EXHIBIT 2.3
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JAMES HARDIE FINANCE B.V., AS ISSUER
JAMES HARDIE N.V., AS GUARANTOR
NOTE PURCHASE AGREEMENT
DATED NOVEMBER 5, 1998
$225,000,000
GUARANTEED SENIOR NOTES
6.86% Guaranteed Senior Notes due 2004, Series A--$24,000,000
6.92% Guaranteed Senior Notes due 2005, Series B--$35,000,000
6.99% Guaranteed Senior Notes due 2006, Series C--$37,000,000
7.05% Guaranteed Senior Notes due 2007, Series D--$11,000,000
7.12% Guaranteed Senior Notes due 2008, Series E--$63,000,000
7.24% Guaranteed Senior Notes due 2010, Series F--$20,000,000
7.42% Guaranteed Senior Notes due 2013, Series G--$35,000,000
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TABLE OF CONTENTS
SECTION PAGE
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1. AUTHORIZATION OF NOTES....................................................... 1
2. SALE AND PURCHASE OF NOTES................................................... 2
3. CLOSING...................................................................... 2
4. CONDITIONS TO CLOSING........................................................ 3
4.1. Representations and Warranties........................................... 3
4.2. Performance; No Default.................................................. 3
4.3. Compliance Certificates.................................................. 3
4.4. Opinions of Counsel...................................................... 3
4.5. Purchase Permitted By Applicable Law, etc................................ 4
4.6. Sale of Other Notes...................................................... 4
4.7. Payment of Special Counsel Fees.......................................... 4
4.8. Private Placement Number................................................. 4
4.9. Changes in Corporate Structure........................................... 4
4.10. Execution of Subsidiary Guarantee....................................... 4
4.11. Concurrent Completion of Reorganization................................. 5
4.12. Evidence of Consent to Receive Service of Process....................... 5
4.13. Proceedings and Documents............................................... 5
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS............................... 5
5.1. Organization; Power and Authority........................................ 5
5.2. Authorization, etc....................................................... 6
5.3. Disclosure............................................................... 6
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates......... 7
5.5. Financial Statements..................................................... 7
5.6. Compliance with Laws, Other Instruments, etc............................. 8
5.7. Governmental Authorizations, etc......................................... 8
5.8. Litigation; Observance of Agreements, Statutes and Orders................ 8
5.9. Taxes.................................................................... 9
5.10. Title to Property; Leases............................................... 9
5.11. Licenses, Permits, etc.................................................. 9
5.12. Compliance with ERISA................................................... 10
5.13. Private Offering by the Issuer.......................................... 11
5.14. Use of Proceeds; Margin Regulations..................................... 11
5.15. Existing Debt; Future Liens............................................. 11
5.16. Foreign Assets Control Regulations, etc................................. 12
5.17. Status under Certain Statutes........................................... 12
5.18. Environmental Matters................................................... 12
SECTION PAGE
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5.19. Year 2000............................................................... 12
6. REPRESENTATIONS OF THE PURCHASER............................................. 13
6.1. Purchase for Investment.................................................. 13
6.2. Source of Funds.......................................................... 13
7. INFORMATION AS TO THE OBLIGORS............................................... 15
7.1. Financial and Business Information....................................... 15
7.2. Officer's Certificate.................................................... 17
7.3. Inspection............................................................... 17
8. PREPAYMENT OF THE NOTES...................................................... 18
8.1. No Required Prepayments.................................................. 18
8.2. Optional Prepayments with Make-Whole Amount.............................. 18
8.3. Allocation of Partial Prepayments........................................ 18
8.4. Maturity; Surrender, etc................................................. 19
8.5. Purchase of Notes........................................................ 19
8.6. Make-Whole Amount........................................................ 19
9. AFFIRMATIVE COVENANTS........................................................ 20
9.1. Compliance with Law...................................................... 20
9.2. Insurance................................................................ 21
9.3. Maintenance of Properties................................................ 21
9.4. Payment of Taxes and Claims.............................................. 21
9.5. Corporate Existence, etc................................................. 21
9.6. Nature of Business....................................................... 22
9.7. Environmental Compliance................................................. 22
9.8. Ownership of Issuer and Subsidiary Guarantor, Activities................. 22
9.9. Covenant to Secure Notes Equally......................................... 23
10. NEGATIVE COVENANTS.......................................................... 23
10.1. Transactions with Affiliates............................................ 23
10.2. Merger, Consolidation; Sale of Assets................................... 23
10.3. Liens................................................................... 25
10.4. Incurrence of Funded Debt............................................... 27
10.5. Priority Debt........................................................... 27
10.6. Restricted Payments..................................................... 27
10.7. Consolidated Net Worth.................................................. 28
10.8. Restrictions on Dividends by Subsidiaries............................... 28
11. GUARANTEE, ETC.............................................................. 28
11.1. Guarantee............................................................... 28
11.2. Guarantee Absolute and Unconditional; Waivers, Etc...................... 29
12. TAX INDEMNIFICATION......................................................... 30
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SECTION PAGE
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13. EVENTS OF DEFAULT........................................................... 34
14. REMEDIES ON DEFAULT, ETC.................................................... 36
14.1. Acceleration............................................................ 36
14.2. Other Remedies.......................................................... 37
14.3. Rescission.............................................................. 37
14.4. No Waivers or Election of Remedies, Expenses, etc....................... 37
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................... 38
15.1. Registration of Notes................................................... 38
15.2. Transfer and Exchange of Notes.......................................... 38
15.3. Replacement of Notes.................................................... 39
16. PAYMENTS ON NOTES........................................................... 39
16.1. Place of Payment........................................................ 39
16.2. Home Office Payment..................................................... 39
17. EXPENSES, ETC............................................................... 40
17.1. Transaction Expenses.................................................... 40
17.2. Survival................................................................ 40
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT................ 40
19. AMENDMENT AND WAIVER........................................................ 41
19.1. Requirements............................................................ 41
19.2. Solicitation of Holders of Notes........................................ 41
19.3. Binding Effect, etc..................................................... 41
19.4. Notes held by an Obligor, etc........................................... 42
20. CONFIDENTIAL INFORMATION.................................................... 42
21. REPRODUCTION OF DOCUMENTS................................................... 43
22. NOTICES..................................................................... 43
23. SUBSTITUTION OF PURCHASER................................................... 44
24. MISCELLANEOUS............................................................... 44
24.1. Successors and Assigns.................................................. 44
24.2. Payments Due on Non-Business Days....................................... 44
24.3. Severability............................................................ 44
24.4. Construction............................................................ 44
24.5. Counterparts............................................................ 45
24.6. Submission to Jurisdiction, Service of Process.......................... 45
24.7. Obligations to make Payments in Dollars................................. 46
24.8. Assumption of Company's Obligations..................................... 46
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SECTION PAGE
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24.9. Governing Law .......................................................... 47
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Issuer and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
EXHIBIT 1 -- Form of Guaranteed Senior Note
EXHIBIT 4.4(a)(i) -- Form of Opinion of New York Special Counsel for the Obligors
EXHIBIT 4.4(a)(ii) -- Form of Opinion of Netherlands Special Counsel for the Obligors
EXHIBIT 4.4(a)(iii) -- Form of Opinion of Special Counsel for the Obligors
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 5.5 Pro Forma Statements
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JAMES HARDIE FINANCE B.V., AS ISSUER
JAMES HARDIE N.V., AS GUARANTOR
26300 La Alameda, Suite 250
Mission Viejo, CA 92691
GUARANTEED SENIOR NOTES
November 5, 1998
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
James Hardie Finance B.V., a company incorporated under the laws of The
Netherlands with its corporate seat at Amsterdam, The Netherlands (the
"ISSUER"), and James Hardie N.V., a company incorporated under the laws of The
Netherlands with its corporate seat at Amsterdam, The Netherlands (the
"GUARANTOR" and, collectively with the Issuer, the "OBLIGORS") agree with you as
follows:
1. AUTHORIZATION OF NOTES.
The Issuer will authorize the issue and sale of $225,000,000 aggregate
principal amount of its Guaranteed Senior Notes (the "NOTES", such term to
include any such notes issued in substitution therefor pursuant to Section 15 of
this Agreement or the Other Agreements (as hereinafter defined)). The Notes will
be issued in seven separate series which shall be entitled, shall be issued in
such amounts, shall bear interest and shall mature as follows:
TITLE PRINCIPAL AMOUNT INTEREST RATE MATURITY DATE
----- ---------------- ------------- -------------
Series A $24,000,000 6.86% November 5, 2004
Series B 35,000,000 6.92% November 5, 2005
Series C 37,000,000 6.99% November 5, 2006
Series D 11,000,000 7.05% November 5, 2007
Series E 63,000,000 7.12% November 5, 2008
Series F 20,000,000 7.24% November 5, 2010
Series G 35,000,000 7.42% November 5, 2013
The Notes shall be substantially in the form set out in Exhibit 1, with
such changes therefrom, if any, as may be approved by you and the Issuer.
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement and references to "this
Agreement" shall mean this Agreement as it may from time to time be amended or
supplemented. Payment of the principal of, and Make-Whole Amount (if any) and
interest on, the Notes, and
performance by the Issuer of all of its obligations under this Agreement, will
be unconditionally guaranteed by the Guarantor as provided in Section 11 hereof.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Issuer will
issue and sell to you and you will purchase from the Issuer, at the Closing
provided for in Section 3, Notes in the principal amount and of the particular
series specified opposite your name in Schedule A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering into this
Agreement, the Issuer is entering into separate Note Purchase Agreements (the
"OTHER AGREEMENTS") identical with this Agreement with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for the sale
at such Closing to each of the Other Purchasers of Notes in the principal amount
and of the particular series specified opposite its name in Schedule A. Your
obligation hereunder and the obligations of the Other Purchasers under the Other
Agreements are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, NY 10019, at 10:00 a.m., New York time, at a closing (the
"CLOSING") on November 5, 1998 or on such other Business Day thereafter as may
be agreed upon by the Issuer and you and the Other Purchasers. At the Closing,
the Issuer will deliver to you the Notes to be purchased by you in the form of a
single Note (or such greater number of Notes in denominations of at least
$100,000 as you may request) dated the date of the Closing and registered in
your name (or in the name of your nominee), against delivery by you to the
Issuer or its order of immediately available funds in the amount of the purchase
price therefor by wire transfer of immediately available funds as follows:
BankAmerica International, New York
Swift Code: BOFAUS3N
ABA No.: 026009593
for the account of:
James Hardie Finance Limited
CHIPS UID: 258417
A/c 6550-6-07300
If at the Closing the Issuer shall fail to tender such Notes to you as
provided above in this Section 3, or any of the conditions specified in Section
4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
non-fulfillment.
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4. CONDITIONS TO CLOSING
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each Obligor in this Agreement shall
be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. Except as otherwise contemplated by the Memorandum, neither Obligor
nor any of their respective Subsidiaries shall have entered into any transaction
since the date of the Memorandum that would have been prohibited by Sections
10.1, 10.3, 10.4 or 10.6 hereof had such Sections applied since such date.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. Each Obligor shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2, 4.9 and 4.11 have been fulfilled.
(b) Secretary's Certificate. Each Obligor shall have delivered to
you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the documents to which such Obligor is a party and the incumbency and authority
of persons executing such documents.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from (i) Gibson, Dunn & Crutcher LLP,
(ii) De Brauw Blackstone Westbroek P.C. and (iii) Allen Allen & Hemsley, counsel
for the Obligors, in substantially the forms set forth in Exhibits 4.4(a)(i),
4.4 (a)(ii) and 4.4(a)(iii), respectively, and in each case covering such other
matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and each Obligor hereby instructs its counsel to deliver
such opinion to you) and (b) from Willkie Fair & Gallagher, your special counsel
in connection with such transactions, substantially in the form set forth in
Exhibit 4.4(b) and covering such other matters incident to such transactions as
you may reasonably request.
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4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be permitted
by the laws and regulations of each jurisdiction to which you are subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject you to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by you, you shall have received an Officer's Certificate certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Issuer shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 17.1, the Issuer shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Issuer at least one Business Day prior
to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
A private placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
Except in connection with the Reorganization or as specified in Schedule
4.9, each Obligor shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
4.10. EXECUTION OF SUBSIDIARY GUARANTEE.
The Subsidiary Guarantor shall have executed and delivered to you a
Subsidiary Guarantee (the "SUBSIDIARY GUARANTEE") substantially in the form of
Exhibit 4.10 hereto and the same shall be in full force and effect.
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4.11. CONCURRENT COMPLETION OF REORGANIZATION.
Contemporaneously with the Closing, the Reorganization shall have been
consummated substantially as set forth in the Memorandum.
4.12. EVIDENCE OF CONSENT TO RECEIVE SERVICE OF PROCESS.
You shall have received, in form and substance reasonably satisfactory to
you, evidence of the consent of CT Corporation System in New York, New York to
the appointment and designation provided for by Section 24.6 (and the payment of
all fees relating thereto).
4.13. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
The Issuer and the Guarantor jointly and severally represent and warrant
to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
Each of the Issuer and the Guarantor is a corporation duly incorporated
and validly existing under the laws of The Netherlands, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Issuer
has all corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to participate in the Reorganization as described in
the Memorandum, to execute and deliver this Agreement, the Notes and the Other
Agreements to which it is a party and to perform the provisions hereof and
thereof. The Guarantor has all corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to participate in the
Reorganization as described in the Memorandum, to execute and deliver this
Agreement and the Other Agreements to which it is a party and to perform the
provisions hereof and thereof. The Subsidiary Guarantor is a corporation duly
organized and validly existing as a corporation under the laws of Australia and
has all corporate power and authority to execute, deliver and perform its
obligations under the Subsidiary Guarantee.
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5.2. AUTHORIZATION, ETC.
This Agreement, the Notes and the Other Agreements to which the Issuer is
a party have been duly authorized by all necessary corporate action on the part
of the Issuer, and this Agreement constitutes, and upon execution and delivery
thereof, each Note will constitute, a legal, valid and binding obligation of the
Issuer enforceable against the Issuer in accordance with its terms, except as
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
This Agreement and the Other Agreements to which the Guarantor is a party have
been duly authorized by all necessary corporate action on the part of the
Guarantor, and this Agreement constitutes a legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Subsidiary Guarantee has been duly
authorized by all necessary corporate action on the part of the Subsidiary
Guarantor and, upon execution and delivery thereof, will constitute a legal,
valid and binding obligation of the Subsidiary Guarantor, enforceable against
the Subsidiary Guarantor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
The Issuer, through its agent, Warburg Dillon Read LLC has delivered to
you and each Other Purchaser a copy of a Private Placement Offering Memorandum,
dated August 1998 (that Memorandum as supplemented by the information set forth
in, or by reference in, Schedule 5.3, herein being referred to as the
"MEMORANDUM"), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Guarantor and the Issuer and the Reorganization.
This Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of any Obligor in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Since March
31, 1998 (and after giving effect to the Reorganization), there has been no
change in the financial condition, operations, business, properties or prospects
of any Obligor or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to any Obligor that could reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of any Obligor specifically for use in connection with
the transactions contemplated hereby. Notwithstanding the foregoing, no
Purchaser should rely on any information not contained either in the Memorandum,
this Agreement or the documents provided by the Obligors in connection with the
Closing, and
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any purchase made by any Purchaser on the basis of information not contained
therein or inconsistent therewith is not authorized. Specifically, and without
limitation, the Obligors do not make any representations or warranties with
respect to the accuracy or inaccuracy of the statements contained in the
Registration Statement of James Hardie N.V. on Form F-1, and the Purchasers
should not rely on any such statements.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein and after giving
effect to the Reorganization) complete and correct lists (i) of the Guarantor's
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization or incorporation, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Guarantor and each other Subsidiary, (ii) of the Guarantor's Affiliates,
other than Subsidiaries, and (iii) of each Obligor's directors and senior
officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Guarantor and its Subsidiaries (or to be so owned after giving effect to the
Reorganization) have been (or as of the Closing will have been) validly issued,
are (or at Closing will be) fully paid and nonassessable and are (or at Closing
will be) owned by the Guarantor or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is (or after giving
effect to the Reorganization at Closing will be) a corporation or other legal
entity duly organized or incorporated, validly existing and in good standing
under the laws of its jurisdiction of organization or incorporation, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has (or after giving effect
to the Reorganization at Closing will have) the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Guarantor or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Guarantor has delivered to each Purchaser copies of the financial
statements of the Guarantor and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Guarantor and its Subsidiaries as of the respective dates
specified in such
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Schedule and the consolidated results of their operations and cash flows for
the respective periods so specified and have been prepared in accordance with
GAAP consistently applied throughout the periods involved except as set forth in
the notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments). The "Pro Forma Statements" attached hereto as
Exhibit 5.5 are derived from and consistent with the the aforesaid financial
statements referred to and included in the Memorandum and comply as to form in
all material respects with all applicable accounting regulations and
pronouncements relating to pro forma financial statements. The assumptions on
which the pro forma adjustments reflected in the Pro Forma Statements are based
provide a reasonable basis for presenting the significant effects of the
Reorganization and such pro forma adjustments give appropriate effect to such
assumptions and are properly applied in the Pro Forma Statements. As of the date
of the Closing and after giving effect to the Reorganization, the Pro Forma
Statements will reflect the financial position and results of operations of the
Guarantor and its Subsidiaries as of the dates and for the periods covered
thereby, all on a pro forma basis as provided for therein.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by each Obligor of this Agreement,
the execution, delivery and performance by the Issuer of Notes and the
execution, and performance of the Subsidiary Guarantee by the Subsidiary
Guarantor will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of any Obligor or any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which any Obligor or any Subsidiary is bound or
by which any Obligor or any Subsidiary or any of their respective properties may
be bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to any Obligor or any
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to any Obligor or any
Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance (a) by each Obligor of this Agreement, (b) by
the Issuer of the Notes or (c) by the Subsidiary Guarantor of the Subsidiary
Guarantee.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of either Obligor, threatened against or affecting any Obligor or any
Subsidiary or any property of any Obligor or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
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(b) Neither Obligor nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(c) Schedule 5.3 sets forth a reasonably detailed description of all
material litigation and other proceedings involving or affecting the Guarantor
and its Subsidiaries (after giving effect to the Reorganization).
5.9. TAXES.
The Obligors and each Subsidiary have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid ail taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which such Obligor or such Subsidiary, as the
case may be, has established adequate reserves in accordance with GAAP. Neither
Obligor knows of any basis for any other tax or assessment that could reasonably
be expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Guarantor and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate.
5.10. TITLE TO PROPERTY; LEASES.
The Obligors and each Subsidiary have (or after giving effect to the
Reorganization at the Closing will have) good and sufficient title to its
properties that individually or in the aggregate are Material, including all
such properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by any Obligor or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are (or after giving effect to the Reorganization at the Closing will be) valid
and subsisting and are (or will be) in full force and effect in all material
respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11 (and in each case after giving effect
to the Reorganization),
(a) each of the Obligors and each Subsidiary owns or possesses all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;
9
(b) to the best knowledge of each of the Obligors, no product of any
Obligor infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(c) to the best knowledge of each of the Obligors, there is no
Material violation by any Person of any right of the Obligors or any Subsidiary
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by any Obligor or any Subsidiary.
5.12. COMPLIANCE WITH ERISA.
(a) The Obligors and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Obligors nor any
ERISA Affiliate have incurred 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 (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Obligors or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Obligors or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities. The term "BENEFIT LIABILITIES"
has the meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE"
and "PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Obligors and their ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Guarantor's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Guarantor and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder and the execution and delivery of the Subsidiary
Guarantee will not involve any transaction that is subject to the prohibitions
of section 406 of ERISA or in connection with which a tax could be imposed
pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the
Obligors in the first sentence of this Section 5.12(e) is made in reliance upon
10
and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
5.13. PRIVATE OFFERING BY THE ISSUER.
Neither of the Obligors nor anyone acting on behalf of either of them has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you, the Other Purchasers and not more than
75 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Obligors nor anyone acting on behalf of
either of them has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Issuer will apply the proceeds of the sale of the Notes as set forth
in Schedule 5.14. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Obligors in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 25% of the value of the consolidated assets
of the Obligors and the Subsidiaries and the Obligors do not have any present
intention that margin stock will constitute more than 25% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.
5.15. EXISTING DEBT; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Debt of the Obligors and the Subsidiaries as
of September 30, 1998, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Obligors or the Subsidiaries. Neither the Obligors nor any
Subsidiary are in default and no waiver of default is currently in effect, in
the payment of any principal or interest on any Debt of any Obligor or any such
Subsidiary and no event or condition exists with respect to any Debt of any
Obligor or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Neither the Obligors nor any Subsidiary have agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 10.3.
11
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Issuer hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Obligors nor any Subsidiary are subject to regulation under
the Investment Issuer Act of 1940, as amended, the Public Utility Holding Issuer
Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal
Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
Neither the Obligors nor any Subsidiary have knowledge of any claim or
have received any notice of any claim, and no proceeding has been instituted
raising any claim against any Obligor or any Subsidiary or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing (and in each case after giving effect to the Reorganization):
(a) neither the Obligors nor any Subsidiary have knowledge of any
facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them in a manner contrary to any Environmental Laws or to other assets
or their use, except, in each case, such as could not reasonably be expected to
result in a Material Adverse Effect;
(b) neither the Obligors nor any Subsidiary have stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and have not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Obligors or any Subsidiary are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
5.19. YEAR 2000.
With respect to the Guarantor and its Subsidiaries (after giving
effect to the Reorganization), (a) a review and assessment has been initiated of
all areas within the Guarantor's and its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Guarantor or any of its Subsidiaries (or suppliers,
vendors and customers) may be unable to recognize and properly perform
date-sensitive functions involving
12
certain dates prior to and any date after December 31, 1999), (b) a plan and
timetable has been developed for addressing the Year 2000 Problem on a timely
basis, and (c) to date, that plan has been implemented in accordance with that
timetable. Any reprogramming required to avoid a Year 2000 Problem will be
completed by June 30, 1999, except where failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. The cost to the Guarantor and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of the Year 2000 Problem
to the Guarantor and its Subsidiaries (including reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or a
Material Adverse Effect. Except for such reprogramming referred to in the
preceding sentence as may be necessary, the computer and management information
systems of the Guarantor and its Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue through the final maturity date of the
Notes to be sufficient to permit the Guarantor and its Subsidiaries to conduct
their respective businesses without a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account or for one
or more separate accounts maintained by you or for the account of one or more
pension or trust funds and not with a view to the distribution thereof, provided
that the disposition of your or their property shall at all times be within your
or their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Issuer is not required to register
the Notes. You also represent that you are an Institutional Investor and that
the Notes will not be offered, sold, transferred or delivered as part of their
initial distribution or at any time thereafter by you, directly or indirectly,
other than to an Institutional Investor.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" (as the
term is defined in PTCE 95-60 (issued July 12, 1995)) in respect of which the
reserves and liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners (the
"NAIC Annual Statement")) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTCE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with your state of domicile; or
13
(b) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, other than a separate
account that is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1
(issued January 29, 1990), or (ii) a bank collective investment fund, within the
meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have
disclosed to the Issuer in writing pursuant to this paragraph (c), no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
(d) 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)(l) 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 I(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 Issuer and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Issuer in
writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) 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 Issuer in writing pursuant to this paragraph
(f); or
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
14
7. INFORMATION AS TO THE OBLIGORS.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Guarantor shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Guarantor (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Guarantor and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Guarantor and its Subsidiaries,
for such quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Guarantor's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1 (a);
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Guarantor, duplicate copies of,
(i) a consolidated balance sheet of the Guarantor and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Guarantor and its Subsidiaries,
for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, and provided
that the delivery within the time period specified above of the Guarantor's
Annual Report on Form 10-K for such fiscal year (together with the Guarantor's
annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in
15
accordance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by any Obligor or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by any Guarantor or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by any Obligor or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 13(f), a written notice specifying
the nature and period of existence thereof and what action each Obligor is
taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that each
Obligor and each ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by any Obligor or any ERISA Affiliate
of a notice from a Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by any Obligor or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans, or in the imposition of
any Lien on any of the rights, properties or assets of any Obligor or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect;
16
(f) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to any Obligor or
any Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of any Obligor or any Subsidiary or relating to
the ability of any Obligor to perform its obligations hereunder and under the
Notes as from time to time may be reasonably requested by any such holder of
Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations)required in order to establish whether the Obligors were in
compliance with the requirements of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and
10.7, during the quarterly or annual period covered by the statements then being
furnished (including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Obligors and
each Subsidiary from the beginning of the quarterly or annual period covered by
the statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of any Obligor or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action each Obligor shall have taken or
proposes to take with respect thereto.
