As filed with the Securities and Exchange Commission on April 23, 1996
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
PARKER-HANNIFIN CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Ohio 34-0451060
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
17325 Euclid Avenue
Cleveland, Ohio 44112-1290
(216) 531-3000
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
_______________
Joseph D. Whiteman, Esq.
Vice President, General Counsel and Secretary
Parker-Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112-1290
(216) 531-3000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
_______________
Copies to:
Thomas C. Daniels, Esq. Earl D. Weiner, Esq.
Jones, Day, Reavis & Pogue Sullivan & Cromwell
901 Lakeside Avenue 125 Broad Street
Cleveland, Ohio 44114 New York, NY 10004
(216) 586-3939 (212) 558-4000
_______________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of the Registration
Statement as determined in light of market conditions.
_______________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.[_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[_]______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]_______
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[_]
Proposed
Title of Each Proposed Maximum
Class of Amount Maximum Aggregate Amount of
Securities to to be Offering Offering Registration
be Registered Registered(1) Price(1) Price(2) Fee
Debt Securities $400,000,000 100% $400,000,000 $137,931.04
(1) Such amount in U.S. dollars or the equivalent thereof in foreign
currencies or foreign currency units as shall result in an aggregate
initial public offering price for all securities of $400,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
_______________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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(Along the left margin of the prospectus document)
INFORMATON CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITITES AND EXCHANGE COMMISSION. THESE SECURITITES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
Subject to Completion, Dated April 23, 1996
PROSPECTUS
$400,000,000
PARKER-HANNIFIN CORPORATION
Senior Debt Securities
_______________
Parker-Hannifin Corporation (the "Company") intends to issue from time to
time in one or more series its senior unsecured debt securities (the "Senior
Debt Securities"), consisting of debentures, notes, bonds and/or other
unsecured evidences of indebtedness, at an aggregate initial offering price
not to exceed U.S. $400,000,000, or the equivalent thereof if Senior Debt
Securities are denominated in one or more foreign currencies or foreign
currency units, at prices and on terms to be determined at or prior to the
time of sale.
Specific terms of the Senior Debt Securities in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
an accompanying supplement to this Prospectus (each, a "Prospectus
Supplement"), together with the terms of the offering of the Offered
Securities, the initial offering price and the net proceeds to the Company
from the sale thereof. The accompanying Prospectus Supplement will set forth,
among other items, the following with respect to the Offered Securities: the
specific designation, aggregate principal amount, authorized denominations,
maturity, rate or method of calculation of interest, if any, and dates for
payment thereof, any redemption, prepayment or sinking fund provisions, any
exchange rights, and the currency, currencies or currency units in which
principal, premium, if any, or interest, if any, is payable.
The Offered Securities may be sold through underwriters, dealers or
agents or may be sold directly to purchasers. If any underwriters, dealers or
agents are involved in the sale of any Offered Securities, their names and any
applicable fee, commission or discount arrangements will be set forth in the
accompanying Prospectus Supplement. The net proceeds to the Company of the
sale of Offered Securities will be the purchase price of such Offered
Securities less attributable issuance expenses, including underwriters',
dealers' or agents' compensation. See "Plan of Distribution" for
indemnification arrangements for underwriters, dealers and agents.
This Prospectus may not be used to consummate sales of Senior Debt
Securities unless accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________
The date of this Prospectus is _____ __, 1996.
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus
or the accompanying Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or any agent, dealer or underwriter. Neither the
delivery of this Prospectus or the accompanying Prospectus Supplement nor any
sale made hereunder or thereunder shall, under any circumstances, create any
implication that the information contained herein or in the accompanying
Prospectus Supplement is correct as of any date subsequent to the date hereof
or thereof or that there has been no change in the affairs of the Company
since the date hereof or thereof. Neither this Prospectus nor the
accompanying Prospectus Supplement constitutes an offer to sell or
solicitation of an offer to buy Senior Debt Securities in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person
to whom it is unlawful to make such offer or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the following regional offices of the Commission: New York
Regional Office, Seven World Trade Center, Suite 1300, New York, New York
10048, and Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
by mail at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's
Common Stock is listed on the New York Stock Exchange, and such reports, proxy
and information statements and other information concerning the Company may
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933 (the "Securities Act"). This Prospectus and
the accompanying Prospectus Supplement omit certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Senior Debt Securities. Statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are incorporated by reference in this Prospectus:
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995; and
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1995 and December 31, 1995.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering hereunder
shall be deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the date of the filing of such documents. Any statement
contained herein or in a document
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incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of the Registration Statement and
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of the Registration Statement or this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents which have been incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Parker-Hannifin Corporation, 17325 Euclid Avenue, Cleveland,
Ohio 44112-1290, Attention: Joseph D. Whiteman, Esq., Vice President, General
Counsel and Secretary, telephone (216) 531-3000.
THE COMPANY
Parker-Hannifin Corporation (the "Company") is a leading worldwide full-
line manufacturer of motion control products, including fluid power systems,
electromechanical controls and related components. Fluid power involves the
transfer and control of power through the medium of liquid, gas or air, in
both hydraulic and pneumatic applications. Fluid power systems move and
position materials, control machines, vehicles and equipment and improve
industrial efficiency and productivity. Components of a simple fluid power
system include a pump which generates pressure, valves which control the
fluid's flow, an actuator which translates the pressure in the fluid into
mechanical energy, a filter to remove contaminants and numerous hoses,
couplings, fittings and seals. Electromechanical control involves the use of
electronic components and systems to control motion and precisely locate or
vary speed in automation applications.
The Company's manufacturing, service, distribution and administrative
facilities are located in 33 states, Puerto Rico and worldwide in 30 foreign
countries. Its motion control technology is used in products of its two
business segments: Industrial and Aerospace. The products are sold as
original and replacement equipment through product and distribution centers
worldwide. The Company markets its products through its direct-sales
employees and more than 6,000 independent distributors. The Company's
products are supplied to over a quarter million customer outlets in virtually
every major manufacturing, transportation and processing industry.
The Company was incorporated in Ohio in 1938. Its principal executive
offices are located at 17325 Euclid Avenue, Cleveland, Ohio 44112-1290,
telephone (216) 531-3000.
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RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for each of the last five fiscal years ended June 30, 1995 and for
the six months ended December 31, 1995 and December 31, 1994. For the purpose
of calculating the ratio of earnings to fixed charges, "earnings" consist of
income from continuing operations before income taxes and fixed charges
(excluding capitalized interest). "Fixed charges" consist of (i) interest on
indebtedness, whether expensed or capitalized, and (ii) that portion of rental
expense the Company believes to be representative of interest.
Six Months Ended Fiscal Year Ended
December 31, December 31, June 30,
1995 1994 1995 1994 1993 1992 1991
Ratio of ____ ____ _____ ____ ____ ____ ____
earnings to
fixed charges 10.09 8.64 10.16 3.68 3.05 2.81 2.54
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Senior
Debt Securities for general corporate purposes, which may include refinancing
or repayment of indebtedness, financing acquisitions as they may arise,
repurchasing the Company's equity securities, financing of capital
expenditures and working capital. Further details relating to the uses of the
net proceeds of any such offering will be set forth in the applicable
Prospectus Supplement.
DESCRIPTION OF SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth
certain general terms and provisions of the Senior Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement (the "Offered Securities") and
the extent, if any, to which such general provisions may apply to the Senior
Debt Securities so offered will be described in the Prospectus Supplement or
Prospectus Supplements relating to such Offered Securities.
The Offered Securities are to be issued under an Indenture (the
"Indenture") between the Company and National City Bank, as Trustee (the
"Trustee"). A form of the Indenture is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Senior Debt Securities and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain
terms, and, with respect to any particular Offered Securities, to the
description of the terms thereof included in the Prospectus Supplement
relating thereto. Section numbers below refer to provisions of the Indenture.
General
The Senior Debt Securities will be unsecured obligations of the Company
and will rank on a parity with all other unsecured unsubordinated indebtedness
of the Company. The Indenture does not limit the amount of Senior Debt
Securities that may be issued thereunder and provides that Senior Debt
Securities may be issued from time to time in one or more series. (Section
301)
The Prospectus Supplement or Prospectus Supplements relating to the
particular series of Senior Debt Securities offered thereby will describe the
following terms of the Offered Securities or the series of which they are a
part: (i) the title of the Offered Securities; (ii) any limit on the
aggregate principal amount
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of the Offered Securities; (iii) the Person to whom any interest on the
Offered Securities shall be payable, if other than the Person in whose
name that Offered Security is registered on the Regular Record
Date for such interest; (iv) the date or dates on which the principal of any
Offered Security is payable; (v) the rate or rates at which the Offered
Securities will bear interest, if any, and the date or dates from which such
interest will accrue and the dates on which such interest will be payable and
the Regular Record Dates for such Interest Payment Dates; (vi) the place or
places where the principal of and any premium and interest on any Offered
Securities is payable; (vii) the period or periods within which, the price or
prices at which and the terms and conditions upon which the Offered Securities
may be redeemed in whole or in part at the option of the Company; (viii) any
mandatory or optional sinking fund or analogous provisions; (ix) if other than
denominations of $1,000 and any integral multiple thereof, the denominations
in which any securities will be issuable; (x) if the amount of payments of
principal of and any premium or the interest on the Offered Securities may be
determined with reference to an index or pursuant to a formula, the manner in
which such amounts shall be determined; (xi) if other than the currency of the
United States of America, the currency, currencies or currency units in which
the principal of or any premium or interest on any Offered Securities is
payable and the manner of determining the equivalent thereof in the currency
of the United States of America under the Indenture; (xii) if the principal of
or any premium or interest on any Offered Securities is to be payable, at the
election of the Company or the Holder thereof, in one or more currencies or
currency units other than that or those in which such Offered Securities are
stated to be payable, the currency, currencies or currency units in which the
principal of or any premium or interest on such Securities as to which such
election is made shall be payable, the periods within which and the terms and
conditions upon which such election is to be made and the amount so payable
(or the manner in which such amount shall be determined); (xiii) if other than
the entire principal amount thereof, the portion of the principal amount of
any Offered Securities which will be payable upon declaration of acceleration
of the Maturity thereof; (xiv) if the principal amount payable at the Stated
Maturity of any Offered Securities will not be determinable as of any one or
more dates prior to the Stated Maturity, the amount which shall be deemed to
be the principal amount of such Offered Securities as of any such date for any
purpose under the Indenture; (xv) if applicable, that the Offered Securities,
in whole or any specified part, shall be defeasible pursuant to the Indenture;
(xvi) if applicable, that any Offered Securities will be issuable in whole or
in part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Security in addition to or in lieu of
the legend referred to under "Book-Entry System" and, if different from those
described under such caption, any circumstances under which any such Global
Security may be exchanged in whole or in part for Senior Debt Securities
registered, and any transfer of such Global Security in whole or in part may
be registered, in the names of persons other than the Depositary for such
Global Security or its nominee; (xvii) any addition to or change in the Events
of Default applicable to any Offered Securities and any change in the right of
the Trustee or the requisite Holders of such Offered Securities to declare the
principal amount thereof due and payable pursuant to the Indenture; (xviii)
any addition to or change in the covenants set forth in Article Ten of the
Indenture (including, without limitation, those described in "Certain
Covenants of Senior Debt Securities") which apply to such Offered Securities;
and (xix) any other terms of the Offered Securities not inconsistent with the
provisions of the Indenture. (Section 301)
Denominations, Registration of Transfer and Exchange
Unless otherwise indicated in the Prospectus Supplement or Prospectus
Supplements relating thereto, the Senior Debt Securities will be issued only
in registered form, without coupons and only in denominations of $1,000 or any
integral multiple thereof. (Section 302)
Senior Debt Securities may be issued under the Indenture as Original
Issue Discount Securities to be offered and sold at a substantial discount
below their stated principal amount. Certain United States federal income tax
consequences (if any) and other special considerations applicable to any such
Original Issue Discount Securities will be described in the Prospectus
Supplement or Prospectus Supplements relating thereto. "Original Issue
Discount Security" means any Senior Debt Security which provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof upon the occurrence of an
Event of Default and the continuation thereof. (Section 101) In
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addition, certain United States federal income tax or other considerations
(if any) applicable to any Senior Debt Securities which are denominated in a
currency or currency unit other than United States dollars may be described
in the applicable Prospectus Supplement.
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, upon surrender for registration of transfer of any Senior
Debt Security of a series at the office or agency of the Company in the Place
of Payment for that series, the Company will execute, and the Trustee will
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Senior Debt Securities of the same series, of any
authorized denominations and of like tenor and aggregate principal amount. At
the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Senior Debt Securities of any
series may be exchanged for other Senior Debt Securities of the same series,
of any authorized denominations and of like tenor and aggregate principal
amount, upon surrender of the Senior Debt Securities to be exchanged at such
office or agency. No service charge will be made for any registration of
transfer or exchange of the Offered Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 305)
Certain Definitions
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"Subsidiary" is defined as a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company and/or
one or more Subsidiaries of the Company.
"Restricted Subsidiary" is defined as a Subsidiary of the Company
substantially all the property of which is located, or substantially all of
the business of which is carried on, within the United States and which owns a
Principal Property.
"Principal Property" is defined to mean any manufacturing or processing
plant or warehouse owned by the Company or any Restricted Subsidiary which is
located within the United States and the gross book value of which (including
related land, improvements, machinery and equipment without deduction of any
depreciation reserves) on the date as of which the determination is being
made, exceeds 1% of Consolidated Net Tangible Assets, other than properties or
any portion of a particular property which in the opinion of the Company's
Board of Directors are not of material importance to the Company's business or
to the use or operation of such property.
"Attributable Debt" is defined to mean the total net amount of rent
required to be paid during the remaining primary term of certain leases,
discounted at a rate per annum equal to the weighted average yield to maturity
of the Senior Debt Securities calculated in accordance with generally accepted
financial practices.
"Consolidated Net Tangible Assets" is defined to mean the aggregate
amount of assets (less applicable reserves and other properly deductible
items) after deducting (i) all liabilities other than deferred income taxes,
Funded Debt and shareholders' equity, and (ii) all goodwill and other
intangibles of the Company and its consolidated Subsidiaries.
"Funded Debt" is defined to mean (i) all indebtedness for money borrowed
having a maturity of more than 12 months from the date as of which the
determination is made or having a maturity of 12 months or less but by its
terms being renewable or extendible beyond 12 months from such date at the
option of the borrower and (ii) rental obligations payable more than 12 months
from such date under leases which are capitalized in accordance with generally
accepted accounting principles (such rental obligations to be included as
Funded Debt at the amount so capitalized at the date of such computation and
to be included
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for the purposes of the definition of Consolidated Net Tangible Assets both
as an asset and as Funded Debt at the respective amounts so capitalized).
Certain Covenants of Senior Debt Securities
The Indenture contains, among other things, the following covenants:
Restrictions of Secured Debt. The Company will not itself, and will not
permit any Restricted Subsidiary to, incur, issue, assume or guarantee any
evidence of indebtedness for money borrowed ("Debt") secured by a mortgage,
pledge or lien ("Mortgage") on any Principal Property of the Company or any
Restricted Subsidiary, or on any shares of stock of or Debt of any Restricted
Subsidiary, without effectively providing that the Senior Debt Securities are
secured equally and ratably with (or, at the Company's option, prior to) such
secured Debt, unless the aggregate amount of all such secured Debt, together
with all Attributable Debt of the Company and its Restricted Subsidiaries with
respect to sale and leaseback transactions involving Principal Properties
(with the exception of such transactions which are excluded as described in
"Restrictions on Sales and Leasebacks" below), would not exceed 10% of
Consolidated Net Tangible Assets.
The above restriction does not apply to, and there will be excluded from
Debt in any computation under such restriction, (i) Debt secured by Mortgages
on property of, or on any shares of stock of or Debt of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary, (ii)
Debt secured by Mortgages in favor of the Company or a Restricted Subsidiary,
(iii) Debt secured by Mortgages in favor of governmental bodies to secure
progress or advance payments or payments pursuant to contracts or statute,
(iv) Debt secured by Mortgages on property, shares of stock or Debt existing
at the time of acquisition thereof (including acquisition through merger or
consolidation) and Debt secured by Mortgages to finance the acquisition of
property, shares of stock or Debt or to finance construction on property which
is incurred within 180 days of such acquisition or completion of construction,
(v) Debt secured by Mortgages securing industrial revenue or pollution control
bonds, or (vi) any extension, renewal or replacement of any Debt referred to
in the foregoing clauses (i) through (v) inclusive, provided, however, that
such extension, renewal or replacement Mortgage shall be limited to all or
part of the same property, shares of stock or Debt that secured the Mortgage
extended, renewed or replaced (plus improvements on such property). (Section
1007)
Restrictions on Sales and Leasebacks. Neither the Company nor any
Restricted Subsidiary may enter into any sale and leaseback transaction
involving any Principal Property, unless the aggregate amount of all
Attributable Debt of the Company and its Restricted Subsidiaries with respect
to such transaction plus all secured Debt to which the restrictions described
under "Restrictions on Secured Debt" above apply would not exceed 10% of
Consolidated Net Tangible Assets.
This restriction does not apply to, and there shall be excluded from
Attributable Debt in any computation under such restriction, any sale and
leaseback transaction if (i) the lease is for a period of not in excess of
three years, including renewal rights, (ii) the sale or transfer of the
Principal Property is made within 180 days after the later of its acquisition
or completion of construction, (iii) the lease secures or relates to
industrial revenue or pollution control bonds, (iv) the transaction is between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries, or
(v) the Company or such Restricted Subsidiary, within 180 days after the sale
is completed, applies (A) to the retirement of the Senior Debt Securities,
other Funded Debt of the Company ranking on a parity with or senior to the
Senior Debt Securities, or Funded Debt of a Restricted Subsidiary, or (B) to
the purchase of other property which will constitute a Principal Property
having a value at least equal to the value of the Principal Property leased,
an amount equal to the greater of (i) the net proceeds of the sale of the
Principal Property leased, or (ii) the fair market value of the Principal
Property leased. In lieu of applying proceeds to the retirement of Funded
Debt, the Company may surrender debentures or notes (including the Senior Debt
Securities) to the Trustee for retirement and cancellation, or the Company or
a Restricted Subsidiary may receive credit for the principal amount of Funded
Debt voluntarily retired within 180 days after such sale. (Section 1008)
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Events of Default
The Indenture defines an Event of Default with respect to Senior Debt
Securities of any series as being any one of the following events and such
other events as may be established for the Senior Debt Securities of a
particular series: (i) default for 30 days in any payment of interest on any
Senior Debt Security of such series; (ii) default in any payment of principal
of or any premium on any Senior Debt Security of such series when due; (iii)
default in the payment of any sinking fund installment with respect to such
series when due; (iv) default for 60 days after appropriate notice in
performance of any other covenant or warranty included in the Indenture (other
than those covenants or warranties included solely for the benefit of series
of Senior Debt Securities other than that series); (v) default under any
evidence of indebtedness of the Company or any Restricted Subsidiary exceeding
$10,000,000 in aggregate principal amount (including a default with respect to
Senior Debt Securities of series other than that series) or under any
mortgage, indenture or instrument under which any such indebtedness is issued
or secured (including the Indenture), which default results in acceleration of
the maturity of such indebtedness, if such acceleration is not rescinded or
annulled or if such indebtedness is not discharged within 10 days after
written notice as provided in the Indenture; (vi) certain events in
bankruptcy, insolvency or reorganization; or (vii) any other Event of Default
provided with respect to Senior Debt Securities of that series. (Section 501)
If an Event of Default with respect to Senior Debt Securities of any series
at the time Outstanding occurs and is continuing, either the Trustee or the
Holders of at least 25% in principal amount of the Outstanding Senior Debt
Securities of that series may declare the principal of such series (or, if the
Senior Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal as may be specified by the terms of that series)
to be due and payable immediately. At any time after a declaration of
acceleration with respect to Senior Debt Securities of any series has been
made, but before a judgment or decree based on acceleration has been obtained,
the Holders of a majority in principal amount of the Outstanding Senior Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502)
Reference is made to the Prospectus Supplement or Prospectus Supplements
relating to each series of Offered Securities which are Original Issue
Discount Securities for the particular provisions relating to acceleration of
the Maturity of a portion of the principal amount of such Original Issue
Discount Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture requires the Company to file annually with the Trustee an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1009) The Indenture provides that if a default
occurs with respect to Senior Debt Securities of any series, the Trustee will
give the Holders of such series notice of such default when, as and to the
extent provided by the Trust Indenture Act, provided, however, that in the
case of any default under any covenant referenced in clause (iv) above with
respect to such series, no such notice to Holders will be given until at least
thirty days after the occurrence thereof. (Section 602)
The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnity. (Section 603) Subject to
such provisions for indemnification of the Trustee, the Holders of a majority
in principal amount of the Outstanding Senior Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Senior Debt Securities of
that series. (Section 512)
Modification and Waiver
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Without the consent of any Holders, the Company and the Trustee, at any
time from time to time, may modify or amend the Indenture to (i) evidence the
succession of another Person to the Company and such Person's assumption of
any covenants of the Company under the Indenture and any Senior Debt
Securities; (ii) add covenants of the Company for the benefit of Holders of
all or any series of Senior Debt Securities or to surrender any right or power
conferred upon the Company; (iii) add any additional Events of Default for the
benefit of the Holders of all or any series of Senior Debt Securities; (iv)
add to or change any provisions of the Indenture to the extent necessary to
permit or facilitate the issuance of Senior Debt Securities in bearer form,
registrable or not registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Senior Debt Securities in
uncertificated form; (v) add to, change or eliminate any of the provisions of
the Indenture in respect of one or more series of Senior Debt Securities,
subject to certain limitations; (vi) secure the Senior Debt Securities; (vii)
establish the form or terms of Senior Debt Securities of any series; (viii)
evidence and provide for the acceptance of appointment by a successor Trustee
with respect to one or more series of Senior Debt Securities; or (ix) to cure
any ambiguity, to correct or supplement any provision in the Indenture which
may be defective or inconsistent with any other provision of the Indenture,
provided that such action will not adversely affect the interests of Holders
of Senior Debt Securities of any series in any material respect. (Section 901)
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3 % in principal
amount of the Outstanding Senior Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each outstanding Senior
Debt Security affected thereby, (i) change the stated maturity date of the
principal of, or any installment of principal of or interest on, any Senior
Debt Security, (ii) reduce the principal amount of, or any premium or interest
on, any Senior Debt Security, (iii) reduce the amount of principal of an
Original Issue Discount Security or any other Senior Debt Security payable
upon acceleration of the Maturity thereof, (iv) change the place or currency
of payment of principal of, or any premium or interest on, any Senior Debt
Security, (v) impair the right to institute suit for the enforcement of any
payment on or with respect to any Senior Debt Security or (vi) reduce the
percentage in principal amount of Outstanding Senior Debt Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults. (Section 902)
The Holders of 66 2/3 % in principal amount of the Outstanding Senior
Debt Securities of any series may on behalf of the Holders of all Senior Debt
Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the
Indenture. (Section 1010) The Holders of a majority in principal amount of
the Outstanding Senior Debt Securities of any series may on behalf of the
Holders of all Senior Debt Securities of that series waive any past default
under the Indenture with respect to that series, except a default in the
payment of the principal of, or any premium or interest on, any Senior Debt
Security of that series or in respect of a provision which under the Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Senior Debt Security of that series affected. (Section 513)
Consolidation, Merger and Sale of Assets
The Company may not consolidate with or merge into or convey, transfer or
lease its property and assets substantially as an entirety to any person (a
"successor Person") unless (i) that person is a corporation, partnership or
trust organized and validly existing under the laws of the United States of
America or any State or the District of Columbia, (ii) the successor Person
assumes by supplemental indenture all of the Company's obligations on the
Senior Debt Securities outstanding at that time, (iii) after giving effect
thereto, no Event of Default, and no event which, after notice or lapse of
time would become an Event of Default shall have occurred and be continuing
and (iv) certain other conditions are met. The Indenture further provides
that no consolidation or merger of the Company with or into any other
corporation and no conveyance, transfer or lease of its property substantially
as an entirety to another corporation may be made if, as a result thereof, any
Principal Property of the Company or any Restricted Subsidiary or any shares of
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Capital Stock or Debt of a Restricted Subsidiary would become subject to a
Mortgage which is not expressly excluded from the restrictions or permitted by
the provisions of Section 1008 (see "Restrictions on Secured Debt"), unless
the Senior Debt Securities are secured equally and ratably with (or prior to)
all indebtedness secured thereby. (Section 801)
Defeasance and Discharge, Covenant Defeasance
The Company may elect, at its option at any time, to effect a defeasance
and discharge (a "Defeasance") or a covenant defeasance (a "Covenant
Defeasance") in respect of the Senior Debt Securities or any series thereof
designated as being defeasible pursuant to its terms.
Upon the Company's exercise of its option to effect a Defeasance, the
Company will be deemed to have been discharged from its obligations with
respect to such Senior Debt Securities on and after the date the conditions to
Defeasance described below are satisfied. For purposes of the Indenture,
Defeasance means the Company will be deemed to have paid and discharged the
entire indebtedness represented by such Senior Debt Securities and to have
satisfied all of its other obligations under or with respect to such Senior
Debt Securities and under the Indenture, except for the following (i) the
rights of Holders of such Senior Debt Securities to receive, solely from the
trust fund described in the Indenture, payments in respect of principal of,
and any premium and interest on, such Senior Debt Securities when due, (ii)
certain of the Company's obligations under the Indenture with respect to
temporary securities; registration, registration of transfer and exchange;
mutilated, destroyed, lost or stolen securities; maintenance of an office or
agency; and money held in trust for the benefit of Holders of Senior Debt
Securities, (iii) the rights, powers, trusts, duties and immunities of the
Trustee and (iv) the foregoing provisions. (Section 1302)
Upon the Company's exercise of its option to effect a Covenant Defeasance
with respect to any Senior Debt Securities or any series thereof, (i) the
Company will be released from its obligations with respect to liens resulting
from consolidations or mergers and its covenants relating to existence,
maintenance of properties, payment of taxes and other claims as well as any
additional covenants specified in the terms of such series of Senior Debt
Securities or any supplemental indenture related thereto, and (ii) the
occurrence of certain events of default related to the foregoing covenants
will be deemed not to be or result in an Event of Default, in each case after
the date that the conditions to Covenant Defeasance described below are
satisfied. (Section 1303)
The conditions that the Company must satisfy in order to effect a
Defeasance or a Covenant Defeasance in respect of the Senior Debt Securities
or any series thereof are as follows: (i) the Company will irrevocably
deposit or cause to be deposited with the Trustee as trust funds for the
purpose of making payments when due under the Indenture money or U.S.
Government Obligations or a combination thereof in an amount sufficient to pay
and discharge the principal of and any premium and interest on such Senior
Debt Securities on the respective Stated Maturities in accordance with the
terms of such Senior Debt Securities and the Indenture; (ii) delivery by the
Company of an Opinion of Counsel regarding the tax effects of such action on
the Holders of Senior Debt Securities; (iii) delivery of an Officer's
Certificate to the effect that no listed Senior Debt Securities will be
delisted; (iv) no Event of Default shall have occurred and be continuing at
the time of the deposit or, regarding bankruptcy-related events, at any time
on or prior to the 90th day after such deposit; (v) such deposit will not
cause the Trustee to have a conflicting interest under the Trust Indenture
Act; (vi) such Defeasance or Covenant Defeasance will not result in a breach
of or default under any other agreement to which the Company is a party or by
which it is bound; (vii) such Defeasance or Covenant Defeasance will not
result in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act unless the trust is
registered or exempted thereunder; and (viii) delivery by the Company to the
Trustee of any Officer's Certificate and Opinion of Counsel, each stating that
all conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with. (Section 1304)
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Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of interest on a Senior Debt Security on any Interest Payment Date
will be made to the person in whose name such Senior Debt Security (or one or
more Predecessor Senior Debt Securities) is registered at the close of
business on the Regular Record Date for such interest. (Section 307)
The Company will maintain in each Place of Payment for any series of
Senior Debt Securities an office or agency where Senior Debt Securities of
that series may be presented or surrendered for payment, where Senior Debt
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of
the Senior Debt Securities of that series and the Indenture may be served.
(Section 1002)
If the Company acts as its own Paying Agent with respect to any series of
Senior Debt Securities, it will, on or before each due date of the principal
of, or any premium or interest on, any securities of such series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and any premium and interest so becoming due
until such sums are paid to such Persons or otherwise disposed of and will
promptly notify the Trustee of its action or failure to so act. Whenever the
Company will have one or more Paying Agents for any series of Senior Debt
Securities, it will, prior to each due date of the principal of, or any
premium or interest on, any Senior Debt Securities of that series, deposit
with the Paying Agent a sum sufficient to pay such amount, such sum to be held
as provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
to so act.
The Company will cause each Paying Agent for any series of Senior Debt
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent agrees with the Trustee, subject to the
Indenture, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Senior Debt Securities of that series) in the making of any payment in respect
of the Senior Debt Securities of that series, upon the written request of the
Trustee, pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Senior Debt Securities of that series. (Section
1003)
Regarding the Trustee
National City Bank is the Trustee under the Indenture. National City
Bank is currently committed to provide loans to the Company under (i) a
$100,000,000 unsecured revolving credit facility, which expires October 31,
2000, and (ii) a $3,000,000 unsecured line of credit for the leasing of
manufacturing equipment, which expires October 31, 1999. National City Bank
also provides the Company with a $10,000,000 unsecured discretionary foreign
exchange guideline, which expires October 31, 1996. Duane E. Collins,
President, Chief Executive Officer and Director of the Company, is a director
of National City Bank.
Book-Entry System
If so specified in the Prospectus Supplement or Prospectus Supplements,
Senior Debt Securities of any series may be issued under a book-entry system
in the form of one or more global securities (each a "Global Security"). Each
Global Security will be deposited with, or on behalf of, a depositary, which,
unless otherwise specified in the Prospectus Supplement or Prospectus
Supplements, will be The Depository Trust Company, New York, New York (the
"Depositary"). The Global Securities will be registered in the name of the
Depositary or its nominee and will bear a legend regarding the restrictions on
exchanges and registration of transfers thereof referred to below and any
other matters as may be provided for pursuant to the Indenture.
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The Depositary has advised the Company that the Depositary is a
limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Upon the issuance of a Global Security in registered form, the Depositary
will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Senior Debt Securities represented by such
Global Security to the accounts of participants. The accounts to be credited
will be designated by the underwriters, dealers or agents, if any, or by the
Company, if such Senior Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in the Global Security will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in the Global
Security will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by such participants. The laws of
some jurisdictions may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interest in a Global Security.
So long as the Depositary or its nominee is the registered owner of a
Global Security, it will be considered the sole owner or holder of the Senior
Debt Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in such
Global Security will not be entitled to have the Senior Debt Securities
represented thereby registered in their names, will not receive or be entitled
to receive physical delivery of certificates representing the Senior Debt
Securities and will not be considered the owners or holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depositary and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the Indenture. The Company understands that under existing practice, in the
event that the Company requests any action of the holders or a beneficial
owner desires to take any action a holder is entitled to take, the Depositary
would act upon the instructions of, or authorize, the participant to take such
action.
Payment of principal of and any premium and interest on Senior Debt
Securities represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner and holder of the
Global Security representing such Senior Debt Securities. None of the
Company, the Trustee, any paying agent or registrar for such Senior Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal and any premium or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. The Company expects that payments
by participants to owners of beneficial interests in the Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in "street name," and will be the responsibility of
such participants.
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A Global Security may not be exchanged or transferred except as a whole
by the Depositary to a nominee or successor of the Depositary or by a nominee
of the Depositary to another nominee of the Depositary. A Global Security
representing all but not part of the Senior Debt Securities being offered
hereby is exchangeable or transferable for Senior Debt Securities in
definitive form of like tenor and terms if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such
Global Security or if at any time the Depositary is no longer eligible to be
or in good standing as a clearing agency registered under the Exchange Act,
and in either case, a successor depositary is not appointed by the Company
within 90 days of receipt by the Company of such notice or of the Company
becoming aware of such ineligibility, or (ii) the Company in its sole
discretion at any time determines not to have all of the Senior Debt
Securities represented by a Global Security and notifies the Trustee thereof.
A Global Security exchangeable pursuant to the preceding sentence shall be
exchangeable for Senior Debt Securities registered in such names and in such
authorized denominations as the Depositary for such Global Security shall
direct. (Section 305)
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in four ways: (i) directly to
purchasers, (ii) through agents, (iii) to or through underwriters and (iv) to
dealers.
The distribution of Senior Debt Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of Senior Debt Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Senior
Debt Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Senior Debt Securities to
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commission
from the purchasers from whom they may act as agents. Any underwriters or
agents participating in the distribution of Senior Debt Securities may be
deemed to be underwriters, and any discounts or commissions received by them
from the Company and any profit on the resale of Senior Debt Securities may be
deemed to be underwriting discounts and commission under the Securities Act.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales will be set forth in the
accompanying Prospectus Supplement.
Offers to purchase Offered Securities may be solicited by agents
designated by the Company from time to time. Any such agent, who may be
deemed to be an underwriter as that term is defined in the Securities Act,
involved in the offer or sale of the Offered Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent set forth, in the accompanying Prospectus Supplement.
Unless otherwise indicated in the accompanying Prospectus Supplement, any such
agent will be acting on a reasonable efforts basis for the period of its
appointment. Agents may be entitled under agreements which may be entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with, or perform services for, the
Company in the ordinary course of business.
If any underwriters are utilized in the sale of the Offered Securities in
respect of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters at the time of sale to them and
the names of the specific managing underwriter or underwriters, as well as any
other underwriters and the terms of the transaction will be set forth in the
accompanying Prospectus Supplement, which will be used by the underwriters to
make resales of the Offered Securities in respect of
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which this Prospectus is delivered to the public. The underwriters may be
entitled, under the relevant underwriting agreement, to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with, or
perform services for, the Company in the ordinary course of business.
If a dealer is utilized in the sale of the Offered Securities in respect
of which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealer, as principal. The dealer may then resell such
Offered Securities to the public at varying prices to be determined by such
dealer at the time of resale. Dealers may be entitled to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engaged in transactions with, or
perform services of, the Company in the ordinary course of business.
Offered Securities may also be offered or sold, if so indicated in the
accompanying Prospectus Supplement, in connection with a remarketing upon
their purchase, in accordance with their terms, by one or more firms
("remarketing firms"), acting as principals for their own accounts or as
agents for the Company. Any remarketing firm will be identified and the terms
of its agreement, if any, with the Company and its compensation will be
described in the accompanying Prospectus Supplement. Remarketing firms may be
entitled under agreements which may be entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, and may be customers of, engage in
transactions with or perform services for the Company in the ordinary course
of business.
If so indicated in the accompanying Prospectus Supplement, the Company
will authorize agents and underwriters or dealers to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the accompanying Prospectus Supplement pursuant to
delayed delivery contracts providing for payments and delivery on a specified
date in the future. Such contracts will be subject to only those conditions
set forth in the accompanying Prospectus Supplement, and the accompanying
Prospectus Supplement will set forth the commission payable for solicitation
of such offers. The obligations of any purchaser under any such contract will
be subject to the condition that the purchase of such Senior Debt Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
Any underwriters, agents or dealers utilized in the sale of Offered
Securities will not confirm sales to accounts over which they exercise
discretionary authority.
LEGAL MATTERS
The validity of the Senior Debt Securities offered hereby will be passed
upon for the Company by Jones, Day, Reavis & Pogue, Cleveland, Ohio, and for
any underwriters or agents by Sullivan & Cromwell, New York, New York.
Sullivan & Cromwell has on occasion been retained to perform legal services
for the Company.
EXPERTS
The consolidated financial statements of the Company contained in its
Annual Report on Form 10-K for the fiscal year ended June 30, 1995, filed with
the Commission and incorporated in this Prospectus have been examined by
Coopers & Lybrand L.L.P., independent accountants, to the extent and for the
periods set forth in their report dated August 3, 1995, incorporated in this
Prospectus by reference, and are incorporated by reference in reliance upon
the report and the authority of said firm as experts in accounting and
auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the expenses to be incurred by the Company in
connection with the issuance and distribution of the Senior Debt Securities
being registered hereby, other than underwriting discounts and commissions.
All of the amounts shown are estimates except for the Commission registration
fee.
Commission registration fee $137,931.04
Printing and engraving costs $ 15,000.00
Accounting fees and expenses $ 16,500.00
Trustee fees and expenses $ 17,500.00
Legal fees and expenses (not including Blue Sky) $ 40,000.00
Blue Sky fees and expenses $ 15,000.00
Rating Agencies' fees $175,000.00
Miscellaneous expenses $ 8,068.96
Total $425,000.00
Item 15. Indemnification of Directors and Officers.
Article VII of the Registrant's Code of Regulations provides as follows:
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Corporation shall indemnify, to the full extent permitted or
authorized by the Ohio General Corporation Law as it may from time to time be
amended, any person made or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise.
The indemnification provided by this Article VII shall not be deemed exclusive
of any other rights to which any person seeking indemnification may be
entitled under the articles of incorporation or the regulations, or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, trustee, officer or employee and shall inure to the benefit of
the heirs, executors and administrators of such a person.
Section 1701.13(E) of the Ohio Revised Code provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any
person who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action
by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is
or was serving at the request of the corporation as a director, trustee,
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officer, employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, limited liability company,
or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorneys' fees, judgments, fines, and amounts paid
in settlement actually and reasonably incurred by him in connection with
such action, suit, or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, if he had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by
judgement, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of it self, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person
who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of
the corporation to procure a judgment in its favor, by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for profit,
limited liability company, or a partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be
made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is
adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless, and only to the
extent that, the court of common pleas or the court in which such
action or suit was brought determines, upon application, that,
despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court of common pleas
or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted
against a director is pursuant to section 1701.95 of the Revised
Code.
(3) To the extent that a director, trustee, officer, employee,
member, manager, or agent has been successful on the merits or otherwise
in defense of any action, suit, or proceeding referred to in division
(E)(1) or (2) of this section, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by him in connection
with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this
section, unless ordered by a court, shall be made by the corporation only
as authorized in the specific case upon a determination that
indemnification of the director, trustee, officer, employee, member,
manager, or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in division (E)(1) or (2) of
this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of
the indemnifying corporation who were not and are not parties to or
threatened with any such action, suit, or proceeding referred to in
division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4) (a) of this
section is not obtainable or if a majority vote of a quorum of
disinterested directors so directs, in a written opinion
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by independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the
action, suit, or proceeding referred to in division (E)(1) or (2) of
this section was brought.
Any determination made by the disinterested directors under division
(E)(4) (a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.
(5)(a) Unless at the time of a director's act or omission that is
the subject of an action, suit, or proceeding refereed to in division
(E)(1) or (2) of this section, the articles or the regulations of a
corporation state, by specific reference to this division, that the
provisions of this division do not apply to the corporation and unless
the only liability asserted against a director in an action, suit, or
proceeding referred to in divisions (E)(1) and (2) of this section is
pursuant to section 1701.95 of the Revised Code, expenses, including
attorney's fees, incurred by a director in defending the action, suit, or
proceeding shall be paid by the corporation as they are incurred, in
advance of the final disposition of the action, suit, or proceeding upon
receipt of an undertaking by or on behalf of the director in which be
agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the corporation or undertaken
with reckless disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any
action, suit, or proceeding referred to in division (E)(1) or (2) of this
section, may be paid by the corporation as they are incurred, in advance
of the final disposition of the action, suit, or proceeding, as
authorized by the directors in the specific case, upon receipt of an
undertaking by or on behalf of the director, trustee, officer, employee,
member, manager, or agent to repay such amount, if it ultimately is
determined that he is not entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to any other rights granted to
those seeking indemnification under the articles or the regulations, any
agreement, a vote of shareholders or disinterested directors, or
otherwise, both as to action in their official capacities and as to
action in another capacity while holding their offices or positions, and
shall continue as to a person who has ceased to be a director, trustee,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including, but not limited to, trust funds, letters
of credit, or self-insurance, on behalf of or for any person who is or
was a director, officer, employee, member, manager, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, or
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<PAGE>
agent of another corporation, domestic or foreign, nonprofit or for
profit, limited liability company, or a partnership, joint venture,
trust, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify
him against such liability under this section. Insurance may be purchased
from or maintained with a person in which the corporation has a financial
interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and
(7) of this section. Divisions (E) (1) and (2) of this section do not
create any obligation to repay or return payments made by the corporation
pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes
all constituent entities in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director,
officer, employee, trustee, member, manager, or agent of such a
constituent entities, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee, trustee,
member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, limited liability company, or partnership, joint
venture, trust, or other enterprise, shall stand in the same position
under this section with respect to the new or surviving corporation as
would if he had served the new or surviving corporation in the same
capacity.
The Company carries directors' and officers' liability insurance that
covers certain liabilities and expenses of the Company's directors and
officers.
Reference is also made to the indemnification provisions in the form of
Underwriting Agreement filed as exhibit 1.1 to this Registration Statement and
to the undertaking "(c)" in Item 17 of this Registration Statement.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits. The following exhibits are filed herewith and made a
part hereof:
Exhibit Description of Exhibit
Number
1.1 Form of Underwriting Agreement.
2.1 Stock Acquisition Agreement, dated as of February 23, 1996, among
Parker Pneumatic AB, the Company, AVC Intressenter AB, Volvo Aero
Corporation and Atlas Copco AB.
2.2 Master Asset Purchase Agreement, dated as of January 15, 1996, as
amended, among Power Control Technologies Inc., Pneumo Abex
Corporation and the Company.
4.1 Form of Indenture between the Company and National City Bank,
as Trustee, relating to the Senior Debt Securities.
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<PAGE>
Exhibit Description of Exhibit
Number
5.1 Opinion of Jones, Day, Reavis & Pogue as to the validity of the
securities being offered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney.
25.1 Statement of Eligibility of National City Bank under the Trust
Indenture Act of 1939 on Form T-1 relating to the Indenture.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the registration statement is on
Form S-3, Form S-8 or Form F-3, and the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
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<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cleveland, State of Ohio, on
April 23, 1996.
PARKER-HANNIFIN CORPORATION
By: ____/s/_Joseph D. Whiteman______
Joseph D. Whiteman
Vice President, General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* P. S. PARKER Chairman of the Board and Director April 23, 1996
P. S. Parker
* D. E. COLLINS President, Chief Executive Officer April 23, 1996
D. E. Collins and Director
(Principal Executive Officer)
* M. J. HIEMSTRA Vice President - Finance and April 23, 1996
M. J. Hiemstra Administration
(Principal Financial Officer)
* H. C. GUERITEY, JR. Controller April 23, 1996
H. C. Gueritey, Jr. (Principal Accounting Officer)
* F. A. LEPAGE Director April 23, 1996
F. A. LePage
* ALLAN L. RAYFIELD Director April 23, 1996
Allan L. Rayfield
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* J. G. BREEN Director April 23, 1996
J. G. Breen
* P. G. SCHLOEMER Director April 23, 1996
P. G. Schloemer
* P. C. ELY, JR. Director April 23, 1996
Paul C. Ely, Jr.
* W. R. SCHMITT Director April 23, 1996
W. R. Schmitt
* W. SEIPP Director April 23, 1996
Walter Seipp
* D. W. SULLIVAN Director April 23, 1996
D. W. Sullivan
* S. A. STREETER
S. A. Streeter Director April 23, 1996
* The undersigned, by signing his name hereto, does hereby sign and execute
this Registration Statement pursuant to the Powers of Attorney executed by the
above-named officers and directors of the Registrant and which have been filed
with the Securities and Exchange Commission on behalf of such officers and
directors.
/s/Joseph D. Whiteman April 23, 1996
Joseph D. Whiteman, Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
Exhibit Exhibit
Number Description
1.1 Form of Underwriting Agreement.
2.1 Stock Acquisition Agreement, dated as of
February 23, 1996, among Parker Pneumatic AB, the
Company, AVC Intressenter AB, Volvo Aero Corporation
and Atlas Copco AB.
2.2 Master Asset Purchase Agreement, dated as of
January 15, 1996, as amended, among Power Control
Technologies Inc., Pneumo Abex Corporation and the Company.
4.1 Form of Indenture between the Company and National
City Bank, as Trustee, relating to the Senior Debt
Securities.
5.1 Opinion of Jones, Day, Reavis & Pogue as to the
validity of the securities being offered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney.
25.1 Statement of Eligibility of National City Bank under
the Trust Indenture Act of 1939 on Form T-1 relating
to the Indenture.
II-9
$____________
Parker-Hannifin Corporation
____% Debentures Due __________ __, ____
UNDERWRITING AGREEMENT
__________ __, 1996
[Name[s] and address[es] of managers]
Gentlemen:
The undersigned PARKER-HANNIFIN CORPORATION, an Ohio corporation
("Company"), confirms its agreement with the several Underwriters
("Underwriters") as follows:
1. Description of Securities. The Company proposes to issue and sell
to the several Underwriters $___________ principal amount of its ____%
Debentures Due ________ __, ____ ("Securities"), to be issued under an
indenture ("Indenture"), dated as of April __, 1996, between the Company and
National City Bank, as trustee ("Trustee").
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement (File No. 333-_____) with respect to
the Securities, including a preliminary form of prospectus, has been
carefully prepared by the Company in conformity with the requirements of
the Securities Act of 1933 ("Act'), the Trust Indenture Act of 1939
("Trust Indenture Act") and the rules and regulations ("Rules and
Regulations") of the Securities and Exchange Commission ("Commission")
thereunder and has been filed with the Commission and has become
effective. No stop order suspending the effectiveness of the
registration statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission. No
amendment or supplement thereto or to any document incorporated by
reference therein has heretofore been filed with the Commission. Copies
of such registration statement, any such amendments and each related
preliminary prospectus ("Preliminary Prospectus") have been delivered to
you. A supplemental prospectus relating to the Securities has been or
will be so prepared and will be filed pursuant to Rule 424 under the
Act. Such registration statement as amended at the time it became
effective is herein referred to as the "Registration Statement", and
such supplemental prospectus (including all documents and information
incorporated by reference therein), as the "Prospectus". Reference
herein to any Preliminary Prospectus or to any amendment or supplement
to the Prospectus includes all documents and information incorporated by
reference therein and shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934 ("Exchange Act") and so incorporated by reference.
<PAGE>
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the foregoing shall not apply to statements in or omissions
from any Preliminary Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by you specifically
for use in the preparation thereof.
(c) Each part of the registration statement, when such part became
or becomes effective, each Preliminary Prospectus, on the date of filing
thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission
and on the Closing Date, conformed or will conform in all material
respects with the requirements of the Act, the Trust Indenture Act and
the Rules and Regulations; each part of the registration statement, when
such part became or becomes effective, did not or will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; each Preliminary Prospectus, on the date of
filing thereof with the Commission, and the Prospectus and any amendment
or supplement thereto, on the date of filing thereof with the Commission
and on the Closing Date, did not or will not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; except
that the foregoing shall not apply to statements in or omissions from
any such document in reliance upon, and in conformity with, written
information furnished to the Company by you specifically for use in the
preparation thereof.
(d) The documents from which information is incorporated by
reference in the Prospectus, when they became effective or were filed
with the Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder,
and any documents so filed and incorporated by reference subsequent to
the effective date of the Registration Statement will, when they are
filed with the Commission, conform in all material respects to the
requirements of the Act and the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(e) The financial statements of the Company and its subsidiaries
set forth in the Registration Statement and Prospectus fairly present
the financial condition of the Company and its subsidiaries as of the
dates indicated and the results of operations and changes in financial
position for the periods therein specified in conformity with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise stated therein).
(f) The Company and each of its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the
laws of its jurisdiction of incorporation, has full power and authority
(corporate and other) to conduct its business as described in the
Registration Statement and Prospectus and is duly qualified to do
business in each jurisdiction in which it owns or leases real property
or in which the conduct of its business requires such qualification
except where the failure to be so qualified, considering all such cases
in the aggregate, does not
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<PAGE>
involve a material risk to the business, properties, financial position
or results of operations of the Company and its subsidiaries (taken as a
whole); and all of the outstanding shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are fully paid
and non-assessable and (except as otherwise stated in the Prospectus)
are owned beneficially by the Company subject to no security interest,
other encumbrance or adverse claim.
(g) The Indenture and the Securities have been duly authorized,
the Indenture has been duly qualified under the Trust Indenture Act,
executed and delivered and constitutes, and the Securities, when duly
executed, authenticated, issued and delivered as contemplated hereby and
by the Indenture, will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(h) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course
of business, that are material to the Company and its subsidiaries
(taken as a whole), and there has not been any material change, on a
consolidated basis, in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, or any material adverse
change, or any development involving a prospective material adverse
change, in the condition (financial or other), business, prospects, net
worth or results of operations of the Company and its subsidiaries
(taken as a whole).
(i) Except as set forth in the Prospectus, there is not pending
or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company or any of its subsidiaries is a party
before or by any court or governmental agency or body, which might
result in any material adverse change in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its subsidiaries, or might materially and adversely affect
the properties or assets thereof.
(j) There are no contracts or documents of the Company or any of
its subsidiaries that are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that
have not been so filed.
(k) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any agreement or instrument to which the Company is
a party or by which it is bound or to which any of the property of the
Company is subject, the Company's Amended Articles of Incorporation or
Regulations, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties; no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated by this Agreement in
connection with the issuance or sale of the Securities by the Company,
except such as may be required under the Act, the Trust Indenture Act or
state securities laws; and the Company has full power and authority to
authorize, issue and sell the Securities as contemplated by this
Agreement.
