1
Exhibit (4)-1
Aeroquip-Vickers, Inc.
$250,000,000
Medium-Term Notes
Due Nine Months or More from Date of Issue
U.S. DISTRIBUTION AGREEMENT
September 30, 1997
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
J.P. Morgan Securities Inc.
60 Wall Street, 3rd Floor
New York, New York 10260
Ladies and Gentlemen:
Aeroquip-Vickers, Inc., an Ohio corporation (the "Company"), confirms
its agreement with each of you with respect to the issue and sale from time to
time by the Company of up to $250,000,000 (or the equivalent thereof in one or
more foreign currencies or composite currencies) aggregate initial public
offering price of its medium-term notes due nine months or more from date of
issue (the "Notes"). The Notes will be issued under an Indenture dated as of
May 1, 1996 as supplemented as of April 17, 1997 (the "Indenture") between the
Company and The First National Bank of Chicago (as successor-in-interest to NBD
Bank), as trustee (the "Trustee"), and will have the maturities, interest
rates, redemption provisions, if any, and other terms as set forth in
supplements to the Base Prospectus referred to below.
The Company hereby appoints Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and J.P. Morgan Securities Inc. ("J.P Morgan") (individually, an
"Agent" and collectively, the "Agents") as its agents, subject to Section 10
hereof, for the purpose of soliciting and
2
receiving offers to purchase Notes from the Company by others and, on the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, each Agent agrees to use reasonable efforts to
solicit and receive offers to purchase Notes upon terms acceptable to the
Company at such times and in such amounts as the Company shall from time to time
specify. In addition, any Agent also may purchase Notes as principal pursuant to
the terms of a written terms agreement relating to such sale substantially in
the form of Exhibit A hereto (a "Terms Agreement") in accordance with the
provisions of Section 2(b) hereof.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to its
debt securities, including the Notes. Such registration statement, including the
exhibits thereto, as amended at the Commencement Date (as hereinafter defined),
is hereinafter referred to as the "Registration Statement." The Company proposes
to file with the Commission from time to time, pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Securities Act"), supplements to the
prospectus included in the Registration Statement that will describe certain
terms of the Notes. The prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "Base Prospectus." The
term "Prospectus" means the Base Prospectus together with the prospectus
supplement or supplements (each a "Prospectus Supplement") specifically relating
to Notes, as filed with, or transmitted for tiling to, the Commission pursuant
to Rule 424. As used herein, the terms "Base Prospectus" and "Prospectus" shall
include in each case the documents, if any, incorporated by reference therein.
The terms "supplement, " "amendment" and "amend" as used herein shall include
all documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Base Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to and agrees with each Agent as of the Commencement Date, as of each date on
which an Agent solicits offers to purchase Notes, as of each date on which the
Company accepts an offer to purchase Notes (including any purchase by an Agent
pursuant to a Terms Agreement, if any), as of each date the Company issues and
delivers Notes and as of each date the Registration Statement or the Base
Prospectus is amended or supplemented, as follows (it being understood that such
representations, warranties and agreements shall be deemed to relate to the
Registration
2
3
Statement, the Base Prospectus and the Prospectus, each as
amended or supplemented to each such date):
(a) the Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission; and the Registration
Statement (as amended if the Company shall have filed any amendments
thereto) complies, or will comply, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"), and does not and will not, as of the applicable
effective date, contain any untrue statement or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; except that the foregoing representations
and warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee,
and (ii) statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to any Agent furnished to the Company in writing by such Agent
expressly for use therein;
(b) the documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission, will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
3
4
(c) the financial statements, and the related notes thereto
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations and the changes in their
consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change, or any development involving a prospective change,
which could reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth or;
contemplated in the Prospectus; and except as set forth or contemplated
in the Prospectus neither the Company nor any of its subsidiaries has,
since January 1, 1997, entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the
Company and its subsidiaries taken as a whole;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have material adverse effect on the Company and
its subsidiaries taken as a whole;
(f) each of Aeroquip Corporation and Vickers, Incorporated
(collectively, the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation, with corporate power and
4
5
authority to own its properties and to conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the Company
and its subsidiaries taken as a whole; and all of the outstanding
shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully-paid and non-assessable, and are owned by
the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims;
(g) this Agreement and any applicable Terms Agreement has been
duly authorized, executed and delivered by the Company and constitutes
the valid and binding agreement of the Company, except as rights to
indemnity and contribution may be limited by applicable law;
(h) the Notes have been duly authorized by the Company, and,
when issued, delivered and authenticated pursuant to this Agreement and
the Indenture, will have been duly executed, issued an delivered and
will constitute valid and binding obligations of the Company entitled
to the benefits provided by the Indenture; the Indenture has been duly
authorized, executed and delivered by the Company, qualified under the
Trust Indenture Act and constitutes a valid and binding instrument of
the Company; and the Notes and the Indenture conform to the
descriptions thereof in the Prospectus;
(i) neither the Company nor either Subsidiary is, or with
the giving of notice or the lapse of time or both would be, in
violation of or in default under its Articles of Incorporation or its
Code of Regulations (or other organizational documents, as the case may
be) or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or either of the
Subsidiaries is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults
which individually and in the aggregate are not material to the Company
and the Subsidiaries taken as a whole; the issue and sale of the Notes
and the performance by the Company of all of its obligations under the
Notes, the Indenture, this Agreement and any applicable Terms Agreement
and the consummation of the transactions herein and therein
5
6
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or either of the Subsidiaries is a
party or by which the Company or either of the Subsidiaries is bound or
to which any of the property or assets of the Company or either of the
Subsidiaries is subject, nor will any such action result in any
violation of the provisions of the Articles of Incorporation or the
Code of Regulations (or other organizational documents, as the case may
be) of the Company or either of the Subsidiaries or any applicable law
or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the
Subsidiaries or any of their respective properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Notes or the consummation by the Company of the
transactions contemplated by this Agreement, any applicable Terms
Agreement or the Indenture, except such consents, approvals,
authorizations, registrations or qualifications as have been obtained
under the Securities Act and the Trust Indenture Act; and
(j) other than as set forth or contemplated in the Prospectus
as amended or supplemented, if applicable, there are no legal or
governmental proceedings pending or, to the knowledge of the Company,
threatened to which the Company or either of the Subsidiaries is or may
be a party or to which any property of the Company or either of the
Subsidiaries is or may be subject which could individually or in the
aggregate reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
and the Subsidiaries taken as a whole and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required.
Notwithstanding the foregoing, the representations and warranties
set forth in Section 1(a) and (h) (except as to due authorization of the Notes)
and (i), when made as of the Commencement Date, or as of any date on which an
Agent
6
7
solicits offers to purchase Notes, with respect to any Notes the payments of
principal or interest on which will be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other factors,
shall be deemed not to address the application of the Commodity Exchange Act, as
amended, or the rules, regulations or interpretations of the Commodity Futures
Trading Commission.
2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.