7.3. INSPECTION.
The Guarantor shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the Guarantor, to
visit the principal executive office of the Guarantor, to discuss the affairs,
finances and accounts of the Guarantor and its Subsidiaries with the Guarantor's
officers, and (with the consent of the Guarantor, which consent will not be
unreasonably withheld) its independent public accountants, and (with the consent
of
17
the Guarantor, which consent will not be unreasonably withheld) to visit the
other offices and properties of the Guarantor and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Guarantor to visit and inspect any of the offices or properties
of the Guarantor or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Guarantor authorizes said accountants to discuss the affairs,
finances and accounts of the Guarantor and its Subsidiaries), all at such times
and as often as may be requested.
8. PREPAYMENT OF THE NOTES.
8.1. NO REQUIRED PREPAYMENTS.
The Notes shall be due and payable in full at maturity, without required
prepayments.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Issuer may, at its option, upon notice as provided below, prepay at
any time all, or from time to time any part of, the Notes, in an amount not less
than $10,000,000 aggregate principal amount in the case of a partial prepayment,
at 100% of the principal amount so prepaid, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Issuer will give each holder of Notes written notice of each optional prepayment
under this Section 8.2 not less than 30 days and not more than 60 days prior to
the date fixed for such prepayment. Each such notice shall specify such date,
the aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Issuer shall
deliver to each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date. Other than as provided under Section 14.1 hereof, no holder of
any Note has the right to demand or cause a prepayment.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
18
8.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Issuer shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Issuer and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Issuer will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes. The Issuer will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment or purchase
of Notes pursuant to any provision of this Agreement and no Notes may be issued
in substitution or exchange for any such Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 8.2 or has become or is declared
to be immediately due and payable pursuant to Section 14.1, as the context
requires.
"DISCOUNTED VALUE" means, 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 (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of any
Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New [ILLEGIBLE] City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page PX1" on the Bloomberg Financial Markets Service (or such other display
as may replace Page PX1 on the Bloomberg Financial Markets Service) 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 (ii) if such yields
are not reported as of such
19
time or the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day 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 will 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 (1) the actively traded U.S.
Treasury security with the average life closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security with
the average life closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal, 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) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled -Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due 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,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 14.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to Section 8.2
or has become or is declared to be immediately due and payable pursuant to
Section 14.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
Each Obligor covenants that so long as any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Guarantor will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits,
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franchises and other governmental authorizations could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Guarantor will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
The Guarantor will and will cause each of its Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Guarantor or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Guarantor has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Guarantor will and will cause each of its Subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Guarantor or any Subsidiary,
provided that neither the Guarantor nor any Subsidiary need pay any such tax or
assessment or claims if (i) the amount, applicability or validity thereof is
contested by the Guarantor or such Subsidiary on a timely basis in good faith
and in appropriate proceedings, and the Guarantor or such Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Guarantor or such Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
9.5. CORPORATE EXISTENCE, ETC.
The Guarantor will at all times preserve and keep in full force and effect
its corporate existence and that of the Issuer (subject to the provisions of
Section 10.2(i)). Subject to Section 10.2, the Guarantor will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into the Guarantor or a Subsidiary) and all
rights and franchises of the Guarantor and its Subsidiaries unless, in the good
faith judgment of
21
the Guarantor, the termination of or failure to preserve and keep in full force
and effect such corporate existence, right or franchise could not, individually
or in the aggregate, have a Material Adverse Effect.
9.6. NATURE OF BUSINESS.
Neither the Guarantor nor any Subsidiary will engage in any business if,
as a result, the general nature of the business, taken on a consolidated basis,
which would then be engaged in by the Guarantor and its Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Guarantor and its Subsidiaries on the date of the Closing as contemplated by and
after giving effect to the Reorganization.
9.7. ENVIRONMENTAL COMPLIANCE.
The Guarantor and each Subsidiary will (i) obtain and maintain all
permits, licenses, and other authorizations that are required of it under all
Environmental Laws other than those which the failure to obtain or maintain,
individually or in the aggregate, could not reasonably be expected to have, a
Material Adverse Effect, (ii) comply with all terms and conditions of all such
permits, licenses, and authorizations and with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in all Environmental Laws or in any
regulation, ordinance or code applicable to it and any, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder directly applicable to it, except to the extent of any
noncompliance which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, and (iii) operate all property owned
or leased by it such that no claim or obligation, including a clean-up
obligation, which individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect shall arise under any Environmental Law, and
if any claim is made against it or any such obligation shall arise under any
Environmental Law, it shall at its own cost and expense, timely satisfy such
claim or obligation, provided no such claim or obligation need be satisfied for
so long as (A) it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and (B) such reserves or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor.
9.8. OWNERSHIP OF ISSUER AND SUBSIDIARY GUARANTOR; ACTIVITIES.
Subject only to the provisions of Section 10.2(i), the Guarantor will at
all times maintain the Issuer and the Subsidiary Guarantor as Wholly-Owned
Subsidiaries of the Guarantor, and the capital stock of, and any other ownership
interests in, the Issuer and the Subsidiary Guarantor will at all times remain
free of any Lien. The Subsidiary Guarantor will engage only in the business of
incurring the Debt represented by the Permitted Australian Credit Facilities and
advancing as a loan or contribution the proceeds thereof to Wholly-Owned
Subsidiaries of the Guarantor primarily engaged in business operations in
Australia and (ii) being a party to the Subsidiary Guarantee (and any similar
guarantee of Debt of the Issuer).
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9.9. COVENANT TO SECURE NOTES EQUALLY.
If the Guarantor 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 Section 10.3 (unless prior written
consent to the creation or assumption thereof shall have been obtained pursuant
to Section 19), it will make or cause to be made effective provision
satisfactory in form and substance to the Required Holders (including, without
limitation, opinions of counsel relating thereto) whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured. Securing the Notes
as provided in this Section 9.9 shall not permit the existence of any Lien not
otherwise permitted by Section 10.3.
10. NEGATIVE COVENANTS.
Each Obligor covenants that so long as any of the Notes are outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Guarantor will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Guarantor or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Guarantor's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Guarantor or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
10.2. MERGER, CONSOLIDATION; SALE OF ASSETS.
Neither the Guarantor nor any Subsidiary shall merge or consolidate with
any other Person or sell, lease or transfer or otherwise dispose of its
respective assets to any Person or Persons, except that:
(i) any Subsidiary may merge or consolidate with or sell,
lease, transfer or otherwise dispose of all or any of its assets to the
Guarantor or a Wholly-Owned Subsidiary (provided, that the Guarantor or
such Wholly-Owned Subsidiary shall be the continuing or surviving
corporation in the case of a merger or consolidation and, in the case of a
merger or consolidation involving, or a sale of all or any substantial
part of its assets by, a Subsidiary which is a corporation or other entity
organized under the laws of, and having its principal place of business
in, a state of the United States of America or the District of Columbia (a
"US ENTITY"), the acquiring or surviving entity is a US Entity) and upon
any such sale, transfer or other disposition of all or substantially all
of such Subsidiary's assets, such Subsidiary may liquidate and dissolve;
(ii) the Guarantor may merge or consolidate with or convey,
transfer or lease all or substantially all of its assets in a single
integrated transaction to, any other corporation, limited liability
company or limited partnership; provided, that (a) in the case of a merger
or consolidation, the Guarantor shall be the continuing or surviving
23
corporation or (b) the successor or acquiring Person (1) shall be solvent
and organized under the laws of any state of the United States of America
or the District of Columbia or the jurisdiction of incorporation of the
Guarantor; and (2) shall expressly assume in writing all of the
obligations and covenants of the Guarantor under this Agreement, and
provided further, that in each case, immediately after and giving effect
thereto, (A) no Default or Event of Default would exist and (B) the
Guarantor would be permitted by the provisions of Section 10.4 to incur at
least $1.00 of additional Funded Debt owing to a Person other than a
Subsidiary of the Issuer;
(iii) the Guarantor and each Subsidiary may sell or lease, as
lessor, inventory in the ordinary course of its business.
(iv) the Guarantor and each Subsidiary may dispose of
equipment or other assets that have become obsolete or otherwise no longer
useful or required for the conduct of its business, provided such that
dispositions do not, individually or in the aggregate, constitute a
liquidation of all or substantially all of the Guarantor's or any
Subsidiary assets; and
(v) in addition to the matters set forth above, the Guarantor
and any Subsidiary may sell, transfer or otherwise dispose of some or all
of its respective properties or assets in a transaction not otherwise
permitted pursuant to this Section 10.2 for fair and adequate
consideration (a "DISPOSITION"), and if such Disposition is a Disposition
of all or substantially all of the assets of a Subsidiary, such Subsidiary
may thereafter liquidate and dissolve; provided, that immediately after
and giving effect to any such Disposition, the greater of (a) the
aggregate book value of each property and asset so sold (each an "ASSET
SOLD" and collectively, the "ASSETS SOLD"), as reflected on the most
recent consolidated balance sheet furnished to the holders pursuant to
Section 7.1(a) prior to the date of Disposition of such Asset Sold, or
(b) the aggregate net proceeds (with any non-cash proceeds being valued at
its fair market value) of the Assets Sold (1) during the immediately
preceding twelve months, less the aggregate amount of Qualifying
Reinvestments, did not exceed more than 15% of Consolidated Total Assets
as reflected on the most recent consolidated balance sheet delivered to
the holders pursuant to Section 7.1(a) or (2) since the date of the
Closing, less the aggregate amount of Qualifying Reinvestments, did not
exceed more than 30% of Consolidated Total Assets as reflected on the most
recent consolidated balance sheet delivered to the holders pursuant to
Section 7.1(a);
provided, that, in each case other than the sale or lease of inventory pursuant
to clause (iii) above or disposition of assets pursuant to clause (iv) above, no
Default or Event of Default exists immediately before or immediately after
giving effect to such sale, transfer or disposition of properties or assets or
such merger or consolidation nor would any Default or Event of Default
reasonably be expected to result therefrom.
For purposes of clause (v) of this Section 10.2, a "QUALIFYING
REINVESTMENT" is the use of the proceeds, or of funds expended reasonably
concurrently in anticipation of the proceeds (i.e. not more than three months
prior to receipt of such proceeds), of Assets Sold not more than
24
eighteen months after the date of a Disposition, to (a) purchase (x) assets
usable in any business permitted to be conducted by Section 9.6, or (y) either
(1) all of the outstanding capital stock or other equity interests of a Person
which, immediately after such purchase, is a Wholly-Owned Subsidiary of the
Guarantor and is engaged in a business permited to be conducted by Section 9.6,
or (2) all or substantially all of the assets and business of a Person which is
engaged in any business permitted to be conducted by Section 9.6; provided, that
if the Assets Sold are subject to a Lien securing the Notes at the time of sale
or other disposition, the assets, equipment, real property, improvements,
capital stock or other equity interests purchased with the proceeds of such
Assets Sold shall not constitute Qualifying Reinvestments unless promptly made
subject to a Lien securing the Notes with the same priority and otherwise
substantially the same terms and conditions as the Liens on the Assets Sold or
(b) to make an optional prepayment of the Notes pursuant to Section 8.2 or to
prepay any other Debt ranking at least pari passu with the Notes.
10.3. LIENS.
The Guarantor will not, and will not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property or asset (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Guarantor or any such
Subsidiary, whether now owned or held or hereafter acquired, or any income or
profits therefrom, or assign or otherwise convey any right to receive income or
profits, except:
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time required
by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet due and payable or
the payment of which is not at the time required by Section 9.4;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security or
retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 90 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 90 days after the expiration of any such stay;
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to, and not interfering with, the
25
ordinary conduct of the business of the Guarantor or any of its Subsidiaries,
provided that such Liens do not, in the aggregate, materially detract from the
value of such property;
(f) Liens on property or assets of the Guarantor or any of its
Subsidiaries securing Debt owing to the Guarantor or to any of its Wholly-Owned
Subsidiaries (other than the Subsidiary Guarantor);
(g) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any improvement thereon)
acquired or constructed by the Guarantor or a Subsidiary after the date of the
Closing, provided that
(i) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or constructed and, if
required by the terms of the instrument originally creating such Lien,
other property (or improvement thereon) which is an improvement to or is
acquired for specific use in connection with such acquired or constructed
property (or improvement thereon) or which is real property being improved
by such acquired or constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the fair market value (as
determined in good faith by the Guarantor) of such property at the time of
such acquisition or construction, and
(iii) any such Lien shall be created contemporaneously with,
or within 180 days after, the acquisition or construction of such
property;
(h) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Guarantor or a Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Issuer or any Subsidiary at the time such property is so acquired (whether or
not the Debt secured thereby shall have been assumed), provided that (i) no such
Lien shall have been created or assumed in contemplation of such consolidation
or merger or such Person's becoming a Subsidiary or such acquisition of
property, and (ii) each such Lien shall extend solely to the item or items of
property so acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is acquired for
specific use in connection with such acquired property;
(i) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (g) or (h) of this Section 10.3, provided that (i) the principal
amount of Debt secured by such Lien immediately prior to such extension, renewal
or refunding is not increased or the maturity thereof reduced, (ii) such Lien is
not extended to any other property, and (iii) immediately after such extension,
renewal or refunding no Default or Event of Default would exist; and
(j) any Lien in addition to those described in subsections (a)
through (i) above securing Debt incurred after the date of the Closing if the
Debt secured thereby is not otherwise prohibited by Section 10.5.
26
10.4. INCURRENCE OF FUNDED DEBT.
The Guarantor will not, and will not permit any Subsidiary to, directly or
indirectly, create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Funded Debt, unless on the date the
Guarantor or such Subsidiary becomes liable with respect to any such Debt and
immediately after giving effect thereto and the concurrent retirement of any
other Debt,
(a) no Default or Event of Default exists;
(b) the ratio of Consolidated Funded Debt to Consolidated Funded
Capitalization does not exceed 60% for the period from the Closing through March
31, 1999 and 55% thereafter; and
(c) the Guarantor would be permitted by the provisions of Section
10.5 hereof to incur at least $1.00 of additional Priority Debt.
For the purposes of this Section 10.4, any Person becoming a Subsidiary
after the date hereof shall be deemed, at the time it becomes a Subsidiary, to
have incurred all of its then outstanding Debt, and any Person extending,
renewing or refunding any Debt shall be deemed to have incurred such Debt at the
time of such extension, renewal or refunding.
10.5. PRIORITY DEBT.
The Guarantor will not at any time permit the aggregate amount of Priority
Debt to exceed 20% of Consolidated Net Worth.
10.6. RESTRICTED PAYMENTS.
The Guarantor will not, and will not permit any of its Subsidiaries
to, at any time, declare or make, or incur any liability to declare or make, any
Restricted Payment unless immediately after giving effect to such action:
(a) no Default or Event of Default would exist;
(b) the aggregate amount of all Restricted Payments made
subsequent to the date hereof would not exceed the sum of (x) $25,000,000
, (y) the Applicable Percentage of Consolidated Net Income (less 100% if
Consolidated Net Income is a negative number) on a cumulative basis for
the period from the date hereof to the date of such Restricted Payment and
(z) the Net Proceeds of Capital Stock received by the Guarantor for the
period from the date hereof to the date of such Restricted Payment; and
(c) the Guarantor would be permitted by the provisions of
Section 10.4 hereof to incur at least $1.00 of additional Funded Debt
owing to a Person other than a Subsidiary of the Guarantor.
27
10.7. CONSOLIDATED NET WORTH.
The Guarantor will not, at any time, permit Consolidated Net Worth
to be less than $250 million until March 31, 1999, $275 million until March 31,
2000, $300 million until March 31, 2001 and $320 million thereafter.
10.8. RESTRICTIONS ON DIVIDENDS BY SUBSIDIARIES
Except for this Agreement and the Bank Credit Agreements as in
effect on the date hereof and as may be required by law, the Guarantor will not,
and will not permit any Subsidiary to, enter into any agreement that would
restrict any Subsidiary's ability or right to pay dividends to, or make advances
to or investments in, the Guarantor (or if any such Subsidiary is not directly
owned by Guarantor, the "parent" Subsidiary of such Subsidiary).
11. GUARANTEE, ETC.
11.1. GUARANTEE.
The Guarantor hereby absolutely unconditionally and irrevocably guarantees
to each and every holder of any of the Notes from time to time
(a) the due and punctual payment of
(i) the principal of and Make-Whole Amount (if any) and
interest on all outstanding Notes (including interest on such principal
and Make-Whole Amount and, to the extent permitted by applicable law, on
any overdue interest), whether at the stated maturity, by acceleration,
pursuant to any prepayment or otherwise, in accordance with the Notes and
this Agreement, and
(ii) all other sums which may become due from the Issuer under
the Notes or this Agreement, including costs, expenses and taxes, and
(b) the due and punctual performance and observance by the Issuer of
all covenants, agreements and conditions on its part to be performed and
observed hereunder;
such payment and other obligations so guaranteed are collectively called the
"GUARANTEED OBLIGATIONS". If default shall be made in the performance of any of
the Guaranteed Obligations, the Guarantor will also pay to the holder of any
Note such amounts, to the extent lawful, as shall be sufficient to pay the costs
and expenses of collection or of otherwise enforcing any of such holder's rights
under this Agreement, including reasonable counsel fees.
The obligations of the Guarantor under this Section 11 shall survive the
transfer or payment of the Notes.
28
11.2. GUARANTEE ABSOLUTE AND UNCONDITIONAL; WAIVERS, ETC.
(a) The obligations of the Guarantor under Section 11.1 constitute a
present and continuing guaranty of payment and not of collectibility and shall
be absolute and unconditional and, to the extent permitted by applicable law,
the Guaranteed Obligations shall not be subject to any counterclaim, setoff,
deduction or defense based upon any claim the Guarantor may have against the
Issuer or any other Person, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected or
impaired by any thing, event, happening, matter, circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or notice
thereof or consent thereto), including without limitation:
(i) any amendment or modification of any provision of this
Agreement or any of the Notes or any assignment or transfer thereof,
including without limitation the renewal or extension of the time of
payment of any of the Notes or the granting of time in respect of such
payment thereof, or of any furnishing or acceptance of security or any
additional guarantee or any release of any security or guarantee so
furnished or accepted for any of the Notes;
(ii) any waiver, consent, extension, granting of time,
forbearance, indulgence or other action or inaction under or in respect of
this Agreement or the Notes, or any exercise or nonexercise of any right,
remedy or power in respect hereof or thereof;
(iii) any bankruptcy, receivership, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or
similar proceedings with respect to the Issuer or any other Person or the
properties or creditors of any of them;
(iv) the occurrence of any Default or Event of Default under,
or any invalidity or any unenforceability of, or any misrepresentation,
irregularity or other defect in, this Agreement;
(v) any transfer of any assets to or from the Issuer,
including without limitation any transfer or purported transfer to the
Issuer from any Person, any invalidity, illegality of, or inability to
enforce, any such transfer or purported transfer, any consolidation or
merger of the Issuer with or into any Person, or any change whatsoever in
the objects, capital structure, constitution or business of the Issuer;
(vi) any failure on the part of the Issuer or any other
guarantor to perform or comply with any term of this Agreement, the Notes
or any other agreement;
(vii) any suit or other action brought by any beneficiaries or
creditors of, or by, the Issuer or any other person for any reason
whatsoever, including without limitation any suit or action in any way
attacking or involving any issue, matter or thing in respect of this
Agreement, the Notes or any other agreement;
(viii) any lack or limitation of status or of power,
incapacity or disability of the Issuer or any trustee or agent thereof; or
29
(ix) any other thing, event, happening, matter, circumstance
or condition whatsoever, not in any way limited to the foregoing.
(b) The Guarantor hereby unconditionally waives diligence,
presentment, demand of payment, protest and all notices whatsoever and any
requirement that any holder of a Note exhaust any right, power or remedy against
the Issuer under this Agreement or the Notes or any other agreement or
instrument referred to herein or therein, or against any other guarantor or any
other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.
(c) In the event that the Guarantor shall at any time pay any amount
on account of the Guaranteed Obligations or take any other action in performance
of its obligations hereunder, the Guarantor shall have no subrogation or other
rights hereunder or under the Notes and the Guarantor hereby waives all rights
it may have to be subrogated to the rights of any holder of a Note, and all
other remedies that it may have against the Issuer, in respect of any payment
made hereunder unless and until the Guaranteed Obligations shall have been
indefeasibly paid in full. If any amount shall be paid to the Guarantor on
account of any such subrogation rights or other remedy, notwithstanding the
waiver thereof, such amount shall be received in trust for the benefit of the
holders of the Notes and shall forthwith be paid to such holders to be credited
and applied upon the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms hereof. The Guarantor agrees that its obligations
under this Section 11 shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of the Issuer is rescinded or
must be otherwise restored by any holder of any Note, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid.