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<PAGE>
(l) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of ______% of the
principal amount of the Securities, the amount of Securities set forth
opposite the name of such Underwriter in Schedule A hereto.
The Securities will be delivered by the Company to you against payment
of the purchase price therefor by wire transfer in same day funds payable to
the order of the Company, at the office of Sullivan & Cromwell, 125 Broad
Street, New York, New York, at 10:00 A.M., New York City time, on __________
__, 1996 (or if the New York or American Stock Exchanges or commercial banks
in The City of New York are not open on such day, the next day on which such
exchanges and banks are open), or at such other time not later than eight full
business days thereafter as you and the Company determine, such time being
herein referred to as the "Closing Date." The Securities, in the form of one
or more global certificates registered in the name of Cede & Co., will be made
available for checking and packaging at the office of The Depository Trust
Company, 55 Water Street, New York, New York, 10004, at least one business day
prior to the Closing Date.
4. Covenants. The Company covenants and agrees with each Underwriter
that:
(a) The Company will use its best efforts to cause any amendments
to the Registration Statement to become effective as promptly as
possible; it will notify you promptly of the time when any such
amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement
or Prospectus or for additional information; it will prepare and file
with the Commission, promptly upon your request, any amendments or
supplements to the Registration Statement or Prospectus that, in your
opinion, may be necessary or advisable in connection with the
distribution of the Securities by the Underwriters; and it will file no
amendment or supplement to the Registration Statement or Prospectus
(other than any document required to be filed under the Exchange Act
that upon filing is deemed to be incorporated by reference therein) to
which you shall reasonably object by notice to the Company after having
been furnished a copy a reasonable time prior to the filing, and it will
furnish to you at or prior to the filing thereof a copy of any document
that upon filing is deemed to be incorporated by reference in whole or
in part in the Prospectus.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceeding for any such purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such a stop order should be issued.
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<PAGE>
(c) Within the time during which a prospectus relating to the
Securities is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the
Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Securities as contemplated by
the provisions hereof and the Prospectus. If during such period any
event occurs 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 a material fact necessary to make the statements therein,
in the light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Act, the Company will
promptly notify you and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the
Securities for sale under the securities law of such jurisdictions as
you reasonably designate and to continue such qualifications in effect
so long as required for the distribution of the Securities, except that
the Company shall not be required in connection therewith to qualify as
a foreign corporation or to execute a general consent to service of
process in any state. The Company will also arrange for the
determination of the eligibility for investment of the Securities under
the laws of such jurisdictions as you reasonably request.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement (three of which will be signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus (including
all documents from which information is incorporated by reference), and
all amendments and supplements to such documents, in each case as soon
as available and in such quantities as you may from time to time
reasonably request.
(f) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an
earnings statement (which need not be audited) covering a 12-month
period beginning after the date upon which the Prospectus is filed
pursuant to Rule 424 under the Act that shall satisfy the provisions of
Section 11(a) of the Act.
(g) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all
expenses incident to the performance of its obligations hereunder, will
pay the expenses of printing all documents relating to the offering, and
will reimburse the Underwriters for any expenses (including fees and
disbursements of counsel) incurred by them in connection with the
matters referred to in Section 4(d) hereof and the preparation of
memoranda relating thereto and for any fees charged by investment rating
agencies for rating the Securities. If the sale of the Securities
provided for herein is not consummated by reason of any failure, refusal
or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the
Company is not fulfilled, the Company will reimburse the several
Underwriters for all reasonable out-of-pocket disbursements (including
fees and disbursements of counsel) incurred by the Underwriters
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<PAGE>
in connection with their investigation, preparing to market and
marketing the Securities or in contemplation of performing their
obligations hereunder. The Company shall not in any event be liable to
any of the Underwriters for loss of anticipated profits from the
transactions covered by this Agreement.
(h) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder for the purposes set forth in the
Prospectus.
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Securities, as provided
herein, shall be subject to the accuracy, as of the date hereof and the
Closing Date (as if made at the Closing Date), of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose
shall have been instituted or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which in your opinion is
material, or omits to state a fact which in your opinion is material
and is required to be stated therein or is necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any change, on a
consolidated basis, in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, or any adverse change, or any
development involving a prospective adverse change, in the condition
(financial or other), business, prospects, net worth or results of
operations of the Company and its subsidiaries or any change in the
rating assigned to any securities of the Company, that, in your
judgment, makes it impractical or inadvisable to offer or deliver the
Securities on the terms and in the manner contemplated in the
Prospectus.
(d) You shall have received the opinion of Jones, Day, Reavis &
Pogue, counsel for the Company, dated the Closing Date, in substantially
the form attached as Exhibit I hereto.
(e) You shall have received the opinion of Joseph D. Whiteman,
Esq., Vice President, General Counsel and Secretary of the Company,
dated the Closing Date, to the effect that each of Parker-Hannifin GmbH,
Parker-Hannifin plc, Parker-Hannifin S.p.A., Parker-Hannifin (Canada)
Inc., Parker-Hannifin RAK, S.A., VOAC Hydraulics AB and Parker Pneumatic
AB (collectively referred to as the "Significant Foreign Subsidiaries")
has been duly organized and is in good standing under the laws of its
respective jurisdiction of incorporation; each of the Significant
Foreign Subsidiaries has full power and authority (corporate and other)
to conduct its business as described in the Registration Statement; each
of the Significant Foreign Subsidiaries is not, and is not required to
be, registered or qualified to do business as a foreign corporation
under the laws of any jurisdiction other than its jurisdiction of
incorporation, and all of the outstanding shares of capital stock of
each of the Significant Foreign Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and (except for
shareholders' or directors'
- 6 -
<PAGE>
qualifying shares) are owned, directly or indirectly, by the Company
subject to no security interest, other encumbrance, or adverse claim
(such counsel being entitled to rely upon opinions of local counsel,
provided that such counsel shall furnish to you signed copies thereof
and state that he believes that both you and he are justified in relying
upon such opinion).
(f) You shall have received from Sullivan & Cromwell, counsel for
the several Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Company, the validity of
the Securities, the Registration Statement, the Prospectus and other
related matters as you reasonably may request, and such counsel shall
have received such papers and information as they request to enable them
to pass upon such matters. In rendering their opinion, such counsel may
rely upon the opinion of Jones, Day, Reavis & Pogue referred to above as
to all matters governed by Ohio law.
(g) At the time of execution of this Agreement and on the Closing
Date, you shall have received a letter from Coopers & Lybrand, dated the
date of delivery thereof, to the effect set forth in Exhibit II hereto.
(h) You shall have received from the Company a certificate, signed
by the Chairman of the Board, the President or a Vice President and by
the principal financial or accounting officer, dated the Closing Date,
to the effect that, to the best of their knowledge based upon reasonable
investigation:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made at and as of the
Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or is threatened by the Commission;
and
(iii) Since the effective date of the Registration
Statement, there has occurred no event required to be set forth in
an amendment or supplement to the Registration Statement or
Prospectus that has not been so set forth, and there has been no
document required to be filed under the Exchange Act and the rules
and regulations thereunder that upon such filing would be deemed
to be incorporated by reference in the Prospectus that has not
been so filed.
(i) The Company shall have furnished to you such further
certificates and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to you. The Company will furnish you with such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request.
- 7 -
<PAGE>
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred by any Underwriter or
any such controlling person in connection with defending or
investigating any such action or claim) caused by any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary
prospectus 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 such untrue statement or omission or
alleged untrue statement or omission based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls
the Company within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, but only with reference
to information relating to such Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either paragraph (a) or (b) of
this Section 6, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party 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 party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding 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 such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by [name of lead manager], in the case of parties
indemnified pursuant to paragraph (a) above and by the Company, in the
case of parties indemnified pursuant to paragraph (b) above. The
indemnifying party 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 party agrees to indemnify the indemnified party
- 8 -
<PAGE>
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 6 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party 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 the Underwriters on the other hand
from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand 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 the Underwriters on the other hand in connection
with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute
pursuant to this Section 6 are several in proportion to the respective
principal amounts of Securities they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the Underwriters 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 paragraph (d) of this Section 6. The amount paid or payable by an
indemnified party 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 limitations set forth above, any legal
or other expenses reasonably incurred
- 9 -
<PAGE>
by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
Section 6, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter 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
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for
in this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at
law or in equity.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any termination of this Agreement, any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, or the Company or any of its officers, directors
or any person controlling the Company, and shall survive delivery of the
Securities to the Underwriters hereunder.
8. Substitution of Underwriters. (a) If any Underwriter or
Underwriters shall fail to take up and pay for the amount of Securities agreed
by such Underwriter or Underwriters to be purchased hereunder, upon tender of
such Securities in accordance with the terms hereof, and the amount of
Securities not purchased does not aggregate more than 10% of the total amount
of Securities set forth in Schedule A hereto, the remaining Underwriters shall
be obligated to take up and pay for (in proportion to their respective
underwriting obligations hereunder as set forth in Schedule A hereto except as
may otherwise be determined by you) the Securities that the withdrawing or
defaulting Underwriters agreed but failed to purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay for
the amount of Securities agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Securities in accordance with the
terms hereof, and the amount of Securities not purchased aggregates more than
10% of the total amount of Securities set forth in Schedule A hereto, and
arrangements satisfactory to you and the Company for the purchase of such
Securities by other persons are not made within 36 hours thereafter, this
Agreement shall terminate. In the event of any such termination the Company
shall not be under any liability to any Underwriter (except to the extent
provided in Section 4(g) and Section 6 hereof) nor shall any Underwriter
(other than an Underwriter who shall have failed, otherwise than for some
reason permitted under this Agreement, to purchase the amount of Securities
agreed by such Underwriter to be purchased hereunder) be under any liability
to the Company (except to the extent provided in Section 6 hereof).
9. Termination. You shall have the right to terminate this Agreement
by giving notice as hereinafter specified at any time at or prior to the
Closing Date if (i) the Company shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any agreement on its
part to be performed hereunder, (ii) any other condition of the
Underwriters' obligations hereunder is not fulfilled, (iii) trading on
the New York Stock Exchange or the American Stock Exchange shall have
been wholly suspended, (iv) minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have
been required, on the New York Stock Exchange or the American Stock
- 10 -
<PAGE>
Exchange, by such Exchange or by order of the Commission or any other
governmental authority having jurisdiction, (v) a banking moratorium
shall have been declared by Federal or New York authorities, (vi) any
downgrading shall have occurred in the rating accorded the Company's
debt securities by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act or any such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities, or (vii) an outbreak or material escalation of major
hostilities in which the United States is involved, a declaration of war
by Congress, any other substantial national or international calamity or
any other event or occurrence of a similar character shall have occurred
since the execution of this Agreement that, in your judgment, makes it
impractical or inadvisable to proceed with the completion of the sale of
and payment for the Securities. Any such termination shall be without
liability of any party to any other party except that the provisions of
Section 4(g) and Section 6 hereof shall at all times be effective. If
you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section, the Company shall
be notified promptly by you by telephone or telegram, confirmed by
letter.
10. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered or telegraphed and confirmed to you, [name and
address of lead manager] Attention: _____________________ or if sent to the
Company; shall be mailed, delivered or telegraphed and confirmed to the
Company at 17325 Euclid Avenue, Cleveland, Ohio 44112 Attention: Treasurer.
Notice to any Underwriter pursuant to Section 6 shall be mailed, delivered or
telegraphed and confirmed to such Underwriter's address as it appears in such
Underwriter's questionnaire or other notice furnished to the Company in
writing for the purpose of communications hereunder. Any party to this
Agreement may change such address for notices by sending to the parties to
this Agreement written notice of a new address for such purpose.
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons, officers and directors referred to in Section 6, and no
other person will have any right or obligation hereunder.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
13. 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.
- 11 -
<PAGE>
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and the several Underwriters.
Very truly yours,
Parker-Hannifin Corporation
By:
Name:
Title:
Accepted at __________________ as of the date
first above written.
[Name[s] of managers]
Acting severally on behalf of themselves
and the several Underwriters named herein.
By:
- 12 -
<PAGE>
SCHEDULE A
Principal
Amount of
Securities
to be
Underwriter Purchased
______
Total $
======
- 13 -
<PAGE>
Exhibit I
(1) The Company and each of its domestic subsidiaries are
duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with corporate power
and authority to own its properties and to conduct its business as
described in the Prospectus and are qualified to do business in
each state in which it owns or leases real property, except where
the failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of the
Company and its subsidiaries (taken as a whole).
(2) All of the outstanding shares of capital stock of each of
the Company's domestic subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and (except as
otherwise stated in the Prospectus) are owned beneficially by the
Company.
(3) The Indenture has been duly authorized, executed, and
delivered by the Company and duly qualified under the Trust
Indenture Act of 1939 and is a valid and binding instrument of the
Company, enforceable against the Company in accordance with its
terms, subject to the effect of (i) general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (ii) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally.
(4) The Debt Securities have been duly authorized,
executed by duly authorized officers of the Company, authenticated
by the Trustee, and delivered, and are validly issued and
outstanding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to the effect of
(i) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law,
and (ii) any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally.
(5) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(6) Neither the execution and delivery of the Underwriting
Agreement nor the performance of the transactions therein contemplated
will result in the violation of any statute or regulation or any order or
<PAGE>
decree of any court or governmental authority known to us which is
binding upon the Company or its property, or conflict with or result in
a default under any of the terms and provisions of the Company's Amended
Articles of Incorporation or Code of Regulations or any indenture, loan
agreement or any agreement listed on Exhibit A attached hereto.
(7) No consent, approval, authorization or order of any
governmental agency or body is required for the issuance or sale by the
Company of the Debt Securities except such as have been obtained under
the Act and the Trust Indenture Act and such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Debt Securities by the Underwriters.
We have participated in the preparation of the Registration
Statement and Prospectus (certain of the documents incorporated into the
Prospectus by reference having previously been prepared and filed by the
Company without our participation). From time to time we have had
discussions with officers, directors, and employees of the Company,
accountants and auditors, the independent accountants who examined
certain of the financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement and Prospectus, and
your representatives concerning the information contained in the
Registration Statement and Prospectus and the proposed responses to
various items in Form S-3. Based thereupon we are of the opinion that
the Registration Statement and the Prospectus (except for financial
statements, financial schedules, and other financial data included
therein, as to which we express no opinion) at the time the Registration
Statement became effective under the Act complied as to form in all
material respects with the Act and the Trust Indenture Act and the
respective rules and regulations thereunder, and that the documents
incorporated or deemed to be incorporated by reference into the
Prospectus that were filed prior to the date of this opinion (except for
financial statements, financial schedules, and other financial data
included therein, as to which we express no opinion) at the time they
were filed complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder.
We do not know of any litigation or governmental proceedings
required to be described in the Prospectus that are not described as
required, or of any contracts or other documents of a character required
to be described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are not described and filed
as required. The descriptions in the Registration Statement and Prospectus
of statutes, legal and governmental proceedings, contracts and other documents
present fair summaries of such statutes, legal and governmental proceedings,
contracts or other documents. We further are of the opinion that the
statements contained in the Prospectus under the caption
<PAGE>
"Description of Senior Debt Securities," insofar as they purport
to summarize the provisions of the documents referred to therein,
present fair summaries of such provisions.
The Registration Statement has become effective under the Act, and
to the best of our knowledge no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that
purpose or challenging the accuracy of any document incorporated by
reference into the Prospectus are pending or, to the best of our
knowledge, threatened by the Commission.
We have not independently verified and are not passing upon,
and do not assume any responsibility for, the accuracy, completeness, or
fairness (except as set forth in the second preceding paragraph above) of
the information contained in the Registration Statement and Prospectus,
including any document incorporated or deemed to be incorporated therein by
reference. Based upon the participation and discussions described above,
however, no facts have come to our attention that cause us to believe that
the Registration Statement (except for financial statements, financial
schedules, and other financial data included therein), at the time it
became effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or that the
Prospectus (with the foregoing exceptions), on the date of the Prospectus
and the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
<PAGE>
EXHIBIT II
(1) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the Rules
and Regulations and the answer to Item 10 of the Registration Statement form
inancial statements and schedules examined by them and included or incorporated
by reference in the Registration Statement and Prospectus comply as to form in
all material respects with the applicable accounting requirements of the Act or
the Exchange Act, as applicable, and the published rules and regulations
thereunder.
(3) On the basis of procedures referred to in such letter, including a
reading of the latest available interim financial statements of the Company
and inquiries of officials of the Company responsible for financial and
accounting matters, nothing caused them to believe that:
(A) any unaudited financial statements included or incorporated
in the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder or are not stated on a basis
substantially consistent with that of the audited financial statements
included in the Company's most recent Annual Report on Form 10-K; or
(B) at a specified date not more than five days prior to the date
of such letter, there was any change in the capital stock, short-term
debt or long-term debt of the Company and its subsidiaries or any
decrease in consolidated net current assets or net assets as compared
with amounts shown in the most recent unaudited balance sheet included
or incorporated by reference in the Prospectus, except in all cases for
changes or decreases which the Prospectus discloses have occurred or may
occur or as may be set forth in such letter; or
(C) for the period from the date of the most recent unaudited
balance sheet included or incorporated by reference in the Prospectus to
a subsequent specified date not more than five days prior to the date of
such letter, there was any decrease, as compared with the corresponding
period of the previous year and with the period of corresponding length
ended the date of such unaudited balance sheet, in consolidated net
sales, consolidated net income before taxes, or net income, except in
all cases for changes or decreases which the Prospectus discloses have
occurred or may occur or as may be set forth in such letter.
(4) In addition to their examination referred to in their report
included or incorporated by reference in the Registration Statement and
Prospectus and the procedures referred to in (3) above, they have carried out
certain other specified procedures, not constituting an audit, with respect to
certain of the dollar amounts, percentages and other financial information to
bc agreed upon by the Company and the Underwriters (in each case to the extent
that such dollar amounts, percentages and other financial information, are
derived directly or by analysis or computation, from the general accounting
records of the Company and its subsidiaries) that are included or incorporated
by reference in the Prospectus and appear or are incorporated by reference in
the Company's Annual Report on Form 10-K under the captions "Item 1.
Business", "Item 6. Selected Financial Data", and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
have found such dollar amounts, percentages and financial information to be in
agreement with the general accounting records of the Company and its
subsidiaries.
VOAC HYDRAULICS AB
STOCK ACQUISITION AGREEMENT
<PAGE>
TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE OF VOAC SHARES 6
1.1 Sale of VOAC Shares 6
1.2 Price and Payment Provisions 7
1.2.1 Purchase Price and Payment 7
1.2.2 General Method of Payment 7
1.2.3 Base Balance Sheet 7
1.2.4 Currency 8
ARTICLE II. REPRESENTATIONS AND WARRANTIES 8
2.1 Representations and Warranties of Seller,
Volvo and Atlas Copco 8
2.1.1 Corporate Status 8
2.1.2 Share Capital 8
2.1.3 Title to Shares 9
2.1.4 Authority 9
2.1.5 Financial Statements 9
2.1.6 Subsidiaries 10
2.1.7 Actions Since October 1, 1995 10
2.1.8 Proprietary Property 11
2.1.9 Real Property; Leases of Real Property 12
2.1.10 Personal Property 12
2.1.11 Title to Property 13
2.1.12 Contracts and Commitments 13
2.1.13 Inventory 15
2.1.14 Powers of Attorney; Bank Accounts 16
2.1.15 Litigation 16
2.1.16 No Broker 16
2.1.17 Governmental Permits; Compliance with Laws 16
2.1.18 Workers' Injuries 19
2.1.19 Trade Union Activity 19
2.1.20 Employees; Employee Benefits 19
2.1.21 Sales Volume; Adverse Trends 20
2.1.22 Taxes 20
2.1.23 Restrictions and Consents 21
2.1.24 Compliance With Laws 21
2.1.25 No Claims 21
2.1.26 Discharge from Liability 21
2.1.27 Accuracy of Statements 22
2.1.28 Binding Effect 22
2.1.29 Backlog 22
2.1.30 Accounts Receivable 22
2.1.31 Insurance 22
2.1.32 Seller's Knowledge 23
2.1.33 VOAC Engineering GmbH 23
2.2 Representations and Warranties of Buyer 23
2
<PAGE>
2.2.1 Corporate Status 23
2.2.2 No Broker 23
2.2.3 Restrictions 23
2.2.4 No Lawsuits; Consents 24
2.2.5 Execution and Effect of Agreement 24
2.2.6 Financial Capacity 24
2.2.7 Compliance With Laws 24
2.2.8 Accuracy of Statements 24
2.2.9 Parent 25
2.2.10 Binding Effect 25
2.2.11 Buyer's Knowledge 25
ARTICLE III. COVENANTS 25
3.1 Covenants of Seller 25
3.1.1 Access to Information 25
3.1.2 Business in Ordinary Course 25
3.1.3 Maintain Properties 26
3.1.4 Maintain Net Asset Value 26
3.1.5 Perform Contracts 26
3.1.6 Maintain Organization 26
3.1.7 Prohibited Actions 26
3.1.8 No Solicitation of Acquisition Offers 26
3.1.9 Non-Competition 27
3.1.10 Intercompany Accounts 27
3.1.11 Accounts Related Parties 27
3.1.12 Adjustment of Accounts 27
3.2 Mutual Covenants 28
3.2.1 Publicity 28
3.2.2 Commercially Reasonable Efforts 28
3.2.3 Shared Services 28
3.3 Covenants of Buyer 28
3.3.1 Guarantees 28
3.3.2 Environmental Permit 28
3.3.3 Name Change 29
ARTICLE IV. CONDITIONS 29
4.1 Conditions to Obligations of Buyer 29
4.1.1 Representations and Warranties True and
Correct 29
4.1.2 Compliance with Agreement 29
4.1.3 No Adverse Change 29
4.1.4 No Litigation 29
4.2 Conditions to Obligations of Seller 30
4.2.1 Representations and Warranties True and
Correct 30
4.2.2 Compliance with Agreement 30
4.2.3 No Litigation 30
4.3 Mutual Conditions 31
4.3.1 No Regulatory Impediment 31
4.3.2 Governmental Consents 31
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ARTICLE V. CLOSING 31
5.1 Closing 31
5.2 Deliveries 31
5.2.1 Seller's Deliveries 31
5.2.2 Buyer's Deliveries 33
ARTICLE VI. INDEMNIFICATION 34
6.1(a) Falkoping Site 34
6.1(b) Indemnification by Seller, Volvo and Atlas
Copco 34
6.1(c) Additional Indemnification 35
6.1(d) Inline Cleanup 36
6.2 Indemnification by Buyer 36
6.3 Knowledge of a Breach 36
6.4 Survival of Indemnification for Breach of
Warranty 37
6.5 Indemnification Procedures 37
6.6 Special Provisions for Environmental
Indemnification 38
ARTICLE VII. MISCELLANEOUS 39
7.1 Notices 39
7.2 Entire Agreement 41
7.3 Entry-Way 41
7.4 Section Headings 41
7.5 Applicable Law/Forum 41
7.6 Expenses 41
7.7 Waiver 41
7.8 Severability 42
7.9 Incorporation by Reference 42
7.10 Counterparts 42
7.11 Assignment 42
7.12 Resignation of VOAC President 42
7.13 Discharge From Liability 43
7.14 Certain Definitions 43
7.15 Further Assurances 43
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STOCK ACQUISITION AGREEMENT
This STOCK ACQUISITION AGREEMENT ("Agreement") is made as of this
23rd day of February, 1996, among PARKER PNEUMATIC AB, a corporation
organized under the laws of Sweden, whose head office is located at
Karlsnasvagen 9, S-523 23 Ulricehamn ("Buyer"), PARKER HANNIFIN CORPORATION,
an Ohio corporation, whose head office is located at 17325 Euclid Avenue,
Cleveland, OHIO 44112-1290, USA, AVC INTRESSENTER AB, a corporation organized
under the laws of Sweden, whose head office is located at c/o Lagerlof &
Leman Advokatbyra AB, Vastra Hamngatan 23, S-403 14 Goteborg ("Seller"),
VOLVO AERO CORPORATION, a corporation organized under the laws of Sweden,
whose head office is located at Stallbacka, S-461 81 Trollhattan, ("Volvo")
and ATLAS COPCO AB , a corporation organized under the laws of Sweden, whose
head office is located at Sickla Industrivag 3, S-105 23 Stockholm, ("Atlas
Copco").
W I T N E S S E T H
WHEREAS, Seller is the owner of 100% of the shares of VOAC
Hydraulics AB ("VOAC"), a Swedish company having a corporate capital of SEK
50,000,000 divided into 500,000 shares of SEK 100 par value per share, whose
head office is located at Boras, Sweden.
WHEREAS, VOAC conducts its worldwide business through itself and
wholly owned subsidiaries in Sweden and abroad which subsidiaries are listed
in Schedule 2.1.6 ("Subsidiary"), together the "VOAC Group".
WHEREAS, Seller wishes to sell to Buyer and Buyer wishes to
purchase all of the outstanding shares of VOAC ("VOAC Shares") and including
subsidiary shares as described below constituting in the aggregate the
worldwide hydraulic business conducted
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within the VOAC Group ("VOAC Business") for the purchase price and upon terms
and conditions hereinafter set forth.
WHEREAS, Buyer has certain affiliated entities ("Local Buyers")
that will be acquiring prior to the Closing the shares of certain
Subsidiaries (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein the parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF VOAC SHARES
1.1 Sale of VOAC Shares. Subject to the terms and
conditions hereof, Seller agrees to sell, assign and transfer to Buyer and
Buyer agrees to purchase from Seller, on the Closing Date (as defined in
Section 5.1), the VOAC Shares.
As conditions precedent for Buyer's obligation to purchase the
VOAC Shares (any of which Buyer may waive in its sole discretion), Seller
shall procure the following:
(i) with respect to the Subsidiaries located in the United States,
United Kingdom and Finland, at any time after 1 January, 1996, but prior to
the transaction envisaged in clause (ii) below, such Subsidiaries shall have
distributed, as a dividend retained earnings to VOAC as set forth in Schedule
1.1; and
(ii) with respect to each non-Swedish Subsidiary set forth in
Schedule 1.1, VOAC on a date not earlier than February 28, 1996 and not later
than February 29, 1996, to be agreed with Buyer ("Date of Transfer") shall
sell all of the shares of such Subsidiary to the Local Buyer set forth
opposite to the name thereof in Schedule 1.1 and at the price stated therein.
The transactions referred to in clause (ii) above shall be made by means of
executed agreements in the forms set forth in Appendix 1. Buyer shall procure
that the respective Local
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Buyers of the Subsidiaries enter into such agreements ("Related Agreements")
and perform their obligations thereunder.
No transaction contemplated in this Article I shall be deemed to have been
completed unless all transactions under this Article I are completed.
1.2 Price and Payment Provisions. The following shall apply:
1.2.1 Purchase Price and Payment. The purchase price for
the VOAC Shares shall be the cash sum of SEK 1,099 million ("Purchase Price")
which will be payable at Closing.
1.2.2 General Method of Payment. The payment of the Purchase
Price, and any other cash payments under this Agreement, shall be made to the
receiving party: (i) by depositing, by bank wire transfer, the required
amount (in immediately available funds) in an account of the recipient
designated by it for such purpose; or (ii) upon the prior written request of
the recipient, by delivery of one or more certified or official bank checks
(in immediately available funds) drawn on a bank reasonably acceptable to the
recipient and made payable to the order of the recipient.
1.2.3 Base Balance Sheet. Attached hereto as Schedule 1.2.3
(i) is a consolidated balance sheet of the VOAC Group as at December 31, 1995
("1.2.3 (i) Statement" or "Base Balance Sheet"). The Base Balance Sheet
consists of the audited balance sheet of the VOAC Group and has been prepared
on a basis consistent with prior consolidated balance sheets of the VOAC
Group and in accordance with generally accepted Swedish accounting
principles. The Base Balance Sheet includes all accruals normally made as of
a year-end closing. Schedule 1.2.3 (ii) describes the accounting principles
used to prepare the Base Balance Sheet ("VOAC's Accounting Principles"). The
audit has been performed by independent accountants of Seller, and Coopers &
Lybrand, on behalf of Buyer, have been permitted to observe the calculations
made in connection with the preparation of the Base Balance Sheet and have
had access to all workpapers of the Seller used in connection
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therewith. The aggregate net asset value of the VOAC Group ("Net Asset Value")
equal to the sum of the net equity reflected on the 1.2.3 (i) Statement, was
kSEK 392,691.
1.2.4 Currency. Whenever this Agreement requires or
necessitates a conversion of (a) SEK into another currency or (b) a currency
other than SEK into SEK, then such conversion shall be effected at the buying
rate of such other currency against SEK, offered by Skandinaviska Enskilda
Banken, Stockholm at the close of business on the banking day immediately
preceding the Closing Date.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller, Volvo and
Atlas Copco. Except in the case of representations and warranties made as of
a specific date, which shall be deemed made as of such date, Seller, Volvo
and Atlas Copco, jointly and severally, represent and warrant to the Buyer as
of the date hereof and as of the Closing Date as follows:
2.1.1 Corporate Status.
(a) Seller. Seller is a corporation duly
organized and validly existing under the laws of Sweden and has the corporate
power to own its properties and carry on its business as now being conducted.
(b) VOAC. VOAC is a corporation duly organized
and validly existing under the laws of Sweden and has the corporate power to
own its properties and carry on its business as now being conducted.
(c) Subsidiaries. Each of the Subsidiaries is
duly organized and validly existing under the laws of its jurisdiction of
incorporation and has the corporate power to own its properties and carry on
its business as now being conducted.
2.1.2 Share Capital. At the Closing, the share capital of VOAC
will be SEK 50,000,000, consisting of 500,000 shares, par value SEK 100 per
share and the share
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capital of each Subsidiary is as set forth at Schedule 2.1.2.
All of the shares of VOAC and of each Subsidiary are fully paid-up and
validly issued and are not subject to any calls or assessments. At the
Closing, there will be no declaration or payment of dividends outstanding and
no commitments providing for the issuance of any additional shares of capital
stock of VOAC or of Subsidiaries (with or without voting rights), or
providing for the issuance of securities convertible into shares of capital
stock or providing for the issuance of other securities.
2.1.3 Title to Shares. At the Closing, (i) Seller will have
good and marketable title to the VOAC Shares and to all of the rights
afforded thereby, and (ii) VOAC will have, or will have transferred to a
Local Buyer, good and marketable title to the shares of the Subsidiaries and
to all of the rights afforded thereby, in each case free of any and all
liens, pledges, encumbrances, charges, agreements or claims of any kind
whatsoever.
2.1.4 Authority. Seller and VOAC has the full corporate power
and authority to enter into this Agreement and the Related Agreements,
respectively, and the other documents contemplated hereby, and to transfer,
assign and deliver the VOAC Shares and the shares of Subsidiaries, as the
case may be, as provided in this Agreement, and such delivery will convey to
Buyer and the Local Buyer good and marketable title to the Shares and the
shares of Subsidiaries, as the case may be, free and clear of any and all
liens, pledges, encumbrances, charges, agreements or claims of any kind
whatsoever.
2.1.5 Financial Statements
(a) Seller has previously delivered to Buyer
audited financial statements for VOAC for each of 1993 and 1994 fiscal years
and unaudited financial statements as at September 30, 1995. Said financial
statements were prepared by VOAC in accordance with VOAC's Accounting
Principles and in accordance with generally accepted Swedish accounting
principles ("god redovisningssed") and on a consistent basis and fairly
present the financial condition and results of operations for each of such
fiscal years/period.
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(b) The Base Balance Sheet has been prepared in
accordance with VOAC's Accounting Principles and in accordance with generally
accepted Swedish accounting principles and on a consistent basis with those
of prior years and fairly presents the financial condition and results of
operations of the VOAC Group at December 31, 1995.
2.1.6 Subsidiaries. Prior to the transactions envisaged in
Section 1.1 (ii), VOAC has no subsidiaries other than those listed in
Schedule 2.1.6. With the exception of a 49% participation in Aqurat AB, VOAC
does not directly or indirectly own any capital stock of or other equity
interests in any other corporation, partnership, or other entity and VOAC is
not a member of or a participant in any partnership, joint venture or similar
enterprise. The Subsidiaries do not directly or indirectly own any capital
stock of or other equity interests in any corporation, partnership, or other
entity and are not members of or participants in any partnership, joint
venture or similar enterprise.
2.1.7 Actions Since October 1, 1995. Since October 1, 1995,
except as set forth in or contemplated by Schedule 2.1.7 or this Agreement,
neither VOAC nor any Subsidiary nor Seller with respect to any of them, has:
(a) incurred any material obligation or material
liability or entered into any material transaction, in each case other than
in the ordinary course of business;
(b) satisfied or discharged any material lien, or
paid any material obligation or material liability other than current
liabilities included in the Base Balance Sheet or notes thereto or in the
ordinary course of business;
(c) made any general wage or salary increase or
any increase in compensation payable or to become payable to any officers or
management employees, or entered into any employment contract with any
officer or key salaried employee except as has been made available to Buyer
under Section 2.1.20;
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(d) declared payment of any dividends except
dividends declared and paid as set forth in Schedule 1.1;
(e) permitted or allowed any real or personal
property to be mortgaged, pledged, charged or subjected to lien or other
encumbrance, except for any Permitted Liens as defined in Section 2.1.11;
(f) sold or transferred any of its assets or
prepaid or cancelled any debts or claims, except in each case in the ordinary
course of business;
(g) sold, assigned or granted rights under any
patent, trade name, trademark or copyright, or any application therefor, or
any trade secrets or designs for any products currently manufactured or
marketed by the VOAC Group or any other Proprietary Property as defined in
Section 2.1.8 below;
(h) knowingly waived any rights of material value;
(i) acquired, or entered into negotiations to
acquire, any other business or entered into any licensing arrangement or
joint venture;
(j) become involved in or, to the best of
Seller's knowledge, been threatened with any labor dispute which has had or
could have a material effect on the VOAC Business or its financial condition;
or
(k) suffered any damage or destruction, whether
or not covered by insurance, materially and adversely affecting the VOAC
Business or its properties.
2.1.8 Proprietary Property. As used in the conduct of the VOAC
Business, Schedule 2.1.8 contains a complete and correct list of (i) each
patent, patent application, registered copyright and applications therefor,
registered trademark and applications therefor, registered trade name and
design owned by Seller, VOAC or any Subsidiary (including application and
expiration dates), and (ii) each license or other
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agreement relating thereto or relating to any other proprietary property
(the foregoing, together with all know-how or trade secrets of Seller, VOAC
or any Subsidiary, the "Proprietary Property"). After the Closing, Seller
will, at its cost, transfer, or cause the transfer of title to the Proprietary
Property (not already owned by VOAC or a Subsidiary) as soon as possible to
VOAC, Parker Intangibles, Inc. or other entity designated by Buyer. All
maintenance and renewal fees due and payable prior to the Closing Date will
have been paid with respect to the Proprietary Property and all Proprietary
Property will be maintained on the Closing Date. The Proprietary Property
constitutes all the proprietary property used in the conduct of the VOAC
Business. Neither VOAC nor any Subsidiary will be a party to any agreement by
which it is granted a license or by which it grants a license on Proprietary
Property owned by it or by which it agrees to maintain the secrecy or
confidentiality of any Proprietary Property, except as set forth in Schedule
2.1.8. None of the Proprietary Property is subject to any pending or, to the
best of Seller's knowledge, threatened challenge nor has Seller, VOAC nor any
Subsidiary received any notice or otherwise know that the foregoing are
invalid or that the Proprietary Property or any products or services made,
sold or used in connection with the VOAC Business conflict with or infringe
the asserted rights of others except as set forth on Schedule 2.1.15. Neither
Seller, VOAC nor any Subsidiary has knowledge that any third party is
infringing any Proprietary Property rights of Seller, VOAC or any Subsidiary.
2.1.9 Real Property; Leases of Real Property. Schedule 2.1.9
contains a description of all real property owned by Seller, VOAC or any
Subsidiary relating to the VOAC Business ("Owned Real Property") or leased by
them ("Leased Real Property") (the Owned Real Property and the Leased Real
Property collectively herein the "Real Property"). Except as set forth in
Schedule 2.1.9, neither Seller nor VOAC nor any Subsidiary are party to any
leases of real property relating to the VOAC Business. Except as set forth in
Schedule 2.1.9, VOAC and the Subsidiaries have all material easements and
rights of ingress and egress necessary for utilities and services and for all
operations conducted on the Real Property.
2.1.10 Personal Property. Seller has made available to Buyer in
reasonable detail accurate and adequate information regarding the personal
property of the VOAC
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Business ("Personal Property") and such Personal Property constitutes all
of the personal property material to their operations and necessary for
the conduct of such business.
2.1.11 Title to Property. Except as set forth in Schedule
2.1.11, as of the Closing or Date of Transfer, as the case may be, each of
VOAC and the relevant Subsidiary will have good and marketable title to all
Owned Real Property, Personal Property and Proprietary Property purported to
be owned by it, subject to no mortgages, liens, pledges, security interests,
or charges of any kind, except Permitted Liens. As used in this Agreement,
the term "Permitted Lien" shall mean, collectively, liens for current taxes
or assessments not delinquent, builder, mechanic, warehousemen, materialmen,
contractor, workmen, repairmen, carrier liens, or other similar liens arising
and continuing in the ordinary course of business for obligations which are
not delinquent or which do not materially affect the value of the property or
the usefulness thereof to the VOAC Business. Insofar as any property or asset
of the VOAC Business is owned by an entity other than VOAC or a Subsidiary,
then unless otherwise provided herein as at Closing or the Date of Transfer
effective title thereto shall have been transferred to VOAC or any Subsidiary
without consideration.
2.1.12 Contracts and Commitments. Except as set forth on
Schedule 2.1.12, neither Seller, as it pertains to the VOAC Business, nor
VOAC nor any Subsidiary, will be a party to or bound by any written or oral:
(a) contract not made in the ordinary course of
business;
(b) employment termination or severance agreement
(excluding termination in accordance with local law and collective bargaining
agreements or other labor agreements), or expatriate or other employment
agreement or consulting or personal services agreement which has an aggregate
future liability in excess of SEK 200,000 (or the foreign currency equivalent
thereof determined at the exchange rate prevailing on the date hereof);
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(c) non-competition or secrecy agreement or any
other agreement which materially restricts the use or exploitation or the
carrying on of the VOAC Business as conducted on the date hereof;
(d) any other lease than listed in Schedule 2.1.9
with respect to any Real or Personal Property, whether as lessor or lessee,
which is material to the carrying on of the VOAC Business;
(e) dealership, manufacturer's representative,
distributor, or agency agreement terminable only upon notice of more than
twelve months;
(f) contract or commitment for capital
expenditures involving estimated total future payments in excess of SEK
600,000 (or the foreign currency equivalent thereof determined at the
exchange rate prevailing on the date hereof);
(g) contract, agreement or understanding (non
cancellable for a period of more than one year) for the sale of any product
subject to special pricing agreements showing customer anticipated annual
sales volumes and accompanying gross margins exceeding SEK 300,000 with less
than a ten percent (10%) gross margin;
(h) order or contract for purchase or sale of
products, materials, supplies, or services, in any case which is for a period
of over six months or which will involve payments in excess of SEK 300,000
(or the foreign currency equivalent thereof determined at the exchange rate
prevailing on the date hereof) on an annual basis not made in the ordinary
course of business;
(i) partnership or joint venture agreement;
(j) mortgage, pledge, charge, factoring agreement
or other similar agreement, not made in the ordinary course of business other
than Permitted Liens;
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(k) agreement, contract or other instrument under
which VOAC or a Subsidiary has borrowed any money long term from, or issued
any note, bond, debenture or other evidence of indebtedness to, any person
and not in the ordinary course of business;
(l) any material agreement, contract or other
instrument under which (i) any person has directly or indirectly guaranteed
any indebtedness, liability or obligation of VOAC or any Subsidiary or (ii)
VOAC or any Subsidiary has directly or indirectly guaranteed any
indebtedness, liability or obligation of any person (in each case, other than
endorsements for the purpose of collection in the ordinary course of business
or product warranties);
(m) agreement, contract or other instrument,
other than those already listed on Schedule 2.1.12, under which VOAC or any
Subsidiary has, directly or indirectly, made any loan, extension of credit or
capital contribution to, or other investment in, any person in excess of SEK
300,000 (or the foreign currency equivalent thereof determined at the
exchange rate prevailing on the date hereof) and for a period in excess of
six months;
(n) agreement or instrument, providing for
indemnification (i) of any person with respect to the transfer of the VOAC
Shares or (ii) by VOAC or any Subsidiary, respectively, with respect to
breaches of representations and warranties, litigation, environmental
liabilities or other business risks or losses, excluding standard provisions
in contracts for sale and purchase of products; or
(o) agreement which will, to the best of Seller's
knowledge, be terminated by a party thereto as a result of the transactions
contemplated in this Agreement and which, if terminated by the other party,
would have a material adverse effect on the business operations or financial
condition of the VOAC Business.
2.1.13 Inventory. At the Closing the inventory of the VOAC
Business will meet all the specifications for such inventories as described
in their product sales documentation and will consist of usable items which,
as to the quality and quantity, are
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saleable in the normal course of business other than those items for which
provisions have been made in accordance with VOAC's Accounting Principles and
in accordance with gene-rally accepted Swedish accounting principles. Inventory
will be valued at the lower of cost or market and will be reflected on the
books in accordance with VOAC's Accounting Principles.
2.1.14 Powers of Attorney; Bank Accounts. Schedule 2.1.14 sets
forth the name of each person, corporation, firm, association or business
entity holding a proxy, general or special power of attorney, or other
similar instrument from VOAC and any Subsidiary. Schedule 2.1.14 sets forth a
brief description of each bank or other financial institution at which VOAC
and the Subsidiaries have an account and the names of all persons having
signature authority over any such account.
2.1.15 Litigation. Except as set forth on Schedule 2.1.15,
there is no action, suit, inquiry, proceeding or investigation pending or, to
the best of Seller's knowledge, threatened against the VOAC Business or
against its property or assets except for claims made by customers in the
ordinary course of business. Except as set forth on Schedule 2.1.15, neither
Seller, VOAC nor a Subsidiary, respectively, has received notice that the
VOAC Business is subject to any judgment, order or decree entered in any
lawsuit or proceeding which would have a material adverse effect on the VOAC
Business.
2.1.16 No Broker. Seller knows no broker, finder or financial
advisor who is acting or has acted in its behalf, or of any person, firm or
corporation entitled to receive any brokerage or finder's or financial
advisory fee from Seller in connection with the transactions contemplated by
this Agreement and the Related Agreements.
2.1.17 Governmental Permits; Compliance with Laws.
(a) Except as set forth in Schedule 2.1.17(a), to
the best of Seller's knowledge, each of the permits, licenses, franchises and
authorizations necessary to the conduct of the VOAC Business as heretofore
conducted is in full force and effect. At the Closing or Date of Transfer, as
the case may be, VOAC and the Subsidiaries will hold all material
governmental or regulatory permits, licenses, franchises and authorizations
of all
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Governmental Entities (as defined in Section 4.3.1) which are required
for their business as currently being conducted. To the best of Seller's
knowledge, (i) no notices have been received by VOAC or the Subsidiaries
relating to termination or cancellation, and (ii) there is no violation of
the material terms and conditions, of any such permits, licenses or
authorizations. Except as disclosed on Schedule 2.1.17(a), to the best of
Seller's knowledge, VOAC and each Subsidiary has been and is in all respects
in compliance with all laws, regulations, orders and permits of all
Governmental Entities applicable to them (including, without limitation,
those relating to antitrust and trade regulation, health and safety, labor,
employment, and zoning and building codes). Neither Seller, VOAC nor any
Subsidiary has received any complaint, citation or notice of violation with
respect to their business from any Governmental Entity and, to the best of
their knowledge, none is threatened, alleging that they have violated any
such laws with respect to their business.
(b) Except as set forth in Schedule 2.1.17(b),
since January 1, 1993: (i) none of Seller, VOAC, nor a Subsidiary or any of
their officers, agents or employees have received any written communication
from a Governmental Entity that alleges that VOAC or a Subsidiary is not in
compliance in any material respect with any Environmental Laws (as defined
below), and neither Seller, VOAC or any Subsidiary is aware of any
circumstances which might give rise to such notice, order or other
communication being received or of any intention on the part of any
Governmental Entity to give any such notice; (ii) VOAC and each Subsidiary
holds, and each is in compliance with, all permits, licenses, consents and
governmental or municipal or other local authorizations required for each of
them to conduct their business under the Environmental Laws ("Environmental
Permits") in the manner in which such business is now conducted, and to the
best of their knowledge are in compliance with all Environmental Laws, with
all relevant codes of practice or guidance, notes, standards and other
advisory material issued by any Governmental Entity; (iii) neither Seller,
VOAC or any Subsidiary has knowledge of any environmental reports other than
those set forth in Schedule 2.1.17(b); and (iv) neither VOAC nor any
Subsidiary have entered into or agreed to any court decree or order and are
not subject to any judgment, decree or order relating to compliance with any
Environmental Law or to investigation or cleanup of Contaminants under any
Environmental Law. Except as set forth in Schedule 2.1.17(b) neither Seller,
VOAC nor any Subsidiary has knowledge of any currently existing or
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potential environmental liabilities arising from any activities or operations
of VOAC or any Subsidiary or the state or condition of any properties now or
formerly owned or occupied by them or any facilities now or formerly used by
them. To the best knowledge of Seller, VOAC or each Subsidiary, no Real
Property is situated in proximity to other land the condition of which is such
that it could give rise, in relation to any Real Property, to any environmental
liabilities. As used in this Agreement, the term "Environmental Laws" means
any and all applicable treaties, laws, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments, injunctions, permits,
approvals, authorizations, licenses, variances, permissions, notices or
binding agreements issued, promulgated or entered into by any Governmental
Entity, in each case as in effect on the date hereof, relating to the
environment, preservation or reclamation of natural resources, or to the
management of Releases (as hereinafter defined) or threatened Releases of
Contaminants or noxious odor. As used in this Agreement, the term
"Contaminants" means those substances that are regulated by, or form the
basis of, liability under any Environmental Law, including asbestos,
polychlorinated biphenyls, Hazardous Materials, pollutants and solid wastes.
As used in this Agreement, the term "Hazardous Materials" means all explosive
or regulated radioactive materials or substances, hazardous or toxic
substances, wastes or chemicals, petroleum (including crude oil or any
fraction thereof) or petroleum distillates, asbestos or asbestos-containing
materials, and all other materials or chemicals regulated pursuant to any
Environmental Law. As used in this Agreement, the term "Release" means any
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, emanation or migration of any Contaminant in, into,
onto, or through the environment (including ambient air, surface water,
ground water, soils, land surface, subsurface strata, workplace, or
structure).
(c) Schedule 2.1.17(c) contains to the best of
Seller's, VOAC's or any Subsidiary's knowledge: (i) a description of all
Hazardous Materials (i.e. acids, alcalics, cutting oils etc.) used or
generated by VOAC or each Subsidiary incident to the manufacture of VOAC's
products; (ii) a description of the past and present waste disposal practices
of the VOAC Business, including the names and addresses of owners or
operators of each location to which wastes were sent for treatment, storage
or disposal; (iii) copies of the results of any environmental or safety
inspections of the VOAC Business facilities within the last three (3) years;
(iv) copies of all former and pending safety or environmental citations or
citations by
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authorities received by Seller, VOAC or each Subsidiary; (v) copies of all
forms filed by VOAC or any Subsidiary which contain safety records and
procedures at its facilities; (vi) a list and description of the location
of all underground tanks, sumps or pits on the Real Property; and (vii) copies
of any analysis of all Releases at VOAC Business facilities for the last three
(3) years. Any environmental conditions disclosed in any Schedule hereto, and
any other environmental condition hereafter identified by Buyer, Seller, VOAC,
a Subsidiary or any Governmental Entity that arises in whole or in part from
facts or circumstances dating prior to the Closing, is herein referred to as
an "Environmental Condition".
2.1.18 Workers' Injuries. Except as set forth on
Schedule 2.1.18, there are no pending or, to the best of Seller's or VOAC's
knowledge or to the best of the relevant Subsidiary's knowledge, threatened
claims by employees for compensation for any injury, disability or illness
arising out of their employment.
2.1.19 Trade Union Activity. Except as set forth in Schedule
2.1.19, there has not been during the last three years, nor is there
currently pending or, to the best of Seller's or VOAC's knowledge or to the
best of the relevant Subsidiary's knowledge, threatened, any strike or work
stoppage.
2.1.20 Employees; Employee Benefits. Seller has made available
to Buyer (i) the names, current annual earnings and rates of pay of each of
the current employees of the VOAC Business as of December 31, 1995, (ii) any
general increase, since July 1, 1995, in the rate of compensation paid to
their salaried and hourly employees; and (iii) at December 31, 1995, all
outstanding loans and advances (other than routine travel advances) made in
the VOAC Business to any employee of them and the current status thereof. All
employee benefits, in cash or in kind, provided to employees of the VOAC
Business have been made available to Buyer (collectively "Benefit Plans").
