SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
VWR CORPORATION
------------------------------------
(Name of issuer)
Common Stock, Par Value $1.00 Per Share
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(Title of class of securities)
918435 10 8
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(CUSIP number)
Klaus H. Jander, Esq.
Rogers & Wells
200 Park Avenue
New York, New York 10166
(212) 878-8001
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(Name, address and telephone number of person
authorized to receive notices and communications)
September 15, 1995
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(Date of event which requires filing of this statement)
If the filing person has previously filed a
statement on Schedule 13G to report the acquisition which is
the subject of this Schedule 13D, and is filing this schedule
because of Rule 13d-1(b)(3) or (4), check the following box
/_/.
Check the following box if a fee is being paid
with the statement /_/. (A fee is not required only if the
reporting person (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note. Six copies of this statement, including all
exhibits, should be filed with the Commission. See Rule 13d-1
(a) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 6 Pages)
__________________________
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes.)
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SCHEDULE 13D
CUSIP No. 918435 10 8 Page 2 of 6 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EM Laboratories, Incorporated
13-3823759
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(c) OR 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF 9,617,993
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
9,617,993
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON /_/
9,617,993
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 46.1%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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Item 2. Identity and Background
-----------------------
The following is added to Item 2:
EM Laboratories, Incorporated ("EM Laboratories") is a
wholly-owned subsidiary of EM Industries, Incorporated ("EM Industries"),
which in turn is a wholly-owned subsidiary of Merck AG, a Swiss
corporation. Merck AG is controlled by Merck & Cie. KG, a Swiss
partnership, which is 97.81% owned by Merck KGaA of Darmstadt,
Germany, a limited liability company based upon shares, the majority of
which are owned by E. Merck of Darmstadt, Germany. Merck KGaA has
succeeded to E. Merck's international business of manufacturing and
distributing pharmaceutical, laboratory and chemical products.
Item 5. Interest in Securities of the Issuer
------------------------------------
The following is added to Item 5:
The closing of the transactions contemplated in the Common
Share and Debenture Purchase Agreement, dated May 24, 1995, between EM
Industries and the Issuer, as such agreement was revised pursuant to a letter
agreement dated August 10, 1995, among the Issuer, EM Industries and EM
Laboratories (the "Purchase Agreement"), occurred on September 15, 1995.
As permitted by Section 14.6 of the Purchase Agreement and
as had been contemplated by the parties, EM Industries assigned its rights and
obligations under the Purchase Agreement to its wholly owned subsidiary,
EM Laboratories, pursuant to an Assignment and Assumption Agreement,
dated June 16, 1995 (the "EM Laboratories Assignment"), between
EM Industries and EM Laboratories. A copy of the EM Laboratories
Assignment was filed as an exhibit to Amendment 2 of this Schedule 13D,
dated August 10, 1995.
On September 15, 1995, as the parties had agreed in the
Purchase Agreement, EM Laboratories exercised the warrant it held pursuant
to the Common Share and Warrant Purchase Agreement, dated February 25,
1995, by and between the Issuer and EM Industries, as such purchase
agreement was subsequently assigned to EM Laboratories pursuant to an
Assignment and Assumption Agreement dated April 13, 1995, by and
between EM Industries and EM Laboratories, and purchased an additional
967,015 Common Shares, par value $1.00 per share, of the Issuer ("Common
Shares") at $11.00 per Common Share, as provided in such warrant. Upon
such exercise, EM Laboratories' ownership of Common Shares increased to
an aggregate of 2,785,196 Common Shares, approximately 20.1% of the total
issued and outstanding Common Shares.
At the closing on September 15, 1995, in accordance with the
Purchase Agreement, EM Laboratories purchased 6,832,797 Common Shares
at a purchase price of $12.44 per share, upon which purchase,
EM Laboratories' ownership of Common Shares increased to an
aggregate of 9,617,993 Common Shares, representing approximately 46.1%
of the total issued and outstanding Common Shares.
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Pursuant to the Purchase Agreement, at the closing the Issuer
issued the VWR Corporation Subordinated Debenture due September 15,
2005 (the "Debenture") in the principal amount of $135,000,000 to
EM Laboratories. Pursuant to Section 4.2(a) of the Debenture, the Debenture
may be transferred to affiliates of EM Industries and, in accordance with the
terms of the Debenture, on September 18, 1995 EM Laboratories assigned
and transfered all of its rights and delegated all of its obligations and duties
with respect to the Debenture and the Debenture Shares (as defined in the
Debenture) under the Purchase Agreement to Merck KGaA, an affiliate and
indirect parent company of EM Industries, pursuant to the Assignment and
Assumption Agreement dated September 18, 1995 by and between EM
Laboratories and Merck KGaA (the "Merck KGaA Assignment"). A copy of
the Merck KGaA Assignment is appended hereto as Exhibit A.
Pursuant to Section 2.1(b) of the Debenture, during the first
year of the term of such Debenture, interest on the principal amount of the
Debenture will be paid to the holder in the form of the aggregate number of
Common Shares equivalent to the dollar value of the interest due and payable
on each interest payment date, at an issue price deemed to be $12.44 per
share (the "Debenture Shares"), until such time as the Issuer shall have issued
and the holder of the Debenture shall have received the aggregate number of
Debenture Shares needed to increase the total number of Common Shares held
by the EM Industries and its affiliates, taking into account the holder's
receipt of such Debenture Shares on such date, to 49.89% of the total issued
and outstanding Common Shares on such date. A copy of the Debenture is
appended hereto as Exhibit B.
Any future acquisition of Common Shares by EM Laboratories
or its affiliates will be subject to the Standstill Agreement dated February 27,
1995 (the "Standstill Agreement"), by and between the Issuer and
EM Industries, as amended on September 15, 1995. See Item 6 below.
Item 6. Contracts, Arrangements, Understandings or
Relationship with Respect to Securities of the Issuer
-----------------------------------------------------
The following is added to Item 6:
At the closing on September 15, 1995, the Issuer, EM
Industries and EM Laboratories executed Amendment Number One to the
Standstill Agreement (the "Amendment"), pursuant to which the Standstill
Agreement was amended. The Amendment provides, among other things,
that:
(1) the definition of "Common Stock Equivalents" shall be
amended to read, in its entirety, "'Common Stock Equivalents' means the
sum of the following, determined at any time during the term of this
Agreement: (a) the total number of shares of issued and outstanding
Common Stock, plus (b) the number of votes which may be cast for the
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election of directors (whether directly or by formula) as a result of owner-
ship of any Voting Securities other than Common Stock; provided, however,
that the votes described in (b) above shall not be included in Common Stock
Equivalents until the Voting Securities other than Common Stock are able to
be voted for the election of directors";
(2) the Percentage Limitation (as defined in the Standstill
Agreement) shall be increased to 49.89% of the Common Stock Equivalents
(as defined in the Standstill Agreement);
(3) whenever the Purchaser (as defined in the Standstill
Agreement) shall make a tender offer for shares of Common Stock under
Section 2.9 of the Standstill Agreement, (a) the Purchaser shall not commence
any such tender offer unless acceptance of Purchaser's offer shall have been
recommended to the shareholders by a majority vote of the Unaffiliated
Directors (as defined in the Standstill Agreement); and (b) such Purchaser
may not close the acquisition of the tendered shares unless all of the following
requirements have been satisfied: (i) Purchaser's offer shall have been made
to all holders of Common Stock; (ii) Purchaser shall offer to purchase for
cash all shares tendered; and (iii) Purchaser's offer shall have been accepted
by shareholders owning not less than a majority of the outstanding Common
Stock; and (c) with respect to calculating whether Purchaser's offer has been
accepted by shareholders owning a majority of the outstanding Common
Stock, Common Shares beneficially owned by Purchaser shall be excluded
from the outstanding Common Stock"; and
(4) as of the closing date the Issuer shall take all requisite
action, including without limitation increasing or decreasing the number of
seats on the Board, to grant EM Industries the right, at EM Industries'
option, to nominate such number of directors to the Board as shall ensure that
EM Industries shall have the right to maintain Board representation at all
times commensurate with the aggregate proportion of Common Shares owned
by EM Industries and its affiliates. A copy of the Amendment is appended
hereto as Exhibit C.