Each default in the payment or performance of any of the Guaranteed
Obligations shall give rise to a separate claim and cause of action hereunder,
and separate claims or suits may be made and brought, as the case may be,
hereunder as each such default occurs. The Guarantor will from time to time
deliver, upon the reasonable request of any holder of a Note, a satisfactory
acknowledgment of its continued liability hereunder.
12. TAX INDEMNIFICATION.
(a) Gross-Up of Payments Subject to Taxes. In the event of the
imposition by or for the account of any Governmental Authority (the "TAXING
AUTHORITY") of The Netherlands or any other country or jurisdiction outside of
the United States of America from or through which any payment in respect of any
Note or this Agreement is made by an Obligor or which is a jurisdiction of
residence of an Obligor for tax purposes (any such Authority or country or
jurisdiction is hereinafter referred to as a "TAXING JURISDICTION") of any tax
(whether income, documentary, sales, stamp, registration, issue, capital,
property, excise or other), duty, levy, impost, fee, charge or withholding (each
a "TAX", and collectively, "TAXES") which requires such Obligor to make a
deduction or withholding in respect of such Tax from any payment in respect of
any Note or this Agreement (each such payment is referred to herein as a
"NOTE-RELATED PAYMENT"), each Obligor hereby agrees to pay forthwith from time
to time in connection with such Note-Related Payment to the holder of the Note
entitled to such Note-Related Payment such amount (the "TAX REIMBURSEMENT
AMOUNT") as shall be required so that such Note-Related
30
Payment received by such holder will, after the deduction or withholding of or
other payment for or on account of such Tax and any interest or penalties
relating thereto as well as any additional Taxes to be withheld or deducted in
respect of such Tax Reimbursement Amount, be equal to the amount due and payable
to such holder in respect of such Note-Related Payment before the imposition or
assessment of such Tax, provided that:
(i) in the case where such holder is not resident in the
United States of America, the Obligors shall not be obligated to pay any
such Tax Reimbursement Amount to such holder in excess of the hypothetical
Tax Reimbursement Amount which the Obligors would have been obligated to
pay hereunder if authorization could have been obtained under the double
tax treaty between the United States of America and the Taxing
Jurisdiction in force at the relevant time in order for such Obligor to
make the Note-Related Payment to such holder either with no deduction or
withholding of such Taxes or with a deduction or withholding of a lesser
amount in respect of such Taxes as if the Notes held by such holder were
beneficially owned at all relevant times by Persons who were resident in
the United States of America for the purposes of such treaty and were
otherwise eligible in full for all benefits and exceptions available under
such treaty with respect to interest received from such Obligor;
(ii) no Obligor shall be obligated to pay any such Tax
Reimbursement Amount to such holder in respect of any Taxes which would
not have been imposed but for the existence of any present or former
connection (other than the mere holding of a Note) between such holder (or
a fiduciary, settlor, beneficiary, member of, shareholder of, or possessor
of a power over, such holder, if such holder is an estate, trust,
partnership or corporation, or any Person other than such holder to whom
the relevant Note or any amount payable thereon is attributable for the
purposes of such Tax) and the Taxing Jurisdiction or any political
subdivision or territory or possession thereof or therein or area subject
to its jurisdiction arising out of such holder's (or such fiduciary's,
settlor's, beneficiary's, member's, shareholder's or possessor's or
Persons other than such holder) being or having been a citizen or resident
thereof, being or having been present or engaged in trade or business
therein or having or having had a permanent establishment therein;
(iii) no Obligor shall be obligated to pay any such Tax
Reimbursement Amount to such holder in respect of any Taxes that
constitute estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessments or governmental charges;
(iv) no Obligor shall be obligated to pay any such Tax
Reimbursement Amount to such holder to the extent of the imposition of any
Tax by reason of:
(A) such holder's not being eligible in full for the
benefits and exemptions available under the double taxation treaty
then in effect between the Taxing Jurisdiction and the United States
of America in relation to interest received by such holder from an
Obligor (including, without limitation, (y) being exempt from United
States of America taxes on income with respect to interest on the
Notes of such holder or (z) if such holder is an estate, trust,
partnership or corporation, or if any Person other than such holder
to whom the relevant Note or
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any amount payable thereon is attributable, the relevant fiduciary,
settlor, beneficiary, member of, shareholder of, or possessor of a
power over, such holder would not have been eligible in full for the
aforesaid benefits and exemptions),
(B) the failure to comply by such holder or any other
Person mentioned in subclause (A) above with a written request of an
Obligor addressed to such holder to provide information concerning
the nationality, residence, domicile or identity of such holder or
such other Person or, information as to if, and where, any
declaration of residence, domicile or other similar claim or
reporting requirement described in subclause (C) hereof has been
made by such holder or other Person,
(C) the failure by such holder or any other Person
mentioned in subclause (A) above to make any aforesaid declaration
of residence, domicile or other claim or reporting requirement, or
to provide such information or certification to a taxation
authority, as is required by a statute, treaty or regulation of the
Taxing Jurisdiction (including a claim (or a requirement to provide
information relating to such a claim) under any international treaty
between the United States of America and such Taxing Jurisdiction
providing for the avoidance of double taxation) as a precondition to
exemption from all or part of such Tax, in the case of you, within
60 days after the date of Closing, in the case of any payment
hereunder, at least 90 days prior to the date of such payment, and
in respect of any subsequent holder of Notes, at least 90 days prior
to the date of the next payment in respect of such holder, provided
that no holder of a Note shall be considered to have delayed or
failed to make any such declaration or to file any form (x) that
would involve the disclosure of confidential or proprietary tax
return or other information, (y) if such holder has filed the
appropriate forms in respect of such declaration with the United
States Internal Revenue Service (or other appropriate authority) at
least 30 days prior to the payment in question or (z) in the case of
forms or declarations not required under existing law and practices
as of the date of the Closing, unless an Obligor has requested that
such forms or declarations be filed (and has furnished such forms or
declarations to such holder) and such holder has had a reasonable
period of time (not less than 30 days) to file such forms or
declarations, or
(D) any combination of subclauses (A), (B) and (C)
above;
nothing in this clause (iv) shall be construed to impose any obligation on
you or any other such holder (or any other Person mentioned in subclause
(A) above) to contest any determination by the Taxing Authority in respect
of such declarations, reports or forms or to require, or be deemed to
require, the disclosure by you or any other such holder of any
confidential or proprietary information.
Not later than 30 days after the date of the Closing, the Issuer will furnish
you with copies of all forms currently required to be filed in The Netherlands
pursuant to paragraph (C) above, and in
32
connection with the transfer of any Note pursuant to Section 15.2, the Issuer
will furnish the transferee of such Note with copies of all forms then required.
(b) Receipt for Taxes. As soon as reasonably practicable after the
date of any payment by any Obligor of any Tax in respect of any Note-Related
Payment, such Obligor shall furnish to each affected holder of a Note a
certified copy of the original tax receipt (if such a receipt has been issued
and, if such tax receipt has not then been issued, such Obligor shall furnish a
copy thereof to such affected holder as soon as reasonably practicable as such
tax receipt is so issued). If such Obligor shall have determined, with respect
to any holder of Notes, that a deduction or withholding of Tax from Note-Related
Payments shall be required to be made to such holder and that no Tax
Reimbursement Amount will be payable to such holder under this Section 12 in
respect of such Tax, such Obligor will use its best efforts to inform such
holder of the imposition or withholding of such Tax and of the applicable
exemption set forth in Section 12 that releases such Obligor from the obligation
to pay a Tax Reimbursement Amount in respect thereof.
(c) Payment of Taxes to Taxing Jurisdiction. If any deduction or
withholding for Tax shall at any time be required by the laws of a Taxing
Jurisdiction in respect of any Note-Related Payments to a holder of Notes,
the Obligor making any such Note-Related Payments will promptly pay over to the
Taxing Authority imposing such Tax the full amount required to be deducted or
withheld in respect thereof (including, without limitation, the full amount of
any Tax required to be deducted or withheld from or otherwise paid in respect of
any related Tax Reimbursement Amount).
(d) Refunds of Tax Reimbursement Amounts. If an Obligor makes
payment of any Tax Reimbursement Amount and a recipient thereof subsequently
receives a refund, credit or allowance in respect thereof (a "TAX REFUND"), and
such recipient determines in its good faith that the Tax Refund is attributable
to the Taxes with respect to which such Tax Reimbursement Amount was paid, then
such recipient shall promptly reimburse such Obligor such amount as such
recipient shall determine, in good faith, to be the proportion of the Tax Refund
as will leave such recipient, after such reimbursement, in no better or worse
position than in which such recipient would have been if payment of such Tax
Reimbursement Amount had not been required. The foregoing notwithstanding,
nothing in this clause (d) shall restrict the right of any recipient to arrange
the tax affairs of such recipient as such recipient shall think fit. Nothing in
this clause (d) shall require any recipient to disclose any information
regarding the tax affairs of such recipient.
(e) Stamp Taxes. The Obligors will pay all stamp, documentary or
similar taxes which may be payable in respect of the execution and delivery of
this Agreement or of the execution and delivery (except as otherwise provided in
Section 15 with respect to transfer of Notes) of any of the Notes or the
Guarantee or the Subsidiary Guarantee or of any amendment of, or waiver or
consent under or with respect to, this Agreement or of any of the Notes or the
Guarantee or the Subsidiary Guarantee and will save each holder of any Note and
all subsequent holders of the Notes harmless against all liabilities resulting
from nonpayment or delay in payment of any such tax required to be paid by the
Obligors hereunder.
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(f) Survival of Obligations. The obligations of each Obligor under
this Section 12 will survive the payment or transfer of any Note and the
termination of this Agreement.
13. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Issuer defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Issuer defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) any Obligor defaults in the performance of or compliance with
any term contained in Sections 10.1 through 10.8; or
(d) any Obligor defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 13) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge of
such default and (ii) an Obligor receiving written notice of such default from
any holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section 13); or
(e) any representation or warranty made in writing by or on behalf
of any Obligor or by any officer of any Obligor in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of which
made; or
(f) (i) the Guarantor or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $10,000,000 beyond any period of grace provided
with respect thereto, or (ii) the Guarantor or any Subsidiary is in default in
the performance of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $10,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared (or one or more Persons are entitled to declare such Debt
to be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Debt to convert such Debt into equity interests), the
Guarantor or any Subsidiary has become obligated to purchase or repay Debt
before its regular maturity or before its regularly scheduled dates of payment
in an aggregate outstanding principal amount of at least $10,000,000; or
34
(g) the Guarantor or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing (except for actions (including the
appointment of a receiver) in connection with the termination of the existence
of a Subsidiary as permitted under Section 9.5); or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Guarantor or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Guarantor or any of
its Subsidiaries, or any such petition shall be filed against the Guarantor or
any of its Subsidiaries and such petition shall not be dismissed within 60 days;
or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against one or more of the
Guarantor and its Subsidiaries and which judgments are not, within 60 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the 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, (ii) 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 any
Obligor or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) 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 $10,000,000, (iv) any Obligor
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, (v) any Obligor or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Issuer 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 any Obligor or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect; or
(k) the Guarantee shall at any time, for any reason, cease to be in
full force and effect or shall be declared to be null and void in whole or in
any material part by the final
35
judgment (which is non-appealable or has not been stayed pending appeal or as to
which all rights to appeal have expired or been exhausted) of any Governmental
Authority having jurisdiction, or the validity or enforceability of the
Guarantee shall be contested by or on behalf of the Guarantor or any of its
Subsidiaries, or the Guarantor or any such Subsidiary shall renounce the
Guarantee or deny that the Guarantor is bound thereby or has any further
liability thereunder; or
(l) the Subsidiary Guarantee shall at any time, for any reason,
cease to be in full force and effect or shall be declared to be null and void in
whole or in any material part by the final judgment (which is non-appealable or
has not been stayed pending appeal or as to which all rights to appeal have
expired or been exhausted) of any Governmental Authority having jurisdiction, or
the validity or enforceability of the Subsidiary Guarantee shall be contested by
or on behalf of the Guarantor or any of its Subsidiaries, or the Guarantor or
any such Subsidiary shall renounce the Subsidiary Guarantee or deny that the
Subsidiary Guarantor is bound thereby or has any further liability thereunder.
As used in Section 13(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
14. REMEDIES ON DEFAULT, ETC.
14.1. ACCELERATION.
(a) If an Event of Default with respect to any Obligor described in
paragraph (g) or (h) of Section 13 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders may at any time at its or their option, by notice or
notices to each Obligor, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 13 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to each Obligor, declare all the Notes held
by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 14.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) if such Notes are declared due and payable under Section
14.1(a), 14.1(b) or 14.1(c), the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each Obligor
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Issuer
(except as herein specifically provided for) and that the provision for
36
payment of a Make-Whole Amount by the Issuer in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
14.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 14.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
14.3. RESCISSION.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 14.1, the Required Holders, by written notice to
each Obligor, may rescind and annul any such declaration and its consequences
if (a) an Obligor has paid all overdue interest on the Notes, all principal of
and Make-Whole Amount, if any, on any Notes that are due and payable and are
unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 19, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 14.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
14.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Obligors under Section 17, the Issuer
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 14, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
37
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
15.1. REGISTRATION OF NOTES.
The Issuer shall keep at its registered office in The Netherlands and its
principal executive office in the United States a register for the registration
and registration of transfers of Notes. As of the date hereof such offices are
located, respectively, as follows:
World Trade Center and 26300 La Alameda
Tower C, 4th Floor Suite 250
Strawinskylaan 819 Mission Viejo, CA 92691
PO Box 819
1070 XX Amsterdam
THE NETHERLANDS
The name and address of each holder of one or more Notes, each transfer
thereof and the name and address of each transferee of one or more Notes shall
be registered in such register. Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof, and the
Issuer shall not be affected by any notice or knowledge to the contrary. The
Issuer shall give to any holder of a Note that is an Institutional Investor
promptly upon request therefor, a complete and correct copy of the names and
addresses of all registered holders of Notes.
15.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the Issuer
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Issuer shall execute and deliver,
at the Issuer's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Issuer may require payment of a sum sufficient to
cover any stamp tax or governmental charge in respect of any such transfer of
Notes which is imposed by the United States of America or any state thereof or
any taxing authority of any thereof. Notes shall not be transferred in
denominations of less than $100,000 (except that in the case of the transfer of
all of the Notes by any holder of Notes aggregating less than $100,000 one Note
may be issued in a denomination equal to such aggregate amount); provided that
the denomination of any Note shall not in any event be less than NLG100,000
(100,000 Dutch Guilders). Any transferee, by its acceptance of a Note registered
in its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
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15.3. REPLACEMENT OF NOTES.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $100 million, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Issuer at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
16. PAYMENTS ON NOTES.
16.1. PLACE OF PAYMENT.
Subject to Section 16.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in New York, NY
at the principal office of The Bank of New York in such jurisdiction. The Issuer
may at any time, by notice to each holder of a Note, change the place of payment
of the Notes so long as such place of payment shall be either the principal
office of the Issuer in such jurisdiction or the principal office of a bank or
trust company in such jurisdiction.
16.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 16.1 or in such Note to the
contrary, the Issuer will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Issuer in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written
request of the Issuer made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Issuer at its
principal executive office or at the place of payment most recently designated
by the Issuer pursuant to Section 16.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Issuer in exchange
for a new Note or Notes pursuant to Section 15.2. The Issuer will afford the
benefits of this Section 16.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by
39
you under this Agreement and that has made the same agreement relating to such
Note as you have made in this Section 16.2.
17. EXPENSES, ETC.
17.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated, the
Obligors jointly and severally will pay all costs and expenses (including
reasonable attorneys' fees of a special counsel and, if reasonably required,
local or other counsel) incurred by you and each Other Purchaser or holder of a
Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Guarantor or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Obligors jointly and severally will pay, and will save you and each
other holder of a Note harmless from, all claims in respect of any fees, costs
or expenses if any, of brokers and finders (other than those retained by you).
17.2. SURVIVAL.
The obligations of the Obligors under Section 17 will survive the payment
or transfer of any Note, the enforcement, amendment or waiver of any provision
of this Agreement or the Notes, and the termination of this Agreement.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of any Obligor pursuant to this Agreement shall be
deemed representations and warranties of such Obligor under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Obligors and supersede
all prior agreements and understandings relating to the subject matter hereof.
40
19. AMENDMENT AND WAIVER.
19.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of each Obligor and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 23 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding (i) subject to the provisions of
Section 14 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal of, or change the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount on,
the Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11, 12, 13(a), 13(b), 14, 19 or 22.
19.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Issuer will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Issuer will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 19 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. No Obligor will directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
19.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 19
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon each Obligor without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between an Obligor 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
41
of any holder of such Note. As used herein, the term "THIS AGREEMENT" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
19.4. NOTES HELD BY AN OBLIGOR, ETC.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by an Obligor or any of their
respective Affiliates shall be deemed not to be outstanding.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Guarantor or any Subsidiary
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you as being
confidential information of the Guarantor or such Subsidiary, provided that such
term does not include information that (a) was publicly known or otherwise known
to you prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by you or any person acting on your behalf, (c)
otherwise becomes known to you other than through disclosure by the Guarantor or
any Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which you offer to purchase any security of the Issuer
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w)to effect compliance with any law,
rule, regulation or order applicable to you, (x) in response to any subpoena or
other legal process, (y) in connection with any litigation to which you are a
party or (z) if an Event of Default has occurred and is continuing, to the
extent you may reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the rights and
remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have
42
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement. On reasonable request by the Guarantor
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Guarantor embodying the provisions
of this Section 20.
21. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. Each
Obligor agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 21
shall not prohibit an Obligor or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
22. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Issuer in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Issuer in
writing,
(iii) if to the Issuer, to the Issuer at its address set forth
at the beginning hereof to the attention of Don E. Cameron, or at such
other address as the Issuer shall have specified to the holder of each
Note in writing, or
(iv) if to the Guarantor, to the Guarantor at its address set
forth at the beginning hereof to the attention of Don E. Cameron, or at
such other address as the Guarantor shall have specified to the holder of
each Note in writing.
Notices under this Section 22 will be deemed given only when actually received.
43
23. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Issuer, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 23), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Issuer of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
23), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
24. MISCELLANEOUS.
24.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
24.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
24.3. SEVERABILITY.
Any provision of this Agreement that 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 (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
24.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
44
24.5. 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. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
24.6. SUBMISSION TO JURISDICTION, SERVICE OF PROCESS.
Each Obligor hereby expressly waives all rights to object to
jurisdiction or execution in any legal action or proceeding relating to this
Agreement or the Notes which it may now or hereafter have by reason of its
domicile or by reason of any subsequent or other domicile. Each Obligor agrees
that any legal action or proceeding with respect to this Agreement or any Note,
or any instrument, agreement or document mentioned or contemplated herein, or to
enforce any judgment obtained against such Obligor in any such legal action or
proceeding against it or any of their respective properties or revenues may be
brought by the holder of any Note in the courts of the State of New York or of
the United States of America located in New York, New York, as the holder of any
Note may elect, and by execution and delivery of this Agreement, each Obligor
irrevocably submits to each such jurisdiction.
In addition, each Obligor hereby irrevocably and unconditionally
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any of the actions, suits or
proceedings described above arising out of or in connection with this Agreement
or the Notes brought in any of such courts, and waives and agrees not to plead
or claim that any such action, suit or proceeding brought in any such court has
been brought in an inconvenient forum.
Each Obligor hereby irrevocably designates, appoints and empowers CT
Corporation System with offices at 1633 Broadway, New York, New York, and its
successors, as the designee, appointee and agent of such Obligor to receive,
accept and acknowledge, for and on behalf of such Obligor and its respective
properties, service of any and all legal process, summons, notices and documents
which may be served in any such action, suit or proceeding in the case of the
courts of the State of New York or of the United States of America located in
New York, New York, which service may be made on any such designee, appointee
and agent in accordance with legal procedures prescribed for such courts. Each
Obligor shall take any and all actions necessary to continue such designation in
full force and effect and should such designee, appointee and agent become
unavailable for this purpose for any reason, such Obligor will forthwith
irrevocably designate a new designee, appointee and agent with offices in New
York, New York, which shall irrevocably agree to act as such, with the powers
and for the purposes specified in this Section 24.6. Each Obligor further
irrevocably consents and agrees to service of any and all legal process,
summons, notices and documents out of any of such courts in any such action,
suit or proceeding delivered to such Obligor in accordance with this Section
24.6 or to its then designee, appointee or agent for service. Service upon any
Obligor or any such designee, appointee and agent as provided for herein shall
constitute valid and effective personal service upon such Obligor and that the
failure of any such designee, appointee and agent to give any notice of such
service to such Obligor shall not impair or affect in any way the validity of
such
45
service or any judgment rendered in any action or proceeding based thereon.
Nothing herein shall, or shall be construed so as to, limit the right of the
holder of the Notes to bring actions, suits or proceedings with respect to the
obligations and liabilities of either Obligor under, or any other matter arising
out of or in connection with, this Agreement or the Notes, or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, in
the courts of whatever jurisdiction in which the respective offices of the
holders of the Notes may be located or assets of such Obligor may be found or as
otherwise shall to the holders of the Notes seem appropriate, or to affect the
right to service of process in any jurisdiction in any other manner permitted by
law.
24.7. OBLIGATIONS TO MAKE PAYMENTS IN DOLLARS.
The Obligors shall make payments under this Agreement and under the Notes
in Untited States currency ("DOLLARS") and the respective obligations of the
Obligors to make such payments shall not be discharged or satisfied by any
tender, or any recovery pursuant to any judgment, which is expressed in or
converted into any currency other than Dollars, except to the extent such tender
or recovery shall result in the actual receipt by the holder of any Note of the
full amount of Dollars expressed to be payable in respect of any such
obligations. The obligation of the Obligors, to make payments in Dollars as
aforesaid shall be enforceable as an alternative or additional cause of action
for the purpose of recovery in Dollars of the amount, if any, by which such
actual receipt shall fall short of the full amount of Dollars expressed to be
payable in respect of any such obligations, and shall not be affected by
judgment being obtained for any other sums due under this Agreement or the
Notes.
24.8. ASSUMPTION OF COMPANY'S OBLIGATIONS.
(A) The Guarantor may cause any James Hardie USA Entity or James Hardie
Netherlands Entity (any such Entity being herein called a "NEW ISSUER") to
assume the obligations of the Issuer for the due and punctual payment of the
principal of and Make-Whole Amount (if any) and interest on the Notes and the
performance of each and every other covenant and obligation of the Issuer under
this Agreement and the Notes, provided that as a condition precedent to any such
assumption,
(1) The Guarantor shall have delivered to each holder of a Note (i)
written notice of such assumption at least 30 days prior to the date of
such assumption, which notice shall refer specifically to this Section
24.8 and shall specify the date such assumption is to become effective,
(ii) an irrevocable and unconditional assumption of such obligations duly
executed and delivered by such New Issuer in a form approved in writing by
the Required Holders (the "ASSUMPTION AGREEMENT"), (iii) a written
confirmation, from each of the Guarantor and the Subsidiary Guarantor of
their continued liability under the Guarantee and the Subsidiary
Guarantee, respectively, and (iv) an opinion of independent counsel of
recognized standing, in customary form and subject only to customary
qualifications, addressed to each such holder, to the effect that the
Assumption Agreement is a legal, valid and binding agreement of such New
Issuer enforceable in accordance with its terms; and
46
(2) immediately after giving effect to such assumption, no Default
or Event of Default shall have occurred and be continuing.