Except for retirement plans which are shown as a specific line item on the
Base Balance Sheet, Seller has made available to Buyer details of all other
pension or retirement benefits beyond mandatory Swedish (or other relevant
country) statutory or regulatory obligations, bonus, profit sharing, stock
purchase or stock option plans, or company savings plans or employee funds of
the VOAC Business. The
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VOAC Business is in compliance in all material respects with all statutory or
regulatory requirements with respect to their employees.
2.1.21 Sales Volume; Adverse Trends. Except as fully and
accurately disclosed in Schedule 2.1.21, as of the date hereof Seller or VOAC
does not know of any fact which will lead to a loss of the benefit of any
relationship with any suppliers or customers which loss would have a material
adverse effect on the VOAC Business.
2.1.22 Taxes.
(a) In respect of the VOAC Business, Seller, VOAC
and each Subsidiary have filed with the appropriate governmental entities all
tax returns and tax reports required to be filed in respect of their
activities and have either paid or accrued all taxes shown or claimed to be
due thereon. Neither Seller, VOAC, nor a Subsidiary is a party to any
agreement for the extension of time for the assessment or payment of taxes in
respect of their activities. Neither Seller, VOAC nor any Subsidiary is a
party to any action or proceeding by any governmental authority for
assessment and collection of taxes, and none have received notice of any
claim for such assessment and collection of taxes in respect of their
activities. Neither, Seller, VOAC nor a Subsidiary has liabilities,
contingent or otherwise, for any taxes except as provided in the Base Balance
Sheet.
(b) For purposes hereof, "taxes" shall mean all
income, capital, net worth, trade, withholding, value added, real and
personal property, sales and use, and other taxes, all other official
charges, duties and impositions of any kind, as well as social security or
equivalent contributions or duties payable by employers.
(c) Seller agrees to reimburse Buyer on the basis
of the tax laws as in force on the date hereof, for any taxes, interest or
penalties assessed by any governmental agency for any tax that has not been
properly paid or provided for and which relates to any period up to and
including the Closing Date or the Date of Transfer, as the case may be, but
excluding any tax assessed on VOAC or any Subsidiary solely as a consequence
of that Subsidiary being transferred under a Related Agreement. Seller agrees
with Buyer that
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Seller have the sole and exclusive right for dealing with tax
authorities on any and all issues which arise during any tax audit or
investigation, for which Seller has an obligation to reimburse Buyer. Buyer
and/or Local Buyers will use their best efforts to minimize any liability
that Seller may incur, including producing any and all necessary records and
documents. Buyer will give 60 days notice of any potential liability or audit
or investigation. Seller will have the right, at its own expense, to contest
with appropriate authorities, as permitted by law within the respective
jurisdiction, any audit finding with which they disagree and for which they
are liable under this Section 2.1.22.
2.1.23 Restrictions and Consents. Except as set forth in this
Agreement or in the Schedules, including Schedule 2.1.23, neither the
execution or delivery of this Agreement, the Related Agreements and the other
documents contemplated hereby or thereby nor the consummation of the
transactions contemplated hereby or thereby, will conflict with or result in
a breach of, or give rise to a right of termination of, or accelerate the
performance required by, any terms of any court order, consent decree,
agreement or permit to which VOAC or a Subsidiary, is subject or a party, or
constitute a default thereunder, or result in the creation of any lien, claim
or encumbrance upon the assets of the VOAC Business or any of its contracts,
assets or business.
2.1.24 Compliance With Laws. Except as set forth on Schedule
2.1.24, Seller, VOAC, and the Subsidiaries are in compliance with all
requirements under applicable worker co-determination or equivalent laws in
respect of the transactions envisaged by this Agreement or generally.
2.1.25 No Claims. Any claims by Seller against VOAC or any
Subsidiary will be recorded on VOAC's books as at the Closing Date.
2.1.26 Discharge from Liability. For all full financial years
of VOAC and each Subsidiary, the Board of Directors have been granted
discharge from liability at the Annual Shareholders Meeting and all auditors
reports in relation thereto have been subject to no qualification.
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2.1.27 Accuracy of Statements. None of the information
contained in the representations, warranties or covenants set forth in this
Agreement, in the Schedules or in any of the certificates, lists, documents,
exhibits or other instruments delivered or to be delivered to the Buyer as
contemplated by any provision of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light
of the circumstances under which they were made, and when taken together, not
misleading. All documents provided to Buyer are true, complete and correct
copies of the documents they purport to represent.
2.1.28 Binding Effect. This Agreement, and the Related
Agreements, are valid, binding and legal obligations of Seller, Volvo and
Atlas Copco, and of VOAC, respectively, enforceable against each of them in
accordance with their terms.
2.1.29 Backlog. At December 31, 1995, the backlog of unshipped
orders of the VOAC Business amounted to approximately SEK 342,7 million
compared to approximately SEK 259,3 million at December 31, 1994.
2.1.30 Accounts Receivable. The accounts receivable of the VOAC
Business shown on the Base Balance Sheet, or obtained since that date,
represents bonafide claims against the account debtors for sales, services or
other charges, are collectible at the aggregate recorded amounts thereof
(less stated reserves for uncollectible accounts, accounts set forth in
Schedule 2.1.30 and accounts receivable collected since December 31, 1995)
and are not, to the best of Seller's, VOAC's or any Subsidiary's knowledge,
subject to any counterclaim, set-off, credit or adjustment whatsoever, except
as described in Schedule 2.1.15.
2.1.31 Insurance. Set forth in Schedule 2.1.31 is a list of all
policies of liability, including product liability, fire, automobile,
property, business interruption and other forms of insurance covering the
VOAC Business, all of which are valid and enforceable and in full force and
effect.
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2.1.32 Seller's Knowledge. Seller and its representatives are
not aware of any facts or circumstances that would constitute a breach of any
representations and warranties and covenants made hereunder by Seller, Volvo
and Atlas Copco.
2.1.33 VOAC Engineering GmbH. The representations and
warranties set forth in this Section 2.1 are true and correct as to any
subsidiary, including VOAC Engineering GmbH, or other entity controlled by
any Subsidiary,.
2.2 Representations and Warranties of Buyer. Except in the
case of representations and warranties made as of a specific date, which
shall be deemed made as of such date, Buyer represents and warrants to Seller
as of the date hereof and as of the Closing Date as follows:
2.2.1 Corporate Status. Buyer is a corporation duly organized
and validly existing under the laws of Sweden, and has the corporate power to
own its properties and to carry on its business as now being conducted.
2.2.2 No Broker. Buyer does not know of any broker, finder or
financial advisor acting or who has acted in its behalf, or of any person,
firm or corporation entitled to receive any brokerage or finder's or
financial advisory fee from any party other than Buyer in connection with the
transactions contemplated by this Agreement, other than Lennart Brag acting
through S.E.P. Normart. Buyer will be responsible to pay such fee.
2.2.3 Restrictions. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach of, or give rise to a right of
termination of, or accelerate the performance required by, any terms of any
court order, consent decree, agreement or permit to which Buyer is subject or
a party, or constitute a default thereunder, or result in the creation of any
lien, claim or incumbrance upon the assets of Buyer or violate any of the
provisions of the charter documents of Buyer.
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2.2.4 No Lawsuits; Consents. There is no lawsuit, proceeding
or investigation pending or, to the best of Buyer's knowledge, threatened
against Buyer or the Local Buyers which might prevent the consummation of any
of the transactions contemplated by this Agreement and the Related
Agreements, and no approval or authorization of any governmental authority
(except cartel notification described in Section 4.3.1 below) or of any third
party on the part of Buyer or any Local Buyer is required in connection with
the execution and delivery of this Agreement or any instruments contemplated
hereby or the consummation of any of the transactions contemplated hereby.
2.2.5 Execution and Effect of Agreement. Buyer, Parker
Hannifin Corporation and each Local Buyer has the full corporate power and
authority to enter into this Agreement and the respective Related Agreement.
The execution and delivery of this Agreement and each Related Agreement and
the consummation of the transactions contemplated thereby have been duly
authorized by the necessary corporate action of Buyer and Local Buyers, as
the case may be.
2.2.6 Financial Capacity. Buyer has adequate financial
resources to complete the acquisition contemplated hereby and pay the
purchase price, and the commitments of Buyer hereunder are not subject to
obtaining bank financing.
2.2.7 Compliance With Laws. Except as set forth on Schedule
2.2.7, Buyer is in compliance with all requirements under applicable worker
co-determination or equivalent laws in respect of the transactions envisaged
by this Agreement or generally.
2.2.8 Accuracy of Statements. None of the information
contained in the representations, warranties or covenants set forth in this
Agreement, in the Schedules or in any of the certificates, lists, documents,
exhibits or other instruments delivered or to be delivered to Seller as
contemplated by any provision of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light
of the circumstances under which they were made, and when taken together, not
misleading. All documents provided to Seller are true, complete and correct
copies of the documents they purport to represent.
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2.2.9 Parent. Parker Hannifin Corporation owns 100 percent of
the shares of Buyer and by its signature below hereby guarantees the
performance by Buyer and the Local Buyers of their respective obligations
hereunder and under the respective Related Agreements.
2.2.10 Binding Effect. This Agreement and the Related
Agreements are valid, legal and binding obligations of Buyer and the Local
Buyers, respectively, enforceable against them in accordance with their
terms.
2.2.11 Buyer's Knowledge. Buyer and its representatives are not
aware of any facts or circumstances that would constitute a breach of any
representations and warranties and covenants made hereunder by Buyer.
ARTICLE III. COVENANTS
3.1 Covenants of Seller. Seller hereby covenants and agrees
that:
3.1.1 Access to Information. From November 16, 1995 to the
Closing Date, authorized representatives of Buyer (including Buyer's
employees, counsel, accountants and other advisors) shall have access, during
normal business hours and in such reasonable manner as to avoid unnecessary
disruption to the conduct of business, to all personnel, properties, books,
records, contracts and documents of VOAC and each Subsidiary. Seller will
furnish to Buyer all information with respect to the affairs and business of
VOAC and each Subsidiary which Buyer may reasonably request, including,
without limitation, requisite information with respect to intercompany
pricing.
3.1.2 Business in Ordinary Course. From November 16, 1995 to
the Closing Date or the Date of Transfer, as the case may be, Seller will
carry on the operations of the VOAC Business in the ordinary and normal
course in substantially the same manner as heretofore conducted, except as
otherwise provided herein, and shall notify Buyer immediately of any changes
or deviations from the ordinary and normal course of business. In particular,
but without limitation, Seller shall cause the VOAC Business to maintain
adequate levels of
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inventory, and to manage their sales and the backlog of orders in accordance
with past practice.
3.1.3 Maintain Properties. From November 16, 1995 to the
Closing Date or the Date of Transfer, as the case may be, Seller shall, and
shall cause VOAC and each Subsidiary to, maintain and keep its plants and
equipment in as good repair, working order and condition as at present,
except for ordinary wear and tear and damage due to casualty.
3.1.4 Maintain Net Asset Value. Seller shall cause the VOAC
Business to have, at the Closing Date a Net Asset Value at least equal to
kSEK 392,691.
3.1.5 Perform Contracts. Between November 16, 1995 and the
Closing Date or the Date of Transfer, as the case may be, except to the
extent performance would prove commercially unreasonable, and in such event
after prior consultation with Buyer, Seller shall, and shall cause VOAC and
each Subsidiary to, perform in all material respects obligations to be
performed under all the contracts, leases and documents relating to their
properties and business.
3.1.6 Maintain Organization. Between November 16, 1995
and the Closing Date or the Date of Transfer, as the case may be, Seller
shall, and shall cause VOAC and each Subsidiary to, use commercially
reasonable efforts to maintain and preserve their business organization
intact, retain their present key officers and employees except the
resignation referred to in Section 7.12, maintain their relationships with
suppliers and customers and maintain the goodwill of the VOAC Business.
3.1.7 Prohibited Actions. Between the date hereof and the
Closing Date, Seller will not undertake any of the acts described in Sections
2.1.7(a) through (k) without the prior written consent of Buyer, which will
not be unreasonably withheld.
3.1.8 No Solicitation of Acquisition Offers. Between November
16, 1995 and the Closing Date Seller shall refrain, either directly or
indirectly, from soliciting offers from third parties to acquire the VOAC
Business, and from offering the VOAC Business, as
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an acquisition candidate to any person, firm, group or corporation other
than Buyer. Further, Seller shall not provide, subject to existing contracts
or as may be required by law, to any party other than to Buyer access to
VOAC's or each Subsidiary's properties, books, records, financial statements,
contracts and documents of the VOAC Business.
3.1.9 Non-Competition. For a period of three (3) years from
the Closing, Seller, Volvo or Atlas Copco and each of their subsidiaries and
affiliates (collectively "Volvo/Atlas Copco Group") shall not, directly or
indirectly engage anywhere throughout the world in: (i) developing, producing
or marketing goods or services competitive with the products manufactured, or
in the design stage, in the VOAC Business as of Closing; or (ii) assisting
any person in any way to do, or attempt to do, anything prohibited by (i)
above. Persons or entities engaged in such competitive activities are
referred to herein as a "Competing Enterprise", provided, however, that
should the Volvo/Atlas Copco Group within the next three year period as part
of an acquisition of some other business become owner of a Competing
Enterprise, then the Volvo/Atlas Copco Group shall agree to negotiate in good
faith exclusively with Buyer in the first instance the sale of the Competing
Enterprise, taking into account the reasonable commercial facts and
circumstances at that time.
3.1.10 Intercompany Accounts. At the Closing hereunder all
intercompany accounts involving the VOAC Business will be reconciled with no
items in dispute.
3.1.11 Accounts Related Parties. At the Closing, trade accounts
between VOAC and any Subsidiaries, on the one hand, and any of Seller, Volvo
or Atlas Copco, on the other hand, will be settled within 60 days of Closing
and any financial accounts between such parties will have been settled.
3.1.12 Adjustment of Accounts. Prior to Closing, Seller will
cause VOAC to make an entry in its accounts to reflect the net favorable
volume variance of kSEK 2,199 thereby reducing the value of the inventory and
the profits in its accounts. Further, Seller will cause VOAC not to record
any adjustment for the over-accruals relating to social costs (kSEK 260) and
pension liabilities (kSEK 176).
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3.2 Mutual Covenants. Each of Seller and Buyer covenants and
agrees as follows:
3.2.1 Publicity. Seller and Buyer agree that, no public
release or announcement concerning the transactions contemplated hereby shall
be issued by either party without the prior consent of the other party (which
consent shall not be unreasonably withheld), except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case the party required to
make the release or announcement shall allow the other party reasonable time
to comment on such release or announcement in advance of such issuance;
provided, however, that Buyer and Seller may make internal announcements to
their respective employees that are consistent with the parties' public
disclosures regarding the transactions contemplated hereby.
3.2.2 Commercially Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each party shall use its commercially
reasonable efforts to cause each of the conditions to Closing to be timely
fulfilled and the Closing to occur.
3.2.3 Shared Services . Atlas Copco, Volvo and Seller and
Buyer will allow involved affiliates the right to continue to share the
services set forth in Schedule 3.2.3. The costs and terms of such sharing
arrangements will be borne by each party as heretofore or as otherwise
mutually agreed. Termination of or changes in such sharing arrangements can
be made by either party as provided in Schedule 3.2.3.
3.3 Covenants of Buyer. Buyer covenants and agrees as
follows:
3.3.1 Guarantees. As to Seller's, Atlas Copco's or Volvo's
guarantees referred to in subsection (n) of Schedule 2.1.12, Buyer will
undertake to replace or substitute such guarantees as of the Closing Date.
3.3.2 Environmental Permit. With respect to the matters
covered by that certain permit held by Volvo dated 23 November 1993 by
Koncessionsnamnden for miljoskydd, Buyer shall cause VOAC to apply, as soon
as reasonably possible after Closing,
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for a permit in VOAC's name. Until such permit shall have been obtained, VOAC
shall be entitled to benefit from and operate under Volvo's aforesaid permit
on the terms and conditions currently applying between the parties.
3.3.3 Name Change. Buyer shall procure that any affected
entity within the VOAC Group shall cause the word "Volvo" to be deleted from
its corporate name without undue delay after Closing.
ARTICLE IV. CONDITIONS
4.1 Conditions to Obligations of Buyer. The obligations of
Buyer to complete the purchase of the VOAC Shares on the Closing Date and to
cause the relevant Local Buyers to fulfill their respective obligations under
the relevant Related Agreements on the Date of Transfer are subject to the
following conditions:
4.1.1 Representations and Warranties True and Correct. The
representations and warranties made in section 2.1. of this Agreement shall
be true and correct in all material respects as of the date hereof and as of
the Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case they shall have been true
and correct as of such date).
4.1.2 Compliance with Agreement. Seller and VOAC shall have
performed and complied in all material respects with all of their obligations
under this Agreement and the Related Agreements at or before the Closing
Date, unless otherwise expressly provided hereunder.
4.1.3 No Adverse Change. Seller has disclosed to Buyer any
adverse changes in the shipping or order levels, businesses, properties,
assets or financial condition of the VOAC Business since the date of the Base
Balance Sheet.
4.1.4 No Litigation. No litigation, proceeding, investigation
or action shall be pending or threatened to enjoin or prevent the
consummation of the sale of the
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VOAC Business or to obtain damages or other relief by reason of such
consummation, or involving the VOAC Business or any of the properties owned
or leased by the VOAC Business which is likely to result in any material
adverse change in the VOAC Business, apart from the pending cases set forth
in Schedule 2.1.15.
The conditions contained in this Section 4.1 are for the benefit
of Buyer and may be waived in whole or in part by Buyer.
4.2 Conditions to Obligations of Seller. The obligations of
Seller and VOAC to complete the transactions contemplated hereby and by the
Related Agreements prior or to on the Closing Date are subject to the
following conditions:
4.2.1 Representations and Warranties True and Correct. The
representations and warranties made in Section 2.2 of this Agreement shall be
true and correct as of the date hereof and as of the Closing Date (except to
the extent such representations and warranties expressly relate to an earlier
date, in which case they shall have been true and correct as of such date).
4.2.2 Compliance with Agreement. Buyer and Local Buyers shall
have performed and complied in all material respects with all of their
obligations under this Agreement and the Related Agreements at or before the
Closing Date.
4.2.3 No Litigation. No litigation, proceeding, investigation
or action shall be pending or threatened to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or the
Related Agreements or to obtain damages or other relief by reason of such
consummation.
The conditions contained in this Section 4.2 are for the benefit
of Seller and may be waived in whole or in part by Seller.
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4.3 Mutual Conditions.
4.3.1 No Regulatory Impediment. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced
or issued by any federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, including any
court, administrative agency, cartel office or commission or other organ of a
country where the VOAC Business is conducted or the European Union or any
instrumentality or organ thereof ("Governmental Entity or Entities") or other
legal restraint or prohibition preventing the purchase and sale of the VOAC
Shares or the shares of the Subsidiary shall be in effect.
4.3.2 Governmental Consents. All consents of Governmental
Entities required to consummate this Agreement or any of the Related
Agreements shall have been obtained.
ARTICLE V. CLOSING
5.1 Closing. The Closing hereunder ("Closing") shall take
place as of February 29, 1996 at the offices of Rydin & Carlsten Advokatbyra
AB, Norrmalmstorg 1, S-111 87 Stockholm, Sweden, at 10 am, or at such other
place and at such other time and date as may be mutually agreed upon in
writing by Buyer and Seller ("Closing Date").
5.2 Deliveries.
5.2.1 Seller's Deliveries. Seller at its expense shall
deliver, or shall cause to be delivered, to Buyer or the respective Local
Buyer and procure the following:
Prior to Closing on Date of Transfer
(a) Executed counterparts of each of the Related
Agreements.
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(b) Duly endorsed certificates representing all
of the shares transferred under the Related Agreements.
At the Closing:
(a) Duly endorsed certificates representing all
of the VOAC Shares.
(b) A certificate dated the Closing Date signed
by a duly authorized officer of Seller to the effect set forth in Sections
4.1.1, 4.1.2 and 4.1.4.
(c) A certificate dated the Closing Date of a
duly authorized officer of each of Seller, Volvo and Atlas Copco setting
forth certification of incumbency of signatory officers and the resolutions
of the Board of Directors of Seller, VOAC, Volvo and Atlas Copco,
respectively, authorizing the execution and delivery of this Agreement, the
Related Agreements, and all other documents contemplated hereby and thereby
and the consummation of the transactions contemplated hereby and thereby, and
certifying that such resolutions were duly adopted and have not been
rescinded or amended as of the Closing Date.
(d) The stockholder register of VOAC.
As Post-Closing Items:
(e) The location of all minutes of all
meetings of shareholders and directors of VOAC and of each of the
Subsidiaries held since their formation.
(f) Satisfactory evidence of the registration of
title to the Owned Real Property in the name of VOAC or of the relevant
Subsidiary to be accomplished on or after the Closing Date.
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(g) All stock powers, certificates, instruments
of conveyance, bills of sale, schedules, exhibits, statements and other
documents necessary or appropriate under this Agreement and the Related
Agreements.
(h) Transfer of signature powers to all of the
VOAC Business bank accounts listed in Schedule 2.1.14.
5.2.2 Buyer's Deliveries. Buyer shall at its expense deliver,
or shall cause to be delivered, to Seller the following:
Prior to Closing or Date of Transfer
Executed counterparts of each of the Related Agreements.
At the Closing
(a) The payment of the Purchase Price as set
forth in Section 1.2.2.
(b) A certificate dated the Closing Date of the
duly authorized officer of Buyer to the effect set forth in Sections 4.2.1,
4.2.2 and 4.2.3.
(c) Incumbency certificates with respect to
signatory officers, certified copies of the resolutions of the Board of
Directors of Buyer and Parker Hannifin Corporation authorizing the execution
and delivery of this Agreement, the Related Agreements and all other
documents contemplated hereby and thereby and the consummation of the
transactions contemplated hereby and thereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended as of
the Closing Date.
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ARTICLE VI. INDEMNIFICATION
6.1(a) Falkoping Site. Without prejudice to their other
obligations and undertakings under this Agreement, Seller, Volvo and Atlas
Copco jointly and severally agree, for a period of two (2) years from
Closing, to retain liability with respect to the environmental matters set
forth on Schedule 6.1(a). Buyer will not unilaterally investigate or notify
such environmental matters unless required by law, and will only do so if
required by official authorities. If such investigation is required, the
parties shall then proceed as set forth in subsections (a) through (e) of
Section 6.6. Seller, Volvo and Atlas Copco shall pay for the investigation,
clean-up, testing and other expenses incurred. Such expenses shall be paid on
a Krona for Krona basis and shall not be subject to the SEK 50 million
cumulative requirement set forth in Section 6.1(b).
6.1(b) Indemnification by Seller, Volvo and Atlas Copco.
Seller, Volvo and Atlas Copco jointly and severally agree to indemnify and
hold the Buyer and Local Buyers under the Related Agreements (including
officers, directors, agents, representatives, and employees) harmless from
and against any and all liabilities, obligations, damages (excluding,
however, consequential damages) deficiencies, losses, claims, actions, suits,
proceedings, judgments, demands, costs, penalties, and expenses (including
reasonable attorneys' fees) suffered or incurred by Buyer, VOAC or any
Subsidiary and resulting from (i) any breach of representation or warranty
contained herein, in any Related Agreement or in any certificate delivered
pursuant hereto, (ii) any Environmental Condition, or (iii) any breach of
covenant on the part of Seller; provided, however, that Seller, Volvo and
Atlas Copco shall not have any liability under clause (i) and clause (ii)
above, except with respect to the Known Environmental Conditions set forth
in Schedule 6.1.(a), after the period of time described in Section 6.4, nor
unless the aggregate of all losses, liabilities, costs and expenses relating
thereto for which they would, but for this proviso, be liable exceeds on a
cumulative basis an amount equal to SEK 50 million (or the foreign currency
equivalent thereof determined at the exchange rate prevailing on the date
thereof) and they shall thereafter indemnify all claims in their entirety on
a Krona for Krona basis. The maximum aggregate amount of liability under this
Article VI and an agreement made on February 29, 1996 among Parker Hannifin
Corporation, Seller, Volvo and Atlas Copco shall not exceed the Purchase
Price. Any liability under clause (ii) above not known by Seller, Volvo or
Atlas Copco (either by notification by Buyer or otherwise) within seven (7)
years of the Closing Date shall cease.
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6.1(c) Additional Indemnification. (1) Seller, Volvo and Atlas
Copco jointly and severally agree, subject to no monetary threshold or
amount, to indemnify and hold harmless Buyer from and against any and all
costs, liabilities and claims arising from (i) the resignation or removal
from office, as such, within 90 days of Closing, of Directors holding office
at or prior to Closing in VOAC , (ii) the failure by Seller to demonstrate
the possession by VOAC on the Closing Date of all mortgage deeds relating to
the Owned Real Estate designated Ingenjoren 1 in Falkoping.
(2) Seller, Volvo, and Atlas Copco jointly and severally agree to
indemnify and hold harmless Buyer, subject to no monetary threshold, in the
event Aqurat AB defaults in the repayment of its outstanding loans to VOAC in
the total amount of kSEK 4,362. If Buyer or any affiliate, without being
obligated thereto, advance additional loans to Aqurat AB in any form or
infuse additional share capital into Aqurat AB, Seller's, Volvo's and Atlas
Copco's liability under this clause (2) is limited to kSEK 4,362, provided
that such limit shall be decreased by two thirds of the amount of such
advances or infusions, but not below kSEK 3,862. Buyer shall not be entitled
to indemnification unless and until bankruptcy proceedings have been
initiated. Buyer shall further not be entitled to any indemnification should
Buyer or any affiliate employ any of the current employees of Aqurat AB
unless bankruptcy proceedings have been initiated. Buyer's right of
indemnification under this clause (2) shall survive the Closing Date for a
period of three (3) years.
(3) Seller, Volvo and Atlas Copco, jointly and severally agree to
indemnify and hold harmless Buyer, subject to no monetary threshold, in the
event Inline defaults in its repayment of outstanding loans to VOAC
Hydraulics GmbH in the total amount of DEM 1,468,273. Buyer recognises that
Seller, Volvo and Atlas Copco's indemnification is based upon the assumption
that VOAC will not initiate action to discontinue its distribution agreement
with Inline unless Inline is in default thereunder. Buyer undertakes to take
all reasonable actions to minimise Seller's, Volvo's and Atlas Copco's
exposure under this clause (3) inclu-ding but not limited to the purchase of
Inline's saleable inventory of VOAC products at Inline's manufactured cost,
making use of any right to set-off and employment of all other procedures to
recover from any right on patent, receivables, machinery etc. to the extent
not pledged to any other creditor. Buyer shall not be entitled to claim under
this clause (3) unless and to the extent the above actions have been taken.
Seller's, Volvo's and Atlas Copco's liabi-
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lity under this clause (3) is limited to the amount of DEM 1,468,273. Buyer's
right of indemnification under this clause (3) shall survive the Closing Date
for a period of two (2) years.
6.1(d) Inline Cleanup. Seller, Volvo and Atlas Copco represent
that the cleanup agreed between VOAC Hydraulikfabrik Beteiligungs GmbH ("VOAC
H") and Inline Hydraulik GmbH ("Inline") to be performed has been performed
in accordance with an independent environmental consultant's specification
and further that Inline has confirmed that it no longer has any claims on
VOAC H in respect of such matter. Any breach of this warranty shall not be
subject to any monetary threshold.
6.2 Indemnification by Buyer. Buyer agrees to indemnify,
defend and hold harmless the Seller (including officers, directors, agents,
representatives, and employees) from and against any and all liabilities,
obligations, damages (excluding, however, consequential damages),
deficiencies, losses, claims, actions, suits, proceedings, judgments,
demands, costs, penalties, and expenses (including reasonable attorneys'
fees) suffered or incurred by Seller and resulting from: (i) any breach of
representation or warranty of Buyer contained herein, or by Local Buyers in
Related Agreements, or in any certificate delivered pursuant hereto; (ii)
third party claims against Seller that arise as a result of the conduct of
the VOAC Business after the Closing by Buyer and do not involve a breach of a
representation, warranty or covenant of Seller, an Environmental Condition,
Seller's Product Liability, or any wrongful conduct of Seller; or (iii) any
breach of covenant on the part of Buyer; provided, however, that Buyer shall
not have any liability under clause (i) above after the period of time
described at Section 6.4 nor unless the aggregate of all losses, liabilities,
costs and expenses relating thereto for which Buyer would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to SEK 50
million (or the foreign currency equivalent thereof determined at the
exchange rate prevailing on the date thereof) and shall thereafter indemnify
all claims in their entirety on a Krona for Krona basis. The maximum
aggregate amount of liability under this clause shall not exceed the Purchase
Price. Any liability under clause (ii) above not known by Buyer (either by
notification by Seller or otherwise) within seven (7) years of the Closing
Date shall cease.
6.3 Knowledge of a Breach. Neither party shall have a right
to indemnification under Sections 6.1(b), 6.1(c) and 6.2 with respect to any
matter as to which it
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<PAGE>
had prior to signing this Agreement been provided with specific information,
provided, however, that this shall not apply to:
(i) any matter within the scope of Section 6.1(a) and
Schedule 6.1(a); and
(ii) any matter which is designated as a Post-Closing Item in
Section 5.2.1 or as to which the Agreement or the Schedules are expressed to
be incomplete.
6.4 Survival of Indemnification for Breach of Warranty. All
representations and warranties contained in this Agreement and Related
Agreements and the right of either party to make a claim for a breach of the
other party's representations or warranties shall survive the Closing Date
for a period of two (2) years except that: (a) claims for indemnification
pursuant to Sections 2.1.1, 2.1.2, 2.1.3, 2.1.11 and 2.1.17 shall survive the
Closing Date for five (5) years; and (b) claims for indemnification pursuant
to Section 2.1.22 shall survive until six (6) months after final assessment
of any taxes (as defined therein); provided that such written notice
specifying in reasonable detail the nature and amount of the claim shall be
given within the relevant survival period, it shall not be a condition to the
indemnification of such claim that the payment, loss, cost or expense upon
which the claim would be based actually be realized or incurred prior to the
expiration of the relevant survival period. The covenants of the parties
contained herein shall survive indefinitely, save to the extent a specific
time period is identified in the relevant covenant.
6.5 Indemnification Procedures.
(a) Third Party Claims. In the event legal
proceedings shall be instituted or any other claim or demand shall be
asserted by any person in respect of which payment may be sought by a party
indemnified pursuant to this Article VI ("Indemnitee"), the Indemnitee shall
promptly cause written notice of the assertion of any claim of which it has
knowledge which is covered by this indemnity to be forwarded to the other
party ("Indemnitor"). The Indemnitor, at its expense, shall defend the
Indemnitee against, negotiate, settle or otherwise deal with any proceeding,
claim or demand which relates to any
37
<PAGE>
loss, liability, damage or deficiency indemnified against hereunder; provided
however, the Indemnitee may participate in any such proceeding with counsel
of its choice and at its expense. In dealing with any such matter, the
Indemnitor will act reasonably and in accordance with good faith business
judgment in the best interests of the VOAC Business. To the extent the
Indemnitor fails to defend such proceeding, claim or demand, and the
Indemnitee defends against, settles or otherwise deals with any such
proceeding, claim or demand, the Indemnitor shall reimburse the Indemnitee
for all liabilities, costs and expenses (including attorney's fees) incurred.
The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such legal proceeding,
claim or demand.
(b) Payment. After any final judgment or award
shall have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction and the expiration of the time in which to
appeal therefrom, or a settlement shall have been consummated, or Buyer and
Seller shall have arrived at a mutually binding agreement with respect to
such matter, or with regard to any other matter indemnified by the Indemnitor
hereunder, the Indemnitee shall forward to the Indemnitor notice of any sums
due owing pursuant thereto and the Indemnitor shall be required to pay all of
the sums so owing to the Indemnitee, at its option, either by certified or
official bank check in immediately available funds or by wire transfer of
immediately available funds to an account it designates, within ten (10) days
after the date of such notice.
6.6 Special Provisions for Environmental Indemnification.
The following provisions shall apply to claims by Buyer for indemnification
for any environmental liability pursuant to Section 2.1.17 ("Environmental
Liability"):
(a) Buyer shall notify Seller without undue delay
after receipt of knowledge of any facts which might give rise to an
Environmental Liability. Such notice shall include copies of all
documentation in Buyer's possession (e.g., notices or other communications
from a Governmental Entity, studies, test results) concerning such
Environmental Liability.
(b) Buyer shall notify Seller without undue delay
of any Cleanup which it proposes to undertake on the Real Property. Promptly
thereafter and prior to
38
<PAGE>
undertaking any Cleanup, the parties will meet and attempt to agree,
in good faith, on the consulting, engineering and other firms
that will conduct the Cleanup. If the parties fail to agree within a
period of fifteen (15) days following notice by Buyer to Seller of the
proposed Cleanup, the parties shall, in good faith, jointly select an
independent environmental consulting firm which firm shall determine the
consulting, engineering and other firms that will conduct the Cleanup.
(c) Prior to Buyer entering into any written
agreement with a Governmental Entity or commencing litigation concerning the
scope, performance, or completion of Cleanup measures, Buyer agrees to
consult with Seller in good faith and not to unreasonably withhold its
consent to any reasonable suggestions of Seller concerning such proposed
agreement or litigation.
(d) As Cleanup measures are undertaken, Buyer
without undue delay shall notify Seller of any proposed course of action or
expenditure of a material nature and will meet with Seller in good faith
attempt to reach agreement concerning such proposed course of action or
expenditure. If the parties cannot reach agreement on the necessity or
reasonableness of any proposed course of action or expenditure of a material
nature within fifteen (15) days following notice by Buyer to Seller of the
proposed course of action or expenditure, the parties, shall, in good faith,
jointly select an independent environmental consulting firm which shall
determine the appropriate course of action or expenditures for the Cleanup
(which firm shall not be responsible for implementing the Cleanup).
(e) As used in this Agreement, the term "Cleanup"
means all actions taken to remedy any Environmental Liability.
ARTICLE VII. MISCELLANEOUS
7.1 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and personally
delivered or sent by registered or certified mail, return receipt requested,
postage prepaid, or if sent by facsimile
39
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transmission with confirmation of receipt addressed as follows or to such
other address as the parties shall have given notice of pursuant hereto:
Buyer: Parker Pneumatic AB
c/o Parker Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112-1290
Attn: Joseph D. Whiteman, Esq.
Vice President, General Counsel
and Secretary
Telecopy: (216) 481-4057
Telephone: (216) 531 3000
With a copy to:
Rydin & Carlsten Advokatbyra AB
Attn: Hans Carlsten, Esq.
Box 1766
S-111 87 Stockholm
Sweden
Telecopy: +46-8-611 48 50
Telephone: +46-8-679 51 70
Seller: AVC Intressenter AB
c/o Lagerlof & Leman Advokatbyra AB
Box 2252
S-403 14 Goteborg
Sweden
Attn: Tryggve Wahlin, Esq.
Telecopy: +46-31-13 56 62
Telephone: +46-31-17 10 00
With copies to:
Volvo Aero Corporation
S-461 81 Trollhattan
Attn: Lars Lidman, Esq.
Telecopy: +46-520-134 91
Telephone: +46-520-949 79
Atlas Copco AB
S-105 23 Stockholm
Sweden
Attn: Hakan Osvald, Esq.
Assistant General Counsel
Telecopy: +46-8-743 80 37
Telephone: +46-8-743 89 95
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<PAGE>
The provision of copies shall be for convenience only and not a requirement
for the effectiveness of any notice.
7.2 Entire Agreement. This Agreement, the Related
Agreements, the Schedules and Appendices hereto and thereto represent the
entire understanding and agreement and supersede all prior agreements,
understandings or arrangements among the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of
such amendment, supplement, modification or waiver is sought.
7.3 Entry-Way. Detailed plans for a new employee entry-
way, paved parking area and fencing at Trollhattan, Sweden, are attached
hereto as Schedule 7.3. The identified work will be completed by Seller at
its expense as soon as practical after Closing but not later than
June 30, 1996.
7.4 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.5 Applicable Law/Forum. This Agreement shall be governed
by and construed and enforced in accordance with the laws of Sweden. All
disputes arising in connection with this Agreement or the Related Agreements
shall be finally settled under the Rules of the Arbitration Institute of the
Stockholm Chamber of Commerce by arbitrators appointed in accordance with the
said Rules. The arbitration proceedings shall take place in Stockholm and
shall be conducted in English.
7.6 Expenses. Whether or not the transactions contemplated
hereby are consummated, the parties hereto shall pay their own respective
expenses.
7.7 Waiver. Any party may, by written notice to another
party: (a) extend the time for the performance of any of the obligations or
other actions of such other party; (b) waive any inaccuracies in the
representations of such other party contained in this
41
<PAGE>
Agreement; or (c) waive compliance with any of the agreements of such other
party contained in this Agreement or waive or consent to the modification of
performance of any of the obligations of such other party. No other action
taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition, or agreement contained herein.
7.8 Severability. If at any time subsequent to the date
hereof, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of
such provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
7.9 Incorporation by Reference. The Schedules and Appendices
to this Agreement constitute integral parts of this Agreement and are hereby
incorporated into this Agreement by this reference.
7.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
7.11 Assignment. The rights and obligations under this
Agreement may not be assigned or delegated, in whole or in part, to any third
party without the prior written consent of the other parties hereto, except
that Buyer may assign its rights hereunder to Parker Hannifin Corporation or
Parker Intangibles Inc. or any other wholly-owned subsidiary of Parker
Hannifin Corporation, provided that Buyer shall guarantee the due performance
by such subsidiary of its obligations hereunder, and provided further that
the representations, warranties, covenants and indemnity obligations of
Seller, Volvo and Atlas Copco for the benefit of Buyer shall be deemed to
benefit, as and to the extent appropriate, each of the Local Buyers.
7.12 Resignation of VOAC President. Prior to the Closing
Johan Halling, President of VOAC, will have submitted his resignation and all
matters of his
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employment, directorships and severance will have been completed. Seller
will indemnify and hold Buyer harmless for all costs associated with his
termination.
7.13 Discharge From Liability. At the next appropriate Annual
Shareholders Meeting Buyer shall cause the directors of VOAC resigning in
connection with Closing to be discharged from liability for 1996 provided that
the auditors of VOAC recommend such discharge.
7.14 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person;
(b) "enforceability," "binding and enforceable in
accordance with its terms" or terms of similar import, where they describe an
obligation of a party to any agreement, shall be deemed in all cases to be
subject to applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
or by legal or equitable principles relating to or limiting creditors' rights
generally;
(c) "business day" means any day other than a
Saturday, Sunday or a public bank holiday, or equivalent for banks generally
under the laws of Sweden;
(d) "person" means an individual, corporation,
partnership, association, trust or any unincorporated organization; and
(e) "hold harmless" as set forth in Sections
6.1(a), 6.1(b) and 6.2 above shall mean having a nil impact on an after tax
basis.
7.15 Further Assurances. The parties hereto agree to execute
such other documents or agreements as may be necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the day and year first above written.
PARKER PNEUMATIC AB AVC INTRESSENTER AB
By: Joseph D. Whiteman By: Tryggve Wahlin
Name: Name:
Title: Director Title:
VOLVO AERO CORPORATION ATLAS COPCO AB (publ)
By: Lars Lidman By: Lennart Johansson
Name: Name:
Title: General Counsel Title: Senior Vice President
PARKER HANNIFIN CORPORATION . . . . . . . . . . . . . . . . . . .
By: Lawrence M. Zeno By: Hakan Osvald
Name: Name:
Title: Vice President Title: Attorney-in-fact
<PAGE>
LIST OF SCHEDULES
Schedule 1.1: List of Transferred Subsidiaries and Local Buyers
and Purchase Prices and Dividends
* Schedule 1.2.3 (i): Base Balance Sheet
* Schedule 1.2.3 (ii): Accounting Principles used to prepare the Base
Balance Sheet
* Schedule 2.1.2: Share Capital of VOAC and Subsidiaries
* Schedule 2.1.6: Subsidiaries
* Schedule 2.1.7: Actions since July 1, 1995
* Schedule 2.1.8: List of Proprietary Property
* Schedule 2.1.9: List of Real Property
* Schedule 2.1.11: Title to Property
* Schedule 2.1.12: List of contracts and commitments
* Schedule 2.1.14: List of powers of attorney and bank accounts
* Schedule 2.1.15: List of litigation judgments, decrees, etc.
* Schedule 2.1.17(a): List of permits, licenses, franchises,
authorizations, etc.
* Schedule 2.1.17(b): Environmental disclosure
* Schedule 2.1.17(c): Hazardous materials
* Schedule 2.1.18: Workers' injuries
* Schedule 2.1.19: Trade union activity
* Schedule 2.1.21: Anticipated adverse trends and/or reduction in
sales volume
* Schedule 2.1.23: List of consents, approvals and Contractual Consents
* Schedule 2.1.24: Compliance with Laws
* Schedule 2.1.30 Uncollectible Accounts Receivable
* Schedule 2.1.31 Insurance
* Schedule 2.2.7 Compliance with Laws
* Schedule 3.2.3 Shared Services
* Schedule 6.1(a) Falkoping Site
* Schedule 7.3 Entry-Way
* Schedule omitted from EDGAR filing.
