Exhibit 10.6
EXECUTION COPY
- --------------------------------------------------------------------------------
VARIAN, INC.
AMENDED AND RESTATED
NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
AND
ASSUMPTION
$12,500,000
7.21% SERIES A SENIOR NOTES DUE JUNE 9, 2007
$25,000,000
6.70% SERIES B SENIOR NOTES DUE APRIL 30, 2014
$14,000,000
7.49% SERIES C SENIOR NOTES DUE JUNE 9, 2002
$7,000,000
6.90% SERIES D SENIOR NOTES DUE JUNE 9, 2002
AND
$50,000,000
PRIVATE SHELF FACILITY
DATED AS OF APRIL 2, 1999
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
(not part of agreement)
PAGE
INTRODUCTION..................................................................................................... 1
1. AUTHORIZATION OF ISSUE OF NOTES......................................................................... 3
1A. Authorization of Issue of Series A Notes....................................................... 3
1B. Authorization of Issue of Series B Notes....................................................... 3
1C. Authorization of Issue of Series C Notes....................................................... 3
1D. Authorization of Issue of Series D Notes....................................................... 3
1E. Authorization of Issue of Shelf Notes.......................................................... 3
2. ASSUMPTION AND AMENDMENT AND RESTATEMENT OF EXISTING NOTES; PURCHASE AND SALE OF SHELF NOTES............ 4
2A(1). Assumption....................................................................... 4
2A(2). Amendment and Restatement of Existing 7.21% Notes and Issuance of Series
A Notes.......................................................................... 4
2A(3). Amendment and Restatement of Existing 6.70% Notes and Issuance of Series
B Notes.......................................................................... 5
2A(4). Amendment and Restatement of Existing 7.49% Notes and Issuance of Series
C Notes.......................................................................... 5
2A(5). Amendment and Restatement of Existing 6.90% Notes and Issuance of Series
D Notes.......................................................................... 6
2B. Purchase and Sale of Shelf Notes............................................................... 6
3. CONDITIONS OF CLOSING................................................................................... 10
3A. Conditions to Amendments and Restatements...................................................... 10
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
3B. Conditions to Purchase of Notes............................................................... 11
4. PREPAYMENTS............................................................................................ 12
4A. Required Prepayments of Series A Notes, Series B Notes, Series C Notes and Series D
Notes......................................................................................... 13
4A(1). Required Prepayments of Series A Notes.......................................... 13
4A(2). Required Prepayments of Series B Notes.......................................... 13
4A(3). Required Prepayments of Series C Notes.......................................... 13
4A(4). Required Prepayments of Series D Notes.......................................... 13
4B. Required Prepayments of Shelf Notes........................................................... 13
4C. Optional Prepayment With Yield-Maintenance Amount............................................. 13
4D. Notice of Optional Prepayment................................................................. 14
4E. Application of Prepayments.................................................................... 14
4F. Retirement of Notes........................................................................... 14
5. AFFIRMATIVE COVENANTS.................................................................................. 14
5A. Financial Statements; Notice of Defaults...................................................... 14
5B. Information Required by Rule 144A............................................................. 16
5C. Inspection of Property........................................................................ 16
5D. Covenant to Secure Notes Equally.............................................................. 16
5E. Maintenance of Insurance...................................................................... 17
5F. Compliance with Laws.......................................................................... 17
6. NEGATIVE COVENANTS..................................................................................... 17
6A. Certain Financial Requirements................................................................ 17
6B. Dividend Limitation........................................................................... 17
6C. Lien, Funded Debt and Other Restrictions...................................................... 18
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
7. EVENTS OF DEFAULT...................................................................................... 21
7A. Acceleration.................................................................................. 21
7B. Rescission of Acceleration.................................................................... 24
7C. Notice of Acceleration or Rescission.......................................................... 24
7D. Other Remedies................................................................................ 24
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.............................................................. 24
8A. Organization.................................................................................. 25
8B. Financial Statements.......................................................................... 25
8C. Actions Pending............................................................................... 25
8D. Outstanding Funded Debt....................................................................... 26
8E. Title to Properties........................................................................... 26
8F. Taxes......................................................................................... 26
8G. Conflicting Agreements and Other Matters...................................................... 26
8H. Offering of Notes............................................................................. 27
8I. Use of Proceeds............................................................................... 27
8J. ERISA......................................................................................... 27
8K. Governmental Consent.......................................................................... 28
8L. Environmental Compliance...................................................................... 28
8M. Disclosure.................................................................................... 28
8N. Hostile Tender Offers......................................................................... 28
8O. Year 2000 Compliance.......................................................................... 28
9. REPRESENTATIONS OF THE PURCHASERS...................................................................... 29
9A. Nature of Purchase............................................................................ 29
9B. Source of Funds............................................................................... 29
10. DEFINITIONS; ACCOUNTING MATTERS........................................................................ 30
10A. Yield-Maintenance Terms....................................................................... 30
10B. Other Terms................................................................................... 31
-iii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
10C. Accounting Principles, Terms and Determinations............................................... 39
11. MISCELLANEOUS.......................................................................................... 39
11A. Note Payments................................................................................. 39
11B. Expenses...................................................................................... 39
11C. Consent to Amendments......................................................................... 40
11D(1). Form, Registration, Transfer and Exchange of Notes; Lost Notes.................. 41
11D(2). Prior Notice to Company Regarding Resale; Excluded Transferees.................. 41
11E. Persons Deemed Owners; Participations......................................................... 42
11F. Survival of Representations and Warranties; Entire Agreement.................................. 42
11G. Successors and Assigns........................................................................ 42
11H. Disclosure to Other Persons................................................................... 43
11I. Independence of Covenants..................................................................... 43
11J. Notices....................................................................................... 43
11K. Payments Due on Non-Business Days............................................................. 44
11L. Severability.................................................................................. 44
11M. Descriptive Headings.......................................................................... 44
11N. Satisfaction Requirement...................................................................... 44
11O. Governing Law................................................................................. 45
11P. Severalty of Obligations...................................................................... 45
11Q. Counterparts.................................................................................. 45
11R. Binding Agreement............................................................................. 45
11S. Amendment and Restatement of Existing Agreements; Release of the Company...................... 46
EXHIBITS AND SCHEDULES
Purchaser Schedule for Series A Notes, Series B Notes, Series C Notes and Series
D Notes Information Schedule
Exhibit A-1 -- Form of Series A Note
Exhibit A-2 -- Form of Series B Note
Exhibit A-3 -- Form of Series C Note
Exhibit A-4 -- Form of Series D Note
Exhibit A-5 -- Form of Shelf Note
-iv-
TABLE OF CONTENTS
(CONTINUED)
PAGE
Exhibit B -- Form of Request for Purchase
Exhibit C -- Form of Confirmation of Acceptance
Exhibit D -- Form of Solvency Certificate
Exhibit E-1 -- Form of Opinion of Company Counsel, Series C Note
Closing
Exhibit E-2 -- Form of Opinion of Company Counsel, Shelf Note
Closing
Exhibit F-1 -- Form of Prudential Confidentiality Agreement
Exhibit F-2 -- Form of Non-Prudential Confidentiality Agreement
Exhibit G -- Investment Policy of Company Board of Directors
Schedule 8G -- Agreements Restricting Debt
-v-
VARIAN, INC.
3120 Hansen Way
Palo Alto, California 94304-1000
As of April 2, 1999
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential,
the "PURCHASERS")
c/o Prudential Capital Group
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Ladies and Gentlemen:
The undersigned, Varian, Inc., a Delaware corporation (herein called
the "COMPANY"), hereby agrees with you as set forth below. Reference is made
to paragraph 10 hereof for definitions of capitalized terms used herein and not
otherwise defined herein.
INTRODUCTION.
Varian Associates, Inc., a Delaware corporation, to be known as Varian
Medical Systems, Inc., effective April 3, 1999 ("MEDICAL SYSTEMS"), and the
holder of all of the outstanding shares of capital stock of the Company, and
Prudential are parties to (i) the Master Shelf Agreement, dated as of May 11,
1992 (as heretofore amended, the "1992 NOTE AGREEMENT"), under which Medical
Systems issued, and there are now outstanding and held by Prudential (a) Medical
Systems' 7.49% Senior Notes due June 9, 2002, in the original aggregate
principal amount of $40,000,000, of which $28,000,000 aggregate principal amount
are now outstanding (the "EXISTING 7.49% NOTES"), and (b) Medical Systems' 6.90%
Senior Notes due June 9, 2002, in the original aggregate principal amount of
$20,000,000, of which $14,000,000 aggregate principal amount are now outstanding
(the "EXISTING 6.90% NOTES"), and (ii) the Note Purchase and Private Shelf
Agreement, dated as of October 18, 1996 (as heretofore amended, the "1996 NOTE
AGREEMENT"), under which Medical Systems issued, and there are now outstanding
and held by Prudential (a) Medical Systems' 7.21% Series A Senior Notes due June
9, 2007 in the aggregate principal amount of $25,000,000 (the "EXISTING 7.21%
NOTES"), and (b) Medical Systems' 6.70% Series B Senior Notes due April 30, 2018
in the aggregate principal amount of $50,000,000 (the "EXISTING 6.70% NOTES").
Medical Systems has advised Prudential that it intends to distribute
all of the shares of the Company to the shareholders of Medical Systems (the
"SPIN OFF"). In connection with the Spin Off, Medical Systems will prepay
$14,000,000 principal amount of the Existing 7.49% Notes and $7,000,000
principal amount of the Existing 6.90% Notes, and the Company and Medical
Systems have requested that Prudential agree to, among other things, the
following effective upon the consummation of the Spin Off:
(1) to amend certain of the terms of $12,500,000 principal amount of
the Existing 7.21% Notes as more specifically set forth in the Medical Systems
Amended and Restated Note Agreement (such $12,500,000 principal amount of the
Existing 7.21% Notes amended pursuant to the Medical Systems Amended and
Restated Note Agreement being herein called the "MEDICAL SYSTEMS SERIES A
NOTES");
(2) to shorten the maturity of the Existing 6.70% Notes to April 30,
2014 and to amend the interest rate on $25,000,000 principal amount of the
Existing 6.70% Notes, as more specifically set forth in the Medical Systems
Amended and Restated Note Agreement (such $25,000,000 principal amount of the
Existing 6.70% Notes the interest rate on which is amended pursuant to the
Medical Systems Amended and Restated Note Agreement being herein called the
"MEDICAL SYSTEMS SERIES B NOTES");
(3) the assumption by the Company of Medical Systems' obligations
under, and the release of Medical Systems from any obligation under, (A) the
$14,000,000 principal amount of the Existing 7.49% Notes and the $7,000,000
principal amount of the Existing 6.90% Notes not prepaid by Medical Systems (the
$14,000,000 principal amount of the Existing 7.49% Notes to be so assumed by the
Company being herein called the "SERIES C NOTES" (which term shall include each
Series C Note delivered pursuant to any provision of this Agreement and each
promissory note of the Company delivered in substitution or exchange for any
Series C Note pursuant to any such provision)) and the $7,000,000 principal
amount of the Existing 6.90% Notes to be so assumed by the Company being herein
called the "SERIES D NOTES" (which term shall include each Series D Note
delivered pursuant to any provision of this Agreement and each promissory note
of the Company delivered in substitution or exchange for any Series D Note
pursuant to any such provision)), (B) the $12,500,000 principal amount of the
Existing 7.21% Notes not constituting the Medical Systems Series A Notes (the
$12,500,000 principal amount of the Existing 7.21% Notes to be so assumed by the
Company being herein called the "SERIES A NOTES" (which term shall include each
Series A Note delivered pursuant to any provision of this Agreement and each
promissory note of the Company delivered in substitution or exchange for any
Series A Note pursuant to any such provision)) and (C) the $25,000,000 principal
amount of the Existing 6.70% Notes not constituting Medical Systems Series B
Notes (the $25,000,000 principal amount of the Existing 6.70% Notes to be so
assumed by the Company being herein called the "SERIES B NOTES" (which term
shall include each Series B Note delivered pursuant to any promissory note of
the Company delivered in substitution or exchange for any Series B Note pursuant
to any such provision)); and
(4) to amend and restate the 1992 Note Agreement and the 1996 Note
Agreement, as they relate to the Series A Notes, the Series B Notes, the Series
C Notes and the Series D Notes, in their entireties as set forth herein,
including to provide for a new private shelf facility as set forth in paragraph
2B hereof, and to provide that the Series A Notes, the Series B Notes, the
2
Series C Notes, the Series D Notes and any Shelf Notes shall be subject to the
terms of this Agreement.
Subject to the terms and conditions hereof, Prudential is willing to
agree to the foregoing. Accordingly, the Company and the Purchasers agree as
follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF SERIES A NOTES. The Company will
authorize the issue of the Series A Notes in the aggregate principal amount of
$12,500,000, to be dated the date of issue thereof, to mature June 9, 2007, to
bear interest (computed on the basis of a 360 day year -- 30 day month) on the
unpaid balance thereof from the date thereof until the principal thereof shall
have become due at the rate of 7.21% per annum, and on overdue principal, Yield-
Maintenance Amount and interest at the rate and at the time specified therein,
and to be substantially in the form of Exhibit A-1 attached hereto.
1B. AUTHORIZATION OF ISSUE OF SERIES B NOTES. The Company will
authorize the issue of the Series B Notes in the aggregate principal amount of
$25,000,000, to be dated the date of issue thereof, to mature April 30, 2014, to
bear interest (computed on the basis of a 360 day year -- 30 day month) on the
unpaid balance thereof from the date thereof until the principal thereof shall
have become due at the rate of 6.70% per annum, and on overdue principal, Yield-
Maintenance Amount and interest at the rate and at the time specified therein,
and to be substantially in the form of Exhibit A-2 attached hereto.
1C. AUTHORIZATION OF ISSUE OF SERIES C NOTES. The Company will
authorize the issue of the Series C Notes in the aggregate principal amount of
$14,000,000, to be dated the date of issue thereof, to mature June 9, 2002 to
bear interest (computed on the basis of a 360 day year -- 30 day month) on the
unpaid balance thereof from the date thereof until the principal thereof shall
have become due at the rate of 7.49 % per annum, and on overdue principal,
Yield-Maintenance Amount and interest at the rate and at the time specified
therein, and to be substantially in the form of Exhibit A-3 attached hereto.
