and all
payments made in respect of this Note shall be made is such Chosen Currency. The
amount of each payment in such Chosen Currency shall be computed on the basis of
the equivalent of the ECU in such Chosen Currency determined as described below.
The equivalent of the ECU in the relevant Chosen Currency as
of any date (the "Day of Valuation") shall be determined by, or on behalf of,
the Issuer on the following basis. The amounts and components composing the ECU
for this purpose (the "Components") shall be the amounts and components that
composed the ECU as of the last date on which the ECU was used as the unit of
account of the EC. The equivalent of the ECU in the Chosen Currency shall be
calculated by, first, aggregating the U.S. dollar equivalents of the Components;
and
13
<PAGE> 14
then, in the case of a Chosen Currency other than U.S. dollars, using the rate
used for determining the U.S. dollar equivalent of the Components in the Chosen
Currency as set forth below, calculating the equivalent in the Chosen Currency
of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of
the Components shall be determined by, or on behalf of, the Issuer on the basis
of the most recently available Market Exchange Rates for such Components.
If, pursuant to the Treaty, all or some of the currencies of
the member countries of the EC are replaced by the Euro, the payment of
principal of, premium, if any, or interest on, this Note if denominated in any
such currency shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the Treaty.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and binding
on the holder of this Note.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal of
and premium, if any, and interest on this Note as herein provided in the Borough
of Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the Notes.
The Issuer may designate other agencies for the payment of said principal,
premium and interest at such place or places (subject to applicable laws and
regulations) as the Issuer may decide. So long as there shall be such an agency,
the Issuer shall keep the Trustee advised of the names and locations of such
agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for payment of the principal of or interest or
premium, if any, on any Notes that remain unclaimed at the end of two years
after such principal, interest or premium shall have become due and payable
(whether at maturity or upon call for redemption or otherwise), (i) the Trustee
or such Paying Agent shall notify the holders of such Notes that such moneys
shall be repaid to the Issuer and any person claiming such moneys shall
thereafter look only to the Issuer for payment thereof and (ii) such moneys
shall be so repaid to the Issuer. Upon such repayment all liability of the
Trustee or such Paying Agent with respect to such moneys shall thereupon cease,
without, however, limiting in any way any obligation that the Issuer may have to
pay the principal of or interest or premium, if any, on this Note as the same
shall become due.
14
<PAGE> 15
No provision of this Note or of the Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the holder in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of,
premium, if any, or the interest on this Note, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer 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, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed
in accordance with, the laws of the State of Ohio.
All terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
15
<PAGE> 16
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-..................Custodian.....................
(Cust) (Minor)
Under Uniform Gifts to Minors Act.................................
(State)
Additional abbreviations may also be used though not in the
above list.
----------------------
16
<PAGE> 17
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
_______________________________________!
!
!
________________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE,
OF ASSIGNEE]
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
________________________________________________________________________________
constituting and appointing such person attorney to transfer
________________________________________________________________________________
such note on the books of the Issuer, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution"
that is a member or participant in a "signature guarantee program" (e.g., the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program.)
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever.
17
<PAGE> 18
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Issuer to repay the within Note (or portion thereof specified below) pursuant to
its terms at a price equal to the principal amount thereof, together with
interest to the Optional Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is
to be repaid, specify the portion thereof which the holder elects to have
repaid: __________________; and specify the denomination or denominations (which
shall not be less than the minimum authorized denomination) of the Notes to be
issued to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): ___________________.
Dated:
------------------- ------------------------------------
NOTICE: The signature on this Option
to Elect Repayment must correspond
with the name as written upon the
face of the within instrument in
every particular without alteration
or enlargement.
18
<PAGE> 1
Exhibit(4)-3
[FORM OF FACE OF SECURITY]
Floating Rate Note
REGISTERED REGISTERED
No. [FLR] [$ ]
CUSIP: *
Unless this certificate 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
certificate 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 is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE
METHOD) SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<TABLE>
<CAPTION>
=============================================================================================================================
AEROQUIP-VICKERS, INC.