(B) In the event that any New Issuer shall assume the obligations of the
Issuer pursuant to Subsection (A) above, all references to the Issuer in this
Agreement or any Note or any document, instrument or agreement executed, or to
be executed, in connection herewith or therewith shall be deemed to be
references to such New Issuer, except for references to the Issuer relating to
its status prior to such assumption.
24.9. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
47
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Issuer, whereupon the foregoing shall become a binding agreement among you and
the Issuer and the Guarantor.
Very truly yours,
JAMES HARDIE FINANCE B.V.
By /s/ Virginia G. Lester
-------------------------------
Title: Attorney
JAMES HARDIE N.V.
By /s/ Virginia G. Lester
-------------------------------
Title: Attorney
The foregoing agreement is
hereby accepted as of the
date first above written.
TEXAS LIFE INSURANCE COMPANY
By: /s/ Gerald P. Marcus
-----------------------------------
Title: AUTHORIZED SIGNATORY
The foregoing agreement is
hereby accepted as of the
date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Gerald P. Marcus
-----------------------------------
Title: GERALD P. MARCUS
DIRECTOR
The foregoing agreement is
hereby accepted as of the
date first above written.
STATE FARM LIFE INSURANCE COMPANY
By: /s/ Donald E. Heltner By: /s/ Lyle Triebwasser
----------------------------- -------------------------------
Name: Donald E. Heltner Name: Lyle Triebwasser
Title: Vice President--Taxable Fixed Title: Senior Investment Officer
Income
The foregoing agreement is
hereby accepted as of the
date first above written.
AMERITAS LIFE INSURANCE CORP.
By: /s/ William W. Lester
-------------------------
William W. Lester
Vice President-Securities
The foregoing agreement is
hereby accepted as of the
date first above written.
PRINCIPAL LIFE INSURANCE COMPANY
By: /s/ [ILLEGIBLE]
--------------------------------
Title: [ILLEGIBLE]
By: /s/ James C. Fifield
--------------------------------
Title: Council
The foregoing agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ [ILLEGIBLE]
--------------------------------
Title: Vice President
The foregoing agreement is
hereby accepted as of the
date first above written.
AMERICAN INVESTORS LIFE INSURANCE
COMPANY
By: /s/ Roger D. Fors
----------------------------------
Title: Vice President
Investment Management & Research
The foregoing agreement is
hereby accepted as of the
date first above written.
THE PAUL REVERE LIFE INSURANCE COMPANY
By: Provident Investment Management, LLC
Its: Agent
By: /s/ David Fussell
------------------------------------
David Fussell
Vice President
The foregoing agreement is
hereby accepted as of the
date first above written.
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ John B. Joyce
-----------------------------------
Title: Managing Director
The foregoing agreement is
hereby accepted as of the
date first above written.
CM LIFE INSURANCE COMPANY
By: /s/ John B. Joyce
-------------------------------------
Title: Investment Officer
The foregoing agreement is
hereby accepted as of the
date first above written.
OHIO NATIONAL LIFE ASSURANCE
CORPORATION
By: /s/ Michael A. Boedeker
--------------------------------------
Title: Michael A. Boedeker
Vice President, Fixed Income Securities
The foregoing agreement is
hereby accepted as of the
date first above written.
USAA LIFE INSURANCE COMPANY
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Senior Vice President
The foregoing agreement is
hereby accepted as of the
date first above written.
THE GUARDIAN LIFE INSURANCE COMPANY
OF AMERICA
By: /s/ Thomas M. Donohue
------------------------------------
Title: Vice President
The foregoing agreement is
hereby accepted as of the
date first above written.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By CIGNA Investments, Inc.
By: /s/ Richard B. McGauley
-------------------------------------
Title: RICHARD B. McGAULEY
MANAGING DIRECTOR
The foregoing agreement is
hereby accepted as of the
date first above written.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY on behalf of One or More Separate Accounts
By CIGNA Investments, Inc.
By: /s/ Richard B. McGauley
-------------------------------------
Title: RICHARD B. McGAULEY
MANAGING DIRECTOR
The foregoing agreement is
hereby accepted as of the
date first above written.
LIFE INSURANCE COMPANY OF NORTH
AMERICA
By CIGNA Investments, Inc.
By: /s/ Richard B. McGauley
-------------------------------------
Title: RICHARD B. McGAULEY
MANAGING DIRECTOR
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
1. All payments on account of Notes held by such purchaser $30,000,000
shall be made by wire transfer of immediately available Series B
funds for credit to: No. RB-1
Account No. 890-0304-391
Bank of New York $11,000,000
New York, New York Series D
(ABA No: 021-000-018 No. RD-1
Each such wire transfer shall set forth a reference to
the name of the Company, maturity date, interest rate, $15,000,000
Security No. !INV6175! and the due date and Series F
application (as among principal, interest and Yield- No. RF-1
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
3. Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
180 N. Stetson Street - Suite 5600
Chicago, IL 60601-6716
Attention: International Finance
Telephone: (312) 540-0931
Telecopy: (312) 540-4222
4. Receipt of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (973) 802-7398
Telecopy: (973) 802-9425
5. Taxpayer Identification No.: 22-1211670
CONNECTICUT GENERAL LIFE INSURANCE COMPANY $4,400,000
Series C
1. Payment No. RC-1
Federal Funds Wire Transfer to: $3,100,000
Series C
Chase NYC/CTR/ No. RC-2
BNF = CIGNA Private Placements/AC = 9009001802
ABA# 021000021 $6,135,000
Series G
Accompanying Information: No. RG-1
OBI = [name of company; description of
security; interest rate; maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made); contact name and
phone.]
2. Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investment, Inc.
Attention: Private Securities - S307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: (860) 726-7203
With a copy to:
Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: (212) 552-3107/1005
3. Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: (860) 726-7203
4. Taxpayer Identification No.: 13-3574027
CONNECTICUT GENERAL LIFE INSURANCE COMPANY $3,000,000
ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS Series C
No. RC-3
SEE INFORMATION UNDER "CONNECTICUT GENERAL LIFE
INSURANCE COMPANY." $3,000,000
Series C
No. RC-4
$5,065,000
Series G
No. RG-2
LIFE INSURANCE COMPANY OF NORTH AMERICA $3,800,000
Series G
SEE INFORMATION UNDER "CONNECTICUT GENERAL LIFE No. RG-3
INSURANCE COMPANY."
METROPOLITAN LIFE INSURANCE COMPANY
1. All payments by wire transfer of immediately available
funds to: $23,500,000
Series E
The Chase Manhattan Bank No. RE-1
ABA #021-000-021
New York, New York
Metropolitan Life Insurance Company
Account No. 002-2-410591
With reference to PPN # N4703# AE3
with sufficient information to identify the source and
application of such funds
2. All notices and other communications:
Metropolitan Life Insurance Company
Private Placements Unit
334 Madison Avenue
Convent Station, New Jersey 07961-0633
Facsimile (973) 254-3050
With a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attention: George M. Bryant (Area 6-H)
Facsimile: (212) 578-3916
3. Taxpayer Identification No.: 13-5581829
TEXAS LIFE INSURANCE COMPANY
1. All payments by wire transfer of immediately available
funds to: $3,000,000
Series E
The Chase Manhattan Bank No. RE-2
ABA #021-000-021
New York, New York
SSG Private Income Processing
Account No. 900-9-000200
Texas Life Insurance Company
Account Number G06748
With reference to PPN # N4703# AE3
with sufficient information to
identify the source and application
of such funds
2. All notice and other communications:
Texas Life Insurance Company
c/o Metropolitan Life Insurance Company
Private Placements Unit
334 Madison Avenue
Convent Station, New Jersey 07961-0633
Facsimile (973) 254-3050
With a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attention: George M. Bryant (Area 6-H)
Facsimile: (212) 578-3916
3. Taxpayer Identification No.: 74-0940890
PRINCIPAL LIFE INSURANCE COMPANY
1. All notices with respect to the Note, except with $24,000,000
respect to payment, should be sent to: Series A
No. RA-1
Principal Life Insurance Company
711 High Street
Des Moines, IA 50392-0800
Attn: Investment Department-Securities Division
Fax #: 515-248-2490
Confirmation #: 515-248-3495
2. All notices with respect to payment on the Note should be sent to:
Principal Life Insurance Company
711 High Street
Des Moines, IA 50392-0960
Attn: Investment Accounting-Securities
Fax #: 515-248-2643
Confirmation #: 515-247-0689
3. All payments with respect to the Note are to be made by a wire
transfer of immediately available funds to:
Norwest Bank Iowa, N.A.
7th & Walnut Streets
Des Moines, IA 50309
ABA No.: 073 000 228
OBI Reference: PFGSE (S) B00617620
For credit to Principal Life Insurance Company
General Account No. 0000014752
4. Taxpayer Identification No.: 42-0127290
USAA LIFE INSURANCE COMPANY
1. All payments on or in respect of the Notes to be by $20,000,000
bank wire transfer of Federal or other immediately Series E
available funds (identifying each payment as James No. RE-3
Hardie Finance B.V., 7.12% Series E Guaranteed
Senior Notes, due 2008, PPN, principal or interest) to:
Bankers Trust Company/USAA
ABA #021001033
Private Placement Processing
AC #99 911 145
for credit to: USAA Life Insurance Company
Accounting Number 99717
2. All notices with respect to payments and written
confirmation of each such payment, to be addressed to:
USAA Life Insurance Company
c/o FSC Portfolio Accounting
USAA Building, B-1-W
9800 Fredericksburg Road
San Antonio, Texas 78288
3. All other communications:
Insurance Company Portfolios
USAA IMCO
USAA Building, BK D04N
9800 Fredericksburg Road
San Antonio, Texas 78288
4. Taxpayer Identification No.: 74-1472662
THE PAUL REVERE LIFE INSURANCE COMPANY
1. Address all notices regarding payments and all other $20,000,000
communications to: Series G
No. RG-4
Provident Investment Management, LLC
Private Placements
One Fountain Square
Chattanooga, Tennessee 37402
Telephone (423) 755-1365
Fax: (423) 755-3351
2. All payments on account of the Notes shall be made by wire
transfer of immediately available funds to:
CUDD & CO.
c/o The Chase Manhattan Bank
New York, NY
ABA No. 021 000 021
SSG Private Income Processing
A/C #900-9-000200
Custodial Account No. G06992
Please reference: Issuer
PPN
Coupon
Principal + $_________
Interest = $_________
3. Taxpayer Identification No.: 13-6022143 (CUDD & CO.)
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $3,250,000
by crediting in the form of bank wire transfer of (Series C)
Federal or other immediately available funds No. RC-5
(identifying each payment as James Hardie Finance
B.V. 6.99% Guaranteed Senior Note due 2006, interest
and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $1,000,000
by crediting in the form of bank wire transfer of Federal (Series C)
or other immediately available funds (identifying each No. RC-10
payment as James Hardie Finance B.V. 6.99% Guaranteed
Senior Note due 2006, interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase Metro Tech Center
New York, NY 10081
ABA No. 021000021
For MassMutual IFM Non-Traditional
Account No. 910-2509073
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made by $625,000
crediting in the form of bank wire transfer of Federal (Series C)
or other immediately available funds (identifying No. RC-11
each payment as James Hardie Finance B.V. 6.99%
Guaranteed Senior Note due 2006, interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase Metro Tech Center
New York, NY 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made by $3,900,000
crediting in the form of bank wire transfer of Federal (Series E)
or other immediately available funds (identifying each No. RE-4
payment as James Hardie Finance B.V. 7.12% Guaranteed
Senior Note due 2008, interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made by $1,200,000
crediting in the form of bank wire transfer of Federal (Series E)
or other immediately available funds (identifying each No. RE-7
payment as James Hardie Finance B.V. 7.12% Guaranteed
Senior Note due 2008, interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase Metro Tech Center
New York, NY 10081
ABA No. 021000021
For MassMutual IFM Non-Traditional
Account No. 910-2509073
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $750,000
by crediting in the form of bank wire transfer of Federal (Series E)
or other immediately available funds (identifying each No. RE-8
payment as James Hardie Finance B. V. 7.12% Guaranteed
Senior Note due 2008, interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase Metro Tech Center
New York, NY 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
CM LIFE INSURANCE COMPANY
C/O MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $125,000
by crediting in the form of bank wire transfer of (Series C)
Federal or other immediately available funds No. RC-12
(identifying each payment as James Hardie Finance
B.V. 6.99% Guaranteed Senior Note due 2006, interest
and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For Segment 43 - Universal Life
Account No. 4068-6561
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 06-1041383
CM LIFE INSURANCE COMPANY
C/O MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $150,000
by crediting in the form of bank wire transfer of (Series E)
Federal or other immediately available funds (identifying No, RE-9
each payment as James Hardie Finance B.V. 7.12% Guaranteed
Senior Note due 2008, interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For Segment 43 - Universal Life
Account No. 4068-6561
Re: Description of security, principal and interest
split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance
Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 06-1041383
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made $4,250,000
by crediting in the form of bank wire transfer of (Series F)
Federal or other immediately available funds (identifying No. RF-2
each payment as James Hardie Finance B.V. 7.24% Guaranteed
Senior Note due 2010, interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1. All payments on account of the Note shall be made by $750,000
crediting in the form of bank wire transfer of Federal (Series F)
or other immediately available funds (identifying each No. RF-3
payment as James Hardie Finance B.V. 7.24% Guaranteed
Senior Note due 2010, interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, NY 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (413) 744-3561
2. All notices and communications to be addressed as
first provided above, except notices with respect to
payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
3. Taxpayer Identification No.: 04-1590850
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
1. Payment by wire to: $6,000,000
Series C
The Chase Manhattan Bank No. RC-6
FED ABA #021000021
CHASE/NYC/CTR/BNF $7,000,000
A/C 900-9-000200 Series E
Reference A/C #G05978 The Guardian No. RE-5
And the name and CUSIP for which payment is
being made
2. Address for all notices relating to payments:
The Guardian Life Insurance Company of America
Attn: Investment Accounting M-IA
201 Park Avenue South
New York, NY 10003
Fax (212) 677-9023
3. Address for all other communications and notices:
The Guardian Life Insurance Company of America
201 Park Avenue South
New York, NY 10003
Attn: Thomas M. Donohue
Investment Department 7B
Fax: (212) 777-6715
4. Taxpayer Identification No.: 13-6022143
AMERICAN INVESTORS LIFE INSURANCE COMPANY
1. Wire instructions for American Investors Life Insurance $7,000,000
Company: Series C
No. RC-7
Bankers Trust Company
New York, NY
ABA #021001033
Credit Account #99911145
For Further Credit Account #093398
American Investors Life Insurance Co.
Ref: Issue name, coupon, maturity date
Contact at Bankers Trust Co. Richard McCormack (212)
618-2230 or Lorraine Squires (212) 618-2200, Fax number (212)
518-2280
2. Address for all notices with respect to payments:
AmerUs life Insurance Company
699 Walnut Street, Suite 1700
Des Moines, Iowa 50309
Attn: Dan Owens
Tel: (515) 283-3431
Fax:(515) 283-3434
3. Address for all other communications:
AmerUs Life Insurance Company
699 Walnut Street, Suite 1700
Des Moines, Iowa 50309
Attn: Steve Sweeney
Tel: (515) 362-3542
Fax: (515) 283-3434
4. Taxpayer Identification No.: 48-0696320
Taxpayer Identification No.: 13-6065491 (Salkeld & Co.)
OHIO NATIONAL LIFE ASSURANCE CORPORATION
1. Address for payments on account of the Notes: $3,500,000
Series E
By bank wire transfer of Federal or other No. RE-6
immediately available funds (identifying each
payment as to issuer, security, and principal or
interest) to:
$3,500,000
Star Bank, N.A. (ABA #042-000013) Series C
5th & Walnut Streets No. RC-8
Cincinnati, OH 45202
For credit to Ohio National Life Assurance
Corporation's Account No. 865-215-8
2. All notices and communications, including notices
with respect to payments and written confirmation
of each such payment, to be addressed to:
Ohio National Life Assurance Corporation
Post Office Box 237
Cincinatti, OH 45201
Attention: Investment Department
3. Taxpayer Identification No.: 31-0962495
STATE FARM LIFE INSURANCE COMPANY
1. Wire Transfer Instructions: $5,000,000
Series B
The Chase Manhattan Bank No. RB-2
ABA No. 021000021
SSG Private Income Processing
A/C #900-9-000200
For Credit to Account Number G 06893
Ref. PPN N4703# AB 9
Rate: 6.92%
Maturity Date: November 5, 2005
2. Send notices (as well as a photocopy of the original
security) to:
State Farm Life Insurance Company
Investment Dept. E-10
One State Farm Plaza
Bloomington, IL 61710
3. Send confirms to:
State Farm Life Insurance Company
Investment Accounting Dept. D-3
One State Farm Plaza
Bloomington, IL 61710
4. Taxpayer Identification No.: 37-0533090
AMERITAS LIFE INSURANCE CORP.
1. All payments by wire transfer of immediately available funds to: $2,000,000
Series C
U.S. Bank No. RC-9
ABA #104-000-029
Ameritas Life Insurance Corp.
Acc# 1-494-0070-0188
Re: Description of Note; Principal & Interest Breakdown
with sufficient information to identify the source and
application of such funds
2. All notices of payments and written confirmations of such
wire transfers:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Fax Number (402) 467-6970
Attn: James Mikus
3. All other communications:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Attn: James Mikus
4. Taxpayer Identification No.: 47-0098400
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
(a) The Obligors have not changed their jurisdictions of incorporation, have not
been parties to any mergers or consolidations and have not succeeded to all or
any substantial part of the liabilities of any other entity since June 30, 1998,
except in connection with the Reorganization.
(b) The "Purchase Agreements," which constitute part of the Reorganization, are
listed below:
1. Share Acquisition Agreement between JHIL and James Hardie Australia
Pty Limited re acquisition of shares of James Hardie Fibre Cement
Pty Limited.
2. Share Acquisition Agreement between JHIL and James Hardie Australia
Pty Limited re acquisition of shares of James Hardie Windows
(Holdings) Pty Limited and James Hardie Building Systems (Holdings)
Pty Limited.
3. Share Sale and Purchase Agreement between RCI Pty Limited, the
Guarantor and JHIL re acquisition of shares of PT James Hardie
Indonesia.
4. Share Acquisition Agreement among RCI Pty Limited, the Guarantor and
JHIL re acquisition of shares of James Hardie Philippines Inc.
5. Share Acquisition Agreement among the Guarantor, RCI Malta
Investments Limited and JHIL re acquisition of shares of James
Hardie Research Holdings Pty Limited.
6. Share Contribution Agreement among the Guarantor, RCI Malta
Investments Limited and JHIL re acquisition of shares of James
Hardie (Holdings) Inc.
7. Business Acquisition Agreement among James Hardie & Coy Pty Limited,
James Hardie Australia Pty Limited and JHIL.
8. Business Acquisition Agreement among James Hardie & Coy Pty Limited,
James Hardie US Investments Carson Inc. and JHIL.
9. Business Acquisition Agreement among James Hardie US Investments
Carson Inc., James Hardie Australia Pty Limited and JHIL.
10. Agreement for Sale and Purchase of Business among James Hardie
Building Products Limited, James Hardie New Zealand Limited and
JHIL.
SCHEDULE 5.3
SUPPLEMENTAL INFORMATION FOR PRIVATE PLACEMENT OFFERING MEMORANDUM
The following information supersedes any information to the contrary set
forth in the Private Placement Offering Memorandum, dated August 1998 (the
"Memorandum"), of James Hardie N. V. and James Hardie Finance B. V. All
capitalized terms not otherwise defined herein have the respective meanings
ascribed to them in the Memorandum.
(a) CLOSING OF THE SALE OF THE NOTES
The closing of the sale of the Notes offered hereby will no longer be
contingent upon, or occur concurrently with, the closing of the planned initial
public offering (the "IPO") of approximately 15% of the outstanding shares of
capital stock of the Company. While the other components of the Reorganization
- -- including the closing of the sale of the Notes and the establishment of one
or more new bank credit facilities - are expected to be completed in November
1998 concurrently with the closing of the sale of the Notes, the IPO is not
expected to be consummated at such time.
JHIL intends to consummate the IPO when market and other relevant
conditions are suitable. However, if JHIL fails to consummate the IPO, the US-NL
Treaty will not apply and interest and dividend payments that would be made from
the Company's U.S. operating subsidiary will be subject to a 30% U.S.
withholding tax. See "Risk Factors -- Tax Risks on Intercompany Interest
Payments." Therefore, if JHIL fails to consummate the IPO, the tax benefits that
are otherwise expected to arise from the new intercompany debt financing will
not be realized. Furthermore, pursuant to a resolution of the shareholders of
JHIL, adopted at an Extraordinary General Meeting on October 16, 1998,
shareholder approval of the IPO will expire on March 31, 1999. As a result,
while JHIL may decide to consummate the IPO after March 31,1999, such IPO will
require reapproval by the shareholders of JHIL.
At the time of the closing of the sale of the Notes, the board of
directors of the Company will be comprised of Donald Cameron, Gunther A. R,
Warris and Wilhelmus B. M. Q. Pessers. Messrs. Warris and Pessers will serve at
the pleasure of JHIL as directors on an interim basis until such time that the
IPO is consummated. Upon the consummation of the IPO, the Company expects the
board of directors to be comprised of the persons set forth in the Memorandum
and three independent directors.
(b) JHIL PURCHASE AGREEMENT INDEMNITIES
The indemnity provisions contained in the Purchase Agreements which will
facilitate the Reorganization provide unlimited indemnity by JHIL and the
relevant non-transferring subsidiary to the Company for (i) all claims related
to asbestos liability; (ii) all environmental related claims arising from the
condition of the real properties prior to the consummation of the Purchase
Agreements or the conduct of the relevant businesses prior to the consummation
of the Purchase Agreements (excluding claims arising from deliberate actions
taken by the Company with the intention of triggering an environmental claim);
(iii) taxes incurred by any subsidiary being transferred to the Company which
relate to the period prior to the consummation of the Purchase Agreements; and
(iv) all claims in relation to defective products and services manufactured or
supplied by JHIL or the relevant subsidiary prior to the consummation of the
Purchase Agreements (excluding claims below a specified threshold for each
transferring business which in aggregate amounts to approximately $2.4 million).