Item 7. Materials to be Filed as Exhibits
----------------------------------
Exhibit A: Assignment and Assumption Agreement, dated September 18,
1995, by and between EM Laboratories, Incorporated and
Merck KGaA.
Exhibit B: VWR Corporation Subordinated Debenture due September 15,
2005, dated September 15, 1995.
Exhibit C: Amendment Number One to the Standstill Agreement, dated
September 15, 1995, by and among VWR Corporation, EM
Industries, Incorporated and EM Laboratories, Incorporated.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: September 19, 1995
EM LABORATORIES,
INCORPORATED
By: /s/ Stephen J. Kunst
Name: Stephen J. Kunst
Title: Secretary
6
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated September 18, 1995,
by and between EM Laboratories, Incorporated and Merck KGaA.
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT, dated the 18th day of September, 1995, by
and between EM LABORATORIES, INCORPORATED, a New York
Corporation ("EM Laboratories"), and MERCK KGaA ("Merck"), a German
Corporation:
W I T N E S S E T H
WHEREAS, EM Industries, Incorporated ("EMI") and VWR
Corporation ("VWR") have entered into a Common Share and Debenture
Purchase Agreement, dated May 24, 1995 (the "Purchase Agreement"), pursuant
to which VWR has agreed to issue and sell to EM Industries on the Closing Date
(as defined in the Purchase Agreement) an aggregate of 6,832,797 shares of the
authorized but unissued Common Shares of VWR at a purchase price of $12.44
per share and a subordinated debenture in the principal amount of
$135,000,000;
WHEREAS, Section 14.6 of the Purchase Agreement provides:
"Assignment; Successors. This Agreement shall be
binding upon and shall inure to the benefit of and be
enforceable by the successors and permitted assigns
of the parties hereto. The Company may not assign
its rights and delegate its duties and obligations
under this Agreement without the prior written
consent of the Purchaser, and the Purchaser may not
assign its rights or delegate its duties and obligations
under this Agreement without the prior written
consent of the Company and, in the absence of such
consent, any such purported assignment or
delegation shall be void; provided, however, that the
Purchaser may assign its rights and delegate its
duties and obligations under this Agreement and the
Debenture without such consent to an Affiliate of
the Purchaser, which Affiliate (referred to herein as
the "Assignee") may, following duly authorized
execution and delivery of an agreement assuming
the obligations of the Purchaser hereunder
reasonably satisfactory to the Company, accept title
to the Purchased Shares, Debenture and/or
Debenture Shares. In the event that the Purchaser
assigns its rights and delegates all of its obligations
under this Agreement or the Debenture in
accordance with this Section, all references to the
Purchaser herein shall refer to the Assignee as well
as to the Purchaser and the Purchaser shall be
jointly and severally liable with the Assignee for the
performance of its obligations hereunder."
WHEREAS, EMI has assigned and EM Laboratories has assumed
all of EMI's rights and obligations under the Purchase Agreement in an
Assignment and Assumption Agreement dated June 16, 1995;
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WHEREAS, Merck is an Affiliate (as defined in the Purchase
Agreement) of EM Industries;
NOW, THEREFORE, in consideration of valuable consideration,
receipt of which is hereby acknowledged, as payment in full for the rights,
obligations, and claims hereby transferred, and of the agreements herein
contained, the parties hereby agree as follows:
SECTION 1. Assignment and Assumption of Rights
1.1 EM Laboratories hereby assigns and transfers all of its
rights to the Debenture and the Debenture Shares under the Purchase Agreement
to Merck.
1.2 Merck hereby accepts all of EM Laboratories' assigned and
transferred rights to the Debenture and the Debenture Shares under the Purchase
Agreement from EM Laboratories.
SECTION 2. Delegation and Assumption of Obligations
2.1 EM Laboratories hereby delegates all of its obligations and
duties with respect to the Debenture and the Debenture Shares under the Purchase
Agreement to Merck except that, as provided in Section 14.6 of the Purchase
Agreement, EM Laboratories shall be jointly and severally liable with Merck for
the performance of the obligations of EM Laboratories under the Purchase
Agreement.
2.2 Merck hereby accepts and assumes all of the obligations and
duties of EM Laboratories with respect to the Debenture and the Debenture
Shares under the Purchase Agreement and agrees to perform and discharge the
same in accordance with the terms thereof.
SECTION 3. Miscellaneous
3.1 A copy of this Agreement shall be delivered to VWR and
VWR shall be entitled to rely on the undertakings herein made.
3.2 This Agreement shall be governed by, and construed
exclusively in accordance with, the laws of the State of New York, without
reference to its conflict of laws principles.
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IN WITNESS WHEREOF, the parties have duly executed this
Assignment and Assumption Agreement on the date first above written.
EM LABORATORIES,
INCORPORATED
By: /s/ Walter W. Zywottek
Name: Walter W. Zywottek
Title: President and Chief
Executive Officer
MERCK KGaA
By: /s/ Harald J. Schroeder
Name: Harald J. Schroeder
Title: Vice-Chairman
By: /s/ Dietrich Ruh
Name: Dietrich Ruh
Title: Director
A-3
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EXHIBIT B
VWR CORPORATION SUBORDINATED DEBENTURE DUE SEPTEMBER
15, 2005, dated September 15, 1995
<PAGE>
THE SECURITIES REPRESENTED BY THIS
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION
THEREUNDER. THIS DEBENTURE IS NOT
TRANSFERABLE EXCEPT TO AN AFFILIATE OF EM
INDUSTRIES, INCORPORATED. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A COMMON SHARE AND DEBENTURE PURCHASE
AGREEMENT DATED MAY 24, 1995 AND A STANDSTILL
AGREEMENT DATED FEBRUARY 27, 1995, AS AMENDED
SEPTEMBER 15, 1995 (COPIES OF WHICH AGREEMENTS
ARE ON FILE WITH THE SECRETARY OF THE
COMPANY) WHICH PROVIDE, AMONG OTHER THINGS,
FOR CERTAIN RESTRICTIONS ON TRANSFER THEREOF.
ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE
WITH SUCH AGREEMENTS SHALL BE VOID.
VWR CORPORATION
SUBORDINATED DEBENTURE
Due September 15, 2005
September 15, 1995 $135,000,000.00
No. 1
VWR CORPORATION, a Pennsylvania corporation (hereinafter called the
"Company"), for value received, hereby promises, subject to Article 3 hereof, to
pay to the Holder (as defined below) on September 15, 2005 the principal amount
of One Hundred Thirty-five Million and 00/100's Dollars ($135,000,000.00), in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for public and private debts, at the principal office of
the Company, and, subject to Article 3 hereof, to pay interest on the unpaid
portion of said principal amount on each Interest Payment Date (as defined
below) commencing on December 1, 1995, at said office, pursuant to the terms
and conditions of, and in the manner described in, Section 2.1 hereof.
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The terms defined in this Article
whenever used in this Debenture shall have the respective meanings hereinafter
specified.
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(a) "Administrative Agent" shall have the meaning set forth in the
Bank Credit Agreement.
(b) "Affiliate" shall have the meaning set forth in the Purchase
Agreement.
(c) "Bank Credit Agreement" shall mean that certain Credit Agreement,
dated as of September 14, 1995, by and among the Company, VWR Scientific of
Canada Ltd., Scientific Holdings Corp. and VWR Scientific International
Corporation, as Borrowers; the several lenders from time to time parties
thereto; CoreStates Bank, N.A., as Administrative Agent and Collateral Agent;
Bank of America National Trust and Savings Association, as Syndication Agent;
PNC Bank, National Association as Documentation Agent, BA Securities, Inc., as
Arranger; and Seattle-First National Bank, as Lead Manager, as the same may be
amended, supplemented or otherwise modified from time to time.
(d) "Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978,
11 U.S.C. et seq., or any successor statute thereto.
(e) "Commitment" shall have the meaning set forth in the Bank Credit
Agreement.
(f) "Common Shares" shall mean the common shares, par value $1.00,
of the Company.
(g) "Company" shall mean VWR Corporation, a Pennsylvania
corporation, and any successor corporation by merger, consolidation, sale or
exchange of all or substantially all of the Company's assets, or otherwise.
(h) "Debenture" shall mean this Subordinated Debenture or such other
Subordinated Debenture or Debentures exchanged therefor as provided in
Section 2.2 herein.
(i) "Debenture Shares" shall have the meaning set forth in Section
2.1(b) herein.
(j) "Deferred Interest" shall have the meaning set forth in Section
2.1(c) herein.
(k) "Event of Default" shall have the meaning set forth in Section 7.1
herein.
(l) "Final Debenture Share Delivery Date" shall have the meaning set
forth in Section 2.1(c) herein.
(m) "Holder" shall mean EM Industries, Incorporated or any
Affiliate of EM Industries, Incorporated to which this Debenture is issued
or subsequently transferred in accordance with the terms provided herein.
(n) "Indebtedness" of any Person shall mean, without duplication:
(1) all indebtedness of such Person for borrowed money;
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(2) all obligations of such Person for the deferred
purchase price of property or services (other than trade payables
incurred in the ordinary course of such Person's business);
(3) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments;
(4) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such
property);
(5) all obligations of such Person as lessee under leases
that have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases;
(6) all obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar facilities;
(7) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any
capital stock of or other ownership or profit interest in such Person
or any other Person or any warrants, rights or options to acquire
such capital stock;
(8) all Indebtedness of others referred to in clauses (1)
through (7) above guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against
loss, (iii) to supply funds to or in any manner invest in the debtor
(including any agreement to pay for property or services
irrespective of whether such property is received or such services
are rendered) or (iv) otherwise to assure a creditor against loss;
and
(9) all Indebtedness referred to in clauses (1) through (7)
above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such
Indebtedness.
(o) "Insolvency Event" shall have the meaning set forth in
Section 3.4.
(p) "Interest Deferral Period" shall have the meaning set forth
in Section 2.1(c).
(q) "Interest Payment Date" shall have the meaning set forth in
Section 2.1(a).
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(r) "Obligor" shall have the meaning set forth in Section 3.1.
(s) "Payment Blockage Notice" shall have the meaning set forth
in Section 3.5.
(t) "Payment Blockage Period" shall have the meaning set forth
in Section 3.5.
(u) "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
(v) "Purchase Agreement" means the Common Share and
Debenture Purchase Agreement, dated May 24, 1995, between the
Company and EM Industries, Incorporated, as assigned by EM Industries,
Incorporated to its wholly owned subsidiary and Affiliate, EM
Laboratories, Incorporated pursuant to an Assignment and Assumption
Agreement dated June 13, 1995.
(w) "Redemption Price" shall have the meaning set forth in
Section 2.4.
(x) "Representative" shall mean (i) with respect to obligations
under the Bank Credit Agreement, the Administrative Agent and (ii) with
respect to any other Senior Debt the holder of such Senior Debt or any
agent appointed for such Senior Debt under the instrument under which
such Senior Debt arose.
(y) "Restricted Security" shall have the meaning set forth in
Section 5.2.
(z) "SEC" shall mean the United States Securities and Exchange
Commission.
(aa) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all as in
effect at the time.
(ab) "Senior Debt" shall mean:
(i) all obligations and liabilities of the Company (whether
for or on account of principal, reimbursement obligations, accrued
and unpaid interest (including without limitation all interest
accruing on and after an Insolvency Event, whether or not such
interest is allowed as a claim in any proceeding or case involving
the Company), fees, expenses, indemnities and other amounts
payable under or in connection with the Bank Credit Agreement
and all documents or instruments executed in connection therewith,
whether outstanding on the date of issuance of this Debenture or
hereafter created, assumed or incurred, and shall include all
renewals, extensions, refinancings and refundings thereof from
time to time; provided that, Senior Debt under this clause (i) shall
not include any obligations of the Company for principal or
reimbursement obligations to the extent (but only to the extent)
such amounts exceed $300,000,000 in principal amount in the
aggregate (i.e., not including interest, fees, expenses, indemnities
and the like); or
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(ii) all obligations and liabilities of the Company under any
and all interest rate protection agreements to the extent such
obligations and liabilities are secured by the collateral documents
that secure the Company's obligations under the Bank Credit
Agreement (or any renewal, extension, refinancing or refunding of
the Bank Credit Agreement) and shall include all renewals,
extensions, refinancings and refundings thereof from time to time.
(ac) "Standstill Agreement" shall mean that certain Standstill
Agreement, dated February 27, 1995, between the Company and
EM Industries, Incorporated, as assigned by EM Industries, Incorporated
to its wholly owned subsidiary and Affiliate, EM Laboratories,
Incorporated pursuant to an Assignment and Assumption Agreement dated
April 13, 1995, as such Standstill Agreement was amended on September
15, 1995.
(ad) "Subsidiary" shall mean any entity of which securities or
other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are
owned directly or indirectly by the Company.
