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Exhibit b(2)
MASTER NOTE
(FIXED AND FLOATING RATES)
$40,000,000.00 Date: May 18, 2000
FOR VALUE RECEIVED, Welch Allyn Inc., a New York corporation (the "Borrower"),
promises to pay to the order of BANK ONE, NA (the "Lender"), in lawful money of
the United States at the office at the Lender at 1 Bank One Plaza, Chicago,
Illinois, or as the Lender may otherwise direct, the lesser of Forty Million and
No/100ths Dollars ($40,000,000.00) or the aggregate outstanding unpaid principal
amount of the Term Loan evidenced hereby, together with interest as provided
below. The Term Loan shall be payable in full on the Maturity Date.
Any person authorized to borrow on behalf of the Borrower (an "Authorized
Person") may request the Term Loan (or a change in the interest rates applicable
to portions thereof) by telephone or telex. The Borrower agrees that the Lender
is authorized to honor requests which it believes, in good faith, to emanate
from an Authorized Person, whether in fact that be the case or not.
The Term Loan may bear interest at either (i) a rate of interest equal to the
prime rate of interest announced from time to time by the Lender or its parent
(which is not necessarily the lowest rate charged to any customer), changing
when and as said prime rate changes (the "Prime Rate"; the portion of the Term
Loan bearing interest at the Prime Rate being herein called a "Floating Rate
Loan") or (ii) a fixed rate for a specific interest period as may be agreed upon
by the Lender and the Borrower (the portion of the Term Loan bearing interest at
a fixed rate being herein called a "Fixed Rate Loans" and, collectively with the
Floating Rate Loan, called the "Loans"). The Term Loan shall be a Floating Rate
Loans unless the Lender and the Borrower agree to a fixed rate for a specific
interest period. At the expiration of an interest period applicable to a Fixed
Rate Loan, such Fixed Rate Loan shall automatically convert into a Floating Rate
Loan unless the Lender and the Borrower agree to a fixed rate for a new interest
period. Interest on each Fixed Rate Loan shall be payable on the last day of
the interest period for such Fixed Rate Loan, on the Maturity Date and on demand
thereafter. Interest on Floating Rate Loans shall be payable on the last day of
each month, on the Maturity Date and on demand thereafter. Any Floating Rate
Loan or Fixed Rate Loan which is not paid on the Maturity Date (or any earlier
accelerated maturity data) shall bear interest at a rate equal to the sum of the
Prime Rate plus 25% per annum, changing when and as the Prime Rate changes.
Each payment of principal or interest hereunder shall be made in immediately
available funds. If any payment shall become due and payable on a Saturday,
Sunday or legal holiday under the laws of Illinois, such payment shall be made
on the next succeeding business day in Illinois and any such extended time of
the payment of principal or interest shall be included in computing interest.
All interest hereunder shall be computed for the actual number of days elapsed
on a 360-day year basis. The Borrower hereby authorizes the Lender to deposit
the proceeds of the Term Loan to, and to charge payments of principal and
interest against, the Borrower's deposit account with the Lender.
A Fixed Rate Loan may not be prepaid prior to the last day of its applicable
interest period
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without the written consent of the Lender. If, for any reason, any payment of a
Fixed Rate Loan occurs prior to the last day of its applicable interest period,
the Borrower will indemnify the Lender for any loss or cost which the Lender
determines is attributable to such payment, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
such Fixed Rate Loan. Floating Rate Loans may be prepaid by the Borrower,
without premium or penalty.
The Borrower hereby authorizes the Lender to record the Term Loan, interest
rates, interest periods, repayments, and payment dates on the schedule attached
to this Note or otherwise in accordance with the Lenders usual practice. The
obligation of the Borrower to repay the Term Loan made hereunder shall be
absolute and unconditional notwithstanding any failure of the Lender to enter
such amounts on such schedule or to receive written confirmation of the
transaction from the Borrower. If the Lender requests a written confirmation of
the requested Term Loan (or any rate selection applicable to any portion
thereof), the Borrower will confirm the terms thereof by mailing a confirmation
letter to the Lender signed by any authorized person. If the Lender elects to
confirm the terms of the Term Loan (or any rate selection applicable to any
portion thereof) to the Borrower, the Borrower will notify the Lender in writing
within 10 days after the Borrower's receipt of such confirmation if it believes
such confirmation to be inaccurate, and the Borrower hereby waives any right to
contest the accuracy of such confirmation after such 10-day period. In the
event of disagreement as to the terms of a transaction, the Lender's records
shall govern, absence manifest error.
If any change in any law, rule, regulation or directive (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) imposes any condition the result of which is to increase the cost to the
Lender of making, funding or maintaining any Fixed Rate Loan or reduces any
amount receivable by the Lender hereunder in connection with a Fixed Rate Loan,
the Borrower shall pay the Lender the amount of such increased expense incurred
or the reduction in any amount received which the Lender determines is
attributable to making, funding and maintaining the Fixed Rate Loans.
The Lender may elect to sell participations in or assign its rights under the
Term Loan (or any portion thereof). The Borrower agrees that if it fails to pay
the Term Loan when due, any purchaser of an interest in the Term Loan shall be
entitled to seek enforcement of this Note. If the purchaser is permitted to do
so pursuant to the terms of the participation agreement or assignment agreement
between the Lender and such purchaser.
The Borrower hereby authorizes the Lender and any other holder of an interest in
this Note (a "Holder") to disclose confidential information relating to the
financial condition or operations of the Borrower (i) to any affiliate of the
Lender or any Holder, (ii) to any purchaser or prospective purchaser of an
interest in the Term Loan, (iii) to legal counsel, accountants, and other
professional advisors to the Lender or any Holder, (iv) to regulatory officials,
(v) as requested or required by law, regulation or legal process or (vi) in
connection with any legal proceeding to which the Lender or any other holder is
a party.
If any amount payable hereunder is not paid when due, then any indebtedness from
the Lender to the Borrower may be offset and applied toward the payment of all
unpaid principal, interest and
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fees payable hereunder, whether or not such amounts, or any part thereof, shall
then be due. The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Note now, or hereafter, required by applicable
law and agrees to pay all costs and expenses of collection.
This Note is the Note issued pursuant to, and is entitled to the benefits of,
the letter agreement between the Borrower and the Lender dated as of May 18,
2000 (which, as it may be amended or modified and in effect from time to time,
is herein called the "Letter Agreement"), to which Letter Agreement reference is
hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which the maturity of this Note may be
accelerated. Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to such terms in the Letter Agreement.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF ILLINOIS, GIVING EFFECT, HOWEVER, TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS. THE BORROWER AND THE LENDER EACH HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS NOTE OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
WELCH ALLYN, INC.
By: /s/ Kevin E. Cahill
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Title: Vice President, Finance and
Chief Financial Officer
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