<PAGE>
APPENDICES
1. Forms of Stock Transfer Agreement for Subsidiaries
(Omitted from EDGAR filing)
<PAGE>
SCHEDULE 1.1
Purchase Price Dividend before
Local Buyer Preliminary closing
_________________ __________________ ______________ _______________
VOAC Hydraulics Parker Hannifin TSEK 3,072 -
A/S, Denmark Denmark A/S
VOAC Hydraulics Parker Hannifin Oy TSEK 7,145 TSEK 7,533
Ab, Finland
VOAC Hydraulics Parker Hannifin TSEK 10,074 -
S.A., France RAK SA
VOAC Hydraulics Parker Hannifin GmbH TSEK 12,874 -
GmbH, Germany
VOAC Hydraulics Parker Hannifin plc TSEK 9,045 TSEK 3,000
Ltd., Great Britain
VOAC Hydraulics Parker Hannifin S.p.A. TSEK 3,475 -
S.P.A., Italy
VOAC Hydraulics Parker Hannifin TSEK 1,561 -
S.A., Spain (espana) SA
VOAC Hydraulics Parker Hannifin Corp. TSEK 4,974 TSEK 9,500
Inc., USA
MASTER ASSET PURCHASE AGREEMENT
Dated as of January 15, 1996
By and Among
POWER CONTROL TECHNOLOGIES, INC.,
PNEUMO ABEX CORPORATION
and
PARKER HANNIFIN CORPORATION
TABLE OF CONTENTS
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . 12
ASSETS TO BE PURCHASED AND SOLD. . . . . . . . . . . . . 12
Section 1.1 Structure of Transaction . . . . . . . . . 12
Section 1.2 Seller's Assets . . . . . . . . . . . . . 13
(a) Acquired Assets. . . . . . . . . . . . . . . . . 13
(i) Acquired Facilities. . . . . . . . . . . . . 14
(ii) Tangible Personal Property . . . . . . . . . 14
(iii) Inventories. . . . . . . . . . . . . . . . . 14
(iv) Contracts. . . . . . . . . . . . . . . . . . 15
(v) Accounts and Notes Receivable. . . . . . . . 15
(vi) Cash . . . . . . . . . . . . . . . . . . . . 15
(vii) Intangible Acquired Assets . . . . . . . . . 15
(viii) Permits, Licenses, Registrations, Etc. . . . 16
(ix) Books and Records. . . . . . . . . . . . . . 16
(x) Security Deposits and Prepaid Expenses
and Third Party Claims . . . . . . . . . . 16
(xi) Causes of Action . . . . . . . . . . . . . . 16
(xii) Indemnification Rights . . . . . . . . . . . 16
(xiii) Other Balance Sheet Assets . . . . . . . . . 17
(b) Retained Assets . . . . . . . . . . . . . . . . 17
(i) Books and Records . . . . . . . . . . . . . 17
(ii) Tax Refunds. . . . . . . . . . . . . . . . . 17
(iii) Retained Intellectual Property. . . . . . . 17
(iv) Insurance. . . . . . . . . . . . . . . . . . 17
(v) Causes of Action . . . . . . . . . . . . . . 17
(vi) Certain Agreements . . . . . . . . . . . . . 18
(vii) Retained Subsidiaries. . . . . . . . . . . . 18
(viii) Other Retained Assets. . . . . . . . . . . . 18
(ix) Benefit Plans. . . . . . . . . . . . . . . . 18
(c) Acquired Stock . . . . . . . . . . . . . . . . . 18
Section 1.3 Seller's Liabilities . . . . . . . . . . . 18
(a) Assumed Liabilities . . . . . . . . . . . . . . . 18
(b) Liabilities Not Assumed . . . . . . . . . . . . . 21
<PAGE>
ARTICLE II. . . . . . . . . . . . . . . . . . . . . . . . . 24
CLOSING AND CLOSING DATE; PURCHASE PRICE. . . . . . . . . 24
Section 2.1 The Closing. . . . . . . . . . . . . . . . 24
(a) Closing Date . . . . . . . . . . . . . . . . . . 24
(b) Closing Documents . . . . . . . . . . . . . . . . 24
(i) Seller's Documents. . . . . . . . . . . . . . 24
(ii) Purchaser's Documents . . . . . . . . . . . . 25
Section 2.2 Payments at the Closing . . . . . . . . . 26
(a) Cash Purchase Price . . . . . . . . . . . . . . . 26
(b) Assumed Liabilities . . . . . . . . . . . . . . . 26
Section 2.3. Post-Closing Adjustment . . . . . . . . . 26
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . 28
REPRESENTATIONS AND WARRANTIES OF THE SELLER. . . . . . . 28
Section 3.1 Organization; Subsidiaries. . . . . . . . 28
Section 3.2. Authority . . . . . . . . . . . . . . . . 29
Section 3.3 Consents and Approvals; No Violations . . 30
Section 3.4 SEC Reports and Financial Statements. . . 31
Section 3.5 Corporate Organization. . . . . . . . . . 32
Section 3.6 Seller Balance Sheet. . . . . . . . . . . 32
Section 3.7 Title to Acquired Assets. . . . . . . . . 32
Section 3.8 Litigation. . . . . . . . . . . . . . . . 33
Section 3.9 Employee Benefits . . . . . . . . . . . . 33
Section 3.10 Absence of Undisclosed Liabilities. . . . 36
Section 3.11 Absence of Certain Changes or Events. . . 36
Section 3.12 No Violation of Law . . . . . . . . . . . 37
Section 3.13 Taxes . . . . . . . . . . . . . . . . . . 37
Section 3.14 Labor Controversies . . . . . . . . . . . 39
Section 3.15 Licenses. . . . . . . . . . . . . . . . . 40
Section 3.16 Acquired Intellectual Property. . . . . . 40
Section 3.17 Material Contracts. . . . . . . . . . . . 42
Section 3.18 Insurance . . . . . . . . . . . . . . . . 43
Section 3.19 Environmental Matters . . . . . . . . . . 43
Section 3.20 Intentionally Omitted . . . . . . . . . . 45
Section 3.21 Backlog . . . . . . . . . . . . . . . . . 45
Section 3.22 Inventory; Accounts Receivable. . . . . . 45
Section 3.23 Personal Property . . . . . . . . . . . . 45
Section 3.24 Sales Volume; Adverse Trends. . . . . . . 45
Section 3.25 Absence of Certain Business Practices . . 46
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Section 3.26 Government Contract Rights. . . . . . . . 46
Section 3.27 Asbestos Matters. . . . . . . . . . . . . 47
ARTICLE IV. . . . . . . . . . . . . . . . . . . . . . . . . 48
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . 48
Section 4.1 Organization . . . . . . . . . . . . . . . 48
Section 4.2 Authority . . . . . . . . . . . . . . . . 48
Section 4.3 Consents and Approvals; No Violations . . 49
Section 4.4 Funds Available for Purchase Price. . . . 50
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . 49
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.1 Conduct of the Aerospace Business. . . . . 49
(a) Ordinary Course . . . . . . . . . . . . . . . . . 50
(b) Governing Documents . . . . . . . . . . . . . . . 50
(c) No Acquisitions; Material Commitments . . . . . . 50
(d) No Dispositions . . . . . . . . . . . . . . . . . 50
(e) Indebtedness. . . . . . . . . . . . . . . . . . . 50
(f) Changes to Benefit Plans. . . . . . . . . . . . . 51
(g) Accounting Policies and Procedures. . . . . . . . 51
(h) Contracts . . . . . . . . . . . . . . . . . . . . 51
(i) Other Actions . . . . . . . . . . . . . . . . . . 51
Section 5.2 Covenants of the Parties . . . . . . . . . 52
ARTICLE VI. . . . . . . . . . . . . . . . . . . . . . . . . 53
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . 53
Section 6.1 Reasonable Efforts . . . . . . . . . . . . 53
Section 6.2 Access to Information. . . . . . . . . . . 54
Section 6.3 Further Assurances; Subsequent Transfer. . 54
Section 6.4 Stockholders' Meeting; Fiduciary Duties;
Nonsolicitation. . . . . . . . . . . . . 56
Section 6.5 Acquired Intellectual Property . . . . . . 57
(a) Use of Names. . . . . . . . . . . . . . . . . . . 57
(b) Assignments of Acquired Intellectual Property . . 57
Section 6.6. Employee Matters;Employee Benefit Plans. . 58
Section 6.7 Fees and Expenses. . . . . . . . . . . . . 61
Section 6.8 Cash Collections and Disbursements . . . . 61
Section 6.9 Insurance. . . . . . . . . . . . . . . . . 62
Section 6.10 Purchase Price Allocation for Tax
Purposes . . . . . . . . . . . . . . . . 62
Section 6.11 Guaranties; Letters of Credit. . . . . . . 63
iii
<PAGE>
Section 6.12 Disclosure Schedule Updates. . . . . . . . 63
Section 6.13 Tax Returns. . . . . . . . . . . . . . . . 63
Section 6.14 Cooperation. . . . . . . . . . . . . . . . 64
Section 6.15 W-2 Preparation. . . . . . . . . . . . . . 64
Section 6.16 Books and Records; Personnel . . . . . . . 64
Section 6.17 Certain Tax Elections. . . . . . . . . . . 65
Section 6.18 Real Estate Matters. . . . . . . . . . . . 65
Section 6.19 Non-competition. . . . . . . . . . . . . . 66
Section 6.20 Certain Other Matters. . . . . . . . . . . 67
Section 6.21 Customer Warranty Claims . . . . . . . . . 68
Section 6.22 Assignment and License of Additional
Intellectual Property. . . . . . . . . . 68
(a) Assignment. . . . . . . . . . . . . . . 68
(b) License . . . . . . . . . . . . . . . . 69
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . 69
INDEMNIFICATION . . . . . . . . 69
Section 7.1 Certain Definitions. . . . . . . . 69
(a) Losses. . . . . . . . . . . . . . . . . 69
(b) Third-Party Claims. . . . . . . . . . . 70
(c) Indemnitee. . . . . . . . . . . . . . . 70
(d) Indemnitor. . . . . . . . . . . . . . . 70
(e) Notice Period . . . . . . . . . . . . . 70
(f) Claim Notice. . . . . . . . . . . . . . 71
Section 7.2 Indemnity by the Seller and
the Parent . . . . . . . . . . . . 71
(a) Retained Liabilities. . . . . . . . . . 71
(b) Third-Party Claims. . . . . . . . . . . 71
(c) Breach of Representation, Warranty, Etc 71
Section 7.3 Indemnity by the Purchaser . . . . 72
(a) Assumed Liabilities . . . . . . . . . . 72
(b) Third-Party Claims. . . . . . . . . . . 72
(c) Breach of Representation, Warranty, Etc 72
(d) Welfare Plans . . . . . . . . . . . . . 73
Section 7.4 Notification of Third-Party Claims 73
(a) Timely Delivery of Claim Notice . . . . 73
(b) Late Delivery of Claim Notice . . . . . 73
Section 7.5 Defense of Claims. . . . . . . . . 74
Section 7.6 Access and Cooperation . . . . . . 75
Section 7.7 Assessment of Claims . . . . . . . 75
iv
<PAGE>
Section 7.8 Limits on Indemnification. . . . . 75
(a) Limitations on the Seller's Environmental
Indemnification . . . . . . . . . . . . 75
(b) Indemnity Basket. . . . . . . . . . . . 76
(c) Limit of Liability. . . . . . . . . . . 77
Section 7.9 Survival of Representations
and Warranties . . . . . . . . . . 77
Section 7.10 Environmental Cleanup Claims
Handling . . . . . . . . . . . . . 77
ARTICLE VIII . . . . . . . . . 81
CONDITIONS. . . . . . . . . . 81
Section 8.1 Conditions to Each Party's
Obligation to Close. . . . . . . . 81
(a) Stockholder Approval. . . . . . . . . . 81
(b) HSR and German Cartel Approval. . . . . 81
(c) Other Approvals . . . . . . . . . . . . 81
(d) No Injunctions or Restraints. . . . . . 81
(e) No Action . . . . . . . . . . . . . . . 82
(f) Closing Under German and Japanese
Stock Purchase Agreements . . . . . . . A2
Section 8.2 Conditions of Obligations of
the Purchaser. . . . . . . . . . . 82
(a) Representations and Warranties. . . . . 82
(b) Performance of Obligations of the Seller 82
(c) Required Assurances . . . . . . . . . . 82
(d) Seller Documents. . . . . . . . . . . . 83
Section 8.3 Conditions of Obligations of
the Seller . . . . . . . . . . . . 83
(a) Representations and Warranties. . . . . 83
(b) Performance of Obligations of the
Purchaser . . . . . . . . . . . . . . . 83
(c) Purchaser Documents . . . . . . . . . . 83
Section 8.4 If Conditions Not Satisfied. . . . 83
ARTICLE IX. . . . . . . . . . 84
TERMINATION AND AMENDMENT. . . . . . 84
Section 9.1 Termination. . . . . . . . . . . . 84
Section 9.2 Effect of Termination. . . . . . . 85
Section 9.3 Termination Fee. . . . . . . . . . 85
ARTICLE X. . . . . . . . . . 85
MISCELLANEOUS. . . . . . . . . 85
Section 10.1 Amendment. . . . . . . . . . . . . 85
Section 10.2 Extension; Waiver. . . . . . . . . 85
Section 10.3 Notices. . . . . . . . . . . . . . 85
v
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Section 10.4 Interpretation . . . . . . . . . . 86
Section 10.5 Counterparts . . . . . . . . . . . 87
Section 10.6 Entire Agreement; No Third Party
Beneficiaries. . . . . . . . . . . 87
Section 10.7 Governing Law. . . . . . . . . . . 87
Section 10.8 Specific Performance . . . . . . . 87
Section 10.9 Broker's Fees. . . . . . . . . . . 87
Section 10.10 Publicity . . . . . . . . . . . . 87
Section 10.11 Bulk Sales Law. . . . . . . . . . 88
Section 10.12 Assignment. . . . . . . . . . . . 88
Section 10.13 Parent Obligation . . . . . . . . 88
EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . 90
(Exhibits have been omitted from the EDGAR filing)
vi
<PAGE>
GLOSSARY OF DEFINED TERMS
Abex Aerohydraul. . . . . . . . . . . . . . . . . . . . . . 13
Abex Industries . . . . . . . . . . . . . . . . . . . . . . 13
Abex Japan. . . . . . . . . . . . . . . . . . . . . . . . . 13
Acquired Assets . . . . . . . . . . . . . . . . . . . . . . 12
Acquired Facilities . . . . . . . . . . . . . . . . . . . . 14
Acquired Intellectual Property. . . . . . . . . . . . . . . 15
Acquired Stock. . . . . . . . . . . . . . . . . . . . . . . 18
Active Aerospace Business Employees . . . . . . . . . . . . 19
Active and Former Aerospace Business Employees. . . . . . . 19
Aerospace Business. . . . . . . . . . . . . . . . . . . . . 12
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 12
Assets and Liabilities. . . . . . . . . . . . . . . . . . . 59
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . 18
Base Net Worth. . . . . . . . . . . . . . . . . . . . . . . 26
Bill of Sale. . . . . . . . . . . . . . . . . . . . . . . . 25
Camarillo Facility. . . . . . . . . . . . . . . . . . . . . 13
Claim Notice. . . . . . . . . . . . . . . . . . . . . . . . 71
Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Closing Balance Sheet . . . . . . . . . . . . . . . . . . . 26
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . 24
Closing Net Worth . . . . . . . . . . . . . . . . . . . . . 28
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Compensation and Benefit Plans. . . . . . . . . . . . . . . 34
Competing Transaction . . . . . . . . . . . . . . . . . . . 57
Complete Registrations. . . . . . . . . . . . . . . . . . . 69
Confidential Information. . . . . . . . . . . . . . . . . . 64
Confidentiality Agreement . . . . . . . . . . . . . . . . . 54
Contract. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Contracting Subsidiary. . . . . . . . . . . . . . . . . . . 29
Conveyancing Agreements . . . . . . . . . . . . . . . . . . 25
Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . 15
Corporate Name. . . . . . . . . . . . . . . . . . . . . . . 15
Covered Acquired Intellectual Property. . . . . . . . . . . 39
vii
<PAGE>
Current Environmental Laws. . . . . . . . . . . . . . . . . 75
Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
DGCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Divested Businesses . . . . . . . . . . . . . . . . . . . . 31
Environmental Assessments . . . . . . . . . . . . . . . . . 44
Environmental Cleanup Claims. . . . . . . . . . . . . . . . 77
Environmental Laws . . . . . . . . . . . . . . . . . . . . 44
Environmental Liabilities . . . . . . . . . . . . . . . . . 21
Environmental Notice. . . . . . . . . . . . . . . . . . . . 67
Environmental Notice Period . . . . . . . . . . . . . . . . 67
Environmental Reports . . . . . . . . . . . . . . . . . . . 44
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . 34
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . 30
Final Balance Sheet . . . . . . . . . . . . . . . . . . . . 27
Final Purchase Price. . . . . . . . . . . . . . . . . . . . 28
Former Aerospace Business Employees . . . . . . . . . . . . 19
Frozen Retirement Income Plan . . . . . . . . . . . . . . . 56
German Stock Purchase Agreement . . . . . . . . . . . . . . 13
Government Contracts. . . . . . . . . . . . . . . . . . . . 31
Governmental Entity . . . . . . . . . . . . . . . . . . . . 30
Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . 20
Hazardous Substances. . . . . . . . . . . . . . . . . . . . 44
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . 38
Indemnification Cap . . . . . . . . . . . . . . . . . . . . 77
Indemnification Period. . . . . . . . . . . . . . . . . . . 77
Indemnitee. . . . . . . . . . . . . . . . . . . . . . . . . 70
Indemnitor. . . . . . . . . . . . . . . . . . . . . . . . . 70
Independent Accounting Firm . . . . . . . . . . . . . . . . 27
Intellectual Property Assignments . . . . . . . . . . . . . 24
Japanese Stock Purchase Agreement . . . . . . . . . . . . . 13
Lease Documents . . . . . . . . . . . . . . . . . . . . . . 25
Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Licensed Marks. . . . . . . . . . . . . . . . . . . . . . . 69
Licensed Products . . . . . . . . . . . . . . . . . . . . . 69
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Material adverse effect on the Purchaser. . . . . . . . . . 47
viii
<PAGE>
Material adverse effect on the Aerospace Business . . . . . 29
MCG . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Most Recent Net Worth . . . . . . . . . . . . . . . . . . . 26
Net Pension Asset . . . . . . . . . . . . . . . . . . . . . 59
Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notice Period . . . . . . . . . . . . . . . . . . . . . . . 70
NWL Retirement Income Plan. . . . . . . . . . . . . . . . . 59
Off-Site Environmental Liabilities. . . . . . . . . . . . . 21
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Parent Financial Statements . . . . . . . . . . . . . . . . 31
Parent SEC Documents. . . . . . . . . . . . . . . . . . . . 31
Parker GMBH . . . . . . . . . . . . . . . . . . . . . . . . 13
Parker Intangibles. . . . . . . . . . . . . . . . . . . . . 13
Parker Japan. . . . . . . . . . . . . . . . . . . . . . . . 13
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . 34
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . 33
Pneumo Abex Retirement Income Plan. . . . . . . . . . . . . 58
Post-Closing Environmental Conditions . . . . . . . . . . . 44
Pre-Closing Environmental Conditions. . . . . . . . . . . . 44
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 12
Purchaser Disclosure Schedule . . . . . . . . . . . . . . . 49
Purchaser Documents . . . . . . . . . . . . . . . . . . . . 25
Purchaser Indemnified Parties . . . . . . . . . . . . . . . 71
Purchaser's Savings Plan. . . . . . . . . . . . . . . . . . 60
Recommendation. . . . . . . . . . . . . . . . . . . . . . . 56
Related to the Aerospace Business . . . . . . . . . . . . . 14
Release. .. . . . . . . . . . . . . . . . . . . . . . . . . 45
Responsible Authorities . . . . . . . . . . . . . . . . . . 45
Retained Agreements . . . . . . . . . . . . . . . . . . . . 18
Retained Assets . . . . . . . . . . . . . . . . . . . . . . 17
Retained Intellectual Property. . . . . . . . . . . . . . . 15
Retained Liabilities. . . . . . . . . . . . . . . . . . . . 21
Retained Subsidiaries . . . . . . . . . . . . . . . . . . . 17
Retired Employees . . . . . . . . . . . . . . . . . . . . . 60
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Securities Act. . . . . . . . . . . . . . . . . . . . . . . 31
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Seller Balance Sheet. . . . . . . . . . . . . . . . . . . . 17
ix
<PAGE>
Seller Disclosure Schedule. . . . . . . . . . . . . . . . . 14
Seller Documents. . . . . . . . . . . . . . . . . . . . . . 24
Seller Indemnified Parties. . . . . . . . . . . . . . . . . 72
Seller's knowledge. . . . . . . . . . . . . . . . . . . . . 28
Service . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Settlement Agreement. . . . . . . . . . . . . . . . . . . . 67
Stockholders' Meeting . . . . . . . . . . . . . . . . . . . 56
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . 29
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . 38
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Third-Party Claims. . . . . . . . . . . . . . . . . . . . . 70
Title Commitments . . . . . . . . . . . . . . . . . . . . . 65
Title Company . . . . . . . . . . . . . . . . . . . . . . . 65
Title Exceptions. . . . . . . . . . . . . . . . . . . . . . 65
Top Hat Plan. . . . . . . . . . . . . . . . . . . . . . . . 22
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . 16
Transferred Subsidiaries. . . . . . . . . . . . . . . . . . 18
U.S. Transferred Employees. . . . . . . . . . . . . . . . . 56
Vested/Retired Employees. . . . . . . . . . . . . . . . . . 58
Wagner. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Wagner Agreement. . . . . . . . . . . . . . . . . . . . . . 68
Wagner License. . . . . . . . . . . . . . . . . . . . . . . 69
Wagner License. . . . . . . . . . . . . . . . . . . . . . . 69
Whitman Agreements. . . . . . . . . . . . . . . . . . . . . 67
Whitman Stock Purchase Agreement. . . . . . . . . . . . . . 67
x
<PAGE>
MASTER ASSET PURCHASE AGREEMENT
MASTER ASSET PURCHASE AGREEMENT, dated as of January 15, 1996 (this
"Agreement"), by and among Power Control Technologies Inc., a Delaware
corporation (the "Parent"), Pneumo Abex Corporation, a Delaware corporation
(the "Seller"), and Parker Hannifin Corporation, an Ohio corporation (the
"Purchaser").
WHEREAS, the Purchaser and the Purchaser's Subsidiaries (as defined in
Section 3.1(c)) desire to acquire all of the assets, properties and rights of
every and all types whatsoever, whether real or personal, tangible or
intangible, of the Parent and the Seller and their Subsidiaries used in,
arising from or related to the design, manufacture and marketing of
components, subsystems and specialty materials for the commercial aerospace,
military aerospace, defense, turbine and racing car markets in the United
States and abroad (the "Aerospace Business") (all such assets other than the
Retained Assets (as defined in Section 1.2(b)) being referred to as the
"Acquired Assets"), and to assume the Assumed Liabilities (as defined in
Section 1.3(b)); and
WHEREAS, the Boards of Directors of each of the Parent, the Seller and
the Purchaser deem the acquisition of the Acquired Assets and the assumption
of the Assumed Liabilities by the Purchaser, subject to the terms, conditions
and provisions hereinafter set forth, advisable and in the best interests of
their respective stockholders and have authorized and approved by all
requisite action this Agreement and the transactions provided for herein;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
agreements herein contained, the parties, intending to be legally bound
hereby, agree as follows:
ARTICLE I
ASSETS TO BE PURCHASED AND SOLD
Section 1.1 Structure of Transaction. The purpose of this
Agreement is to set forth the basic framework and structure pursuant to which
the Purchaser and the Purchaser's Subsidiaries will acquire the Aerospace
Business. The parties acknowledge that the Purchaser is acquiring the assets
and assuming the liabilities of the Aerospace Business only and that the
Purchaser shall not be deemed to have any successor liability with respect
to any other products manufactured or sold, or operations conducted, by any
other businesses of the Seller, its predecessors, parents, subsidiaries or
affiliates, including without limitation, the manufacture or sale of any
asbestos-containing products.
1
<PAGE>
The Aerospace Business includes all assets at the following
locations, all of which are owned or leased by the Seller or one of its
wholly-owned Subsidiaries: Kalamazoo, Michigan; Beaufort, South Carolina;
Dublin, Georgia; Camarillo, California (the "Camarillo Facility"); Mainz-
Kastel, Germany; and Yokohama, Japan. The Purchaser, through its direct or
indirect wholly-owned subsidiaries, shall acquire the Aerospace Business
as follows:
(a) Parker Hannifin GmbH ("Parker GmbH"), an indirect,
wholly- owned affiliate of the Purchaser, will acquire all of the
stock of the Seller's direct wholly-owned German subsidiary, Abex
Industries Beteiligungs GmbH ("Abex Industries"), and all of the
stock which the Seller owns in its indirect wholly-owned German
subsidiary, Abex GmbH Aerohydraul ("Abex Aerohydraul"), from the
Seller pursuant to the terms of the agreement to be entered into
between Parker GmbH and the Seller in the form attached hereto as
Exhibit A (the "German Stock Purchase Agreement");
(b) Parker Hannifin Japan, Ltd. ("Parker Japan"), a
wholly-owned subsidiary of the Purchaser, will acquire the stock of
the Seller's Japanese subsidiary, Abex Japan Ltd. ("Abex Japan"),
pursuant to the terms of the agreement to be entered into between
Parker Japan and the Seller in the form attached hereto as Exhibit B
(the "Japanese Stock Purchase Agreement");
(c) Parker Intangibles Inc. ("Parker Intangibles"), a
wholly-owned subsidiary of the Purchaser, will purchase certain
patents and trademarks of the Aerospace Business in accordance with
this Agreement; and
(d) the Purchaser will purchase other assets of the
Aerospace Business and assume certain liabilities of the Aerospace
Business from the Seller in accordance with this Agreement.
Section 1.2 Seller's Assets.
(a) Acquired Assets. On the Closing Date (as defined
in Section 2.1(a)) and subject to the terms and conditions of this
Agreement, the Seller and its Subsidiaries shall sell, assign,
transfer, convey and deliver, or cause to be sold, assigned,
transferred, conveyed and delivered, to the Purchaser and Parker
Intangibles, and the Purchaser and Parker Intangibles shall
purchase, pay for and accept from the Seller and its Subsidiaries
all of the right, title and interest of the Seller and its
Subsidiaries in all of the Acquired Assets held by the Seller or its
Subsidiaries as of the Closing Date (provided, however, that for the
purposes of this Section 1.2(a) the Acquired Assets shall not be
deemed to include the assets of the Transferred Subsidiaries (as
defined in Section 1.2(c))), free and clear of all
2
<PAGE>
mortgages, liens, security interests or encumbrances other than the
Assumed Liabilities and Permitted Liens (as defined in Section 3.7(c)),
including, without limitation, the following assets, properties and
rights, other than the Retained Assets (as defined in Section
1.2(b)):
(i) Acquired Facilities. All of the owned facilities
Related to the Aerospace Business (as defined below), owned
by the Seller, all of which are identified in Section
1.2(a)(i) of the disclosure schedule delivered by the Seller
to the Purchaser on the date hereof (the "Seller Disclosure
Schedule") (collectively, the "Acquired Facilities"),
including, without limitation, the following:
(A) all real estate upon which the
Acquired Facilities are situated;
(B) any and all presently existing
easements or licenses necessary in connection
with the use of, or in order to maintain free
access to, the Acquired Facilities, except for
those easements or licenses identified in Section
1.2(a)(i) of the Seller Disclosure Schedule which
cannot be assigned by the Seller or its
Subsidiaries;
(C) all improvements constituting a part
of the Acquired Facilities; and
(D) all of the fixed plant, machinery and
equipment and all other fixtures and fittings
owned by the Seller or any of its Subsidiaries on
the Closing Date and used in connection with any
of the Acquired Facilities in, arising from or
related to the Aerospace Business ("Related to
the Aerospace Business") .
(ii) Tangible Personal Property. All moveable plant,
machinery, equipment, computer hardware, furniture, fixtures,
fittings, automobiles, trucks, tools and supplies, leasehold
improvements, and other tangible personal property owned by
the Seller or any of its Subsidiaries and, in each case,
Related to the Aerospace Business.
(iii) Inventories. All inventories of finished goods,
work in progress, raw materials, packaging, service parts and
supplies of the Seller or any of its Subsidiaries Related to
the Aerospace Business, whether or not
3
<PAGE>
recorded on the Seller Balance Sheet (as defined in Section 1.2
(a)(xiii)), and wherever located at the Closing Date.
(iv) Contracts. All Contracts (as defined in Section
3.3) and contract rights of the Seller or any of its
Subsidiaries Related to the Aerospace Business, including,
without limitation, all Contracts set forth in Section 3.17 of
the Seller Disclosure Schedule.
(v) Accounts and Notes Receivable. All accounts and
notes receivable of the Seller or any of its Subsidiaries
Related to the Aerospace Business.
(vi) Cash. All cash and marketable securities of the
Seller or any of its Subsidiaries Related to the Aerospace
Business.
(vii) Intangible Acquired Assets. All goodwill and
other intangible assets owned by the Seller or any of its
Subsidiaries Related to the Aerospace Business, excluding the
Pneumo Abex name (the "Corporate Name") and the registrations
for the Abex trademark or trade name set forth in Section
1.2(a)(vii) of the Seller Disclosure Schedule (together with
the Corporate Name, the "Retained Intellectual Property") and
subject to the existing licenses set forth in Section 3.17(i)
of the Seller Disclosure Schedule, including, without
limitation, the following intangible assets of an intellectual
property nature Related to the Aerospace Business
(collectively, but exclusive of the Retained Intellectual
Property, the "Acquired Intellectual Property"):
(A) all know-how, confidential or
proprietary technical information, trade
secrets, designs, processes, computer software
and data bases originating with the Seller or any
of its Subsidiaries or as a "work for hire"
created for the Seller or any of its
Subsidiaries, research in progress, inventions
and invention disclosures (whether patentable or
unpatentable) and drawings, schematics,
blueprints, flow sheets, designs and models, of
any nature whatsoever;
(B) all copyrights, copyright
registrations and copyright applications (the
"Copyrights");
(C) all patents, patent applications,
patents pending, patent disclosures on inventions
and all patents
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issued upon said patent applications or based upon such
disclosures but excluding the Retained Intellectual Property
(the "Patents"); and
(D) all registered and unregistered trade
names, trademarks, service marks, part number
designations, trade dress, logos and slogans,
together with all registrations and recordings
and all applications for registration therefor
and all goodwill relating to all of the foregoing
but excluding the Retained Intellectual Property
(the "Trademarks").
(viii) Permits, Licenses, Registrations, Etc. To the
extent assignable, all consents, permits, licenses, orders,
registrations, franchises, certificates, approvals or other
similar rights from any federal, state or local regulatory
agencies Related to the Aerospace Business, including, without
limitation, the Licenses (as defined in Section 3.15).
(ix) Books and Records. All books and records of the
Seller and its Subsidiaries Related to the Aerospace Business,
including, without limitation, financial records, customer
lists, payment histories, sales and other records, promotional
material, operating manuals and guidelines, software manuals
and documentation, files, documents, papers, data stored in
electronic, optical or magnetic form, agreements, books of
account, Contracts, correspondence, plats, plans and drawings
and specifications.
(x) Security Deposits and Prepaid Expenses and Third
Party Claims. All security deposits and prepaid expenses and
other prepaid items made by the Seller or any of its
Subsidiaries Related to the Aerospace Business.
(xi) Causes of Action. Subject to Section 1.2(b) (v),
all rights to causes of action, lawsuits, judgments, rights
of recovery, warranties, guarantees, refunds, settlements,
claims and demands of any nature available to or being pursued
by the Seller or any of its Subsidiaries to the extent
relating to any Assumed Liabilities (except to the extent the
Purchaser has previously received indemnity payments from the
Seller with respect thereto) or any Acquired Assets or
otherwise Related to the Aerospace Business, whether arising
by way of counterclaim or otherwise, including rights to
recoveries under insurance policies with respect to insured
liabilities that arise from or relate to the Acquired Assets
or that are otherwise Related to the Aerospace Business,
except, in all cases, to the
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extent relating to the Retained Assets or the Retained Liabilities.
(xii) Indemnification Rights. Subject to Sections
1.2(b)(vi) and 6.3, all warranties, indemnities and similar
rights in favor of the Seller or any of its Subsidiaries to
the extent relating to any Assumed Liabilities (except to the
extent the Purchaser has been indemnified by the Seller with
respect thereto), any Acquired Assets or otherwise Related to
the Aerospace Business, whether such rights arise prior to or
after the Closing Date, except, in all cases, to the extent
relating to the Retained Assets or the Retained Liabilities.
(xiii) Other Balance Sheet Assets. All assets of the
Seller or any of its Subsidiaries which are reflected or of a
type included on the balance sheet of the Seller as of
September 30, 1995 (the "Seller Balance Sheet") included in
Section 2.3 of the Seller Disclosure Schedule.
(b) Retained Assets. Notwithstanding anything contained
herein to the contrary, the Seller shall not sell, transfer, convey
or deliver, or cause to be sold, transferred, conveyed or delivered,
to the Purchaser, and the Purchaser shall not purchase from the
Seller the following assets, properties, interests and rights of the
Seller and/or of its Subsidiaries (the "Retained Assets"; provided,
however, that for the purpose of this Section 1.2(b), the Retained
Assets shall not be deemed to include any assets of the Transferred
Subsidiaries):
(i) Books and Records. All books and records of the
Seller or any of its Subsidiaries related to the Retained
Assets or the Retained Liabilities.
(ii) Tax Refunds. All claims of the Seller or any of
the Retained Subsidiaries (as defined in Section 1.2(b)(vii))
for refunds, credits, carrybacks or carry forwards in
connection with any Income Taxes or other Taxes (as each such
item is defined in Section 3.13(b)) for tax periods ending on
or prior to the Closing Date and the proceeds thereof.
(iii) Retained Intellectual Property. The Retained
Intellectual Property.
(iv) Insurance. All insurance policies, binders and
related prepaid expenses, other than insurance policies to the
extent a Transferred Subsidiary is the first named insured.
(v) Causes of Action. All rights, claims, actions and
causes of
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action which the Seller or any of its Subsidiaries or affiliates may
have against any person and all rights to recoveries under insurance
policies to which a Transferred Subsidiary is the first named
insured with respect to insured liabilities, in each case to the
extent related to any Retained Liabilities or any Retained Assets,
including all proceeds remitted to the Seller or any of its
Subsidiaries from claims, rights and causes of action with respect
thereto, or to Assumed Liabilities to the extent the Purchaser
has previously received indemnity payments from the Seller
with respect thereto.
(vi) Certain Agreements. The agreements identified on
Section 1.2(b)(vi) of the Seller Disclosure Schedule (the
"Retained Agreements"), including all rights of the Seller or
any of its Subsidiaries thereunder.
(vii) Retained Subsidiaries. All of the capital stock
or other equity interests held by the Seller or any of its
Subsidiaries in the corporations identified in Section
1.2(b)(vii) of the Seller Disclosure Schedule (the "Retained
Subsidiaries").
(viii) Other Retained Assets. All of the assets,
properties, interests and rights of the Seller or any of its
Subsidiaries described or listed in Section 1.2(b)(viii) of
the Seller Disclosure Schedule.
(ix) Benefit Plans. Except as provided in Section
6.6(b), all assets related to or held under any Compensation
and Benefit Plan (as defined in Section 3.9).
(c) Acquired Stock. On the Closing Date, the Seller shall
sell, transfer, convey and deliver to Parker Japan all of the
capital stock of Abex Japan and to Parker GmbH all of the capital
stock of Abex Industries and all of the capital stock owned by the
Seller in Abex Aerohydraul (Abex Japan, Abex Industries and Abex
Aerohydraul are hereinafter referred to as the "Transferred
Subsidiaries"), free and clear of all mortgages, liens, security
interests or encumbrances, (the capital stock of the Transferred
Subsidiaries is hereinafter referred to as the "Acquired Stock").
Section 1.3 Seller's Liabilities.
(a) Assumed Liabilities. On and as of the Closing
Date and subject to the terms and conditions of this Agreement, the
Purchaser shall assume and agree to pay, perform and discharge as
and when due the following liabilities and obligations of the
Seller or any of its Subsidiaries Related to the Aerospace
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Business, whether fixed, absolute or contingent, material or immaterial,
matured or unmatured, as the same exist as of the Closing Date
except for the Retained Liabilities (as defined in Section 1.3(b))
(collectively, the "Assumed Liabilities") (it being understood,
however, that the Purchaser is assuming all of the liabilities of
the Transferred Subsidiaries, except as otherwise provided herein):
(i) all liabilities and obligations of the Seller or
any of its Subsidiaries that are reflected or of a type
reserved against on the 1 Seller Balance Sheet, to the extent
such liabilities or obligations have not been paid or
discharged prior to Closing Date, and such categories of
liabilities and obligations incurred in the ordinary course of
the Aerospace Business consistent with past practice since the
date of the Seller Balance Sheet, including, without
limitation, all accounts payable, accrued expenses, trade
obligations, notes payable, general liability or automobile
liability claims, Taxes (as defined in Section 3.13(b)) other
than Income Taxes (as defined in Section 3.13(b)), and any
other liabilities or obligations of a type which is reserved
against on the Seller Balance Sheet, in each case Related to
the Aerospace Business;
(ii) all capital commitments of the Seller or any of
its Subsidiaries Related to the Aerospace Business either
identified in Section 1.3(a)(ii) of the Seller Disclosure
Schedule or made in the ordinary course of business and not
exceeding $25,000 individually or $100,000 in the aggregate
for each month from the date hereof through the Closing Date
or otherwise agreed to in writing by the Purchaser;
(iii) with respect to all employees who are employed
by the Seller or its Subsidiaries on the Closing Date,
substantially all of whom are listed in Section 1.3(a)(iii) of
the Seller Disclosure Schedule (the "Active Aerospace Business
Employees"), all liabilities and obligations of the Seller and
its Subsidiaries under, or relating to, wages, bonuses,
commissions, FICA and FUTA payments, incentive compensation,
vacation pay, and employment, consultant, severance or
termination agreements and arrangements;
(iv) with respect to Active Aerospace Business
Employees and those former employees of the Aerospace
Business listed in Section 1.3(a)(iv) of the Seller Disclosure
Schedule, all liabilities and obligations relating to
continuation health coverage described in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), or the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently
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existing or that may arise as a result of the transactions
contemplated by this Agreement or otherwise;
(v) with respect to those individuals listed in
Section 1.3(a)(v) of the Seller Disclosure Schedule, all
liabilities and obligations with respect to the provision of
the benefits listed in Section 1.3(a)(v) of the Seller
Disclosure Schedule after the Closing Date;
(vi) the Liabilities of the NWL Retirement Income Plan
(both as defined in Section 6.6(b));
(vii) to the extent not otherwise constituting
Retained Liabilities, all liabilities and obligations under or
related to existing Licenses and Contracts which constitute
Acquired Assets;
(viii) all liabilities and obligations Related to the
Aerospace Business arising from outstanding commitments (in
the form of accepted purchase orders or otherwise) to sell
products, or outstanding quotations, proposals or bids with
respect to the sale of products;
(ix) all liabilities and obligations Related to the
Aerospace Business arising from outstanding commitments (in
the form of issued purchase orders or otherwise), or
outstanding quotations, proposals or bids, to purchase or
acquire finished goods, raw materials, components, supplies or
services;
(x) all liabilities and obligations Related to the
Aerospace Business arising from any rights or claims of
customers of the Aerospace Business to return or exchange
products sold by the Aerospace Business or arising under any
warranty related to such products;
(xi) all liabilities and obligations of the Seller and
its Subsidiaries in respect of the foreign exchange contracts,
letters of credit, guaranties, bid bonds, letters of comfort
and performance bonds Related to the Aerospace Business set
forth in Section 1.3(a)(xi) of the Seller Disclosure Schedule
and those incurred in the ordinary course of the Aerospace
Business consistent with past practice from the date hereof to
the Closing Date (collectively, the "Guaranties");
(xii) all liabilities and obligations arising from or
in connection with any claim or litigation Related to the
Aerospace Business which is
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described in Section 1.3(a)(xii) of the Seller Disclosure Schedule
or arising from or alleged to have arisen from any actual or alleged
injury to persons or property occurring after the Closing Date
either as a result of the ownership, possession or use of any
product manufactured or sold by the Aerospace Business (including
for purposes of this Section 1.3(a)(xii) products manufactured,
serviced or sold at or from the Seller's former facilities at
Oxnard and Santa Maria, California and at or from the business
formerly conducted by Jensen-Kelley Corporation) or of any
violation of applicable law in the operation of the Aerospace
Business, including any relating to workers' compensation,
occupational health and safety, occupational disease,
occupational injury or toxic tort; and
(xiii) all liabilities and obligations Related to the
Aerospace Business arising from or connected with
Environmental Laws or Hazardous Substances (each as defined in
Section 3.19(b)) and response costs under 42 U.S.C. Section 7601 et
seq. or any state law or Cleanup (as defined in Section
3.19(b)) expense (collectively, "Environmental Liabilities"),
that relate to (A) Post-Closing Environmental Conditions (as
defined in Section 3.19(b)), or (B) actions by the Purchaser
or any of its affiliates that result in a violation of Section
12(g) of the Whitman Stock Purchase Agreement (as defined in
Section 6.20(a)), as amended by the Settlement Agreement (as
defined in Section 6.20(a)).
(b) Liabilities Not Assumed. Notwithstanding anything to
the contrary contained in this Agreement, the Seller and its Subsidiaries
shall retain and the Purchaser and its Subsidiaries shall not assume or
in any manner become liable or responsible for any liability, obligation,
commitment or expense of any kind, known or unknown, now existing or
hereafter arising from the following (the "Retained Liabilities"):
(i) any liabilities and obligations to the extent
arising out of the Retained Assets;
(ii) all liabilities and obligations of the Seller and
its Subsidiaries under the Retained Agreements;
(iii) all Environmental Liabilities that relate to (A)
Pre-Closing Environmental Conditions (as defined in Section
3.19(b)) and (1) are set forth in Section 3.19 of the Seller
Disclosure Schedule or (2) as to which the Purchaser has
notified the Seller, within three years following the Closing
Date, in accordance with Section 6.20(c); and (B) Hazardous
Substances shipped or removed from the Acquired Facilities
prior to or on
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the Closing Date (the "Off-Site Environmental Liabilities");
(iv) any Income Taxes payable with respect to the
Acquired Assets or to the Seller's or its Subsidiaries'
operations, assets or income (other than Income Taxes payable
with respect to the Transferred Subsidiaries' operations,
assets or income) for, or properly attributable to, any
periods ending on or prior to the Closing Date (including any
Income Taxes payable by the Seller or its Subsidiaries
resulting from the transactions contemplated by this Agreement
and including, with respect to any taxable period that
includes but does not end on the Closing Date, Income Taxes
(other than Income Taxes payable with respect to the
Transferred Subsidiaries' operations, assets or income) with
respect to the portion of such period that includes and ends
on the Closing Date calculated as if such taxable period ended
at the consummation of the Closing on the Closing Date);
(v) all liabilities and obligations arising from or
alleged to have arisen from any actual or alleged injury to
persons or property occurring on or prior to the Closing Date
as a result of the ownership, possession or use of any product
manufactured or sold by the Aerospace Business;
(vi) all liabilities and obligations arising from or
alleged to have arisen from any actual or alleged injury to
persons or property occurring at any time from the manufacture
or sale of the asbestos-containing products identified on
Section 3.27 of the Seller Disclosure Schedule;
(vii) all liabilities and obligations arising from or
alleged to have arisen from occurrences on or prior to the
Closing Date with respect to workers compensation matters
(including for purposes of this Section 1.3(b)(vii) those
relating to the Seller's former facilities in Oxnard or Santa
Maria, California);
(viii) all liabilities and obligations arising from or
alleged to have arisen from occurrences on or prior to the
Closing Date with respect to automobile liability, general
liability, and non-aircraft products matters; provided,
however, that the Purchaser shall reimburse the Seller or at
the Seller's direction the Seller's insurance carriers for any
obligations arising from deductibles, self-insured retentions
or retrospective rating premiums or letters of credit for the
foregoing matters in effect after April 1, 1991 and shall
provide, at the Purchaser's cost, any required oversight or
administrative services in connection with such matters,
including coordination with claims services and compliance
with reporting
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requirements;
(ix) except with respect to those liabilities and
obligations specifically assumed by the Purchaser under
Section 1.3(a) above, including, but not limited to, the
assumption of liabilities provided in Section 1.3(a)(i), all
liabilities and obligations under any Compensation and Benefit
Plans or other similar arrangements of Seller and its
Subsidiaries Related to the Aerospace Business, including
without limitation: (A) those relating to medical, dental,
disability, or life benefits for services incurred or death or
disability occurring on or before the Closing Date; (B) except
as provided in Section 6.6(b), all liabilities for benefits
accrued or contributions due under any Pension Plan (as
defined in Section 3.9) maintained by Seller or any Subsidiary
or to which Seller or any Subsidiary makes or is obligated to
make contributions; (C) all liabilities relating to or in
respect of the Pneumo Abex ERISA Excess Plan (also known as
the top Hat Plan; and (D) all liabilities with respect to the
nonqualified pension arrangement for James Coakley;
(x) all liabilities or obligations (A) under any
employment, compensation, stock option, severance, or other
plan or agreement with Albert Indelicato, except that Mr.
Indelicato shall be treated as a former employee of the
Aerospace Business for purposes of Sections 1.3(a)(iv) and
6.6(b)(i) and (B) that arise out of or relate to the matter
disclosed in the first paragraph of Section 3.13 of the Seller
Disclosure Schedule;
(xi) subject to Section 6.7, expenses incurred by the
Seller or its Subsidiaries in connection with the sale of the
Acquired Assets pursuant to this Agreement or the other
transactions contemplated hereby, including without
limitation, the fees and expenses of the Seller's counsel,
investment advisors and independent auditors;
(xii) any liabilities or obligations arising from or
related to (a) the alleged nondisclosure by personnel at the
Oxnard facility, during the period 1987 to 1990, of make-buy
decisions involving McDonnell Douglas, Lockheed-Martin, and
the United States Navy, including the notifications listed on
Sections 3.8(a) (Paragraph 3), 3.26(h) and 3.26(i) of the
Seller Disclosure Schedule, and (b) the alleged non-compliance
by personnel at the Oxnard facility with CAS 402, 405, 410 and
418, including those matters listed on Section 3.8(a),
Paragraph 4, of the Seller Disclosure Schedule; and
(xiii) subject to Sections 1.3(a)(xiii) and
1.3(b)(vii), any liabilities
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or obligations of the Seller or its Subsidiaries not Related to the
Aerospace Business, including without limitation, those relating to
the manufacture or sale of any asbestos-containing products which
were manufactured or sold by the Seller or its Subsidiaries
other than as part of the Aerospace Business or Environmental
Liabilities relating to the operation of any facilities other
than those currently operated by the Aerospace Business
(including without limitation the facilities formerly operated
by the Aerospace Business in Oxnard, California and Santa
Maria, California); provided, that no liability, obligation,
commitment or expense of any of the Transferred Subsidiaries
except Pre-Closing Environmental Liabilities and the
liabilities described in Sections 1.3(b)(v) shall be treated
as a Retained Liability.
ARTICLE II
CLOSING AND CLOSING DATE; PURCHASE PRICE
Section 2.1 The Closing.
(a) Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York, commencing promptly following completion
of the Stockholders' Meeting (as defined in Section 6.4) or, if not
all of the conditions set forth in Article VIII shall then have been
satisfied or waived, such later date and time as agreed by the
parties once such conditions are satisfied or waived (the "Closing
Date"); provided, however, that, if the Closing would otherwise
occur later than the 20th day in PCT's business month, the Closing
will be deferred until the last business day during such month; and
provided, further, the parties may, by agreement in writing, change
the Closing Date or place of the Closing to another date or place.
(b) Closing Documents.
(i) Seller's Documents. At or prior to the
Closing, the Seller shall deliver or cause to be delivered to
the Purchaser the following documents (the "Seller
Documents"):
(A) executed and, if appropriate,
acknowledged limited warranty deeds with
covenants against grantor's acts only
substantially in the forms attached as Exhibit
2.1(b)(i)(A) hereto (the "Deeds"), together with
such
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affidavits, certificates and other instruments as are
ordinarily delivered to a purchaser of real estate or filed in
the public records of Kalamazoo County, Michigan, Beaufort
County, South Carolina and Laurens County,
Georgia;
(B) an executed Bill of Sale,
Assignment and Assumption in the form
attached as Exhibit 2.1(b)(i)(B) hereto
(the "Bill of Sale");
(C) an executed Lease Assignment for the
lease at the Camarillo Facility, and the premises
at St. Charles, Missouri, Seattle, Washington,
Melbourne, Florida, and West Sussex, England in
the form attached as Exhibit 2.1(b)(i)(C) hereto
and an estoppel letter and consent to such
assignment from the landlords under such leases
(the "Lease Documents");
(D) executed copies of the German Stock
Purchase Agreement and the Japanese Stock
Purchase Agreement and duly executed copies of
such other documents and certificates as are
required to transfer title to the Acquired Stock
to the Purchaser;
(E) such other executed and, if
appropriate, acknowledged sale, conveyance and
transfer documents in form and substance
reasonably satisfactory to the Purchaser and its
counsel in order to effectively vest in the
Purchaser, Parker Intangibles, Parker GmbH or
Parker Japan, as the case may be, title to all of
the Acquired Assets and Acquired Stock (all such
documents, together with the Deeds, the
Intellectual Property Assignments, the Bill of
Sale, the Lease Documents, the German Stock
Purchase Agreement and the Japanese Stock
Purchase Agreement, the "Conveyancing
Agreements"); and
(F) the various other documents otherwise
required by this Agreement to be delivered by the
Seller or its Subsidiaries at or prior to the
Closing.
(ii) Purchaser's Documents. At the Closing, the
Purchaser shall deliver or cause to be delivered to the Seller
the following documents (the
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"Purchaser Documents"):
(A) the Conveyancing Agreements to which
it will become a party, in each case executed by
the Purchaser or Parker Intangibles; and
(B) the various other documents otherwise
required by this Agreement to be delivered by the
Purchaser at or prior to the Closing.
Section 2.2 Payments at the Closing. The consideration
to be paid to the Seller on the Closing Date for the Acquired Assets
shall be as follows:
(a) Cash Purchase Price. The Purchaser shall pay or
cause to be paid to the Seller by wire transfer of immediately
available funds to an account designated by the Seller (or other
means acceptable to the Seller) an amount equal to $193,000,000,
adjusted as follows: (i)(A) in the event that the Net Worth, as
indicated on a balance sheet of the Aerospace Business as of the end
of the most recent business month for which such information is
available, and prepared on a basis consistent with the Seller
Balance Sheet (the "Most Recent Net Worth"), exceeds $75,117,000
(the "Base Net Worth"), the purchase price shall be increased by the
amount of such excess, or (B) in the event that the Most Recent Net
Worth is less than the Base Net Worth, the purchase price shall be
reduced by the amount of such shortfall; and (ii) the adjusted
purchase price determined pursuant to clause (i) shall be increased
by an interest factor calculated based on the thirty-day AA
composite commercial paper rate (as last published by the Federal
Reserve prior to the Closing Date) during the period beginning with
but not including the last business day of the business month most
recently completed preceding the month in which the Closing Date
occurs through and including the Closing Date. For purposes of this
Section 2.2(a), "Net Worth" shall mean the amount, determined
pursuant to this Section 2.2, by which the total Acquired Assets as
of the date of determination exceed the total Assumed Liabilities as
of such date of determination.
(b) Assumed Liabilities. On the Closing Date, the
Purchaser shall assume the Assumed Liabilities.
Section 2.3. Post-Closing Adjustment.
(a) Within 30 days following the Closing Date, the
Seller shall provide to the Purchaser an unaudited combined balance
sheet of the Aerospace
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Business as of the Closing Date, if the Closing Date shall occur on the
last business day of the Company's business month, or otherwise as of the
last day of the business month most recently completed preceding the
month in which the Closing Date occurs, but without giving effect to the
Closing, prepared on the basis set forth on Section 2.3 of the Seller
Disclosure Schedule and otherwise in accordance with United States
generally accepted accounting principles and on a basis consistent
with the Seller Balance Sheet (the "Closing Balance Sheet"). In the
event of a conflict between the principles of United States
generally accepted accounting principles and consistency with the
Seller Balance Sheet, the principle of consistency shall apply. The
inventory on the Closing Balance Sheet shall not include any
inventory which existed as of the date of the Seller Balance Sheet
and was not counted, costed, valued or included in the preparation
of the Seller Balance Sheet. The Purchaser shall cooperate fully in
good faith with the Seller in the preparation of the Closing Balance
Sheet, such cooperation to include, without limitation, full access
to the books and records of the Purchaser Related to the Aerospace
Business for such purpose.
(b) The Purchaser shall have 30 days following receipt
of the Closing Balance Sheet to notify the Seller of any dispute
with the Closing Balance Sheet. In order to facilitate the
Purchaser's review of the Closing Balance Sheet, the Seller shall
cooperate fully in good faith with the Purchaser, such cooperation
to include, without limitation, full access to the Seller's work
papers relating to the Closing Balance Sheet. If the Purchaser
fails to notify the Seller of any such dispute within such 30-day
period, or, prior to the expiration thereof, notifies the Seller in
writing that no such dispute exists, the Closing Balance Sheet shall
be deemed to be the "Final Balance Sheet." In the event that the
Purchaser shall so notify the Seller of any dispute, the Seller and
the Purchaser shall cooperate in good faith to resolve such dispute
as promptly as practicable. In the event that the Seller and the
Purchaser are unable to resolve any such dispute within 20 days of
the Purchaser's delivery of such notice, such dispute shall be
resolved by the New York office of Price Waterhouse LLP or another
accounting firm acceptable to the Seller and the Purchaser (the
"Independent Accounting Firm"), with any fees being paid 50% by the
Seller and 50% by the Purchaser. The determination of the
Independent Accounting Firm shall be final and binding. The Closing
Balance Sheet, as it may be modified by resolution of any disputes
by the Seller and the Purchaser or by the Independent Accounting
Firm pursuant hereto shall be the "Final Balance Sheet."
(c) In the event that the Closing Net Worth as
reflected on the Final Balance Sheet is less than the Most Recent
Net Worth used for purposes of adjusting the purchase price pursuant
to Section 2.2(a), then the Seller shall
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transfer to the Purchaser a cash amount equal to the amount by which the
Closing Net Worth is less than such the Most Recent Net Worth. In the
event that the Closing Net Worth is more than the Most Recent Net Worth,
then the Purchaser shall transfer to the Seller a cash amount equal to
the amount by which the Closing Net Worth is more than the Most Recent
Net Worth. Such transfers shall be made to the account designated
in writing for such purpose within two business days after delivery
of the Final Balance Sheet by wire transfer in immediately available
funds of the amount of such differences as determined pursuant to
the preceding sentences, together with interest thereon from but not
including the last day of the business month of the Seller most
recently completed preceding the month in which the Closing Date
occurs through and including the date of payment calculated based on
the thirty-day AA composite commercial paper rate (as last published
by the Federal Reserve prior to the Closing Date). For purposes of
this Section 2.3, "Closing Net Worth" shall equal the amount,
determined pursuant to this Section 2.3, by which the total Acquired
Assets on the Final Balance Sheet exceed the total Assumed
Liabilities on the Final Balance Sheet.
(d) The cash purchase price payable at the Closing, as
adjusted pursuant to this Section 2.3, shall be deemed to be the
"Final Purchase Price".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser and its Subsidiaries
as follows:
Section 3.1 Organization; Subsidiaries.
(a) Each of the Parent, the Seller and the Transferred
Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority
would not have a "material adverse effect on the Aerospace Business"
(as defined below). The Parent, the Seller and each of the
Transferred Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the
aggregate, have
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a material adverse effect on the Aerospace Business. The Seller has
heretofore made available to the Purchaser a complete and correct copy of
the charter and by-laws or comparable organizational documents, each as
amended to date, of the Parent, the Seller and each of the Transferred
Subsidiaries. Such charters and by-laws are in full force and effect.
None of the Parent, the Seller nor any of the Transferred Subsidiaries is
in violation of any provision of its charter, by-laws or comparable
organizational documents, except for such violations that would not,
individually or in the aggregate, have a material adverse effect on the
Aerospace Business.
(b) Except for the Transferred Subsidiaries and the
Retained Subsidiaries, neither the Seller nor any of its
Subsidiaries has any direct or indirect equity interest in any
corporation, partnership or other entity Related to the Aerospace
Business. All of the outstanding shares of capital stock of each
Transferred Subsidiary have been validly issued and are fully paid
and nonassessable, and such shares are owned by the Seller or one of
its Subsidiaries free and clear of any liens, claims, charges,
security interests, encumbrances or other rights of third parties
("Liens") other than as set forth in Section 3.1(b) of the Seller
Disclosure Schedule or Permitted Liens. Upon consummation of the
transactions contemplated hereby, the Purchaser will acquire all of
the Seller's or its Subsidiaries' interests in the outstanding
shares of capital stock of each Transferred Subsidiary, free and
clear of any adverse claims (within the meaning of Section 8-302 of
the Uniform Commercial Code as in effect in the State of New York).