For a period of seven years after the consummation of the Purchase
Agreements, JHIL and any relevant non-transferring subsidiary are also
indemnifying the Company in relation to other matters expressly warranted in the
Purchase Agreements. This indemnity does not include individual claims of less
than $1,000 or claims, when aggregated with all other claims in that financial
year, that do not exceed $50,000. Claims related to the warranties are also
excluded from the indemnity to the extent that certain key managers had
knowledge of the matter prior to closing. Complete copies of the Purchase
Agreements are available upon request from the Company.
(c) RISK FACTOR RELATING TO RECENT VOLATILITY IN ASIAN ECONOMIES AND FINANCIAL
AND CURRENCY MARKETS
During fiscal year 1998, approximately 3% of the Company's revenue was
generated from product sales in Asia and the Company views continued expansion
in Asia as a potential opportunity for future growth. Continued volatility in
the Asian economies and financial and currency markets may have a material
adverse effect on the Company's expansion plans and current operations in this
region. In the event of a prolonged economic crisis, the construction industry
in which the Company operates could be disproportionately affected. As a result,
the Company does not currently have any plans to establish manufacturing
facilities in Asia other than in the Philippines where a plant is currently
under construction and is scheduled to be commissioned in October 1998. However,
the Company continues to evaluate opportunities in the region and remains of the
view at this time that Asia offers growth prospects for the Company's products
in the long-term.
The recent economic volatility in Asia has also had a negative effect on
the Australian and New Zealand economies in general and the Company is beginning
to recognize these effects on its operations. For example, until the commission
of the Philippines manufacturing facility later this year, the Company is
supplying that market by exporting products manufactured in Australia and New
Zealand. For the three months ended June 30, 1998, sales of fiber cement
products in the Philippines declined by 41.9% in local currency terms from $4.1
million for the same period in the previous year to $1.6 million. This decline
is due to the contraction of the Philippines building and construction market
which is likely a result of Asian economic conditions. Continued contraction in
this market will result in a slower start-up and potentially lower than expected
capacity utilization for the new Philippines manufacturing facility. In
addition, there can be no assurance that exports to other Asian markets will not
continue to decline. Currency devaluation in Asian countries has resulted and
may continue to result in increased sales of lower priced imports by certain of
the Company's competitors in Australia and New Zealand and decreased levels of
exports by the Company.
The Company's Building Systems business, which comprised approximately 18%
of the Company's net sales and 12% of the Company's operating profit for fiscal
year 1998, has also been negatively impacted by the Asian economic crisis.
Activity in the Australian mining and resources industry, a market serviced by
the Building Systems business, has declined due to concerns about falling demand
from Asia for minerals and other natural resources and a general decrease in
commodity prices which has deterred investment in Australian mining and resource
projects. The continuation of limited activity in this industry could have a
material adverse effect on the results of operations and financial condition of
the Building Systems business.
(d) LEGAL PROCEEDINGS
The Company and its subsidiaries (collectively, the "Group") are involved
from time to time in various legal proceedings and administrative actions
incident to the normal conduct of the Group's business. Although it is
impossible to predict the outcome of any pending legal proceeding, management
believes that such proceedings and actions should not, individually or in the
aggregate, have a material adverse effect on its business, financial condition
or results of operations. The Reorganization has been structured so that no
existing or potential liabilities in relation to the manufacture by JHIL and its
non-transferring subsidiaries of products containing asbestos prior to 1987 are
being assumed by the Group and the Group is indemnified by JHIL with respect to
any such liabilities. While it is impossible to predict the incidence or outcome
of future litigation, the Group believes that it is unlikely that significant
personal injury suits for damages for asbestos exposure will be filed against
the Group, or if filed, would have a material adverse effect on the Group's
business, results of operations or financial condition. The Group's belief is
based in part upon the advice of its Australian legal advisers, Allen Allen &
Hemsley, that there is no equivalent under Australian law of the U.S. legal
doctrine of "successor liability." Under U.S. Law, this doctrine provides that
an acquirer of the assets of a business carried on by a corporation (as distinct
from the acquirer of shares in that corporation) can, in certain circumstances,
be held responsible for liabilities arising from the conduct of that business
prior to the acquisition, notwithstanding the absence of any contractual
arrangement between the acquirer and the selling corporation pursuant to which
the acquirer agreed to assume such liabilities. Allen Allen & Hemsley has
advised the Company that the general position under Australian law is that in
the absence of a contractual agreement to transfer specified liabilities of a
business, such liabilities remain with the corporation which previously carried
on the business and are not passed on to the acquirer of the assets.
Specifically, in the case of the Group, based on the information provided to
Allen Allen & Hemsley, the transfer to it from JHIL and certain non-
2
transferring subsidiaries of business assets comprising plant and equipment and
inventory should not, in the opinion of Allen Allen & Hemsley, give rise to the
assumption by any member of the Group of any asbestos related liabilities
(tortious or otherwise) which may have been incurred during the period prior to
the transfer of the assets when the business was being carried on by JHIL and
its non-transferring subsidiaries.
3
SCHEDULES 5.4
(a)(i) Subsidiaries of James Hardie N.V.
as of October 30, 1998
James Hardie NV Netherlands
James Hardie Finance BV Netherlands
James Hardie International Holdings BV Netherlands
James Hardie Philippines Inc. Philippines
PT James Hardie Indonesia Indonesia
James Hardie Research (Holdings) Pty Ltd Australia
James Hardie FC Pty Ltd Australia
James Hardie Research Pty Ltd. Australia
James Hardie Tech Pty Ltd. Australia
James Hardie USA Investments BV Netherlands
James Hardie (Holdings) Inc. USA
James Hardie (USA) Inc. USA
James Hardie Building Products Inc. USA
James Hardie Credit Corp. USA
James Hardie Gypsum Inc. USA
James Hardie Industries (USA) Inc. USA
James Hardie Trading Co Inc. USA
Wallace O' Connor Inc. USA
Wallace O'Connor Pacific Inc. USA
James Hardie US Investments Sierra Inc. USA
James Hardie US Investments Washoe Inc. USA
James Hardie NZ Trustees Ltd NZ
James Hardie Hardie NZ Investco Trust NZ Trust
James Hardie NZ Holdings Trust NZ Trust
James Hardie NZ New Zealand Ltd NZ
James Hardie Aust. Holdings Pty Ltd Australia
James Hardie Aust. Investco Pty Ltd Australia
James Hardie Aust. Investco Services Pty Ltd Australia
James Hardie Aust. Investments No. 1 Pty Ltd Australia
James Hardie Aust. Investments No. 2 Pty Ltd Australia
James Hardie Australia Pty Ltd Australia
James Hardie Building Systems (Holdings) Pty Ltd Australia
James Hardie Building Systems Pty Ltd Australia
James Hardie Fibre Cement Pty Ltd Australia
James Hardie Windows (Holdings) Pty Ltd Australia
James Hardie Windows Pty Ltd Australia
Louvre Properties Pty Ltd Australia
Each of the Subsidiaries listed above, except for James Hardie Tech Pty
Ltd., is owned 100% by James Hardie N.V. and/or its other Subsidiaries. With
respect to James Hardie Tech Pty Ltd., 6,700,000 shares are held by James Hardie
Research (Holdings) Pty Ltd., a Subsidiary of James Hardie N.V., and two shares
are held by James Hardie Industries Ltd.
SCHEDULES 5.4 (cont'd)
(a)(ii) Non-subsidiary Affiliates
of James Hardie N.V.
as of October 30, 1998
James Hardie Industries Limited Australia
ACN 001 664 740 Pty Ltd Australia
Hardie Trading Pty Ltd in Liquidation Australia
James Hardie & Coy Pty Ltd Australia
James Hardie US Investments Carson Inc. USA
James Hardie Finance Ltd Australia
James Hardie Finance Inc. USA
Jaekero Pty Ltd Australia
Moosthato Pty Ltd Australia
Naco Paqcific Pty Ltd Australia
RCI Pty Ltd Australia
Oletool (WA) Pty Ltd Australia
Fibre Cement Technology * Australia) Pty Ltd Australia
Framex Seirra Pty Ltd Australia
Hardie Holdings (NZ) Ltd. NZ
James Hardie Impey Ltd NZ
Fire & Safety Products (NZ) Ltd NZ
Kern Holdings Ltd NZ
James Hardie Building Products Ltd NZ
James Hardie Finance (NZ) Ltd NZ
James Hardie Impey Employee Share Scheme Ltd NZ
Noel Products Ltd NZ
James Hardie Impey Finance Ltd NZ
James Hardie Acceptances BV Netherlands
James Hardie Building Boards (Asia) Pta Ltd Singapore
James Hardie (Holdings) Ltd Jersey
Hardie Ltd Jersey
JHI Development Capital Ltd Jersey
RCI Finance Ltd Jersey
James Hardie (Netherlands) BV Netherlands
Marehurst Europe Ltd Malta
RIS Irrigation Portugal SA Portugal
RIS International Finance NV Aruba
RIS Irrigation (Holdings) BV Netherlands
RCI International Services Company Ltd in Liquidation Hungary
RCI Malta Holdings Ltd Malta
RCI Malta Investments Ltd Malta
RCI Netherlands Investments BV Netherlands
James Hardie NV Netherlands
Yelrom International Pty Ltd Australia
Seapip Pty Ltd Australia
SCHEDULES 5.4 (cont'd)
(a)(iii) Directors and Senior Officers of Obligors:
James Hardie N.V.:
Managing Directors - Donald Ewen Cameron
Wilhelmus B.M.Q. Pessers
Gunther A.R. Warris
James Hardie Finance B.V.:
Sole Managing Director - Donald Ewen Cameron
SCHEDULE 5.5
FINANCIAL STATEMENTS
The following list identifies the financial statements for the James
Hardie Businesses that are attached hereto:
1. Report of the Independent Accountants
2. Consolidated Balance Sheets as of March 31,1997 and 1998.
3. Consolidated Statements of Income for the Years Ended March
31,1996,1997 and 1998.
4. Consolidated Statements of Cash Flows for the Years Ended March
31,1996, 1997 and 1998.
5. Consolidated Statements of Changes in Equity for the Years Ended
March 31, 1996,1997 and 1998.
6. Notes to Consolidated Financial Statements
7. Consolidated Balance Sheets as of March 31,1998 (audited) and June
30,1998 (unaudited).
8. Consolidated Statements of Income for the Three Month Periods Ended
June 30, 1997 and 1998 (unaudited).
9. Consolidated Statements of Cash Flows for the Three Month Periods
Ended June 30,1997 and 1998 (unaudited).
10. Consolidated Statements of Changes in Equity for the Three Month
Periods Ended June 30,1997 and 1998 (unaudited).
11. Notes to Consolidated Financial Statements (unaudited)
SCHEDULE 5.11
LICENSES, PERMITS, ETC.
No exceptions.
SCHEDULE 5.14
USE OF PROCEEDS
The use of proceeds from the issue of the Notes by James Hardie Finance
B.V. will be the ultimate repayment of existing debt (including, without
limitation, the prepayment of the 9,23% Series A Guaranteed Senior Notes due
2005 and the 9.44% Series B Guaranteed Notes due 2007 of James Hardie Finance
Inc. issued in 1995 (the "1995 Notes"). The repayment of debt (including the
1995 Notes) will occur following the repayment of intercompany loans, which
repayment will be funded in part by the use of the proceeds from the issuance of
the Notes.
SCHEDULE 5.15
Existing Debt as of 30 September 1998
ENTITY AMOUNT
- ------ ------
(MILLIONS)
1 . James Hardie Finance (NZ) Limited
Promissory Notes issued under a NZ$250 million
facility established in 1997 NZ$54
2. James Hardie Impey Finance Limited
Convertible Notes issued in NZ$13
3. James Hardie Finance Inc
Senior unsecured notes issued under a Private Placement
to various United States institutions in January 1995 US$158
Revolving Credit facilities with various banks US$240
4. Various subsidiaries
Amounts drawn under overdraft facilities established
with the Group's bankers A$6
EXHIBIT 1
[FORM OF GUARANTEED SENIOR NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS
REGISTERED OR EXEMPT FROM REGISTRATION UNDER SAID ACT OR SUCH
OTHER LAWS.
THE NOTES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED AS
PART OF THEIR INITIAL DISTRIBUTION OR AT ANY TIME THEREAFTER,
DIRECTLY OR INDIRECTLY,OTHER THAN TO (INVESTMENT) BANKS, PENSION
FUNDS, INSURANCE COMPANIES, SECURITIES FIRMS AND INVESTMENT
INSTITUTIONS, CENTRAL GOVERNMENTS, LARGE NATIONAL AND
SUPRANATIONAL ORGANIZATIONS AND OTHER COMPARABLE ENTITIES,
INCLUDING, INTER ALIA, TREASURIES AND FINANCE COMPANIES OF LARGE
ENTERPRISES, WHO OR WHICH ARE REGULARLY ACTIVE IN THE FINANCIAL
MARKETS ON A PROFESSIONAL BASIS AND FOR THEIR OWN ACCOUNT.
JAMES HARDIE FINANCE B.V.
______% GUARANTEED SENIOR NOTE DUE _______, SERIES _
No. [_____] [Date]
$[_______] PPN[___________________]
FOR VALUE RECEIVED, the undersigned, JAMES HARDE FINANCE B.V. (herein
called the "Issuer"),incorporated and existing under the laws of The
Netherlands, hereby promises to pay to[__________]or registered assigns, the
principal sum of [____________] DOLLARS on [____________], with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of [__]% per annum from the date hereof,
payable semiannually, on the fifth day of May and November in each year,
commencing with the May 5 or November 5 next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually 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) [___]% or (ii) 2% over the rate of interest publicly announced by
The Bank of New York from time to time in New York, NY as its "base" or "prime"
rate.
Payments of the principal of and Make-Whole Amount (if any) and interest
on this Note are to be made in lawful money of the United States of America at
The Bank of New York, New York, NY or at such other place as the Issuer shall
nave designated by written notice to the holder of this Note as provided in the
Note Purchase Agreements referred to below.
This Note is one of a series of Guaranteed Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
November 5,1998 (as from time to time amended, the "Note Purchase Agreements"),
among the Issuer, James Hardie N.V. (the "Guarantor") and the respective
Purchasers named therein 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 Section 20 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, 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 a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Issuer 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 Issuer will not be affected by any notice to the
contrary.
This Note is subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
The due and punctual payment of the principal of and Make-Whole Amount (if
any) and interest on the Notes has been absolutely unconditionally and
irrevocably guaranteed by the Guarantor as provided in the Note Purchase
Agreements.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE ISSUER AND THE HOLDER HEREOF SHALL BE GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK EXCLUDING CHOICE OF LAW PRINCIPLES OF NEW YORK. LAW THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
JAMES HARDIE FINANCE B.V.
By_______________________________
Title:
2
EXHIBIT 4.4(a)(i)
FORM OF OPINION OF NEW YORK
SPECIAL COUNSEL FOR THE OBLIGORS
GIBSON, DUNN & CRUTCHER LLP
LOS ANGELES JAS. A GIBSON, 1852-1922
----------- W.E. DUNN, 1861-1925
333 SOUTH GRAND AVENUE LAWYERS ALBERT CRUTCHER, 1860-1931
LOS ANGELES, CALIFORNIA 90071-3197
A REGISTERED LIMITED LIABILITY PARTNERSHIP -----------
CENTURY CITY INCLUDING PROFESSIONAL CORPORATIONS
------------
2029 CENTURY PARK EAST WASHINGTON
LOS ANGELES, CALIFORNIA 90067-3026 ----------
200 PARK AVENUE 1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 200036-5306
ORANGE COUNTY NEW YORK, NEW YORK 10166-0193
-------------
4 PARK PLAZA PARIS
IRVINE, CALIFORNIA 92614-8557 -----
------------ 104 AVENUE RAYMOND POINCARE
75116 PARIS, FRANCE
SAN DIEGO (212) 351-4000
---------
750 B STREET LONDON
SAN DIEGO, CALIFORNIA 92104-4605 ------
FACSIMILE: (212) 351-4035 30/35 PALL MALL
LONDON SWIY SLP
SAN FRANCISCO
-------------
ONE MONTGOMERY STREET, TELESIS TOWER November 5, 1998 HONG KONG
SAN FRANCISCO, CALIFORNIA 94104-4505 ---------
10TH FLOOR, TWO PACIFIC PLACE
88 QUEENSWAY
DALLAS HONG KONG
------
1717 MAIN STREET
DALLAS, TEXAS 75201-7390
AFFILIATED SAUDI ARABIA OFFICE
------------------------------
DENVER JARIR PLAZA, OLAYA STREET
------ P.O. BOX 15870
1801 CALIFORNIA STREET RIYADH 11454, SAUDI ARABIA
DENVER, COLORADO 80202-2641
WRITER'S DIRECT DIAL NUMBER OUR FILE NUMBER
(212) 351-4000 C46223-00001
The Purchasers listed on
Schedule A hereto
Re: James Hardie Finance B. V. - Note Purchase Agreement
dated as of November 5, 1998
Ladies and Gentlemen:
We have acted as special counsel to James Hardie Finance B.V., a
company incorporated under the laws of The Netherlands (the "Issuer"), and James
Hardie N.V., a company incorporated under the laws of The Netherlands (the
"Guarantor"), in connection with the preparation of:
(i) the Note Purchase Agreement dated as of November 5,1998 (the
"Purchase Agreement") by and among the Issuer, the Guarantor and certain
purchasers as listed on Schedule A hereto (the "Purchasers"); and
(ii) the Series A, B, C, D, E, F and G Guaranteed Senior Notes, in
the aggregate principal amount of $225,000,000, dated as of the date
hereof made by the Issuer payable to the respective Purchasers (the
"Notes").
This opinion is being furnished to you pursuant to Section 4.4 of
the Purchase Agreement. Each capitalized term used and not defined herein has
the meaning assigned to that term in the Purchase Agreement. The Purchase
Agreement and the Notes are collectively referred to herein as the "Documents."
GIBSON, DUNN & CRUTCHETR LLP
November 5, 1998
Page 2
We have assumed with your permission that:
a) The signatures on all documents examined by us are genuine,
all individuals executing such documents had all requisite
legal capacity and competency and were duly authorized, the
documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies
conform to the originals;
b) Each of the Purchasers has all requisite power and authority
to execute, deliver and perform its obligations under the
Purchase Agreement, the execution and delivery of the Purchase
Agreement by the Purchasers and performance of their
obligations thereunder have been duly authorized by all
necessary action of the Purchasers and do not violate any law,
regulation, order, judgment or decree applicable to the
Purchasers, and the Purchase Agreement is the legal, valid and
binding obligation of the Purchasers, enforceable against them
in accordance with its terms;
c) Each of the Issuer and the Guarantor has been duly
incorporated and is a validly existing corporation in good
standing under the laws of its jurisdiction of incorporation,
has the requisite corporate power and authority to execute and
deliver the Documents to which it is a party and to perform
its obligations thereunder, has taken all necessary corporate
action to authorize the execution and delivery of the
Documents to which it is a party and the performance of its
obligations thereunder and has duly executed and delivered the
Documents to which it is a party;
d) Except as reflected in the Documents, there are no agreements
or understandings between or among the Issuer, the Guarantor,
the Purchasers or third parties that would expand, modify
otherwise affect the terms of the Documents or the respective
rights or obligations of the parties thereunder; and
e) The representations and warranties set forth in the Purchase
Agreement of the Purchasers are accurate, each Purchaser and
each other person to whom offers were made is an "accredited
investor" within the meaning of Regulation D promulgated under
the Securities Act, none of the Purchasers has taken or
intends to take any action that would subject the issuance and
sale of the Notes to the registration requirements of the
Securities Act, and the offer and sale of the Notes occurred
pursuant to private negotiations between the Issuer and the
Purchasers.
GIBSON, DUNN & CRUTCHER LLP
November 5, 1998
Page 3
In rendering this opinion, we have made such inquiries and
examined, among other things, originals or copies, certified or otherwise
identified to our satisfaction, of such records, agreements, certificates,
instruments and other documents as we have considered necessary or
appropriate for purposes of this opinion. As to certain factual matters,
we have relied upon the representations and warranties of the Issuer and
the Guarantor in the Documents, certificates of officers of the Issuer and
Guarantor or certificates obtained from public officials. We have also,
with your permission and without independent investigation, relied upon,
and assumed the correctness of the conclusions expressed in, the opinions
of even date of De Brauw Blackstone Westbroek P.C. and Allen Allen &
Hemsley with respect to all matters covered thereby.
Except as expressly stated otherwise herein, whenever an
opinion herein with respect to the existence or absence of facts is stated
to be to our knowledge, such statement is intended to signify that, during
the course of our representation of the Issuer and Guarantor, as herein
described, no information has come to the attention of the lawyers working
on substantive matters for the Issuer or the Guarantor during the prior
twelve (12) months (and who are still employed by this firm) that would
give us actual knowledge of facts contrary to the existence or absence of
the facts indicated. However, we have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts
should be drawn from our representation of the Issuer or the Guarantor or
any affiliate thereof.
Based on the foregoing and in reliance thereon, and subject to
the assumptions, exceptions, qualifications and limitations set forth
herein, we are of the opinion that:
1. Each Document constitutes a legal, valid and binding
obligation of the Issuer, enforceable against it in accordance with its
terms.
2. The Purchase Agreement constitutes a legal, valid and
binding obligation of the Guarantor, enforceable against it in accordance
with its terms.
3. The execution and delivery by each of the Issuer and the
Guarantor of the Documents to which it is a party and the performance of
its obligations thereunder do not result in a breach or violation of
Regulations U, T and X of the Board of Governors of the Federal Reserve
System
4. Neither the Issuer nor the Guarantor is an "investment
company" or, to our knowledge, a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
5. The execution, delivery and performance by each of the
Issuer and the Guarantor of the Documents to which it is a party do not
and will not (i) violate or result in a
GIBSON. DUNN & CRUTCHER LLP
November 5, 1998
Page 4
breach or default under any order, judgment or decree of any court or
other agency of government of the State of New York or the United States
of America binding on the Issuer or the Guarantor of which we have
knowledge, (ii) violate any law or regulation of the State of New York or
the United States of America applicable to the Issuer or the Guarantor
that, in our experience, is generally applicable to transactions in the
nature of those contemplated by the Documents, or (iii) require any
authorization, consent, waiver or approval of any governmental authority
or regulatory body of the State of New York or the United States of
America, except for filings and authorizations as may be required under
any securities or Blue Sky laws and such authorizations, consents, waivers
or approvals that, if not made or obtained, would not have a material
adverse effect on the Issuer or the Guarantor or on either of the Issuer's
or Guarantor's ability to perform its obligations under the Documents to
which it is a party and would not expose any Purchaser to liability.