MEDIUM-TERM NOTE
(Floating Rate)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
- -----------------------------------------------------------------------------------------------------------------------------
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT
DATE(S):
- -----------------------------------------------------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- -----------------------------------------------------------------------------------------------------------------------------
ALTERNATE RATE INITIAL INTEREST RESET INTEREST RESET PERIOD:
EVENT SPREAD: DATE:
- -----------------------------------------------------------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATES:
- -----------------------------------------------------------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- -----------------------------------------------------------------------------------------------------------------------------
INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
- ------------
Applies only if this Note is a Registered Global Security.
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDEX CURRENCY: INITIAL REDEMPTION TOTAL AMOUNT OF OID:
PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL REDEMPTION ORIGINAL YIELD TO
PERCENTAGE REDUCTION: MATURITY:
- -----------------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS: OPTIONAL REPAYMENT INITIAL ACCRUAL PERIOD
DATE(S): OID:
=============================================================================================================================
</TABLE>
AEROQUIP-VICKERS, INC., an Ohio corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to
, or registered assignees, the principal sum of
on the Maturity Date specified above (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon, from the Interest
Accrual Date specified above at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above, and
thereafter at a rate per annum determined in accordance with the provisions
specified on the reverse hereof until the principal hereof is paid or duly made
available for payment. The Issuer will pay interest in arrears monthly,
quarterly, semiannually or annually as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Interest Accrual Date specified
above, and on the Maturity Date (or any redemption or repayment date); PROVIDED,
HOWEVER, that if the Interest Accrual Date occurs between a Record Date, as
defined below, and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date succeeding the Interest
Accrual Date to the registered holder of this Note on the Record Date with
respect to such second Interest Payment Date; and PROVIDED, FURTHER, that if an
Interest Payment Date (other than the Maturity Date or redemption or repayment
date) would fall on a day that is not a Business Day, as defined on the reverse
hereof, such Interest Payment Date shall be the following day that is a Business
Day, except that if the Base Rate specified above is LIBOR and such next
Business Day falls in the next calendar month, such Interest Payment Date shall
be the immediately preceding day that is a Business Day; and PROVIDED, FURTHER,
<PAGE> 3
that if the Maturity Date or redemption or repayment date would fall on a day
that is not a Business Day, such payment shall be made on the following day that
is a Business Day and no interest shall accrue for the period from and after
such Maturity Date or redemption or repayment date.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided
for, or, if no interest has been paid or duly provided for, from the Interest
Accrual Date, until the principal hereof has been paid or duly made available
for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day) (each such date a "Record Date"); PROVIDED, HOWEVER, that interest payable
on the Maturity Date (or any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest
due at the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payment of the principal of and
premium, if any, and interest on this Note will be made in the Specified
Currency indicated above; PROVIDED, HOWEVER, that U.S. dollar payments of
interest, other than interest due at maturity or any date of redemption or
repayment, will be made by U.S. dollar check mailed to the address of the person
entitled thereto as such address shall appear in the Note register. A holder of
U.S. $10,000,000 or more in aggregate principal amount of Notes having the same
Interest Payment Date will be entitled to receive payments of interest, other
than interest due at maturity or any date of redemption or repayment, by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date. If this Note is
denominated in a Specified Currency other than U.S. dollars, payments of
interest hereon will be made by wire transfer of immediately available funds to
an account maintained by the holder hereof with a bank located outside the
United States if appropriate wire transfer instructions have been received by
the Paying Agent in writing not less than 15 calendar days prior to the
applicable Interest Payment Date. If such wire transfer instructions are not so
received, such interest payments will be made by check payable in such Specified
3
<PAGE> 4
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register.
Reference is hereby made to the further provisions of this Note 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 Note
shall not be entitled to any benefit under the Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: AEROQUIP-VICKERS, INC.
By
-------------------------------------
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes
referred to in the within-
mentioned Indenture.
The First National Bank of Chicago,
as Trustee
By
------------------------------
Authorized Officer
4
<PAGE> 5
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of Medium-Term Notes,
having maturities more than nine months from the date of issue (the "Notes") of
the Issuer. The Notes are issuable under an Indenture, dated as of May 1, 1996,
as supplemented as of April 17, 1997 (the "Indenture"), between the Issuer and
The First National Bank of Chicago, as Trustee (as successor-in-interest to NBD
Bank) (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 of the Issuer, the Trustee and holders of the Notes and
the terms upon which the Notes are, and are to be, authenticated and delivered.