ARTICLE 2
INTEREST; EXCHANGES AND TRANSFER; REDEMPTION
SECTION 2.1. Payment of Interest.
--------------------
(a) The Company shall pay to the Holder interest, subject to
Article 3 hereof, in the form and manner described in this Section
(computed on the basis of a year of 365 or 366 days, as the case may be),
on the unpaid principal amount hereof at the rate of 13% per annum on
March 1, June 1, September 1 and December 1 of each year (subject to
paragraphs (b) and (c) below) during the term of this Debenture (each, an
"Interest Payment Date"), commencing on December 1, 1995.
(b) Beginning on the first Interest Payment Date and on each
subsequent Interest Payment Date occurring on or before the Final
Debenture Share Delivery Date (as defined below), subject to clauses (1)
and (2) of this paragraph (b), the Company shall pay interest to the Holder
in the form of the aggregate number of Common Shares equivalent to the
dollar value of the interest due and payable on such Interest Payment Date
(collectively, the "Debenture Shares"), at an issue price deemed to be
$12.44 per share (the "Debenture Share Issue Price"), until such time (the
"Final Debenture Share Delivery Date") as the Company shall have issued
and the Holder shall have received the aggregate number of Debenture
Shares needed to increase the total number of Common Shares held by the
Holder and its Affiliates, taking into account the Holder's receipt of such
Debenture Shares on such date, to 49.89% of the total issued and
outstanding Common Shares on such date.
(1) If, however, the total amount of accrued interest due
and payable on such final Interest Payment Date occurring on or
before the Final Debenture Share Delivery Date exceeds the dollar
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amount equal to the product of the total number of Debenture
Shares received by the Holder on such Interest Payment Date times
the Debenture Share Issue Price, then such excess dollar amount
of accrued interest shall be deferred and added to the amount of
Deferred Interest (as defined below) and shall become due and
payable and shall be paid by the Company as provided in
paragraph (e) below.
(2) No fractional Common Shares will be issued as
Debenture Shares in connection with the interest payments
provided for in this paragraph (b), but in lieu of such fractional
shares, if any, on each Interest Payment Date occurring before the
Final Debenture Share Delivery Date an amount of interest equal
to the product of the applicable fraction multiplied by the
Debenture Share Issue Price shall be deferred and added to the
amount of Deferred Interest (as defined below) and shall become
due and payable and shall be paid by the Company as provided in
paragraph (e) below.
(c) On each Interest Payment Date occurring during the time
period subsequent to the Final Debenture Share Delivery Date but prior to
the second anniversary of the issuance of this Debenture (the "Interest
Deferral Period"), the interest due and payable on this Debenture, plus
such amounts of deferred interest, if any, described in clauses (1) and (2)
of paragraph (b) above, shall accrue but shall be deferred (the "Deferred
Interest"), and such Deferred Interest shall become due and payable on
September 15, 2005, as described in paragraph (e) below.
(d) On each Interest Payment Date occurring subsequent to the
completion of the Interest Deferral Period, the Company shall pay to the
Holder interest on the unpaid portion of the principal amount of this
Debenture at the interest rate set forth above in paragraph (a) above at the
Company's principal office in the coin or currency of the United States of
America as at the time of payment shall be legal tender for public and
private debts. On September 15, 2005, subject to paragraph (e) below, all
interest that shall have accrued on the unpaid principal balance of this
Debenture subsequent to the final Interest Payment Date shall become due
and payable, and the Company shall pay such accrued interest to the
Holder at the Company's principal office in the coin or currency of the
United States of America as at the time of payment shall be legal tender
for public and private debts.
(e) On September 15, 2005, in addition to the accrued interest
described in the second sentence of paragraph (d) above, all Deferred
Interest shall become due and payable and the Company will pay the
Holder the total amount of Deferred Interest, plus interest thereon at the
interest rate set forth above in paragraph (a) above, at the Company's
principal office in the coin or currency of the United States of America as
at the time of payment shall be legal tender for public and private debts.
(f) If any amount of the principal of, or interest on, this
Debenture shall not be paid for a period of 30 days after the date when
due, the Company shall pay the Holder interest on such overdue amount
at a rate equal to the sum of the interest rate set forth above in paragraph
(a) above plus 5% per annum on the amount thereof from the date when
due until such amount shall have been paid in full.
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SECTION 2.2. Exchange and Registration of Transfer of
Debentures. The Holder may, at its option, surrender this Debenture at
the office of the Company and receive in exchange therefor a Debenture
or Debentures, each in the denomination of $1,000,000.00 or an integral
multiple of $1,000,000.00 in excess thereof, dated as of the date of this
Debenture, and payable to such transferee, or order, as may be designated
by such Holder. The aggregate principal amount of such Debenture or
Debentures exchanged in accordance with this Section shall equal the
aggregate unpaid principal amount of this Debenture as of the date of such
surrender; provided, however, that upon such exchange there shall be filed
with the Company the name and address for all purposes hereof of the
Holder or Holders of the Debenture or Debentures delivered in such
transfer. This Debenture, when presented for registration of transfer or
for exchange or payment, shall (if so required by the Company) be duly
endorsed by, or be accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company duly executed by, the Holder
or its attorney duly authorized in writing.
SECTION 2.3. Loss, Theft, Destruction of Debenture. Upon
receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Debenture and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Debenture, the Company will make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Debenture, a
new Debenture of like tenor and unpaid principal amount dated as of the
date hereof. This Debenture shall be held and owned upon the express
condition that the provisions of this Section are exclusive with respect to
the replacement of a mutilated, destroyed, lost or stolen Debenture and
shall preclude any and all other rights and remedies notwithstanding any
law or statute existing or hereafter enacted to the contrary with respect to
the replacement of negotiable instruments or other securities without their
surrender.
SECTION 2.4. Optional Redemption by the Company. The
Company at its election, upon notice given as provided in Section 2.5,
may redeem this Debenture in whole or in part at any time if it remains
outstanding on or after September 15, 2000 at the aggregate principal
amount outstanding so to be redeemed, together with accrued interest
thereon to the date fixed for such redemption (the "Redemption Price");
provided, however, that the source of funds for such redemption shall be
the Company's cash flow and shall not consist in whole or in part of any
Indebtedness of the Company incurred for the purpose of funding such
redemption. Partial redemptions shall be in an aggregate principal amount
of $1,000,000.00 or an integral multiple of $1,000,000.00 in excess
thereof. The amount to be redeemed shall be calculated according to the
respective unredeemed principal amount hereof.
SECTION 2.5. Notice of Redemptions. In the case of any
redemption of this Debenture, notice thereof shall be given in writing to
the Holder not fewer than 30 nor more than 60 days prior to the date fixed
for such redemption, which notice shall specify the date fixed for such
redemption and make reference to this Section 2.5 pursuant to which such
redemption is to be made. Such notice of redemption and all other notices
to be given to the Holder shall be given by registered mail at its
designated address.