6. To our knowledge, there is no action, suit or proceeding
pending or threatened in the United States against the Issuer or the
Guarantor of the nature described in Section 5.8(a) of the Purchase
Agreement or in which an injunction or order has been entered preventing
or adversely affecting consummation of the transactions that are
contemplated by the Purchase Agreement to be consummated by the Issuer or
the Guarantor on the Closing Date.
7. The issuance and sale of the Notes on the date hereof is
exempt from the registration requirements of Section 5 of the Securities
Act and it is not necessary to qualify the Purchase Agreement under the
Trust Indenture Act of 1939, as amended, in connection therewith.
The foregoing opinions are subject to the following
exceptions, qualifications and limitations:
A. We render no opinion herein as to matters involving the
laws of any jurisdiction other than the States of New York and the United
States of America. This opinion is limited to the effect of the present
state of the laws of the State of New York and the United States of
America and the facts as they presently exist. We assume no obligation to
revise or supplement this opinion in the event of future changes in such
laws or the interpretations thereof or such facts.
B. Our opinions set forth in paragraphs 1 and 2 are subject to
(i) the effect of any bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting the enforcement of creditors' rights
generally (including, without limitation, the effect of statutory or other
laws regarding fraudulent transfers or preferential transfers or
distributions by corporations to stockholders) and (ii) general principles
of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other
equitable remedies, regardless of whether enforceability is considered in
a proceeding in equity or at law.
GIBSON, DUNN & CRUTCHER LLP
November 5, 1998
Page 5
C. We express no opinion regarding (i) the effectiveness of
any waiver (whether or not stated as such) under the Documents of, or any
consent thereunder relating to, any unknown future rights or the rights of
any party thereto existing, or duties owing to it, as a matter of law,
(ii) the effectiveness of any waiver (whether or not stated as such)
contained in the Documents of rights of any party, or duties owing to it,
that is broadly or vaguely stated or does not describe the right or duty
purportedly waived with reasonable specificity, (iii) provisions relating
to indemnification, exculpation or contribution, to the extent such
provisions may be held unenforceable as contrary to public policy or
federal or state securities laws, (iv) any provision in any Document
waiving the right to object to venue in any court; (v) any consent or
agreement to submit to the jurisdiction of any Federal Court; (vi) any
waiver of the right to jury trial; (vii) the effect on the enforceability
of the Note Purchase Agreement against the Guarantor of any facts or
circumstances occurring after the date hereof that would constitute a
defense to the obligation of a surety, unless such defense has been waived
effectively by such Guarantor; and (viii) any provision of the Documents
requiring written amendments or waivers of such documents insofar as it
suggests that oral or other modifications, amendments or waivers could not
be effectively agreed upon by the parties or that the doctrine of
promissory estoppel might not apply.
D. In rendering our opinions expressed in paragraph 5, while
we advise you that (subject to the other assumptions, exceptions,
qualifications and limitations herein) the Documents may be performed in a
manner that does not result in a violation, breach or default described
therein, we express no opinion as to whether the actual performance of the
terms and provisions of the Documents after the date hereof will not
violate any law, regulation, order, judgment or decree applicable to the
Issuer or the Guarantor.
E. Our opinions in paragraphs 5(i) and 6 are based solely upon
inquiry of Gibson, Dunn & Crutcher LLP lawyers who have billed time to the
Issuer or the Guarantor during the last twelve (12) months and factual
certificates of the Issuer or the Guarantor.
F. We express no opinion as to the applicability to, or the
effect of noncompliance by, any Purchaser with any state or federal laws
applicable to the transactions contemplated by the Documents because of
the nature of the business of such Purchaser.
This opinion is rendered to the Purchasers in connection with
the Documents and may not be relied upon by any person other than the
Purchasers or by the Purchasers in any other context, provided that the
Purchasers may provide this opinion (i) to regulatory authorities should
they so request or in connection with their normal examinations, (ii) to
the independent auditors and attorneys of the Purchasers, (iii) pursuant
to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which any Purchaser is a party arising
out of the transactions contemplated by the Documents, or (v) to proposed
permitted transferees of the interests of any Purchaser under the
Documents (provided that such delivery
GIBSON, DUNN & CRUTCHER LLP
November 5, 1998
Page 6
shall not constitute a re-issue or reaffirmation of this opinion as of any
date after the date hereof). This opinion may not be quoted without the
prior written consent of this Firm.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
-------------------------------------
GIBSON, DUNN & CRUTCHER LLP
JRH/MWS/AEM
OA982910.022/2+
GIBSON, DUNN & CRUTCHER LLP
SCHEDULE A
The Prudential Insurance Company of America
Connecticut General Life Insurance Company
Life Insurance Company of North America
Metropolitan Life Insurance Company
Texas Life Insurance Company
Principal Life Insurance Company
USAA Life Insurance Company
The Paul Revere Life Insurance Company
Massachusetts Mutual Life Insurance Company
CM Life Insurance Company
The Guardian Life Insurance Company of America
American Investors Life Insurance Company
Ohio National Life Assurance Corporation
State Farm Life Insurance Company
Ameritas Life Insurance Corp.
EXHIBIT 4.4(a)(ii)
FORM OF OPINION OF NETHERLANDS
SPECIAL COUNSEL FOR THE OBLIGORS
DE BRAUW BLACKSTONE WESTBROEK P.C.
advocaten & notarissen
712 Fifth Avenue, 30th Floor
New York, NY 10019-4102
Telephone (212) 801-3430
Telefax (212) 801-3435
Kaarina A. Zimmer
H. Rutger de Witt Wijnen
Vincent P. Bettonville
Alexander Harmse
Enrique Boerboom
Gerda de Heer
attorneys at law, candidate civil law notaries
admitted in the Netherlands
not admitted in New York
November 5, 1998
03191AH.N05
To the investors listed in the
annex to this opinion letter
(collectively: the "INVESTORS")
Dear Sirs:
JAMES HARDIE FINANCE B.V.
US$ 225,000,000 GUARANTEED SENIOR NOTES
I have acted as legal counsel in respect of the law of the Netherlands to James
Hardie Finance B.V., a company incorporated under the law of the Netherlands,
with corporate seat at Amsterdam, the Netherlands (the "ISSUER"), and to James
Hardie N.V., a company incorporated under the law of the Netherlands, with
corporate seat at Amsterdam, the Netherlands (the ("GUARANTOR"), in
connection with the issue and private placement
De Brauw Blackstone Westbroek P.C. is the New York branch of De Brauw Blackstone
Westbroek New York B.V., Chamber of Commerce The Hague, reg. no. 27172369.
Alliance of European Lawyers
(European Economic Interest Grouping)
MEMBERS: OFFICES: JOINT OFFICES:
De Bandt, Van Hecke & Lagae Brussels, Antwerp Brussels
De Brauw Blackstone Westbroek Amsterdam, The Hague, Rotterdam London
Lagerlof & Leman Stockholm, Goteborg, Malmo New York
Oppenhoff & Radler Berlin, Cologne, Frankfurt am Main, Leipzig, Munich Prague
Uria & Menendez Madrid, Barcelona, Valencia Warsaw
-2-
(the "ISSUE") BY the Issuer of US$ 225,000,000 aggregate principal amount
Guaranteed Senior Notes due 2004 (Series A), 2005 (Series B), 2006 (Series C),
2007 (Series D), 2008 (Series E), 2010 (Series F) and 2013 (Series G)
(collectively, the "NOTES"), stated to be absolutely, unconditionally and
irrevocably guaranteed as to payment of principal, interest and any Make-Whole
Amount (as defined in the Note Purchase Agreements (as defined below)) by the
Guarantor and James Hardie Aust. Investco Pty Limited, a company organized under
the laws of Australia.
This opinion is rendered pursuant to section 4.4 of the Note Purchase Agreements
(as defined below).
For the purpose of this opinion I have examined the following documents:
(a) a telecopy dated October 26, 1998, of an official copy of the deed of
incorporation of the Issuer containing the text of the articles of
association of the Issuer (the "ISSUER ARTICLES OF ASSOCIATION"), as filed
with the Chamber of Commerce and Industry in Amsterdam, the Netherlands
(the "CHAMBER OF COMMERCE");
(b) a telecopy dated November 5, 1998, of an extract from the trade register
regarding the Issuer, dated November 5, 1998, provided by the Chamber of
Commerce;
(c) a telecopy dated October 23, 1998, of an official copy of the deed of
incorporation of the Guarantor and the text of the articles of association
of the Guarantor as most recently
DE BRAUW BLACKSTONE WESTBROEK P.C.
-3-
amended by deed of amendment executed on October 22, 1998, according to
the Extract (as defined below)(the "GUARANTOR ARTICLES OF ASSOCIATION"),
both as filed with the Chamber of Commerce;
(d) a telecopy dated November 5, 1998, of an extract from the trade register
regarding the Guarantor dated November 5, 1998, provided by the Chamber of
Commerce (the "EXTRACT");
(e) a telecopy dated October 27, 1998, of a resolution of the board of
managing directors (bestuur) of the Issuer dated October 22, 1998 (the
"ISSUER RESOLUTION");
(f) a telecopy dated November 3, 1998, of a power of attorney dated November
3, 1998, granted in the name of the Issuer to Phillip Graham Morley, Allan
Richard Brown, Bryon Borgardt and Virginia Lester (the "ISSUER POWER OF
ATTORNEY");
(g) a telecopy dated October 27, 1998, of an undated resolution of the
managing board (bestuur) of the Guarantor (the "GUARANTOR RESOLUTION");
(h) a telecopy dated November 4, 1998, of a power of attorney dated November
3, 1998, granted in the name of the Guarantor to Phillip Graham Morley,
Allan Richard Brown, Bryon Borgardt and Virginia Lester (the "GUARANTOR
POWER OF ATTORNEY");
(i) a photocopy of an execution copy of a note purchase agreement, to be dated
November 5, 1998, together with the executed signatory pages to all 15
note purchase agreements,
DE BRAUW BLACKSTONE WESTBROEK P.C.
-4-
each among the Issuer, the Guarantor, and one of the Investors
(collectively, the "NOTE PURCHASE AGREEMENTS"), each containing the form
of the Notes;
(j) a private placement offering memorandum dated August 1998, relating to the
Issue, as supplemented by the information set forth in schedule 5.3 to the
Note Purchase Agreements;
and such other documents as I have deemed necessary to enable me to render this
opinion.
My examination has been limited to the text of the documents.
The Issuer Resolution and the Guarantor Resolution are hereinafter together
referred to as the "RESOLUTIONS". The Issuer Power of Attorney and the Guarantor
Power of Attorney are hereinafter together referred to as the "POWERS OF
ATTORNEY".
For the purpose of this opinion I have made the following assumptions:
(i) all the parties to the Note Purchase Agreements other than the Issuer and
the Guarantor have the required capacity, power and authority to enter
into, execute and deliver the Note Purchase Agreements and to perform
their respective obligations thereunder, and the Note Purchase Agreements
have been duly authorised, executed and delivered by all the parties
thereto other than the Issuer and the Guarantor;
DE BRAUW BLACKSTONE WESTBROEK P.C.
-5-
(ii) no rule of law which under the The Hague Convention on the Law applicable
to Agency of 14th March 1978 applies or may be applied to the existence
and extent of the authority of any person who is authorised to execute and
deliver the Note Purchase Agreements under the Powers of Attorney,
adversely affects the existence and extent of such authority under the law
of the Netherlands;
(iii) the Notes have been or will have been executed and delivered in the name
of the Issuer, manually or in facsimile, by the managing director of the
Issuer (with approval of the signing managing director to use his
facsimile signature);
(iv) the Note Purchase Agreements and the Notes, when duly executed and
delivered by all the parties thereto, constitute valid, binding and
enforceable obligations of all the parties thereto under New York law to
which they are expressed to be subject;
(v) all signatures on original documents are the genuine signatures of the
persons purported to have executed the same and copies (in whatever form)
conform to the originals;
(vi) the Issuer complies with the conditions in order not to be considered a
credit institution (kredietinstelling) within the meaning of the 1992 Act
on the supervision of the credit system (Wet toezicht kredietwezen 1992)
pursuant to the Regulation of the Minister of Finance of
DE BRAUW BLACKSTONE WESTBROEK P.C.
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February 4, 1993 in implementation of section 1 subsection 3 of the 1992
Act on the supervision of the credit system (Netherlands Government
Gazette (Nederlandse Staatscourant) 1993, 29);
(vii) the Notes are only issued and offered in individual denominations of at
least NLG 100,000 or the equivalent thereof in any other currency; and
(viii) the Resolutions and the Powers of Attorney are in full force and effect
and have not been revoked at the date hereof.
I have not investigated the law of any jurisdiction other than the Netherlands
and I do not express an opinion on the law of any jurisdiction other than the
Netherlands. I only express an opinion on matters of the law of the Netherlands
as it stands and has been published as at the date of this opinion. No opinion
is expressed on any taxation matters.
Terms and expressions of law and of legal concepts as used in this opinion have
the meaning attributed to them under the law of the Netherlands and this opinion
should be read and understood accordingly.
Based upon the foregoing (including the documents listed above and the
assumptions set out above) and subject to the qualifications listed below and
subject to any facts, circumstances, events or documents not disclosed to me in
the course of my examination referred to above, I am, at the date hereof, of the
following opinion:
DE BRAUW BLACKSTONE WESTBROEK P.C.
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1. The Issuer has been duly incorporated and is validly existing as a legal
entity in the form of a private company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid) under the law of the
Netherlands, and the Guarantor has been duly incorporated and is validly
existing as a legal entity in the form of a limited liability company
(naamloze vennootschap) under the law of the Netherlands.
2. The Issuer has the corporate power and authority to execute and deliver
the Note Purchase Agreements, to execute, deliver and offer the Notes and
to perform its obligations under the Note Purchase Agreements and the
Notes.
3. The Guarantor has the corporate power and authority to execute and deliver
the Note Purchase Agreements and to perform its obligations under the Note
Purchase Agreements.
4. The Issuer has taken all necessary corporate action to authorize the
execution and delivery by the Issuer of the Note Purchase Agreements, the
execution, delivery and offering by the Issuer of the Notes and the
performance by the Issuer of its obligations under the Note Purchase
Agreements and the Notes.
5. The Guarantor has taken all necessary corporate action to authorize the
execution and delivery by the Guarantor of the Note Purchase Agreements
and the performance by the Guarantor of its obligations under the Note
Purchase Agreements.
DE BRAUW BLACKSTONE WESTBROEK P.C.
-8-
6. The choice of New York law as the law expressed to be governing the Note
Purchase Agreements and the Notes will be recognized and accordingly:
- the Note Purchase Agreements and the Notes will, according to the
courts of the Netherlands duly applying New York law, constitute
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their respective terms; and
- the Note Purchase Agreements will, according to the courts of the
Netherlands duly applying New York law, constitute valid and binding
obligations of the Guarantor, enforceable against the Guarantor in
accordance with their terms.
7. The execution and delivery by the Issuer of the Note Purchase Agreements
and the Notes, the performance by the Issuer of its obligations under the
Note Purchase Agreements and the Notes and the offering by the Issuer of
the Notes as contemplated under the Note Purchase Agreements do not and
will not conflict with or result in a breach of any provision of the law
of the Netherlands or of the Issuer Articles of Association.
8. The execution and delivery by the Guarantor of the Note Purchase
Agreements and the performance by the Guarantor of its obligations under
the Note Purchase Agreements do not and will not conflict with or result
in a breach of any provision of the law of the Netherlands or of the
Guarantor Articles of Association.
DE BRAUW BLACKSTONE WESTBROEK P.C.
-9-
9. No licence, authorization, permission or consent from any public authority
or governmental agency of the Netherlands is required by the law of the
Netherlands for the valid execution and delivery by the Issuer of the Note
Purchase Agreements and the Notes, for the performance by the Issuer of
its obligations under the Note Purchase Agreements and the Notes or for
the offering by the Issuer of the Notes as contemplated under the Note
Purchase Agreements.
10. No licence, authorization, permission or consent from any public authority
or governmental agency of the Netherlands is required by the law of the
Netherlands for the valid execution and delivery by the Guarantor of the
Note Purchase Agreements and for the performance by the Guarantor of its
obligations under the Note Purchase Agreements.
11. In order to ensure the legality, validity, enforceability or admissibility
in evidence of the Note Purchase Agreements or the Notes, it is not
necessary that any of these documents be filed or recorded with any public
office in the Netherlands.
12. The submission by the Issuer and the Guarantor to the jurisdiction of the
courts of the State of New York or of the United States of America located
in New York, New York, will be recognised by the courts of the Netherlands
and will, according to the courts of the Netherlands duly applying New
York law, be valid and binding on the Issuer and the Guarantor.
DE BRAUW BLACKSTONE WESTBROEK P.C.
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The opinions expressed above are subject to the following qualifications:
(aa) the opinions expressed above are limited by any applicable bankruptcy,
moratorium and other laws affecting creditors' rights generally (including
statutory preferences);
(bb) when applying New York law as the law governing the Note Purchase
Agreements and the Notes, the courts of competent jurisdiction of the
Netherlands, if any:
- may give effect to the mandatory rules of the law of another country
with which the situation has a close connection, if and insofar as,
under the law of the latter country, those rules must be applied
whatever the law applicable to the Note Purchase Agreements and the
Notes;
- will apply the law of the Netherlands in a situation where it is
mandatory irrespective of the law otherwise applicable to the Note
Purchase Agreements and the Notes;
- may refuse to apply New York law if such application is manifestly
incompatible with the public policy of the Netherlands;
- shall have regard to the law of the country in which performance
takes place in relation to the manner of performance and the steps
to be taken in the event of defective performance;
(cc) the recognition of the submission by the Issuer and the Guarantor to the
jurisdiction of the courts of the State of New York or of the United
States of America located in New
DE BRAUW BLACKSTONE WESTBROEK P.C.
-11-
York, New York will be subject to similar conditions and limitations as
those set forth in the EC Convention on jurisdiction and the enforcement
of judgments in civil and commercial matters of 27th September 1968, as
amended, and the rules and regulations promulgated pursuant thereto, such
as the limitation that application for provisional, including protective,
measures which are available under the law of another state than the State
of New York may be made to the courts of that state;
(dd) the enforcement in the Netherlands of the Note Purchase Agreements and the
Notes and of foreign judgments will be subject to the rules of civil
procedure as applied by the courts of the Netherlands including the rules
of private international law relating to civil procedure;
(ee) in the absence of an applicable convention between a foreign country (such
as the United States of America) and the Netherlands, a judgment in
respect of the Note Purchase Agreements or the Notes, rendered by a court
of the foreign country, will not be recognized and enforced by the courts
of the Netherlands; in order to obtain a judgment which is enforceable in
the Netherlands, the party in whose favor a final judgment of the court of
the foreign country has been rendered will have to file its claim with the
court of competent jurisdiction of the Netherlands and may submit in the
course of the proceedings the judgment rendered by the court of the
foreign country; if and to the extent that the court of the Netherlands
finds that the jurisdiction of the court of the foreign country has been
based on grounds which
DE BRAUW BLACKSTONE WESTBROEK P.C.
-12-
are internationally acceptable and that proper legal procedures have been
observed, the court of the Netherlands will, in principle, give binding
effect to the judgment of the court of the foreign country, unless such
judgment contravenes principles of public policy of the Netherlands;
(ff) to the extent that the law of the Netherlands is applicable, the provision
that the holder of any Note will be treated as its absolute owner as set
forth in section 15.1 of the Note Purchase Agreements notwithstanding any
notice to the contrary, may not be enforceable under all circumstances;
(gg) a holder of a Note may obtain a duplicate Note in the Netherlands subject
to the provisions of the Securities Replacement Act
(Effectenvernieuwingswet) , if such Note has been destroyed, lost or
stolen in the Netherlands or has been mutilated;
(hh) to the extent that the law of the Netherlands is applicable, a creditor of
a company may invoke the nullity of any legal act (rechtshandeling)
(including but not limited to a guarantee pursuant to which such company
guarantees the performance of the obligations of a third party and any
other legal act having a similar effect) performed by such company without
the obligation (onverplicht) to do so and as a consequence of which the
creditors (present or future) of the company are prejudiced, provided that
at the moment of the performance of the legal act such company and, unless
the act has been performed for no consideration (om niet), the party with
or towards whom such company has performed such act, knew or
DE BRAUW BLACKSTONE WESTBROEK P.C.
-13-
should have known that the creditors (present of future) of such company
would be prejudiced; and
(ii) a guarantee by a company incorporated under the law of the Netherlands for
the performance of obligations of a third party which is not a wholly
owned direct or indirect subsidiary of such company may, if such guarantee
is not in the legitimate business interest of such company, be deemed to
be (i) exceeding the corporate objects of such company, (ii) violating the
articles of association of such company, and (iii) not valid, binding and
enforceable against such company under the law of the Netherlands;
(jj) under Netherlands law a power of attorney, instruction, designation or
appointment (such as the appointment of CT Corporation System as agent as
set forth in section 24.6 of the Note Purchase Agreements) may not be
deemed to be irrevocable, to the extent that such power of attorney,
instruction, designation or appointment has not been granted or given for
the performance of a legal act in the interest of the receiver thereof or
of a third party, and to the extent Netherlands law would apply thereto,
such power of attorney, instruction, designation or appointment would
terminate upon the bankruptcy of the grantor, instructor, designator or
appointor thereof; and
(kk) no opinion is rendered in respect of the authority of Warburg Dillon Read
LLC to act as securities intermediary (effectenbemiddelaar) in or from
within the Netherlands with respect to the offering and sale of the Notes.
DE BRAUW BLACKSTONE WESTBROEK P.C.
-14-
This opinion is rendered to you and is for the sole benefit of yourselves and it
may not be relied upon by any person other than yourselves and your legal
advisers for the purpose of giving their opinion to you in connection with this
matter. This opinion may not without my prior written consent be relied upon by,
transmitted to or filed with any other person, firm, company or institution.
Yours faithfully,
/s/ Kaarina A. Zimmer
----------------------------------
Kaarina A. Zimmer
for
De Brauw Blackstone Westbroek P.C.
DE BRAUW BLACKSTONE WESTBROEK P.C.
-15-
ANNEX
The Prudential Insurance Company of America
Connecticut General Life Insurance Company
Life Insurance Company of North America
Metropolitan Life Insurance Company
Texas Life Insurance Company
Principal Life Insurance Company
USAA Life Insurance Company
The Paul Revere Life Insurance Company
Massachusetts Mutual Life Insurance Company
CM Life Insurance Company
The Guardian Life Insurance Company of America
American Investors Life Insurance Company
Ohio National Life Assurance Corporation
State Farm Life Insurance Company
Ameritas Life Insurance Corp.