1D. AUTHORIZATION OF ISSUE OF SERIES D NOTES. The Company will
authorize the issue of the Series D Notes in the aggregate principal amount of
$7,000,000, to be dated the date of issue thereof, to mature June 9, 2002, to
bear interest (computed on the basis of a 360 day year -- 30 day month) on the
unpaid balance thereof from the date thereof until the principal amount thereof
shall have become due at the rate of 6.90% per annum, and on overdue principal,
Yield-Maintenance Amount and interest at the rate and at the time specified
therein, and to be substantially in the form of Exhibit A-4 attached hereto
1E. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company may authorize
the issue of its additional senior promissory notes (the "SHELF NOTES") in the
aggregate principal amount of $50,000,000, to be dated the date of issue
thereof, to mature, in the case of each Shelf Note so issued, no more than
fifteen years after the date of original issuance thereof, to have an average
life, in the case of each Shelf Note so issued, of no more than twelve years
after the date of original issuance thereof, to bear interest on the unpaid
balance thereof from the date thereof at the rate per annum, and to have such
other particular terms, as shall be set forth, in the case of
3
each Shelf Note so issued, in the Confirmation of Acceptance with respect to
such Shelf Note delivered pursuant to paragraph 2B(5), and to be substantially
in the form of Exhibit A-5 attached hereto. The terms "SHELF NOTE" and "SHELF
NOTES" as used herein shall include each Shelf Note delivered pursuant to any
provision of this Agreement and each Shelf Note delivered in substitution or
exchange for any such Shelf Note pursuant to any such provision. The terms
"NOTE" and "NOTES" as used herein shall include each Series A Note, each Series
B Note, each Series C Note, each Series D Note and each Shelf Note delivered
pursuant to any provision of this Agreement and each Note delivered in
substitution or exchange for any such Note pursuant to any such provision. Notes
which have (i) the same final maturity, (ii) the same principal prepayment
dates, (iii) the same principal prepayment amounts (as a percentage of the
original principal amount of each Note), (iv) the same interest rate, (v) the
same interest payment periods and (vi) the same date of issuance (which, in the
case of a Note issued in exchange for another Note, shall be deemed for these
purposes the date on which such Note's ultimate predecessor Note was issued),
are herein called a "SERIES" of Notes.
2. ASSUMPTION AND AMENDMENT AND RESTATEMENT OF EXISTING NOTES;
PURCHASE AND SALE OF SHELF NOTES.
2A(1). ASSUMPTION. Effective as of the Restatement Date, the
Company hereby irrevocably, absolutely, unconditionally and expressly assumes
(i) the due and punctual payment of all of the principal of, interest on, Yield-
Maintenance Amount (if any) with respect to, and all other payments due under or
relating to, (a) the $14,000,000 principal amount of the Existing 7.49% Notes
and the $7,000,000 principal amount of the Existing 6.90% Notes not prepaid by
Medical Systems as contemplated by the Medical Systems Amended and Restated Note
Agreement, (b) the $12,500,000 principal amount of the Existing 7.21% Notes not
constituting Medical Systems Series A Notes, and (c) the $25,000,000 principal
amount of the Existing 6.70% Notes the maturity of which has been shortened to
April 30, 2014 pursuant to the Medical Systems Amended and Restated Note
Agreement but not constituting Medical Systems Series B Notes, (ii) as amended
and restated in paragraphs 2A(2), 2A(3), 2A(4) and 2A(5), the due and punctual
payment and performance of all covenants and provisions in the 1992 Note
Agreement, the 1996 Note Agreement, the Existing 7.49% Notes, the Existing 6.90%
Notes, the Existing 7.21% Notes, the Existing 6.70% Notes and all other
instruments, agreements and undertakings which have been made by Medical
Systems, in each case to the extent related to the indebtedness the payment of
which is assumed by the Company pursuant to clause (i) of the paragraph 2A(1),
and (iii) all other debts, liabilities and obligations of Medical Systems under
any of the agreements, promissory notes, instruments or undertaking referred to
in clause (ii) of this paragraph 2A(1), in each case to the extent related to
the indebtedness the payment of which is assumed by the Company pursuant to
clause (i) of this paragraph 2A(1). The Company covenants that its debts,
liabilities and obligations assumed pursuant to this paragraph 2A(1) shall be
those of a primary obligor and not a guarantor, surety or secondary obligor.
2A(2). AMENDMENT AND RESTATEMENT OF EXISTING 7.21% NOTES AND
ISSUANCE OF SERIES A NOTES. Subject to the terms and conditions herein set
forth, the Company and Prudential agree that, effective on the Restatement Date,
the $12,500,000 principal amount of the Existing 7.21% Notes the payment of
which is being assumed by the Company pursuant to paragraph 2A(1) will be
amended and restated in their entirety to be a like principal amount of Series A
Notes having the terms described in paragraph 1A hereof and to be in the form of
4
Exhibit A-1 hereto. On the Restatement Date, the Company will deliver to
Prudential, in substitution and exchange for the Existing 7.21% Notes being so
amended and restated, at the offices of Schiff Hardin & Waite, 6600 Sears Tower,
Chicago, Illinois 60606, one or more Series A Notes registered in the name of
Prudential, evidencing the aggregate principal amount of the Existing 7.21%
Notes held by Prudential being so amended and restated, and in the denomination
or denominations, specified in the Purchaser Schedule attached hereto. The
Series A Notes (i) are given in exchange and substitution for, and not as
payment of the indebtedness evidenced by, the $12,500,000 principal amount of
the Existing 7.21% Notes being amended and restated pursuant to this paragraph
2A(2), (ii) merely re-evidence the indebtedness evidenced by such $12,500,000
principal amount of the Existing 7.21% Notes, and (iii) are not intended to
constitute a novation or discharge of the indebtedness evidenced by such
$12,500,000 principal amount of the Existing 7.21% Notes. Promptly after the
Restatement Date Prudential agrees to mark such Existing 7.21% Notes "Replaced"
and to return such Existing 7.21% Notes to Medical Systems.
2A(3). AMENDMENT AND RESTATEMENT OF EXISTING 6.70% NOTES AND
ISSUANCE OF SERIES B NOTES. Subject to the terms and conditions herein set
forth, the Company and Prudential agree that, effective on the Restatement Date,
the $25,000,000 principal amount of the Existing 6.70% Notes the payment of
which is being assumed by the Company pursuant to paragraph 2A(1) will be
amended and restated in their entirety to be a like principal amount of Series B
Notes having the terms described in paragraph 1B hereof and to be in the form of
Exhibit A-2 hereto. On the Restatement Date, the Company will deliver to
Prudential, in substitution and exchange for the Existing 6.70% Notes being so
amended and restated, at the offices of Schiff Hardin & Waite, 6600 Sears Tower,
Chicago, Illinois 60606, one or more Series B Notes registered in the name of
Prudential, evidencing the aggregate principal amount of the Existing 6.70%
Notes held by Prudential being so amended and restated, and in the denomination
or denominations, specified in the Purchaser Schedule attached hereto. The
Series B Notes (i) are given in exchange and substitution for, and not as
payment of the indebtedness evidenced by, the $25,000,000 principal amount of
the Existing 6.70% Notes being amended and restated pursuant to this paragraph
2A(3), (ii) merely re-evidence the indebtedness evidenced by such $25,000,000
principal amount of the Existing 6.70% Notes, and (iii) are not intended to
constitute a novation or discharge of the indebtedness evidenced by such
$25,000,000 principal amount of the Existing 6.70% Notes. Promptly after the
Restatement Date Prudential agrees to mark such Existing 6.70% Notes "Replaced"
and to return such Existing 6.70% Notes to Medical Systems.
2A(4). AMENDMENT AND RESTATEMENT OF EXISTING 7.49% NOTES AND
ISSUANCE OF SERIES C NOTES. Subject to the terms and conditions herein set
forth, the Company and Prudential agree that, effective on the Restatement Date,
the $14,000,000 principal amount of the Existing 7.49% Notes the payment of
which is being assumed by the Company pursuant to paragraph 2A(1) will be
amended and restated in their entirety to be a like principal amount of Series C
Notes having the terms described in paragraph 1C and to be in the form of
Exhibit A-3 hereto. On the Restatement Date, the Company will deliver to
Prudential, in substitution and exchange for the Existing 7.49% Notes being so
amended and restated, at the offices of Schiff Hardin & Waite, 6600 Sears Tower,
Chicago, Illinois 60606, one or more Series C Notes registered in the name of
Prudential, evidencing the aggregate principal amount of the Existing 7.49%
Notes held by Prudential being so amended and restated, and in the denomination
or
5
denominations, specified in the Purchaser Schedule attached hereto. The Series C
Notes (i) are given in exchange and substitution for, and not a payment of the
indebtedness evidenced by, the $14,000,000 principal amount of the Existing
7.49% Notes being amended and restated pursuant to this paragraph 2A(4), (ii)
merely re-evidence the indebtedness evidenced by such $14,000,000 principal
amount of the Existing 7.49% Notes, and (iii) are not intended to constitute a
novation or discharge of the indebtedness evidenced by such $14,000,000
principal amount of the Existing 7.49% Notes. Promptly after the Restatement
Date, Prudential agrees to mark such Existing 7.49% Notes "Replaced" and to
return such Existing 7.49% Notes to Medical Systems.
2A(5). AMENDMENT AND RESTATEMENT OF EXISTING 6.90% NOTES AND
ISSUANCE OF SERIES D NOTES. Subject to the terms and conditions herein set
forth, the Company and Prudential agree that, effective on the Restatement Date,
the $7,000,000 principal amount of the Existing 6.90% Notes the payment of which
is being assumed by the Company pursuant to paragraph 2A(1) will be amended and
restated in their entirety to be a like principal amount of Series D Notes
having the terms described in paragraph 1D and to be in the form of Exhibit A-4
hereto. On the Restatement Date, the Company will deliver to Prudential, in
substitution and exchange for the Existing 6.90% Notes being so amended and
restated, at the offices of Schiff Hardin & Waite, 6600 Sears Tower, Chicago,
Illinois 60606, one or more Series D Notes registered in the name of Prudential,
evidencing the aggregate principal amount of the Existing 6.90% Note held by
Prudential being so amended and restated, and in the denomination or
denominations, specified in the Purchaser Schedule attached hereto. The Series D
Notes (i) are given in exchange and substitution for, and not as payment of the
indebtedness evidenced by, the $7,000,000 principal amount of the Existing 6.90%
Notes being amended and restated pursuant to this paragraph 2A(5), (ii) merely
re-evidence the indebtedness evidenced by such $7,000,000 principal amount of
the Existing 6.90% Notes, and (iii) are not intended to constitute a novation or
discharge of the indebtedness evidenced by such $7,000,000 principal amount of
the Existing 6.90% Notes. Promptly after the Restatement Date, Prudential agrees
to mark such Existing 6.90% Notes "Replaced" and to return such Existing 6.90%
Notes to Medical Systems.
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Shelf Notes
pursuant to this Agreement. The willingness of Prudential to consider such
purchase of Shelf Notes is herein called the "Facility". At any time, the
aggregate principal amount of Shelf Notes stated in paragraph 1E, minus the
-----
aggregate principal amount of Shelf Notes purchased and sold pursuant to this
Agreement prior to such time, minus the aggregate principal amount of Accepted
-----
Notes (as hereinafter defined) which have not yet been purchased and sold
hereunder prior to such time, is herein called the "AVAILABLE FACILITY AMOUNT"
at such time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER
PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS
UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES,
SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND
THE FACILITY SHALL IN NO WAY BE
6
CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold
pursuant to this Agreement until the earlier of (i) the third anniversary of the
date of this Agreement (or if such anniversary is not a Business Day, the
Business Day next preceding such anniversary) and (ii) the thirtieth day after
Prudential shall have given to the Company, or the Company shall have given to
Prudential, written notice stating that it elects to terminate the issuance and
sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not
a Business Day, the Business Day next preceding such thirtieth day). The period
during which Shelf Notes may be issued and sold pursuant to this Agreement is
herein called the "ISSUANCE PERIOD".
2B(3). REQUEST FOR PURCHASE. The Company may from time to time
during the Issuance Period make requests for purchases of Shelf Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for Purchase
shall be made to Prudential by telecopier or overnight delivery service, and
shall (i) specify the aggregate principal amount of Shelf Notes covered thereby,
which shall not be less than $5,000,000 and not be greater than the Available
Facility Amount at the time such Request for Purchase is made, (ii) specify the
principal amounts, final maturities, principal prepayment dates and amounts and
interest payment periods (quarterly or semi-annual in arrears) of the Shelf
Notes covered thereby, (iii) specify the use of proceeds of such Shelf Notes,
(iv) specify the proposed day for the closing of the purchase and sale of such
Shelf Notes, which shall be a Business Day during the Issuance Period not less
than 5 Business Days and not more than 30 Business Days after the making of such
Request for Purchase, (v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of such Shelf
Notes are to be transferred on the Closing Day for such purchase and sale, (vi)
certify that the representations and warranties contained in paragraph 8 are
true on and as of the date of such Request for Purchase (except to the extent
caused by the transactions herein contemplated) and that there exists on the
date of such Request for Purchase no Event of Default or Default, (vii) specify
the Designated Spread for such Shelf Notes and (viii) be substantially in the
form of Exhibit B attached hereto. Each Request for Purchase shall be in writing
and shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than two Business Days after the
Company shall have given Prudential a Request for Purchase pursuant to paragraph
2B(3), Prudential may, but shall be under no obligation to, provide to the
Company by telephone or telecopier, in each case between 9:30 A.M. and 1:30 P.M.
New York City local time (or such later time as Prudential may elect) interest
rate quotes for the several principal amounts, maturities, principal prepayment
schedules, and interest payment periods of Shelf Notes specified in such Request
for Purchase. Each quote shall represent the interest rate per annum payable on
the outstanding principal balance of such Shelf Notes at which Prudential or a
Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of
the principal amount thereof.