Upon notice of any redemption being given as provided in this
Section, the Redemption Price shall become due and payable to the
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Holder, at the office of the Company on the date specified in such notice
and from and after such date (unless the Company shall default in the
payment of the Redemption Price) interest shall cease to accrue on this
Debenture or portion hereof subject to such notice of redemption.
SECTION 2.6. Surrender of Debentures; Notation Thereon.
Upon any redemption of a portion of the principal amount of this
Debenture pursuant to Section 2.4, the Holder at its option may require
the Company to make and deliver, at the expense of the Company (other
than for transfer taxes, if any), upon surrender of this Debenture, a new
Debenture payable to the Holder, or to such Person or Persons, or order,
as may be designated by the Holder, for the principal amount of this
Debenture then remaining unredeemed, dated as of the date to which
interest has been paid on the unredeemed principal amount of this
Debenture (or, if no interest has been paid hereon, then dated as of the
date of this Debenture), or may present this Debenture to the Company for
notation hereon of the payment of the portion of the principal amount so
redeemed. The Company may, as a condition of payment of all or any of
the principal of or interest on this Debenture, require the Holder to present
this Debenture for notation of such payment and, if this Debenture be paid
in full, require the surrender hereof.
SECTION 2.7. Who Deemed Absolute Owner. The
Company may deem the Person in whose name this Debenture shall be
registered upon the registry books of the Company to be, and may treat
it as, the absolute owner of this Debenture (whether or not this Debenture
shall be overdue) for the purpose of receiving payment of or on account
of the principal of this Debenture and for all other purposes, and the
Company shall not be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge the liability
upon this Debenture to the extent of the sum or sums so paid.
ARTICLE 3
SUBORDINATION
The payment of this Debenture shall be subject to the following
restrictions:
SECTION 3.1. Agreement to Subordinate. Anything in this
Debenture or the Purchase Agreement to the contrary notwithstanding, the
Company agrees, and by accepting this Debenture the Holder agrees, that
the indebtedness evidenced by this Debenture is subordinate and subject
in right of payment, to the extent and in the manner provided in this
Article 3, to the prior payment in full in cash of all Senior Debt and that
the subordination is for the benefit of and enforceable by the holders of
Senior Debt. This Debenture shall in all respects rank pari passu with all
other present and future unsecured and unsubordinated obligations of the
Company, and only Senior Debt shall rank senior to this Debenture. The
subordination provided herein is absolute, unconditional and irrevocable
irrespective of:
(a) any failure of, or delay by, a holder of Senior Debt:
(i) to assert any claim or demand or to enforce any
right, power or remedy against the Company or any other Person
primarily or secondarily liable with respect to the Senior Debt (an
"Obligor"); or
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(ii) to exercise any right, power or remedy against the
Company or any Obligor or any collateral securing any Senior
Debt;
(b) any change in the time, manner, or place of payment of, or
in any other term of, all or any Senior Debt;
(c) any reduction, limitation, impairment, or termination of any
Senior Debt for any reason, including any claim of waiver, release,
surrender, alteration or compromise;
(d) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Bank Credit
Agreement or any other document under which Senior Debt is incurred;
(e) any addition, exchange, release, surrender or nonperfection
of any collateral securing any Senior Debt; or
(f) any other circumstances which might otherwise constitute
a defense available to, or a legal or equitable discharge of, or otherwise
prejudicially affect the subordination herein provided.
SECTION 3.2. Reinstatement, etc. The subordination
provisions of this Article 3 shall continue to be effective or be reinstated,
as the case may be, if at any time any payment (in whole or in part) of
any Senior Debt is rescinded or must otherwise be restored by the holder
of such Senior Debt upon any Insolvency Event (as herein defined) or
otherwise, all as though such payment had not been made.
SECTION 3.3. Certain Waivers. The Holder hereby waives
promptness, diligence, notice of acceptance, and any other notice with
respect to any of the Senior Debt and any requirement that any holder of
the Senior Debt (or any agent therefor) protect, secure, perfect, or insure
any lien, security interest or similar encumbrance or any property subject
thereto, or exhaust any right or take any action against the Company, any
Obligor or any other Person or any collateral securing any Senior Debt;
provided, that the Company shall send, or cause the Administrative Agent
to send, to the Holder, at the following address (or such other address as
the Holder shall notify the Company and the Administrative Agent in
writing): c/o EM Industries, Incorporated, 5 Skyline Drive, Hawthorne,
New York 10532, a copy of any Payment Blockage Notice or notice of
acceleration of the principal amount owed under the Bank Credit
Agreement promptly after the same is sent by the Administrative Agent to
the Company; provided, that the failure of the Company or the
Administrative Agent to send to the Holder a copy of such notice shall not
affect or impair in any respect the rights of any holder of Senior Debt
hereunder or the extent or scope of the subordination provisions herein.
SECTION 3.4. Insolvency, Bankruptcy, Dissolution of
Company. Upon any payment or distribution (whether in cash, securities
or other property) to creditors of the Company in the event of (i) any
winding-up, insolvency, bankruptcy, liquidation or reorganization of the
Company, whether voluntary or involuntary, (ii) any proceeding or case
for reorganization, liquidation, bankruptcy, dissolution or other winding-up
of the Company or its assets, whether or not involving insolvency or
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bankruptcy, (iii) any assignment by the Company for the benefit of
creditors or (iv) any receivership or other similar proceeding or any
marshalling of assets of the Company (each, an "Insolvency Event"):
(a) all Senior Debt shall first be paid in full in cash (including
without limitation the cash collateralizing at 105% of the face amount of
any obligations under outstanding letters of credit) before the Holder shall
be entitled to receive any payment or other distribution on or in respect of
this Debenture; and
(b) until all Senior Debt is paid in full in cash (including
without limitation the cash collateralizing at 105% of the face amount of
any obligations under outstanding letters of credit), any payment or
distribution to which the Holder would be entitled but for this Article 3
(whether in cash, property, securities or whatever) shall be made to
holders of Senior Debt as their interests may appear, except that the
Holder may receive shares of the Company as reorganized or readjusted
or securities of the Company or any other corporation if (i) in the case of
securities, the payment of such securities is subordinate to Senior Debt to
at least the same extent as this Debenture is subordinate to Senior Debt
and (ii) in the case of stock or securities, such stock or securities are
issued pursuant to a plan of reorganization which does not alter, amend or
impair (as defined in Section 1124 of the Bankruptcy Code) the rights of
any holder of Senior Debt.
SECTION 3.5. Default on Senior Debt
----------------------
(a) The Company may not pay the principal of, premium, if
any, or interest on, this Debenture or make any deposit in respect of this
Debenture and may not repurchase, redeem or otherwise retire this
Debenture (collectively, "pay this Debenture") if:
(i) any Senior Debt is not paid when due,
(ii) there shall be a default under the Bank Credit
Agreement with respect to the following financial covenants, which
covenants are currently set forth in Sections 9.1 (a) through (e)
therein: (v) Maintenance of Consolidated Net Worth, (w) Minimum
Consolidated EBITDA, (x) Interest Coverage Ratio, (y) Senior
Leverage Ratio or (z) Fixed Charge Coverage Ratio, or
(iii) any other default on Senior Debt occurs and the
maturity of such Senior Debt is accelerated in accordance with its
terms unless, in each case, the default has been cured or waived
and any such acceleration has been rescinded or such Senior Debt
has been paid in full in cash (including without limitation the cash
collateralizing at 105% of the face amount of any obligations under
outstanding letters of credit) and any commitment in connection
with such Senior Debt to extend further loans or credit to the
Company or any Affiliate thereof shall have been terminated
(including without limitation, with respect to obligations under the
Bank Credit Agreement, the termination of the Commitment).