(A) SOLICITATIONS AS AGENT. In connection with an Agent's actions as
agent hereunder, such Agent agrees to use reasonable efforts to solicit offers
to purchase Notes upon the terms and conditions set forth in the Prospectus as
then amended or supplemented.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one business
day's prior notice from the Company, the Agents will forthwith suspend
solicitations of offers to purchase Notes from the Company until such time as
the Company has advised the Agents that such solicitation may be resumed. While
such solicitation is suspended, the Company shall not be required to deliver any
certificates, opinions or letters in accordance with Sections 5(a), 5(b) and
5(c); PROVIDED, HOWEVER, that if the Registration Statement or Prospectus is
amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the Notes
or for a change the Agents deem to be immaterial), no Agent shall be required
to resume soliciting offers to purchase Notes until the Company has delivered
such certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the sale
of each Note resulting from a solicitation made or an offer to purchase received
by such Agent, a commission in the form of a discount from the purchase price of
such Note equal to the percentage set forth below of the purchase price of such
Note:
7
8
Term Commission Rate
---- ---------------
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to less than 30 years .750%
From 30 years and beyond to be negotiated
Each Agent shall communicate to the Company, orally or in writing, each
offer to purchase Notes received by such Agent as agent that in its judgment
should be considered by the Company. The Company shall have the sole right to
accept offers to purchase Notes and may reject any offer in whole or in part.
Each Agent shall have the right to reject any offer to purchase Notes that it
considers to be unacceptable, and any such rejection shall not be deemed a
breach of its agreements contained herein. The procedural details relating to
the issue and delivery of Notes sold by the Agents as agents and the payment
therefor shall be as set forth in the Administrative Procedures (as hereinafter
defined).
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as principal
shall be made in accordance with the terms of this Agreement. In connection with
each such sale, the Company will enter into a Terms Agreement that will provide
for the sale of such Notes to and the purchase thereof by such Agent. Each Terms
Agreement will take the form of either (i) a Terms Agreement, or (ii) an oral
agreement between such Agent and the Company confirmed in writing by such Agent
to the Company.
An Agent's commitment to purchase Notes pursuant to a Terms Agreement
shall be deemed to have been made on the basis of the representations and
warranties of the Company herein contained and shall be subject to the terms and
conditions herein set forth. Each Terms Agreement shall specify the principal
amount of Notes to be purchased by such Agent pursuant thereto, the maturity
date of such Notes, the price to be paid to the Company for such Notes, the
interest rate and interest rate formula, if any, applicable to such Notes and
any other terms of such Notes. Each such Terms Agreement may also specify any
requirements for officers' certificates, opinions of counsel and letters from
the independent public accountants of the Company
8
9
pursuant to Section 4 hereof. A Terms Agreement may also specify certain
provisions relating to the reoffering of such Notes by such Agent.
Each Terms Agreement shall specify the time and place of delivery of
and payment for such Notes. Unless otherwise specified in a Terms Agreement, the
procedural details relating to the issue and delivery of Notes purchased by an
Agent as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to be
purchased by an Agent pursuant to a Terms Agreement is referred to herein as a
"Settlement Date."
Unless otherwise specified in a Terms Agreement, if you are purchasing
Notes as principal you may resell such Notes to other dealers. Any such sales
may be at a discount, which shall not exceed the amount set forth in the
Prospectus Supplement relating to such Notes.
(C) ADMINISTRATIVE PROCEDURES. The Agents and the Company agree to
perform the respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures (attached hereto as
Exhibit B) (the "Administrative Procedures"), as amended from time to time. The
Administrative Procedures may be amended only by written agreement of the
Company and the Agents.
(D) DELIVERY. The documents required to be delivered by Section 4 of
this Agreement as a condition precedent to each Agent's obligation to begin
soliciting offers to purchase Notes as an agent of the Company shall be
delivered at the office of Brown & Wood LLP, counsel for the Agents, not later
than 12 Noon, New York time, on the date hereof, or at such other time and/or
place as the Agents and the Company may agree upon in writing, but in no event
later than the day prior to the earlier of (i) the date on which the Agents
begin soliciting offers to purchase Notes and (ii) the first date on which the
Company accepts any offer by an Agent to purchase Notes pursuant to a Terms
Agreement. The date of delivery of such documents is referred to herein as the
"Commencement Date."
(e) OBLIGATIONS SEVERAL. The Company acknowledges that the obligations
of the Agents under this Agreement are several and not joint.
9
10
3. AGREEMENTS. The Company agrees with each Agent that:
(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement or any Terms Agreement, the Company will not tile any Prospectus
Supplement relating to the Notes or any amendment to the Registration Statement
unless the Company has previously furnished to the Agents copies thereof for
their review and will not file any such proposed supplement or amendment to
which the Agents reasonably object; PROVIDED, HOWEVER, that (i) the foregoing
requirement shall not apply to any of the Company's periodic filings with the
Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, copies of which filings the Company will cause to be delivered
to the Agents promptly after being transmitted for filing with the Commission
and (ii) any Prospectus Supplement that merely sets forth the terms or a
description of particular Notes shall only be reviewed and approved by the Agent
or Agents offering such Notes. Subject to the foregoing sentence, the Company
will promptly cause each Prospectus Supplement to be filed with or transmitted
for filing to the Commission in accordance with Rule 424(b) under the Securities
Act. The Company will promptly advise the Agents (i) of the filing of any
amendment or supplement to the Base Prospectus (except that notice of the filing
of an amendment or supplement to the Base Prospectus that merely sets forth the
terms or a description of particular Notes shall only be given to the Agent or
Agents offering such Notes), (ii) of the filing and effectiveness of any
amendment to the Registration Statement, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement
to the Base Prospectus or for any additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or notice of suspension of qualification and, if issued, to
obtain as soon as possible the withdrawal thereof. If the Base Prospectus is
amended or supplemented as a result of the filing under the Exchange Act of any
document incorporated by reference in the Prospectus, no Agent shall be
obligated to solicit offers to purchase Notes so long as it is not reasonably
satisfied with such document.
(b) If, at any time when a prospectus relating to the Notes is required
to be delivered under the Securities
10
11
Act, any event occurs or condition exists as a result of which the Prospectus,
as then amended or supplemented, would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances when the Prospectus, as then amended
or supplemented, is delivered to a purchaser, not misleading, or if, in the
opinion of the Agents or in the opinion of the Company, it is necessary at any
time to amend or supplement the Prospectus, as then amended or supplemented, to
comply with applicable law, the Company will immediately notify the Agents by
telephone (with confirmation in writing) to suspend solicitation of offers to
purchase Notes and, if so notified by the Company, the Agents shall forthwith
suspend such solicitation and cease using the Prospectus, as then amended or
supplemented. If the Company shall decide to amend or supplement the
Registration Statement or Prospectus, as then amended or supplemented, it shall
so advise the Agents promptly by telephone (with confirmation in writing) and,
at its expense, shall prepare and cause to be filed promptly with the Commission
an amendment or supplement to the Registration Statement or Prospectus, as then
amended or supplemented, satisfactory in all respects to the Agents, that will
correct such statement or omission or effect such compliance and will supply
such amended or supplemented Prospectus to the Agents in such quantities as they
may reasonably request. If any documents, certificates, opinions and letters
furnished to the Agents pursuant to paragraph (f) below and Sections 5(a), 5(b)
and 5(c) in connection with the preparation and filing of such amendment or
supplement are satisfactory in all respects to the Agents, upon the filing with
the Commission of such amendment or supplement to the Prospectus or upon the
effectiveness of an amendment to the Registration Statement, the Agents will
resume the solicitation of offers to purchase Notes hereunder. Notwithstanding
any other provision of this Section 3(b), until the distribution of any Notes
an Agent may own as principal has been completed, if any event described above
in this paragraph (b) occurs, the Company will, at its own expense, forthwith
prepare and cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or Prospectus, as then amended or
supplemented, satisfactory in all respects to such Agent, will supply such
amended or supplemented Prospectus to such Agent in such quantities as it may
reasonably request and shall furnish to such Agent pursuant to paragraph (f)
below and Sections 5(a), 5(b) and 5(c) such documents, certificates, opinions
and letters as it may request in connection with the preparation and filing of
such amendment or supplement.