2B(5). ACCEPTANCE. Within 5 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2B(4) or such shorter
period as Prudential may specify to the Company (such period herein called the
"ACCEPTANCE WINDOW"), the Company may, subject to paragraph 2B(6), elect to
accept such interest rate quotes as to not less than $5,000,000 aggregate
principal amount of the Shelf Notes specified in the related Request for
Purchase.
7
Such election shall be made by an Authorized Officer of the Company notifying
Prudential by telephone or telecopier within the Acceptance Window that the
Company elects to accept such interest rate quotes, specifying the Shelf Notes
(each such Shelf Note being herein called an "ACCEPTED NOTE") as to which such
acceptance (herein called an "ACCEPTANCE") relates. The day the Company notifies
an Acceptance with respect to any Accepted Notes is herein called the
"ACCEPTANCE DAY" for such Accepted Notes. Any interest rate quotes as to which
Prudential does not receive an Acceptance within the Acceptance Window shall
expire, and no purchase or sale of Shelf Notes hereunder shall be made based on
such expired interest rate quotes. Subject to paragraph 2B(6) and the other
terms and conditions hereof, the Company agrees to sell to Prudential or a
Prudential Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the
principal amount of such Notes. As soon as practicable following the Acceptance
Day, the Company, Prudential and each Prudential Affiliate which is to purchase
any such Accepted Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto (herein called a
"CONFIRMATION OF ACCEPTANCE"). If the Company should fail to execute and return
to Prudential within three Business Days following receipt thereof a
Confirmation of Acceptance with respect to any Accepted Notes, Prudential may at
its election at any time prior to its receipt thereof cancel the closing with
respect to such Accepted Notes by so notifying the Company in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of
paragraph 2B(5), if Prudential shall have provided interest rate quotes pursuant
to paragraph 2B(4) and thereafter prior to the time an Acceptance with respect
to such quotes shall have been notified to Prudential in accordance with
paragraph 2B(5) the domestic market for U.S. Treasury securities or derivatives
shall have closed or there shall have occurred a general suspension, material
limitation, or significant disruption of trading in securities generally on the
New York Stock Exchange or in the domestic market for U.S. Treasury securities
or derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Shelf Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies Prudential of the Acceptance of any
such interest rate quotes, such Acceptance shall be ineffective for all purposes
of this Agreement, and Prudential shall promptly notify the Company that the
provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York
City local time) on the Closing Day for any Accepted Notes, the Company will
deliver to each Purchaser listed in the Confirmation of Acceptance relating
thereto at the offices of Prudential Capital Group, Four Embarcadero Center,
Suite 2700, San Francisco, California 94111, the Accepted Notes to be purchased
by such Purchaser in the form of one or more Notes in authorized denominations
as such Purchaser may request for each Series of Accepted Notes to be purchased
on the Closing Day, dated the Closing Day and registered in such Purchaser's
name (or in the name of its nominee), against payment of the purchase price
thereof by transfer of immediately available funds for credit to the Company's
account specified in the Request for Purchase of such Notes. If the Company
fails to tender to any Purchaser the Accepted Notes to be purchased by such
Purchaser on the scheduled Closing Day for such Accepted Notes as provided above
in this paragraph 2B(7), or any of the conditions specified in paragraph 3 shall
not have been fulfilled by the time required on such scheduled Closing Day, the
Company shall, prior to 1:00 P.M., New York City local time, on such scheduled
Closing Day notify Prudential (which notification shall be deemed received by
each Purchaser) in writing whether (i) such closing is to be
8
rescheduled (such rescheduled date to be a Business Day during the Issuance
Period not less than one Business Day and not more than 30 Business Days after
such scheduled Closing Day (the "RESCHEDULED CLOSING DAY")) and certify to
Prudential (which certification shall be for the benefit of each Purchaser) that
the Company reasonably believes that it will be able to comply with the
conditions set forth in paragraph 3 on such Rescheduled Closing Day and that the
Company will pay the Delayed Delivery Fee in accordance with paragraph
2B(8)(iii) or (ii) such closing is to be canceled. In the event that the Company
shall fail to give such notice referred to in the preceding sentence, Prudential
(on behalf of each Purchaser) may at its election, at any time after 1:00 P.M.,
New York City local time, on such scheduled Closing Day, notify the Company in
writing that such closing is to be canceled. Notwithstanding anything to the
contrary appearing in this Agreement, the Company may not elect to reschedule a
closing with respect to any given Accepted Notes on more than one occasion,
unless Prudential shall have otherwise consented in writing.
2B(8). FEES.
2B(8)(i). ISSUANCE FEE. The Company will pay to Prudential
in immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day (other than any other Closing Day which occurs prior to the date
which is three months after the Restatement Date) in an amount equal to 0.15% of
the aggregate principal amount of Notes sold on such Closing Day.
2B(8)(ii). DELAYED DELIVERY FEE. If the closing of the
purchase and sale of any Accepted Note is delayed for any reason beyond the
original Closing Day for such Accepted Note, the Company will pay to Prudential
(a) on the Cancellation Date or actual closing date of such purchase and sale
and (b) if earlier, the next Business Day following 90 days after the Acceptance
Day for such Accepted Note and on each Business Day following 90 days after the
prior payment hereunder, a fee (herein called the "DELAYED DELIVERY FEE")
calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, i.e., the yield per
annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Note) to but
excluding the date of such payment; and "PA" means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery Fee be less than zero. Nothing contained
herein shall obligate any Purchaser to purchase any Accepted Note on any day
other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
9
2B(8)(iii). CANCELLATION FEE. If the Company at any time
notifies Prudential in writing that the Company is canceling the closing of the
purchase and sale of any Accepted Note, or if Prudential notifies the Company in
writing under the circumstances set forth in the last sentence of paragraph
2B(5) or the penultimate sentence of paragraph 2B(7) that the closing of the
purchase and sale of such Accepted Note is to be canceled, or if the closing of
the purchase and sale of such Accepted Note is not consummated on or prior to
the last day of the Issuance Period (the date of any such notification, or the
last day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay to Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid and ask
prices shall be as reported by Bridge Telerate Services (Telerate) (or, if such
data for any reason ceases to be available through Bridge Telerate Services
(Telerate), any publicly available source of similar market data). Each price
shall be based on a U.S. Treasury security having a par value of $100.00 and
shall be rounded to the second decimal place. In no case shall the Cancellation
Fee be less than zero.
3. CONDITIONS OF CLOSING.
3A. CONDITIONS TO AMENDMENTS AND RESTATEMENTS. The effectiveness of
the amendment and restatement of the $12,500,000 principal amount of Existing
7.21% Notes pursuant to paragraph 2A(1) hereof, the amendment and restatement of
the $25,000,000 principal amount of the Existing 6.70% Notes pursuant to
paragraph 2A(2) hereof, the amendment and restatement of the $14,000,000
principal amount of the Existing 7.49% Notes pursuant to paragraph 2A(3) hereof,
the amendment and restatement of the $7,000,000 principal amount of the 6.90%
Notes pursuant to paragraph 2A(4) hereof, and the amendment and restatement of
the 1992 Note Agreement and the 1996 Note Agreement pursuant to paragraph 11S
hereof are subject to the satisfaction, on or before the Restatement Date, of
(i) each of the conditions set forth in paragraph 3B hereof, and (ii) each of
the following conditions:
3A(1). SPIN OFF. All agreements and instruments relating to the
Spin Off shall be in form and substance reasonably satisfactory to Prudential
and shall have been duly executed and delivered by the parties thereto,
Prudential shall have received copies of all such agreements and instruments
together with an Officer's Certificate certify that such agreements and
instrument are correct and complete, and the Spin Off shall have been
consummated in accordance with the terms of such agreements and instruments.
3A(2). MEDICAL SYSTEMS AMENDED AND RESTATED NOTE AGREEMENT.
Prudential and Medical Systems shall have duly executed and delivered the
Medical Systems Amended and Restated Note Agreement and the Medical Systems
Amended and Restated Note
10
Agreement shall be in full force and effect. All conditions to the effectiveness
of the amendment and restatement of the 1992 Note Agreement and the 1996 Note
Agreement, as they relate to the Medical Systems Series A Notes and the Medical
Systems Series B Notes, and the release of Medical Systems from obligations
being assumed by the Company hereunder under the Medical Systems Amended and
Restated Note Agreement shall have been satisfied.
3A(3). RESTATED NOTES. Prudential shall have received the Series A
Notes, the Series B Notes, the Series C Notes and the Series D Notes, as
contemplated by paragraphs 2A(2), 2A(3), 2A(4) and 2A(5) hereof, duly executed
and delivered by the Company.
3A(4). SECURITIES VALUATION OFFICE QUESTIONNAIRE. The Company will
have delivered to Prudential a copy of the Company's response to the Year 2000
Due Diligence Questionnaire supplied by the Securities Valuation Office of the
National Association of Insurance Commissioners.
3A(5). SOLVENCY CERTIFICATE. Prudential shall have received an
Officer's Certificate as to the solvency of the Company after giving effect to
the Spin-Off, the assumption by the Company pursuant to paragraph 2A(1) hereof,
the amendments and restatements pursuant to paragraphs 2A(2), 2A(3), 2A(4) and
2A(5), the issuance of the Notes and the consummation of the other transactions
contemplated hereby in the form of Exhibit D attached hereto.
3B. CONDITIONS TO PURCHASE OF NOTES. The effectiveness of the amendments
and restatements referred to in paragraph 3A and the obligation of any Purchaser
to purchase and pay for any Notes is subject to the satisfaction (i) on or
before the Restatement Date, of each of the conditions set forth in paragraph
3A, and (ii) on or before the Closing Day for such Notes, of the following
additional conditions:
3B(1). CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the Restatement Date or the applicable Closing
Day, as applicable:
(i) In the case of the purchase of any Note(s), the Note(s) to be
purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Boards of Directors
of the Company authorizing the execution and delivery of this Agreement and
the issuance of the Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to this
Agreement and the Notes.
(iii) Certificates of the Secretary or an Assistant Secretary and one
other officer of the Company certifying the names and true signatures of
the officers of the Company authorized to sign this Agreement and the Notes
and the other documents to be delivered hereunder.
(iv) Certified copies of the Charter and By-laws of the Company.
(v) A favorable opinion from the general counsel of the Company (or
such other counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser and substantially in the form
of Exhibit E-1 (in the case of the
11
effectiveness of such amendments and restatements) or E-2 (in the case of
any Shelf Notes) attached hereto and as to such other matters as such
Purchaser may reasonably request. The Company hereby directs each such
counsel to deliver such opinion, agrees that the issuance and sale of any
Notes will constitute a reconfirmation of such direction, and understands
and agrees that each Purchaser receiving such an opinion will and is hereby
authorized to rely on such opinion.
(vi) Good standing certificates for the Company from the Secretaries
of State of Delaware and California dated as of a recent date and such
other evidence of the status of the Company as such Purchaser may
reasonably request.
(vii) In the case of Closing Days other than the Restatement Date,
additional documents or certificates with respect to legal matters or
corporate or other proceedings related to the transactions contemplated
hereby as may be reasonably requested by such Purchaser at least two
Business Days prior to the Closing Day.
3B(2). OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall
have received from James F. Evert, Assistant General Counsel of Prudential or
such other counsel who is acting as special counsel for it in connection with
this transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3B(3). REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties of the Company contained in paragraph 8 hereof
shall be true on and as of the Restatement Date or such Closing Day, as
applicable, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on the Restatement Date or such Closing Day, as
applicable, no Event of Default or Default; and the Company shall have delivered
to such Purchaser an Officer's Certificate, dated the Restatement Date or such
Closing Day, as applicable, to both such effects.
3B(4). PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and shall not
subject such Purchaser to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and such
Purchaser shall have received such certificates or other evidence as it may
request to establish compliance with this condition.
3B(5). PAYMENT OF FEES. The Company shall have paid to Prudential
any fees due it pursuant to or in connection with this Agreement, including any
Issuance Fee due pursuant to paragraph 2B(8)(i) and any Delayed Delivery Fee due
pursuant to paragraph 2B(8)(ii).
4. PREPAYMENTS. The Series A Notes, the Series B Notes, the Series C
Notes, the Series D Notes and any Shelf Notes shall be subject to required
prepayment as and to the extent provided in paragraphs 4A and 4B, respectively.
The Series A Notes, the Series B Notes,
12
the Series C Notes, the Series D Notes and any Shelf Notes shall also be subject
to prepayment under the circumstances set forth in paragraph 4C.
4A. REQUIRED PREPAYMENTS OF SERIES A NOTES, SERIES B NOTES, SERIES C NOTES
AND SERIES D NOTES.
4A(1). REQUIRED PREPAYMENTS OF SERIES A NOTES. Until the Series A
Notes shall be paid in full, the Company shall apply to the prepayment of the
Series A Notes, without Yield Maintenance Amount, the sum of $1,250,000 on June
9 and December 9 in each year, commencing December 9, 2002 through and including
December 9, 2006, and such principal amounts of the Series A Notes, together
with interest accrued thereon to the payment dates, shall become due on such
payment dates. The remaining unpaid principal amount of the Series A Notes,
together with interest accrued thereon, shall become due on the maturity date of
the Series A Notes.
4A(2). REQUIRED PREPAYMENTS OF SERIES B NOTES. Until the Series B
Notes shall be paid in full, the Company shall apply to the prepayment of the
Series B Notes, without Yield-Maintenance Amount, the sum of $6,250,000 on April
30, 2008, April 30, 2010 and April 30, 2012, and such principal amounts of the
Series B Notes, together with interest accrued thereon to the payment dates,
shall become due on such payment dates. The remaining unpaid principal amount of
the Series B Notes, together with interest accrued thereon, shall become due on
the maturity date of the Series B Notes.
4A(3). REQUIRED PREPAYMENTS OF SERIES C NOTES. Until the Series C
Notes shall be paid in full, the Company shall apply to the prepayment of the
Series C Notes, without Yield-Maintenance Amount, the sum of $2,000,000 on June
9 and December 9 in each year, commencing June 9, 1999 through and including
December 9, 2001, and such principal amounts of the Series C Notes, together
with interest accrued thereon to the payment dates, shall become due on such
payment dates. The remaining unpaid principal amount of the Series C Notes,
together with interest accrued thereon, shall become due on the maturity date of
the Series C Notes.