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During the continuation of any default (other than a default described in
clauses (i), (ii) or (iii) above) with respect to any Senior Debt, pursuant
to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the
Company may not pay this Debenture for a period (a "Payment Blockage
Period") commencing upon the receipt by the Company of written notice
of such default from a Representative of such Senior Debt specifying an
election to effect a Payment Blockage Period (a "Payment Blockage
Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Company from
the Representative which gave such Payment Blockage Notice, (ii) by
repayment in full in cash of such Senior Debt (including without limitation
the cash collateralizing at 105% of the face amount of any obligations
under outstanding letters of credit) and the termination of any commitment
in connection with such Senior Debt to extend further loans or credit to the
Company or any Affiliate thereof (including without limitation, with
respect to obligations under the Bank Credit Agreement, the termination
of the Commitment) or (iii) because the default specified in such Payment
Blockage Notice is no longer continuing, as verified in writing by the
Representative that sent such Payment Blockage Notice). Notwithstanding
the immediately preceding sentence (but subject to the provisions contained
in the first sentence of this Section), unless the holders of such Senior
Debt or the Representative of such holders shall have accelerated the
maturity of such Senior Debt, the Company shall resume payments
(including any missed payments) on this Debenture after the end of such
Payment Blockage Period unless such payment is otherwise prohibited
under this Article 3. Multiple Payment Blockage Periods may be imposed
so long as (x) the cumulative period covered by all such Payment Blockage
Periods does not exceed 179 days in any 365 consecutive-day period and
(y) no more than one Payment Blockage Period may result from the same
default.
(b) The failure to make a payment or distribution on this
Debenture by reason of this Article 3 shall not be construed or deemed to
prevent the occurrence of an Event of Default hereunder; provided that
any acceleration of payment of this Debenture resulting therefrom shall be
rescinded if and when the following conditions shall be simultaneously
satisfied: (i) each payment or distribution which gave rise to such event of
default shall be made, and (ii) no other such event of default shall have
occurred.
SECTION 3.6. Subordinated Acceleration; Standstill.
-------------------------------------
(a) Holder agrees to give the Administrative Agent under the
Bank Credit Agreement not less than 5 days' prior notice of its intention
to accelerate the maturity of this Debenture pursuant to Section 6.2 hereof.
(b) Holder will not for a period of 90 days following an
acceleration of this Debenture (other than such acceleration resulting from
the acceleration of a majority in principal amount of the then outstanding
amount of Senior Debt) pursue or exercise any other right, power or
remedy under this Debenture, the Purchase Agreement or applicable law.
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SECTION 3.7. Turnover. If Holder receives any payment
or other distribution on this Debenture (whether in cash, property,
securities or whatever) at a time when such payment or distribution should
not have been made to Holder by reason of this Article 3, such payment
or distribution shall be deemed to have been received and held in trust for
the benefit of the holders of the Senior Debt, and shall be segregated from
other property of Holder and be paid and delivered as promptly as
practicable to the holders of the Senior Debt, as their interests may appear,
for application to, or collateral for, the payment or prepayment of the
Senior Debt.
SECTION 3.8. Subrogation. If all Senior Debt has been paid
in full in cash (including without limitation the cash collateralizing at
105% of the face amount of any obligations under outstanding letters of
credit) and any commitment in connection with such Senior Debt to extend
further loans or credit to the Company or any Affiliate thereof shall have
been terminated (including without limitation, with respect to obligations
under the Bank Credit Agreement, the termination of the Commitment),
then until this Debenture is paid in full, Holder shall be subrogated to all
rights of holders of Senior Debt, including the right to receive payments
or distributions in respect thereof. A payment or distribution made to
holders of Senior Debt pursuant to this Article 3 which otherwise would
have been made to Holder shall not be construed or deemed, as between
the Company and Holder, a payment or distribution in respect of Senior
Debt.
SECTION 3.9. Relative Rights. This Article 3 defines the
relative rights of Holder and the holders of Senior Debt. Nothing herein
shall:
(a) impair, as between the Company and Holder, the obligation of
the Company, which is absolute and unconditional, to pay principal of,
premium, if any, and interest on this Debenture in accordance with its
terms; or
(b) except as otherwise expressly provided herein, prevent
Holder from exercising its available remedies upon a default, subject to the
rights of holders of Senior Debt to receive distributions otherwise payable
to Holder.
SECTION 3.10. Subordination May Not be Impaired
No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by this Debenture shall at any time in any way be
prejudiced or impaired by an act or omission in good faith by a holder of
Senior Debt (or any agent therefor), or by any act or failure to act by the
Company or by the Company's failure to comply with this Debenture.
SECTION 3.11. Reliance by Holders of Senior Debt
on Subordination Provisions. Holder by accepting this Debenture
acknowledges and agrees that the foregoing subordination provisions are,
and are intended to be, an inducement and a consideration to each holder
of any Senior Debt, whether such Senior Debt was created or acquired
before or after the issuance of this Debenture, to acquire and continue to
hold, or to continue to hold, such Senior Debt and such holder of Senior
Debt shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold,
such Senior Debt.
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ARTICLE 4
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
SECTION 4.1. Restrictive Legend. Unless and until
otherwise permitted by this Section, any certificate for Debenture Shares
initially issued pursuant to this Debenture and any certificate for Common
Shares issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND
NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREUNDER.
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A COMMON SHARE
AND DEBENTURE PURCHASE AGREEMENT DATED
MAY 24, 1995 AND A STANDSTILL AGREEMENT
DATED FEBRUARY 27, 1995, AS AMENDED
SEPTEMBER 15, 1995 (COPIES OF WHICH
AGREEMENTS ARE ON FILE WITH THE SECRETARY
OF THE COMPANY) WHICH PROVIDE, AMONG
OTHER THINGS, FOR CERTAIN RESTRICTIONS ON
TRANSFER THEREOF. ANY SALE OR OTHER
TRANSFER NOT IN COMPLIANCE WITH SUCH
AGREEMENTS SHALL BE VOID.
SECTION 4.2. Restrictions on Transfer; Notice of Proposed
Transfers; Opinion of Counsel.
-----------------------------------------------------------------
(a) This Debenture is not transferable to any Person who
is not an Affiliate of EM Industries, Incorporated.
(b) Prior to any transfer or attempted transfer of this
Debenture or any Debenture Shares held by a Holder before such
Debenture or Debenture Shares have been registered under the Securities
Act in accordance with the terms of this Debenture, the Holder shall give
written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner and circumstances of the
proposed transfer. Any sale or other transfer not in compliance herewith
shall be void.