(c) For purposes of this Agreement, (i) the term
"Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which
(A) such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests
of which held by such party or any Subsidiary of such party do not
have a majority of the voting interest in such partnership) or (B)
at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board
of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries,
(ii) any reference to any event, change or effect having a "material
adverse effect on the Aerospace Business" means such event, change
or effect which is materially adverse to (A) the business, results
of operations or financial condition of the Aerospace Business,
taken as a whole, or (B) the ability of the Seller or any of its
Subsidiaries to consummate the transactions contemplated hereby, and
(iii) the phrase "to the Seller's knowledge,"
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shall be deemed to include the actual knowledge of each of the persons
described in Section 3.1(c)(iii) of the Seller Disclosure Schedule as to
the specific representations and warranties indicated thereon for such
person.
Section 3.2. Authority. The Parent, the Seller and each
of its Subsidiaries which will be a party to any of the Seller
Documents (each such subsidiary, a "Contracting Subsidiary") has the
requisite corporate power and authority to execute and deliver this
Agreement and the Seller Documents (to the extent it will be a party
thereto) and to consummate the transactions contemplated hereby and
thereby (other than the approval and adoption of this Agreement and
the transactions contemplated herein by the affirmative vote of the
stockholders of the Parent). The execution, delivery and
performance of this Agreement and the Seller Documents by the
Parent, the Seller and each Contracting Subsidiary and the
consummation by the Parent, the Seller and each Contracting
Subsidiary of the transactions contemplated hereby and thereby have
been duly authorized by the respective Boards of Directors of the
Parent, the Seller and each Contracting Subsidiary (to the extent
it will be a party thereto), and no other corporate proceedings on
the part of the Parent, the Seller or any Contracting Subsidiary are
necessary to authorize this Agreement and the Seller Documents (to
the extent it will be a party thereto), or to consummate the
transactions so contemplated (other than the approval and adoption
of this Agreement and the transactions contemplated herein by the
affirmative vote of the stockholders of the Parent). This Agreement
has been and each of the Seller Documents will be duly executed and
delivered by the Parent, the Seller and each Contracting Subsidiary
(to the extent it will be a party thereto) and constitutes or (to
the extent such agreement is not being entered into as of the date
hereof) will constitute a valid and binding obligation of each of
the Parent, the Seller and each Contracting Subsidiary (to the
extent it is or will be a party thereto), enforceable against it in
accordance with its terms.
Section 3.3 Consents and Approvals; No Violations.
Except as set forth in Section 3.3 of the Seller Disclosure
Schedule, and except for such filings, permits, authorizations,
consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), ERISA, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Japanese
antitrust laws or the German Cartel regulations, none of the
execution, delivery or performance of this Agreement or the Seller
Documents by the Parent, the Seller or any Contracting Subsidiary
(to the extent it is or will
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be a party thereto), or the consummation by the Parent, the Seller or any
Contracting Subsidiary (to the extent it is or will be a party thereto)
of the transactions contemplated hereby or thereby and compliance by the
Parent, the Seller or any Contracting Subsidiary (to the extent it is or
will be a party thereto) with any of the provisions hereof or thereof
will (i) conflict with or result in any breach of any provisions of the
charter or by-laws or comparable organizational documents of the
Parent, the Seller or any of its Subsidiaries, (ii) require any
filing by the Parent, the Seller or any of its Subsidiaries with, or
any permit, authorization, consent or approval to be obtained by the
Parent, the Seller or any of its Subsidiaries of, any court,
arbitral tribunal, administrative agency or commission or other
governmental or regulatory authority or administrative agency or
commission whether domestic or foreign (a "Governmental Entity"),
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or
acceleration) under, or result in the creation of any Lien on any of
the Acquired Assets (other than Permitted Liens); pursuant to, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement, franchise, permit,
concession or other instrument, obligation, understanding,
commitment or other arrangement to which the Seller or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected (each, a "Contract"),
or (iv) violate any order, writ, injunction, decree, statute,
ordinance, rule or regulation applicable to the Seller or any of its
Subsidiaries except, in the case of clauses (ii) and (iii), for
Contracts made by the Seller or a Subsidiary of the Seller with a
Governmental Entity ("Government Contracts") which require the
consent of the applicable Government Entities to the assignment of
such Government Contracts to the Purchaser.
Section 3.4 SEC Reports and Financial Statements. The
Parent has timely filed with the Securities and Exchange Commission
(the "SEC"), and has heretofore made available to the Purchaser true
and complete copies of, all forms, reports and documents required to
be filed by it since June 15, 1995 under the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act (as such
documents have been amended since the time of their filing,
collectively, the "Parent SEC Documents"). The Parent SEC
Documents, including, without limitation, any financial statements
or schedules included therein, at the time filed, in respect of the
Aerospace Business (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act,
as the case may be. The consolidated financial statements of the
Parent included in the Parent SEC Documents (including the notes and
schedules thereto, the "Parent Financial Statements") comply as to
form in all material respects with applicable accounting
requirements and with the published rules and regulations of
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the SEC with respect thereto, have been prepared in accordance with
United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form l0-Q of the SEC) and fairly present
in all material respects (subject, in the case of the unaudited
statements, to normal audit adjustments) the consolidated financial
position of the Parent and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations and
cash flows for the periods then ended.
Section 3.5 Corporate Organization. Predecessors of the
Seller were acquired by a predecessor of the Parent from IC
Industries Inc. (now known as Whitman Corporation) in 1988. At the
time of such acquisition, such predecessors were engaged in the
Aerospace Business as well as in several other businesses which have
since been sold by the Seller (the "Divested Businesses"). In June
1995, certain arrangements were entered into among the Parent, the
Seller and Mafco Consolidated Group Inc. ("MCG") pursuant to which
MCG agreed to indemnify and hold the Parent and the Seller harmless
for certain liabilities relating to the Divested Businesses to the
extent not covered by indemnification and insurance available from
third parties. Copies of the material agreements relating to the
sales of the Divested Businesses or such arrangements with MCG have
been filed by the Parent or MCG with the SEC or otherwise been made
available to the Purchaser.
Section 3.6 Seller Balance Sheet. The Seller Balance
Sheet has been derived from the Parent's balance sheet as of
September 30, 1995 included in the Parent SEC Documents by
eliminating the Retained Assets and Retained Liabilities and by
making the additional adjustments described in Section 2.3 of the
Seller Disclosure Schedule.
Section 3.7 Title to Acquired Assets.
(a) Except as set forth in Section 3.7(a) of the Seller
Disclosure Schedule, the Seller directly or indirectly owns or has
a valid leasehold interest in the Acquired Assets, free and clear of
any Liens, except for Permitted Liens and as may be reflected in the
Seller Balance Sheet. At the Closing, the Purchaser will, directly
or indirectly, acquire good and marketable title to, or a valid
leasehold interest in, the Acquired Assets, free and clear of any
Liens, except for Permitted Liens. On the Closing Date, the
Acquired Assets will include the assets reflected on the Seller
Balance Sheet and the capital stock interests in any Transferred
Subsidiary, as such may have changed since the date of the Seller
Balance Sheet consistent with the provisions of this Agreement, but
in any event shall include all
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of the Seller's direct and indirect right, title and interest in, any
assets then used in connection with the Aerospace Business, other than
the Retained Assets.
(b) Section 1.2(a)(i) of the Seller Disclosure Schedule
contains a complete and accurate list of all of the Acquired
Facilities. At the Closing, (i) the Purchaser will acquire good and
marketable title in fee simple to the Acquired Facilities, other
than those owned by the Transferred Subsidiaries, free and clear of
all Liens, other than Permitted Liens, and (ii) the Transferred
Subsidiaries will have good and marketable title in fee simple to
the Acquired Facilities owned by them free and clear of all Liens
other than Permitted Liens.
(c) For the purposes of this Agreement, "Permitted
Liens" means Liens for (i) Taxes not yet due and payable or Taxes
which are being contested in good faith and disclosed in Section
3.7(c) of the Seller Disclosure Schedule, (ii) workmen's,
repairmen's or other similar Liens imposed by law but not yet
asserted, arising or incurred in the ordinary course of business in
respect of obligations which are not overdue, (iii) minor title
defects, easements, encroachments, restrictions, covenants or
encumbrances which do not materially impair the value or continued
use of the property to which they relate, assuming that the property
is used on the same basis as such property is currently being used,
(iv) retention of title agreements with suppliers entered into in
the ordinary course of business consistent with past practice (all
such agreements in an individual amount in excess of $50,000 being
set forth in Section 3.7(c) of the Seller Disclosure Schedule), and
(v) Liens listed in Section 3.7(c) of the Seller Disclosure
Schedule.
Section 3.8 Litigation. Except as set forth in Section
3.8(a) of the Seller Disclosure Schedule, as of the date hereof,
there is no suit, claim, action, proceeding or, to the 1 Seller's
knowledge, investigation pending or threatened, against the Seller
or any of its Subsidiaries before any Governmental Entity Related to
the Aerospace Business or related to the transactions contemplated
by this Agreement. To the Seller's knowledge, as of the date
hereof, all claims based upon any theory of tort (including but not
limited to product liability) or contract (including but not limited
to product or service warranty) which have been made or threatened
in writing against the Seller or its Subsidiaries Related to the
Aerospace Business since January 1, 1995 are described in Section
3.8(b) of the Seller Disclosure Schedule. Except as disclosed in
Section 3.8(c) of the Seller Disclosure Schedule, as of the date
hereof, neither the Seller nor any of its Subsidiaries is subject to
any outstanding order, writ, injunction or decree, domestic or
foreign, Related to the Aerospace Business or related to the
transactions contemplated by this Agreement.
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Section 3.9 Employee Benefits.
(a) Section 3.9(a) of the Seller Disclosure Schedule
contains a list of all material bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock and stock
option plans, all employment or severance contracts, other material
employee benefit plans and any applicable "change of control" or
similar provisions in any plan, contract or arrangement which are or
have been maintained by the Seller or any of its Subsidiaries and
which cover employees of the Aerospace Business, and all other
benefit plans, contracts or arrangements (regardless of whether they
are funded or unfunded or foreign or domestic) which are or have
been maintained by the Seller or any of its Subsidiaries and which
cover employees of the Aerospace Business, including, but not
limited to, "employee benefit plans" within the meaning of Section
3(3) of ERISA, other than government plans (collectively, the
"Compensation and Benefit Plans"). True and complete copies of all
the Compensation and Benefit Plans, including any trust instruments,
insurance contracts, summary plan descriptions, or other employee
booklets, if any, forming a part of any such plans, and all
amendments thereto, have been made available to the Purchaser.
(b) Except as set forth in Section 3.9(b) of the Seller
Disclosure Schedule, each of the Compensation and Benefit Plans has
been operated and administered in all material respects in
compliance with its terms and applicable law, including but not
limited to ERISA and the Code. All reports and returns have been
filed and all disclosures have been made with respect to the
Compensation and Benefit Plans, as required by ERISA and the Code.
Except as set forth in Section 3.9(b) of the Seller Disclosure
Schedule, each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and which is intended to be qualified under Section
401(a) of the Code, has received a favorable determination letter or
a filing for such letter is pending with respect to the Tax Reform
Act of 1986 and all subsequent legislations affecting qualified
pension and profit sharing plans from the United States Internal
Revenue Service (the "Service"), and the Seller is not aware of any
circumstances that could result in revocation of any such favorable
determination letter. Seller shall take whatever steps may be
required by the Service to maintain the qualification of any Pension
Plan through the Closing Date. Forms 5500, including Schedules P,
have been filed for all Pension Plans including any plans that have
been merged into any currently existing Pension Plans. Neither the
Seller nor any entity that, together with the Seller, would be
considered a "single employer" within the meaning of Section 4001 of
ERISA or Section 414 of the Code (an "ERISA Affiliate") has engaged
in a transaction with respect to any Compensation and Benefit Plan
that is reasonably likely to subject the Seller or any ERISA
Affiliate to a tax or penalty imposed by Sections 405, 409 or 502(i)
of ERISA. The Seller has not engaged in a transaction with respect
to any
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Compensation and Benefit Plan that is reasonably likely to subject the
Seller to a penalty imposed by Section 4975 of the Code. No
multiemployer withdrawal liability will be imposed upon the Purchaser as
a result of any obligation of the Seller or any ERISA Affiliate to
contribute to any multiemployer plan (as defined in ERISA). The Seller
has complied in all material respects with the continuation coverage
requirements for its group health plans pursuant to Section 4980B of the
Code and Part 6 of Title I of ERISA.
(c) Except as set forth in Section 3.9(c) of the Seller
Disclosure Schedule, no material liability under Subtitles C or D of
Title IV of ERISA has been or, to the Seller's knowledge, will be
incurred by the Seller or any ERISA Affiliate with respect to any
ongoing, frozen or terminated Pension Plan, currently or formerly
maintained by any of them.
(d) Full payment has been made, or will be made, in
accordance with Section 404 (a) (6) of the Code, of all amounts
which the Seller or any ERISA Affiliate is required to pay under the
terms of each Pension Plan as of the last day of the period ending
on the Closing Date, including any amounts accrued as contributions
under a defined contribution plan. No Pension Plan or any trust
established thereunder has incurred an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section
412 of the Code or Section 302 of ERISA. Neither the Seller nor any
ERISA Affiliate has provided, or is required to provide, security to
any Pension Plan pursuant to Section 401 (a) (29) of the Code.
(e) Neither the Seller nor any of its Subsidiaries has
any obligations for severance or retiree health and life benefits
under any Compensation and Benefit Plan in respect of former or
current employees of the Aerospace Business, except as set forth in
Section 3.9(e) of the Seller Disclosure Schedule.
(f) Except as set forth in Section 3.9(f) of the Seller
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement or in the Conveyancing Agreements
will not (i) entitle any employees of the Aerospace Business to
severance pay, unemployment compensation or any other payment, or
(ii) accelerate the time of payment or vesting, or increase the
amount of compensation due or other benefits granted to any
employees of the Aerospace Business. Except as set forth in Section
3.9(f) of the Seller Disclosure Schedule, no payments which will or
may be made by the Seller or any ERISA Affiliate to
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any employees of the Aerospace Business as a result of the transactions
contemplated by this Agreement will constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(g) Except as provided in Section 3.9(g) of the Seller
Disclosure Schedule, there are no pending, threatened or anticipated
material claims under any Compensation and Benefit Plan by any
employee or beneficiary covered under any such Compensation and
Benefit Plan, or otherwise involving any such Compensation and
Benefit Plan (other than routine claims for benefits).
Section 3.10 Absence of Undisclosed Liabilities. Except
as set forth in Section 3.10 of the Seller Disclosure Schedule or as
contemplated by this Agreement, neither the Seller nor any of its
Subsidiaries had at September 30, 1995, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature which would be Assumed
Liabilities, except liabilities, obligations or contingencies (i)
which were accrued or reserved against on the Seller Balance Sheet
or were not required to be so accrued or reserved under generally
accepted accounting principles, or (ii) which were incurred after
September 30, 1995 in the ordinary course of the Aerospace Business
consistent with past practice and which would not, in the aggregate,
have a material adverse effect on the Aerospace Business or which
have been discharged or paid in full prior to the date hereof.
Section 3.11 Absence of Certain Changes or Events. Since
September 30, 1995, the Seller and its Subsidiaries have conducted
the Aerospace Business only in the ordinary course of business
consistent with past practice and except as set forth in Section
3.11 of the Seller Disclosure Schedule, have not with respect to the
Aerospace Business:
(a) satisfied and discharged any lien, or paid any
obligation or liability, except in the ordinary course of business,
or other than current liabilities included in the Seller Balance
Sheet or notes thereto and current liabilities incurred since that
date in the ordinary course of business;
(b) made any general wage or salary increase or any
increase in compensation payable or to become payable to any key
management employees (other than salary increases for specific
employees granted in the ordinary course of business), or entered
into any employment contract with any key management employees;
(c) mortgaged, pledged, charged or subjected to Lien or other
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encumbrance any property other than Permitted Liens;
(d) sold or transferred any assets or prepaid or
canceled any debts or claims, except in each case in the ordinary
course of business or as contemplated by this Agreement;
(e) sold, assigned or granted rights to any third party
under any patent, trade name, trademark or copy right, or any
application therefor, or any trade secrets or designs for any
products currently manufactured or services provided by the
Aerospace Business;
(f) knowingly waived without receiving consideration
any rights of material value;
(g) become involved or threatened with any labor
dispute which has had or could have a material adverse effect on the
Aerospace Business;
(h) suffered any damage or destruction, whether or not
covered by insurance, materially and adversely affecting the
properties of the Aerospace Business; or
(i) experienced any other event or condition of any
character which is or with the lapse of time or occurrence of such
event or condition would be, materially adverse to the financial
condition, assets, properties or operations of the Aerospace
Business.
Section 3.12 No Violation of Law. Except as set forth in
Section 3.12 of the Seller Disclosure Schedule, neither the Seller
nor any of its Subsidiaries is in conflict with, or in default or
violation of, or, to the Seller's knowledge, is under investigation
with respect to or has been given notice or been charged by any
Governmental Entity with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (other than any applicable
Environmental Law, as to which the representations and warranties
contained in Section 3.19 shall apply) of any Governmental Entity,
except for violations which do not relate to the Aerospace Business.
Section 3.13 Taxes.
(a) Except as set forth in Section 3.13 of the Seller
Disclosure Schedule and only to the extent Related to the Aerospace
Business:
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(i) the Seller and each of the Transferred Subsidiaries
have (x) duly filed (or there has been filed on their behalf)
on a timely basis with the appropriate governmental
authorities all Tax Returns (as defined below) required to be
filed by them on or prior to the date hereof, except where any
failure to file such Tax Returns would not have a material
adverse effect on the Aerospace Business or the Acquired
Assets, taken as a whole, and such Tax Returns are true,
correct and complete in all material respects, and (y) duly
paid in full or made provision in accordance with generally
accepted accounting principles (or there has been paid or
provision has been made on their behalf) for the payment of
(I) all material Taxes shown to be due on such Tax Returns and
(II) all deficiencies and assessments of Taxes of which
written notice has (or by the Closing Date will have) been
received by the Seller or any of the Transferred Subsidiaries
that are or may become payable by the Transferred Subsidiaries
or chargeable as a Lien upon the Acquired Assets;
(ii) each of the Transferred Subsidiaries have
established (and until the Closing will establish) on their
books and records accruals or reserves in compliance with
generally accepted accounting principles for the payment of
all Taxes for which they will be required to file Tax Returns
or reports and which are not yet due and payable;
(iii) there are no Liens for Taxes upon any of the
Acquired Assets, except for Permitted Liens;
(iv) the Seller and its Subsidiaries have complied in
all respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any
foreign laws) and have, within the time and the manner
prescribed by law, withheld from employee wages and paid over
to the proper governmental authorities all amounts required to
be so withheld and paid over under applicable laws;
(v) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the
Transferred Subsidiaries, and none of the Transferred
Subsidiaries has received a written notice of any pending
audits or proceedings;
(vi) there are no outstanding requests, agreements,
consents or
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waivers to extend the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Transferred
Subsidiaries, and no power of attorney granted by either the Seller
or any of its Subsidiaries with respect to any Taxes of any
Transferred Subsidiary is currently in force; and
(vii) neither the Seller nor any of its Subsidiaries
has, with regard to any Acquired Assets, filed a consent to
the application of Section 341(f) of the Code, or agreed to
have Section 341(f) (2) of the Code apply to any disposition
of a subsection (f) asset (as such term is defined in Section
341(f) (4) of the Code) owned by the Seller or any of its
Subsidiaries.
(b) "Taxes" shall mean any and all taxes, charges,
fees, levies or other assessments, including, gross receipts,
excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, license, net worth,
payroll, transfer and recording taxes, fees and charges, imposed by
the Service or any taxing authority (whether domestic or foreign
including, without limitation, any state, county, local or foreign
government or any subdivision or taxing agency thereof (including a
United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term
shall include any interest whether paid or received, fines,
penalties or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies or other
assessments; provided, that the term "Taxes," when referring to the
Seller or its Subsidiaries other than the Transferred Subsidiaries,
shall not include income or other taxes, charges, fees, levies or
assessments determined or imposed solely on the basis of net income
("Income Taxes"). "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be
supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes of the Seller or its Subsidiaries,
including, without limitation, information returns, any documents
with respect to or accompanying payments of estimated Taxes, or with
respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or
other information.
(c) The representations and warranties set forth in
Section 3.13 (a) are not applicable with respect to matters
constituting a breach of such representations and warranties unless
and until, as a result of such breach:
(i) the Acquired Assets are made subject to Tax Liens;
(ii) the Purchaser or its Subsidiaries, including the
Transferred
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Subsidiaries, is made liable for Taxes; or
(iii) the payment of Taxes is sought from any of the
Transferred Subsidiaries.
Section 3.14 Labor Controversies. Except as set forth in
Section 3.14 of the Seller Disclosure Schedule, neither the Seller
nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other understanding
with a labor union or labor organization Related to the Aerospace
Business or related to the Active Aerospace Business Employees.
Except as set forth in Section 3.8(a) to the Seller Disclosure
Schedule, as of the date hereof, there are no material controversies
pending or, to the Seller's knowledge, threatened between the Seller
or any of its Subsidiaries and any of their respective employees,
and, to the Seller's knowledge, as of the date hereof, there are no
organizational efforts presently being made involving any of the
employees of the Seller or any of its Subsidiaries, in each case
Related to the Aerospace Business or related to the Active Aerospace
Business Employees. Except as set forth in Section 3.14 of the
Seller Disclosure Schedule, the Seller and its Subsidiaries have
complied in all material respects with all laws relating to wages,
hours, collective bargaining, discrimination, and the payment of
social security and similar Taxes with respect to the Aerospace
Business, and, as of the date hereof, no person has, to the Seller's
knowledge, asserted that the Seller or any of its Subsidiaries is
liable with respect to the Aerospace Business for any arrears of
wages or any taxes or penalties for failure to comply with any of
the foregoing.
Section 3.15 Licenses. Except as set forth in Section
3.15 of the Seller Disclosure Schedule, the Seller or its
Subsidiaries have, and as of the Closing Date the Purchaser will
acquire, all permits, licenses, waivers and authorizations
(collectively, "Licenses") which are necessary for the Aerospace
Business to conduct its business in the manner in which it is
presently being conducted, other than any Licenses the failure of
which to have would not, individually or in the aggregate, have a
material adverse effect on the Aerospace Business. To the Seller's
knowledge, no event has occurred or other fact exists with respect
to the Licenses which permits, or after notice or lapse of time or
both would permit, revocation or termination of any of the Licenses
or would result in any other impairment of the rights of the holder
of any of the Licenses, other than any revocation, termination or
impairment which would not, individually or in the aggregate, have
a material adverse effect on the Aerospace Business. The Seller and
its Subsidiaries have duly performed their respective obligations
under the Licenses in all material respects. There is not pending
or, to the Seller's knowledge, threatened, any application,
petition, objection or other pleading with any Governmental Entity
which challenges or questions the validity of or any rights of the
holder under any License.
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Section 3.16 Acquired Intellectual Property.
(a) Section 3.16 (a) of the Seller Disclosure Schedule
contains a complete and accurate list of all of the Acquired
Intellectual Property, other than (i) the Acquired Intellectual
Property described in Section 1.2(a)(vii)(A), (ii) the unregistered
Acquired Intellectual Property described in Sections 1.2(a)(vii)(B)
and 1.2(a)(vii)(D), and (iii) the patent disclosures on inventions
described in Section 1.2(a)(vii)(C). Except as set forth in
Sections 3.16(a) and 3.16(a)(i) of the Seller Disclosure Schedule,
the Seller and its Subsidiaries own all right, title and interest in
and to the Acquired Intellectual Property, and have the right and
authority to assign to the Purchaser, Parker Intangibles, Parker
GmbH or Parker Japan, as the case may be, the entire right, title
and interest in and to the Acquired Intellectual Property subject to
the licenses to third parties set forth in Section 3.17(i) of the
Seller Disclosure Schedule.
(b) Except as set forth in Sections 3.16(b) and
3.16(a)(i) of the Seller Disclosure Schedule, the Seller and its
Subsidiaries have not, as of and since the date upon which they
acquired any of the Acquired Intellectual Property, (i) transferred,
conveyed, sold, assigned, pledged, mortgaged or granted a security
interest in any of the Acquired Intellectual Property to any third
party, (ii) entered into any license, franchise or other agreement
with respect to any of the Acquired Intellectual Property with any
third person other than those set forth in Section 3.17(i) of the
Seller Disclosure Schedule, or (iii) otherwise encumbered any of the
Acquired Intellectual Property. The Seller and its Subsidiaries
have maintained and enforced the Acquired Intellectual Property in
accordance with their customary practices in order to safeguard the
secrecy of all the Acquired Intellectual Property that are
considered to be trade secrets.
(c) The conduct of the Aerospace Business by the Seller
and its Subsidiaries as currently conducted does not, to the
Seller's knowledge, infringe any intellectual property right of any
third party, and there is no claim, suit, action or proceeding
pending or, to the Seller's knowledge, threatened against the Seller
or any of its Subsidiaries (i) alleging that the conduct of the
Aerospace Business or the use of the Acquired Intellectual Property
by the Seller or any of its Subsidiaries infringes any third party's
intellectual property rights, or (ii) challenging the Seller's or
its Subsidiaries' ownership of or right to use or the validity of
any Acquired Intellectual Property. To the Seller's knowledge,
there are no infringements by any third party of any of the Acquired
Intellectual Property.
(d) Each Copyright registration, Patent and Trademark
registration and each application therefor listed in Section 3.16(a)
of the Seller Disclosure Schedule is valid, subsisting and in proper
form, and has been duly maintained, including the submission of all
necessary filings in accordance with the legal and
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administrative requirements of the appropriate jurisdictions, except for
such failures which would not, individually or in the aggregate, have a
material adverse effect on the Aerospace Business. Except as set
forth in Section 3.16(d) of the Seller Disclosure Schedule, to the
Seller's knowledge, there have been no failures in complying with
such requirements and no Copyright registration, Patent or Trademark
registration has lapsed and there has been no cancellation or
abandonment thereof, except for such failures, lapses, cancellations
or abandonments which would not, individually or in the aggregate,
have a material adverse effect on the Aerospace Business.
(e) Except as contained in licenses identified in
Section 3.17(i) of the Seller Disclosure Schedule, neither the
Seller nor, to the Seller's knowledge, has any other person granted
any release, covenant not to sue, or non-assertion assurance or
entered into any indemnification or settlement agreement with any
person with respect to any part of the Acquired Intellectual
Property.
(f) To the Seller's knowledge, (i) the trademark
registrations on Sections 3.16(a) and 1.2(a)(vii) of the Seller
Disclosure Schedule are all of the ABEX trademark registrations
owned by the Seller or its Subsidiaries that cover hydraulic or
pneumatic products or products of the Aerospace Business, and (ii)
the patents on Section 3.16(a) of the Seller Disclosure Schedule are
all of the patents owned by the Seller or its Subsidiaries Related
to the Aerospace Business. In the event that the Seller becomes
aware of an additional ABEX trademark registration or a patent in-
cluded in the Acquired Intellectual Property but not listed on
Section 3.16(a) or 1.2(a)(vii) of the Seller Disclosure Schedule,
such trademark registration or patent shall be deemed part of
Section 3.16(a) or 1.2(a)(vii) of the Seller Disclosure Schedule, as
the case may be, and the Seller shall assign such trademark
registration or patent to the Purchaser or its designee pursuant to
Sections 6.5(a) and 6.5(b) or Section 6.22 hereof, as appropriate.
Section 3.17 Material Contracts. Except as disclosed in
Section 3.17 of the Seller Disclosure Schedule, as of the date
hereof, neither the Seller nor any of its Subsidiaries is a party to
any Contract Related to the Aerospace Business: (a) to undertake
capital expenditures or to acquire any property in an aggregate
amount exceeding $100,000; (b) to loan money or to extend credit in
an amount greater than $100,000 to any person or group of related
persons, with the exception of contracts for the sale of aerospace
components entered into in the ordinary course of business; (c)
which would restrict the Aerospace Business from carrying on any
business anywhere in the world or which would restrict the products
or services which the Aerospace Business may sell or the customers
to whom the Aerospace Business may sell; (d) involving any
indebtedness, obligation or liability for borrowed money or the
guaranty of any such indebtedness, obligation or liability in an
amount greater than $100,000; (e) involving any outstanding
quotations, bids
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or proposals, or the provision of goods or services having annual
aggregate payments in excess of $500,000 and which is not terminable by
the Seller or one of its Subsidiaries without penalty upon notice of
ninety days or less; (f) involving employment, consulting, compensation
or severance obligations; (g) involving any lease of personal property
having annual payments in excess of $100,000 and which is not terminable
by the Seller or one of its Subsidiaries without penalty upon notice of
ninety days or less; (h) involving any lease of real property; (i)
involving any license of Acquired Intellectual Property or involving any
license of intellectual property rights of any third party; (j) involving
any partnership or joint venture agreement; (k) involving any
intercompany agreements or obligations or any agreements with
Seller's shareholders, officers, directors, subsidiaries or
affiliates, or any other agreements entered into other than on an
arms-length basis, or (l) involving the distribution or resale of
any products of the Aerospace Business. Except as set forth in
Section 3.17 of the Seller Disclosure Schedule, (i) the consummation
of the transactions contemplated hereby or in the Conveyancing
Agreements will not impair any of the Aerospace Business' rights
under any such Contract, except for such impairments which would
not, individually or in the aggregate, have a material adverse
effect on the Aerospace Business and except that the Government
Contracts require the consent of the applicable Government Entities
to assign such Government Contracts to the Purchaser, and (ii) to
the Seller's knowledge, all such Contracts constitute valid and
binding obligations of the parties thereto. Except as set forth in
Section 3.17 of the Seller Disclosure Schedule, there is no breach
or violation of, or default under, any such Contract, and no event
has occurred which, with notice or lapse of time or both, would
constitute a breach, violation or default, or give rise to a right
of termination, modification, cancellation, prepayment or
acceleration under any such Contract, other than such breaches,
violations or defaults which would not, individually or in the
aggregate, have a material adverse effect on the Aerospace Business.
Section 3.18 Insurance. Set forth in Section 3.18 of the
Seller Disclosure Schedule is a list of all policies of liability,
fire, automobile, property, business interruption and other forms of
insurance covering the Aerospace Business or the Acquired Assets in
effect as of the date hereof, all of which are valid and enforceable
and in full force and effect.
Section 3.19 Environmental Matters.
(a) Except as set forth in Section 3.19 of the Seller
Disclosure Schedule, (i) the Seller and, to the Seller's knowledge,
each of its Subsidiaries is in compliance with all applicable
Environmental Laws (which includes, but is not limited to, the
possession by the Seller and its Subsidiaries of all Licenses
required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except for any noncompliance that
would not, individually or
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in the aggregate, have a material adverse effect on the Aerospace
Business, (ii) no asbestos in a friable condition or equipment containing
polychlorinated biphenyls is contained in or located at any Acquired
Facility, (iii) no underground or above-ground storage tanks are or, to
the Seller's knowledge, were contained in or located at any Acquired
Facility, and, and (iv) neither the Seller nor any of its Subsidiaries
has received notice of a civil, criminal or administrative suit, claim,
action, proceeding or investigation relating to the Aerospace
Business or any property or facility owned, operated or leased, or
previously owned operated or leased, by Seller or any of its
Subsidiaries in connection with the Aerospace Business relating to
Environmental Laws which would have, individually or in the
aggregate, a material adverse effect on the Aerospace Business.
Except as otherwise disclosed in Section 3.19 of the Seller
Disclosure Schedule, and except as expressly authorized by an
effective permit or by applicable law, there have been no Releases
of any Hazardous Substances, into, onto, under or from any real
property owned or used in the Aerospace Business by Seller or its
Subsidiaries or, to the Seller's knowledge, by any third party.
Except as otherwise disclosed in Section 3.19 of the Seller
Disclosure Schedule, Seller and its Subsidiaries have not conducted,
engaged or permitted others to conduct or engage at any such real
property in the manufacture, treatment or disposal of any Hazardous
Substances. Section 3.19 of the Seller Disclosure Schedule contains
(i) a list of all written reports submitted to any Responsible
Authority with respect to any Hazardous Substance contamination,
Release or Cleanup at the Acquired Facilities (the "Environmental
Reports"); and (ii) a list of all written reports in the Seller's
possession resulting from any environmental or safety inspection or
assessment of the Acquired Facilities during the past five years,
whether performed by the Seller, its predecessors, Responsible
Authorities or any third party (the "Environmental Assessments").
Complete copies of the Environmental Reports and the Environmental
Assessments have been provided to the Purchaser.
(b) As used in this Agreement, the following terms
shall have the respective meanings set forth below:
"Cleanup" means all actions as are required by
Environmental Laws, by any Governmental Entity pursuant to
Environmental Laws, or otherwise taken as necessary to comply with
Environmental laws, to (i) clean up, remove, contain, treat or in
any other way address or remediate any Hazardous Substances in the
environment, or (ii) prevent the dispersal of Hazardous Substances
in the environment so that they do not migrate and endanger public
health or safety or the environment.
"Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of
human health or the
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environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Substances into the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Substances and all laws and
regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Substances.
"Hazardous Substances" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40
C.F.R. Section 300.5, or defined as such by, or regulated as such under,
any Environmental Law.
"Post-Closing Environmental Conditions" shall mean any
environmental condition at any Acquired Facility other than a Pre-Closing
Environmental Condition described in Section 1.3(b)(iii)(A).
"Pre-Closing Environmental Conditions" shall mean any
environmental condition caused by the presence or Release of
Hazardous Substances prior to or on the Closing Date and discovered
by Purchaser or its Subsidiaries or Responsible Authorities , which
conditions are on or under or emanate from any Acquired Facility.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the environment (including,
without limitation, ambient air, surface water, groundwater and
surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Substances through or in the
air, soil, surface water, groundwater or property.
"Responsible Authorities" shall mean the United States
Environmental Protection Agency and any other Federal, state or
local regulatory agency or commission, court or other body with
jurisdiction over environmental matters under Environmental Laws.
Section 3.20 Intentionally Omitted.
Section 3.21 Backlog. The Seller has provided to the
Purchaser a complete and accurate copy of the report prepared by the
Seller's management with management's estimate of "backlog" at
September 30, 1995.
Section 3.22 Inventory; Accounts Receivable. The amounts
shown for inventory on the Seller Balance Sheet present fairly the
value of the inventory as
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of such date in accordance with generally accepted accounting principles
applied on a consistent basis with preceding periods and does not include
inventory which existed as of the date of the Seller Balance Sheet and
was not counted, costed, valued or included in the preparation of the
Seller Balance Sheet. The accounts receivable of the Aerospace Business
shown on the Seller Balance Sheet arose in the ordinary course of
business and are properly reflected on the Seller Balance Sheet in
accordance with generally accepted accounting principles on a consistent
basis with preceding periods.
Section 3.23 Personal Property. The personal property
included in the Acquired Assets and reflected on the Seller Balance
Sheet at other than nominal value is in good working condition,
ordinary wear and tear excepted, and has been maintained by the
Seller in accordance with reasonable maintenance practices.
Section 3.24 Sales Volume; Adverse Trends. Except as
otherwise disclosed in Section 3.24 of the Seller Disclosure
Schedule, as of the date hereof, the Seller has not received written
notice from any customer of the Aerospace Business that accounted
for more than 5% of the sales of the Aerospace Business during the
year ended December 31, 1994 that it will materially reduce its
volume of purchases from the Seller during 1996 and 1997.
Section 3.25 Absence of Certain Business Practices.
Neither the Seller nor, to the Seller's knowledge, any officer,
employee, agent thereof or other person acting on its behalf has,
directly or indirectly, within the past three years given any gift
or similar benefit to any customer, supplier, competitor, or
governmental employee or official which would subject the Seller to
any material damage, or penalty or injunction in any civil,
criminal, or governmental litigation or proceeding or would subject
the Seller to cancellation of any material contract or agreement.
Section 3.26 Government Contract Rights. Except as
disclosed in Section 3.26 of the Seller Disclosure Schedule, as of
the date hereof:
(a) the Seller has no outstanding quotations, bids or
proposals with respect to the Aerospace Business in which the price
exceeds $500,000 and which has been submitted to the United States
Government or any proposed prime contractor under an existing or
proposed prime contract;
(b) to the Seller's knowledge, the Seller has complied
in all material respects with all statutory and regulatory
requirements affecting its contracts with the United States
Government or any prime contractor under a United States Government
contract and with all certificates and representations executed in
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connection therewith;
(c) the Seller is not debarred or suspended from doing
business with the United States Government and the Seller has not
been informed in writing that it will be subject to the institution
of debarment or suspension proceedings against it;
(d) the Seller has not since January 1, 1995 received
any written show cause notices, cure notices or default
determinations on any of its contracts with the United States
Government or with any prime contractor under a United States
Government prime contract;
(e) the Seller has not since January 1, 1995 received
any written negative determinations of responsibility from the
United States Government with respect to any bid, quotation or
proposal submitted by the Aerospace Business;
(f) the Seller has not since January 1, 1995 received
any document questioning or disallowing any cost incurred as a
result of a finding or determination by the United States
Government;
(g) neither the United States Government nor any prime
contractor under a United States Government prime contract has
withheld or set off, or attempted to withhold or set off, since
January 1, 1995, monies due to the Seller under any of its
contracts;
(h) to the Seller's knowledge, the Seller is not under
any administrative, civil or criminal investigation or indictment
with respect to any alleged irregularity, misstatement or omission
arising out of or in any way relating to any of its contracts, bids,
quotations or proposals with respect to the Aerospace Business;
(i) the Seller is not undergoing, has not since January
1, 1995 undergone and has not been notified in writing that it is
scheduled to undergo any audit arising under or relating to any
contract with the United States Government or with any prime
contractor under a United States Government prime contract, in each
case with respect to the Aerospace Business;
(j) to the Seller's knowledge, the Seller is not
involved in any qui tam actions; and
(k) the Seller possesses all necessary security clear-
ances for the performance of its obligations under each of its
contracts with the U.S. Government or with the prime contractor
under a U.S. Government prime
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contract.
Section 3.27 Asbestos Matters. To the Seller's
knowledge, except as described in Section 3.27 of the Seller
Disclosure Schedule, no asbestos-containing products have ever been
manufactured or sold by the Aerospace Business and none of the
Acquired Assets has been used for the manufacture or sale of such
products. The Seller acknowledges that the Purchaser is not assuming
any liability relating to the manufacture or sale of asbestos-containing
products other than those identified on Section 3.27 of
the Seller Disclosure Schedule and that such liabilities are being
retained by the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 4.1 Organization. Each of the Purchaser,
Parker Intangibles, Parker GmbH and Parker Japan is a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a
"material adverse effect on the Purchaser" (as defined below). Each
of the Purchaser, Parker Intangibles, Parker GmbH and Parker Japan
is duly qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on
the Purchaser. The Purchaser has heretofore made available to the
Seller a complete and correct copy of the charter and by-laws or
comparable organizational documents, each as amended to date of each
of the Purchaser, Parker Intangibles, Parker GmbH and Parker Japan.
Such charters and by-laws are in full force and effect. Neither the
Purchaser nor any of its Subsidiaries is in violation of any
provision of its charter, by-laws or comparable organizational
documents, except for such violations that would not, individually
or in the aggregate, have a material adverse effect on the
Purchaser. As used in this Agreement, any reference to any event,
change or effect having a "material adverse effect on the Purchaser"
means such event, change or effect which is materially adverse to
(A) the business, results of operations or financial condition of
the Purchaser and its Subsidiaries, taken as a whole, or (B) the
ability of the Purchaser to consummate the transactions
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contemplated hereby.
Section 4.2 Authority. The Purchaser, Parker
Intangibles, Parker GmbH and Parker Japan each has the requisite
corporate power and authority to execute and deliver this Agreement
and the Purchaser Documents (to the extent it is or will be a party
thereto) and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement
and the Purchaser Documents by the Purchaser, Parker Intangibles,
Parker GmbH and Parker Japan and the consummation by the Purchaser,
Parker Intangibles, Parker GmbH and Parker Japan of the transactions
contemplated hereby and thereby have been duly authorized by the
respective Boards of Directors of the Purchaser, Parker Intangibles,
Parker GmbH and Parker Japan (to the extent it is or will be a party
thereto) and no other corporate proceedings on the part of the
Purchaser, Parker Intangibles, Parker GmbH or Parker Japan are
necessary to authorize this Agreement and the Purchaser Documents
(to the extent it is or will be a party thereto) or to consummate
the transactions so contemplated. This Agreement has been, and each
of the Purchaser Documents will be, duly executed and delivered by
the Purchaser, Parker Intangibles, Parker GmbH and Parker Japan and
constitutes or (to the extent such agreement is not being entered
into as of the date hereof) will constitute a valid and binding
obligation of each of the Purchaser, Parker Intangibles, Parker GmbH
and Parker Japan (to the extent it is or will be a party thereto) ,
enforceable against the Purchaser, Parker Intangibles, Parker GmbH
or Parker Japan, as the case may be, in accordance with its terms.
Section 4.3 Consents and Approvals; No Violations.
(a) Except as set forth in Section 4.3(a) of the
disclosure schedule delivered by the Purchaser to the Seller on or
prior to the date hereof (the "Purchaser Disclosure Schedule"), and
except for such filings, permits, authorizations, consents and
approvals as may be required under, and other applicable
requirements of, the Exchange Act, the HSR Act, the Japanese
antitrust laws or the German Cartel regulations, none of the
execution, delivery or performance of this Agreement by the
Purchaser, Parker Intangibles, Parker GmbH and Parker Japan (to the
extent it is or will be a party thereto) or the consummation by the
Purchaser, Parker Intangibles, Parker GmbH and Parker Japan of the
transactions contemplated hereby or by the Purchaser Documents (to
the extent it is or will be a party thereto) or compliance by the
Purchaser, Parker Intangibles, Parker GmbH and Parker Japan (to the
extent it is or will be a party thereto) with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of
any provision of the charter or by-laws of the Purchaser, Parker
Intangibles, Parker GmbH or Parker Japan, (ii) require any filing by
the Purchaser or its Subsidiaries with, or any permit,
authorization, consent or approval of, any Governmental Entity to be
obtained by the Purchaser or its Subsidiaries, (iii) result
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in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement, franchise, permit, concession
or other instrument, obligation, understanding, commitment or other
arrangement to which the Purchaser or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets
may be bound or affected, or (iv) violate any order, writ,
injunction, decree, statute, ordinance, rule or regulation
applicable to the Purchaser or any of its Subsidiaries.
(b) Except as set forth in Section 4.3(b) of the
Purchaser Disclosure Schedule, neither the Purchaser nor any of its
Subsidiaries is in conflict with, or in default or violation of, any
note, bond, mortgage, indenture, lease, license, contract,
agreement, franchise, permit, concession or other instrument,
obligation, understanding, commitment or other arrangement to which
the Purchaser or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or
affected.
Section 4.4 Funds Available for Purchase Price. The
Purchaser has adequate resources available to pay the cash Purchase
Price on the Closing Date as provided by Section 2.2.
ARTICLE V
COVENANTS
Section 5.1 Conduct of the Aerospace Business. During
the period from the date of this Agreement and continuing until the
Closing Date, the Seller agrees as to itself and its Subsidiaries
that, except for the transactions expressly provided for in this
Agreement, or to the extent that the Purchaser shall otherwise
consent in writing:
(a) Ordinary Course. The Seller shall, and shall
cause each of its Subsidiaries to, conduct the Aerospace Business in
the usual, regular and ordinary course consistent with past practice
and shall use its reasonable efforts, and will cause each of its
Subsidiaries to use its reasonable efforts, to preserve
substantially intact the present business organization of the
Aerospace Business, keep substantially available the services of the
present officers and employees of the Aerospace Business and
preserve substantially intact the business relationships of the
Aerospace Business with customers, suppliers and others having
business dealings with the Aerospace Business.
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(b) Governing Documents. The Seller and its
Subsidiaries shall not amend or propose to amend their respective
certificates of incorporation or by-laws or comparable
organizational documents in any manner which would require any
further authorization or approval by the Board of Directors or
stockholders of the Seller or its Subsidiaries, as the case may be,
for the consummation of the transactions contemplated by this
Agreement or which would place any material restraints or material
additional requirements on any of the parties hereto in connection
with the consummation of the transactions contemplated by this
Agreement.
(c) No Acquisitions; Material Commitments. The Seller
shall not, nor shall it permit any of its Subsidiaries to, (i)
acquire or agree to acquire by merging or consolidating with, or by
purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire
or agree to acquire any material assets, in each case Related to the
Aerospace Business, other than the purchase of raw materials and
inventory in the ordinary course of the Aerospace Business
consistent with past practice, or (ii) otherwise enter into any
material commitment or transaction Related to the Aerospace Business
outside the ordinary and usual course of the Aerospace Business
consistent with past practice.
(d) No Dispositions. Subject to Section 6.4(b), the
Seller shall not, nor shall it permit any of its Subsidiaries to,
sell, lease, license, encumber or otherwise dispose of, or agree to
sell, lease, license, encumber or otherwise dispose of, any Acquired
Assets other than in the ordinary course of the Aerospace Business
consistent with past practice.
(e) Indebtedness. The Seller shall not, nor shall it
permit any of its Subsidiaries to, incur, assume, pre-pay,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for any indebtedness
for borrowed money or other material obligation Related to the
Aerospace Business which would become an Assumed Liability, except
in the ordinary course of the Aerospace Business consistent with
past practice.
(f) Changes to Benefit Plans. Except as set forth in
Section 5.1(f) of the Seller Disclosure Schedule, and except as
otherwise contemplated by this Agreement, the Seller shall not, nor
shall it permit any at its Subsidiaries to, (i) enter into, adopt,
amend (except as may be required by law and except for immaterial
amendments) or terminate any Compensation and Benefit Plan as it
relates to any Active Aerospace Business Employees, or (ii) except
for immaterial or normal increases in the ordinary course of the
Aerospace Business consistent with past practice, increase in any
manner the compensation or fringe benefits of
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any Active Aerospace Business Employee or pay any benefit to any Active
Aerospace Business Employee not required by any plan or arrangement as in
effect as at the date hereof or enter into any Contract, agreement,
commitment or arrangement to do any of the foregoing.
(g) Accounting Policies and Procedures. The Seller
will not and will not permit any of its Subsidiaries to change in
any material respect any of its accounting principles, policies,
practices or procedures, except as may be required by United States
generally accepted accounting principles or by United States laws
and regulations governing Government Contracts, in respect of the
Aerospace Business.
(h) Contracts. The Seller will not, and shall not
permit any of its Subsidiaries to, modify, amend or terminate any
Contract Related to the Aerospace Business, waive, release,
relinquish or assign any Contract or other right or claim Related to
the Aerospace Business or cancel or forgive any indebtedness owed to
the Seller or its Subsidiaries which would be an Acquired Asset.
(i) Other Actions. Notwithstanding the fact that such
action might otherwise be permitted pursuant to this Section 5.1,
the Seller shall not, nor shall it permit any of its Subsidiaries
to, take any action that would or can reasonably be expected to
result in any of the conditions to the obligations of the Purchaser
set forth in Article VIII not being satisfied or that would impair
the ability of the Seller to consummate the transactions
contemplated herein in accordance with the terms hereof or that
would delay such consummation.
Notwithstanding the provisions of this Section 5.1, nothing in
this Agreement shall be construed or interpreted to prevent the
Seller from (i) paying or making regular or special cash dividends
or other cash distributions, (ii) making or accepting inter- or
intra-company advances to, from or with one another or with the
Seller or any of its Subsidiaries except that advances to either
Transferred Subsidiary may only be made as permanent capital to the
extent necessary to maintain the solvency of such Transferred
Subsidiary, (iii) engaging in any transaction incident to the
normal cash management procedures of Seller and its Subsidiaries,
including short-term investments in bank deposits, money market
instruments, time deposits, certificates of deposit and bankers'
acceptances and borrowings for working capital purposes and purposes
of providing additional funds to the Aerospace Business in the
ordinary course of business, (iv) continuing the management of
environmental or products liability related claims in accordance
with past practice, or (v) settling or compromising any actual or
threatened lawsuit or claim whether or not Related to the Aerospace
Business.
Section 5.2 Covenants of the Parties.
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(a) During the period from the date of this Agreement
and continuing until the Closing Date, the Purchaser agrees as to
itself and its Subsidiaries that the Purchaser shall not take any
action that would or can reasonably be expected to result in any of
the conditions to the obligations of the Seller set forth in Article
VIII not being satisfied or that would materially impair the ability
of the Purchaser to consummate the transactions contemplated herein
in accordance with the terms hereof or that would materially delay
such consummation.
(b) Each party shall promptly provide the other (or
its counsel) copies of all filings made by it with any federal,
state or foreign Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(c) Each party shall cooperate and assist the others in
making claims under insurance policies relating to periods prior to
the Closing Date and collecting recoveries with respect thereto.