4A(4). REQUIRED PREPAYMENTS OF SERIES D NOTES. Until the Series D
Note shall be paid in full, the Company shall apply to the prepayment of the
Series D Notes, without Yield-Maintenance Amount, the sum of $1,000,000 on June
9 and December 9 in each year, commencing, June 9, 1999 through and including
December 9, 2001, and such principal amounts of the Series D Notes, together
with interest accrued thereon to the payment dates, shall become due on such
payment dates. The remaining unpaid principal balance of the Series D Notes,
together with interest accrued thereon, shall become due on the maturity date of
the Series D Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of Shelf Notes shall
be subject to the required prepayments, if any, set forth in the Notes of such
Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes of each
Series shall be subject to prepayment, in whole at any time or from time to time
in part (in integral multiples of $100,000 and in a minimum amount of
$1,000,000), at the option of the
13
Company, at 100% of the principal amount so prepaid plus interest thereon to the
prepayment date and the Yield-Maintenance Amount, if any, with respect to each
such Note. Notwithstanding paragraphs 4A(1), 4A(2), 4A(3), 4A(4) and 4B, upon
any partial prepayment of Notes of a Series pursuant to this paragraph 4C, the
principal amount of each required prepayment of the Notes of such Series under
paragraph 4A(1), 4A(2), 4A(3), 4A(4) or 4B, as the case may be, becoming due
after the date of such prepayment shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Notes of such Series is reduced as a
result of such prepayment pursuant to this paragraph 4C.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note of a Series to be prepaid pursuant to paragraph 4C irrevocable written
notice of such prepayment not less than 5 Business Days prior to the prepayment
date, specifying such prepayment date, the aggregate principal amount of the
Notes of such Series to be prepaid on such date, the principal amount of the
Notes of such Series held by such holder to be prepaid on that date and that
such prepayment is to be made pursuant to paragraph 4C. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together
with the Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4C, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each Significant Holder which shall have designated a
recipient for such notices in the Purchaser Schedule attached hereto or in the
applicable Confirmation of Acceptance or by notice in writing to the Company.
4E. APPLICATION OF PREPAYMENTS. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Notes of any Series
pursuant to paragraph 4A, 4B or 4C, the amount to be prepaid shall be applied
pro rata to all outstanding Notes of such Series according to the respective
unpaid principal amounts thereof.
4F. RETIREMENT OF NOTES. The Company shall not, and shall not permit any
of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than by prepayment pursuant to
paragraph 4A, 4B or 4C or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
of any Series held by any holder.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company covenants that
it will deliver to each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 45 days after the
end of each of the first three quarterly periods in each fiscal year,
consolidated statements of earnings, cash flows and shareholders' equity of
the Company and its Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
quarterly period, setting forth in each case in comparative form figures
for the
14
corresponding period in the preceding fiscal year, all in reasonable detail
and certified by an authorized financial officer of the Company, subject to
changes resulting from year-end adjustments; provided, however, that
-------- -------
pursuant to clause (iii) below of copies of the Quarterly Report on Form
10-Q of the Company for such quarterly period filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (i);
(ii) as soon as practicable and in any event within 90 days after the
end of each fiscal year, consolidated statements of earnings, cash flows
and shareholders' equity of the Company and its Subsidiaries for such year,
and a consolidated balance sheet of the Company and its Subsidiaries as at
the end of such year, setting forth in each case in comparative form
corresponding consolidated figures from the preceding annual audit, all in
reasonable detail and satisfactory in form to the Required Holder(s) and
containing an unqualified opinion by independent nationally recognized
public accountants selected by the Company; provided, however, that
-------- -------
delivery pursuant to clause (iii) below of copies of the Annual Report on
Form 10-K of the Company for such fiscal year filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (ii);
(iii) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its
stockholders and copies of all registration statements (without exhibits
and exclusive of any registration statement on From S-8 or any successor
thereto) and all reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions
of the Securities and Exchange Commission);
(iv) promptly upon any amendment or other modification thereof which
changes the types or amounts of investments or classes of investments
permitted thereby, a copy of the Investment Policy reflecting such
amendment or other modification; and
(v) with reasonable promptness, such other financial data as such
Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A, 6B, 6C(2)
and 6C(3) and stating that there exists no Event of Default or Default, or, if
any Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary for their report on
such financial statements, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of Default
or Default, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of such audit.
15
The Company also covenants that immediately after any Designated Officer
obtains knowledge of an Event of Default or Default, it will deliver to each
Significant Holder an Officer's Certificate specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it will,
upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to and in compliance with the reporting requirements
of section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph
5B, the term "qualified institutional buyer" shall have the meaning specified in
Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit any
Person designated by any Significant Holder in writing, at such Significant
Holder's expense, to visit and inspect any of the properties of the Company and
its Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom
(provided making copies or taking extracts of any such documents with the
consent of the Company is not prohibited by any federal, state or local law) and
to discuss the affairs, finances and accounts of any of such corporations with
(x) the principal officers of the Company and (y) during the pendency of an
Event of Default and so long as an officer of the Company is provided an
opportunity to attend, its independent public accountants, all at such
reasonable times and as often as such Significant Holder may reasonably request;
provided, however, that (i) the foregoing provisions of this paragraph 5C shall
- -------- -------
be subject to compliance with applicable security regulations of the United
States Government, (ii) matters which the Company in good faith has determined
are subject to the attorney/client privilege, information from third parties
which the Company is required to maintain as confidential and confidential
research and design information of the Company or of any Subsidiary shall not be
subject to such inspection, examination, copying and discussion and (iii)
disclosure of any other material non-public information of the Company or its
Subsidiaries requested by such Person may be conditioned upon such Person's
execution and delivery of a confidentiality agreement in the form of Exhibit F-1
(in the case of Prudential or any Prudential Affiliate) or in the form of
Exhibit F-2 or such other form as is reasonably satisfactory to the Company and
such Person (in the case of any other holder of Notes).
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if it or
any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C(1) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), it
will, if requested by the Required Holders, make or cause to be made effective
provision whereby the Notes will be secured by such Lien equally and ratably
with any and all other Funded Debt thereby secured so long as any such other
Funded Debt shall be so secured.
16
5E. MAINTENANCE OF INSURANCE. The Company covenants that it will, and will
cause its Subsidiaries to, maintain insurance in such amounts and against such
hazards and liabilities as customarily is maintained by other companies
operating similar businesses and, from time to time, upon the written request of
any Significant Holder, will deliver an Officer's Certificate specifying the
details of such insurance then in effect.
5F. COMPLIANCE WITH LAWS. The Company covenants that it will, and will
cause each of the Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all applicable statutes, rules,
regulations and orders of all federal, state, local and foreign governments,
courts, agencies or regulatory bodies, including all Environmental Laws, except
where noncompliance would not materially adversely affect the business,
condition (financial or otherwise) or operations of the Company and the
Subsidiaries taken as a whole.
6. NEGATIVE COVENANTS. During the Issuance Period and so long thereafter
as any Note or other amount due hereunder is outstanding and unpaid, the Company
covenants as follows:
6A. CERTAIN FINANCIAL REQUIREMENTS. The Company covenants that it will not
permit:
(i) Consolidated Working Capital at any time to be less than
$65,000,000;
(ii) the ratio of (A) the sum of Consolidated Cash and Cash
Equivalents plus Consolidated Receivables to (B) Consolidated Current
Liabilities at any time to be less than 50%; or
(iii) the ratio of (A) the sum of (1) Consolidated Net Earnings plus
(2) Consolidated income taxes plus (3) Consolidated Interest Expense to (B)
Consolidated Interest Expense for the five immediately preceding
consecutive fiscal quarters at any time to be less than 300%.
6B. DIVIDEND LIMITATION. The Company covenants that it will not and will
not permit any Subsidiary to (i) pay or declare any dividend on any class of its
stock, or make any other distribution on account of any class of its stock, or
(ii) redeem, purchase or otherwise acquire, directly or indirectly, any shares
of its stock (all of the foregoing being herein called "RESTRICTED PAYMENTS")
except any such Restricted Payment which, when added to all prior Restricted
Payments made by the Company or any Subsidiary after October 2, 1998, does not
exceed Consolidated Net Earnings Available for Restricted Payments. There shall
not be included in Restricted Payments (i) dividends paid, or distributions
made, in its own stock by the Company or a Subsidiary; (ii) exchanges of stock
of one or more classes of the Company or a Subsidiary for its common stock or
for its stock of the same class, except to the extent that cash or other value
is involved in such exchange; (iii) the cost of stock of the Company repurchased
by the Company in any year for the issuance of new stock to employees and
directors under the employee stock plans and programs described in the Company's
proxy statement dated February 12, 1999, and any successor or replacement
programs, but not to exceed the proceeds received by the Company from the
issuance of stock under such plans and programs during such year; or (iv)
17
dividends or distributions paid by a Subsidiary to the Company. The term "stock"
as used in this paragraph 6B shall include warrants, rights or options to
purchase stock.
6C. LIEN, FUNDED DEBT AND OTHER RESTRICTIONS. The Company covenants that
it will not and will not permit any Subsidiary to:
6C(1). LIENS. Create, assume or suffer to exist at any time any
Lien upon any of its property or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable securing of the Note
in accordance with the provisions of paragraph 5C), except
(i) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles;
(ii) other Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and
which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of
its business;
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary; and
(iv) any Lien on property of the Company or any Subsidiary securing
Funded Debt permitted by paragraph 6C(2), provided that Funded Debt secured
--------
by all such Liens shall not at any time exceed 15% of Consolidated Tangible
Net Worth;
6C(2). CONSOLIDATED FUNDED DEBT. Create, incur, assume or suffer to
exist at any time any Funded Debt, except to the extent that (i) Consolidated
Funded Debt is less than or equal to 55% of Consolidated Tangible Gross Worth,
(ii) Consolidated Funded Debt secured by Liens is less than or equal to 15% of
Consolidated Tangible Net Worth, and (iii) Funded Debt of Subsidiaries
(including Guarantees of Funded Debt of the Company) to Persons other than the
Company or another Subsidiary is less than or equal to 10% of Consolidated
Tangible Net Worth;
6C(3). LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES.