(c) For so long as the transfer restrictions set forth in
the Purchase Agreement, Standstill Agreement or this Debenture are in
effect, any certificate evidencing Debenture Shares issued upon transfer
(each, a "Restricted Security") shall bear the restrictive legend set forth in
Section 4.1, provided, however, that in the event counsel for the Company
shall opine that the removal of any legend (or part thereof) required to
appear on any certificate pursuant to the Purchase Agreement from the
certificates representing the Common Shares is permissible, the Company
shall remove from such certificates all legends no longer required and shall
rescind any stop-transfer instructions previously communicated to its
transfer agent relating to such certificates.
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SECTION 4.3. Registration Rights. The Company shall have
no obligation to the Holder of any Restricted Security to cause or consent
to the registration of any such security under the Securities Act, except to
the extent set forth in the Standstill Agreement.
ARTICLE 5
COVENANTS
The Company covenants and agrees that so long as this Debenture
shall be outstanding:
SECTION 5.1. Payment of Debenture; Source of Funds. The
Company will punctually pay or cause to be paid the principal of, or
interest on, this Debenture according to the terms hereof. The source of
funds for all such payments of principal and interest shall be the
Company's cash flow and shall not consist in whole or in part of any
Indebtedness of the Company.
SECTION 5.2. Notice of Default. If any one or more events
occur which constitute or which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default or if the Holder shall
demand payment or take any other action permitted upon the occurrence
of any such Event of Default, the Company will forthwith give notice to
the Holder, specifying the nature and status of the Event of Default or
other event or of such demand or action, as the case may be.
SECTION 5.3. Sufficient Number of Authorized Common Shares.
The Company will at all times have authorized and reserved for issuance
a sufficient number of Common Shares to provide for the issuance of the
Debenture Shares as provided herein.
SECTION 5.4. Insurance. The Company will carry and maintain
in full force and effect at all times with insurers the Company reasonably
believes to be financially sound and reputable such insurance in such
amounts as is customary in the respective industries of the Company and
such subsidiaries.
ARTICLE 6
REMEDIES
SECTION 6.1. Events of Default. "Event of Default"
wherever used herein means any one of the following events:
(a) default in the due and punctual payment of the
principal of, interest on, or any other amount owing in respect of, this
Debenture when and as the same shall become due and payable, and
continuance of such default for a period of thirty (30) calendar days; or
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(b) default in the performance or observance of any
covenant or agreement of the Company in this Debenture (other than a
covenant or agreement a default in the performance of which is
specifically provided for elsewhere in this Section), and the continuance
of such default for a period of thirty (30) calendar days after there has
been given to the Company by a Holder a written notice specifying such
default and requiring it to be remedied; or
(c) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or any Subsidiary 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 the Bankruptcy Code or any other applicable
Federal or state law, or appointing a receiver, liquidator, assignee, trustee
or 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 unstayed
and in effect for a period of 90 calendar days; or
(d) the institution by the Company or any Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by
it to the institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Code or any other applicable
Federal or state law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee or
sequestrator (or 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
(e) any principal with respect to other Indebtedness
(other than Senior Debt) of the Company or any Subsidiary exceeding
$1,000,000 is not repaid within any applicable grace period after its final
maturity date or becomes due and payable by reason of default before its
final maturity date.
SECTION 6.2. Acceleration of Maturity. If an Event of
Default occurs and is continuing, then and in every such case the Holder
may, subject to the restrictions contained in Article 3, declare the principal
of this Debenture to be due and payable immediately, by a notice in
writing to the Company, and upon any such declaration the principal of
this Debenture shall become immediately due and payable.
SECTION 6.3. Remedies Not Waived. No course of dealing
between the Company and the Holder or any delay in exercising any rights
hereunder shall operate as a waiver by the Holder.
ARTICLE 7
MISCELLANEOUS
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SECTION 7.1. Register. The Company shall keep at its
principal office a register in which the Company shall provide for the
registration of this Debenture.
SECTION 7.2. Governing Law. This Debenture shall be
exclusively governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania without reference to the conflicts of laws
principles thereof.
SECTION 7.3. Headings. The headings of the Articles and
Sections of this Debenture are inserted for convenience only and do not
constitute a part of this Debenture.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be signed by its duly authorized officer under its corporate
seal, attested by its duly authorized officer, on the date of this Debenture.
VWR CORPORATION
By: /s/ Jerrold B. Harris
Name: Jerrold B. Harris
Title: President and Chief
Executive Officer
Attest
By: /s/ Walter S. Sobon
Name: Walter S. Sobon
Title: Secretary
[Corporate Seal]
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EXHIBIT C
AMENDMENT NUMBER ONE TO THE STANDSTILL AGREEMENT,
dated September 15, 1995, by and among VWR Corporation, EM
Industries, Incorporated and EM Laboratories, Incorporated.
<PAGE>
<PAGE>
AMENDMENT NUMBER ONE TO THE STANDSTILL AGREEMENT
This Amendment Number One to the Standstill Agreement
(the "Amendment") made this 15th day of September, 1995 by and among
VWR Corporation ("VWR"), a Pennsylvania corporation, EM Industries,
Incorporated ("EMI"), a New York corporation, and EM Laboratories,
Incorporated ("EM Laboratories"), a New York corporation,
W I T N E S S E T H:
WHEREAS, EMI and VWR entered into a Standstill
Agreement dated February 27, 1995 (the "Standstill Agreement");
WHEREAS, pursuant to an Assignment and Assumption
Agreement dated April 13, 1995, and in conformity with Section 10.4 of
the Standstill Agreement, EMI assigned its rights and delegated its duties
and obligations under the Standstill Agreement to EM Laboratories and
EM Laboratories accepted such assignment and delegation; and
WHEREAS, accordingly, all references to EMI in the Standstill
Agreement refer to EM Laboratories as assignee as well as to EMI, and
EMI and EM Laboratories are jointly and severally liable for the
performance of the obligations of EM Laboratories under the Standstill
Agreement;
WHEREAS, Section 10.5 of the Standstill Agreement
provides that the Standstill Agreement may be amended by a written
agreement signed by VWR and EMI; and
WHEREAS, VWR, EMI and EM Laboratories have agreed
to amend the Standstill Agreement as provided herein,
NOW THEREFORE, in consideration of the mutual
agreements and covenants set forth herein, and for other good and valuable
consideration, the parties agree that the Standstill Agreement shall be
amended as of the date hereof as follows:
SECTION. 1. To the Recitals there shall be added Recital D, which
shall read in its entirety as follows:
"D. Company and EMI have entered into a Common
Share and Debenture Purchase Agreement dated May 24,
1995, pursuant to which, among other things, Company
shall issue and sell to EMI additional Common Stock (as
defined below) of Company and a subordinated debenture
(the 'Debenture')."
SECTION 2.To Article 1 there shall be added the following sentence,
which shall be set forth immediately after the caption "DEFINITIONS":
"Capitalized terms used but not defined herein shall have
the meaning set forth, as the case may be, in the Common
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Share and Warrant Purchase Agreement (as defined below)
or the Common Share and Debenture Purchase Agreement
(as defined below)."