(c) The Company will make generally available to its security holders
and to the Agents as soon as
11
12
practicable earning statements that satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
covering twelve month periods beginning, in each case, not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in Rule 158 under the Securities Act) of the Registration Statement with
respect to each sale of Notes. If such fiscal quarter is the last fiscal quarter
of the Company's fiscal year, such earning statement shall be made available not
later than 90 days after the close of the period covered thereby and in all
other cases shall be made available not later than 45 days after the close of
the period covered thereby.
(d) The Company will furnish to each Agent, without charge, a signed
copy of the Registration Statement, including exhibits and all amendments
thereto, and as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto as such Agent may
reasonably request.
(e) The Company shall furnish to the Agents such relevant documents and
certificates of officers of the Company relating to the business, operations and
affairs of the Company, the Registration Statement, the Base Prospectus, any
amendments or supplements thereto, the Indenture, the Notes, this Agreement, the
Administrative Procedures, any Terms Agreement and the performance by the
Company of its obligations hereunder or thereunder as the Agents may from time
to time reasonably request.
(f) The Company shall notify the Agents promptly in writing of any
downgrading, or of its receipt of any notice of any intended or potential
downgrading or of any review for possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(g) The Company will, whether or not any sale of Notes is consummated,
pay all expenses incident to the performance of its obligations under this
Agreement and any Terms Agreement, including: (i) the preparation and filing of
the Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of the Company's counsel and accountants and of the
Trustee and its counsel, (iv) the printing and delivery to the Agents in
quantities as hereinabove stated of copies of the Registration Statement and all
amendments thereto and of the Prospectus and any amendments or supplements
thereto, (v) any fees charged by rating agencies
12
13
for the rating of the Notes, (vi) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors and (vii) the
fees and disbursements of counsel for the Agents incurred in connection with the
offering and sale of the Notes, including any opinions to be rendered by such
counsel hereunder.
(h) During the period beginning the date of any Terms Agreement and
continuing to and including the Settlement Date with respect to such Terms
Agreement, the Company will not, without such Agent's prior written consent,
offer, sell, contract to sell or otherwise dispose of any debt securities of the
Company or warrants to purchase debt securities of the Company substantially
similar to such Notes (other than (i) the Notes that are to be sold pursuant to
such Terms Agreement, (ii) Notes previously agreed to be sold by the Company and
(iii) commercial paper issued in the ordinary course of business), except as
may otherwise be provided in such Terms Agreement.
4. CONDITIONS OF THE OBLIGATIONS OF THE AGENTS. Each Agent's obligation
to solicit offers to purchase Notes as agent of the Company, each Agent's
obligation to purchase Notes pursuant to any Terms Agreement and the obligation
of any other purchaser to purchase Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of the Company's officers made in each certificate
furnished pursuant to the provisions hereof and to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed (in the case of an Agent's obligation to
solicit offers to purchase Notes, at the time of such solicitation, and, in the
case of an Agent's or any other purchaser's obligation to purchase Notes, at the
time the Company accepts the offer to purchase such Notes and at the time of
issuance and delivery) and (in each case) to the following additional conditions
precedent when and as specified:
(a) Prior to such solicitation or purchase, as the case may be:
(i) since the respective dates as of which information is given in the
Prospectus there shall not have been any change or any development
involving a change, which could reasonably be expected to have a material
adverse effect on the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company and the Subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus as
13
14
amended or supplemented at the time of such solicitation or at the time
such offer to purchase was made, the effect of which in the judgment of the
relevant Agent makes it impracticable to market the Notes on the terms and
in the manner contemplated in the Prospectus;
(ii) trading generally shall not have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange,
the American Stock Exchange, or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of or guaranteed by the
Company shall not have been suspended on any exchange or in any over-the-
counter market, (iii) a general moratorium on commercial banking activities
in New York shall not have been declared by either Federal or New York
State authorities, or (iv) there shall not have occurred any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the relevant Agent, is material
and adverse and which, in the judgment of such Agent, makes it
impracticable to market the Notes on the terms and in the manner
contemplated in the Prospectus.
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of (i) any intended or potential downgrading or (ii)
any review for possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(A) except, in each case described in paragraph (i), (ii) or (iii)
above, as disclosed to the relevant Agent in writing by the Company prior to
such solicitation or, in the case of a purchase of Notes, as disclosed to the
relevant Agent before the offer to purchase such Notes was made or (B) unless in
each case described in (ii) above, the relevant event shall have occurred and
been known to the relevant Agent before such solicitation or, in the case of a
purchase of Notes, before the offer to purchase such Notes was made.
(b) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, the relevant Agents shall have received:
14
15
(i) The opinion, dated as of such date, of James E. Kline, general
counsel of the Company, to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus;
(B) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a material adverse effect on the Company and its Subsidiaries
taken as a whole;
(C) each Subsidiary has been duly incorporated and is validly
existing as a corporation under the law of its jurisdiction of
incorporation with corporate power and authority to own its properties
and conduct its business as described in the Prospectus, as then
amended or supplemented, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified and in
good standing would not have a material adverse effect on the Company
and the Subsidiaries taken as a whole; and all of the issued shares of
capital stock of each Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(D) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the best
of such counsel's knowledge, threatened to which the Company or either
of the Subsidiaries is or may be a party or to which any property of
the Company or the Subsidiaries is or may be the subject which could
individually or in the aggregate reasonably be expected to have a
material adverse effect on the general affairs,
15
16
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and the Subsidiaries
taken as a whole; to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others; and such counsel does not know of any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required;
(E) neither the Company nor either of the Subsidiaries is, or
with the giving of notice or the lapse of time or both would be, in
violation of its Articles of Incorporation or its Code of Regulations
(or other organizational documents, as the case may be), except for
violations which individually or in the aggregate could not reasonably
be expected to have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and the Subsidiaries
taken as a whole, and the issue and sale of the Notes and the
performance by the Company of its obligations under the Notes, the
Indenture and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to which the
Company or either of the Subsidiaries is a party or by which the
Company or either of the Subsidiaries is bound or to which any of the
property or assets of the Company or either of the Subsidiaries is
subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the Code of Regulations
(or other organizational documents, as the case may be) of the Company
or either of the Subsidiaries or any applicable law or statute (except
as rights to indemnity and contribution hereunder may be limited by
applicable law) or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the
Subsidiaries or any of their respective properties;
16
17
(F) the statements incorporated by reference in the Prospectus
from Item 3 of Part 1 of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and in the Registration
Statement in Item 15, in so far as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents or proceedings; and
(G) such counsel (1) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Prospectus, as then amended or supplemented (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) complied when so filed as to
form in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (2) is of the
opinion that the Registration Statement and Prospectus, as then
amended or supplemented, if applicable (except for financial
statements and schedules included therein as to which such counsel
need not express any opinion) comply as to form in all material
respects with the Securities Act and the Trust Indenture Act and the
applicable rules and regulations of the Commission thereunder, (3) has
no reason to believe that (except for financial statements and
schedules as to which such counsel need not express any belief and
except for that part of the Registration Statement that constitutes
the Form T-l heretofore referred to) each part of the Registration
Statement, as then amended, if applicable, when such part became
effective, contained and as of the date such opinion is delivered,
contains any untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (4) has no reason to
believe that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus, as
then amended or supplemented, if applicable, as of the date such
opinion is delivered contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED that in the case of an opinion
delivered on the Commencement Date or
17
18
pursuant to Section 5(b), the opinion and belief set forth in clauses
(3) and (4) above shall be deemed not to cover information concerning
an offering of particular Notes to the extent such information will be
set forth in a supplement to the Base Prospectus.