DE BRAUW BLACKSTONE WESTBROEK P.C.
EXHIBIT 4.4(a)(iii)
FORM OF OPINION OF AUSTRALIAN
SPECIAL COUNSEL FOR THE OBLIGORS
ALLENS
ARTHUR ROBINSON
ALLEN ALLEN & HEMSLEY GROUP
SOLICITORS & NOTARIES THE CHIFLEY TOWER CORRESPONDENCE
2 CHIFLEY SQUARE GPO BOX 50
SYDNEY AUSTRALIA SYDNEY NSW
OUR REFERENCE AGM 1312903 MXK TELEPHONE - 61-2-9230 4000 AUSTRALIA 2001
YOUR REFERENCE FACSIMILE - 61-2-9230 5333
WRITER'S DIRECT LINE (02) 9230 4216 VOICE MAIL - 61-2-9230 4111
PARTNER RESPONSIBLE ALAN MAXTON DX 105 SYDNEY
4 November 1998
To: Each Noteholder referred to below
Dear Sirs
JAMES HARDIE REORGANISATION
We have acted for James Hardie Aust. Investco Pty Limited (the GUARANTOR) in
connection with the Deed Poll Deed of Guarantee (the GUARANTEE) dated 4 November
1998 executed by the Guarantor in favour of the Noteholders.
Definitions in the Guarantee apply in this opinion but FACILITY means any
Revolving Facility Agreement dated 3 November 1998 between the Guarantor and
each of Wachovia Bank, The Industrial Bank of Japan Limited, Westdeutsche
Landesbank and Banque Nationale de Paris and dated 4 November 1998 between the
Guarantor and Australia and New Zealand Banking Group Limited. ISSUER means
James Hardie Finance B.V., a company incorporated in The Netherlands, JHNV means
James Hardie N.V., a company incorporated in The Netherlands, NOTE means any
guaranteed senior note issued under any NPA, NOTEHOLDER means any person in
whose name any Note is registered under any NPA, NPA means any note purchase
agreement, to be dated as of 5 November 1998, and executed by the Issuer and
each initial noteholder and RELEVANT JURISDICTION means the Commonwealth of
Australia or New South Wales.
No assumption or qualification in this opinion limits any other assumption or
qualification in it.
1. GUARANTEE
We have examined the following documents:
(a) an executed counterpart of the Guarantee;
(b) of the constitution of the Guarantor;
(c) certified copies of extracts of resolutions passed by the board of
directors of the Guarantor;
(d) certified copies of extracts of resolutions passed by the board of
directors of James Hardie Aust. Holdings Pty Limited (the sole shareholder
of the Guarantor);
GROUP AND ASSOCIATED OFFICES
SYDNEY MELBOURNE BRISBANE PERTH ADELAIDE GOLD COAST
SINGAPORE HONG KONG JAKARTA PORT MORESBY SHANGHAI BANGKOK
Allen Allen & Hemsley Page 2
(e) executed powers of attorney in connection with the execution of the
Guarantee by the Guarantor;
(f) a solvency certificate executed by the directors of the Guarantor; and
(g) the unexecuted form of each:
(i) NPA;
(ii) 364 day standby facility agreement between the Guarantor and JHNV as
guarantors and the Issuer as borrower and each of Westdeutsche
Landesbank Girozentrale, Banque Nationale de Paris, Australian and
New Zealand Banking Group Limited and Wachovia Bank (the BANKS); and
(iii) revolving loan facility agreement between the Guarantor as borrower,
the Issuer and JHNV as guarantors, and each of the Banks and The
Industrial Bank of Japan Limited.
2. ASSUMPTIONS
For the purposes of giving this opinion we have assumed the following.
(a) The authenticity of all seals and signatures and of any duty stamp or
marking.
(b) The completeness, and the conformity to original instruments, of all
copies submitted to us, and that any document (other than the Guarantee)
or authorisation submitted to us continues in full force and effect.
(c) Each power of attorney referred to in paragraph 1(e) above has been or
will be registered in the jurisdiction of execution and of the governing
law of each Guarantee to which it relates.
(d) The Guarantor executes the Guarantee for its benefit and for the purposes
of its business. In relation to this assumption, we note the following.
(i) The Guarantor has arranged the Facilities under which certain banks
agree to make financial accommodation available to the Guarantor.
One of the conditions precedent to the Facilities is that the Issuer
and JHNV (each a company with significant assets) guarantee the
Guarantor's payment of all Secured Moneys under the Facility. The
Issuer and JHNV will only grant that guarantee if the Guarantor
executes the Guarantee. We understand that without the guarantee of
the Issuer and JHNV, it is unlikely that the Guarantor could arrange
the Facilities.
(ii) The borrowing under the Facilities benefits the Guarantor because it
enables it to capitalise its wholly owned subsidiary, James Hardie
Aust. Investco Services Pty Limited, who will lend those funds to
another subsidiary of the Guarantor, James Hardie Australia Pty
Limited, who will purchase certain operating businesses, the
ownership of which the Guarantor was specifically incorporated for.
The directors of the Guarantor consider that the purchase and
ultimate ownership of those businesses will benefit the Guarantor.
Further, we note that the directors of the Guarantor concluded that
given the financial strength of the Issuer, and the fact that JHNV
guarantees the
Allen Allen & Hemsley Page 3
same obligations as the Guarantee, the likelihood of demand being
made under the Guarantee is remote.
While the existence of benefit to the company is a question solely for the
directors of the Guarantor, it appears that the directors had reasonable
grounds for concluding that there was commercial benefit in executing the
Guarantee. We note that the directors determination of the existence of
that benefit is recorded in the extract of minutes referred to in
paragraph 1(c) of this opinion.
(e) No entity has engaged or will engage in misleading or unconscionable
conduct or is or will be involved in or a party to any relevant
transaction or any associated activity in a manner or for a purpose not
evident on the face of the Guarantee which might render the Guarantee or
any relevant transaction or associated activity in breach of law, void or
voidable.
(f) The Guarantee has been or will be executed in New South Wales.
(g) Insofar as any obligation under the Guarantee is to be performed in any
jurisdiction other than a Relevant Jurisdiction, its performance will not
be illegal or unenforceable under the law of that jurisdiction.
(h) Each of the Guarantor, JHNV and the Issuer are wholly owned subsidiaries
of James Hardie Industries Limited at the time of execution of the
Guarantee.
(i) All proceeds of the Notes will be lent by the Issuer to James Hardie USA
Inc.. That company will use all the proceeds of that loan to repay
inter-company debt to James Hardie Finance Inc (JHFI). JHFI will use all
of those repayments to repay lenders who are not members of the James
Hardie group.
3. QUALIFICATIONS
Our opinion is subject to the following qualifications.
(a) We express no opinion as to any laws other than the laws of each Relevant
Jurisdiction as in force at the date of this opinion.
(b) Our opinion that an obligation or document is enforceable means that the
obligation or document is of a type and form which courts in the Relevant
Jurisdictions enforce. It does not mean that the obligation or document
can necessarily be enforced in accordance with its terms in all
circumstances. In particular:
(i) equitable remedies, such as injunction and specific performance, are
discretionary; and
(ii) the enforceability of an obligation, document or security interest
may be affected by statutes of limitation, by estoppel, waiver and
similar principles, by the doctrine of frustration, by laws
concerning insolvency, bankruptcy, liquidation, administration,
enforcement of security interests or reorganisation, or by other
laws generally affecting creditors' or counterparties' rights or
duties.
(c) We have relied on a search of public records of the Australian Securities
and Investments Commission on 27 October 1998. We note that records
disclosed by such search may not be complete or up to date.
Allen Allen & Hemsley Page 4
(d) We have relied on the assumptions specified in s129 of the Corporations
Law and note that you may do so unless you knew or suspected that the
assumption was incorrect.
(e) Any provision that certain calculations, determinations or certificates
will be conclusive and binding will not apply if those calculations,
determinations or certificates are fraudulent or manifestly inaccurate.
(f) Clause 8 of the Guarantee may not be enforceable in accordance with its
terms, as a court may reserve to itself a decision as to whether any
provision is severable.
(g) The obligation of a party under the Guarantee to pay interest on overdue
amounts at a rate higher than the rate applying before the amount fell due
may be held to constitute a penalty and be unenforceable.
(h) We express no opinion on any provision in the Guarantee requiring written
amendments and waivers insofar as it suggests that oral or other
modifications, amendments or waivers could not be effectively agreed on or
granted between or by the parties.
(i) The courts might not give full effect to an indemnity for legal costs or
for penalties on Taxes.
(j) We have relied, as to certain matters of fact, on certificates of officers
of the Guarantor and on certain information provided by
PricewaterhouseCoopers relating to use of the proceeds of the Notes.
(k) Insofar as our opinions in clause 4 relate to the performance of the
Guarantee, those opinions are limited to the principal transactions
contemplated by the Documents. They do not extend to the performance of
obligations under other documents referred to in the Guarantee.
(l) A judgment by a court may be given in some cases only in Australian
dollars.
(m) Purported waivers of statutory rights or agreements not to sue or
agreements to agree or negotiate or consult may not be enforceable.
(n) In relation to our opinion in 4(j), we note that section 260A of the
Corporations Law has only been operative since 1 July 1998 and we are only
aware of one case on it (RE BIDVEST). That case does not provide very much
guidance on the interpretation of the section. Further, if the giving of
financial assistance is part of a larger transaction, it is not clear
whether the courts will consider the giving of that assistance in
isolation from, or as part of, that larger transaction.
4. OPINION
Based on the assumptions and subject to the qualifications set out above we are
of the following opinion.
(a) The Guarantor is incorporated under the laws of the place of its
incorporation stated in the Guarantee.
(b) The Guarantor has the corporate power to enter into and perform its
obligations under the Guarantee.
Allen Allen & Hemsley Page 5
(c) The execution, delivery and performance by the Guarantor of the Guarantee
did not and will not violate in any respect any existing provision of:
(i) any law of any Relevant Jurisdiction; or
(ii) its constitution.
(d) The Guarantee constitutes legal, valid and binding obligations of the
Guarantor enforceable in competent courts of the Relevant Jurisdictions.
(e) All Authorisations under the laws of any Relevant Jurisdiction now
obtainable and required in connection with the execution, delivery,
performance, validity or enforceability of the Guarantee have been
obtained or effected and are in full force and effect.
(f) No stamp or registration or similar taxes or charges are payable under the
laws of any Relevant Jurisdiction in connection with the execution,
delivery, performance and enforcement of the Guarantee or any transaction
contemplated by them other than nominal duty, financial institutions duty
and debits tax.
(g) It is not necessary or advisable under the laws of any Relevant
Jurisdiction to file, register or record the Guarantee.
(h) Neither the Guarantor nor any of its properties or assets has any immunity
from the jurisdiction of any court or from legal process under the laws of
any Relevant Jurisdiction.
(i) It is not necessary that a Noteholder should be licensed, qualified or
otherwise entitled to carry on business under the laws of any Relevant
Jurisdiction in order to enforce its rights under the Guarantee or by
reason only of the execution, delivery and performance of the Guarantee.
(j) The issuing of the Guarantee does not constitute the giving of financial
assistance within the meaning of s260A of the Corporations Law because all
proceeds of the Notes are applied in repayment of existing external debt
of James Hardie Finance Inc. and are not used to assist the acquisition of
shares in the Guarantor, or any holding company of the Guarantor. However,
if a court were to conclude that the issuing of the Guarantee did
constitute such financial assistance, we think it unlikely that that court
would conclude that there had been a breach of s260A. That section is only
breached by the giving of financial assistance which MATERIALLY PREJUDICES
the company giving the assistance, its creditors or shareholders. We note
that:
(i) the shareholders of the Guarantor have acknowledged the issuing of
the Guarantee and have concluded that they do not suffer any
material prejudice;
(ii) for the reasons stated in paragraph 2(d)(ii) above, the likelihood
of a demand being made under the Guarantee could reasonably be
considered remote and the Guarantor's directors have concluded that
its execution benefits the Guarantor;
(iii) at the date of execution of the Guarantee, we understand that the
Guarantor had no creditors other than:
(A) the banks under the Facilities; and
Allen Allen & Hemsley Page 6
(B) some of those same banks under a 364 day standby facility
which has also been guaranteed by the Guarantor.
In relation to the Facilities, the cross guarantees from the Issuer
and JHNV were requirements of the banks to their entering into the
Facilities.
In relation to the 364 day standby facility, the guarantees of JHNV
and of the Guarantor were requirements of the lending banks.
As the banks are aware, those guarantees by the Issuer and JHNV
could only be issued by those companies on the basis that the
Guarantor issued the Guarantee. The banks therefore appear to
benefit from the issuing of the Guarantee since if the Guarantor did
not do so, the banks would not receive the benefit of the guarantees
from the Issuer and JHNV, companies with significant assets.
Creditors do not therefore appear to suffer any material prejudice
from the issuing of the Guarantee.
(k) The indebtedness of the Guarantor under the Guarantee will rank pari passu
with its indebtedness under the Facilities and all other unsecured
unsubordinated indebtedness of the Guarantor which is not mandatorily
preferred by law.
(l) Part 2E of the Corporations Law (which affects transactions involving
public companies and entities controlled by public companies where the
public company or entity does not get full value from the transaction, and
the benefiting party is a related party) does not apply to the issuing of
the Guarantee as the Guarantor, the Issuer and JHNV are all directly or
indirectly wholly owned subsidiaries of James Hardie Industries Limited.
(m) There is no Australian equivalent of the United States legal doctrine of
"successor liability" which might transfer asbestos related liability to a
company which is acquiring assets of, as opposed to shares in, any
transferring company.
(n) If after issuing the Guarantee the Guarantor is solvent (and we note the
directors' certificate referred to in 1(f) states that it is) and the
execution of the Guarantee by the Guarantor (having regard to the benefits
and detriment to it in entering into the Guarantee) is ultimately for its
benefit and for the purposes of its business so that a reasonable person
in its position would have entered into it, the Guarantee will not be void
or voidable on the basis of Australian fraudulent conveyance laws.
This opinion is addressed to you for your sole benefit. It is not to be relied
on by any other person or for any other purpose nor is it to be quoted or
referred to in any public document or filed with any Government Agency or other
person without our consent.
Yours faithfully
/s/ Allen Allen & Hemsley
- -------------------------
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
WILLKIE FARR & GALLAGHER 787 Seventh Avenue
New york, NY 10019-6099
212 728 8000
Fax: 212 728 8111
November 5, 1998
To each of the Purchasers
listed in Schedule A to the Note
Purchase Agreements referred to below
Re: James Hardie Finance B. V. (Issuer) and James Hardie N. V.
(Guarantor)
6.86% Guaranteed Senior Notes due 2004, Series A--$24,000,000
6.92% Guaranteed Senior Notes due 2005, Series B--$35,000,000
6.99% Guaranteed Senior Notes due 2006, Series C--$37,000,000
7.05% Guaranteed Senior Notes due 2007, Series D--$11,000,000
7.12% Guaranteed Senior Notes due 2008, Series E--$63,000,000
7.24% Guaranteed Senior Notes due 2010, Series F--$20,000,000
7.42% Guaranteed Senior Notes due 2013, Series G--$35,000,000
Ladies and Gentlemen:
We have acted as your special counsel in connection with (i)
the issuance by James Hardie Finance B.V. (the "Issuer") of its
above-referenced Guaranteed Senior Notes in an aggregate principal amount
of $225,000,000 (the "Notes"), and (ii) the purchases by you pursuant to
the separate Note Purchase Agreements made by you with the Issuer and
Hames Hardie N.V., (the "Guarantor"), as guarantor of the Notes, under
date of November 5, 1998 (the "Note Purchase Agreements") of Notes in the
respective aggregate principal amounts and of the particular series as set
forth in Schedule A to the Note Purchase Agreements.
We have examined such corporate records of the Issuer and the
Guarantor, agreements and other instruments, certificates of public
officials and of officers and representatives of the Issuer and the
Guarantor, and such other documents, as we have deemed necessary in
connection with the opinions hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of
documents submitted to us as originals and the conformity with the
authentic originals of all documents submitted to us as copies. As to
questions of fact material to such opinions we have, when relevant facts
were not independently established, relied upon the representations set
forth in the Note Purchase Agreements and upon certifications by officers
or other representatives of the Issuer and the Guarantor.
New York
Washington, DC
Paris
London
2
In addition, we attended the closing held today at our office
at which you purchased and made payment for Notes in the respective
aggregate principal amounts to be purchased by you, all in accordance with
the Note Purchase Agreements.
Based upon the foregoing and having regard for legal
considerations that we deem relevant, we render our opinion to you
pursuant to Section 4.4 of the Note Purchase Agreements as follows:
1. The Note Purchase Agreements constitute legal, valid and
binding obligations of the Issuer and the Guarantor, enforceable
against Issuer and the Guarantor in accordance with their terms.
2. The Notes being purchased by you today constitute legal,
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms.
3. No consent, approval or authorization of, or declaration,
qualification, registration or filing with, any New York or United
States Federal governmental authority is required for the valid
execution and delivery of the Note Purchase Agreements or the valid
offer, issue, sale and delivery of the Notes pursuant to the Note
Purchase Agreements.
4. It is not necessary in connection with the offer, issue,
sale and delivery of the Notes, under the circumstances contemplated
by the Note Purchase Agreements, to register the Notes under the
Securities Act of 1933, as amended, or to qualify an indenture in
respect of the Notes under the Trust Indenture Act of 1939, as
amended.
5. The use of proceeds from the sale of the Notes will not be
deemed to be, directly or indirectly, for the purposes of buying or
carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System and it is not
necessary for you to obtain a statement in conformity with the
requirements of Federal Reserve Form FR G-3 or to register on
Federal Reserve Form FR G-l under such Regulation U in connection
with your purchase of the Notes.
We have examined the opinions of Gibson, Dunn & Crutcher LLP,
special counsel to the Issuer and the Guarantor, De Brauw Blackstone
Westbroek P.C., Netherlands counsel to the Issuer and the Guarantor, and
Allen Allen & Hemsley, Australian counsel for the Issuer and the
Guarantor, each dated today and delivered to you pursuant to Section 4.4
of the Note Purchase Agreements, which opinions are
3
satisfactory to us in form and substance with respect to the matters
respectively specified therein and we believe that both you and we are
justified in relying thereon. We call to your attention the fact that in
approving the substance of said opinions we have not made an investigation
sufficient to enable us to express an independent opinion with respect to
the substantive matters covered by said opinions (other than substantive
matters governed by United States Federal laws or the laws of the State of
New York and specifically covered by this opinion); however nothing has
come to our attention that would cause us to disagree with the legal
conclusions expressed in any of said opinions as to any such matters.
The opinions expressed above as to the enforceability of any
agreement or instrument in accordance with its terms are subject to the
exception that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and (ii) general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
We express no opinion as to any provision in the Note Purchase
Agreements insofar as such provisions relate to (a) the subject matter
jurisdiction of a United States Federal District Court sitting in New York
to adjudicate any controversy relating to the Note Purchase Agreements or
the Notes, or (b) the waiver of inconvenient forum with respect to
proceedings in any such United States Federal District Court.
We are members of the bar of the State of New York and do not
herein intend to express any opinion as to any matters governed by any
laws other than United States Federal laws and the laws of the State of
New York. To the extent that the opinions expressed above involve matters
governed by Netherlands law or Australian law, we have relied upon the
aforementioned opinions of De Brauw Blacksone Westbroek P.C. and Allen
Allen & Hemsley, respectively, and our conclusions as to such matters are
subject to the same assumptions, limitations and qualifications as are
contained in said opinions.
This opinion is given solely for your benefit, and for the
benefit of other institutional investor holders from time to time of Notes
purchased by you today, in connection with the closing held today of the
transactions contemplated by the Note Purchase Agreements and may not be
relied upon by any other person for any purpose without our prior written
consent.
Very truly yours,
/s/ Willkie Farr & Gallagner
----------------------------
Willkie Farr & Gallagner
EXHIBIT 5.5
PRO FORMA STATEMENTS
COVER NOTE TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The "Unaudited Pro Forma Consolidated Financial Data" containing the Pro Forma
Statements has been excerpted from the publicly available Amendment No. 1 to the
Form F-l Registration Statement of James Hardie N.V. as filed with the
Securities and Exchange Commission on October 15, 1998 (as amended, the
"Registration Statement"). Neither the Registration Statement nor the prospectus
included therein is incorporated herein by reference. Any reference to "this
Prospectus" in the excerpted pages should be read as a reference to "the
Memorandum". The Pro Forma Statements were prepared to give accounting effect to
certain transactions that will occur in connection with the Reorganization based
on the assumptions stated therein, including an assumption that the equity
offering on Form F-l would be completed at the same time as the Reorganisation
and the Debt Financing.
In the event that the equity offering does not occur as planned, or it does
occur but other conditions relating to the treatment of interest paid by the
U.S. Subsidiary to the Finance Subsidiary under the US-NL Tax Treaty are not
met, then withholding taxes of 30% in the U.S. may become payable in any year,
although this amount may be partially alleviated by the deductibility in the
Netherlands of foreign tax paid in the U.S.. For the purposes of the Debt
Financing and assuming that such equity offering does not occur, management has
estimated that additional income tax expense of US$14.6 million and US$3.7
million would need to be reflected as a pro forma adjustment in the unaudited
pro forma statements of income for the fiscal year ended March 31, 1998 and for
the three months ended June 30,1998, respectively. After giving effect to these
adjustments, the pro forma income from continuing operations would be US$29.5
million and US$10.0 million income for the fiscal year ended March 31, 1998 and
for the three months ended June 30, 1998, respectively.
For a discussion of the principal tax issues and conditions, refer to footnote
nine to the unaudited pro forma consolidated statement of income for the fiscal
year ended March 31, 1998 and to footnote seven to the unaudited pro forma
consolidated statement of income for the three months ended June 30,1998.
The company has not determined how it may reorganise its intercompany financing
arrangements if the equity offering does not occur and the pro forma adjustment
described above does not reflect the benefits, if any, that may be generated
from alternative financial arrangements. The pro forma data is for informational
purposes only and should not be construed to be indicative of the Company's
financial position or results of operations had the transactions been
consummated on the dates assumed and do not project the
Company's consolidated financial position or results of operations for any
future date or period.
COMPANY REPRESENTATION
In relation to the "Unaudited Pro Forma Consolidated Financial Data," and when
read in conjunction with the covering note prepared for the Private Placement
Memorandum, the assumptions on which the pro forma adjustments reflected in the
Pro Forma Statements are based provide a reasonable basis for presenting the
significant effects of the Reorganisation and the Debt Financing assuming that
the equity offering does not occur, and such pro forma adjustments give
appropriate effect to such assumptions and are properly applied in the Pro Forma
Statements.