The Issuer has appointed the Trustee, at its corporate trust office in The City
of New York as the paying agent (the "Paying Agent," which term includes any
additional or successor Paying Agent appointed by the Issuer) with respect to
the Notes. The terms of individual Notes may vary with respect to interest
rates, interest rate formulas, issue dates, maturity dates, or otherwise, all as
provided in the Indenture. To the extent not inconsistent herewith, the terms of
the Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless
otherwise provided on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or subject to repayment at the
option of the holder prior to maturity.
Unless otherwise indicated on the face of this Note, this Note may not
be redeemed prior to the Maturity Date. If so indicated on the face of this
Note, this Note may be redeemed in whole or in part at the option of the Issuer
on or after the Initial Redemption Date specified on the face hereof on the
terms set forth on the face hereof, together with interest accrued and unpaid
hereon to the date of redemption. If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption. Notice of
redemption shall be mailed to the registered holders of the Notes designated for
redemption at their addresses as the same shall appear on the Note register not
less than 30 nor
5
<PAGE> 6
more than 60 days prior to the date fixed for redemption, subject to all the
conditions and provisions of the Indenture. In the event of redemption of this
Note in part only, a new Note or Notes for the amount of the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the cancellation
hereof.
Unless otherwise indicated on the face of this Note, this Note shall
not be subject to repayment at the option of the holder prior to the Maturity
Date. If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 or, if this Note is denominated in a Specified Currency other than U.S.
dollars, in increments of 1,000 units of such Specified Currency (provided that
any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest
accrued and unpaid hereon to the date of repayment. For this Note to be repaid
at the option of the holder hereof, the Paying Agent must receive at its
corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 days prior to the date of repayment, (i) this Note
with the form entitled "Option to Elect Repayment" below duly completed or (ii)
a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or a trust company in the United States setting forth
the name of the holder of this Note, the principal amount hereof, the
certificate number of this Note or a description of this Note's tenor and terms,
the principal amount hereof to be repaid, a statement that the option to elect
repayment is being exercised thereby and a guarantee that this Note, together
with the form entitled "Option to Elect Repayment" duly completed, will be
received by the Paying Agent not later than the fifth Business Day after the
date of such telegram, telex, facsimile transmission or letter; PROVIDED, that
such telegram, telex, facsimile transmission or letter shall only be effective
if this Note and form duly completed are received by the Paying Agent by such
fifth Business Day. Exercise of such repayment option by the holder hereof shall
be irrevocable. In the event of repayment of this Note in part only, a new Note
or Notes for the amount of the unpaid portion hereof shall be issued in the name
of the holder hereof upon the cancellation hereof.
6
<PAGE> 7
This Note will bear interest at the rate determined in accordance with
the applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; PROVIDED, HOWEVER, that the interest rate in effect for the period from
the Interest Accrual Date to the Initial Interest Reset Date will be the Initial
Interest Rate. If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next succeeding
day that is a Business Day, except that if the Base Rate specified on the face
hereof is LIBOR and such Business Day is in the next succeeding calendar month,
such Interest Reset Date shall be the next preceding Business Day. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and (i) if
this Note bears interest calculated by reference to LIBOR that is also a London
Banking Day, (ii) if this Note is denominated in a Specified Currency other than
U.S. dollars, Australian dollars or ECUs, in the principal financial center of
the country of the Specified Currency, (iii) if this Note is denominated in
Australian dollars, in Sydney and (iv) if this Note is denominated in ECUs, that
is not a non-ECU clearing day, as determined by the ECU Banking Association in
Paris.