(ii) The opinion, dated as of such date, of Jones, Day, Reavis &
Pogue, outside counsel for the Company (or such other counsel as is
acceptable to the Agents), to the effect that:
(A) each of this Agreement and any applicable Terms Agreement has been
duly authorized, executed and delivered by the Company;
(B) the Notes have been duly authorized and, if executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the purchasers thereof on the date of such
opinion, would be valid and binding obligations of the Company and would be
entitled to the benefits of the Indenture;
(C) the Indenture has been duly authorized, executed and delivered by
the Company and duly qualified under the Trust Indenture Act and
constitutes a valid and binding instrument of the Company;
(D) no consent, approval or authorization or order of any governmental
agency or body is required for the issue and sale of the Notes, except such
as have been obtained under the Securities Act and the Trust Indenture Act;
(E) the statements in the Prospectus, under the captions "Description
of Notes" and "Description of Securities", in each case insofar as such
statements purport to summarize the provisions of the documents referred to
therein, present fair summaries of such provisions;
(F) such counsel is of the opinion ascribed to it in the Prospectus,
as then amended or supplemented, under the caption "United States
Taxation"; and
(G) (1) such counsel is of the opinion that the Registration Statement
and the Prospectus and any amendments and supplements thereto (except for
the financial statements and supporting schedules included therein and that
part of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-l) under the Trust Indenture Act
18
19
of the Trustee as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities
Act and the Trust Indenture Act, (2) no facts have come to the attention of
such counsel to cause them to believe that the Registration Statement
(except for the financial statements and supporting schedules included
therein and that part of the Registration Statement which constitutes the
Statement of Eligibility and Qualification (Form T-l) under the Trust
Indenture Act of the Trustee as to which such counsel need express no
belief), on the date of this Agreement, contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (3)
no facts have come to the attention of such counsel to cause them to
believe that the Prospectus (except for the financial statements and
supporting schedules included therein as to which counsel need express no
belief) as amended or supplemented, if applicable, to the Closing Date
contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the States of Ohio and New York, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Agents' counsel) of other counsel reasonably acceptable to Agents' counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers
of the Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The opinions of such counsel for
the Company shall state that the opinion of any such other counsel is in
form satisfactory to such counsel and, in such counsel's opinion, he or
they, as the case may be, and the Agents are justified in relying thereon.
With respect to the matters to be covered in subparagraphs (b)(i)(G) and
(b)(ii)(G), respectively, above, James E. Kline and Jones, Day, Reavis &
Pogue (or such other counsel as is acceptable to the Agents) may state that
their opinions and beliefs are based upon their participation in the
preparation of the Prospectus and any amendment or supplement thereto and
review and
19
20
discussion of the contents of the Registration Statement and the Prospectus
and that, except as specified, they have not independently verified and are
not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the information contained in the Registration
Statement and the Prospectus;
(iii) The opinion, dated as of such date, of Brown & Wood LLP, counsel
for the Agents, covering the matters in subparagraphs (A), (B), (C), (E)
and (G) in paragraph (b) (ii) above. With respect to subparagraph (G) of
paragraph (b)(ii) above, Brown & Wood LLP may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (but not including documents incorporated therein by reference) and
review and discussion of the contents thereof (including documents
incorporated therein by reference), but are without independent check or
verification, except as specified.
(c) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, the relevant Agents shall have received a
certificate, dated the Commencement Date or such Settlement Date, as the case
may be, and signed by an executive officer of the Company, to the effect set
forth in subparagraph (a)(iii) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of such date and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied on or
before such date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(d) On the Commencement Date and, if called for by any Terms Agreement,
on the corresponding Settlement Date, Ernst & Young LLP, independent public
accountants, shall have furnished to the relevant Agents a letter or letters,
dated the Commencement Date or such Settlement Date, as the case may be, in form
and substance satisfactory to such Agents containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus, as
then amended or supplemented.
20
21
(e) On the Commencement Date and on each Settlement Date, the Company
shall have furnished to the relevant Agents such appropriate further
information, certificates and documents as they may reasonably request.
5. ADDITIONAL AGREEMENTS OF THE COMPANY. (a) Each time that the
Registration Statement or Prospectus is amended or supplemented (other than by
an amendment or supplement (i) solely setting forth the terms of any Securities
other than the Notes or (ii) providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities offered on
the Notes or for a change the Agents deem to be immaterial), the Company will
deliver or cause to be delivered forthwith to each Agent a certificate signed by
an executive officer of the Company, dated the date of such amendment or
supplement, as the case may be, in form reasonably satisfactory to the Agents,
of the same tenor as the certificate referred to in Section 4(c) relating to the
Registration Statement or the Prospectus as amended or supplemented to the time
of delivery of such certificate.
(b) Each time that the Company furnishes a certificate pursuant to
Section 5(a), the Company will furnish or cause to be furnished forthwith to
each Agent the written opinions of James E. Kline, Esq. and Jones, Day, Reavis &
Pogue (or such other counsel as is acceptable to the Agents). Any such opinions
shall be dated the date of such amendment or supplement, as the case may be,
shall be in a form satisfactory to the Agents and shall be of the same tenor as
the respective opinions referred to in Sections 4(b)(i) and (ii), but modified
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion. In lieu of such opinions,
each such counsel last furnishing such opinion to an Agent may furnish to each
Agent a letter to the effect that such Agent may rely on such last opinion to
the same extent as though it were dated the date of such letter (except that
statements in such last opinion will be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented to the time of delivery
of such letter.)
(c) Each time that the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information or such amended or supplemental information is incorporated by
reference in the Prospectus, the Company shall cause its independent public
accountants forthwith to furnish each Agent with a letter, dated the date of
such amendment or supplement, as the case may be, in form satisfactory to the
Agents, of the same tenor as the letter referred to in Section 4(d), with
regard to the amended or supplemental
21
22
financial information included or incorporated by reference in the Registration
Statement or the Prospectus as amended or supplemented to the date of such
letter.