The Seller agrees that, with respect to liabilities insured under
insurance policies included with the Retained Assets that arise from
or relate to the Acquired Assets or that are otherwise Related to
the Aerospace Business for the period prior to the Closing Date, the
Seller will use its best efforts, at the Purchaser's sole cost and
expense, to obtain insurance recoveries for the Purchaser and remit
to the Purchaser any insurance recovery obtained by the Seller
pursuant to such claims, after deducting any out-of-pocket costs and
expenses incurred by the Seller in obtaining such insurance recovery
and after giving effect to any applicable deductible. The Purchaser
agrees that, with respect to liabilities insured under insurance
policies included with the Acquired Assets that arise from or relate
to the Retained Assets for the period prior to the Closing Date, the
Purchaser will use its best efforts, at the Seller's sole cost and
expense, to obtain insurance recoveries for the Seller and remit to
the Seller any insurance recovery obtained by the Purchaser pursuant
to such claims, after deducting any out-of-pocket costs and expenses
incurred by the Purchaser in obtaining such insurance recovery and
after giving effect to any applicable deductible.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Reasonable Efforts. Subject to the terms
and conditions of this Agreement, including, without limitation,
Section 6.3(b), each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or
advisable under this Agreement and under applicable Contracts, laws
and regulations to consummate
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and make effective the transactions contemplated by this Agreement (which
actions shall include, without limitation, furnishing all information
required under the HSR Act and in connection with approvals of or filings
with any Governmental Entity) and will promptly cooperate with and
furnish information to each other in connection with any such
requirements imposed upon any of them or any of their respective
Subsidiaries in connection therewith. Subject to the terms and
conditions hereof, each of the Seller and the Purchaser will, and will
cause its respective Subsidiaries to, promptly use all reasonable efforts
to obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required
to be obtained or made by such party in connection with the taking
of any action contemplated by this Agreement.
Section 6.2 Access to Information. After the date
hereof and prior to the Closing Date, upon reasonable notice, the
Seller shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives
of the Purchaser, access, during normal business hours to the extent
necessary for the Purchaser to prepare or evaluate any schedules or
filings contemplated by this Agreement, to all its properties,
books, Contracts, commitments and records and all other information
Related to the Aerospace Business, the Acquired Assets, the Assumed
Liabilities, the Retained Assets, the Retained Liabilities and the
Active and Former Aerospace Business Employees as the Purchaser may
reasonably request, and, during such period, each of the Seller and
the Purchaser shall (and shall cause each of their respective
Subsidiaries to) furnish promptly to the other a copy of each
report, schedule, registration statement and other document filed by
it during such period pursuant to the requirements of federal
securities laws. Unless otherwise required by law, the parties will
hold any such information which is non-public in confidence in
accordance with the Confidentiality Agreement, dated August 23, 1995
(the "Confidentiality Agreement"), between the Seller and the
Purchaser.
Section 6.3 Further Assurances; Subsequent Transfer.
(a) From time to time, each of the parties hereto will
execute and deliver such further instruments and will take such
other actions as the Purchaser or any of its Subsidiaries, on the
one hand, or the Seller or any of its Subsidiaries, on the other
hand, may reasonably request in order to effectuate the purposes of
this Agreement and to carry out the terms hereof. Without limiting
the generality of the foregoing, at any time and from time to time
after the Closing Date, (i) at the request of the Purchaser or any of its
Subsidiaries, the Seller and its Subsidiaries will execute and deliver
such other instruments of transfer, and take such action as the Purchaser
or any of its Subsidiaries may reasonably deem necessary in order to
effectively transfer, convey and assign to the Purchaser and its
Subsidiaries all
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of the Acquired Assets, to put the Purchaser and its Subsidiaries in
actual possession and operating control thereof and to permit the
Purchaser and its Subsidiaries to exercise all rights with respect
thereto (including, without limitation, rights under Contracts and other
arrangements as to which the consent of any third party to the transfer
thereof shall not have previously been obtained) and to properly assume
and discharge the related Assumed Liabilities, and (ii) at the request
of the Seller or any of its Subsidiaries, the Purchaser and its
Subsidiaries will execute and deliver such other instruments and
agreements, and take such action, as the Seller or any of its
Subsidiaries may reasonably deem necessary in order effectively to
assume from the Seller all of the Assumed Liabilities and to confirm
the Seller's right, title and interest in and to the Retained
Assets.
(b) The Seller will use all reasonable efforts and the
Purchaser will reasonably cooperate with the Seller to obtain any
consents required to transfer and assign to the Purchaser all
Contracts, Licenses and other rights of any nature whatsoever
relating to or constituting a part of the Acquired Assets
(including, without limitation, by assisting the Purchaser in its
efforts to obtain title insurance in respect of real property
included within the Acquired Assets), it being understood that
neither the Seller nor the Purchaser shall be obligated to make
payments to third parties in order to obtain consents. In the event
and to the extent that at the Closing the Seller is unable to obtain
any such required consents, and the Purchaser elects to waive any
condition to the Closing with respect to such consents, (i) the
Seller shall continue to be bound by all of the above-mentioned
Contracts, Licenses and other rights as to which such consent was
not obtained, (ii) the Purchaser shall pay, perform and discharge
fully all of the obligations of the Seller thereunder from and
after the Closing Date, and (iii) the Seller shall, for a period
continuing through September 30, 1996, continue to use all
reasonable efforts to obtain such consent at the earliest
practicable date following the Closing Date. The Seller shall,
without further consideration therefor, pay, assign and remit to the
Purchaser promptly all monies, rights and other consideration
received in respect of such performance. The Seller shall exercise,
enforce or exploit the rights and options under all such Contracts,
Licenses and other rights and commitments referred to in this
Section 6.3(b) only as reasonably directed in writing by the
Purchaser and at the Purchaser's expense. Except with respect to
the exercise or exploitation of the rights and options under the
non-assignable Contracts, Licenses and other rights and commitments
as contemplated under this Section 6.3(b), the Seller and its
Subsidiaries shall have no obligation hereunder to pay, perform or
discharge any obligations under any such non-assignable Contract,
License or other right relating to the Acquired Assets after the
Closing, and the Purchaser shall indemnify and hold harmless the
Seller and its Subsidiaries (i) from any Third-Party Claims (as
defined in Section 7.1) relating thereto, except to the extent such
Third Party Claims relate to or arise from the performance by
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the Seller prior to the Closing Date or to any conduct which would
amount to a breach by the Seller of its representations, warranties
or covenants set forth in this Agreement, and (ii) from Third-Party
Claims arising out of, resulting from or relating to any actions
taken by the Seller or its Subsidiaries in connection with such
Contracts, Licenses and other rights and commitments which the
Purchaser directed the Seller or its Subsidiaries to take or which
were reasonably taken if directions were requested by the Seller in
writing and not forthcoming from the Purchaser within a reasonable
period of time. If and when any such consent shall be obtained or
such Contract, License or other right shall otherwise become
assignable, the Seller or such Subsidiary, as the case may be, shall
promptly assign all its rights and obligations thereunder to the
Purchaser without payment of further consideration and the Purchaser
shall, without the payment of any further consideration therefor,
assume such rights and obligations.
(c) Prior to the Closing, the Seller and its
Subsidiaries shall take all necessary steps to remove any mortgages,
claims, liens, charges or encumbrances affecting the assets of the
Transferred Subsidiaries, other than Permitted Liens and any
encumbrances relating to the Assumed Liabilities.
Section 6.4 Stockholders' Meeting; Fiduciary Duties;
Nonsolicitation.
(a) The Parent shall, promptly after the date hereof,
take all action necessary in accordance with the Delaware General
Corporation Law (the "DGCL") and its Certificate of Incorporation
and By-laws to convene a meeting of the Parent's stockholders to,
among other things, consider and vote upon this Agreement and the
transactions contemplated herein (the "Stockholders' Meeting"). The
Board of Directors of the Parent will recommend to the Parent's
stockholders the approval and adoption of this Agreement and the
transaction contemplated herein (the "Recommendation"); provided,
however, that the Board of Directors of the Parent may withdraw or
modify the Recommendation if the Board of Directors concludes in
good faith following consultation with outside counsel that such
action is reasonably necessary for the Board of Directors to comply
with its fiduciary obligations to the Parent's stockholders under
applicable law. Unless the Recommendation shall have been withdrawn
or modified in a manner adverse to the Purchaser, the Parent shall
use its best efforts to solicit from its stockholders proxies in
favor of the approval and adoption of this Agreement and the
transactions contemplated herein and to secure the vote or the
consent of the stockholders required by the DGCL to approve and
adopt this Agreement and the transactions contemplated herein.
(b) The Parent and the Seller shall not, and shall
direct their respective officers, directors, employees and
representatives not to, solicit any inquiries or the making of any
proposal which constitutes, or may reasonably be
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expected to lead to, a Competing Transaction (as defined below), or,
except in the circumstances described below, participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal. Nothing
contained in this Section 6.4(b) or in any other provision of this
Agreement shall, however, prohibit the Parent or its Board of
Directors or its representatives from making such disclosures to its
stockholders as are required under applicable law or by rules of the
New York Stock Exchange or any other exchange on which the Parent's
securities may be listed for trading. Notwithstanding the
foregoing, nothing contained in this Section 6.4(b) or elsewhere in
this Agreement shall prohibit the Board of Directors of the Parent
or the Seller from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes a
bona fide written proposal for a Competing Transaction if such Board
of Directors, after consultation with its legal counsel and
financial advisors, determines in good faith that such Competing
Transaction is economically superior to the transactions
contemplated hereby and, in the case of the Board of Directors of
the Parent, that such action is necessary or required for the Board
of Directors of the Parent to comply with its fiduciary duties to
the Parent's stockholders under applicable law. Subject to
compliance with the provisions of Section 9.3 and the preceding
sentence, the Board of Directors of the Parent may approve and
recommend to the Parent's stockholders a Competing Transaction. As
used herein, a "Competing Transaction" shall mean any of, or a
proposal to effect any of, the following (other than the
transactions contemplated by this Agreement) (i) any merger,
consolidation, business combination or other similar transaction
with respect to the Parent or the Seller, (ii) any tender offer or
exchange offer for all of the outstanding capital stock of the
Parent, or (iii) any sale, transfer or other disposition of all of
the assets of the Aerospace Business.
Section 6.5 Acquired Intellectual Property.
(a) Use of Names. Following the Closing Date, (i) the
Purchaser and its Subsidiaries shall have the sole and exclusive
ownership of and right to use, as between the Purchaser and its
Subsidiaries, on the one hand, and the Seller and its Subsidiaries,
on the other hand, the Trademarks, (ii) the Seller shall, and shall
cause its Subsidiaries and other affiliates to, take all action
necessary to cease using, and change as promptly as practicable
(including by amending any charter documents), any corporate or
other names which are the same as or confusingly similar to any of
the Trademarks; provided, however, that the Purchaser acknowledges
the Seller's rights to use the Pneumo Abex name and the Abex name
as, or as part of, its corporate name or in connection with matters
not related to the Aerospace Business, and provided further that
Seller will not use the Pneumo Abex or Abex name or mark in any
manner in connection with aerospace products or hydraulic or
pneumatic products, and the parties agree that such uses described
above are not likely to cause confusion with the Purchaser's use of
the Trademarks,
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(iii) the Purchaser shall promptly take all action
necessary to cause the Aerospace Business to cease the use of the
name Pneumo Abex, (iv) the Seller and its Subsidiaries will not
oppose, cancel, or challenge the use or applications or
registrations of the Trademarks by the Purchaser and its
Subsidiaries, (v) the Purchaser and its Subsidiaries will not
oppose, cancel, or challenge the use or applications or
registrations of the Corporate Name or the Abex trademark or trade
name in connection with matters other than the Aerospace Business or
hydraulic or pneumatic products by the Seller and its Subsidiaries,
and (vi) the Seller and its Subsidiaries, on the one hand, and the
Purchaser and its Subsidiaries, on the other hand, will each execute
and deliver to the other such further consents as may be reasonably
requested in connection with the foregoing applications or
registrations, to the extent such consents are consistent with the
rights of the respective parties under this Agreements.
(b) Assignments of Acquired Intellectual Property. As
soon as reasonably practicable following the Closing, the Seller
will bring record title into Seller's name, and will deliver to the
Purchaser executed assignments in such forms including legalizations
and notarization, if appropriate, sufficient to properly convey,
transfer and record title in the registered or applied for
(including trademarks, patents and copyrights) Acquired Intellectual
Property, other than that owned by Abex Aerohydraul or by Abex
Japan, as follows:
(i) to Parker Intangibles, all issued and
pending U.S. Patents, and all Trademark registrations
and applications therefor in all countries except
Austria, Egypt, Italy, Korea, Mexico, Taiwan and
Thailand; and
(ii) to the Purchaser, all Copyright
registrations and applications therefor, all issued and
pending Patents outside the United States, and all Trademark
registrations and applications therefor in Austria, Egypt,
Italy, Korea, Mexico, Taiwan and Thailand.
(c) Purchaser shall be solely responsible for recording
the assignments referenced in Section (b) above, and will be solely
responsible for all fees in connection with such recordings.
Section 6.6. Employee Matters; Employee Benefit Plans.
(a) As of the Closing Date, the Purchaser shall offer
employment on such terms and conditions as the Purchaser shall deem
appropriate (but subject to any applicable requirements of law) to
all Active Aerospace Business Employees.
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(b) Pension Plan, Savings Plan, Retiree Medical.
Except as otherwise provided in this subsection, and Sections
1.3(a), and 7.3(d), the Purchaser is not assuming and will not have
any responsibility for any claims arising under any Compensation or
Benefit Plan of the Seller before or after the Closing Date.
(i) Pension Plan:
(A) Seller maintains the Pneumo Abex Corporation
Retirement Income Plan (the "Pneumo Abex Retirement Income
Plan"), a defined benefit pension plan qualified under Section
401(a) of the Code, for the benefit of many of its current
and former employees, including the Active Aerospace Business
Employees and certain former employees of the Aerospace
Business who are receiving a benefit or are entitled to
receive a benefit in the future (the "Vested/Retired
Employees"). Section 6.6(b)(i)(A) of the Seller Disclosure
Schedule sets forth the following information with respect to
all Active Aerospace Business Employees and Vested/Retired
Employees: name, Social Security number, estimated accrued
benefit as of January 1, 1995 (Vested/Retired Employees only),
pay status, and form of payment (Vested/Retired Employees in
pay status only).
(B) The Seller agrees to take all action necessary and
advisable to spin off from the Pneumo Abex Retirement Income
Plan as of the end of business December 31, 1995, or such
other date prior to the Closing as the Seller may determine,
a plan that will include the vested and unvested projected
benefit obligations of the Active Aerospace Business Employees
and the vested projected benefit obligations of the
Vested/Retired Employees (the "NWL Retirement Income Plan"),
and an amount of assets related to such liabilities and
obligations (collectively, the "Assets and Liabilities"). The
Pneumo Abex Retirement Income Plan will retain all liabilities
and obligations (and related assets) with respect to all other
participants in the Pneumo Abex Retirement Income Plan. In
computing the amount of the Assets and Liabilities to be
transferred to the NWL Retirement Income Plan, and the amount
of assets and liabilities to be retained by the Pneumo Abex
Retirement Income Plan, the rules of Sections 414(l)(1) and
414(l)(2) shall be applied.
(C) As of the day following the Closing Date, The
Purchaser shall be substituted for the Seller as the plan
sponsor and plan administrator (within the meaning of Section
3(16) of ERISA) of the NWL Retirement Income Plan, and all
instruments governing such plan shall be amended effective as
of the day after the Closing Date by changing all references
to Pneumo Abex Corporation therein to "Parker-Hannifin
Corporation," and
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making all other changes necessary or appropriate to effectuate
the terms and conditions of this Agreement.
(D) The Pneumo Abex Retirement Income Plan is assumed
to have a net pension excess of $14,088,000 as of September
30, 1995, which amount shall be reflected as an asset on the
Seller Balance Sheet (the "Net Pension Asset").
(E) The Closing Balance Sheet shall reflect the Assets
and Liabilities as modified pursuant to this Section
6.6(b)(i)(E). As of the Closing Date, the amount of the
Liabilities shall be calculated by rolling forward the
Liabilities as of January 1, 1996, calculated by applying a
discount rate of seven and one-half percent (7-1/2%), salary
scale of four percent (4%), and other relevant assumptions
used by Seller for purposes of calculating funding
liabilities for the Pneumo Abex Retirement Income Plan under
the Code for the plan year ending in 1994. The Liabilities
will be rolled forward from January 1, 1996 to the Closing
Date in accordance with the formula set forth in Section
6.6(b)(i)(E) of the Seller Disclosure Schedule. The amount of
the Assets shall be the fair market value of the Assets on the
Closing Date. The fair market value of the Assets at the
Closing Date shall be reduced by the Liabilities at the
Closing Date in order to obtain the Net Pension Asset for
purposes of the Closing Balance Sheet.
(ii) Savings Plan:
(A) As of the Closing Date, the Seller shall provide
for full vesting of the account balance of each Active
Aerospace Business Employee who has been participating in the
Pneumo Abex Corporation Supplemental Retirement and Savings
Plan for Salaried Employees, and shall permit distribution of
such Active Aerospace Business Employees' account balances,
to the extent permitted by the Code, ERISA and the plan
documents, as soon as practicable after the Closing; provided,
that any such Active Aerospace Business Employee shall have
the right to direct that his account balance shall be
transferred into the Parker Retirement Savings Plan (the
"Purchaser's Savings Plan").
(B) All Active Aerospace Business Employees, other
than any such Employees who are represented by collective
bargaining, shall be entitled to participate in the
Purchaser's Savings Plan as soon as practicable following the
Closing, provided that any such Active Aerospace Business
Employee has a total of at least 90 days of employment with
the Seller and the Purchaser (combined) at the time the
Purchaser's Savings Plan becomes available to him or her.
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(iii) Retiree Medical. The Purchaser shall make retiree
medical, dental and life benefits available to each former employee
of the Aerospace Business who was employed at an Acquired Facility
and who is receiving or is entitled to receive such benefits as of
the Closing Date (the "Retired Employees"); provided, however, that
the Purchaser reserves the right to change the terms and conditions
of such coverage from time to time. The Closing Balance sheet shall
reflect a liability for retiree medical obligations, which shall be
assumed to be $24,668,000 as of September 30, 1995, shall be
adjusted for benefit accruals and accrued interest on the
liabilities from September 30, 1995 to the Closing Date, and shall
be recalculated as of the Closing Date based on a discount rate of
seven and one-half percent (7-1/2%), a health care cost trend rate
of ten percent (10%) in 1995, graded uniformly down to five percent
(5%) in 2008, and other assumptions set forth in Section 6.6(b)(iii)
of the Seller Disclosure Schedule.
(iv) Active Medical and Dental Benefits. As of the Closing,
Purchaser will provide all Active Aerospace Business Employees with
such medical, dental, life, and other benefits as the Purchaser
deems appropriate. Notwithstanding the foregoing, Seller shall
remain liable for any medical or dental services incurred on or
before the Closing.
(vi) Ability to Amend. Nothing contained herein shall be
deemed in any way to restrict, prohibit, or limit Purchaser's right
to modify, amend or eliminate any employee benefit plan or program,
or to add additional, or substitute other employee benefit plans or
programs with respect to any Active Aerospace Business Employee.
(vii) The parties hereto agree that if a bond is posted or an
escrow established in favor of the NWL Retirement Income Plan
(including any successor), or otherwise in respect of the assets and
liabilities thereof assumed by this Agreement, in each case by
reasons of transactions occurring prior to the Closing Date, the
cost of posting such bond or the burden of funding the escrow shall
be borne by the Seller and not by the Purchaser. Notwithstanding
the foregoing, if and to the extent that there is performance on any
such bond or a claim made against such escrow, or if any amounts are
contributed to or paid in respect of such plan (or successor) or the
assets and liabilities thereof assumed by this Agreement, in lieu of
claims with respect to such bond or escrow, the Purchaser shall
reimburse and pay to the Seller all amounts so contributed, paid,
claimed or performed.
(viii) References to employee or former employee participants
in this Agreement shall include dependents or beneficiaries of such
persons.
Section 6.7 Fees and Expenses. Whether or not the
transactions contemplated by this Agreement are consummated all
costs and expenses incurred
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in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, it being
agreed for such purposes that amounts paid to record title in the
Acquired Intellectual Property or to obtain title insurance for real
property included in the Acquired Assets shall be expenses of the
Purchaser. The parties agree, however, to share equally any transfer
taxes, sales taxes, recording taxes or similar taxes payable by either
the Seller or its Subsidiaries, on the one hand, or by the Purchaser or
its Subsidiaries, on the other hand, in connection with the transfer of
the Acquired Assets to the Purchaser or its Subsidiaries hereunder.
The party which is legally obligated to pay the applicable tax (or
in the absence of a legal requirement, the party that customarily
pays such tax) shall file the relevant tax return and pay the
appropriate tax and will be promptly reimbursed by the other party
for one-half of the tax liability.
Section 6.8 Cash Collections and Disbursements. For
each calendar month commencing with the month in which the Closing
Date occurs and continuing until reasonably determined by the
parties no longer to be necessary, and the Seller shall cause all
cash collections and cash disbursements received or made by the
Seller and its Subsidiaries for the benefit of the Purchaser and its
Subsidiaries during the relevant month to be remitted or reimbursed,
as the case may be, to the Purchaser as promptly as possible but in
any case within 15 days after the receipt thereof or request for
reimbursement thereof, as the case may be.
Section 6.9 Insurance.
(a) The Seller will continue to carry and maintain in
full force and effect the insurance policies listed on Section 3.18
of the Seller Disclosure Schedule, or policies with comparable
coverage, to the Closing Date.
(b) The Seller agrees to maintain insurance coverage on
an occurrence basis for liabilities and obligations arising out of
any actual or alleged injury to persons or property (except for
employees or property of the Aerospace Business) occurring prior to
the Closing Date, either as a result of ownership, possession or use
of any product manufactured or sold by the Aerospace Business
(including for purposes of this Section 6.9(b) the Seller's former
facilities at Oxnard and Santa Maria, California and the business
formerly conducted by Jensen-Kelly Corporation). The Seller agrees
that the Transferred Subsidiaries will each be insureds under the
above-mentioned insurance coverage. The Purchaser agrees to main-
tain insurance coverage on an occurrence basis for liabilities and
obligations arising out of any actual or alleged injury to persons
or property (except for employees or property of the Aerospace
Business) occurring on or after the Closing Date, either as a result
of ownership, possession or use of any product manufactured or sold
by the Aerospace Business (including for purposes of this Section
6.9(b) the Seller's former facilities at Oxnard and Santa Maria,
California
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and the business formerly conducted by Jensen-Kelly Company). All such
policies of insurance shall be procured on a basis consistent with
standard industry practices.
Section 6.10 Purchase Price Allocation for Tax Purposes.
Pursuant to Section 1060 of the Code and the Treasury regulations
thereunder and any analogous provisions of state, local or foreign
law, the Seller and the Purchaser shall prepare and file "asset
acquisition statements" with the Service and other taxing
authorities as required by applicable law with respect to the
acquisition of the Acquired Assets. The asset acquisition statements
shall be filed in the time and manner set forth in Section 1060 of
the Code and the Treasury regulations thereunder, and any analogous
provisions of state, local or foreign law, and shall allocate the
total consideration to be paid by the Purchaser (including the
Assumed Liabilities) to the Acquired Assets in conformance with the
methods prescribed therein. The parties agree that the asset
acquisition statements shall provide for the allocations set forth
in Section 6.10 of the Seller Disclosure Schedule unless otherwise
agreed to by the parties.
Section 6.11 Guaranties; Letters of Credit. The
Purchaser shall cause itself or one or more of its affiliates to be
substituted in all respects for the Seller or any Retained
Subsidiary, effective as of the Closing Date, in respect of all
obligations of the Seller and any such Retained Subsidiary under
each of the Guaranties. If, after using all reasonable efforts to
do so, the Purchaser is unable to effect such a substitution with
respect to any Guaranty that is not a letter of credit, the
Purchaser shall indemnify the Seller with respect to the obligations
and liabilities covered by each of the Guaranties for which the
Purchaser does not effect such substitution. As a result of the
substitution contemplated by the first sentence of this Section
6.11, the Seller and the Retained Subsidiaries shall from and after
the Closing cease to have any obligation whatsoever arising from or
in connection with the Guaranties except for obligations, if any,
for which the Seller is fully indemnified by the Purchaser.
Section 6.12 Disclosure Schedule Updates. No later than
five business days prior to the scheduled Closing Date, the Seller
shall amend or supplement the Seller Disclosure Schedule and the
Purchaser shall amend or supplement the Purchaser Disclosure
Schedule with respect to any matter coming to their respective
attention or arising which, if known to them or existing prior to
the date of this Agreement, would have been required to be set forth
therein or which is necessary or desirable to complete or correct
any information contained therein or in any representation or
warranty rendered inaccurate thereby. In the event the Closing
occurs, all references in this Agreement to the Seller Disclosure
Schedule and the Purchaser Disclosure Schedule shall be deemed to
give effect to all such amendments and supplements.
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Section 6.13 Tax Returns. The Purchaser agrees to
prepare IRS Form 5471 for the taxable year which includes the
Closing Date, if applicable, for any Transferred Subsidiaries on
behalf of the Seller and the Purchaser and to prepare all other
required Tax Returns for any Transferred Subsidiaries with a return
due date after the Closing Date in a manner consistent with
applicable Tax laws. A copy of such Tax Returns shall be submitted
to the Seller for its review at least 30 days prior to the earlier
of its due date or the date of filing. The Purchaser agrees to
provide the Seller with copies of such Tax Returns as filed. The
Seller will prepare all Tax Returns for any Transferred Subsidiaries
for any taxable year with a return due date ending on or prior to
the Closing Date on a basis consistent with past practice. The
Purchaser will provide the Seller with appropriate powers of
attorney to enable the Seller to sign and file such returns. The
Seller agrees to provide the Purchaser with copies of such Tax
Returns as filed. Any disputes with respect to such Tax Returns
shall be resolved by the Independent Accounting Firm, or such other
independent expert as may be mutually agreed upon by the parties,
whose determination shall be binding on the parties.
Section 6.14 Cooperation. The Purchaser and the Seller
and their respective affiliates shall cooperate in the preparation
of all Tax Returns relating in whole or in part to taxable periods
ending on or before or including the Closing Date that are required
to be filed after such date. Such cooperation shall include, but
not be limited to, furnishing prior years' Tax Returns or return
preparation packages illustrating previous reporting practices or
containing historical information relevant to the preparation of
such Tax Returns, and furnishing such other information within such
party's possession requested by the party filing such Tax Returns as
is relevant to their preparation. In the case of any state, local
or foreign joint, consolidated, combined, unitary or group relief
system Tax Returns, such cooperation shall also relate to any other
taxable periods in which one party could reasonably require the
assistance of the other party in obtaining any necessary
information.
Section 6.15 W-2 Preparation. The Seller and Purchaser
agree that the Purchaser is purchasing substantially all of the
property used in the Aerospace Business and, in connection
therewith, the Purchaser will employ individuals who immediately
before the Closing Date were employed in such business by the
Seller. Accordingly, pursuant to Revenue Procedure 84-77, at the
request of the Seller, provided the Seller provides the Purchaser
with all necessary payroll records for the calendar year that
includes the Closing Date, the Purchaser will furnish a Form W-2 to
each U.S. Transferred Employee that is employed by the Purchaser
disclosing all wages and other compensation paid for such calendar
year, and Taxes withheld and deposited therefrom, and Seller will be
relieved of the responsibility to do so.
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Section 6.16 Books and Records; Personnel.
(a) Neither the Purchaser nor any of its Subsidiaries
shall within ten years after the Closing Date or, with respect to
Tax records within the later of six years or the applicable statute
of limitations as extended, dispose of or destroy any business
records or files Related to the Aerospace Business for periods prior
to the Closing Date, without first offering to turn over possession
thereof to the Seller by written notice at least 30 days prior to
the proposed dates of such disposition or destruction.
(b) From and after the Closing Date, to the extent
reasonably required by or in connection with the preparation of Tax
Returns or other legitimate purposes specified in writing, each of
the Purchaser and the Seller shall (subject to applicable
contractual and privacy obligations) allow the other party and its
agents access to all business records and files (other than those
containing competitively sensitive or privileged information)
Related to the Aerospace Business, which relate to periods prior to
the Closing Date, upon reasonable advance notice during normal
working hours, and each party shall have the right, at its own
expense, to make copies of any such records and files, provided,
however, that any such access or copying shall be had or done in
such a manner so as not to interfere with the normal conduct of
business.
(c) From and after the Closing Date, each party shall
make available to the other upon written request (and at the
requesting party's expense) personnel whose assistance or
participation is reasonably required in anticipation of, preparation
for, or the prosecution or defense of existing or future claims or
actions, Tax Returns or other matters in which the parties do not
have any adverse interest.
(d) Any confidential, proprietary or trade secret
information provided under this Section 6.16 shall be deemed
"Confidential Information" under the terms of the Confidentiality
Agreement and shall be held in accordance with the terms thereof.
Section 6.17 Certain Tax Elections. Neither the
Purchaser nor any member of the affiliated group (within the meaning
of Section 1504 of the Code) which includes the Purchaser shall make
an election under Section 338 of the Code, or take or omit to take
any action, the taking or omission of which causes the Purchaser or
any member of the affiliated group which includes the Purchaser to
be treated as having made an election under Section 338 of the Code,
with respect to any Transferred Subsidiary.
Section 6.18 Real Estate Matters. Prior to the Closing,
the Purchaser and
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the Seller shall complete the following actions with respect to the real
estate upon which the Acquired Facilities are situated:
(a) On or before February 29, 1996, the Seller shall
deliver to the Purchaser, at the Purchaser's expense, (i)
commitments for ALTA owners title insurance policies (the "Title
Commitments") from a mutually agreeable nationally recognized title
company (the "Title Company") to insure in the Purchaser, (a) fee
simple title to the Kalamazoo Real Property, (b) fee simple title to
the Beaufort Real Property, and (c) fee simple title to the Dublin
Real Property, in each case free and clear of all liens and
encumbrances, except Permitted Liens (the "Title Exceptions"); and
(ii) ALTA surveys of the Kalamazoo Real Property, the Beaufort Real
Property, and the Dublin Real Property, certified to the Purchaser
and the Title Company, and prepared in such a manner as to enable
the Title Company to remove the standard survey exception from the
Title Commitments.
(b) Following review and approval by the Purchaser and
prior to the Closing, the Seller will execute and deliver to the
Title Company for safekeeping the Deeds, together with such
affidavits, certificates and other instruments as are ordinarily
delivered to a purchaser of real estate or filed in the public
records of Kalamazoo County, Michigan, Beaufort County, South
Carolina, and Laurens County, Georgia.
(c) At the time Seller delivers the Deeds to the Title
Company, the Seller and the Purchaser will deliver to the Title
Company a joint letter instructing the Title Company to hold the
Deeds until the Closing; and
(i) At the Closing, if the Title Company is then
prepared to issue to the Purchaser the Title Company's
Owner's Policies of Title Insurance in the form set
forth in the Title Commitments described in Section
6.18(a), and upon joint telephonic instructions from the
Seller and the Purchaser to file the Deeds for record in
appropriate public records; or
(ii) In the event the Closing does not occur, to
return the Deeds to the Seller and the funds deposited
by each party to that party.
(d) If the Title Company is instructed to file the Deeds for
record, then the Deeds will be deemed to have been filed as of the
close of business on the Closing Date;
Section 6.19 Non-competition. The Seller, on behalf of
itself and its Subsidiaries, agrees that, for a period beginning on
the Closing Date and ending
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five years thereafter, it will not, directly or indirectly, anywhere in
the world, engage in any business or acquire any financial or beneficial
interest in any corporation (other than the ownership of 5% or less of
the stock of a company whose stock is publicly held), partnership, joint
venture, trust or other entity as to which the production, development,
and processing for the production of, manufacturing, distribution or
sale of products that are the same as, similar to, or competitive
with those manufactured, sold, distributed or provided by the
Aerospace Business represents 10% or more of its revenues on a
consolidated basis. If, at the time of enforcement of this Section
6.19, a court shall hold that the duration, scope, area or other
restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope, area
or other restrictions reasonable under such circumstances shall be
substituted for the stated duration, scope, area or other
restrictions. The Seller recognizes and affirms that in the event
of a breach of any of the provisions of this Section 6.19, money
damages would be inadequate and the Purchaser would have no adequate
remedy at law. Accordingly, the Seller agrees that the Purchaser
shall have the right, in addition to any other rights and remedies
existing in its favor, to enforce its rights hereunder not only by
an action or actions for damages, but also by an action or actions
for specific performance, injunction and/or other equitable relief
in order to enforce or prevent any violations (whether anticipatory,
continuing or future) of the provisions of this Section 6.19,
including, without limitation, the extension of the duration of the
non-competition period by a period equal to the length of the
violation. In the event of a breach or violation of any of the
provisions of this Section 6.19, the running of the non-competition
period (but not of the Seller's obligations thereunder) shall be
tolled during the continuance of any actual breach or violation.
Section 6.20 Certain Other Matters.
(a) Neither the Purchaser nor any of its Subsidiaries
or affiliates shall take any action which, to the Purchaser's
knowledge, would result in a violation of any of the provisions of
the Stock Purchase Agreement, dated as of April 28, 1988, as amended
(the "Whitman Stock Purchase Agreement"), between IC Industries,
Inc. and PA Holdings Corporation, and the Settlement Agreement,
dated as of September 23, 1991 (the "Settlement Agreement" and,
collectively with the Whitman Stock Purchase Agreement, the "Whitman
Agreements") , between Whitman Corporation and Pneumo Abex
Corporation (copies of which Seller has furnished to the Purchaser)
applicable to the Seller with respect to the Aerospace Business, the
Acquired Assets or the Assumed Liabilities and the Purchaser shall
reasonably assist and cooperate with the Seller in complying with
the Seller's obligations under the Whitman Agreements.
(b) Prior to the Closing, the Seller shall file all
required Annual
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Stockholding Reports for Abex Japan for the years 1992, 1993 and 1994 and
1995, with the Japan Fair Trade Commission, and the Seller shall pay to
such Commission any fines or penalties resulting from the failure to file
such Reports.
(c) The Purchaser shall provide the Seller with notice
(the "Environmental Notice") of any Environmental Liability which
the Purchaser seeks to designate as a Retained Liability under
Section 1.3(b)(iii)(A)(2), within 45 days of the earlier of (i)
receiving notice of the facts giving rise to such Environmental
Liability, or (ii) receiving notice from a third party of a claim
for such Environmental Liability, (the "Environmental Notice
Period").
(d) Any Environmental Liability subject to the
requirements of Section 6.20(c) for which the Purchaser fails to
satisfy the notice requirements of Section 6.20(c) shall be deemed
an Assumed Liability under Section 1.3(a)(xii), and the Seller shall
have no liability for or obligation to take any action with respect
to any such Environmental Liability; provided, however, that if such
Environmental Liability results from a Third Party Claim (as defined
in Section 7.1(b)) and the Environmental Notice is not given by
Purchaser within the Environmental Notice Period set forth in
Section 6.20(b), the Environmental Liability shall be eligible for
designation as a Retained Liability:
(i) if Purchaser can establish that the time elapsed
between the end of the Environmental Notice Period and the
giving of the Environmental Notice is reasonable; and
(ii) to the extent that the Purchaser can establish
that the Seller has not been prejudicial by such time elapsed.
(e) All notices and other communications under this
Section 6.20 shall be delivered pursuant to Section 10.3.
Section 6.21 Customer Warranty Claims. The Purchaser will assume
liability for all customer warranty and retrofit claims for products
manufactured or sold by the Seller (including for purposes of this
Section 6.21 at the Seller's former facilities in Oxnard and Santa Maria,
California) prior to the Closing Date, including the obligation to
provide refunds, credits, replacement products or to complete retrofits.
The Closing Balance Sheet shall include a reserve for all such warranty
and retrofit claims through the Closing Date, calculated in a manner
consistent with the Seller Balance Sheet. The Seller will reimburse the
Purchaser for any such warranty or retrofit claims which aggregate
$500,000 in excess of such reserve which are submitted by the Purchaser
to the Seller within a period of one year after the Closing Date.
Section 6.22 Assignment and License of Additional
Intellectual Property.
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(a) Assignment. With respect to the trademark
registrations set forth in Section 1.2(a)(vii) to the Seller
Disclosure Schedule, Purchaser acknowledges Seller's obligation
pursuant to Section 5.18 of the Asset Purchase Agreement between
Seller and Wagner Electric Corporation ("Wagner") dated November 21,
1994 (the "Wagner Agreement") to assign to Wagner that portion of
such registrations that cover products of the Business, as that term
is defined in the Wagner Agreement ("Wagner Products"), provided,
however, that no such assignment of any particular registration is
required if it is impracticable in the relevant jurisdiction (i) to
divide that registration into separate registrations for Wagner
Products and all other products, (ii) to amend such registration to
permit the issuance of a registration to Wagner covering Wagner
Products, or (iii) to partially assign such registration to Wagner
to the extent it covers Wagner Products. As soon as practicable
following the Closing, Seller will undertake to determine whether in
each relevant jurisdiction each trademark registration on Section
1.2(a)(vii) of the Seller Disclosure Schedule can be divided,
amended or partially assigned as described above. For any
registration that can be so divided, amended or partially assigned
as described above, Seller will promptly assign the non-Wagner
registration or portion thereof together with all goodwill
associated therewith, to Parker Intangibles by delivering to
Purchaser assignments as described in Section 6.5(b) of this
Agreement for such non-Wagner registration or portion thereof. For
any registration that cannot be so divided, amended, or partially
assigned, Seller shall promptly assign the entire registration,
together with all goodwill associated therewith (the "Complete
Registrations") to Parker Intangibles by delivering to Purchaser
assignments as described in Section 6.5(b) of this Agreement for
such Complete Registrations subject to the existing December 29,
1994 Trademark license to Wagner (the "Wagner License") which
license shall also be assigned to Parker Intangibles with respect to
any such Complete Registration assigned to Parker Intangibles.
Purchaser shall cause Parker Intangibles to assume the obligations
of Seller under the Wagner License with respect to any Complete
Registration so assigned to Parker Intangibles and to take no action
nor omit to take any action which would constitute a breach of the
Wagner License.
(b) License. Following the Closing and until such time
as the assignments described above are completed, Purchaser shall
have the exclusive right to use the trademarks set forth in Section
1.2(a)(vii) of the Seller Disclosure Schedule in the applicable
jurisdictions listed in such Section (the "Licensed Marks") in
connection with the products and services that were offered by
Seller under the Licensed Marks in the course of the Aerospace
Business as of the Closing Date (the "Licensed Products").
Purchaser agrees that (i) the Licensed Products bearing the Licensed
Marks will be of a standard of quality at least as high as that
heretofore established by Seller and existing as of the Closing Date
for the Licensed Products, (ii) the Licensed Marks shall be used
substantially in the manner used by
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Seller as of the Closing Date, and (iii) the Licensed Marks and Licensed
Products bearing such Licensed Marks shall be used and sold in accordance
with all applicable laws and regulations, and (iv) in the event the
Licensed Marks and Licensed Products are not used in the manner described
in (ii) above and of a quality described in (i) above, respectively,
Seller shall have the right to terminate the license described
herein.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Certain Definitions. As used in this
Agreement, the following terms shall have the meanings set forth
below:
(a) Losses. The term "Losses" shall mean any and all
losses, liabilities, damages, reasonable expenses or diminutions in
value of any kind or character (whether or not known or asserted
prior to the date hereof), including, without limitation, interest
on any amount payable to a third party as a result of the foregoing,
liabilities on account of Taxes (including interest and penalties
thereon) and any legal or other expenses reasonably incurred in
connection with investigating or defending any claims or actions,
whether or not resulting in any liability; provided, however, that
Losses shall be net of any insurance proceeds received by an
Indemnitee from an insurance company on account of such losses
(after taking into account any costs incurred in obtaining such
proceeds); provided, further, that Losses shall not include losses,
liabilities, damages or expenses incurred due to the interruption of
the Indemnitee's business.
(b) Third-Party Claims. The term "Third-Party Claims"
shall mean any and all Losses which arise out of or result from (i)
any claims or actions asserted against an Indemnitee by a third
party, (ii) any rights of a third party asserted against an
Indemnitee, or (iii) any liabilities of, or amounts payable by, an
Indemnitee to a third party arising out of subparagraphs (i) or
(ii), including, without limitation, claims or actions asserted
against an Indemnitee by any taxing authority on account of Taxes.
(c) Indemnitee. The term "Indemnitee" shall mean any
person which may be entitled to seek indemnification pursuant to the
provisions of Section 7.2 or 7.3.
(d) Indemnitor. The term "Indemnitor" shall mean any
person which may be obligated to provide indemnification pursuant to
Section 7.2 or 7.3,
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(e) Notice Period. The term "Notice Period," as
applied to any Third-Party Claim for which an Indemnitee seeks to be
indemnified pursuant to this Article VII, shall mean the period
ending the earlier of the following:
(i) 45 days after the time at which the
Indemnitee has either (x) received notice of the facts
giving rise to such Third-Party Claim or (y) commenced
an active investigation of circumstances likely to give
rise to such Third-Party Claim and, in each case, where
such Indemnitee believes or should reasonably believe
that such facts or circumstances would give rise to such
Third-Party Claim for which such Indemnitee would be
entitled to indemnification pursuant to this Article
VII; and
(ii) 45 days after the time at which any
Third-Party claim against the Indemnitee has become the
subject of proceedings before any court or tribunal, or
such time as would allow the Indemnitor sufficient time
to contest, on the assumption that there is an arguable
defense to such Third-Party Claim, such proceeding prior
to any judgment or decision thereon.
(f) Claim Notice. The term "Claim Notice" shall have
the meaning set forth in Section 7.4(a).
Section 7.2 Indemnity by the Seller and the Parent. The
Seller and the Parent jointly and severally agree to indemnify and
hold harmless the Purchaser and its Subsidiaries (including the
Transferred Subsidiaries), directors, officers, employees, agents
and representatives (the "Purchaser Indemnified Parties") (each of
whom may be an Indemnitee pursuant to this Section 7.2) from and
against the following:
(a) Retained Liabilities. Any and all Losses in
respect of the Retained Liabilities.
(b) Third-Party Claims. Any and all Third-Party
Claims in respect of the Acquired Assets, other than Third-Party
Claims in respect of Assumed Liabilities, which may be asserted
against any such Indemnitee or the Acquired Assets or which any such
Indemnitee shall incur or suffer to the extent that such Third-Party
Claims arise out of, result from or relate to:
(i) any Retained Liabilities;
(ii) any Liens imposed on the Acquired Assets, or
any of them, resulting from the Seller's or any of its
Subsidiaries' failure
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to satisfy Retained Liabilities; or
(iii) any liability resulting from the Seller's
or any of its Subsidiaries' failure to comply with the
requirements of any bulk sales or similar legislation
applicable to the transactions contemplated by this
Agreement.
(c) Breach of Representation, Warranty, Etc. Any and
all Losses which may be asserted against such Indemnitee or which
such Indemnitee may incur or suffer and which arise out of or result
from:
(i) any untrue representation or breach of
warranty of the Seller in this Agreement;
(ii) any default or nonfulfillment or breach of
any covenant or agreement on the part of the Seller
under this Agreement;
(iii) any untrue representation or breach of
warranty in any of the Seller Documents; or
(iv) the failure by the Seller to have conveyed
to the Purchaser on the Closing Date all right, title
and interest in and to the Acquired Assets, including,
without limitation, any Contracts Related to the
Aerospace Business other than those the benefits of
which are provided to the Purchaser pursuant to Section
6.3(b), free and clear of any Lien of any nature
whatsoever (except for Permitted Liens and as otherwise
contemplated by this Agreement and other than such
thereof as are included in or arise in respect of the
Assumed Liabilities);
provided, that, for purposes of determining Losses arising out of or
resulting from any untrue representation or breach of warranty of the
Seller, (i) qualifications to the effect that inaccuracies of such
representation or warranty "would not, individually or in the aggregate,
have a material adverse effect on the Aerospace Business" shall be
disregarded, and (ii) Losses which are reflected in the calculation of
the Closing Net Worth shall be disregarded.
Section 7.3 Indemnity by the Purchaser. The Purchaser
shall indemnify and hold harmless the Seller, Parent, any
Compensation and Benefit Plan and their respective directors,
officers, employees, agents, fiduciaries and representatives (the
"Seller Indemnified Parties") (each of whom may be an Indemnitee
pursuant to this Section 7.3) from and against the following:
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(a) Assumed Liabilities. Any and all Losses in
respect of the Assumed Liabilities.
(b) Third-Party Claims. Any and all Third-Party
Claims in respect of the Acquired Assets, other than Third-Party
Claims in respect of Retained Liabilities, which may be asserted
against any such Indemnitee, or which any such Indemnitee shall
incur or suffer, including, without limitation, Third-Party Claims
in respect of Assumed Liabilities.
(c) Breach of Representation, Warranty, Etc. Any and
all Losses which may be asserted against any such Indemnitee or
which any such Indemnitee shall incur or suffer and which arise out
of or result from:
(i) any untrue representation or breach of
warranty of the Purchaser in this Agreement;
(ii) any default or nonfulfillment or breach of
any covenant or agreement on the part of the Purchaser
under this Agreement; or
(iii) any untrue representation or breach of
warranty in any of the Purchaser Documents;
provided, that, for purposes of determining Losses arising out of or
resulting from any untrue representation or breach of warranty of
the Purchaser, qualifications to the effect that inaccuracies of
such representation or warranty "would not, individually or in the
aggregate, have a material adverse effect on the Purchaser" shall be
disregarded.
(d) Welfare Plans. Any and all Losses that may be
asserted against any such Indemnitee or which such Indemnitee shall
incur or suffer and which, directly or indirectly, arise out of,
relate to, or result from (x) any act or omission of the Purchaser
after the Closing Date with respect to any medical, dental, life,
disability or other benefits provided (or not provided) to or in the
respect of the individuals described in Sections 1.3(a)(iii),
1.3(a)(iv), 1.3(a)(v), 6.6(b)(iii), or 6.6(b)(iv), or (y) Seller's
discontinuance of its benefit plans with respect to Active Aerospace
Business Employees or Retired Employees as a result of the
transactions contemplated in this Agreement and Purchaser's
provision of (or failure to provide) benefits with respect to such
employees. By way of example only, and without limitation, such an
act or omission would include Purchaser's choice not to offer a
specified type or level of retiree medical coverage to Retired
Employees or Purchaser's choice not to offer retiree medical
coverage to Active Aerospace Business Employees. The indemnity
provided for in this paragraph shall not be construed to impose any
obligation on the Purchaser to provide benefits
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in any specific amount or to any specific group, or to interfere with the
powers reserved by the Purchaser to modify, amend or terminate any
employee benefit plan or program as provided in Section 6.6(b)(v).
Section 7.4 Notification of Third-Party Claims. In no
case shall any Indemnitor under this Agreement be liable with
respect to any Third-Party Claim against any Indemnitee unless the
Indemnitee shall have delivered to the indemnitor a Claim Notice and
the following conditions are satisfied:
(a) Timely Delivery of Claim Notice. Except as
provided in Section 7.4(b), no right to indemnification under this
Article VII shall be available to an indemnitee with respect to a
Third-Party Claim unless the Indemnitee shall have delivered to the
Indemnitor within the Notice Period a notice (a "Claim Notice")
describing in reasonable detail the facts giving rise to such
Third-Party Claim and stating that the Indemnitee intends to seek
indemnification for such Third-Party Claim from the Indemnitor
pursuant to this Article VII.
(b) Late Delivery of Claim Notice. If, in the case of
a Third-Party claim, a Claim Notice is not given by the Indemnitee
within the Notice Period as set forth in Section 7.4(a), the
Indemnitee shall nevertheless be entitled to be indemnified under
this Article VII:
(i) if the Indemnitee can establish that the time
elapsed between the end of the Notice Period and the
giving of the Claim Notice is reasonable; and
(ii) to the extent that the Indemnitee can
establish that the Indemnitor has not been prejudiced by
such time elapsed.
Section 7.5 Defense of Claims. Upon receipt of a Claim
Notice from an Indemnitee with respect to any Third-Party Claim not
Related to the Aerospace Business or relating to an Off-Site
Environmental Liability, the Indemnitor shall assume the defense
thereof with counsel reasonably satisfactory to such Indemnitee and
the Indemnitee shall cooperate in all reasonable respects in such
defense. Upon receipt of a Claim Notice from an Indemnitee with
respect to any Third-Party Claim Related to the Aerospace Business
(except those relating to an Off-Site Environmental Liability), the
Indemnitor may assume the defense thereof with counsel reasonably
satisfactory to such Indemnitee and the Indemnitee shall cooperate
in all reasonable respects in such defense. The Indemnitee shall
have the right to employ separate counsel in any action or claim and
to participate in the defense thereof, provided that the fees and
expenses of counsel employed by the Indemnitee shall be at the
expense of the Indemnitor only if such counsel is retained pursuant
to either of the following two sentences or if the employment of
such
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counsel has been specifically authorized by the Indemnitor. If the
Indemnitor does not notify the Indemnitee within sixty days after receipt
of the Claim Notice Related to the Aerospace Business that is elects to
undertake the defense thereof, the Indemnitee shall have the right to
defend the claim with counsel of its choosing reasonably satisfactory to
the Indemnitor, subject to the right of the Indemnitor to assume the
defense of any claim at any time prior to settlement or final
determination thereof. Notwithstanding anything to the contrary
contained in this Section 7.5, the Indemnitee shall have the right to
employ separate counsel if, under applicable standards of professional
conduct (as advised by counsel to the Indemnitee), a conflict of interest
on any issue between the Indemnitee and the Indemnitor exists in respect
of a Third-Party Claim. The Indemnitee shall send a written notice to
the Indemnitor of any proposed settlement of any claim, which
settlement the Indemnitor may reject, in its reasonable judgment,
within thirty days of receipt of such notice. Failure to reject such
notice within such thirty day period shall be deemed an acceptance
of such notice.