Make or permit to remain outstanding any loan or advance to, or Guarantee,
endorse or otherwise voluntarily be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person (provided that for
--------
purposes of this Agreement down payments and progress payments in the ordinary
course of business shall not be considered as advances), except that the Company
or any Subsidiary may:
(i) make or permit to remain outstanding loans or advances to any
Subsidiary,
18
(ii) own, purchase or acquire stock, obligations or securities of a
Subsidiary, or of a corporation which immediately after such purchase or
acquisition will be a Subsidiary,
(iii) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
the Company or any Subsidiary,
(iv) endorse negotiable instruments for collection in the ordinary
course of business,
(v) make or permit to remain outstanding (A) travel advances in the
ordinary course of business to, and (B) loans and Guarantees pursuant to
employee relocation and housing programs approved by the Company's Board of
Directors to or on behalf of, officers and employees of the Company or any
Subsidiary,
(vi) guarantee obligations of other Persons, provided the Funded
Debt represented by such Guarantees does not violate any provision of this
Agreement, including paragraph 6C(2),
(vii) make investments as permitted by the investment policy (the
"INVESTMENT POLICY") adopted by the Board of Directors of the Company and
which is attached hereto as Exhibit G, as amended from time to time,
(viii) make Restricted Payments in compliance with paragraph 6B,
and
(ix) guarantee obligations of Medical Systems and Varian
Semiconductor Equipment Associates, Inc. ("VSEA") consisting of "shared
liabilities" as that term is defined in the Distribution Agreement dated as
of January 14, 1999 by and among the Company, Medical Systems and VSEA,
(x) make other loans, advances and investments, provided that the
--------
aggregate dollar amount thereof shall not at any time exceed 20% of
Consolidated Tangible Net Worth;
6C(4). SALE OF STOCK AND FUNDED DEBT OF SUBSIDIARIES. Sell, issue
or otherwise dispose of any shares of stock (other than director's or
shareholder's qualifying shares) or Funded Debt of any Subsidiary, except (i) to
the Company or another Subsidiary, (ii) that all shares of stock and Funded Debt
of any Subsidiary at the time owned by or owed to the Company and all
Subsidiaries may be sold as an entirety for a consideration which represents the
fair value (as determined in good faith by the Board of Directors of the
Company) at the time of sale of the shares of stock and Funded Debt so sold,
provided that such sale shall be subject to and shall not violate paragraph
- --------
6C(5), and further provided that, at the time of such sale, such Subsidiary
--------
shall not own, directly or indirectly, any shares of stock or Funded Debt of any
other Subsidiary (unless all of the shares of stock and Funded Debt of such
other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this paragraph 6C(4))
and (iii) less than all shares of stock in a Subsidiary may be sold for a
consideration of not less than fair value (as determined in good faith by the
Board of
19
Directors of the Company) so long as the Company's remaining investment in such
former Subsidiary is treated as an investment and can be held in compliance with
paragraph 6C(3);
6C(5). MERGER AND SALE OF ASSETS. Enter into any transaction of
merger or consolidation with any other corporation or sell, lease or transfer or
otherwise dispose of all or a substantial part of its assets to any Person,
except that
(i) any Subsidiary wholly-owned by the Company may merge with the
Company (provided that the Company shall be the continuing or surviving
corporation) or with any one or more other Subsidiaries,
(ii) any Subsidiary may sell, lease, transfer or otherwise dispose of
(collectively, "TRANSFER") any of its assets to the Company or another
Subsidiary,
(iii) any Subsidiary may Transfer all or substantially all of its
assets subject to the conditions specified in paragraphs 6C(4)(ii) and the
remainder of this 6C(5) with respect to the sale of the stock of such
Subsidiary,
(iv) the Company may merge or consolidate with any other corporation
provided that the Company shall be the continuing or surviving corporation
--------
and that immediately after such merger or consolidation, there shall exist
no Event of Default or Default under this Agreement, and
(v) the Company or any Subsidiary may Transfer any of its assets
provided that (x) the book value of all such assets Transferred, together
with the book value of all shares of stock and Funded Debt of any
Subsidiary Transferred pursuant to the provisions of paragraph 6C(4) and
assets Transferred pursuant to clause (iii) of this paragraph 6C(5), in any
fiscal year does not exceed 20% of Consolidated Tangible Net Worth as of
the last day of the immediately preceding fiscal year, and (y) the assets,
including any assets Transferred pursuant to clause (iii) of this paragraph
6C(5) and any Subsidiary Transferred pursuant to the provisions of
paragraph 6C(4), Transferred in any fiscal year shall have contributed less
than 10% of the average amount of Consolidated Net Earnings for the three
fiscal years immediately preceding the fiscal year in which such
determination takes place;
provided, however, that notwithstanding any provision of paragraphs 6C(4) and
- -------- -------
6C(5) to the contrary, (A) the Company and its Subsidiaries shall not Transfer
assets, on a cumulative basis from the date of this Agreement, either with a
book value in excess of 40% of Consolidated Tangible Net Worth (measured as of
the last day of the fiscal year immediately preceding the fiscal year in which
such determination takes place) or that contributed Consolidated Net Earnings
(calculated as set forth in clause (v) (y) above) in excess of 20% of
Consolidated Net Earnings for the three fiscal years immediately preceding the
fiscal year in which such determination takes place, and (B) the Company may
discontinue the operation of, or sell, any division of its business or any
Subsidiary if such division or Subsidiary is unprofitable and the Board of
Directors of the Company in good faith has determined that the business of such
division or Subsidiary should be so discontinued or otherwise abandoned;
20
6C(6). SALE OR DISCOUNT OF RECEIVABLES. Discount or sell with
recourse, or sell for less than the face value thereof, any of its notes or
accounts receivable, except that the Company or any Subsidiary may (i) sell
------
notes or accounts receivable with recourse provided that the aggregate face
amount of such notes and accounts receivable sold in any fiscal year does not
exceed 5% of Consolidated gross sales for the fiscal year then most recently
ended, and (ii) discount notes or accounts receivable provided that the amount
of such discount reflects only customary finance charges paid by the Company or
such Subsidiary in the normal course of business;
6C(7). TRANSACTIONS WITH STOCKHOLDERS. Directly or indirectly,
purchase, acquire or lease any property from, or Transfer any property to, or
otherwise deal with, in the ordinary course of business or otherwise (i) any
Affiliate or (ii) any Substantial Stockholder, except that (a) the Company may
sell to, or purchase (within the limitations of paragraph 6B) from, any such
person shares of the Company's stock, (b) such acts and transactions prohibited
by this paragraph 6C(7) may be performed or engaged in if made upon terms not
less favorable than if no such relationship described in clauses (i) and (ii)
above existed, (c) the foregoing shall not apply to cash compensation, stock
option and other stock-based incentive compensation, employee relocation and
other employee benefit plans approved by the Company's Board of Directors, (d)
the Company and its Subsidiaries may, in the ordinary course of business,
directly or indirectly, purchase, acquire or lease property from, or Transfer
property to, or otherwise deal with Affiliates provided that such transaction
with any such Affiliate shall be not less favorable to the Company and its
Subsidiaries than if such transactions were entered into with non-Affiliates and
(e) the Company and Subsidiaries may engage in such transactions if approved by
a majority of the outside, disinterested members of the Company's Board of
Directors.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield Maintenance Amount on any Note when the same shall become due, either
by the terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest on any Note
for more than 10 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor, as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized
Lease Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage or
any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect
thereto, or the Company or any Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement under which
any such obligation is created (or if
21
any other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or
to permit the holder or holders of such obligation (or a trustee on behalf
of such holder or holders) to cause, such obligation to become due (or to
be repurchased by the Company or any Subsidiary) prior to any stated
maturity, provided that the aggregate amount of all obligations as to which
--------
such a payment default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to the Company or
any Subsidiary) shall occur and be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company herein or by
the Company or any of its officers in any writing furnished in connection
with or pursuant to this Agreement shall be false in any material respect
on the date as of which made; or
(v) the Company fails to perform or observe any agreement contained
in paragraph 6; or
(vi) the Company fails to perform or observe any other agreement,
term or condition contained herein and such failure shall not be remedied
within 30 days after any Designated Officer obtains actual knowledge
thereof; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company or
any Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereafter in effect (herein called the
"BANKRUPTCY LAW"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more than
30 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than 60
days; or
22
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets with a book
value, or the divestiture of the stock of a Subsidiary whose assets have a
book value, in excess of 20% of Consolidated Tangible Net Worth (measured
at the end of the fiscal year immediately preceding the fiscal year in
which such divestiture occurs) or which requires the divestiture of assets,
or stock of a Subsidiary, which shall have contributed in excess of 10% of
the average amount of Consolidated Net Earnings for the three completed
fiscal years immediately preceding the fiscal year in which such
divestiture occurs, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount in excess of
$5,000,000 is rendered against the Company or any Subsidiary and, within 60
days after entry thereof, any such judgment is not discharged or execution
thereof stayed pending appeal, or within 60 days after the expiration of
any such stay, any such judgment is not discharged; or
(xiv) if (a) any Plan shall fail to satisfy any applicable minimum
funding standards of ERISA or the Code for any plan year or part thereof or
a waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (b) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (c) the aggregate "amount of
unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $1,000,000, (d) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (e) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (f) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides post-
employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (a) through (f) above, either individually or together
with any other such event or events, would reasonably be expected to have a
material adverse effect on the financial condition of the Company and its
Subsidiaries taken as a whole;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held by
such holder shall thereupon be and become, immediately due and payable at par
together with interest accrued thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company, (b) if such
event is an Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, all of the Notes at the time
outstanding shall automatically become immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
with
23
respect to each Note, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Company, and (c) with respect to any
event constituting an Event of Default, the Required Holder(s) of the Notes of
any Series may at its or their option during the continuance of such Event of
Default, by notice in writing to the Company, declare all of the Notes of such
Series to be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each Note of such
Series, without presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the Notes
of any Series shall have been declared immediately due and payable pursuant to
paragraph 7A, the Required Holder(s) of the Notes of such Series may, by notice
in writing to the Company, rescind and annul such declaration and its
consequences if (i) the Company shall have paid all overdue interest on the
Notes of such Series, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes of such Series which have become due otherwise
than by reason of such declaration, and interest on such overdue interest and
overdue principal and Yield-Maintenance Amount at the rate specified in the
Notes of such Series, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows (all such representations, warranties and
covenants being made both immediately before and after giving effect to the Spin
Off and all references to "SUBSIDIARY" and "SUBSIDIARIES" in this paragraph 8
shall be deemed omitted if the Company has no Subsidiaries at the time the
representations herein are made or repeated):
24
8A. ORGANIZATION. The Company is a corporation duly organized and existing
in good standing under the laws of the State of Delaware, each Subsidiary is
duly organized and existing in good standing under the laws of the jurisdiction
in which it is incorporated, and the Company has and each Subsidiary has the
corporate power to own its respective property and to carry on its respective
business as now being conducted, and the Company is and each Subsidiary is duly
qualified as a foreign corporation to do business and in good standing in every
jurisdiction in which the nature of the respective business conducted by it
makes such qualification necessary, excepting jurisdictions where failure to
qualify would on a consolidated basis have no material effect on the Company.
The issuance of any Notes pursuant to this Agreement is in compliance with the
authorizing resolutions of the Board of Directors then in effect and will not
result in the aggregate outstanding amount of Notes, debt obligations and other
borrowings authorized by such resolutions, after giving effect to the issuance
of, and application of the proceeds from, such Notes, to exceed the aggregate
limitation contained in such authorizing resolutions.
8B. FINANCIAL STATEMENTS. The Company has furnished Prudential and each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) a consolidated
balance sheet of the Company and its Subsidiaries as at the last day of each of
the two fiscal years of the Company most recently completed prior to the date as
of which this representation is made or repeated to such Purchaser (other than
fiscal years completed within 90 days prior to such date for which audited
financial statements have not been released) and consolidated statements of
earnings, cash flows and shareholders' equity of the Company and its
Subsidiaries for each such year, all reported on by PricewaterhouseCoopers LLP
(or another nationally recognized independent accounting firm) and (ii) a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
the quarterly period (if any) most recently completed prior to such date and
after the end of such fiscal year (other than quarterly periods completed within
45 days prior to such date for which financial statements have not been
released) and the comparable quarterly period in the preceding fiscal year and
consolidated statements of earnings and cash flows for the periods from the
beginning of the fiscal years in which such quarterly periods are included to
the end of such quarterly periods, prepared by the Company (provided that no
such quarterly statements have been delivered for any quarterly period ended
prior to the Spin-Off). Such financial statements (including any related
schedules and/or notes) are complete (subject, as to interim statements, to
changes resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of earnings,
stockholders' equity and cash flows fairly present the results of the operations
of the Company and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, property
or assets, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole since the end of the most recent fiscal year
for which such audited financial statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, or any properties or rights of the Company or any of
its Subsidiaries, by or before any court,
25
arbitrator or administrative or governmental body which could reasonably be
expected to result in any material adverse change in the business, property or
assets, condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole.
8D. OUTSTANDING FUNDED DEBT. Neither the Company nor any of its
Subsidiaries has outstanding any Funded Debt except as permitted by paragraph
6C(2). There exists no default under the provisions of any instrument evidencing
such outstanding Funded Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries has
good and marketable title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, other than any immaterial assets with respect to which it
will diligently attempt to obtain good and marketable title after the Spin Off,
in both cases to the extent material to the Company's Consolidated business,
including the properties and assets reflected in the most recent audited balance
sheet referred to in paragraph 8B (other than properties and assets disposed of
in the ordinary course of business and, to the extent disclosure thereof has
been made in writing to Prudential, other properties and assets disposed of in
compliance with the terms of this Agreement), subject to no Lien of any kind
except Liens permitted by paragraph 6C(1). All leases necessary in any material
respect for the conduct of the Consolidated business of the Company and its
Subsidiaries are valid and subsisting and are in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of the Company and its Subsidiaries, are required to be filed, and each
has paid all taxes as shown on such returns and on all assessments received by
it to the extent that such taxes have become due and the failure to either file
such returns or pay such taxes or assessments could have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, except such taxes
as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
the Company's Consolidated business, property or assets, condition (financial or
otherwise) or operations. Neither the execution nor delivery of this Agreement
or the Notes, nor the offering, issuance and sale of the Notes, nor fulfillment
of nor compliance with the terms and provisions hereof and of the Notes
(including, without limitation, the consummation of the Spin Off and the
assumption by the Company of certain of the obligations of Medical Systems as
contemplated by paragraph 2A(1) hereof) will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
or result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to,
the charter or by-laws of the Company or any of its Subsidiaries, any material
award of any arbitrator or any material agreement (including any agreement with
shareholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any of its Subsidiaries is subject. Neither
the Company nor any of its Subsidiaries is a party to, or otherwise subject to
any provision contained in, any instrument evidencing Funded Debt of the Company
or such
26
Subsidiary, any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Funded Debt of the Company of the type to be
evidenced by the Notes, except in each case as set forth in the agreements
listed in Schedule 8G attached hereto (as such Schedule 8G may have been
-----------
modified from time to time subsequent to the Restatement Date by written
supplements thereto delivered by the Company to Prudential).
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than Institutional Investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
Section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. None of the proceeds of the sale of any Notes will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any "margin stock" as defined in Regulation
U (12 CFR Part 221) of the Board of Governors of the Federal Reserve System
(herein called "MARGIN STOCK") or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
stock that is then currently a margin stock (other than retiring indebtedness
incurred to acquire stock of the Company, which stock is retired promptly upon
the Company's acquisition thereof) or for any other purpose which might
constitute the purchase of such Notes a "purpose credit" within the meaning of
such Regulation U, unless the Company shall have delivered to the Purchaser
which is purchasing such Notes, on the Closing Day for such Notes, an opinion of
counsel satisfactory to such Purchaser stating that the purchase of such Notes
does not constitute a violation of such Regulation U. Neither the Company nor
any agent acting on its behalf has taken or will take any action which might
cause this Agreement or the Notes to violate Regulation T, Regulation U or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan (other than a Multiemployer Plan) that is or would be materially
adverse to the business, property or assets, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole. No liability
to the PBGC has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
Company, any Subsidiary or any ERISA Affiliate which is or would be materially
adverse to the business, property or assets, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole. Neither the
Company, any Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the
business, property or assets, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole. The execution and delivery
of this Agreement and the issuance and sale of the Notes will be exempt from or
will not involve any transaction which is subject to
27
the prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence is made in reliance
upon and subject to the accuracy of the representation of each Purchaser in
paragraph 9B as to the source of funds to be used by it to purchase any Notes.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Closing Day for any
Notes with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes. To the extent
pertaining to the Securities Act and state Blue Sky laws, the representation by
the Company in the next preceding sentence is made in reliance upon and subject
to the accuracy of the representation of each Purchaser in paragraph 9A hereof.
8L. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all of
their respective properties and facilities have complied at all times and in all
respects with all Environmental Laws, except, in any such case, where failure to
comply would not result in a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
8M. DISCLOSURE. Neither this Agreement nor any other document, certificate
or statement furnished to any Purchaser by or on behalf of the Company in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. To the knowledge of any Designated Officer, there is
no fact peculiar to the Company or any of its Subsidiaries which materially
adversely affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole and which has not been set forth in this Agreement and the schedules
hereto (or in any certificate or other document required to be delivered
subsequent to the execution and delivery of this Agreement).
8N. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any Notes
will be used to finance a Hostile Tender Offer.
8O. YEAR 2000 COMPLIANCE. The Company has and its Subsidiaries have
conducted an analysis of, and developed or are developing a compliance program
with respect to, the effect of Year 2000 upon the key software, tradeware,
telecommunications, physical plant and automated processes of the Company and
its Subsidiaries and have made appropriate inquiries of the key customers and
suppliers of the Company and its Subsidiaries. The Company anticipates that such
compliance program will be completed on a timely basis and that the impact of
Year 2000 on the Company, its Subsidiaries and the key customers and suppliers
of the Company and
28
its Subsidiaries will not be such as to have a material adverse effect on the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is acquiring the Notes purchased by
it hereunder for investment only, with neither an intention at the time of such
purchase to sell or distribute such Notes nor with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act, provided that the disposition of such Purchaser's property shall at all
--------
times be and remain within its control.