6. INDEMNITY AND CONTRIBUTION. The Company agrees to indemnify and hold
harmless each Agent and each person, if any, who controls any Agent within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including without limitation the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Agent furnished
to the Company in writing by such Agent expressly for use therein;
Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Agent, but only with
reference to information relating to such Agent furnished to the Company in
writing by such Agent expressly for use in the Registration Statement or the
Prospectus or any amendment or supplement thereto.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such
22
23
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties)include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for any Agent and such control persons
of an Agent shall be designated in writing by Morgan Stanley or, if Morgan
Stanley is not an Indemnified Person, by the Agents that are Indemnified Persons
and any such separate firm for the Company, its directors, its officers who sign
the Registration Statement and such control persons of the Company or authorized
representatives shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 6 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and each Agent on the other
hand from the offering of the Notes or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
23
24
confirmed to Morgan Stanley at 1585 Broadway, New York, New York 10036,
Attention: Manager, Credit Department (telefax number: 212-761-0687), with a
copy to 1585 Broadway, New York, New York 10036, Attention: Managing Director,
Debt Syndicate (telefax number: 212-761-0785); (ii) if sent to J.P. Morgan, will
be mailed, delivered or telefaxed and confirmed to J.P. Morgan Securities Inc.,
60 Wall Street, 3rd Floor, New York, New York 10260, Attention: Manager, Credit
Department (telefax number: 212-761-0687); or (iii) if sent to the Company, will
be mailed, delivered or telefaxed and confirmed to the Company at
Aeroquip-Vickers, Inc., 3000 Strayer, Maumee, Ohio 43537-0050, Attention: James
E. Kline, Vice President and General Counsel (telefax number: (419) 867-2209).
10. SUCCESSORS. This Agreement and any Terms Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Section 6 and the purchasers of Notes (to the extent expressly provided in
Section 4), and no other person will have any right or obligation hereunder.
11. AMENDMENTS. This Agreement may be amended or supplemented if, but
only if, such amendment or supplement is in writing and is signed by the Company
and each Agent; PROVIDED that the Company may from time to time, upon notice to
the Agents but without the consent of any Agent, amend this Agreement to add as
a party hereto one or more additional firms registered under the Exchange Act,
whereupon each such firm shall become an Agent hereunder on the same terms and
conditions as the other Agents that are parties hereto. The Agents shall sign
any amendment or supplement giving effect to the addition of any such firm as an
Agent under this Agreement.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
24
25
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and each Agent
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Agent on the other shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such Notes
(before deducting expenses) received by the Company and the total discounts and
commissions received by each Agent bear to the aggregate public offering price
of the Notes. The relative fault of the Company on the one hand and each Agent
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by each Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by PRO RATA
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitation set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, in no event shall an Agent be required to
contribute any amount in excess of the amount by which the total price at which
the Notes referred to in the immediately preceding paragraph that were offered
and sold to the public through such Agent exceeds the amount of any damages that
such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6
are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
25
26
The indemnity and contribution agreements contained in this Section 6
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Agent or any person controlling any Agent or by or on behalf of the
Company, its officers or directors or any other person controlling the Company
and (iii) acceptance of and payment for any of the Notes.
7. POSITION OF THE AGENTS. In acting under this Agreement and in
connection with the sale of any Notes by the Company (other than Notes sold to
an Agent pursuant to a Terms Agreement), each Agent is acting solely as agent of
the Company and does not assume any obligation towards or relationship of agency
or trust with any purchaser of Notes. An Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company, but
such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company shall default in its
obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall hold the relevant Agent harmless against any loss, claim, damage
or liability arising from or as a result of such default and shall, in
particular, pay to such Agent the commission it would have received had such
sale been consummated.
8. TERMINATION. This Agreement may be terminated at any time by the
Company or, as to any Agent, by the Company or such Agent upon the giving of
written notice of such termination to the other parties hereto, but without
prejudice to any rights, obligations or liabilities of any party hereto accrued
or incurred prior to such termination. The termination of this Agreement shall
not require termination of any Terms Agreement, and the termination of any such
Terms Agreement shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third paragraph of Section 2(a),
Section 2(e), the last sentence of Section 3(b) and Sections 3(c), 3(g), 6, 7,
9, 11 and 14 shall survive; PROVIDED that if at the time of termination an offer
to purchase Notes has been accepted by the Company but the time of delivery to
the purchaser or its agent of such Notes has not occurred, the provisions of
Sections 2(b), 2(c), 3(a), 3(e), 3(f), 3(h), 4 and 5 shall also survive
until such delivery has been made.
9. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and (i) if sent to Morgan Stanley, will be mailed,
delivered or telefaxed and
26
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
AEROQUIP-VICKERS, INC.
By: /s/ W.R. Ammann
---------------------------------------
Title: Vice President - Administration
and Treasurer
The foregoing Agreement
is hereby confirmed
and accepted as of the
date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Jennifer A. Harris
------------------------
Title: Vice President
J.P. MORGAN SECURITIES INC.
By: /s/ Maureen Krim
------------------------
Title: Maureen Krim
Vice President
27
28
EXHIBIT A
Aeroquip-Vickers, Inc.
MEDIUM-TERM NOTES
TERMS AGREEMENT
____________________, 19___
Aeroquip-Vickers, Inc.
3000 Strayer
Maumee, Ohio 43537-0050
Attention: James E. Kline, Vice President
and General Counsel
Re: Distribution Agreement dated September 30, 1997 (the "Distribution
Agreement")
-----------------------------------------------------------------------
We agree to purchase your Medium-Term Notes having the following terms:
[We agree to purchase, severally and not jointly, the principal amount
of Notes set forth below opposite our names:
Principal Amount
Name of Notes
---- ----------------
Morgan Stanley & Co.
Incorporated
J.P. Morgan Securities Inc.
[Insert syndicate list]1
Total . . . . . . . . $
=============
The Notes shall have the following terms:
- ------------------
1 Delete if the transaction will not be syndicated.
A-1
29
All Notes: Fixed Rate Notes: Floating Rate Notes:
- ---------- ----------------- --------------------
Principal amount: Interest Rate: Base rate:
Purchase price: Applicability Index maturity:
of modified
Price to public: payment upon Spread:
acceleration:
Settlement date Spread multiplier:
and time: If yes, state
issue price: Alternate rate
Place of event spread:
delivery: Amortization
schedule: Initial interest
Specified rate:
currency:
Initial interest
Maturity date: reset date:
Initial accrual Interest reset
period OID: dates:
Total amount Interest reset
of OID: period:
Original yield Maximum interest
to maturity: rate:
Optional repayment Minimum interest
date(s): rate:
Optional redemption Interest payment
date(s): period:
Initial redemption Interest payment
date: dates:
Initial redemption Calculation agent:
percentage:
Annual redemption
percentage
decrease:
Other terms:
A-2
30
The provisions of Sections 1, 2(b) and 2(c) and 3 through 6, 9, 10, 11
and 14 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
[If on the Settlement Date any one or more of the Agents shall fail or
refuse to purchase Notes that it has or they have agreed to purchase on such
date, and the aggregate amount of Notes which such defaulting Agent or Agents
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate amount of the Notes to be purchased on such date, the other Agents
shall be obligated severally in the proportions that the amount of Notes set
forth opposite their respective names above bears to the aggregate amount of
Notes set forth opposite the names of all such non-defaulting Agents, or in such
other proportions as Morgan Stanley & Co. Incorporated may specify, to purchase
the Notes which such defaulting Agent or Agents agreed but failed or refused to
purchase on such date; provided that in no event shall the amount of Notes that
any Agent has agreed to purchase pursuant to this Agreement be increased
pursuant to this paragraph by an amount in excess of one-ninth of such amount of
Notes without the written consent of such Agent. If on the Settlement Date any
Agent or Agents shall fail or refuse to purchase Notes and the aggregate amount
of Notes with respect to which such default occurs is more than one-tenth of the
aggregate amount of Notes to be purchased on such date, and arrangements
satisfactory to Morgan Stanley & Co. Incorporated and the Company for the
purchase of such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Agent or the Company. In any such case either Morgan Stanley & Co. Incorporated
or the Company shall have the right to postpone the Settlement Date but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Agent from liability in respect of any default of such
Agent under this Agreement.] 2
This Agreement is subject to termination on the terms incorporated by
reference herein. If this Agreement is so terminated, the provisions of Sections
3(g), 6, 9, 11 and 14 of the Distribution Agreement shall survive for the
purposes of this Agreement.