Section 7.6 Access and Cooperation. After the Closing
Date, the Purchaser, on the one hand and the Seller, on the other
hand, shall (i) each cooperate fully with the other as to all
Third-Party Claims, shall make available to the other, as reasonably
requested, all information, records and documents relating to all
Third-Party Claims and shall preserve all such information, records
and documents until the termination of any Third-Party Claim and
(ii) make available to the other, as reasonably requested, personnel
(including technical and scientific), agents and other
representatives who are responsible for preparing or maintaining
information, records or other documents, or who may have particular
knowledge with respect to any Third-Party Claim.
Section 7.7 Assessment of Claims. In the event that any
of the Losses for which an Indemnitor is responsible or allegedly
responsible pursuant to Section 7.2 or 7.3 are recoverable or
potentially recoverable against any third party at the time when
payment is due hereunder, following payment by the Indemnitor to the
Indemnitee for such losses the Indemnitee shall assign any and all
rights that it may have to recover such losses to the Indemnitor,
or, if such rights are not assignable under applicable law or
otherwise, the Indemnitee shall attempt in good faith to collect any
and all Losses on account thereof from such third party for the
benefit of, and at the expense and direction of, the Indemnitor.
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Section 7.8 Limits on Indemnification.
(a) Limitations on the Seller's Environmental
Indemnification.
(i) In calculating any amount payable to any
Purchaser Indemnified Party for an Environmental
Liability which is a Retained Liability under Section
1.3(b)(iii), the amount shall be reduced by any
recoveries by the Purchaser or any of its affiliates
from third parties (including insurance carriers), net
of recovery costs (including internal costs) pursuant to
indemnification (or otherwise) with respect thereto. To
the extent that the Purchaser recovers any amount from
any third party in respect of any matter for which the
Seller shall have paid any amount pursuant to Section
7.2, the amount so recovered shall be promptly refunded
to the Seller without any other right of set-off, other
than for the costs of recovering such amount. The
Purchaser shall use its reasonable efforts to mitigate
Losses for which it seeks indemnification under this
Article VII.
(ii) The Purchaser shall not be entitled to
indemnification and the Seller shall not have any
obligation to take any action regarding Environmental
Liabilities which are Retained Liabilities under Section
1.3(b)(iii)(A) to the extent arising out of or
attributable to:
(A) measures in excess of those reasonably
necessary to comply with Current Environmental
Laws (including those measures required by a
Governmental Entity to comply with such
Environmental Laws), or, in the case of measures
not specifically required by Current
Environmental Laws (as defined in Section
7.8(a)(iii)) or mandated by a Governmental
Entity, in excess of those necessary to prevent
harm to human health or the environment;
(B) Environmental Laws or Cleanup
standards more stringent than those existing
under Current Environmental Laws;
(C) the failure of the Purchaser or any of
its affiliates to use reasonable efforts to
mitigate liabilities and costs for which it seeks
indemnification under this Article VII;
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(D) actions required by any Environmental
Law in connection with the modification, change,
transfer, lease or shut-down by the Purchaser of
any activities, equipment, property or portion
thereof subsequent to the Closing Date except to
the extent such actions would have been required
prior to the Closing Date by Current
Environmental Laws in the absence of such
modification, change, transfer, leasing or shut-down; or
(E) any Cleanup or measure to remove or
otherwise abate asbestos and asbestos-containing
materials from the building structures or
interiors of any Acquired Facility and any
equipment or fixtures thereon.
(iii) As used in Section 7.8(a)(ii) hereof, the
term "Current Environmental Laws" shall mean
Environmental Laws in effect at the time any Cleanup or
other measures are being taken by the party responsible
for any Environmental Liability pursuant to the terms
hereof, but in no event more stringent, onerous or
cumbersome than Environmental Laws in effect at any time
prior to the third anniversary of the Closing Date.
(b) Indemnity Basket. Notwithstanding anything to the
contrary contained in this Article VII, (i) the Seller shall only be
obligated to indemnify the Purchaser Indemnified Parties under
Section 7.2 (c)(i), (ii) and (iii) to the extent that the aggregate
amount of all Losses thereunder exceeds $1,750,000, and (ii) the
Purchaser shall only be obligated to indemnify the Seller
Indemnified Parties under Section 7.3(c) to the extent that the
aggregate amount of all Losses thereunder exceeds $1,750,000.
(c) Limit of Liability. Notwithstanding anything
contained in this Article VII to the contrary, the Seller shall have
no indemnification obligation under Section 7.2(c) to the extent
such Losses (after giving effect to the application of Section
7.8(b)) exceed $100,000,000 in the aggregate (the "Indemnification
Cap").
Section 7.9 Survival of Representations and Warranties.
All representations and warranties of the parties contained in this
Agreement, the Seller Documents or the Purchaser Documents, each and
every one of which representations and warranties is strictly relied
upon by the parties to whom they are made, shall survive the Closing
hereunder and continue in full force and effect thereafter,
regardless of any investigation made or to be made by or on behalf
of any party hereto, for a period ending on the date that is 18
months after the Closing
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Date (the "Indemnification Period"), except for the representations and
warranties of the Seller provided for in Sections 3.1(b) and 3.7(a)
(which shall survive the Closing hereunder and continue in full force and
effect thereafter, regardless of any investigation made or to be made by
or on behalf of any party hereto); in Section 3.13 (which shall survive
the Closing hereunder and continue in full force and effect thereafter,
regardless of any investigation made or to be made by or on behalf
of any party hereto, for the relevant statutes of limitations
including any extension or waiver thereof regarding the filing of
Tax Returns and the payment of Taxes); and in Section 3.19 (which
shall survive the Closing hereunder for a period of three (3)
years). Except as set forth in this Section 7.9, after the end of
the Indemnification Period, the Seller's obligation to the Purchaser
Indemnified Parties, on the one hand, and the Purchaser's
obligations to the Seller Indemnified Parties, on the other hand,
under this Article VII with respect to such representations and
warranties shall expire except with respect to a matter set forth in
a Claim Notice theretofore delivered to an Indemnitee; provided,
that the expiration of indemnification obligations pursuant to this
Section 7.9 shall in no way constitute an assumption by the
Purchaser or any of its successors or related Indemnitees of any
liabilities of the Seller other than Assumed Liabilities or a waiver
by the Purchaser or any of its successors of any other legal
remedies they may have to seek from the Seller or its successor for
reimbursement or contribution for amounts paid or payable in respect
of Retained Liabilities. It is further agreed that the Purchaser's
rights to indemnification set forth in Sections 7.2(a), 7.2(b) and
7.2(c)(iv) and the Seller's rights to indemnification set forth in
Sections 7.3(a) and 7.3(b) shall remain in full force and effect
indefinitely.
Section 7.10 Environmental Cleanup Claims Handling.
(a) Notwithstanding the provisions of Section 7.5
hereof, all Environmental Cleanup Claims (as defined in subsection
(b) below) will be handled in the manner specified in this Section
7.10.
(b) As used in this Section 7.10, the term
"Environmental Cleanup Claims" shall mean claims by a Purchaser
Indemnified Party in connection with a Cleanup at an Acquired
Facility:
(i) related to a Retained Liability specified in
Section 1.3(b)(iii)(A) hereof; or
(ii) for which Seller is the Indemnitor pursuant
to Section 7.2(c) hereof due to a breach or alleged
breach of Section 3.19 hereof.
Environmental Cleanup Claims shall not include claims related
to (x) Off-
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Site Environmental Liabilities, (y) Environmental Liabilities not
Related to the Aerospace Business or the Acquired Facilities or (z)
Environmental Liabilities which do not involve a Cleanup at the Acquired
Facilities, all of which shall be handled in the manner specified in
Section 7.5.
(c) Except as provided in subsection (d) below, with
respect to each Environmental Cleanup Claim, Seller retains the
right initially to elect to manage the Environmental Cleanup Claim
or to leave the Environmental Cleanup Claim to Purchaser for
management. Management of any Environmental Cleanup Claim may
thereafter be shifted between the parties by mutual agreement.
(d) Purchaser shall manage any Environmental Cleanup Claim:
(i) to the extent that any Cleanup may in the reasonable
judgment of Purchaser interfere with the business operations
of Purchaser; or
(ii) to the extent (but only to the extent) the Cleanup
requires immediate emergency action or prompt action to
protect human health or the environment.
(e) As soon as practicable, but in any event within
thirty (30) days of the later of (i) Purchaser providing notice in
reasonable detail to Seller of a new Environmental Cleanup Claim
which may call for indemnification by Seller; and (ii) Purchaser
providing to Seller information and documents reasonably available
to Purchaser which may assist Seller in understanding the basis for
the Environmental Cleanup Claim, Seller shall either tentatively
accept or reject the matter as falling within the scope of its
indemnification obligation and shall state whether or not it will
manage the Environmental Cleanup Claim. Any rejection shall state
the grounds for the rejection in detail fairly sufficient to permit
Purchaser to respond. Should Seller reject a matter, Purchaser,
after providing to Seller any additional documents or information
which may then be available to Purchaser, may from time to time
thereafter, based on new information, request in writing that Seller
reconsider whether it will accept responsibility for an
Environmental Cleanup Claim it previously rejected. Seller shall
reconsider the matter in good faith, based on all information known
to Seller at that time, and shall make a new determination as soon
as practicable, but in any event within thirty (30) days, again
stating the grounds for any rejection in accordance with the
foregoing.
(f) As between third-parties (including private parties
and governmental agencies), Seller and Purchaser, Purchaser shall
remain responsible to all third-parties despite Seller managing the
Environmental Cleanup Claims. For Environmental Cleanup Claims
managed by Seller, Purchaser shall, at Seller's
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direction, attend meetings, sign pleadings, and otherwise cooperate in
the management of the Environmental Cleanup Claim. With respect to all
Environmental Cleanup Claims, Purchaser shall designate a competent
and experienced person to serve as the contact person available to
the third-parties, unless otherwise directed by Seller.
(g) The party "managing" an Environmental Cleanup Claim
shall (i) designate a competent, experienced person to coordinate
with the monitoring party and select outside counsel and other
consultants; (ii) defend any litigation, administrative or other
proceeding involved in the Environmental Cleanup Claim; (iii) make
tactical and strategic decisions in the course of the Environmental
Cleanup Claim; (iv) pay all bills and invoices, subject to
indemnification where applicable; (v) conduct all negotiations,
discussions, correspondence or other communications with claimants,
governmental bodies or other third-parties; (vi) consult with the
monitoring party as appropriate and in all respects accord to the
monitoring party all rights to which it is entitled under this
Agreement; (vii) provide to the monitoring party upon reasonable
request all information and documents known or reasonably available
to the managing party relating to the Environmental Cleanup Claim;
and (viii) keep the party monitoring the Environmental Cleanup Claim
apprised on an ongoing basis of the status and future prospects of
the Environmental Cleanup Claim.
(h) The party not managing a particular Environmental
Cleanup Claim shall "monitor" that matter, and the party monitoring
a matter shall designate an experienced, competent person to
coordinate with the managing party. If the party monitoring the
Environmental Cleanup Claim is the indemnifying party, then it shall
automatically receive (i) copies of all correspondence between the
managing party and the claimant; (ii) all nonprivileged
communications between the managing party and all of its consultants
or advisors, including lawyers; (iii) all pleadings, filings,
submissions or other written communications between any and all
parties in any judicial or administrative matter; and (iv) upon the
request of the monitoring/indemnifying party, all other relevant,
non-privileged documents or information. The monitoring party shall
provide to the managing party all relevant information and documents
known or reasonably available to it relating to the Environmental
Cleanup Claim, generally within twenty (20) days of request. The
parties shall use their best efforts to resolve any disputes
concerning the withholding of documents or information under a claim
of privilege, and may jointly retain counsel to resolve any
potential privilege issues.
(i) With respect to matters for which Purchaser is the
managing party, at its discretion, Purchaser shall have the right,
from time to time, to obtain Seller's approval or rejection of
proposed settlements of Environmental Cleanup Claims, and other
significant decisions (e.g., retention of a particular consultant,
the scope
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of a remediation for an environmental clean-up). Unless otherwise
agreed, such a request for approval shall be in writing, and shall set
forth the relevant information and considerations (including a copy of
any recommendations of handling legal counsel, if any), and the course of
action proposed by Purchaser, in detail sufficient to allow Seller a fair
opportunity to make its judgment. If Purchaser desires to obtain
Seller's approval or rejection, Purchaser shall do so at the earliest
reasonably possible opportunity. If Purchaser properly and timely
submits a request for approval or rejection, Seller shall, at the
earliest reasonably possible opportunity, send Purchaser a written
response approving or rejecting the proposal, in whole or in part, and
any rejection shall state the grounds for rejection in sufficient detail
to permit Purchaser a fair chance to respond. When Seller's approval is
obtained for a particular Environmental Cleanup Claim, then Seller
shall be barred from later taking a position in that matter, as
against Purchaser, inconsistent with the scope of its approval.
Purchaser agrees and acknowledges that this section is not intended
to allow Purchaser to avoid any contentions (e.g., failure to
mitigate) that relate to action or inaction by the Purchaser, or any
subsequent neglect or default by Purchaser in managing an
Environmental Cleanup Claim.
(j) With respect to Environmental Cleanup Claims for
which Seller is the managing party, Purchaser shall (a) promptly
relay to Seller's designated representative all non-privileged
communications received concerning the Environmental Cleanup Claim;
(b) promptly respond, to the extent reasonably possible, to Seller's
reasonable requests for information, documents known or reasonably
available to Purchaser, and reasonable requests for access to
personnel (including meetings and testimony for litigation) or
facilities, and other assistance as required in the responsible
management of the Environmental Cleanup Claim. Purchaser shall not
be required to provide access to personnel or facilities where to do
so would subject Purchaser to unreasonable interference with the
conduct of the operations of Purchaser beyond the interference that
would occur if Purchaser were responsible for the management or
defense of the matter. Purchaser shall provide reasonable
assistance to Seller in identifying, contacting and seeking
assistance from third parties.
(k) In Environmental Cleanup Claims for which Purchaser
is the managing party, Seller shall make all reimbursement or
indemnification payments within thirty (30) days of receipt of the
request and reasonable supporting documentation, such as (but not
necessarily in each instance) underlying invoices, contracts,
purchase orders, or correspondence. Seller shall have the right to
request additional documentation, which Purchaser shall attempt in
good faith to provide, to the extent reasonably available, within an
additional thirty (30) days and, in such cases, Seller shall have an
additional thirty (30) days to make its payment; provided, however,
that if Seller has requested further information as to
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only a subset of the items in a request for reimbursement, Seller shall
pay the remainder within the first thirty (30) days.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Close. The respective obligations of the parties to effect the
transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated herein shall have been approved and
adopted by the affirmative vote of a majority of the votes that the
holders of the outstanding shares of capital stock of the Parent are
entitled to cast.
(b) HSR and German Cartel Approval. Any applicable
waiting period under the HSR Act and German Cartel regulations shall
have expired or been terminated.
(c) Other Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity,
shall have been filed, occurred or been obtained.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement shall be in effect (each
party agreeing to use all reasonable efforts to have any such order
reversed or injunction lifted).
(e) No Action. No action, suit or proceeding by any
Governmental Entity before any court or governmental or regulatory
authority shall be pending or threatened against the Seller or the
Purchaser or any of their Subsidiaries challenging the validity or
legality of the transactions contemplated by this Agreement, other
than actions, suits or proceedings which, in the reasonable opinion
of counsel to the parties hereto, are unlikely to result in an
adverse judgment.
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(f) Closing Under German and Japanese Stock Purchase
Agreements. Simultaneously with the Closing hereunder, the closings
shall have occurred under the German Stock Purchase Agreement and
the and Japanese Stock Purchase Agreements.
Section 8.2 Conditions of Obligations of the Purchaser.
The obligations of the Purchaser to effect the transactions
contemplated by this Agreement are subject to the satisfaction, on
or prior to the Closing Date, of the following conditions unless
waived by the Purchaser:
(a) Representations and Warranties. (i) The aggregate
effect of all inaccuracies in the representations and warranties of
the Seller set forth in this Agreement (without taking into account
any qualifications as to materiality contained in such
representations and warranties, it being understood, however, that
for the purposes of this clause (i), the accuracy of any
representation or warranty which speaks as of the date of this
Agreement or another date prior to the Closing Date shall be
determined solely as of the date of this Agreement or such other
date and not as of the Closing Date) does not and will not have a
material adverse effect on the Aerospace Business, and (ii) the
representations and warranties of the Seller contained in Sections
3.1, 3.2, 3.3, 3.5(a), 3.7, 3.9 and 3.13 shall be true and correct
in all material respects as of the date hereof, and, except to the
extent such representations and warranties speak as of an earlier
date, as of the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement, and the
Purchaser shall have received a certificate signed on behalf of the
Seller by the chief executive officer or the chief financial officer
of the Seller to such effect.
(b) Performance of Obligations of the Seller. The
Seller and its Subsidiaries shall have performed in all material
respects all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Purchaser shall
have received a certificate signed on behalf of the Seller by the
chief executive officer or the chief financial officer of the Seller
to such effect.
(c) Required Assurances. The Seller shall have
provided to the Purchaser satisfactory assurances that the
non-governmental customers identified in Attachment A to Section 3.17 of
the Seller Disclosure Schedule will consent to the assignment of
their Contracts with the Seller to the Purchaser.
(d) Seller Documents. The Seller shall have executed
and delivered to the Purchaser the Seller Documents.
Section 8.3 Conditions of Obligations of the Seller.
The obligation of the Seller to effect the transactions contemplated
by this Agreement is subject to the
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satisfaction of the following conditions, on or prior to the Closing
Date, unless waived by the Seller:
(a) Representations and Warranties. (i) The aggregate
effect of all inaccuracies in the representations and warranties of
the Purchaser set forth in this Agreement (without taking into
account any qualifications as to materiality contained in such
representations and warranties, it being understood, however, that
for the purposes of this clause (i), the accuracy of any
representation or warranty which speaks as of the date of this
Agreement or another date prior to the Closing Date shall be
determined solely as of the date of this Agreement or such other
date and not as of the Closing Date) does not and will not have a
material adverse effect on the Purchaser, and (ii) the
representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of
the date hereof, and, except to the extent such representations and
warranties speak as of an earlier date, as of the Closing Date as
though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and the Seller shall have received
a certificate signed on behalf of Purchaser by the chief executive
officer or the chief financial officer of the Purchaser to such
effect.
(b) Performance of Obligations of the Purchaser. The
Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and the Seller shall have received a
certificate signed on behalf of the Purchaser by the chief executive
officer or the chief operating officer of the Purchaser to such
effect.
(c) Purchaser Documents. The Purchaser shall have
executed and delivered to the Seller the Purchaser Documents.
Section 8.4 If Conditions Not Satisfied. In the event
that any of the foregoing conditions of obligations of a party shall
fail to have been satisfied, such party may elect, in its sole
discretion, to consummate the transactions contemplated by this
Agreement despite such failure, in which event such party shall be
deemed to have waived any claim for damages, Losses or other relief
arising from or in connection with such failure.
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ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be
terminated at any time prior to the Closing Date as follows:
(a) by mutual consent of the Purchaser and the Seller;
(b) by either the Purchaser or the Seller if the
Closing shall not have occurred before May 31, 1996 (unless the
failure to so consummate the Closing by such date shall be due to
the action or failure to act of the party seeking to terminate this
Agreement, which action or failure to act constitutes a breach of
this Agreement);
(c) by the Purchaser if there has been a breach on the
part of the Seller in the representations, warranties or covenants
of the Seller set forth herein, or any failure on the part of the
Seller to comply with its obligations hereunder, such that, in any
such case, any of the conditions to the Closing set forth in Section
8.1 or 8.2 hereof could not be satisfied on or prior to May 31,
1996;
(d) by the Seller if there has been a breach on the
part of the Purchaser in the representations, warranties or
covenants of the Purchaser set forth herein, or any failure on the
part of the Purchaser to comply with its obligations hereunder, such
that, in any such case, any of the conditions to the closing set
forth in Section 8.1 or 8.3 hereof could not be satisfied on or
prior to May 31, 1996;
(e) by either the Seller or the Purchaser, if this
Agreement and the transactions contemplated herein shall fail to
receive the requisite vote for approval and adoption by the
stockholders of the Parent at the Stockholders' Meeting; or
(f) by the Purchaser, if (i) the Board of Directors of
the Parent shall withdraw, modify or change the Recommendation in a
manner adverse to the Purchaser or shall have resolved to do any of
the foregoing; or (ii) a tender offer or exchange offer for shares
of capital stock of the Parent, which would result in the beneficial
ownership by any person or any "group" (as defined in Section 13(d)
of the Exchange Act and the rules and regulations promulgated
thereunder) of more than 50% of the outstanding shares of any class
of capital stock of the Parent, is commenced, and the Board of
Directors of the Parent recommends that the stockholders of the
Parent tender their shares in such tender or exchange offer.
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Section 9.2 Effect of Termination. In the event of a
termination of this Agreement by either the Seller or the Purchaser
as provided in Section 9.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of
the Purchaser or the Seller or their affiliates or respective
officers or directors, other than the provisions of Section 6.7 and
Section 9.3; provided, however, that any such termination shall not
relieve any party from liability for any breach of this Agreement.
Section 9.3 Termination Fee. The Seller agrees that it
will pay to the Purchaser a termination fee in an amount equal to
$6,000,000, plus reimburse up to $1,500,000 of the Purchaser's
actual, out-of-pocket expenses incurred in connection with the
transactions contemplated by this Agreement, if (a) this Agreement
is terminated pursuant to Section 9.1(f), such payment to be made
within two business days following such termination, or (b) this
Agreement is terminated pursuant to Section 9.1(e) and, within
eighteen months following such termination, the Seller or the Parent
shall have consummated a Competing Transaction, such payment to be
made within two business days following such consummation.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment. This Agreement may be amended by
the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time by an instrument in
writing signed on behalf of each of the parties hereto.
Section 10.2 Extension; Waiver. At any time prior to the
Closing Date, the parties hereto, by action taken or authorized by
the respective Boards of Directors, may to the extent legally
allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the agreements or conditions contained here.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
Section 10.3 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given on the date delivered if delivered personally (including by
reputable overnight courier), on the date transmitted if sent by
telecopy (which is confirmed) or on the date received if mailed by
registered or certified mail (return receipt requested) to the
parties at the following
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addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Purchaser, to
Parker Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112
Attn: Michael J. Hiemstra,
Vice President, Finance - Administration
Telecopy: (216) 481-4057
with a copy to
Parker Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112
Attn: Joseph D. Whiteman, Esq.
Vice President, General Counsel and Secretary
Telecopy: (216) 481-4057
(b) if to the Seller or the Parent, to
Power Control Technologies Inc.
c/o MacAndrews & Forbes Holdings Inc.
35 East 62nd Street
New York, New York 10021
Attn: Barry F. Schwartz
Telecopy: (212) 572-5184
with a copy to
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Randall H. Doud
Telecopy: (212) 735-2000
Section 10.4 Interpretation. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of
this Agreement unless otherwise indicated. The Table of Contents,
Glossary of Defined Terms and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement they
shall be
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deemed to be followed by the words "without limitation." The phrases
"the date of this Agreement," "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to refer
to January 15, 1996.
Section 10.5 Counterparts. This Agreement may be
executed in counterparts, all of which shall be considered one and
the same agreement and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the
other parties, it being understood that all parties need not sign
the same counterpart.
Section 10.6 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents and the
instruments referred to herein) (a) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof and thereof, and (b) is not intended to confer upon any
person other than the parties hereto and thereto (and pursuant to
Article VII, Purchaser Indemnified Parties and Seller Indemnified
Parties) any rights or remedies hereunder or thereunder.
Section 10.7 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State of
New York without regard to any applicable conflicts of law
principles.
Section 10.8 Specific Performance. The parties hereto
agree that if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law
would exist and damages would be difficult to determine, and that
the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 10.9 Broker's Fees. Each of the Seller and the
Purchaser (a) represents and warrants that it has not taken and will
not take any action that would cause the other party to have any
obligation or liability to any person for a finder's or broker's
fee, and (b) agrees to indemnify the other party for breach of the
foregoing representation and warranty, whether or not the Closing
occurs.
Section 10.10 Publicity. Except as otherwise required by
law or the rules of the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Seller nor the Purchaser shall,
nor shall they permit any of their Subsidiaries or affiliates to,
issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent
shall not be unreasonably withheld or delayed.
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Section 10.11 Bulk Sales Law. The parties agree that
notifications shall not be filed with respect to the purchase and
sale contemplated hereby under the bulk transfer provisions of
applicable laws.
Section 10.12 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties; providing,
that the Purchaser may assign its rights, but not its obligations,
to one or more of its direct or indirect wholly-owned Subsidiaries.
Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 10.13 Parent Obligation. The Parent agrees that it
will cause the Seller to perform the Seller's various covenants and
other agreements hereunder.
78
<PAGE>
IN WITNESS WHEREOF, the Purchaser, the Parent and the Seller
have caused this Asset Purchase Agreement to be signed by their
respective officers thereunto duly authorized as of the date first
written above.
POWER CONTROL TECHNOLOGIES INC.
By: __________Albert D. Indelicato______
Name: Albert D. Indelicato
Title: Chief Executive Officer
(Federal Tax I.D. No. 02-04234116)
PNEUMO ABEX CORPORATION
By: __________Albert D. Indelicato______
Name: Albert D. Indelicato
Title: Chief Executive Officer
(Federal Tax I.D. No. 06-1238996)
PARKER HANNIFIN CORPORATION
By: __________Duane E. Collins__________
Name: Duane E. Collins
Title: President and Chief
Executive Officer
(Federal Tax I.D. No. 34-045-1060)
79
<PAGE>
EXHIBITS
(Exhibits have been omitted from the EDGAR filing)
Exhibit A . . . . . . . . . . . German Stock Purchase Agreement
Exhibit B . . . . . . . . . . . Japanese Stock Purchase Agreement
Exhibit 2.1(b)(i)(A). . . . . . Deeds
Exhibit 2.1(b)(i)(C). . . . . . Bill of Sale
Exhibit 2.1(b)(i)(D). . . . . . Lease Assignment
80
<PAGE>
SECTION 2.3 of Seller Disclosure Schedule
Attached hereto is the Seller Balance Sheet. The Seller Balance
Sheet was prepared by making the following adjustments to the Parent's balance
sheet as of September 30, 1995 included in the Parent SEC Documents:
(i) All Retained Assets and Retained Liabilities
(including any related reserves) were eliminated.
(ii) The short-term and long-term reserves relating to
the DCAA claim and the claims identified in Section 1.3(b)(xii) of
the Asset Purchase Agreement (which aggregated $28,805,252 at
September 30, 1995) were eliminated.
(iii) The short-term and long-term FAS 106 liability
(which aggregated $43,913,000 at September 30, 1995) was eliminated
and replaced with $24,668,000.
(iv) The asset relating to the overfunding in the
Pneumo Abex Retirement Income Plan (which aggregated $19,601,772 at
September 30, 1995) was eliminated and replaced with $14,088,000.
(v) Inventories net of reserves (which aggregated
$58,154,000 at September 30, 1995) was eliminated and replaced with
$56,754,000 and the other long-term liabilities were reduced by
$1,400,000.
The Closing Balance Sheet will be prepared by making the following
adjustments to the Parent's balance sheet prepared as of the close of business
on the Closing Date in accordance with United States generally accepted
accounting principles on a basis consistent with Seller Balance Sheet:
(i) All Retained Assets and Retained Liabilities (including
any related reserves) shall be eliminated.
(ii) The short-term and long-term FAS 106 liability shall be
determined in accordance with Section 6.6(b)(iii) of the Asset Purchase
Agreement.
(iii) The asset related to the overfunding in the Aerospace
Retirement Income Plan shall be determined in accordance with Section
6.6(b)(i) of the Asset Purchase Agreement.
81
<PAGE>
(iv) Inventories shall be determined by beginning with
$56,754,000 (which is stated net of reserves and progress billings),
adjusted as follows:
Plus or minus the book physical inventory adjustment for
the physical inventory taken at the end of November,
1995.
Plus purchases of material between October 1, 1995 and
the Closing.
Plus direct labor and inventoriable overhead chargeable
to open work-in-process inventory work orders incurred
between October 1, 1995 and the Closing.
Minus costs of sales for all shipments between October
1, 1995 and the Closing.
Minus all charges for scrap work in process and all
other scrapped inventory items or items to be scrapped
between October 1, 1995 and the Closing.
Minus all inventories consumed by other than cost of
sales such as bid and proposal, research and
development, product development maintenance, warranty,
rework, etc. between October 1, 1995 and the Closing.
Plus or minus any change in progress billings.
(vi) Net Fixed Assets shall be determined by (A) increasing
$58,038,000 by the amount of any additions to fixed assets from September
30, 1995 through the Closing Date, and (B) subtracting the book value of
any fixed assets disposed of from September 30, 1995 through the Closing
Date, (C) freezing the fixed asset reserve for lost assets reflected on
the Seller Balance Sheet and (D) subtracting depreciation expense.
82
<PAGE>
AMENDMENT
AMENDMENT, dated as of March 15, 1996 (this Amendment")
to the Master Asset Purchase Agreement, dated as of January
15, 1996 (the "Asset Purchase Agreement"), in both cases by
and among Power Control Technologies Inc., a Delaware
corporation (the "Parent"), Pneumo Abex Corporation, a
Delaware corporation (the "Seller"), and Parker-Hannifin
Corporation, an Ohio corporation (the "Purchaser").
NOW, THEREFORE, in consideration of the premises and
the mutual promises herein made, and in consideration of the
agreements herein contained, the parties, intending to be
legally bound hereby, agree as follows:
ARTICLE II
1. The first sentence of Section 2.1(a) of the Asset
Purchase Agreement is hereby amended and restated as
follows:
"The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the
offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York, commencing promptly following
completion of the Stockholders' Meeting (as defined in
Section 6.4) or, if not all of the conditions set forth in
Article VIII shall then have been satisfied or waived, such
later date and time as agreed by the parties once such
conditions are satisfied or waived (the "Closing Date");
provided, however, that, if the Closing would otherwise
occur later than the 20th day in PCT's business month, the
Closing will be deferred until the last business day during
such month; and provided, further, the parties may, by
agreement in writing, change the Closing Date or place of
the Closing to another date or place."
2. The first sentence of Section 2.2(a) of the Asset
Purchase Agreement is hereby amended and restated as
follows:
"The purchaser shall pay or cause to be paid to
the Seller by wire transfer of immediately available funds
to an account designated by the Seller (or other means
acceptable to the Seller) an amount equal to $193,000,000,
adjusted as follows: (i) (A) in the event that the Net
Worth, as indicated on a balance sheet of the Aerospace
Business as of the end of the most recent business month
<PAGE>
for which such information is available, and prepared on a basis
consistent with the Seller Balance Sheet (the "Most Recent
Net Worth'), exceeds $75,117,000 (the "Base Net Worth"), the
purchase price shall be increased by the amount of such
excess, or (B) in the event that the Most Recent Net Worth
is less than the Base Net Worth, the purchase price shall be
reduced by the amount of such shortfall; and (ii) the
adjusted purchase price determined pursuant to clause (i)
shall be increased by an interest factor calculated based on
the thirty-day AA composite commercial paper rate (as last
published by the Federal Reserve prior to the Closing Date)
during the period beginning with but not including the last
business day of the business month most recently completed
preceding the month in which the closing Date occurs through
and including the Closing Date."
3. The first sentence of Section 2.3(a) of the Asset
Purchase Agreement is hereby amended and restated as
follows:
"Within 30 days following the Closing Date, the
Seller shall provide to the purchaser an unaudited combined
balance sheet of the Aerospace Business as of the Closing
Date, if the Closing Date shall occur on the last business
day of the Company's business month, or otherwise as of the
last day of the business month most recently completed
preceding the month in which the Closing Date occurs, but
without giving effect to the Closing, prepared on the basis
set forth on Section 2.3 of the Seller Disclosure Schedule
and otherwise in accordance with United States generally
accepted accounting principles and on a basis consistent
with the Seller Balance Sheet (the "Closing Balance
Sheet")."
4. The third sentence of Section 2.3(c) of the Asset
Purchase Agreement is hereby amended and restated as
follows:
"Such transfers shall be made to the account
designated in writing for such purpose within two business
days after delivery of the Final Balance Sheet by wire
transfer in immediately available funds of the amount of
such differences as determined pursuant to the preceding
sentences, together with interest thereon from but not
including the last day of the business month of the Seller
most recently completed preceding the month in which the
Closing Date occurs through and including the date of
payment calculated based on the thirty-day AA composite
commercial paper rate (as last published by the Federal
Reserve prior to the Closing Date)."
2
<PAGE>
5. Other than as modified pursuant to this Amendment,
all provisions at the Asset Purchase Agreement remain
unmodified and in full force and effect.
6. This Amendment shall be governed and construed in
accordance with the laws of the State of New York without
regard to any applicable conflicts of law principles.
IN WITNESS WHEREOF, the Purchaser, the Parent and the
Seller have caused this Amendment to be signed by their
respective officers thereunto duly authorized as at the date
first written above.
POWER CONTROL TECHNOLOGIES INC.
By: Albert D. Indelicato
Name: Albert D. Indelicato
Title: Chief Executive Officer
PNEUMO ABEX CORPORATION
By: Albert D. Indelicato
Name: Albert D. Indelicato
Title: Chief Executive Officer
PARKER-HANNIFIN CORPORATION
By: Michael J. Hiemstra
Name: Michael J. Hiemstra
Title: Vice President and
Chief Financial Officer
3
<PAGE>
CLOSING AGREEMENT
CLOSING AGREEMENT, dated as of April 15, 1996 (this "Closing
Agreement"), by and among Power Control Technologies Inc., a Delaware
corporation (the "Parent"), Pneumo Abex Corporation, a Delaware corporation
(the "Seller"), and Parker-Hannifin Corporation, an Ohio corporation (the
"Purchaser").
WHEREAS, the parties have determined to enter into this Closing
Agreement in order to resolve certain interpretative issues that have arisen
under the Master Asset Purchase Agreement, dated as of January 15, 1996 and as
amended as of March 15, 1996 (the "Asset Purchase Agreement"), by and among
the parties to this Closing Agreement and to clarify the payment mechanics
with respect to certain payments to be made by the Purchaser to employees of
the Seller (capitalized terms used herein without definition having the
meanings ascribed to them in the Asset Purchase Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the agreements herein contained,
the parties, intending to be legally bound hereby, agree as follows:
1. The parties agree that the cash purchase price to be paid today
pursuant to Section 2.2(a) of the Asset Purchase Agreement (including
the interest factor of $453,170 as provided for in the Asset Purchase
Agreement) is $201,119,170 and has been determined thereunder using the
Most Recent Net Worth as calculated by reference to the balance sheet of
the Aerospace Business as of March 31, 1996 attached hereto (the "Latest
Balance Sheet"), by substituting $21,756,000 for $24,668,000 in the
second sentence of Section 6.6(b)(iii) and the first clause (iii) of
Section 2.3 of the Seller Disclosure Schedule and by recalculating the
amounts shown on the Seller Balance Sheet giving effect to such
substitution. The parties further agree that the Closing Balance Sheet
will reflect the same aggregate FAS 106 liability of $22,374,000 shown
on the Latest Balance Sheet and that there will be no payment required
to be made by the Seller to the Purchaser pursuant to Section 2.3(c) of
the Asset Purchase Agreement unless the required payment is in excess of
$3,000,000, and only then to the extent of such excess.
<PAGE>
2. The Purchaser agrees to (a) make the 1996 incentive compensation
payments to the individuals and in the amounts set forth in the
schedules attached to the Memorandum dated April 11, 1996 from A.D.
Indelicato to J. Eric Hanson, a copy of which was previously provided to
the Purchaser, and (b) make the stock option cash-out payments to the
individuals and in the amounts set forth in the schedule to the
Memorandum dated April 12, 1996 from A.D. Indelicato to J. Eric Hanson,
a copy of which was previously provided to the Purchaser, in each case
such payments to be made on or prior to April 30, 1996.
3. Other than as modified pursuant to this Closing Agreement, all
provisions of the Asset Purchase Agreement, as previously amended,
remain unmodified and in full force and effect.
4. This Closing Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law principles.
IN WITNESS WHEREOF, the Purchaser, the Parent and the Seller have
caused this Closing Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
POWER CONTROL TECHNOLOGIES INC.
By: Albert D. Indelicato
Name: Albert D. Indelicato
Title: Chief Executive Officer
PNEUMO ABEX CORPORATION
By: Albert D. Indelicato
Name: Albert D. Indelicato
Title: Chief Executive Officer
PARKER-HANNIFIN CORPORATION
By: Michael J. Hiemstra
Name: Michael J. Hiemstra
Title: Vice President and Chief
Financial Officer
2
___________________________________________________________________________
PARKER-HANNIFIN CORPORATION
TO
NATIONAL CITY BANK
_____________
INDENTURE
Dated as of ___________ __, 1996
___________________________________________________________________________
<PAGE>
PARKER-HANNIFIN CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of ___________ __, 1996
Trust Indenture
Act Section Indenture Section
310(a)(1) . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . 608
610
311(a) . . . . . . . . . . . . . . . . . . . . . . 613(a)
(b) . . . . . . . . . . . . . . . . . . . . . . 613(b)
(b)(2) . . . . . . . . . . . . . . . . . . . . . 703(a)(2)
312(a) . . . . . . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . 702(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . . . . 703(b)
(c) . . . . . . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d) . . . . . . . . . . . . . . . . . . . . . . 703(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . 102
315(a) . . . . . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . . . . 602
703(a)(6)
(c) . . . . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . . . . 601(c)
(d)(1) . . . . . . . . . . . . . . . . . . . . . 601(a)(1)
(d)(2) . . . . . . . . . . . . . . . . . . . . . 601(c)(2)
(d)(3) . . . . . . . . . . . . . . . . . . . . . 601(c)(3)
(e) . . . . . . . . . . . . . . . . . . . . . . 514
316(a) . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A). . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B). . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . 508
317(a)(1) . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . 1003
318(a) . . . . . . . . . . . . . . . . . . . . . . 107
<PAGE>
TABLE OF CONTENTS
Parties 1
Recitals of the Company 1
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 2
Attributable Debt . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . . . . . . . . 3
Consolidated Net Tangible Assets . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . . . . . . . 4
Covenant Defeasance . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . . . . . . 4
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . 4
Expiration Date . . . . . . . . . . . . . . . . . . . . . 4
Funded Debt . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . 4
interest . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . . . . . . . 5
Investment Company Act . . . . . . . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notice of Default . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . . . . . . . . 7
Predecessor Security . . . . . . . . . . . . . . . . . . . 7
Principal Property . . . . . . . . . . . . . . . . . . . . 7
________________________
Note: This Table of Contents shall not, for any purpose, be
deemed to be a part of the Indenture
<PAGE>
Redemption Date . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . 7
Restricted Subsidiary . . . . . . . . . . . . . . . . . . 8
Securities . . . . . . . . . . . . . . . . . . . . . . . . 8
Securities Act . . . . . . . . . . . . . . . . . . . . . . 8
Security Register and Security Registrar . . . . . . . . . 8
Special Record Date . . . . . . . . . . . . . . . . . . . 8
Stated Maturity . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligation . . . . . . . . . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . . . . . . . . 9
Section 102. Compliance Certificates and Opinions . . . . . . . 9
Section 103. Form of Documents Delivered to Trustee . . . . . . 10
Section 104. Acts of Holders; Record Dates . . . . . . . . . . . 10
Section 105. Notices, Etc., to Trustee and Company . . . . . . . 13
Section 106. Notice to Holders; Waiver . . . . . . . . . . . . . 13
Section 107. Conflict with Trust Indenture Act . . . . . . . . . 14
Section 108. Effect of Headings and Table of Contents . . . . . 14
Section 109. Successors and Assigns . . . . . . . . . . . . . . 14
Section 110. Separability Clause . . . . . . . . . . . . . . . . 14
Section 111. Benefits of Indenture . . . . . . . . . . . . . . . 14
Section 112. Governing Law . . . . . . . . . . . . . . . . . . . 15
Section 113. Legal Holidays . . . . . . . . . . . . . . . . . . 15
ARTICLE TWO
Security Forms
Section 201. Forms Generally . . . . . . . . . . . . . . . . . . 15
Section 202. Form of Face of Security . . . . . . . . . . . . . 16
Section 203. Form of Reverse of Security . . . . . . . . . . . . 17
Section 204. Form of Legend for Global Securities . . . . . . . 22
Section 205. Form of Trustee's Certificate of Authentication . . 22
<PAGE>
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series . . . . . . . 23
Section 302. Denominations . . . . . . . . . . . . . . . . . . . 26
Section 303. Execution, Authentication, Delivery and Dating . . 26
Section 304. Temporary Securities . . . . . . . . . . . . . . . 27
Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . 28
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . . . . 30
Section 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . . . . . . 31
Section 308. Persons Deemed Owners . . . . . . . . . . . . . . . 32
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . 32
Section 310. Computation of Interest . . . . . . . . . . . . . . 33
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture . . . . . . 33
Section 402. Applicable of Trust Money . . . . . . . . . . . . . 34
ARTICLE FIVE
Remedies
Section 501. Events of Default . . . . . . . . . . . . . . . . . 35
Section 502. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . 37
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . 38
Section 504. Trustee May File Proofs of Claim . . . . . . . . . 39
Section 505. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . . . . . 39
<PAGE>
Section 506. Application of Money Collected . . . . . . . . . . 39
Section 507. Limitation on Suits . . . . . . . . . . . . . . . . 40
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest . . . . . . . . . . 41
Section 509. Restoration of Rights and Remedies . . . . . . . . 41
Section 510. Rights and Remedies Cumulative . . . . . . . . . . 41
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . 41
Section 512. Control by Holders . . . . . . . . . . . . . . . . 42
Section 513. Waiver of Past Defaults . . . . . . . . . . . . . . 42
Section 514. Undertaking for Costs . . . . . . . . . . . . . . . 42
Section 515. Waiver of Usury, Stay or Extension Laws . . . . . . 43
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities . . . . . . . . 43
Section 602. Notice of Defaults . . . . . . . . . . . . . . . . 43
Section 603. Certain Rights of Trustee . . . . . . . . . . . . . 44
Section 604. Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . . . . . . . 45
Section 605. May Hold Securities . . . . . . . . . . . . . . . . 45
Section 606. Money Held in Trust . . . . . . . . . . . . . . . . 45
Section 607. Compensation and Reimbursement . . . . . . . . . . 45
Section 608. Conflicting Interests . . . . . . . . . . . . . . . 46
Section 609. Corporate Trustee Required; Eligibility . . . . . . 46
Section 610. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . . . . 47
Section 611. Acceptance of Appointment by Successor . . . . . . 48
Section 612. Merger, Conversation, Consolidation or
Succession to Business . . . . . . . . . . . . . . 50
<PAGE>
Section 613. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . 50
Section 614. Appointment of Authenticating Agent . . . . . . . . 50
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . . . . . 52
Section 702. Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . . . . . . 52
Section 703. Reports by Trustee . . . . . . . . . . . . . . . . 53
Section 704. Reports by Company . . . . . . . . . . . . . . . . 53
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . 53
Section 802. Successor Substituted . . . . . . . . . . . . . . . 54
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of
Holders . . . . . . . . . . . . . . . . . . . . . . 55
Section 902. Supplemental Indentures With Consent of
Holders . . . . . . . . . . . . . . . . . . . . . . 56
Section 903. Execution of Supplemental Indentures . . . . . . . 57
Section 904. Effect of Supplemental Indentures . . . . . . . . . 58
Section 905. Conformity with Trust Indenture Act . . . . . . . . 58
Section 906. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . 58
<PAGE>
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest . . . . 58
Section 1002. Maintenance of Office or Agency . . . . . . . . . 59
Section 1003. Money for Securities Payments to Be Held
in Trust . . . . . . . . . . . . . . . . . . . . . 59
Section 1004. Existence . . . . . . . . . . . . . . . . . . . . 60
Section 1005. Maintenance of Properties . . . . . . . . . . . . 61
Section 1006. Payment of Taxes and Other Claims . . . . . . . . 61
Section 1007. Restrictions on Secured Debt . . . . . . . . . . . 61
Section 1008. Restrictions on Sales and Leasebacks . . . . . . . 63
Section 1009. Statement by Officers as to Default . . . . . . . 64
Section 1010. Waiver of Certain Covenants . . . . . . . . . . . 64
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article . . . . . . . . . . . . . 65
Section 1102. Election to Redeem; Notice to Trustee . . . . . . 65
Section 1103. Selection by Trustee of Securities to be
Redeemed . . . . . . . . . . . . . . . . . . . . . 65
Section 1104. Notice of Redemption . . . . . . . . . . . . . . . 66
Section 1105. Deposit of Redemption Price . . . . . . . . . . . 67
Section 1106. Securities Payable on Redemption Date . . . . . . 67
Section 1107. Securities Redeemed in Part . . . . . . . . . . . 68
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article . . . . . . . . . . . . . 68
Section 1202. Satisfaction of Sinking Fund Payments
with Securities . . . . . . . . . . . . . . . . . 68
<PAGE>
Section 1203. Redemption of Securities for Sinking Fund . . . . 69
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance . . . . . . . . . . . . . . . 69
Section 1302. Defeasance and Discharge . . . . . . . . . . . . . 70
Section 1303. Covenant Defeasance . . . . . . . . . . . . . . . 70
Section 1304. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . 71
Section 1305. Deposited Money and U.S. Government Obligations
to be Held in Trust; Miscellaneous Provisions . . 73
Section 1306. Reinstatement . . . . . . . . . . . . . . . . . . 74
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . . . . 75
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . 76
<PAGE>
INDENTURE, dated as of _____________ __, 1996, between Parker-
Hannifin Corporation, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the "Company"), having its
principal office at 17325 Euclid Avenue, Cleveland, Ohio 44112, and National
City Bank, a national bank organized and existing under the laws of United
States, with its principal office at 1900 East Ninth Street, Cleveland, Ohio
44114, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof,
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such
<PAGE>
2
accounting principles as are generally accepted at the date of
such computation;
(4) unless the context otherwise requires, any reference to
an Article or a Section refers to an Article or a Section, as the case
may be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Attributable Debt" means, as to any particular lease under which
any Person is at the time liable and at any date as of which the amount
thereof is to be determined, the total net amount of rent required to be
paid by such Person under such lease during the remaining primary term
thereof, discounted from the respective due dates thereof to such date at a
rate per annum equal to the weighted average yield to maturity of the Debt
Securities calculated in accordance with generally accepted financial
practices. The net amount of rent required to be paid under any such lease
for any such period shall be the aggregate amount of the rent payable by the
lessee with respect to such period after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments,
water rates and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount
shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the
<PAGE>
3
Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day", when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment are authorized or
obligated by law or executive order to close.
"Capital Stock", as applied to the stock of any corporation, means
the capital stock of every class whether now or hereafter authorized,
regardless of whether such capital stock shall be limited to a fixed sum or
percentage with respect to the rights of the holders thereof to participate
in dividends and in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of such corporation.
"Commission" means the Securities and Exchange Commission, from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (i) all liabilities other than deferred income taxes,
Funded Debt and shareholders' equity (including all preferred stock whether
or not redeemable) and (ii) all goodwill, trade names, trademarks, patents,
organization expenses and other like intangibles, all as set forth on the
most recent balance sheet of the Company and its consolidated Subsidiaries
and computed in accordance with generally accepted accounting principles.
"Corporate Trust Office" means the principal office of the Trustee
in Cleveland, Ohio at which at any particular time its corporate trust
business shall be administered.
<PAGE>
4
"corporation" means a corporation, association, company, joint-
stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series
issuable in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act
as Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Funded Debt" means (i) all indebtedness for money borrowed having
a maturity of more than 12 months from the date as of which the
determination is made or having a maturity of 12 months or less but by its
terms being renewable or extendible beyond 12 months from such date at the
option of the borrower and (ii) rental obligations payable more than 12
months from such date under leases which are capitalized in accordance with
generally accepted accounting principles (such rental obligations to be
included as Funded Debt at the amount so capitalized at the date of such
computation and to be included for the purposes of the definition of
Consolidated Net Tangible Assets both as an asset and as Funded Debt at the
respective amounts so capitalized).
"Global Security" means a Security that evidences all or part of
the Securities of any series and bears the legend set forth in Section 204
(or such legend as may be specified as contemplated by Section 301 for such
Securities).
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental
<PAGE>
5
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of
particular series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940
and any statute successor thereto, in each case as amended from time to
time.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Notice of Default" means a written notice of the kind specified
in Section 501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the
Company, and delivered to the Trustee. One of the officers signing an
Officer's Certificate given pursuant to Section 1009 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 502.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
<PAGE>
6
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satis
factory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected
pursuant to Section 1302; and
(4) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Securities are held
by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original
Issue Discount Security which shall be deemed to be Outstanding shall be the
amount of the principal thereof which would be due and payable as of such
date upon acceleration of the Maturity thereof to such date pursuant to
Section 502, (B) if, as of such date, the principal amount payable at the
Stated Maturity of a Security is not determinable, the principal amount of
such Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the principal
amount of a Security denominated in one or more foreign currencies or
currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as
contemplated by Section 301, of the principal amount of such Security (or,
in the case of a Security described in clause (A) or (B) above, of the
amount determined as provided in such clause), and (D) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which
the Trustee knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not
the Company or any other
<PAGE>
7
obligor upon the Securities or any Affiliate of the Company or of such other
obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of or any premium or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Securities of
any series, means the place or places where the principal of and any premium
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security.