Such Purchaser acknowledges that the Notes being purchased by it have not
been registered under the Securities Act, and cannot be transferred except in
compliance with the Securities Act and applicable state securities laws.
9B. SOURCE OF FUNDS. At least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by it
hereunder: (i) the Source is the "insurance company general account" of such
Purchaser (as such term is defined under Section V of the United States
Department of Labor's Prohibited Transaction Class Exemption ("PTCE") 95-60),
and as of the date of the purchase of the Notes such Purchaser satisfies all of
the applicable requirements for relief under Sections 1 and IV of PTCE 95-60;
(ii) the Source is a separate account maintained by such Purchaser in which no
employee benefit plan, other than employee benefit plans identified on a list
which has been furnished by such Purchaser to the Company, participates to the
extent of 10% or more; (iii) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of Part V
of the QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part 1(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company and (a) the
identity of such QPAM and (b) the names of all employee benefit plan whose
assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (iii); (iv) the Source is a governmental
plan; (v) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this clause (v);
or (vi) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA. For the purpose of this paragraph
9B, the terms "separate account", "governmental plan", "party in interest" and
"employee benefit plan" shall have the respective meanings specified in section
3 of ERISA.
29
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4C or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DESIGNATED SPREAD" shall mean 0 in the case of each Series A Note, each
Series B Note, each Series C Note and each Series D Note and 0 in the case of
each Note of any other Series unless the Confirmation of Acceptance with respect
to the Notes of such Series specifies a different Designated Spread in which
case it shall mean, with respect to each Note of such Series, the Designated
Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the Designated Spread over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on Bridge Telerate Services (Telerate) (or such
other display as may replace page 678 on Bridge Telerate Services (Telerate))
for actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, or
if such yields shall not be reported as of such time or the yields reported as
of such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have been
so reported as of the Business Day next preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release H. 15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of years (calculated
to the nearest one-twelfth year) which will elapse between the Settlement Date
30
with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4C or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2B(5).
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2B(5).
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person either (i) possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such corporation, whether
through the ownership of voting securities, by contract or otherwise or (ii)
owns beneficially, directly or indirectly, 10% or more of the voting stock of
such corporation.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, a
Designated Officer, any other officer of the Company designated as an
"Authorized Officer" of the Company in the Information Schedule attached hereto
or any vice president of the Company designated as an "Authorized Officer" of
the Company for the purpose of this Agreement in an Officer's Certificate
executed by a Designated Officer and delivered to Prudential, and (ii) in the
case of Prudential, any officer of Prudential designated as its "Authorized
Officer" in the Information Schedule or any officer of Prudential designated as
its "Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers. Any action taken under this
Agreement on behalf of the Company by any individual who on or after the date of
this Agreement shall have been an Authorized Officer of the Company and whom
Prudential in good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though such
individual shall have ceased to be an Authorized Officer of the Company, and any
action taken under this Agreement on behalf of Prudential by
31
any individual who on or after the date of this Agreement shall have been an
Authorized Officer of Prudential and whom the Company in good faith believes to
be an Authorized Officer of Prudential at the time of such action shall be
binding on Prudential even though such individual shall have ceased to be an
Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in paragraph
2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a Sunday,
(ii) a day on which commercial banks in New York City or San Francisco are
required or authorized to be closed and (iii) for purposes of paragraph 2B(3)
hereof only, a day on which The Prudential Insurance Company of America is not
open for business.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in paragraph
2B(8)(iii).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CLOSING DAY" shall mean, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note in
the Request for Purchase of such Accepted Note, provided that (i) if the Company
--------
and the Purchaser which is obligated to purchase such Accepted Note agree on an
earlier Business Day for such closing, the "Closing Day" for such Accepted Note
shall be such earlier Business Day, and (ii) if the closing of the purchase and
sale of such Accepted Note is rescheduled pursuant to paragraph 2B(7), the
Closing Day for such Accepted Note, for all purposes of this Agreement except
references to "original Closing Day" in paragraph 2B(8)(iii), shall mean the
Rescheduled Closing Day with respect to such Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"CONSOLIDATED" when used in connection with an accounting term, including
all defined terms herein, shall mean the combined account of the type defined by
the accounting term for the Company and all Subsidiaries determined in
accordance with generally accepted accounting principles.
"CONSOLIDATED CASH AND CASH EQUIVALENTS" shall mean, with respect to the
Company and its Subsidiaries (i) all amounts from time to time on deposit in
demand deposit accounts, along with interest thereon, and all other amounts
shown as part of "Cash and Cash Equivalents" on the Company's consolidated
balance sheet in accordance with generally accepted accounting principles, (ii)
all certificates of deposit at banks or other financial institutions, net of any
penalty or fees for early withdrawal and (iii) marketable securities, as
determined by generally accepted
32
accounting principles and that are within the parameters of the Investment
Policy; provided, however, that "Consolidated Cash and Cash Equivalents" shall
-------- -------
not include any of the foregoing to the extent that such amounts are on deposit
for or otherwise subject to a claim or right of another Person superior or pari
passu in right of priority to that of the Company or any Subsidiary, such as
escrow or performance deposits.
"CONSOLIDATED CURRENT ASSETS" shall mean, with respect to the Company and
its Subsidiaries, the consolidated current assets thereof determined in
accordance with generally accepted accounting principles.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, with respect to the Company
and its Subsidiaries, the consolidated current liabilities thereof determined in
accordance with generally accepted accounting principles.
"CONSOLIDATED INTEREST EXPENSE" shall mean Consolidated gross interest
expense, as determined by generally accepted accounting principles.
"CONSOLIDATED NET EARNINGS" shall mean the consolidated gross revenues of
the Company and its Subsidiaries less all operating and non-operating expenses
of the Company and its Subsidiaries including all charges of a proper character
(including current and deferred taxes on income, provision for taxes on
unremitted foreign earnings which are included in gross revenues, and current
additions to revenues), but not including in gross revenues any gains (net of
expenses and taxes applicable thereto) in excess of losses resulting from the
sale, conversion or other disposition (other than in the ordinary course of
business) of capital assets (i.e., assets other than current assets), any gains
resulting from the write-up (other than in the ordinary course of business) of
assets, any extraordinary gains, any equity of the Company and its Subsidiaries
in the undistributed earnings of any corporation which is not a Subsidiary, any
earnings of any other corporation acquired by the Company or any Subsidiary
through purchase, merger, or consolidation or otherwise for any year prior to
the year of acquisition, or any equity in any Subsidiary at the date of
acquisition over the cost of the investment in such Subsidiary and not including
in expenses any extraordinary losses, or any equity of the Company and its
Subsidiaries in the undistributed earnings of all such corporations, all
determined in accordance with generally accepted accounting principles
consistently applied. With respect to any determination of Consolidated Net
Earnings hereunder for any period of determination which includes any period
prior to the Spin-Off, Consolidated Net Earnings for such period of
determination shall be calculated on a proforma basis as though the Spin-Off had
been consummated immediately prior to the beginning of the period of
determination.
"CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS" shall mean an
amount equal to (i) $30,000,000 plus (ii) 65% (or minus 100% in case of a
-----
deficit) of Consolidated Net Earnings for the period (taken as one accounting
period) commencing on October 3, 1998 and terminating at the end of the last
fiscal quarter immediately preceding the date of any proposed Restricted
Payment.
"CONSOLIDATED RECEIVABLES" shall mean the Company's consolidated accounts
receivable, determined in accordance with generally accepted accounting
principles.
33
"CONSOLIDATED TANGIBLE NET WORTH" shall mean the amount shown on the books
of the Company and all Subsidiaries as total shareholders' equity (determined on
a consolidated basis in accordance with generally accepted accounting principles
consistently applied, less (without duplication) goodwill, trade names,
trademarks, patents, organization expenses, unamortized debt discount expenses
and other intangibles.
"CONSOLIDATED TANGIBLE GROSS WORTH" shall mean the sum of (i) Consolidated
Funded Debt, and (ii) Consolidated Tangible Net Worth.
"CONSOLIDATED WORKING CAPITAL" shall mean the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2B(8)(ii).
"DEMAND" shall have the meaning specified in paragraph 11B.
"DESIGNATED OFFICER" shall mean the Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer and
Controller of the Company.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes, and any and all regulations, codes, plans, orders,
decrees, judgments, injunctions, notices or demand letters issued, entered,
promulgated or approved thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the same
controlled group of corporations as the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
- --------
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCLUDED PERSONS" shall mean those Persons and their respective Affiliates
set forth on the list provided by the Company to a holder of a Note pursuant to
paragraph 11D(2). "Excluded Persons" shall not include, except if otherwise
agreed to in writing by the Company and such holder, any Person of the type
specified in clause (i) of the definition of Institutional Investors.
34
"EXISTING 6.70% NOTES" shall have the meaning specified in the
Introduction.
"EXISTING 6.90% NOTES" shall have the meaning specified in the
Introduction.
"EXISTING 7.21% NOTES" shall have the meaning specified in the
Introduction.
"EXISTING 7.49% NOTES" shall have the meaning specified in the
Introduction.
"FACILITY" shall have the meaning specified in paragraph 2B(1).
"FUNDED DEBT" shall mean, without duplication, (i) any obligation payable
more than one year from the date of the creation thereof (or which is renewable
or extendable at the option of the obligor for a period of more than one year
from the date of creation), (ii) all indebtedness having a maturity of less than
one year, provided such indebtedness is incurred pursuant to revolving credit
--------
arrangements or other financing commitments with a final, non-extendable
maturity more than one year from the date of creation thereof, (iii) any
obligation for borrowed money (and any notes payable, drafts accepted or
advances representing extensions of credit (other than trade payables) whether
or not representing obligations for borrowed money) payable on demand or within
a period of one year from the date or creation thereof, (iv) seasonal credit
facilities, (v) Capitalized Lease Obligations, (vi) obligations of third parties
secured by a Lien on the property or other assets of the Company or any
Subsidiary, (vii) obligations of partnerships and joint ventures of which the
Company or any Subsidiary is a general partner or coventurer and which is not
expressly non-recourse to the Company or such Subsidiaries, (viii) unfunded
vested benefits under each Plan maintained for employees of the Company or any
Subsidiary and covered by Title IV of ERISA, (ix) Guarantees by the Company or
any Subsidiary of the foregoing (excluding letters of credit and other
contingent liabilities for advance payments and performance bonds) and (x)
modifications, renewals and extensions of the above.
"GUARANTEE" shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(other than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or service, regardless of the non-delivery or non- furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
35
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note, the
United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital stock of
any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases for portfolio
investment purposes of such shares, equity interests, securities or rights
which, together with any such shares, equity, interests, securities or rights
then held, represent less than 5% of the equity interests or beneficial
ownership of such corporation or other entity, and such offer or purchase has
not been duly approved by the board of directors of such corporation or the
equivalent governing body of such other entity prior to the date on which the
Company makes the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"INSTITUTIONAL INVESTORS" shall mean (i) banks, finance companies,
insurance companies, pension funds and other commercial lenders, (ii)
"accredited investors," as such term is defined under Regulation D promulgated
under the Securities Act and (iii) "qualified institutional buyers", as such
term is defined in Rule 144A promulgated under the Securities Act.
"INVESTMENT POLICY" shall have the meaning specified in paragraph
6C(3)(vii).
"ISSUANCE FEE" shall have the meaning specified in paragraph 2B(8)(i).
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
"MEDICAL SYSTEMS" shall have the meaning specified in the Introduction.
"MEDICAL SYSTEMS AMENDED AND RESTATED NOTE AGREEMENT" shall mean the
Amended and Restated Note Purchase and Private Shelf Agreement, dated as of
April 2, 1999, among Medical Systems, Prudential, PRUCO Life Insurance Company,
PRUCO Life Insurance Company of New Jersey and each Prudential Affiliate which
becomes bound by the provisions thereof.
"MEDICAL SYSTEMS SERIES A NOTES" shall have the meaning specified in the
Introduction.
"MEDICAL SYSTEMS SERIES B NOTES" shall have the meaning specified in the
Introduction.
36
"MEDICAL SYSTEMS SERIES B NOTES" shall have the meaning specified
in the Introduction.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001 (a)(3) of ERISA.
"1992 NOTE AGREEMENT" shall have the meaning specified in the Introduction.
"1996 NOTE AGREEMENT" shall have the meaning specified in the Introduction.
"NOTES" shall have the meaning specified in paragraph 1E.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the
Company by an Authorized Officer of the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor replacement entity thereto under ERISA.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean (i) any Person which, directly or
indirectly, controls, is controlled by, or is under common control with,
Prudential and (ii) any investment fund which is managed by Prudential or a
Prudential Affiliate described in clause (i) of this definition.
"PURCHASERS" shall mean Prudential with respect to the Series A Notes, the
Series B Notes, the Series C Notes and the Series D Notes and, with respect to
any Accepted Notes, Prudential and/or the Prudential Affiliate(s), which are
purchasing such Accepted Notes.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph 2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of more than 50% of
the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2B(7).
"RESTATEMENT DATE" shall mean the "Series C Closing Day", as defined in the
Medical Systems Amended and Restated Note Agreement.
37
"RESTRICTED PAYMENTS" shall have the meaning specified to such term in
paragraph 6B.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph 1E.
"SERIES A NOTES" shall have the meaning specified in the Introduction.
"SERIES B NOTES" shall have the meaning specified in the Introduction.
"SERIES C NOTES" shall have the meaning specified in the Introduction.
"SERIES D NOTES" shall have the meaning specified in the Introduction.
"SHELF NOTES" shall have the meaning specified in paragraph 1E.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as Prudential or
any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 10% of the aggregate
principal amount of the Notes of any Series from time to time outstanding.
"SPIN OFF" shall have the meaning specified in the Introduction.
"STRUCTURING FEE" shall have the meaning provided in paragraph 2B(8)(i).