- ---------------------------
2 Delete if the transaction will not be syndicated.
A-3
31
The following information, opinions, certificates, letters and
documents referred to in Section 4 of the Distribution Agreement will be
required:
A. The officers' certificate referred to in Section 4(c).
B. The opinion or opinions of the general counsel of the Company referred
to in Section 4(b)(i).
C. The opinion or opinions of outside counsel for the Company referred to
in Section 4(b)(ii).
D. The opinion of Agents' counsel referred to in Section 4(b)(iii).
E. The accountants' letter referred to in Section 4(d).
MORGAN STANLEY & CO. INCORPORATED
By: ____________________
Title:
J.P. MORGAN SECURITIES INC.
By: ____________________
Title:
Accepted:
AEROQUIP-VICKERS, INC.
By: _____________________
Title:
A-4
32
EXHIBIT B
AEROQUIP-VICKERS, INC.
$250,000,000
MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
------------------------------------
Explained below are the administrative procedures and specific terms of
the offering of Medium-Term Notes (the "Notes"), on a continuous basis by
Aeroquip-Vickers, Inc. (the "Company") pursuant to the Distribution Agreement,
dated as of September 30, 1997 (the "Distribution Agreement") among the Company
and Morgan Stanley & Co. Incorporated ("Morgan Stanley") and J.P. Morgan
Securities Inc. ("J.P. Morgan") (the "Agents"). The Notes will be issued under
an Indenture dated as of May 1, 1996 as supplemented as of April 17, 1997 (the
"Indenture") between the Company and The First National Bank of Chicago (as
successor-in-interest to NBD Bank), as trustee (the "Trustee"). In the
Distribution Agreement, the Agents have agreed to use reasonable efforts to
solicit purchases of the Notes, and the administrative procedures explained
below will govern the issuance and settlement of any Notes sold through an
Agent, as agent of the Company. An Agent, as principal, may also purchase Notes
for its own account, and if requested by such Agent, the Company and such Agent
will enter into a terms agreement (a "Terms Agreement"), as contemplated by the
Distribution Agreement. The administrative procedures explained below will
govern the issuance and settlement of any Notes purchased by an Agent, as
principal, unless otherwise specified in the applicable Terms Agreement.
The Trustee will be the Registrar, Calculation Agent, Authenticating
Agent and Paying Agent for the Notes and will perform the duties specified
herein. Each Note will be represented by either a Global Security (as defined
below) delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry
Note") or a certificate delivered to the holder thereof or a person
B-1
33
designated by such holder (a "Certificated Note"). Except as set forth in the
Indenture, an owner of a Book-Entry Note will not be entitled to receive a
Certificated Note.
Book-Entry Notes, which may be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures. Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof. Unless otherwise defined
herein, terms defined in the Indenture, the Notes or any prospectus supplement
relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of the employees of the
Company with whom the Agents are to communicate regarding offers to purchase
Notes and the related settlement details.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of September 30, 1997, and a
Medium-Term Note Certificate Agreement between the Trustee and DTC, dated as of
May 26, 1989 (the "MTN Certificate Agreement"), and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry
Notes, the Company will issue a single global
security in fully registered form without coupons
(a "Global Security") representing up to U.S.
$200,000,000 principal amount of all such Notes
that have the same Original Issue Date, Maturity
Date and other terms. Each Global Security will be
dated and issued as of the date of its
authentication by the Trustee. Each Global
Security will bear an "Interest Accrual Date,"
which will be (i) with respect to an original
Global Security (or any portion thereof), its
original issuance date and (ii) with respect to
any Global Security (or any portion thereof)
issued subsequently upon
B-2
34
exchange of a Global Security, or in lieu of a
destroyed, lost or stolen Global Security, the
most recent Interest Payment Date to which
interest has been paid or duly provided for on the
predecessor Global Security (or if no such payment
or provision has been made, the original issuance
date of the predecessor Global Security),
regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry
Notes may be payable only in U.S. dollars. No
Global Security will represent any Certificated
Note.
Denominations: Book-Entry Notes will be issued in principal
amounts of U.S. $100,000 or any amount in excess
thereof that is an integral multiple of U.S.
$1,000. Global Securities will be denominated in
principal amounts not in excess of U.S.
$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of
$200,000,000 would, but for the preceding
sentence, be represented by a single Global
Security, then one Global Security will be issued
to represent each U.S. $200,000,000 principal
amount of such Book-Entry Note or Notes and an
additional Global Security will be issued to
represent any remaining principal amount of such
Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry
Note or Notes shall be assigned the same CUSIP
number.
Preparation If any offer to purchase a Book-Entry Note is
of Pricing accepted by or on behalf of the Company, the
Supplement: Company will prepare a pricing supplement (a
"Pricing Supplement") reflecting the terms of such
Note. The Company (i) will arrange to file 10
copies of such Pricing Supplement with the
Commission in accordance with the applicable
paragraph of Rule 424(b) under the Securities Act
and (ii) will, as soon as possible and in any
event not later than the date on which such
Pricing Supplement is filed with the Commission,
B-3
35
deliver the number of copies of such Pricing
Supplement to the relevant Agent as such Agent
shall request.
In each instance that a Pricing Supplement is
prepared, the relevant Agent will affix the
Pricing Supplement to Prospectuses prior to their
use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other
than those retained for files), will be
destroyed.
Settlement: The receipt by the Company of immediately
available funds in payment for a Book-Entry Note
and the authentication and issuance of the Global
Security representing such Note shall constitute
"settlement" with respect to such Note. All offers
accepted by the Company will be settled on the
third Business Day next succeeding the date of
acceptance pursuant to the timetable for
settlement set forth below, unless the Company and
the purchaser agree to settlement on another day,
which shall be no earlier than the next Business
Day.
Settlement Settlement Procedures with regard to each
Procedures: Book-Entry Note sold by the Company to or through
an Agent (unless otherwise specified pursuant to a
Terms Agreement) shall be as follows:
A. The relevant Agent will advise the
Company by telephone that such Note is a
Book-Entry Note and of the following
settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed
Rate Book-Entry Note, the
Interest Rate, whether such
Note will pay interest
annually or semiannually and
whether such Note is an
Amortizing Note, and, if so,
the amortization schedule,
or, in the case of a
Floating Rate
B-4
36
Book-Entry Note, the Initial
Interest Rate (if known at
such time), Interest
Payment Date(s), Interest
Payment Period, Calculation
Agent, Base Rate, Index
Maturity, Interest Reset
Period, Initial Interest
Reset Date, Interest Reset
Dates, Spread or Spread
Multiplier (if any),
Minimum Interest Rate (if
any), Maximum Interest Rate
(if any) and the Alternate
Rate Event Spread (if any).
4. Redemption or repayment
provisions (if any).
5. Settlement date and time
(Original Issue Date).
6. Interest Accrual Date.
7. Price.
8. Agent's commission (if any)
determined as provided in the
Distribution Agreement.
9. Whether the Note is an Original
Issue Discount Note (an "OlD Note"),
and if it is an OlD Note, the total
amount of OlD, the yield to
maturity, the initial accrual period
OlD and the applicability of
Modified Payment upon Acceleration
(and, if so, the Issue Price).