SECTION 3.To Article 1 there shall be added the following definitions,
the other sections of Article 1 being renumbered accordingly, which new
definitions shall read in their entirety as follows:
"1.3. Agreement. 'Agreement' means this Standstill Agreement,
as it may be from time to time modified, amended, altered or
supplemented by written agreement of the parties as provided in Section
10.5."
"1.10.Common Share and Debenture Purchase Agreement.
'Common Share and Debenture Purchase Agreement'
means the Common Share and Debenture Purchase
Agreement, dated May 24, 1995, between Company and
EMI."
"1.31.Second Closing Date. 'Second Closing Date' means
the date the acquisition of the Common Stock and
Debenture by Purchaser is consummated pursuant to the
terms of the Common Share and Debenture Purchase
Agreement."
SECTION 4.Section 1.10 of the Agreement shall be renumbered Section
1.12 shall be amended to read, in its entirety, as follows:
"1.12. Common Stock Equivalents. 'Common Stock
Equivalents' means the sum of the following, determined at
any time during the term of this Agreement: (a) the total
number of shares of issued and outstanding Common Stock,
plus (b) the number of votes which may be cast for the
election of directors (whether directly or by formula) as a
result of ownership of any Voting Securities other than
Common Stock; provided, however, that the votes described
in (b) above shall not be included in Common Stock
Equivalents until the Voting Securities other than Common
Stock are able to be voted for the election of directors."
SECTION 5.The second sentence of Section 2.2 shall be amended to
read in its entirety as follows:
"The 'Percentage Limitation' shall be 49.89% of the
Common Stock Equivalents."
SECTION 6.Section 2.7(e) shall be amended to read in its entirety as
follows:
"(e) If Company does not elect to purchase shares from
Purchaser, or elects to purchase only a portion of the shares
under Section 2.7(b), Purchaser shall be entitled to retain
the shares over the Percentage Limitation but the
Percentage Limitation shall remain 49.89%."
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<PAGE>
SECTION 7.Section 2.10 shall be amended to read in its entirety as
follows:
"2.10 Requirements for Tender Offers. Whenever
Purchaser shall make a tender offer for shares of Common
Stock under Section 2.9:
"(a) Purchaser shall not commence any such tender offer
unless acceptance of Purchaser's offer shall have been
recommended to the shareholders by a majority vote of the
Unaffiliated Directors; and
"(b) Purchaser may not close the acquisition of the
tendered shares unless all of the following requirements
have been satisfied:
"(i) Purchaser's offer shall have been made to all
holders of Common Stock;
"(ii) Purchaser shall offer to purchase for cash all
shares tendered; and
"(iii) Purchaser's offer shall have been accepted by
shareholders owning not less than a majority of the
outstanding Common Stock.
"(c) With respect to calculating whether Purchaser's offer
has been accepted by shareholders owning a majority of the
outstanding Common Stock, Common Shares beneficially
owned by Purchaser shall be excluded from the outstanding
Common Stock."
SECTION 8.Section 4.1(a) shall be amended so that the legend set forth
therein shall read in its entirety as follows:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW AND ARE SUBJECT TO THE
RESTRICTIONS ON DISPOSITION SET FORTH IN
AND TO THE OTHER PROVISIONS OF A COMMON
SHARE AND WARRANTY PURCHASE AGREEMENT,
DATED FEBRUARY 27, 1995, BETWEEN VWR
CORPORATION AND EM INDUSTRIES,
INCORPORATED, AND A COMMON SHARE AND
DEBENTURE PURCHASE AGREEMENT, DATED
MAY 24, 1995, BETWEEN VWR CORPORATION AND
EM INDUSTRIES, INCORPORATED, AND A
STANDSTILL AGREEMENT, DATED FEBRUARY 27,
1995, BETWEEN VWR CORPORATION AND EM
INDUSTRIES, INCORPORATED, AS AMENDED ON
SEPTEMBER 15, 1995. COPIES OF SUCH
AGREEMENTS ARE ON FILE AT THE RESPECTIVE
OFFICES OF VWR CORPORATION AND EM
INDUSTRIES INCORPORATED."
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<PAGE>
SECTION 9.Section 6.1 shall be amended to read in its entirety as
follows:
"6.1. Size of Board; Proportionate Representation. (a)
On or before the Second Closing Date, the Company shall
take all requisite action, including without limitation
increasing or decreasing the number of seats on the Board,
to grant EMI the right, at EMI's option, to nominate such
number of directors to the Board as shall ensure that EMI
shall have the right to maintain Board representation at all
times commensurate with the aggregate proportion of
Common Shares owned by EMI and its Affiliates.
"(b) At any time when EMI shall exercise its option to
appoint directors, as described in paragraph (a) above, the
Company shall take all requisite action to cause the
election, effective immediately, of the individuals
designated by EMI to fill the number of seats on the Board
that shall be proportionate to the aggregate Common Share
ownership of EMI and its Affiliates."
SECTION 10. Section 6.2 shall be amended to read in its entirety
as follows:
"6.2 Terms. EMI shall advise Company as necessary,
from time to time, which of the Affiliated Directors shall
have a term expiring at the second annual meeting of
shareholders of Company next following the Second
Closing Date, and which shall have a term expiring at the
third such annual meeting. After the term of any Affiliated
Director expires, his or her successor shall serve a term of
three (3) years as provided in the Restated Articles of
Incorporation of Company."
SECTION 11. Section 8.1(a) shall be amended to read in its entirety
as follows:
"(a) Purchaser's completion of a tender offer in accordance
with Section 2.10, provided, that Purchaser's offer shall
have been recommended to the shareholders by a majority
vote of the Unaffiliated Directors and shall have been
accepted by shareholders owning not less than a majority of
the outstanding Common Stock, as provided in such
Section; or".
SECTION 12. The proviso set forth in the second sentence of
Section 10.4 shall be amended to read in its entirety as follows:
". . . provided, however, that EMI may assign its rights
and delegate its duties and obligations under this Agreement
without such consent to an Affiliate of EMI, which Affiliate
(referred to herein as the "Assignee") may, following duly
authorized execution and delivery of an agreement assuming
the obligations of EMI hereunder reasonably satisfactory to
Company, accept title to the Shares and/or Warrant
Shares."
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<PAGE>
SECTION 13. This Amendment shall be exclusively governed by,
construed in accordance with, and interpreted according to the substantive
law of the Commonwealth of Pennsylvania without giving effect to the
principles of conflict of laws.
SECTION 14. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, VWR, EMI and EM
Laboratories have caused this Amendment to be executed on the date first
above written.
VWR CORPORATION
By: /s/ Jerrold B. Harris
Name: Jerrold B. Harris
Title: President and Chief
Executive Officer
EM INDUSTRIES, INCORPORATED
By: /s/ Walter W. Zywottek
Name: Walter W. Zywottek
Title: President and Chief
Executive Officer
EM LABORATORIES, INCORPORATED
By: /s/ Walter W. Zywottek
Name: Walter W. Zywottek
Title: President and Chief
Executive Officer
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