"SUBSIDIARY" shall mean any corporation, association or other business
entity in which the Company or one or more of its Subsidiaries or the Company
and one or more of its Subsidiaries owns at least 75% of the equity or voting
interests of such entity (and such equity or voting interests so owned enable
the Company and/or Subsidiaries to elect at least a majority of the directors,
or persons performing similar functions, of such entity), and any partnership or
joint venture if more than a 75% interest in the profits or capital thereof is
owned by the Company or one or more of its Subsidiaries or the Company and one
or more of its Subsidiaries (unless such partnership can and does ordinarily
take major business actions without the prior approval of the Company or one or
more of its Subsidiaries).
"SUBSTANTIAL STOCKHOLDER" shall mean (i) any Person owning beneficially,
directly or indirectly, either individually or together with all other Persons
to whom such Person is related by blood, adoption or marriage, 5% or more of the
outstanding voting stock of the Company, or (ii) any Person related by blood,
adoption or marriage to any Person coming within clause (i) of this definition.
"TRANSFER" shall have the meaning specified in paragraph 6C(5)(ii).
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of
38
directors of such corporation (irrespective of whether at the time stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B. Any
reference herein to any specific citation, section or form of law, statute, rule
or regulation shall refer to such new, replacement or analogous citation,
section or form should citation, section or form be modified, amended or
replaced.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on, and any
Yield-Maintenance Amount payable with respect to, such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit to (i) the account or accounts of such Purchaser specified in the
Purchaser Schedule attached hereto in the case of any Series A Note, Series B
Note, Series C Note or Series D Note, (ii) the account or accounts of such
Purchaser specified in the Confirmation of Acceptance with respect to such Note
in the case of any Shelf Note or (iii) such other account or accounts in the
United States as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, it
will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of all
reasonable out-of-pocket expenses arising in connection with the following: (i)
all document negotiation, drafting and duplication charges and the fees and
expenses of any special counsel engaged by (A) Prudential and the Purchasers in
connection with entering into this Agreement and (B) Prudential, any Purchaser
or any Transferee in connection with any subsequent transaction contemplated by,
proposed modification of, or proposed consent under, this Agreement, if such
proposed transaction, modification or consent (1) is requested by the Company,
whether or not such transaction occurs, such modification becomes effective or
such consent is granted or (2) results from or relates to the occurrence of a
Default or Event of Default, or in order to avert, waive, consent to or cure the
same; provided, however, that in each such case the Company shall be responsible
-------- -------
for the fees and expenses of only one firm of outside counsel for Prudential,
the Purchasers and the
39
Transferees at any one time; and (ii) the costs and expenses, including
attorneys' fees, incurred by Prudential, any Purchaser or any Transferee in (A)
responding to any subpoena or other legal process, including in connection with
litigation, or informal investigative demand (collectively, "DEMANDS"),
provided, however, that such Demand (1) is issued principally in connection with
- -------- -------
this Agreement, the transactions contemplated hereby or by reason of any
Purchaser's or Transferee's having acquired any Note or having acquired
information regarding the Company or any Subsidiary in connection with its
acquisition of any Note, (2) does not arise out of any litigation between the
Purchaser and its Transferee and (3) is not issued in connection with any
inquiry, audit or investigation by any governmental authority that relates
principally to the business, operations or investments of the entity that
received such Demand and (B) enforcing (or determining whether or how to
enforce) any rights under this Agreement or the Notes, including without
limitation costs and expenses incurred in any workout, restructuring or
bankruptcy case.
The obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any Purchaser or
any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to change or affect the rate or
time of payment of interest on or any Yield-Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential (and not without the
written consent of Prudential) the provisions of paragraph 2B may be amended or
waived (except insofar as any such amendment or waiver would affect any rights
or obligations with respect to the purchase and sale of Notes which shall have
become Accepted Notes prior to such amendment or waiver), and (iv) with the
written consent of all of the Purchasers which shall have become obligated to
purchase Accepted Notes of any Series (and not without the written consent of
all such Purchasers), any of the provisions of paragraphs 2B and 3 may be
amended or waived insofar as such amendment or waiver would affect only rights
or obligations with respect to the purchase and sale of the Accepted Notes of
such Series or the terms and provisions of such Accepted Notes. Each holder of
any Note at the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of
40
any holder of such Note. As used herein and in the Notes, the term "THIS
AGREEMENT" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.
11D(1). FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $1,000,000, except as may be necessary to reflect any
principal amount not evenly divisible by $1,000,000. The Company shall keep at
its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for registration
of transfer of any Note at the principal office of the Company, the Company
shall, at its expense, execute and deliver one or more new Notes of like tenor
and of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Each prepayment of principal payable on each prepayment date upon each new Note
issued upon any such transfer or exchange shall be in the same proportion to the
unpaid principal amount of such new Note as the prepayment of principal payable
on such date on the Note surrendered for registration of transfer or exchange
bore to the unpaid principal amount of such Note. No reference need be made in
any such new Note to any prepayment or prepayments of principal previously due
and paid upon the Note surrendered for registration of transfer or exchange.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duty authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and Interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's indemnity agreement (which shall be unsecured if such holder is
Prudential, a Prudential Affiliate or an Institutional Investor with a tangible
net worth in excess of $200,000,000), or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver a new
Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11D(2). PRIOR NOTICE TO COMPANY REGARDING RESALE; EXCLUDED
TRANSFEREES. Anything contained in paragraph 11D(1) or paragraph 11E to the
contrary notwithstanding, if any holder of any Note wishes to sell all or any
portion of its Note or grant any participation or other interest therein to any
Person other than Prudential or a Prudential Affiliate, it shall (a) give the
Company written notice of (i) such intent (a "RESALE NOTICE") at the time such
determination is made and (ii) as soon as such information is available, but in
no event later than 10 days prior to any such sale, either a list of Persons to
whom it intends to offer the Notes, if available, or, if such holder is selling
its Notes through another Person, the identity of such Person, (b) for a five-
day period commencing on the date such holder provides to the Company the
information described in clause (a)(ii), consult with the Company in good faith
regarding the acceptability to the Company of any prospective purchasers of such
Notes or participations therein prior to
41
soliciting bids for such sale or participation, and (c) solicit, accept and
consider in good faith bids from the Company to repurchase such holder's Notes
during the same time period as such holder is soliciting offers for such Notes
from third parties (as part of its bid, the Company shall certify that no Event
of Default exists or would exist after giving effect to its repurchase of such
Notes). If such holder has not entered into a commitment to sell its Note (or
portion thereof) within 90 days after the expiration of such ten-day period,
such holder shall again be obligated to give notice required by this paragraph
11D(2). Prudential and Prudential Affiliates shall not be liable for any failure
to provide any Resale Notice that results from such Person's negligence. The
foregoing right of notice, consultation and bidding is in addition to the
obligations set forth in the next succeeding paragraph regarding Excluded
Persons.
The Company may, at any time, provide to the holders of the Notes a list of
Excluded Persons and update such list from time to time. In designating
Excluded Persons, the Company shall act reasonably and in good faith. If such
list of Excluded Persons is provided or updated, as the case may be, within two
Business Days of the Company's receipt of a Resale Notice, the selling holder
will not knowingly sell all or any portion of or participation in its Note to
any Excluded Person or any Affiliate thereof.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence and to the
requirements set forth in paragraph 11D, the holder of any Note may from time to
time grant participations in all or any part of such Note to any Person on such
terms and conditions as may be determined by such holder in its sole and
absolute discretion. The Company shall be justified in dealing only with the
holder of the Note who grants any participation, and shall not, except if an
event of the type described in clauses (viii) through (xi) of paragraph 7A
occurs with respect to such holder, be obligated to deal with such participants.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
42
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that
Prudential, each Purchaser and each holder of any Note (each being a "Delivering
Person") may deliver copies of any financial statements and other documents
delivered to it, and disclose any other information disclosed to it, by or on
behalf of the Company or any Subsidiary in connection with or pursuant to this
Agreement to (i) its directors, officers, employees, agents and professional
consultants, (ii) any Purchaser or holder of any Note, (iii) any Person (other
than an Excluded Person) to which it offers to sell any Note or any part
thereof, (iv) any Person (other than an Excluded Person) to which it sells or
offers to sell a participation in all or any part of any Note, (v) to the extent
that it has a legal obligation to disclose such information, any Person from
which it offers to purchase any security of the Company; provided, however, that
-------- -------
in the case of clause (iii), (iv) or (v), such holder will obtain from such
Person an executed confidentiality agreement in the form of Exhibit F-2 before
disclosing any material non-public information with respect to the Company or
any Subsidiary, (vi) any federal or state regulatory authority having
jurisdiction over it, (vii) the National Association of Insurance Commissioners
or any similar organization, or (viii) any other Person to which such delivery
or disclosure may be required (a) to comply with any law, rule, regulation or
order applicable to it, (b) to respond sufficiently to Demand served on it,
provided, however, that with respect to material, nonpublic information
- -------- -------
regarding the Company and/or its Subsidiaries, except as prohibited by law, such
Delivering Person shall provide notice to the Company of such legal requirement
or Demand at least ten Business Days (or such shorter period of time as is set
forth therein) prior to the date such information must be produced so that the
Company can intervene on its own behalf in such proceeding to prevent, postpone
or restrict such disclosure; provided further, however, that (1) not earlier
-------- ------- -------
than the third Business Day prior to the date specified in such Demand for such
document or information delivery or disclosure, such Delivering Person shall be
free to comply with such Demand if the Company has not at such time obtained any
protective or similar order preventing, postponing or restricting such
disclosure and (2) Prudential and any Prudential Affiliate shall not be liable
for any failure to provide any such notice to the Company that results from such
Person's negligence; or (c) with the prior consent of the Company (which, if
given orally initially by an Authorized Officer, shall be promptly confirmed, in
writing), which consent shall not be reasonably withheld, in order to protect
the investment of such Delivering Person in its Notes.
11I. INDEPENDENCE OF COVENANTS. Except to the extent the context
specifically requires otherwise, all covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of' another covenant
shall not (i) avoid the occurrence of a Default or Event of Default if such
action is taken or such condition exists or (ii) in any way prejudice an attempt
by the holder of any Note to prohibit, through equitable action or otherwise,
the taking of any action by the Company or any Subsidiary which would result in
a Default or Event of Default
11J. NOTICES. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first class
mail or nationwide overnight delivery service (with charges prepaid) and (i) if
to any Purchaser, addressed as specified for such communications in the
Purchaser Schedule attached hereto (in the case of the Series A Notes, Series B
Notes, Series C Notes or Series D Notes) or the Purchaser Schedule attached to
the applicable Confirmation of Acceptance (in the case of any Shelf Notes) or at
such other address as any such Purchaser shall have specified to the Company in
writing, (ii) if to any
43
other holder of any Note, addressed to it at such address as it shall have
specified in writing to the Company or, if any such holder shall not have so
specified an address, then addressed to such holder in care of the last holder
of such Note which shall have so specified an address to the Company and (iii)
if to the Company, addressed to it at 3120 Hansen Way, Palo Alto, California
94304-1000, Attention: Chief Financial Officer, provided, however, that any such
-------- -------
communication to the Company may also, at the option of the Person sending such
communication, be delivered by any other means either to the Company at its
address specified above or to any Authorized Officer of the Company. Any
communication pursuant to paragraph 2 shall be made by the method specified for
such communication in paragraph 2, and shall be effective to create any rights
or obligations under this Agreement only if, in the case of a telephone
communication, an Authorized Officer of the party conveying the information and
of the party receiving the information are parties to the telephone call, and in
the case of a telecopier communication, the communication is signed by an
Authorized Officer of the party conveying the information, addressed to the
attention of an Authorized Officer of the party receiving the information, and
in fact received at the telecopier terminal the number of which is listed for
the party receiving the communication in the Information Schedule or at such
other telecopier terminal as the party receiving the information shall have
specified in writing to the party sending such information.
So long as Prudential is the holder of any Note outstanding, the Company
shall be deemed to have given any required notices or information to Noteholders
who are Prudential Affiliates so long as it timely provides such notice or
information to Prudential in the manner specified by the applicable provision of
this Agreement.
11K. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on, or Yield-Maintenance Amount payable with respect to, any Note that is due on
a date other than a Business Day shall be made on the next succeeding Business
Day. If the date for any payment is extended to the next succeeding Business
Day by reason of the preceding sentence, the period of such extension shall not
be included in the computation of the interest payable on such Business Day.
11L. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof' and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11M. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement
11N. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
44
11O. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF CALIFORNIA.
11P. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are to
be several sales, and the obligations of Prudential and the Purchasers under
this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and neither
Prudential nor any Purchaser shall be responsible for the obligations of, or any
action taken or omitted by, any other such Person hereunder.
11Q. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11R. BINDING AGREEMENT. When this Agreement is executed and delivered by
the Company and Prudential, it shall become a binding agreement between the
Company and Prudential. This Agreement shall also inure to the benefit of each
Purchaser which shall have executed and delivered a Confirmation of Acceptance,
and each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
45
11S. AMENDMENT AND RESTATEMENT OF EXISTING AGREEMENTS; RELEASE OF THE
COMPANY. Upon satisfaction of the conditions specified in paragraph 3A hereof,
each of the 1992 Note Agreement and the 1996 Note Agreement, insofar as the same
relate to the Series A Notes, the Series B Notes, the Series C Notes or the
Series D Notes, shall be amended and restated in their entirety to read as set
forth herein, and the Series A Notes, the Series B Notes, the Series C Notes,
the Series D Notes and any Shelf Notes shall be subject to the terms hereof.
Very truly yours,
VARIAN, INC.