10. Whether the Note is a PERLS
Note, and if it is a PERLS Note, the
Denominated Currency, the Indexed
Currency or Currencies, the Payment
Currency, the Exchange Rate Agent,
the Reference Dealers, the Face
Amount, the Fixed Amount of each
Indexed Currency, the Aggregate
Fixed Amount of each Indexed
Currency and the Authorized
B-5
37
Denominations (if other than U.S.
dollars).
11. Whether the Note is a Renewable
Note, and if it is a Renewable Note,
the Initial Maturity Date and the
Final Maturity Date.
12. Whether the Company has to
extend the Original Maturity Date of
the Note, and, if so, the Final
Maturity Date of such Note.
13. Whether the Company has the
option to reset the Interest Rate,
the Spread or the Spread Multiplier
of the Note.
14. Any other applicable terms.
B. The Company will advise the Trustee
by telephone or electronic transmission
(confirmed in writing at any time on the
same date) of the information set forth
in Settlement Procedure "A" above. The
Trustee will then assign a CUSIP number
to the Global Security representing such
Note and will notify the Company and the
relevant Agent of such CUSIP number by
telephone as soon as practicable.
C. The Trustee will enter a pending
deposit message through DTC's
Participant Terminal System, providing
the following settlement information to
DTC, the relevant Agent and Standard &
Poor's Rating Services:
1. The information set forth in
Settlement Procedure "A".
2. The Initial Interest Payment Date
for such Note, the number of days by
which such
B-6
38
date succeeds the related DTC Record
Date (which in the case of Floating
Rate Notes which reset daily or
weekly, shall be the date five
calendar days immediately preceding
the applicable Interest Payment Date
and, in the case of all other Notes,
shall be the Record Date as defined
in the Note) and, if known, the
amount of interest payable on such
Initial Interest Payment Date.
3. The CUSIP number of the Global
Security representing such Note.
4. Whether such Global Security will
represent any other Book-Entry Note
(to the extent known at such time).
5. Whether such Note is an
Amortizing Note (by an appropriate
notation in the comments field of
DTC's Participant Terminal System).
6. The number of participant
accounts to be maintained by DTC on
behalf of the relevant Agent and the
Trustee.
D. The Trustee will complete and
authenticate the Global Security
representing such Note.
E. DTC will credit such Note to the
Trustee's participant account at DTC.
F. The Trustee will enter an SDFS
deliver order through DTC's Participant
Terminal System instructing DTC to (i)
debit such Note to the Trustee's
participant account and credit such Note
to the relevant Agent's participant
account
B-7
39
and (ii) debit such Agent's settlement
account and credit the Trustee's
settlement account for an amount equal
to the price of such Note less such
Agent's commission (if any). The entry
of such a deliver order shall constitute
a representation and warranty by the
Trustee to DTC that (a) the Global
Security representing such Book-Entry
Note has been issued and authenticated
and (b) the Trustee is holding such
Global Security pursuant to the MTN
Certificate Agreement.
G. Unless the relevant Agent is the end
purchaser of such Note, such Agent will
enter an SDFS deliver order through
DTC's Participant Terminal System
instructing DTC (i) to debit such Note
to such Agent's participant account and
credit such Note to the participant
accounts of the Participants with
respect to such Note and (ii) to debit
the settlement accounts of such
Participants and credit the settlement
account of such Agent for an amount
equal to the price of such Note.
H. Transfers of funds in accordance with
SDFS deliver orders described in
Settlement Procedures "F" and "G" will
be settled in accordance with SDFS
operating procedures in effect on the
settlement date.
I. The Trustee will credit to the
account of the Company maintained at The
First National Bank of Chicago,
Aeroquip-Vickers-Account #59-29024,
Chicago, Illinois, in immediately
available funds the amount transferred
to the Trustee in accordance with
Settlement Procedure "F".
J. Unless the relevant Agent is the end
purchaser of such Note, such
B-8
40
Agent will confirm the purchase of such
Note to the purchaser either by
transmitting to the Participants with
respect to such Note a confirmation
order or orders through DTC's
institutional delivery system or by
mailing a written confirmation to such
purchaser.
K. Monthly, the Trustee will send to the
Company a statement setting forth the
principal amount of Notes outstanding as
of that date under the Indenture and
setting forth a brief description of any
sales of which the Company has advised
the Trustee that have not yet been
settled.
Settlement For sales by the Company of Book-Entry Notes
Procedures to or through an Agent (unless otherwise
Timetable: specified pursuant to a Terms Agreement)
for settlement on the first Business Day
after the sale date, Settlement Procedures
"A" through "J" set forth above shall be
completed as soon as possible but not later
than the respective times in New York City
set forth below:
Settlement
Procedure Time
--------- ----
A 11:00 A.M. on sale date
B 12:00 Noon on sale date
C 2:00 P.M. on sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
If a sale is to be settled more than one
Business Day after the sale date, Settlement
procedures "A", "B" and "C" shall be
completed as soon as practicable but no
later than 11:00 A.M., 12:00 Noon and 2:00
P.M., respectively, on the first Business
Day after the sale date. If the Initial
Interest Rate for a Floating Rate
B-9
41
Book-Entry Note has not been determined at
the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has
been determined but no later than 12:00 Noon
and 2:00 P.M., respectively, on the first
Business Day before the settlement date.
Settlement Procedure "H" is subject to
extension in accordance with any extension
of Fedwire closing deadlines and in the
other events specified in the SDFS operating
procedures in effect on the settlement date.
If settlement of a Book-Entry Note is
rescheduled or canceled, the Trustee, after
receiving notice from the Company or the
relevant Agent, will deliver to DTC, through
DTC's Participant Terminal System, a
cancellation message to such effect by no
later than 2:00 P.M. on the Business Day
immediately preceding the scheduled
settlement date.
Failure If the Trustee fails to enter an SDFS deliver
to Settle: order with respect to a Book-Entry Note
pursuant to Settlement Procedure "F", the
Trustee may deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message instructing
DTC to debit such Note to the Trustee's
participant account, provided that the
Trustee's participant account contains a
principal amount of the Global Security
representing such Note that is at least
equal to the principal amount to be debited.
If a withdrawal message is processed with
respect to all the Book-Entry Notes
represented by a Global Security, the
Trustee will mark such Global Security
"canceled," make appropriate entries in the
Trustee's records and send such canceled
Global Security to the Company. The CUSIP
number assigned to such Global Security
shall, in accordance with the procedures of
the CUSIP Service Bureau of Standard &
Poor's Rating Services, be canceled and not
immediately reassigned. If a withdrawal
message is processed with
B-10
42
respect to one or more, but not all, of the
Book-Entry Notes represented by a Global
Security, the Trustee will exchange such
Global Security for two Global Securities,
one of which shall represent such Book-Entry
Note or Notes and shall be canceled
immediately after issuance and the other of
which shall represent the remaining
Book-Entry Notes previously represented by
the surrendered Global Security and shall
bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry
Note is not timely paid to the Participants
with respect to such Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such purchaser), such
Participants and, in turn, the relevant
Agent may enter SDFS deliver orders through
DTC's Participant Terminal System reversing
the orders entered pursuant to Settlement
Procedures "F" and "G", respectively.
Thereafter, the Trustee will deliver the
withdrawal message and take the related
actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry Note, DTC may take any actions in
accordance with its SDFS operating
procedures then in effect.