"Principal Property" means any manufacturing or processing plant
or warehouse owned at the date hereof or hereafter acquired by the Company
or any Restricted Subsidiary of the Company which is located within the
United States of America and the gross book value (including related land
and improvements thereon and all machinery and equipment included therein
without deduction of any depreciation reserves) of which on the date as of
which the determination is being made exceeds 1% of Consolidated Net
Tangible Assets, other than (i) any property which in the opinion of the
Board of Directors is not of material importance to the total business
conducted by the Company as an entirety or (ii) any portion of a particular
property which is similarly found not to be of material importance to the
use or operation of such property.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for
that purpose as contemplated by Section 301.
<PAGE>
8
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Subsidiary" means a Subsidiary of the Company (i)
substantially all the property of which is located, or substantially all the
business of which is carried on, within the United States of America and
(ii) which owns a Principal Property.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other Sub-
sidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this instrument was executed;
provided, however, that in the event the
<PAGE>
9
Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act
means, to the extent required by any such amendment, the Trust Indenture Act
of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used
with respect to the Securities of any series shall mean the Trustee with
respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in
Section 1304.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act and this Indenture. Each such certificate or
opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given
by counsel, and shall comply with the requirements of the Trust Indenture
Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for
certificates provided for in Section 1009) shall include,
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
<PAGE>
10
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a certificate
or opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representa-
tions with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consoli-
dated and form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given,
made or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture
<PAGE>
11
and (subject to Section 601) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to
be given, made or taken by Holders of Securities of such series, provided
that the Company may not set a record date for, and the provisions of this
paragraph shall not apply with respect to, the giving or making of any
notice, declaration, request or direction referred to in the next paragraph.
If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is
taken. Promptly after
<PAGE>
12
any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the
manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of such series on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken
on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record
date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite
principal amount of Outstanding Securities of the relevant series on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to
any earlier or later day; provided that no such change shall be effective
unless notice of the proposed new Expiration Date is given to the other
party hereto in writing, and to each Holder of Securities of the relevant
series in the manner set forth in Section 106, on or prior to the existing
Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the party hereto which set such
record date shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date
<PAGE>
13
shall be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or
by one or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee,
but such filing shall not be a condition
<PAGE>
14
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act which is required under such Act to be
a part of and govern this Indenture, the latter provision shall control. If
any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act which may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
<PAGE>
15
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of
the Securities (other than a provision of any Security which specifically
states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place
of Payment on such date, but may be made on the next succeeding Business Day
at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form
set forth in this Article, or in such other form as shall be established by
or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof. If the
form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
<PAGE>
16
SECTION 202. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder]
PARKER-HANNIFIN CORPORATION
[Title of Securities]
No. __________ $___________
Parker-Hannifin Corporation, a corporation duly organized and
existing under the laws of Ohio (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
___________________________________,
or registered assigns, the principal sum of _____________________
_____________________________________________________ Dollars on
________________, ____. [If the Security is to bear interest prior to
Maturity, insert --, and to pay interest thereon from ________________ or
from the most recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on ________________ and ________________
in each year, commencing ________________, at the rate of ___% per annum,
until the principal hereof is paid or made available for payment [If
applicable insert --, provided that any principal and premium, and any such
installment of interest, which is overdue shall bear interest at the rate of
__% per annum (to the extent that the payment of such interest shall be
legally enforceable) from the dates such amounts are due until they are paid
or made available for payment, and such interest shall be payable on
demand]. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest, which shall be the _______ or _______ (whether or
not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities of
this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture].
<PAGE>
17
[If the Security is not to bear interest prior to Maturity,
insert-- The principal of this Security shall not bear interest except in
the case of a default in payment of principal upon acceleration, upon
redemption or at Stated Maturity and in such case the overdue principal and
any overdue premium shall bear interest at the rate of __% per annum (to the
extent that the payment of such interest shall be legally enforceable), from
the dates such amounts are due until they are paid or made available for
payment. Interest on any overdue principal or premium shall be payable on
demand.]
Payment of the principal of (and premium, if any) and [if
applicable, insert-- any such] interest on this Security will be made at the
office or agency of the Company maintained for that purpose in
_______________, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private
debts [if applicable, insert-; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register].
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
PARKER-HANNIFIN CORPORATION
By_________________________
Attest:
______________________________
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture,
<PAGE>
18
dated as of ____________ __, 1996 (herein called the "Indenture," which term
shall have the meaning assigned to it in such instrument), between the
Company and National City Bank, as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the
Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof [if applicable,
insert--, limited in aggregate principal amount to $_______________].
[If applicable, insert-- The Securities of this series are subject
to redemption upon not less than 30 days' notice by mail, [if applicable,
insert-- (1) on _______________ in any year commencing with the year ____
and ending with the year ____ through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and (2)]
at any time [if applicable, insert-- on or after __________________, 19__,
as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount): If
redeemed [on or before _______________, ____%, and if redeemed] during the
12-month period beginning ______________ of the years indicated.
Redemption Redemption
Year Price Year Price
____ _____ ____ _____
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption [if applicable, insert--
(whether through operation of the sinking fund or otherwise)] with accrued
interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.]
[If applicable, insert-- The Securities of this series are subject
to redemption upon not less than 30 days' notice by mail, (1) on
________________________ in any year commencing with the year ___ and ending
with the year ____ through operation of the sinking fund for this series at
the Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time[if applicable, insert-- (on or after
<PAGE>
19
________________], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in
the table below: If redeemed during the 12-month period beginning
___________________________ of the years indicated.
Redemption Price Redemption Price For
For Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
____ ___________________ ______________________
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of
the sinking fund or otherwise) with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert-- Notwithstanding the foregoing, the
Company may not, prior to _____________________, redeem any Securities of
this series as contemplated by [if applicable, insert-- Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed
having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than ____% per annum.]
[If applicable, insert-- The sinking fund for this series provides
for the redemption on ________________ in each year beginning with the year
____ and ending with the year ____ of [if applicable, insert-- not less
than] $____________ [("mandatory sinking fund") and not more than
$______________] aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company otherwise than
through [if applicable, insert-- mandatory] sinking fund payments may be
credited against subsequent [if applicable, insert-- mandatory] sinking fund
payments otherwise
<PAGE>
20
required to be made--[if applicable, insert-- in the inverse order in which
they become due.]
[If the Security is subject to redemption of any kind, insert-- In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]
[If applicable, insert-- The Indenture contains provisions for
defeasance at any time of [the entire indebtedness of this Security[ [or]
[certain restrictive covenants and Events of Default with respect to this
Security[ [,in each case] upon compliance with certain conditions set forth
in the Indenture.]
[If the Security is not an Original Issue Discount Security.--
insert-- If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.]
[If the Security is an Original Issue Discount Security.--
insert-- If an Event of Default with respect to Securities of this series
shall occur and be continuing, an amount of principal of the Securities of
this series may be declared due and payable in the manner and with the
effect provided in the Indenture. Such amount shall be equal to--insert
formula for determining the amount. Upon payment (i) of the amount of
principal so declared due and payable and (ii) of interest on any overdue
principal, premium and interest (in each case to the extent that the payment
of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and premium and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities
of each series to be affected under the Indenture at any time by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal
amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series
at the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders
of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu
<PAGE>
21
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, the Holders of not less than
25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this series
at the time Outstanding a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall
not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest
hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
any premium and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of this series, and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $____________ and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor,
of a different authorized denomination, as requested by the Holder
surrendering the same.
<PAGE>
22
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and
delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART
MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
SECTION 205. Form of Trustees Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
NATIONAL CITY BANK, as Trustee
By____________________________
Authorized Officer
<PAGE>
23
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section
303, set forth, or determined in the manner provided, in an Officers'
Certificate, or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107
and except for any Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities
of the series is payable;
(5) the rate or rates at which any Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for any such
interest payable on any Interest Payment Date;
(6) the place or places where the principal of and any premium
and interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which any Securities of the
series may be redeemed, in whole or in
<PAGE>
24
part, at the option of the Company and, if other than by a Board
Resolution, the manner in which any election by the Company to redeem
the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or
purchase any Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of the Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which any Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Securities of the
series shall be issuable;
(10) if the amount of principal of or any premium or interest on
any Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts shall
be determined;
(11) if other than the currency of the United States of
America, the currency, currencies or currency units in which the
principal of or any premium or interest on any Securities of the series
shall be payable and the manner of determining the equivalent thereof
in the currency of the United States of America for any purpose,
including for purposes of the definition of Outstanding in Section 101;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or the Holder thereof, in one or more currencies or currency
units other than that or those in which such Securities are stated to
be payable, the currency, currencies or currency units in which the
principal of or any premium or interest on such Securities as to which
such election is made shall be payable, the periods within which and
the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount shall be
determined);
(13) if other than the entire principal amount thereof, the
portion of the principal amount of any Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(14) if the principal amount payable at the Stated Maturity of
any Securities of the series will not be determinable as of any one or
more dates prior to the Stated Maturity, the amount which shall be
deemed to be the principal amount of such Securities as of any such
date for any purpose thereunder or hereunder, including the principal
amount thereof which shall be due and payable upon any
<PAGE>
25
Maturity other than the Stated Maturity or which shall be deemed to be
Outstanding as of any date prior to the Stated Maturity (or, in any
such case, the manner in which such amount deemed to be the principal
amount shall be determined);
(15) if applicable, that the Securities of the series, in
whole or any specified part, shall be defeasible pursuant to Section
1302 or Section 1303 or both such Sections and, if other than by a
Board Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(16) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for such
Global Securities, the form of any legend or legends which shall be
borne by any such Global Security in addition to or in lieu of that set
forth in Section 204 and any circumstances in addition to or in lieu of
those set forth in clause (2) of the last paragraph of Section 305 in
which any such Global Security may be exchanged in whole or in part for
Securities registered, and any transfer of such Global Security in
whole or in part may be registered, in the name or names of Persons
other than the Depositary for such Global Security or a nominee
thereof;
(17) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of
the Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 502;
(18) any addition to or change in the covenants set forth in
Article Ten which applies to Securities of the series; and
(19) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture), except as
permitted by Section 901(5).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section
303) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered
<PAGE>
26
to the Trustee at or prior to the delivery of the Officers' Certificate
setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in only registered
form without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified
denomination with respect to the Securities of any series, the Securities of
such series shall be issuable in denominations of $1,000 and any integral
multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities of the series have
been established by or pursuant to one or more Board Resolutions as
permitted by Sections 201 and 301, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation
to such Securities, the Trustee shall be entitled to receive, and (subject
to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture; and
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27
(3) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and Opinion
of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that
such Security has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Security shall have been authenticated
and delivered hereunder but never issued and sold by the Company, and the
Company shall deliver such Security to the Trustee for cancellation as
provided in Section 309, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series,
the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially
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28
of the tenor of the definitive Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company in a Place
of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities of any series, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor one or more definitive Securities of the same series, or
any authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security of a
series at the office or agency of the Company in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series, of any authorized denominations and
of like tenor and aggregate principal amount.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of like tenor and aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the
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29
Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 304, 906 or 1107 not involving any
transfer.
If the Securities of any series (or any series and specified
tenor) are to be redeemed in part, the Company shall not be required (A) to
issue, register the transfer of or exchange any Securities of that series
(or of that series and specified tenor, as the case may be,) during a period
beginning at the opening of business 15 days before the day of the mailing
of a notice of redemption of any such Securities selected for redemption
under Section 1103 and ending at the close of business on the day of such
mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part.
The provisions of clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary
or a nominee thereof or custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this
Indenture.
(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary
for such Global Security or a nominee thereof unless (A) such
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30
Depositary (i) has notified the Company that it is unwilling or unable
to continue as Depositary for such Global Security or (ii) has ceased
to be a clearing agency registered under the Exchange Act, (B) there
shall have occurred and be continuing an Event of Default with respect
to such Global Security or (C) there shall exist such circumstances, if
any, in addition to or in lieu of the foregoing as have been specified
for this purpose as contemplated by Section 301.
(3) Subject to clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Security or any portion thereof, whether pursuant to this Section,
Section 304, 306, 906 or 1107 or otherwise, shall be authenticated and
delivered in the form of, and shall be, a Global Security, unless such
Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed
<PAGE>
31
in relation thereto and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall
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32
be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be given to each Holder of Securities
of such series in the manner set forth in Section 106, not less than 10
days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of principal
of and any premium and (subject to Section 307) any interest on such
Security and for all other purposes whatsoever, whether or not such Security
be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration
of transfer or exchange or for credit against any sinking fund payment
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be
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33
promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee
shall be disposed of as directed by a Company Order.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306
and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust
money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the principal
and any premium and interest for whose payment such money has been deposited
with the Trustee.
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35
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of or any premium
on any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of
Securities other than that series), and continuance of such default or
breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 10% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence
of indebtedness for money borrowed in an aggregate principal amount
exceeding $10,000,000 by the Company or any Restricted Subsidiary
(including a default with respect to Securities of any series other
than that series) or under any mortgage, indenture or instrument
(including this Indenture) under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed
in an aggregate principal amount exceeding $10,000,000 by the Company or
any Restricted Subsidiary whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable
<PAGE>
36
prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 10
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 10% in principal amount of the Outstanding
Securities of that series a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or
cause such acceleration to be rescinded or annulled, as the case may
be, and stating that such notice is a "Notice of Default" hereunder;
provided, however, that, subject to the provisions of Sections 601 and
602, the Trustee shall not be deemed to have knowledge of such default
unless either (A) a Responsible Officer of the Trustee shall have
actual knowledge of such default or (B) the Trustee shall have received
written notice thereof from the Company, from any Holder, from the
holder of any such indebtedness or from the trustee under any such
mortgage, indenture or other instrument; or
(6) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
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37
other similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(8) any other Event of Default provided with respect to
Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or,
if any Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified
by the terms thereof) of all the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect
to Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as hereinafter
in this Article provided, the Holders of a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences
if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of and any premium on any Securities of
that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate
or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses,
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38
disbursements and advances of the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of
that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on
such Securities for principal and any premium and interest and, to the
extent that payment of such interest shall be legally enforceable, interest
on any overdue principal and any premium and on any overdue interest, at the
rate or rates prescribed therefor in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities
of such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
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39
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding
or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee allowed
in any such proceeding. In particular, the Trustee shall be authorized to
collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts
due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of
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40
such money on account of principal or any premium or interest, upon
presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any
premium and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
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41
Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional,
to receive payment of the principal of and any premium and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the Trustee
and the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this
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42
Article or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to
the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to
such series and its consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided that neither this Section nor
the
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43
Trust Indenture Act shall be deemed to authorize any court to require such
an undertaking or to make such an assessment in any suit instituted by the
Company.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers.
Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give to Holders of Securities of such series
notice of such default as to the extent provided by the Trust Indenture Act;
provided, however, that, in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Securities of such series.
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44
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order,
and any resolution of the Board of Directors shall be sufficiently
evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the
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45
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of
the Securities. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 608 and 613, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and
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46
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture. To
the extent permitted by the Trust Indenture Act, the Trustee shall not be
deemed to have a conflicting interest by virtue of being a trustee under
this Indenture with respect to Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder
with respect to the Securities of each series, which may be Trustee
hereunder for Securities of one or more other series. Each Trustee shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000. If any such
Person publishes reports of condition at least annually, pursuant to law or
to the requirements of its supervising or examining authority, then for the
purposes of this Section and to the extent permitted by the Trust Indenture
Act, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the
Securities of any series shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the
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successor Trustee in accordance with the applicable requirements of Section
611.
The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 611
shall not have been delivered to the Trustee within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the
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48
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to
the Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611,
any Holder who has been a bona fide Holder of a Security of such series for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee; but,
on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver
to such successor Trustee all property and money held by such retiring
Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and
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49
which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust and
that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise
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50
qualified and eligible under this Article, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
In case any Securities shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent. Each Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
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51
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall give notice of such appointment in the manner provided in Section 106
to all Holders of Securities of the series with respect to which such
Authenticating Agent will serve. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this
Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
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52
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
NATIONAL CITY BANK, As Trustee
By___________________________
As Authenticating Agent
By_____________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than June 15 and December 15 in each
year, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders of Securities of each series as
of the preceding June 1 or December 1, as the case may be, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
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53
The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and privileges of the Trustee, shall be as provided
by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the time and in the manner provided pursuant
thereto.
A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the time and in the manner provided pursuant to the Trust Indenture Act;
provided that any such information, document or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within 15 days after the same is so required
to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
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54
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a
corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of and any premium and interest on all the Securities and
the performance or observance of every covenant of this Indenture on
the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or
any Subsidiary as a result of such transaction as having been incurred
by the Company or such Subsidiary at the time of such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing;
(3) if, as a result of any such consolidation or merger
or such conveyance, transfer or lease, properties or assets of
the Company would become subject to a mortgage, pledge, lien,
security interest or other encumbrance which would not be
permitted by this Indenture, the Company or such successor
Person, as the case may be, shall take such steps as shall be
necessary effectively to secure the Securities equally and
ratably with (or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with or merger of the
Company into any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor
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55
Person formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had
been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time,
may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit
of the Holders of all or any series of Securities (and if such
additional Events of Default are to be for the benefit of less
than all series of Securities, stating that such additional
Events of Default are expressly being included solely for the
benefit of such series); or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in bearer form, registrable
or not registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Securities in
uncertificated form; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more
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56
series of Securities, provided that any such addition, change or
elimination (A) shall neither (i) apply to any Security of any
series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii)
modify the rights of the Holder of any such Security with respect
to provision or (B) shall become effective only when there is no
such Security Outstanding; or
(6) to secure the Securities pursuant to the requirements
of Section 1006 or otherwise; or
(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section
611(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action
pursuant to this clause (9) shall not adversely affect the interests of
the Holders of Securities of any series in any material respect.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than 66- 2/3% in
principal amount of the Outstanding Securities of each series affected by
such supplemental indenture, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities of such series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the
principal of
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57
an Original Issue Discount Security or any other Security
which would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 502, or change any Place of
Payment where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1010, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that
this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 1010, or the
deletion of this proviso, in accordance with the requirements of
Sections 611 and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this
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58
Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
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59
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series
and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to
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the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent
will (1) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent and (2) during the continuance of any default by the
Company (or any other obligor upon the Securities of that series) in the
making of any payment in respect of the Securities of that series, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent for payment in respect of the Securities of
that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same terms as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any
premium or interest on any Security of any series and remaining unclaimed
for two years after such principal, premium or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to
the Holders.
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SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary
and not disadvantageous in any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the Company or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1007. Restrictions on Secured Debt.
The Company will not itself, and will not permit any Restricted
Subsidiary to, incur, issue, assume, or guarantee any loans, whether or not
evidenced by negotiable instruments or securities, or any notes, bonds,
debentures or other similar evidences of indebtedness for money borrowed
(loans, and notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed being hereinafter in this Section 1007
called "Debt"), secured after the date hereof by pledge of, or mortgage or
lien on, any Principal Property of the Company or any Restricted Subsidiary
or any shares of Capital Stock of or Debt of any Restricted Subsidiary
(mortgages, pledges and liens being hereinafter in this Section 1007 called
"Mortgage" or "Mortgages"), without effectively providing that the
Securities (together with, if the Company shall so determine, any other Debt
of the Company or such Restricted Subsidiary then existing or thereafter
created which is not subordinated to the Securities) shall be secured
equally and ratably with (or, at the option of
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62
the Company, prior to) such secured Debt, so long as such secured Debt shall
be so secured, unless, after giving effect thereto, the aggregate amount of
all such secured Debt plus all Attributable Debt of the Company and its
Restricted Subsidiaries with respect to sale and lease back transactions to
which Section 1008 is applicable would not exceed 10% of Consolidated Net
Tangible Assets; provided, however, that this Section 1007 shall not apply
to, and there shall be excluded from secured Debt in any computation under
this Section 1007, Debt secured by:
(1) Mortgages on property of, or on any shares of Capital
Stock of or Debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary;
(2) Mortgages in favor of the Company or any Restricted
Subsidiary;
(3) Mortgages in favor of any governmental body to secure
progress, advance or other payments pursuant to any contract or
provision of any statute;
(4) Mortgages on property, shares of Capital Stock or Debt
existing at the time of acquisition thereof (including acquisition
through merger or consolidation) or to secure the payment of all or any
part of the purchase price thereof or construction thereon or to secure
any Debt incurred prior to, at the time of, or within 180 days after
the later of the acquisition of such property, shares of Capital Stock
or Debt or the completion of construction, for the purpose of financing
all or any part of the purchase price thereof or construction thereon;
(5) Mortgages securing obligations issued by a State,
territory or possession of the United States, any political subdivision
of any of the foregoing, or the District of Columbia, or any
instrumentality of any of the foregoing to finance the acquisition or
construction of property, and on which the interest is not, in the
opinion of tax counsel of recognized standing or in accordance with a
ruling issued by the Internal Revenue Service, includible in gross
income of the holder by reason of Section 103(a)(1) of the Internal
Revenue Code (or any successor to such provision) as in effect at the
time of the issuance of such obligations; or
(6) Any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of any
Mortgage referred to in the foregoing clauses (1) to (5), inclusive;
provided, however, that such extension, renewal or replacement Mortgage
shall be limited to all or part of the same property, shares of Capital
Stock or Debt that secured the Mortgage extended, renewed or replaced
(plus improvements on such property).
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SECTION 1008. Restrictions on Sales and Leasebacks.
The Company will not itself, and will not permit any Restricted
Subsidiary to enter into any transaction after the date hereof with any
bank, insurance company or other lender or investor, or any such transaction
to which any such bank, company, lender or investor is a party, providing
for the leasing by the Company or a Restricted Subsidiary of any Principal
Property which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such bank, company, lender or investor, or any
person to whom funds have been or are to be advanced by such bank, company,
lender or investor on the security of such Principal Property (herein
referred to as a "sale and leaseback transaction") unless, after giving
effect thereto, the aggregate amount of all Attributable Debt with respect
to all such transactions plus all secured Debt to which Section 1007 is
applicable would not exceed 10% of Consolidated Net Tangible Assets. This
covenant shall not apply to, and there shall be excluded from Attributable
Debt in any computation under this Section 1008 or Section 1007 Attributable
Debt with respect to, any sale and leaseback transaction if:
(1) the lease in such sale and lease back transaction is for a
period, including renewal rights, of not in excess of three years, or
(2) the Company or a Restricted Subsidiary, within 180 days
after the sale or transfer shall have been made by the Company or by a
Restricted Subsidiary, applies an amount equal to the greater of the
net proceeds of the sale of the Principal Property leased pursuant to
such arrangement or the fair market value of the Principal Property so
leased at the time of entering into such arrangement (as determined in
any manner approved by the Board of Directors) to
(a) the retirement of the Securities, other Funded Debt
of the Company ranking on a parity with or senior to the
Securities, or Funded Debt of a Restricted Subsidiary, provided,
however, that the amount to be applied to the retirement of such
Funded Debt of the Company or a Restricted Subsidiary shall be
reduced by (x) the principal amount of any Securities (or other
notes or debentures constituting such Funded Debt) delivered
within such 180-day period to the Trustee or other applicable
trustee for retirement and cancellation and (y) the principal
amount of such Funded Debt, other than items referred to in the
preceding clause (x), voluntarily retired by the Company or a
Restricted Subsidiary within 180 days after such sale, and
provided, further, that, notwithstanding the foregoing, no
retirement referred to in this clause (a) may be effected by any
payment at maturity or pursuant to any mandatory sinking fund
payment or any mandatory prepayment provision; or
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(b) the purchase of other property which will constitute
a Principal Property having a fair market value, in the opinion of
the Board of Directors, at least equal to the fair market value of
the Principal Property leased in such sale and lease back
transaction, or
(3) such sale and leaseback transaction is entered into prior
to, at the time of, or within 180 days after the later of the
acquisition of the Principal Property or the completion of construction
thereon, or
(4) the lease in such sale and leaseback transaction secures
or relates to obligations issued by a State, territory or possession of
the United States, or any political subdivision of any of the
foregoing, the District of Columbia, or any instrumentality of any of
the foregoing to finance the acquisition or construction of property,
and on which the interest is not, in the opinion of tax counsel of
recognized standing or in accordance with a ruling issued by the
Internal Revenue Service, includible in gross income of the holder by
reason of Section 103(a)(1) of the Internal Revenue Code (or any
successor to such provision) as in effect at the time of the issuance
of such obligations, or
(5) such sale and leaseback transaction is entered into
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries.
SECTION 1009. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without
regard to any period of grace or requirement of notice provided hereunder)
and if the Company shall be in default, specifying all such defaults and the
nature and status thereof of which they may have knowledge.
SECTION 1010. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Company may, with respect to the Securities
of any series, omit in any particular instance to comply with any term,
provision or condition set forth in any covenant provided pursuant to
Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such
series or in any of Sections 1004 to 1008, inclusive, if before the time for
such compliance the Holders of at least 66 2/3 % in principal
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65
amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION Of SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for such Securities) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities. In case of any redemption
at the election of the Company of less than all the Securities of any series
(including any such redemption affecting only a single Security), the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of
the Securities to be redeemed. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in
the terms of such Securities or elsewhere in this Indenture, the Company
shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to
be redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities
of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of a portion of the principal amount of any
Security of such series, provided that
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the unredeemed portion of the principal amount of any Security shall be in
an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities
of such series and of a specified tenor are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in the case of any
Securities selected for partial redemption as aforesaid, the principal
amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Security, whether
such Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to
be redeemed and, if less than all the Outstanding Securities of
any series consisting of a single
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Security are to be redeemed the principal amount of the particular
Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and,
if applicable, that interest thereon will cease to accrue on and
after said date,
(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request,
by the Trustee in the name and at the expense of the Company and shall be
irrevocable.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on,
all the Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however,
that, unless otherwise specified as contemplated by Section 301,
installments of interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on
the relevant Record Dates according to their terms and the provisions of
Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any
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premium shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder
of such Security without service charge, a new Security or Securities of the
same series and of like tenor, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for
the unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of any series except as otherwise
specified as contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by
the terms of such Securities is herein referred to as an "optional sinking
fund payment". If provided for by the terms of any Securities, the cash
amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities as provided for by the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (2) may apply as a
credit Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to any Securities of such
<PAGE>
69
series required to be made pursuant to the terms of such Securities as and
to the extent provided for by the terms of such Securities; provided that
the Securities to be so credited have not been previously so credited. The
Securities to be so credited shall be received and credited for such purpose
by the Trustee at the Redemption Price, as specified in the Securities so to
be redeemed, for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for
any Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment
for such Securities pursuant to the terms of such Securities, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting
Securities pursuant to Section 1202 and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days prior to each such
sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner provided in Section
1104. Such notice having been duly given, the redemption of such Securities
shall be made upon the terms and in the manner stated in Sections 1106 and
1107.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have
Section 1302 or Section 1303 applied to any Securities or any series of
Securities, as the case may be, designated pursuant to Section 301 as being
defeasible pursuant to such Section 1302 or 1303, in accordance with any
applicable requirements provided pursuant to Section 301 and upon compliance
with the conditions set forth below in this Article. Any such election shall
be evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities.
<PAGE>
70
SECTION 1302. Defeasance and Discharge.
Upon the Company's exercise of its option, if any, to have this
Section applied to any Securities or any series of Securities, as the case
may be, the Company shall be deemed to have been discharged from its
obligations with respect to such Securities as provided in this Section on
and after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Securities and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), subject to the
following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely
from the trust fund described in Section 1304 and as more fully set forth in
such Section, payments in respect of the principal of and any premium and
interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 306,
1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (4) this Article. Subject to compliance with this
Article, the Company may exercise its option, if any, to have this Section
applied to any Securities notwithstanding the prior exercise of its option,
if any, to have Section 1303 applied to such Securities.
SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of its option, if any, to have this
Section applied to any Securities or any series of Securities, as the case
may be, (1) the Company shall be released from its obligations under
Section 801(3), Sections 1005 through 1009, inclusive, and any covenants
provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit of
the Holders of such Securities and (2) the occurrence of any event specified
in Sections 501(4) (with respect to any of Section 801(3), Sections 1005
through 1008, inclusive, and any such covenants provided pursuant to
Section 301(18), 901(2) or 901(7)), 501(5) and 501(8) shall be deemed not to
be or result in an Event of Default, in each case with respect to such
Securities as provided in this Section on and after the date the conditions
set forth in Section 1304 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Securities, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth
in any such specified Section (to the extent so specified in the case of
Section 501(4)), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any
such Section to any other provision herein or in
<PAGE>
71
any other document, but the remainder of this Indenture and such Securities
shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of
Section 1302 or Section 1303 to any Securities or any series of Securities,
as the case may be:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust
for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to, the benefits of the Holders
of such Securities, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or any such other qualifying trustee) to pay
and discharge, the principal of and any premium and interest on such
Securities on the respective Stated Maturities, in accordance with the
terms of this Indenture and such Securities. As used herein, "U.S.
Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either
case (i) or (ii), is not callable or redeemable at the option of the
issuer thereof, and (y) any depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with
respect to any U.S. Government Obligation which is specified in
clause (x) above and held by such bank for the account of the holder of
such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the U.S. Government Obligation
or the specific payment of principal or interest evidenced by such
depositary receipt.
<PAGE>
72
(2) In the event of an election to have Section 1302 apply to
any Securities or any series of Securities, as the case may be, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this instrument, there has been a change in the applicable
Federal income tax law, in either case (A) or (B) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times
as would be the case if such deposit, Defeasance and discharge were not
to occur.
(3) In the event of an election to have Section 1303 apply to
any Securities or any series of Securities, as the case may be, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of such Securities will not recognize gain
or loss for Federal income tax purposes as a result of the deposit and
Covenant Defeasance to be effected with respect to such Securities and
will be subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit and
Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an
Officer's Certificate to the effect that neither such Securities nor
any other Securities of the same series, if then listed on any
securities exchange, will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to such Securities
or any other Securities shall have occurred and be continuing at the
time of such deposit or, with regard to any such event specified in
Sections 501(6) and (7), at any time on or prior to the 90th day after
the date of such deposit (it being understood that this condition shall
not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of the Trust Indenture Act).
(7) Such Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default
<PAGE>
73
under, any other agreement or instrument to which the Company is a
party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act unless such trust
shall be registered under such Act or exempt from registration
thereunder.
(9) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes
of this Section and Section 1306, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in
respect of any Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to
the payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in
trust need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
<PAGE>
74
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the obligations
under this Indenture and such Securities from which the Company has been
discharged or released pursuant to Section 1302 or 1303 shall be revived and
reinstated as though no deposit had occurred pursuant to this Article with
respect to such Securities, until such time as the Trustee or Paying Agent
is permitted to apply all money held in trust pursuant to Section 1305 with
respect to such Securities in accordance with this Article; provided,
however, that if the Company makes any payment of principal of or any
premium or interest on any such Security following such reinstatement of its
obligations, the Company shall be subrogated to the rights, if any, of the
Holders of such Securities to receive such payment from the money so held in
trust.
* * * * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE>
75
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
PARKER-HANNIFIN CORPORATION
By ________________________
Attest:
_______________________________
NATIONAL CITY BANK
By ________________________
Attest:
_______________________________
<PAGE>
76
STATE OF _______ )
) SS:
COUNTY OF ______ )
On the ___ day of ___________, 1996, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is the _____________ of Parker-Hannifin Corporation, one of the
corporations described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name
thereby by like authority.
______________________________
STATE OF ______ )
) SS:
COUNTY OF _____ )
On the ___ day of __________, 1996, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say
that he is ______________ of National City Bank, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereby by like
authority.
______________________________
April 23, 1996
Parker-Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112
Re: $400,000,000 Aggregate Amount of Senior Debt
Securities of Parker-Hannifin Corporation
Gentlemen:
We are acting as counsel for Parker-Hannifin Corporation, an Ohio
corporation (the "Company"), in connection with the creation and authorization
of the issuance and sale of up to $400,000,000 aggregate amount of Senior Debt
Securities (the "Securities"), to be issued pursuant to an Indenture (the
"Indenture") to be entered into between the Company and National City Bank, as
Trustee (the "Trustee").
We have examined such documents, records and matters of law as we
have deemed necessary for purposes of this opinion, and based thereupon, but
subject to the assumptions and qualifications set forth below, we are of the
opinion that:
1. The Indenture, when duly executed and delivered by the Company
and the Trustee, will constitute a valid and binding instrument of the
Company.
2. The Securities have been duly authorized and, when duly
executed, authenticated and delivered to and paid for by the purchasers
thereof in accordance with the terms of such Securities and this Indenture,
will be valid and binding obligations of the Company and will be entitled to
the benefits of the Indenture.
<PAGE>
Parker-Hannifin Corporation
April 23, 1996
Page 2
In rendering the foregoing opinions we have also assumed that (i)
the definitive information, including, without limitation, the definitive
terms of the Securities, remaining to be completed in the form of Indenture
relating to the Securities as filed as Exhibit 4.1 to the Registration
Statement filed by the Company to effect registration of the Securities under
the Securities Act of 1933 (the "Registration Statement"), will be so
completed and the Indenture and Securities will be duly authorized by the
Board of Directors of the Company or its designee in such form with such
completions, and (ii) the Underwriting Agreement will be executed and
delivered by the Company and the Underwriters in substantially the form filed
as Exhibit 1.1 to the Registration Statement.
We hereby consent to the filing of this opinion as Exhibit 5.1 to
the Registration Statement on Form S-3 filed by the Company to effect
registration of the Securities under the Securities Act of 1933 and to the
reference to us under the caption "Legal Matters" in the Prospectus
constituting a part of such Registration Statement.
Very truly yours,
Jones, Day Reavis & Pogue
<TABLE>
<CAPTION>
Exhibit 12
PARKER-HANNIFIN CORPORATION
STATEMENT OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)
Six months
Ended December 31, Fiscal Year Ended June 30,
____________________ _____________________________________________________
1995 1994 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Income from continuing operations
before income taxes $ 167,891 $ 140,054 $ 348,407 $ 112,449 $ 108,066 $ 105,391 $ 103,468
Add:
Interest on indebtedness, exclusive
of interest capitalized in
accordance with FASB #34 and
interest on ESOP loan guarantee 14,599 13,733 28,884 34,687 43,055 47,394 53,898
Amortization of deferred loan costs 64 64 128 297 237 246 220
Portion of rents representative of
interest factor 3,766 4,396 8,791 7,157 10,299 10,476 12,158
Equity share of losses of companies
for which debt obligations are
not guaranteed 242 311 392 1,359 1,566 416 407
Amortization of previously
capitalized interest 105 109 216 217 206 200 225
_________ _________ _________ _________ _________ _________ _________
Income as adjusted $ 186,667 $ 158,667 $ 386,818 $ 156,166 $ 163,429 $ 164,123 $ 170,376
========= ========= ========= ========= ========= ========= =========
FIXED CHARGES
Interest on indebtedness, exclusive
of interest capitalized in
accordance with FASB #34 and
interest on ESOP loan guarantee $ 14,599 $ 13,733 $ 28,884 $ 34,687 $ 43,055 $ 47,394 $ 53,898
Capitalized interest 65 178 283 298 32 232 921
Amortization of deferred loan costs 64 64 128 297 237 246 220
Portion of rents representative of
interest factor 3,766 4,396 8,791 7,157 10,299 10,476 12,158
_________ _________ _________ _________ _________ _________ _________
Fixed charges $ 18,494 $ 18,371 $ 38,086 $ 42,439 $ 53,623 $ 58,348 $ 67,197
========= ========= ========= ========= ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES 10.09x 8.64x 10.16x 3.68x 3.05x 2.81x 2.54x
========= ========= ========= ========= ========= ========= =========
</TABLE>
COOPERS Coopers & Lybrand L.L.P.
& LYBRAND
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Parker-Hannifin Corporation on Form S-3 of our report dated
August 3, 1995, on our audits of the consolidated financial statements
and financial statement schedule of Parker-Hannifin Corporation as of
June 30, 1995 and 1994, and for the years ended June 30, 1995, 1994, and
1993. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Cleveland, Ohio
April 23, 1996
PARKER-HANNIFIN CORPORATION
REGISTRATION STATEMENT ON FORM S-3
POWER OF ATTORNEY
Parker-Hannifin Corporation, an Ohio corporation (the "Corporation"),
hereby constitutes and appoints, Duane E. Collins, Michael J. Hiemstra,
Joseph D. Whiteman, Timothy K. Pistell, Thomas A. Piraino and Kevin D.
Cramer and each of them, with full power of substitution and resubstitution,
as attorneys-in-fact or attorney-in-fact of the Corporation, for it and in
its name, place and stead, to execute and file with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933 one
or more Registration Statement(s) on Form S-3 relating to the registration
for sale of one or more series of debt securities (the "Securities") of the
Corporation, with any and all amendments, supplements and exhibits thereto
(including pre-effective and post-effective amendments or supplements), to
execute and file any and all other applications or other documents to be
filed with the Commission and all documents required to be filed with any
state securities regulating board or commission pertaining to such
Securities registered pursuant to the Registration Statement(s) on Form S-3,
with any and all amendments, supplements and exhibits thereto each such
attorney to have full power to act with or without the others, and to have
full power and authority to do and perform, in the name and on behalf of the
Corporation, every act whatsoever necessary, advisable or appropriate to be
done in the premises, hereby ratifying and approving the act of said
attorneys and any of them and any such substitute.
EXECUTED as of April 11, 1996.
PARKER-HANNIFIN CORPORATION
By: /s/ Joseph D. Whiteman
Name: Joseph D. Whiteman
Title: Vice President, General Counsel
and Secretary
<PAGE>
DIRECTORS AND OFFICERS OF
PARKER-HANNIFIN CORPORATION
REGISTRATION STATEMENT ON FORM S-3
POWER OF ATTORNEY
The undersigned directors and officers of Parker-Hannifin Corporation,
an Ohio corporation, do hereby constitute and appoint, Duane E. Collins,
Michael J. Hiemstra, Joseph D. Whiteman, Timothy K. Pistell, Thomas A.
Piraino and Kevin D. Cramer and each of them, with full power of
substitution and resubstitution, as attorneys-in-fact or attorney-in-fact of
the undersigned, for him/her and in his/her name, place and stead, to
execute and file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 one or more Registration
Statement(s) on Form S-3 relating to the registration for sale of one or
more series of debt securities (the "Securities") of the Corporation, with
any and all amendments, supplements and exhibits thereto (including pre-
effective and post-effective amendments or supplements), to execute and file
any and all other applications or other documents to be filed with the
Commission and all documents required to be filed with any state securities
regulating board or commission pertaining to such Securities registered
pursuant to the Registration Statement(s) on Form S-3, with any and all
amendments, supplements and exhibits thereto each such attorney to have full
power to act with or without the others, and to have full power and
authority to do and perform, in the name and on behalf of the undersigned,
every act whatsoever necessary, advisable or appropriate to be done in the
premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said
attorneys and any of them and any such substitute.
EXECUTED as of April 11, 1996.
/s/ Duane E. Collins /s/ Patrick S. Parker
Duane E. Collins, President, Patrick S. Parker,
Chief Executive Officer and Director Chairman of the Board of Directors
(Principal Executive Officer)
/s/ John G. Breen
/s/ Michael J. Heimstra John G. Breen, Director
Michael J. Hiemstra, Vice-President-
Finance and Administration
(Principal Financial Officer) /s/ Paul C. Ely, Jr.
Paul C. Ely, Jr., Director
/s/ Harold C. Gueritey, Jr.
Harold C. Gueritey, Jr., Controller /s/ Allen H. Ford
(Principal Accounting Officer) Allen H. Ford, Director
/s/ Frank A. LePage
Frank A. LePage, Director
/s/ Peter W. Likins
Peter W. Likins, Director
<PAGE>
/s/ Allen L. Rayfield
Allen L. Rayfield, Director
/s/ Paul G. Schloemer
Paul G. Schloemer, Director
/s/ Wolfgang R. Schmitt
Wolfgang R. Schmitt, Director
/s/ Dennis W. Sullivan
Dennis W. Sullivan, Director
/s/ Stephanie A. Streeter
Stephanie A. Streeter, Director
/s/ Dr. Walter Siepp
Dr. Walter Siepp, Director
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee pursuant to
section 305(b)(2)
NATIONAL CITY BANK
(Exact name of Trustee as specified in its charter)
34-0420310
(I.R.S. Employer Identification No.)
1900 East Ninth Street
Cleveland, Ohio 44114
(Address of principal executive (zip code)
offices)
David L. Zoeller
Senior Vice President and General Counsel
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114
(216) 575-9313
(Name, address and telephone number of agent for service)
__________
PARKER-HANNIFIN CORPORATION
(Exact name of obligor as specified in its charter)
OHIO 34-0451060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17325 Euclid Avenue
Cleveland, OH 44112
(Address of principal (zip code)
executive offices)
Senior Debt Securities
(Title of Indenture securities)
<PAGE>
GENERAL
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, Washington, D.C.
The Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
National City Bank is authorized to exercise corporate trust powers.
2. Affiliations with obligor. If the obligor is an affiliate of the
trustee, describe such affiliation.
NONE
16. List of exhibits
(1) A copy of the Articles of Association of the Trustee.
Incorporated herein by reference is Charter No. 786
Merger No. 1043 the Articles of Association of National
City Bank, which Articles of Association were included as
a part of Exhibit 1 to Form T-1 filing made by said
National City Bank with the Securities and Exchange
Commission in November 1973 (File No. 2-49786).
Attached hereto as Exhibit 1 is an amendment to the
Articles of Association, per Action by Written
Consent of the Shareholder as of November 9, 1995.
(2) A copy of the certificate of authority of the
Trustee to commence business:
(a) a copy of the certificate of NCB National Bank
to commence business.
<PAGE>
Incorporated herein by reference is a true and
correct copy of the certificate issued by the
Comptroller of the Currency under date of
April 26, 1973, whereby NCB National Bank was
authorized to commence the business of banking
as a National banking Association, which true
copy of said Certificate was included as Exhibit 2(a)
to Form T-1 filing made by said National City
Bank with the Securities and Exchange Commission
in November 1973 (File 2-49786)
(b) a copy of the approval of the merger of The
National City Bank of Cleveland into NCB National
Bank under the charter of NCB National Bank and
under the title "National City Bank."
Incorporated herein by reference is a true and
corrected copy of the certificate issued by the
Comptroller of the Currency under date of April
27, 1973, whereby the National City Bank of
Cleveland was merged into NCB National Bank,
which true copy of said certificate was included
as Exhibit 2(b) to Form T-1 filing made by said
National City Bank with the Securities and
Exchange Commission in November 1973 (File 2-49786).
(3) A copy of the authorization of the Trustee to exercise
corporate trust powers.
Incorporated herein by reference is a true and
correct copy of the certificate dated April 13,
1973 issued by the Comptroller of the Currency
whereby said National City Bank has been granted
the right to exercise certain trust powers, which
true copy of said certificate was included as
Exhibit 3 to Form T-1 filing made by said National
City Bank with the Securities and Exchange
Commission in November 1973 (File 2-49786).
(4) A copy of existing By-Laws of the Trustee.
Incorporated herein by reference is a true and
correct copy of the National City Bank By-Laws as
amended through January 1, 1993. This true copy
of said By-Laws was included as Exhibit 4 to For
T-1 filing made by National City Bank with the
Securities and Exchange Commission in March, 1995
(File 22-26594).
(5) Not applicable.
<PAGE>
(6) Consent of the United States Institutional Trustee
required by Section 321(b) of the Act.
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act
of 1939, as amended, and to the extent required thereby to enable
it to act as an indenture trustee, National City Bank hereby consents
as of the date hereof that reports of examinations of it by the Treasury
Department, the Comptroller of the Currency, the Board of Governors of
the Federal Reserve Banks, the Federal Deposit Insurance Corporation or
of any other Federal or State authority having the right to examine
National City Bank, may be furnished by similar authorities to the
Securities and Exchange Commission upon request theron.
NATIONAL CITY BANK
By: /s/ J. A. Schwartz
Janet A. Schwartz
Vice President
(7) A copy of the latest report of condition of the
Trustee published pursuant to law or the
requirements of its supervising or examining
authority.
Attached hereto as Exhibit 7 is the latest report
of condition of National City Bank.
(8) Not applicable.
(9) Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, National City Bank a national banking association organized and
existing under the laws of the United State of America, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Cleveland, and State of Ohio,
on the 23 of April, 1996.
NATIONAL CITY BANK
By: /s/ J. A. Schwartz
Janet A. Schwartz
Vice President
<PAGE>
EXHIBIT 1
NATIONAL CITY CORPORATION
Action by Written Consent of the Shareholder
The undersigned being the sole shareholder of National City Bank, a
national banking association formed under the laws of the United States (the
"Bank"), does hereby take and adopt the following actions by this unanimous
written consent as of the 9th day of November, 1995.
RESOLVED, that the outstanding common stock of the Bank shall be
decreased $109,668,510 by a decrease in the par value per share from $32.00 to
$2.00 thus decreasing the outstanding capital stock to $7,311,234; and be it
further
RESOLVED, that upon the effective date of this reduction, article fifth
of the articles of association of the Bank be amended to read as follows:
FIFTH. The authorized amount of capital stock of this Association
shall be 4,500,000 shares of common stock of the par value of two
dollars (2.00) each; but said capital stock may be increased or
decreased from time to time, in accordance with the provisions of
the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have any preemptive or preferential right of
subscription to any shares of any class of stock of the
Association, whether now or hereafter authorized, or to any
obligations convertible into stock of the Association, issued or
sold, nor any right of subscription to any thereof, other than
such, if any, as the Board of Directors, in its discretion, may
from time to time determine and at such price as the Board of
Directors from time to time fix.
The Association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated,
without the approval of the shareholders. Obligations classified
as debt, whether or not subordinated, which may be issued by the
Association without the approval of shareholders, do not carry
voting rights on any issue, including an increase or decrease in
the aggregate number of the securities, or the exchange or
reclassification of all or part of securities into securities of
another class or series.
IN WITNESS WHEREOF, the undersigned shareholder has executed this Action
by Unanimous Written Consent as of the 9th day of November, 1995.
/s/ William R. Robertson
William R. Robertson
President
<PAGE>
REPORT OF CONDITION EXHIBIT 7
NATIONAL CITY BANK
(Including Domestic and Foreign Subsidiaries)
Of Cleveland, In the State of Ohio, at the close of
business on December 31, 1995, published in response to
call made by Comptroller of the Currency, under Title 12,
United States Code, Section 161.
ASSETS
(In Thousands)
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . $616,413
Interest-bearing balances. . . . . . . . . . . . . . . . . . 1,207
Securities:
Held-to-maturity securities. . . . . . . . . . . . . . . . . 0
Available-for-sale securities. . . . . . . . . . . . . . . . 1,874,172
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds sold . . . . . . . . . . . . . . . . . . . . . 902,111
Securities purchased under agreements to resell. . . . . . . 150,000
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . $6,367,568
Less: Allowance for loan and lease losses . . 111,013
Loans and leases, net of unearned income and allowance . . . . . 6,256,555
Assets held in trading accounts. . . . . . . . . . . . . . . . . 398
Premises and fixed assets (including capitalized leases) . . . . 93,192
Other real estate owned. . . . . . . . . . . . . . . . . . . . . 3,225
Customers' liability to this bank on acceptances outstanding . . 39,486
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . 1,317
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 378,680
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $10,316,756
LIABILITIES
Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . $5,629,426
Non-interest bearing . . . . . . . . . . . $1,589,744
Interest-bearing . . . . . . . . . . . . . 4,039,682
In foreign offices, Edge and Agreement subsidiaries, and IBFs 492,515
Interest-bearing . . . . . . . . . . . . . 492,515
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds Purchased. . . . . . . . . . . . . . . . . . . 1,209,505
Securities sold under agreements to repurchase . . . . . . . 809,936
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . 41,713
Trading Liabilities. . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:
With original maturity of one year or less . . . . . . . . . 640,580
With original maturity of more than one year . . . . . . . . 424,642
Bank's liability on acceptances executed and outstanding . . . . 39,486
Subordinated notes and debentures. . . . . . . . . . . . . . . . 174,127
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . 242,198
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 9,704,128
EQUITY CAPITAL
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 7,436
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,822
Undivided profits and capital reserves. . . . . . . . . . . . . 539,876
Net unrealized holding gains (losses) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . . . . . . 9,494
TOTAL EQUITY CAPITAL. . . . . . . . . . . . . . . . . . . . 612,628
TOTAL LIABILITIES AND EQUITY CAPITAL. . . . . . . . . . . . $10,316,756
I, Gary M. Small, Vice President and Comptroller of the above named bank do
hereby declare that this Report of Condition is true and correct to the best
of my knowledge and belief.
Gary M. Small
We, the undersigned directors attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of
our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
William E. MacDonald, III
William R. Robertson
David A. Daberko