By: /s/ Franco N. Palomba
_____________________
Its: Treasurer
And by: /s/ Allen J. Lauer
------------------
Its: President and Chief Executive Officer
The foregoing Agreement is hereby accepted
as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Jeffrey L. Dickson
______________________
Vice President
46
INFORMATION SCHEDULE
Authorized Officers for Prudential
----------------------------------
ALLEN A. WEAVER JEFFREY L. DICKSON
Senior Managing Director Managing Director
Prudential Capital Group Prudential Capital Group
Two Prudential Plaza Four Embarcadero Center
Suite 5600 Suite 2700
Chicago, Illinois 60601 San Francisco, California 94111
Telephone: (312) 540-4211 Telephone: (415) 291-5054
Facsimile: (312) 540-4222 Facsimile: (415) 421-6233
JOSEPH Y. ALOUF STEPHEN J. DEMARTINI
Senior Vice President Senior Vice President
Prudential Capital Group Prudential Capital Group
Four Embarcadero Center Four Embarcadero Center
Suite 2700 Suite 2700
San Francisco, California 94111 San Francisco, California 94111
Telephone:(415) 291-5056 Telephone:(415) 291-5056
Facsimile: (415) 421-6233 Facsimile:(415) 421-6233
Authorized Officers for the Company
-----------------------------------
Each "Designated Officer" of the Company as such term is defined in paragraph
10B of the Agreement.
Varian, Inc.
3120 Hansen Way
Palo Alto, California
Telephone: (650) 213-8000
Facsimile: (650) 213-8200
PURCHASER SCHEDULE
Series A Notes, Series B Notes, Series C Notes and Series D Notes
-----------------------------------------------------------------
VARIAN, INC.
Aggregate principal
amount of Series A
Notes, Series B Notes,
Series C Notes and
Series D Notes to be
issued in exchange for
Existing 7.21% Notes,
Existing 6.70% Notes,
Existing 7.49% Notes
and Existing 6.90%
Notes, respectively Note Denominations(s)
------------------- ---------------------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $12,500,000 of $12,500,000 of
Series A Notes Series A Notes
(1) All payments on account of Series A $25,000,000 of $20,000,000 and
Notes, Series B Notes in the original Series B Notes $5,000,000 of
principal amount of $20,000,000, Series Series B Notes
C Notes and Series D Notes in the
original principal amount of $5,600,000 $14,000,000 of $14,000,000 of
held by such Purchaser shall be made by Series C Notes Series C Notes
wire transfer of immediately available
funds for credit to:
$7,000,000 of $5,600,000 and
Series D Notes $1,400,000 of
Series D Notes
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
All payments on account of the Series B
Notes in the original principal amount of
$5,000,000 and Series D Notes in the
original principal amount of $1,400,000 held
by such Purchaser shall be made by wire
transfer of immediately available funds for
credit to:
Account No. 890-0304-944
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the
name of the Company, a reference to "7.21%
Series A Senior Notes due June 9, 2007,
Security No. !INV______!", 6.70% Series B
Senior Notes due April 30, 2014, Security
No. "PPN922206\A INV6533", 7.49% Series C
Senior Notes due June 9, 2002, Security No.
"!INV______!", or 6.90% Series D Senior
Notes due June 9, 2002, Security No.
"!INV____!", as the case may be, and the due
date and application (as among principal,
interest and Yield-Maintenance Amount) of
the payment being made
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations
Group
Telephone: (973) 802-5260
Telecopy: (973) 802-8055
2
(3) Address for all other communications and
notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group - Corporates
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Managing Director
Telecopy: (415) 421-6233
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (201) 802-6660
Telecopy: (201) 802-9425
(5) Tax Identification No.: 22-1211670
3
EXHIBIT A-1
-----------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
[FORM OF SERIES A NOTE]
VARIAN, INC.
7.21% SERIES A SENIOR NOTE DUE JUNE 9, 2007
No. ________ __________________
$ ________________ __________________
FOR VALUE RECEIVED, the undersigned, Varian, Inc. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of _____________________on June 9, 2007
with interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the rate of 7.21% per annum from the date hereof,
payable quarterly on the 9th day of March, June, September and December in each
year, commencing with the March 9, June 9, September 9 or December 9 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of Yield Maintenance Amount and any overdue
payment of interest, payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum [from time to time]1
equal to [the greater of (i)]1 9.21% [or (ii) 2% over the rate of interest
publicly announced by Bank of New York from time to time in New York City as its
prime rate]./1/
Payments of principal, Yield Maintenance Amount, if any, and interest
are to be made at the main office of Bank of New York in New York City or at
such other place as the holder hereof shall designate to the Company in writing,
in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Purchase and Private Shelf
Agreement and Assumption, dated as of April 2, 1999 (herein called the
"Agreement"), between the Company, on the one hand, and The Prudential Insurance
Company of America and each Prudential Affiliate which becomes party thereto, on
the other hand, and is entitled to the benefits thereof. As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part, in certain cases without Yield Maintenance Amount and in other cases with
the Yield Maintenance Amount specified in the Agreement. Each holder of this
Note will be deemed by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in paragraph 11H of the Agreement, (ii) to
have made the representation set forth in paragraph 9B of the Agreement, and
(iii) to have agreed to the limitations on transfers set forth in paragraph 11D
of the agreement.
_____________________
/1/ Delete in the case of holder not exempt from California usury law.
A-1-1
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note (i) merely re-evidences a portion of the indebtedness previously
evidenced by Varian Associates, Inc.'s 7.21% Series A Senior Notes due June 9,
2007 (the "Existing 7.21% Notes") which has been assumed by the Company, (ii) is
given in exchange for, and not as payment of, Existing 7.21% Note(s), and (iii)
is in no way intended to constitute a novation of any Existing 7.21% Notes.
Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Agreement.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
VARIAN, INC.
By:_______________________________
Title:____________________________
And by:___________________________
Title:____________________________
A-1-2
EXHIBIT A-2
-----------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
[FORM OF SERIES B NOTE]
VARIAN, INC.
6.70% SERIES B SENIOR NOTE DUE APRIL 30, 2014
No. ________ _______________
$ ________________ _______________
FOR VALUE RECEIVED, the undersigned, Varian, Inc. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of _____________________on April 30, 2014
with interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the rate of 6.70% per annum from the date hereof,
payable quarterly on January 31, April 30, July 31 and October 31 in each year,
commencing with the January 31, April 30, July 31 or October 31 next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) on any overdue payment (including any overdue prepayment) of principal,
any overdue payment of Yield Maintenance Amount and any overdue payment of
interest, payable quarterly as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum [from time to time]1 equal to
[the greater of (i)]1 8.70% [or (ii) 2% over the rate of interest publicly
announced by Bank of New York from time to time in New York City as its prime
rate]./1/
Payments of principal, Yield Maintenance Amount, if any, and interest are
to be made at the main office of Bank of New York in New York City or at such
other place as the holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Purchase and Private Shelf
Agreement and Assumption, dated as of April 2, 1999 (herein called the
"Agreement"), between the Company, on the one hand, and The Prudential Insurance
Company of America and each Prudential Affiliate which becomes party thereto, on
the other hand, and is entitled to the benefits thereof. As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part, in certain cases without Yield Maintenance Amount and in other cases with
the Yield Maintenance Amount specified in the Agreement. Each holder of this
Note will be deemed by its acceptance
___________________
/1/ Delete in the case of holder not exempt from California usury law.
A-2-1
hereof, (i) to have agreed to the confidentiality provisions set forth in
paragraph 11H of the Agreement, (ii) to have made the representation set forth
in paragraph 9B of the Agreement, and (iii) to have agreed to the limitations on
transfers set forth in paragraph 11D of the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note (i) merely re-evidences a portion of the indebtedness previously
evidenced by Varian Associates, Inc.'s 6.70% Series B Senior Notes due April 30,
2018 (the "Existing 6.70% Notes") which has been assumed by the Company, (ii) is
given in exchange for, and not as payment of, Existing 6.70% Note(s), and (iii)
is in no way intended to constitute a novation of any Existing 6.70% Notes.
Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Agreement.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
VARIAN, INC.
By:_________________________________
Title:______________________________
And by:_____________________________
Title:______________________________
A-2-2
EXHIBIT A-3
-----------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
[FORM OF SERIES C NOTE]
VARIAN, INC.
7.49% SERIES C SENIOR NOTE DUE JUNE 9, 2002
No. ________ ________________
$ ________________ ________________
FOR VALUE RECEIVED, the undersigned, Varian, Inc. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of _____________________on June 9, 2002
with interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the rate of 7.49% per annum from the date hereof,
payable quarterly on the 9th day of March, June, September and December in each
year, commencing with the March 9, June 9, September 9 or December 9 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of Yield Maintenance Amount and any overdue
payment of interest, payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum [from time to time]1
equal to [the greater of (i)]1 9.49% [or (ii) 2% over the rate of interest
publicly announced by Bank of New York from time to time in New York City as its
prime rate]./1/
Payments of principal, Yield Maintenance Amount, if any, and interest are
to be made at the main office of Bank of New York in New York City or at such
other place as the holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Purchase and Private Shelf
Agreement and Assumption, dated as of April 2, 1999 (herein called the
"Agreement"), between the Company, on the one hand, and The Prudential Insurance
Company of America and each Prudential Affiliate which becomes party thereto, on
the other hand, and is entitled to the benefits thereof. As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part, in certain
___________________
/1/ Delete in the case of holder not exempt from California usury law.
A-3-1
cases without Yield Maintenance Amount and in other cases with the Yield
Maintenance Amount specified in the Agreement. Each holder of this Note will be
deemed by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in paragraph 11H of the Agreement, (ii) to have made the
representation set forth in paragraph 9B of the Agreement, and (iii) to have
agreed to the limitations on transfers set forth in paragraph 11D of the
Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note (i) merely re-evidences a portion of the indebtedness previously
evidenced by Varian Associates, Inc.'s 7.49% Senior Notes due June 9, 2002 (the
"Existing 7.49% Notes") which has been assumed by the Company, (ii) is given in
exchange for, and not as payment of, Existing 7.49% Note(s), and (iii) is in no
way intended to constitute a novation of any Existing 7.49% Notes.
Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Agreement.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
VARIAN, INC.
By:__________________________________
Title:_______________________________
And by:______________________________
Title:_______________________________
A-3-2
EXHIBIT A-4
-----------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
[FORM OF SERIES D NOTE]
VARIAN, INC.
6.90% SERIES D SENIOR NOTE DUE JUNE 9, 2002
No. ________ _________________
$ ________________ _________________
FOR VALUE RECEIVED, the undersigned, Varian, Inc. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ________________________, or registered
assigns, the principal sum of _____________________on June 9, 2002 with interest
(computed on the basis of a 360-day year--30-day month) (a) on the unpaid
balance thereof at the rate of 6.90 % per annum from the date hereof, payable
quarterly on the 9th day of March, June, September and December in each year,
commencing with the March 9, June 9, September 9 or December 9 next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) on any overdue payment (including any overdue prepayment) of principal,
any overdue payment of Yield Maintenance Amount and any overdue payment of
interest, payable quarterly as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum [from time to time]1 equal to
[the greater of (i)]1 8.90% [or (ii) 2% over the rate of interest publicly
announced by Bank of New York from time to time in New York City as its prime
rate]./1/
Payments of principal, Yield Maintenance Amount, if any, and interest
are to be made at the main office of Bank of New York in New York City or at
such other place as the holder hereof shall designate to the Company in writing,
in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Purchase and Private Shelf
Agreement and Assumption, dated as of April 2, 1999 (herein called the
"Agreement"), between the Company, on the one hand, and The Prudential Insurance
Company of America and each Prudential Affiliate which becomes
__________________
/1/ Delete in the case of holder not exempt from California usury law.
A-4-1
party thereto, on the other hand, and is entitled to the benefits thereof. As
provided in the Agreement, this Note is subject to prepayment, in whole or from
time to time in part, in certain cases without Yield Maintenance Amount and in
other cases with the Yield Maintenance Amount specified in the Agreement. Each
holder of this Note will be deemed by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in paragraph 11H of the Agreement,
(ii) to have made the representation set forth in paragraph 9B of the Agreement,
and (iii) to have agreed to the limitations on transfers set forth in paragraph
11D of the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note (i) merely re-evidences a portion of the indebtedness previously
evidenced by Varian Associates, Inc.'s 6.90% Senior Notes due June 9, 2002 (the
"Existing 6.90% Notes") which has been assumed by the Company, (ii) is given in
exchange for, and not as payment of, Existing 6.90% Note(s), and (iii) is in no
way intended to constitute a novation of any Existing 6.90% Notes.
Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Agreement.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
VARIAN, INC.
By:__________________________________
Title:_______________________________
And by:______________________________
Title:_______________________________
A-4-2
EXHIBIT A-5
-----------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
[FORM OF SHELF NOTE]
VARIAN, INC.
SENIOR SERIES ___ NOTE
No. __
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, Varian, Inc. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to _________________________, or registered
assigns, the principal sum of _______________________ DOLLARS [on the Final
Maturity Date specified above] [, payable on the Principal Prepayment Dates and
in the amounts specified above, and on the Final Maturity Date specified above
in an amount equal to the unpaid balance of the principal hereof,] with interest
(computed on the basis of a 360-day year--30-day month) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above, payable on each
Interest Payment Date specified above and on the Final Maturity Date specified
above, commencing with the Interest Payment Date next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) on
any overdue payment (including any overdue prepayment) of principal, any overdue
payment of Yield Maintenance Amount and any overdue payment of interest, payable
on each Interest Payment Date as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the
rate of interest publicly announced by [Morgan Guaranty Trust Company of New
York] from time to time in New York City as its prime rate.
Payments of principal, Yield Maintenance Amount, if any, and interest are
to be made at the main office of Bank of New York in New York City or at such
other place as the holder hereof shall designate to the Company in writing,
lawful money of the United States of America.
A-5-1
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Purchase and Private Shelf
Agreement and Assumption, dated as of April 2, 1999 (herein called the
"Agreement"), between the Company, on the one hand, and The Prudential Insurance
Company of America and each Prudential Affiliate (as defined in the Agreement)
which becomes party thereto, on the other hand, and is entitled to the benefits
thereof. Each holder of this Note will be deemed by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in paragraph 11H of
the Agreement, (ii) to have made the representation set forth in paragraph 9B of
the Agreement, and (iii) to have agreed to the limitations on transfers set
forth in paragraph 11D of the Agreement.
This Note is subject to optional prepayment, in whole or from time to time
in part, on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default shall occur and be continuing, the principal of
this Note may be declared or otherwise become due and payable in the manner and
with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Agreement.
A-5-2
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
VARIAN, INC.
By:_____________________________
Title:__________________________
And by:_________________________
Title:__________________________
A-5-3