In the event of a failure to settle with
respect to one or more, but not all, of the
Book-Entry Notes to have been represented by
a Global Security, the Trustee will provide,
in accordance with Settlement Procedures "D"
and "F", for the authentication and issuance
of a Global Security representing the
Book-Entry Notes to be represented by such
Global Security and will make appropriate
entries in its records.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the
B-11
43
Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as
of the date of its authentication by the Trustee.
Each Certificated Note will bear an Original Issue
Date, which will be (i) with respect to an
original Certificated Note (or any portion
thereof), its original issuance date (which will
be the settlement date) and (ii) with respect to
any Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a
Certificated Note or in lieu of a destroyed, lost
or stolen Certificated Note, the original issuance
date of the predecessor Certificated Note,
regardless of the date of authentication of such
subsequently issued Certificated Note.
Preparation If any offer to purchase a Certificated Note
of Pricing is accepted by or on behalf of the Company, the
Supplement: Company will prepare a Pricing Supplement
reflecting the terms of such Note. The Company (i)
will arrange to file 10 copies of such Pricing
Supplement with the Commission in accordance with
the applicable paragraph of Rule 424(b) under the
Securities Act and (ii) will, as soon as possible
and in any event not later than the date on which
such Pricing Supplement is filed with the
Commission, deliver the number of copies of such
Pricing Supplement to the relevant Agent as such
Agent shall request.
In each instance that a Pricing Supplement is
prepared, the relevant Agent will affix the
Pricing Supplement to Prospectuses prior to their
use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other
than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately
available funds in exchange for an authenticated
Certificated Note delivered to the relevant Agent
and such Agent's delivery of such Note against
receipt of
B-12
44
immediately available funds shall constitute
"settlement" with respect to such Note. All offers
accepted by the Company will be settled on the
third Business Day next succeeding the date of
acceptance pursuant to the timetable for
settlement set forth below, unless the Company and
the purchaser agree to settlement on another date,
which date shall be no earlier than the next
Business Day.
Settlement Settlement Procedures with regard to each
Procedures: Certificated Note sold by the Company to or
through an Agent (unless otherwise specified
pursuant to a Terms Agreement) shall be as
follows:
A. The relevant Agent will advise the Company by
telephone that such Note is a Certificated Note
and of the following settlement information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address for
payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated Note,
the Interest Rate, whether such Note will pay
interest annually or semiannually and whether such
Note is an Amortizing Note and, if so, the
amortization schedule, or, in the case of a
Floating Rate Certificated Note, the Initial
Interest Rate (if known at such time), Interest
Payment Date(s), Interest Payment Period,
Calculation Agent, Base Rate, Index Maturity,
Interest Reset Period, Initial Interest Reset
Date, Interest Reset Dates, Spread or Spread
Multiplier (if any), Minimum Interest Rate (if
any), Maximum Interest
B-13
45
Rate (if any) and the Alternate Rate Event Spread
(if any).
7. Redemption or repayment provisions (if any).
8. Settlement date and time (Original Issue Date).
9. Interest Accrual Date.
10. Price.
11. Agent's commission (if any) determined as
provided in the Distribution Agreement.
12. Denominations.
13. Specified Currency.
14. Whether the Note is an OlD Note, and if it is
an OlD Note, the total amount of OlD, the yield to
maturity, the initial accrual period OlD and the
applicability of Modified Payment upon
Acceleration (and if so, the Issue Price).
15. Whether the Note is a PERLS Note, and if it is
a PERLS Note, the Denominated Currency, the
Indexed Currency or Currencies, the Payment
Currency, the Exchange Rate Agent, the Reference
Dealers, the Face Amount, the Fixed Amount of each
Indexed Currency, the Aggregate Fixed Amount of
each Indexed Currency and the Authorized
Denominations (if other than U.S. dollars).
16. Whether the Note is a Renewable Note, and if
it is a Renewable Note, the Initial Maturity Date
and the Final Maturity Date.
17. Whether the Company has the option to extend
the Original Maturity Date of the Note, and, if
so, the Final Maturity Date of such Note.
18. Whether the Company has the option to reset
the Interest Rate, the Spread or
B-14
46
the Spread Multiplier of the Note.
19. Any other applicable terms.
B. The Company will advise the Trustee by
telephone or electronic transmission (confirmed in
writing at any time on the same date) of the
information set forth in Settlement Procedure "A"
above.
C. The Company will have delivered to the Trustee
a pre-printed four-ply packet for such Note, which
packet will contain the following documents in
forms that have been approved by the Company, the
relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Note and
authenticate such Note and deliver it (with the
confirmation) and Stubs One and Two to the
relevant Agent, and such Agent will acknowledge
receipt of the Note by stamping or otherwise
marking Stub One and returning it to the Trustee.
Such delivery will be made only against such
acknowledgment of receipt and evidence that
instructions have been given by such Agent for
payment to the account of the Company at The First
National Bank of Chicago, Aeroquip-Vickers-Account
#59-29024, Chicago, Illinois, or to such other
account as the Company shall have specified to
such Agent and the Trustee, in immediately
available funds, of an amount equal to the price
of such Note less such Agent's commission (if
any). In the event that the instructions given by
such Agent for payment to the account of the
Company are revoked, the Company will as promptly
as possible wire transfer to the account of such
Agent an amount of immediately available funds
equal to the amount of such payment made.
B-15
47
E. Unless the relevant Agent is the end purchaser
of such Note, such Agent will deliver such Note
(with confirmation) to the customer against
payment in immediately available funds. Such Agent
will obtain the acknowledgment of receipt of such
Note by retaining Stub Two.
F. The Trustee will send Stub Three to the Company
by first-class mail. Monthly, the Trustee will
also send to the Company a statement setting forth
the principal amount of the Notes outstanding as
of that date under the Indenture and setting forth
a brief description of any sales of which the
Company has advised the Trustee that have not yet
been settled.
Settlement For sales by the Company of Certificated Notes to or
Procedures through an Agent (unless otherwise specified
Timetable: pursuant to a Terms Agreement), Settlement
Procedures "A" through "F" set forth above shall be
completed on or before the respective times in New
York City set forth below:
Settlement
Procedure Time
--------- ----
A 2:00 P.M. on day before
settlement date
B 3:00 P.M. on day before
settlement date
C-D 2:15 P.M. on settlement date
E 3:00 P.M. on settlement date
F 5:00 P.M. on settlement date
Failure If a purchaser fails to accept delivery of and make
to Settle: payment for any Certificated Note, the relevant
Agent will notify the Company and the Trustee
by telephone and return such Note to the Trustee.
Upon receipt of such notice, the Company will
immediately wire transfer to the account of such
Agent an amount equal to the price of such Note less
such Agent's commission in respect of such Note (if
any). Such wire transfer will be made on the
settlement date, if possible, and in any event not
later than the Business Day following the settlement
date. If the failure shall have
B-16
48
occurred for any reason other than a default by
such Agent in the performance of its obligations
hereunder and under the Distribution Agreement,
then the Company will reimburse such Agent or the
Trustee, as appropriate, on an equitable basis for
its loss of the use of the funds during the period
when they were credited to the account of the
Company. Immediately upon receipt of the
Certificated Note in respect of which such failure
occurred, the Trustee will mark such Note
"canceled," make appropriate entries in the
Trustee's records and send such Note to the
Company.
B-17