The Interest Determination Date pertaining to an Interest Reset Date
for Notes bearing interest calculated by reference to the CD Rate, Commercial
Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the second
Business Day next preceding such Interest Reset Date. The Interest Determination
Date pertaining to an Interest Reset Date for Notes bearing interest calculated
by reference to LIBOR shall be the second London Banking Day preceding such
Interest Reset Date. As used herein, "London Banking Day" means any day on which
dealings in deposits in the Index Currency (as defined herein) are transacted in
the London interbank market. The Interest Determination Date pertaining to an
Interest Reset Date for Notes bearing interest calculated by reference to the
Treasury Rate shall be the day of the week in which such Interest Reset Date
falls on which Treasury bills normally would be auctioned.
7
<PAGE> 8
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but the auction may be held on the preceding Friday. If, as a
result of a legal holiday an auction is so held on the preceding Friday, the
Friday will be the Interest Determination Date pertaining to the Interest Reset
Date, occurring in the next succeeding week. If an auction falls on a day that
is an Interest Reset Date, the Interest Reset Date will be the next following
Business Day..
Unless otherwise specified on the face hereof, the "Calculation
Date" pertaining to an Interest Determination Date will be the earlier of (i)
the tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day, or (ii) the Business Day
preceding the applicable Interest Payment Date or Maturity Date (or, with
respect to any principal amount to be redeemed or repaid, any redemption or
repayment date), as the case may be.
DETERMINATION OF CD RATE. If the Base Rate specified on the face
hereof is the CD Rate, the CD Rate with respect to this Note shall be determined
on each Interest Determination Date and shall be the rate on such date for
negotiable certificates of deposit having the Index Maturity specified on the
face hereof as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "Cds (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on the
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 P.M. Quotations for
U.S. Government Securities" (the "Composite Quotations") under the heading
"Certificates of Deposit." If the rate is not yet published in either H.15(519)
or the Composite Quotation by 3:00 P.M., New York City time, on the Calculation
Date pertaining to the Interest Determination Date, the CD Rate on the Interest
Determination Date will be calculated by the Calculation Agent referred to on
the face hereof and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such Interest Determination Date
for certificates of deposit in the denomination of U.S. $5,000,000 with a
remaining maturity closest to the Index Maturity specified on the face hereof of
three leading nonbank dealers in negotiable U.S. dollar
8
<PAGE> 9
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit with a remaining maturity closest
to the Index maturity specified on the face hereof in an amount that is
representative for a single transaction in that market at that time; PROVIDED,
HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as set forth above, the CD Rate in effect for the applicable period
will be the same as the CD Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
DETERMINATION OF COMMERCIAL PAPER RATE. If the Base Rate specified on
the face hereof is the Commercial Paper Rate, the Commercial Paper Rate with
respect to this Note shall be determined on each Interest Determination Date and
shall be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial Paper-
Nonfinancial." In the event that the rate is not published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to the Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate
on the Interest Determination Date for commercial paper of the Index Maturity
specified on the face hereof as published in Composite Quotations under the
heading "Commercial Paper-Nonfinancial." If by 3:00 P.M., New York City time, on
the Calculation Date, the rate is not yet available in either H.15(519) of
Composite Quotations, then the Commercial Paper Rate shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on the Interest Determination Date of three leading dealers in
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper of the Index Maturity specified on the face hereof, placed for
an industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized rating agency; PROVIDED, HOWEVER, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate in effect for the applicable period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no Interest Reset Period, the rate of
interest payable hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with the
following formula:
9
<PAGE> 10
Money Market Yield = D x 360
---------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
DETERMINATION OF FEDERAL FUNDS RATE. If the Base Rate specified on the
face hereof is the Federal Funds Rate, the Federal Funds Rate with respect to
this Note shall be determined on each Interest Determination Date and shall be
the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)," or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on the Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If the rate is not yet published in either
H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the
Calculation Date pertaining to the Interest Determination Date, the Federal
Funds Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds as of 9:00 A.M., New York City time, on
the Interest Determination Date arranged by three leading brokers in Federal
funds transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the Federal Funds Rate in effect for
the applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
DETERMINATION OF LIBOR. If the Base Rate specified on the face hereof
is LIBOR, LIBOR with respect to this Note shall be determined on each Interest
Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation Agent
will determine (a) if "LIBOR Reuters" is specified as the Reporting Service
on the face hereof, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page (as defined below) by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits
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in the London interbank market in the Index Currency for the period of the
Index Maturity specified on the face hereof, commencing on the second
London Banking Day immediately following such Interest Determination Date,
which appear on the Designated LIBOR Page at approximately 11:00 A.M.,
London time, on such Interest Determination Date, if at least two such
offered rates appear (unless, as aforesaid, only a single rate is required)
on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified as
the Reporting Service on the face hereof, the rate for deposits in the
Index Currency for the period of the Index Maturity, commencing on such
Interest Determination Date, that appears on the Designated LIBOR Page at
as of 11:00 A.M., London time, on the Interest Determination Date. If fewer
than two offered rates appear (if "LIBOR Reuters" is specified as the
Reporting Service on the face hereof and calculation of LIBOR is based on
the arithmetic mean of the offered rates) or if no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR Reuters"
and the Designated LIBOR Page by its terms provides only for a single rate
or (y) "LIBOR Telerate"), LIBOR in respect of that Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to an Interest Determination Date on which fewer than
two offered rates appear (if "LIBOR Reuters" is specified as the Reporting
Service on the face hereof and calculation of LIBOR is based on the
arithmetic mean of the offered rates) or no rate appears (if the Reporting
Service on the face hereof specifies either (x) "LIBOR Reuters" and the
Designated LIBOR Page by its terms provides only for a single rate or (y)
"LIBOR Telerate"), the Calculation Agent will request the principal London
offices of each of four major reference banks in the London interbank
market, as selected by the Calculation Agent (after consultation with the
Issuer), to provide the Calculation Agent with its offered quotations for
deposits in the Index Currency for the period of the Index Maturity
specified on the face hereof, commencing on the second London Banking Day
immediately following the Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on
the Interest Determination Date and in a principal amount equal to an
amount of not less than U.S.$1 million (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that is
representative of a single transaction in such Index Currency in such
market at the time. If at least
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two quotations are provided, LIBOR determined on the Interest Determination
Date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided, LIBOR in determined on the Interest Determination
Date will be the arithmetic mean of rates quoted at approximately 11:00
A.M. (or such other time specified on the face hereof), in the applicable
principal financial center for the country of the Index Currency on such
Interest Determination Date, by three major banks in such principal
financial center selected by the Calculation Agent (after consultation with
the Issuer) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the Index Maturity
specified on the face hereof commencing on the second London Banking Day
immediately following such Interest Determination Date and in a principal
amount of not less than U.S.$1 million (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that is
representative of a single transaction in the Index Currency in the market
at the time; provided, however, that if the banks so selected as aforesaid
by the Calculation Agent are not quoting rates as mentioned in this
sentence, "LIBOR" in effect for the applicable period will be the same as
LIBOR for the immediately preceding Interest Reset Period (or, if there was
no Interest Reset Period, the rate of interest payable on the LIBOR Notes
for which LIBOR is being determined shall be the Initial Interest Rate).
"Index Currency" means the currency (including composite currencies)
specified as Index Currency on the face hereof. If no such currency is specified
as Index Currency on the face hereof, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated as the
Reporting Service on the face hereof, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated as the Reporting Service on the face hereof, the display on the Dow
Jones Telerate Service for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified as the Reporting Service on the face hereof, LIBOR
for the applicable Index Currency will be determined as if LIBOR Telerate (and,
if the U.S. dollar is the Index Currency, Page 3750) had been specified.
DETERMINATION OF PRIME RATE. If the Base Rate specified on the face
hereof is the Prime Rate, the Prime Rate with respect to this Note shall be
determined on each
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Interest Determination Date and shall be the rate set forth in H.15(519) for the
date opposite the caption "Bank Prime Loan." If the rate is not yet published by
9:00 A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Prime Rate for the Interest Determination Date
will be the arithmetic mean of the rates of interest publicly announced by each
bank named on the Reuters Screen USPRIME1 Page (as defined below) as such bank's
prime rate or base lending rate as in effect for such Interest Determination
Date as quoted on the Reuters Screen USPRIME1 Page on the Interest Determination
Date, or, if fewer than four such rates appear on the Reuters Screen USPRIME1
Page for the Interest Determination Date, the rate shall be the arithmetic mean
of the prime rates quoted on the basis of the actual number of days in the year
divided by 360 as of the close of business on such Interest Determination Date
by at least two of the three major money center banks in The City of New York
selected by the Calculation Agent from which quotations are requested. If fewer
than two quotations are provided, the Prime Rate shall be calculated by the
Calculation Agent and shall be determined as the arithmetic mean on the basis of
the prime rates in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, in each case having total equity capital of
at least U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such rate
or rates. "Reuters Screen USPRIME1 Page" means the display designated as Page
"USPRIME1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIME1 Page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
If in any month or two consecutive months the Prime Rate is not
published in H.15(519) and the banks or trust companies selected as aforesaid
are not quoting as mentioned in the preceding paragraph, the "Prime Rate" for
such Interest Reset Period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate). If this failure continues over three or more consecutive months, the
Prime Rate for each succeeding Interest Determination Date until the maturity or
redemption or repayment of this Note or, if earlier, until this failure ceases,
shall be LIBOR determined as if the Base Rate specified on the face hereof were
LIBOR, as if LIBOR Telerate had been specified as the Reporting Service and U.S.
dollars had been specified as the Index Currency and the Spread, if any, shall
be the number of basis points
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<PAGE> 14
specified on the face hereof as the "Alternate Rate Event Spread."
DETERMINATION OF TREASURY RATE. If the Base Rate specified on the face
hereof is the Treasury Rate, the Treasury Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate for the
auction held on such date of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as published in
H.15(519) under the heading "Treasury Bills--auction average (investment)," or
if not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to the Interest Determination Date, the auction average rate on the
Interest Determination Date (expressed as a bond equivalent, on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity specified on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no
auction is held on the Interest Determination Date, then the Treasury Rate shall
be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) calculated using the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on the Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
on the face hereof; PROVIDED, HOWEVER, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, the
Treasury Rate for such Interest Reset Date will be the same as the Treasury Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the Initial
Interest Rate).
DETERMINATION OF CMT RATE. If the Base Rate is the CMT Rate as
specified on the face hereof, "CMT Rate" means with respect to any Interest
Determination Date, the rate displayed on the Designated CMT Telerate Page (as
defined below) under the caption "...Treasury Constant Maturities... Federal
Reserve Board Release H.15...Mondays Approximately 3:45 p.m. under the column
for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on the Interest Determination
Date and (ii) if the Designated CMT
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Telerate Page is 7052, the week or the month, as applicable, ended immediately
preceding the week in which the related Interest Determination Date occurs. If
the rate is no longer displayed on the relevant page, or if not displayed by
3:00 p.m., New York City time on the related Calculation Date, then the CMT Rate
for the Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index as published in the relevant H.15(519). If
the rate is no longer published, or, if not published by 3:000 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date, will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to the Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 p.m., New York City time on the
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include the Agents or
their affiliates selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent, after consultation with the
Corporation, and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury notes") with an original
maturity approximately the Designated CMT Maturity Index and remaining term to
maturity of not less than such Designated CMT Maturity Index minus one year. If
the Calculation Agent cannot obtain three such Treasury notes quotation, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York City
time on the Interest Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of
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<PAGE> 16
equality, one of the lowest)), for Treasury notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If three or four (and not five)
of such Reference dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of the quotes will be eliminated; provided, however, that
if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate for the Interest Reset Date will be
the same as the CMT Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the CMT Note for which the CMT Rate is being determined shall be the Initial
Interest Rate). If two Treasury notes with an original maturity as described in
the third preceding sentence have remaining terms to maturity equally close to
the Designated CMT Maturity Index, the quotes for the Treasury note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in an applicable Pricing Supplement (or any other
page as may replace the page on that service for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in an applicable Pricing Supplement with respect to which the CMT Rate
will be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent shall
calculate the interest rate hereon in accordance with the foregoing on or before
each Calculation Date. The interest rate on this Note will in no event be higher
than the maximum rate permitted by Ohio law, as the same may be modified by
United States Federal law of general application.
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<PAGE> 17
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next Interest
Reset Date.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Accrued interest hereon shall
be an amount calculated by multiplying the face amount hereof by an accrued
interest factor. Such accrued interest factor shall be computed by adding the
interest factor calculated for each day in the period for which interest is
being paid. The interest factor for each such date shall be computed by dividing
the interest rate applicable to such day by 360 if the Base Rate is CD Rate,
Commercial Paper Rate, Federal Funds Rate, Prime Rate or LIBOR, as specified on
the face hereof, or by the actual number of days in the year if the Base Rate is
the Treasury Rate or the CMT Rate, as specified on the face hereof. All
percentages resulting from any calculation of the rate of interest on this Note
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (.0000001), with five one-millionths of a percentage point
rounded upward, and all dollar amounts used in or resulting from such
calculation on this Note will be rounded to the nearest cent (with one-half cent
rounded upward). The interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. The interest rate applicable to any
other day is the interest rate from the immediately preceding Interest Reset
Date (or, if none, the Initial Interest Rate).
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and PARI PASSU with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, and, if
denominated in U.S. dollars, is issuable only in denominations of U.S. $1,000
and any integral multiple of U.S. $1,000 in excess thereof. If this Note is
denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable only
in denominations of the equivalent of U.S. $1,000 (rounded to an integral
multiple of 1,000 units of such Specified Currency), or any amount in excess
thereof
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which is an integral multiple of 1,000 units of such Specified Currency, as
determined by reference to the noon dollar buying rate in New York City for
cable transfers of such Specified Currency published by the Federal Reserve Bank
of New York (the "Market Exchange Rate") on the Business Day immediately
preceding the date of issuance; PROVIDED, HOWEVER, in the case of ECUs, the
Market Exchange Rate shall be the rate of exchange determined by the Commission
of the European Communities (or any successor thereto) as published in the
Official Journal of the European Communities, or any successor publication, on
the Business Day immediately preceding the date of issuance.
The Trustee has been appointed registrar for the Notes, and the
Trustee will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; PROVIDED, HOWEVER, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.
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In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Indenture provides that, (a) if an Event of Default (as defined in
the Indenture) due to the default in payment of principal of, (or premium, if
any on), or interest on, any series of such debt securities issued under the
Indenture, including the series of Medium-Term Notes of which this Note forms a
part, or due to the default in the performance or breach of any other covenant
or warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the Indenture
shall have occurred and be continuing, either the Trustee or the holders of not
less than 25% in aggregate principal amount of the debt securities of each
affected series (voting as a single class) by notice in writing to the Issuer
may then declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an Event
of Default due to a default in the performance of any other of the covenants or
agreements in the Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in aggregate
principal amount of all debt securities issued under the Indenture then
outstanding (treated as one class) by notice in writing to the Issuer may
declare the principal of all such debt securities and interest accrued thereon
to be due and payable immediately, but upon certain conditions such declarations
may be annulled and past defaults may be waived (except a continuing default in
payment of principal (or premium, if any) or interest on such debt securities)
by the holders of a majority in principal amount of the debt securities of all
affected series then outstanding.
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The Indenture permits the Issuer and the Trustee, with the consent of
the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Indenture then outstanding and
affected (voting as one class), to execute supplemental indentures adding any
provisions to or changing in any manner the rights of the holders of each series
so affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby, (a)
extend the final maturity of any such debt security, or reduce the principal
amount thereof or premium, if any, or reduce the rate or extend the time of
payment of interest or Additional Accounts (as defined in the Indenture)
thereon, or reduce the amount due and payable on redemption or repayment
thereof, or change the currency of payment thereof, or impair or affect the
rights of any holder to institute suit for the payment thereof without the
consent of the holder of each debt security so affected; or (b) reduce the
aforesaid percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture, without the
consent of the holders of each debt security so affected.
Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than
U.S. dollars and such Specified Currency is not available to the Issuer for
making payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if such Specified Currency is replaced by the Euro, the payment
of principal of, premium, if any, or interest on this Note denominated in such
currency shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the treaty establishing the
European Community (the "EC"), as amended by the Treaty on European Union (as
so amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, Euro) where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default.
The value of the ECU, in which this Note may be denominated or may
be payable, is equal to the value of the ECU that is from time to time used as
the unit of account of
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the EC and which is valued on the basis of specified amounts of the currencies
of 12 of the 15 member states of the EC. Under Article 109G of the Treaty, the
currency composition of the ECU may not be changed. Other changes to the ECU may
be made by the EC in conformity with EC law, in which event the ECU will change
accordingly. From the start of the third stage of European monetary union, the
value of the ECU as against the currencies of member states participating in the
third stage will be irrevocably fixed and the ECU will become a currency in its
own right, replacing all or some of the currencies of the 15 member states of
the EC. In contemplation of the third stage, the European Council meeting in
Madrid on December 16, 1995 decided that the name of the new currency will be
the Euro and that, in accordance with the Treaty, substitution of the Euro for
the ECU will be at the rate of one Euro for one ECU. From the start of the third
stage of European monetary union, all payments in respect of this Note
denominated or payable in ECU will be payable in Euro at the rate then
established in accordance with the Treaty.
If payment in respect of this Note is required to be made in ECUs
and ECUs are unavailable due to the imposition of exchange controls or other
circumstances beyond the Issuer's control, or are no longer used as the unit of
account of the European Community, or have not become a currency replacing all
or some of the currencies of the member states of the EC, then the Issuer shall
choose a substitute currency (the "Chosen Currency"), which may be any currency
which was, on the last day on which the ECU was used as the unit of account of
the EC, a component currency of the ECU or U.S. dollars and all payments made in
respect of this Note shall be made is such Chosen Currency. The amount of each
payment in such Chosen Currency shall be computed on the basis of the equivalent
of the ECU in such Chosen Currency determined as described below.
The equivalent of the ECU in the relevant Chosen Currency as of
any date (the "Day of Valuation") shall be determined by, or on behalf of, the
Issuer on the following basis. The amounts and components composing the ECU for
this purpose (the "Components") shall be the amounts and components that
composed the ECU as of the last date on which the ECU was used as the unit of
account of the EC. The equivalent of the ECU in the Chosen Currency shall be
calculated by, first, aggregating the U.S. dollar equivalents of the Components;
and then, in the case of a Chosen Currency other than U.S. dollars, using the
rate used for determining the U.S. dollar equivalent of the Components in the
Chosen Currency as set forth below, calculating the equivalent in the Chosen
Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of
each of the
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Components shall be determined by, or on behalf of, the Issuer on the basis of
the most recently available Market Exchange Rates for such Components.
If, pursuant to the Treaty, all or some of the currencies of the
member countries of the EC are replaced by the Euro, the payment of principal
of, premium, if any, or interest on, this Note if denominated in any such
currency shall be effected in Euro in conformity with legally applicable
measures taken pursuant to, or by virtue of, the Treaty.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and binding
on the holder of this Note.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the Notes.
The Issuer may designate other agencies for the payment of said principal,
premium and interest at such place or places (subject to applicable laws and
regulations) as the Issuer may decide. So long as there shall be such an agency,
the Issuer shall keep the Trustee advised of the names and locations of such
agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of,
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premium, if any, and interest on this Note at the time, place, and rate, and in
the coin or currency, herein prescribed unless otherwise agreed between the
Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer 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, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of Ohio.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
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<PAGE> 24
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN
ACT-...........Custodian..............
(Cust) (Minor)
Under Uniform Gifts to Minors
Act...................
(State)
Additional abbreviations may also be used though not in the above list.
---------------------
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<PAGE> 25
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- ---------------------------------------!
!
!
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably
- --------------------------------------------------------------------------------
constituting and appointing such person attorney to transfer
- --------------------------------------------------------------------------------
such note on the books of the Issuer, with full power of
- --------------------------------------------------------------------------------
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular
without alteration or enlargement or any change whatsoever.
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution"
that is a member or participant in a "signature guarantee program" (e.g., the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program.)
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever.
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<PAGE> 26
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer
to repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
__________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid):
___________________________.
Dated:_____________ ___________________________________
NOTICE: The signature on this Option to Elect Repayment
must correspond with the name as written upon the face
of the within instrument in every particular without
alteration or enlargement.
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