(2)
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial statements of
income (the "Unaudited Pro Forma Consolidated Statements of Income") for the
year ended March 31, 1998 and the three months ended June 30, 1998 and the
unaudited pro forma consolidated balance sheet (the "Unaudited Pro Forma
Consolidated Balance Sheet") as of June 30, 1998 (collectively, the "Pro Forma
Statements") reflect adjustments to the audited Consolidated Financial
Statements of the James Hardie Businesses (consisting of both the assets and
liabilities of the Transferred Businesses and the Retained Assets and
Liabilities) appearing elsewhere in this Prospectus to give accounting impact to
certain transactions that will occur in connection with the Reorganization. The
pro forma adjustments to each Pro Forma Statement are described in the
accompanying footnotes to the Pro Forma Statements. The pro forma adjustments
are based on available information and certain assumptions management believes
are reasonable.
The Pro Forma Statements are for informational purposes only and should
not be construed to be indicative of the Company's consolidated financial
position or results of operations had the transactions been consummated on the
dates assumed and do not project the Company's consolidated financial position
or results of operations for any future date or period.
In accordance with U.S. GAAP, the transfers to the Company of the
Transferred Businesses will be accounted for in the Consolidated Financial
Statements of the Company at cost using the "as if" pooling method on the basis
that the transfers are under common control. The financial adjustments required
to eliminate the Retained Assets and Liabilities will be recorded as a deemed
transfer to JHIL in the Consolidated Financial Statements of the Company. All
pro forma adjustments have been recorded at historical cost in the Pro Forma
Statements.
The Pro Forma Statements should be read in conjunction with the
Consolidated Financial Statements of the James Hardie Businesses and the related
notes thereto, and other financial information pertaining to the Company and the
James Hardie Businesses included elsewhere in this Prospectus.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The Unaudited Pro Forma Consolidated Balance Sheet gives accounting effect
to the following pro forma transactions that affect the James Hardie Businesses'
historical financials as if they occurred on June 30, 1998: (1) the transfer of
the Transferred Businesses to the Company and the retention of the Retained
Assets and Liabilities by JHIL and (2) the completion of the Debt Financing.
The total shareholders' equity disclosed in the Unaudited Pro Forma
Consolidated Balance Sheet gives accounting effect to the adjustments noted as
if they occurred on June 30, 1998. Total equity at the date of the
Reorganization may differ significantly from that disclosed in the Unaudited Pro
Forma Consolidated Balance Sheet as a result of movements in foreign exchange
rates that impact the balance of the foreign currency translation adjustment
account, earnings, capital expenditure and other cash flows impacting cash
balances in the period June 30, 1998 to the date of the Offerings.
25
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN MILLIONS, EXCEPT PER SHARE DATA)
JUNE 30, 1998
---------------------------------------------------------
PRO FORMA ADJUSTMENTS
-----------------------------
JHIL
RETAINED
ASSETS
JAMES HARDIE AND REVISED DEBT
BUSINESSES LIABILITIES STRUCTURE PRO FORMA
------------ ----------- ------------ ---------
ASSETS
Current assets:
Cash and cash equivalents....................... $ 204.5 $ (202.5)(1) $ 2.0
Accounts and notes receivable, net of allowance
for doubtful accounts...................... 113.9 (8.5)(2) -- 105.4
Inventories..................................... 60.0 -- -- 60.0
Prepaid expenses and other current assets....... 14.2 (2.3)(2) -- 11.9
Deferred tax assets............................. 24.9 (8.7)(3) -- 16.2
------------ ---------
Total current assets.................... 417.5 195.5
Long term receivables........................... 10.9 (7.3)(2) -- 3.6
Investments..................................... 20.4 (17.6)(2) -- 2.8
Property, plant and equipment, net.............. 488.6 (26.2)(4) -- 462.4
Intangibles, net................................ 36.0 -- -- 36.0
Mineral reserves................................ 24.4 -- -- 24.4
Prepaid pension cost............................ 10.7 -- -- 10.7
Deferred tax assets............................. 68.5 (51.6)(3) -- 16.9
------------ ---------
Total assets............................ $ 1,077.0 $ 752.3
============ =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities........ $ 84.0 $ (15.9)(2) -- $ 68.1
Bank overdraft.................................. 2.7 (2.7)(1) --
Current portion of long term debt............... 31.4 (31.4)(1) -- --
Accrued compensation............................ 11.8 -- -- 11.8
Accrued product liabilities..................... 10.7 (5.5)(2) -- 5.2
Other liabilities............................... 6.2 (6.2)(2) -- --
------------ ---------
Total current liabilities............... 146.8 85.1
Long-term debt.................................. 481.9 (481.9)(1) $ 340.0(7) 340.0
Deferred tax liability.......................... 14.4 -- -- 14.4
Other noncurrent liabilities.................... 14.1 (5.2)(2) -- 8.9
------------ ---------
Total liabilities....................... $ 657.2 $ 448.4
------------ ---------
Shareholders' equity:
Capital......................................... $ 543.4 $ 211.9(6) $ (340.0)(7) $ 415.3
Unrealized gain(loss) on available securities
for sale....................................... (1.8) 1.8(2) -- --
Cumulative translation adjustment............... (111.4) -- -- (111.4)
Employee loans.................................. (10.4) 10.4(5) -- --
------------ ---------
Total shareholders' equity.............. 419.8 303.9(8)
------------ ---------
Total liabilities and shareholders'
equity............................... $ 1,077.0 $ 752.3
============ =========
26
- ----------
(1) Reflects the elimination of cash deposits and existing debt facilities of
JHIL which are to be retained by JHIL.
(2) Retained Assets and Liabilities of JHIL or its non-transferring
subsidiaries which will not be transferred to the Company are comprised
of:
$ MILLIONS
----------
Accounts and notes receivable, net of allowance for doubtful accounts:
Financing structures retained by JHIL............................... $ 8.5
==========
Prepaid expenses and other current assets:
Capitalized expenses................................................ $ 2.3
==========
Long term receivables:
Vendor finance...................................................... $ 7.3
==========
Investments:
AEF portfolio....................................................... $ 7.5
Other............................................................... 10.1
----------
$ 17.6
==========
Accounts payable and accrued liabilities:
Financing structures retained by JHIL............................... $ 15.4
Other............................................................... 0.5
----------
$ 15.9
==========
Accrued product liabilities:
JHIL or its non-transferring subsidiaries will retain responsibility
for certain specific product warranty claims...................... $ 3.7
Environmental rectification......................................... 1.8
----------
$ 5.5
==========
Other current liabilities............................................. $ 6.2
==========
Other noncurrent liabilities
Surplus lease space................................................ $ 2.3
Product warranty (see note above).................................. $ 2.2
Other.............................................................. $ 0.7
----------
$ 5.2
==========
Unrealized loss on securities available for sale...................... $ 1.8
==========
(3) Adjustment made to deferred tax assets associated with certain of the
above liabilities and residing in JHIL and certain subsidiaries which will
not form part of the Transferred Businesses amounting to $60.3 million.
(4) Reflects properties to be retained by JHIL or its non-transferring
subsidiaries and leased to the Company with a net book value of $26.2
million. The properties concerned comprise:
NET
BOOK VALUE
$ MILLIONS
----------
Fiber Cement Australia............................... $ 19.6
Fiber Cement New Zealand............................. 6.6
----------
$ 26.2
==========
(5) Reflects the removal of employee loans related to executive share purchase
plan which will be retained by JHIL and will not transfer to or be assumed
by the Company.
(6) For accounting purposes, the retention by JHIL and its non-transferring
subsidiaries of the Retained Assets and Liabilities as set forth in
adjustments (1) to (5) above is recorded as a deemed contribution by JHIL
to the Company of $211.9 million.
27
(7) Reflects adjustments which are required to facilitate the Debt Financing
and the related deemed dividend. The Finance Subsidiary will issue
approximately $225 million aggregate principal amount of Notes and arrange
a Bank Facility, including a $115 million term facility and a $80 million
revolving credit facility. At the time of the Offerings, the Company does
not expect to have drawn down the revolving credit facility. The Notes
will be issued with a mix of maturities ranging from 6 to 15 years. The
Pro Forma Consolidated Balance Sheet reflects the indebtedness under the
Bank Facility and the Notes of $340 million.
(8) The total shareholders' equity disclosed in the Unaudited Pro Forma
Consolidated Balance Sheet gives accounting effect to the adjustments
noted in (1) to (7) above as if they occurred on June 30, 1998. Total
equity at the date of the Offerings may differ significantly from that
disclosed in the Unaudited Pro Forma Consolidated Balance Sheet as a
result of movements in foreign exchange rates that impact the balance of
the foreign currency translation adjustment account, earnings, capital
expenditure and other cash flows impacting cash balances in the period
from June 30, 1998 to the date of the Offerings.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
The Unaudited Pro Forma Consolidated Statements of Income for the fiscal
year ended March 31, 1998 and the three months ended June 30, 1998 give
accounting effect to the following transactions that affect the James Hardie
Businesses' historical financials as if they occurred on April 1, 1997 and April
1, 1998 respectively: (1) the transfer of the Transferred Businesses to the
Company and the retention of the Retained Assets and Liabilities by JHIL,
including any related income and expenses, (2) the completion of the Debt
Financing, and (3) certain tax consequences of the Reorganization.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED MARCH 31, 1998
---------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS PRO FORMA PRO FORMA PRO FORMA
---------------------- WITHOUT ADJUSTMENT WITH
JAMES HARDIE JHIL DEBT INTERCOMPANY INTERCOMPANY INTERCOMPANY
BUSINESSES RETAINED FINANCING TAX BENEFIT TAX BENEFIT TAX BENEFIT
------------ -------- --------- ------------ ------------ ------------
Net sales................... $ 822.3 -- -- $ 822.3 -- $ 822.3
Cost of goods sold.......... (592.3) $ (4.2)(1) -- (596.5) -- (596.5)
------------ ----------- -----------
Gross profit................ 230.0 225.8 225.8
Selling, general and
administrative expenses..... (142.7) -- -- (142.7) -- (142.7)(10)
Restructuring and other
operating expenses........ (5.1) -- -- (5.1) -- (5.1)
------------ ----------- -----------
Operating profit............ 82.2 78.0 78.0
Interest expense............ (37.6) 37.6(2) $ (22.9)(3) (22.9) -- (22.9)
Interest expense -- related
parties................... (11.3) 11.3(2) -- -- -- --
Interest income............. 28.3 (28.3)(4) -- -- -- --
Equity earnings -- RCI ..... 6.2 (6.2)(5) -- -- -- --
Other nonoperating expenses,
net....................... (12.1) 11.9(6) -- (0.2) -- (0.2)
------------ ----------- -----------
Income (loss) from
continuing operations
before income tax......... 55.7 -- -- 54.9 -- 54.9
Income tax (expense) benefit (25.0) (6.7)(7) 4.9(8) (26.8) $ 16.0(9) (10.8)
------------ ----------- -----------
Income from continuing
operations................ $ 30.7 $ 28.1 $ 44.1
============ =========== ===========
Pro forma earnings per share $ $
=========== ===========
28
- --------
(1) Reflects the difference between depreciation historically incurred by JHIL
on certain properties that it will retain in the Reorganization, and the
rental expense that the Company will incur to lease such properties from
JHIL. The adjustment is comprised of:
$ MILLIONS
----------
Depreciation on retained property............ $ 0.9
Additional rental expense.................... (5.1)
----------
$ (4.2)
==========
The rental expense assumed by the Company for purposes of the Pro Forma
Consolidated Statement of Income is based on an assessment of the fair
market rental for the properties retained by JHIL and the terms of the
leases the Company will enter into with JHIL.
(2) Reflects the elimination of $37.6 million in interest expense relating to
the existing debt facilities of the James Hardie Businesses which will be
retained by JHIL and the elimination of $11.3 million in interest expense
to related parties which relates to RCI Corporation sold in fiscal year
1998.
(3) Pursuant to the Debt Financing, the Finance Subsidiary will issue
approximately $225 million aggregate principal amount of Notes and will
arrange a Bank Facility consisting of $115 million term loan and an $80
million revolving credit facility. At the time of the Offerings, the
Company does not expect to have drawn down on the revolving credit
facility. The Notes will be issued with a mix of maturities ranging from 6
to 15 years. The blended interest rate on the Notes and the term loan is
estimated by the Company to be 6.7% or $22.9 million assuming outstanding
indebtedness of $340 million for the entire year ended March 31, 1998. The
$340 million payment represents the settlement of liabilities to JHIL
which arise in connection with the Reorganization. The effect on unaudited
pro forma income for the year ended March 31,1998 of each 1/8 % change in
the blended interest rate on the Notes and the term loan would be $0.4
million.
(4) Reflects the elimination of interest income earned on cash and cash
equivalents held by the James Hardie Businesses during fiscal year 1998
which are to be retained by JHIL.
(5) Reflects equity earnings of RCI Corporation sold in fiscal year 1998.
(6) The amount of $11.9 million primarily reflects the elimination of a $12.2
million accrual for losses relating to guarantees and other expenses
associated with the settlement of litigation relating to the 1987
Firmandale transaction. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Ongoing obligations
associated with the Firmandale litigation will be retained by JHIL and
will not be transferred to or assumed by the Company. The remaining $0.3
million reduction reflects the net expenses of previous tax franking
credit structures utilized by JHIL and dividend income, comprised of:
$ MILLIONS
----------
Tax franking credit.............. $ 0.2
Dividends received............... (0.5)
----------
$ (0.3)
==========
(7) Reflects the impact of additional taxes resulting from the following
adjustments referred to above, as follows:
APPLICABLE
GROSS INCOME TAX
($ MILLIONS) ($ MILLIONS)
------------ ------------
Depreciation on retained property.......... $ 0.9 $ --
Rental expense............................. (5.1) 1.8
Interest expense........................... 37.6 (14.0)
Interest income............................ (28.3) 10.2
Tax franking credit........................ 0.2 --
Dividends received......................... (0.5) --
Interest expense -- related parties........ 11.3 (4.0)
Equity earnings of RCI Corporation......... (6.2) --
Firmandale expense......................... 12.2 (0.7)
------------
$ (6.7)
============
29
(8) Assumes that the term loan has been drawn down in Australia and the Notes
have been issued in The Netherlands. The tax expense has been calculated
as follows:
TAX
PRINCIPAL INTEREST DEDUCTION
($ MILLIONS) ($ MILLIONS) TAX RATE ($ MILLIONS)
------------ ------------ -------- ------------
Notes............ $ 225.0 $ 16.0 15% $ 2.4
Term loan........ 115.0 6.9 36% 2.5
------ -----
$ 22.9 $ 4.9
====== =====
(9) Reflects the deferred tax (expense) benefit of the intercompany debt
arrangements of an estimated $877.0 million established in connection with
the Reorganization, with the Finance Subsidiary assumed to be advancing to
its subsidiaries in the United States, Australia and New Zealand, $747.0
million, $97.0 million and $33.0 million, respectively. The adjustment has
been calculated as follows assuming an interest rate of 7.5% on
intercompany debt:
DEFERRED TAX
PRINCIPAL INTEREST TAX (EXPENSE) BENEFIT
($ MILLIONS) ($ MILLIONS) RATE ($ MILLIONS)
------------ ------------ ---- -----------------
Interest income
The Netherlands..... $ 877.0 $ 65.8 15% $ (9.8)
=======
Interest expense
United States....... 747.0 56.0 40% 22.4
Australia........... 97.0 7.2 36% 2.6
New Zealand......... 33.0 2.5 33% 0.8
------- ------
$ 877.0 $ 16.0
======= ======
The actual amount of the intercompany debt at the date of the
Reorganization will vary from that noted above due to foreign exchange
movements and other movements on intercompany account balances.
The tax impact of the Debt Financing represents certain tax benefits that
the Company expects to realize as a result of the new intercompany debt
financing between the Finance Subsidiary and James Hardie's U.S.
subsidiary. In calculating this amount, the following income tax rates
have been assumed:
United States (anticipated federal and state taxes)...... 40%
Australia................................................ 36%
New Zealand.............................................. 33%
The Netherlands (Financial Risk Reserve Regime).......... 15%
This calculation assumes that current tax laws of all relevant
jurisdictions were in effect during fiscal year 1998, and that any tax
rulings which relevant companies have obtained in connection with the
Reorganization were also applicable and in effect during such year.
The calculation further assumes that interest payable by the U.S.
subsidiary to the Finance Subsidiary will be taxed in The Netherlands at
an effective rate of 15% pursuant to a ruling issued by the Dutch tax
authorities applicable until 2008 based on certain conditions, including
that all of the group's treasury activities are conducted exclusively from
The Netherlands.
The calculation also assumes that the intercompany debt was in place
throughout fiscal year 1998, and further assumes that (i) interest
payments were fully deductible by the U.S. subsidiary in that year, and
(ii) that such payments were not subject to U.S. withholding tax pursuant
to the US-NL Treaty.
Interest paid by the U.S. subsidiary to the Finance Subsidiary should be
currently deductible for U.S. tax purposes in any year provided that such
interest is actually paid in that year and provided that the U.S.
subsidiary has sufficient earnings to avoid limitations on the
deductibility of interest resulting from the application of the U.S.
"earnings stripping" rules. The Company does not anticipate that the U.S.
subsidiary will make interest payments with respect to the related party
debt during fiscal year 1999 or fiscal year 2000. Accordingly, no current
U.S. tax deduction will be available for such years, although the
associated tax benefit will be treated as realized currently for financial
accounting purposes as the Company expects to ultimately realize the tax
benefit from such years in the future.
Interest paid by the U.S. subsidiary to the Finance Subsidiary would
likely not be subject to the US-NL Treaty and would be subject to a 30%
U.S. withholding tax in any year unless, among other conditions of
eligibility for benefits, the aggregate number of shares of the Common
Stock traded on the applicable exchange during the previous taxable
30
year is at least 6% of the average number of shares outstanding during
that previous taxable year, in which case 0% withholding tax would apply
under the US-NL Treaty. See "Risk Factors -- Tax Risks on Intercompany
Interest Payments."
Deductions in Australia and New Zealand for interest paid to the Finance
Subsidiary are subject to thin capitalization rules, which disallow
interest on related party loans in excess of a prescribed multiple of the
equity of the borrower. Withholding tax in Australia and New Zealand of
10% on interest paid to the Finance Subsidiary will be available as a
credit against Dutch tax payable by the Finance Subsidiary, subject to
certain limitations.
(10) Selling, general and administrative expenses include the current head
office expenses of the James Hardie Businesses. Management estimates that
head office expenses applicable to the Company will not vary significantly
from the current level of head office expenses incurred by the James
Hardie Businesses.
31
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
FOR THE THREE, MONTHS ENDED JUNE 30 1998
-----------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS PRO FORMA PRO FORMA
---------------------- WITHOUT PRO FORMA WITH
JAMES HARDIE JHIL DEBT INTERCOMPANY INTERCOMPANY INTERCOMPANY
BUSINESSES RETAINED FINANCING TAX BENEFIT TAX BENEFIT TAX BENEFIT
------------ -------- --------- ------------ ------------ ------------
Net sales........................... $ 206.2 -- -- $ 206.2 -- $ 206.2
Cost of goods sold.................. (147.7) $ (0.9)(1) -- (148.6) -- (148.6)
------------ ------------
Gross profit........................ 58.5 57.6 57.6
Selling, general and administrative
expenses.......................... (35.1) -- -- (35.1) -- (35.1)
Restructuring and other operating
expenses.......................... (0.5) -- -- (0.5) -- (0.5)
------------ ------------ ------------
Operating profit.................... 22.9 22.0 22.0
Interest expense.................... (7.3) 7.3(2) $ (5.7)(3) (5.7) -- (5.7)
Interest income..................... 3.4 (3.4)(4) -- -- -- --
------------ ------------ ------------
Income (loss) from continuing
operations before income tax...... 19.0 -- -- 16.3 -- 16.3
Income tax (expense) benefit........ (6.6) (1.2)(5) 1.2(6) 6.6 $ 4.0(7) (2.6)
------------ ------------ ------------
Income from continuing operations... $ 12.4 $ 9.7 $ 13.7
============ ============ ============
Pro forma earnings per share........ $ $
============ ============
- ---------
(1) Reflects the difference between depreciation on buildings historically
incurred by JHIL on certain properties that it will retain in the
Reorganization, and the rental expense that the Company will incur to
lease such properties from JHIL. The adjustment is comprised of:
$ MILLIONS
----------
Depreciation on retained property...... $ 0.2
Additional rental expense.............. (1.1)
----------
$ (0.9)
==========
The rental expense assumed by the Company for purposes of the Pro Forma
Consolidated Statement of Income is based on an assessment of the fair
market rental for the properties retained by JHIL and the terms of the
leases the Company will enter into with JHIL.
(2) Reflects the elimination of $7.3 million interest expense relating to the
existing debt facilities of the James Hardie Businesses which will be
retained by JHIL.
(3) Pursuant to the Debt Financing, the Finance Subsidiary will issue
approximately $225 million of aggregate principal amount Notes and will
arrange a Bank Facility, consisting of $115 million term loan and an $80
million revolving credit facility. At the time of the Offerings, the
Company does not expect to have drawn down on the revolving credit
facility. The Notes will be issued with a mix of maturities ranging from 6
to 15 years. The blended interest rate on the Notes and the term loan is
estimated by the Company to be 6.7% or $5.7 million assuming outstanding
indebtedness of $340 million for the whole of the three months ended June
30, 1998. The effect on income of each 1/8 % change in the blended
interest rate on the Notes and the term loan for a three month period
would be $0.l million.
(4) Reflects the elimination of interest income earned on cash and cash
equivalents held by the James Hardie Businesses which are to be retained
by JHIL.
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(5) Reflects the impact of additional taxes resulting from the following
adjustments referred to above, as follows:
APPLICABLE
GROSS INCOME TAX
($ MILLIONS) ($ MILLIONS)
------------ ------------
Depreciation on retained property...... $ 0.2 $ --
Rental expense......................... (0.8) 0.3
Interest expense....................... 7.3 (2.7)
Interest income........................ (3.4) 1.2
-----
$(1.2)
=====
(6) Assumes that the term loan has been drawn down in Australia and the Notes
have been issued in The Netherlands. The tax expense has been calculated
as follows:
TAX
PRINCIPAL INTEREST DEDUCTION
($ MILLIONS) ($ MILLIONS) TAX RATE ($ MILLIONS)
------------ ------------ -------- ------------
NOTES....................... $ 225.0 $ 4.0 15% $ 0.6
TERM LOAN................... 115.0 1.7 36% 0.6
----- -----
$ 5.7 $ 1.2
===== =====
(7) Reflects the deferred tax (expense) benefit of the intercompany debt
arrangements of $877.0 million created in connection with the
Reorganization, with the Finance Subsidiary assumed to be advancing to its
subsidiaries in the United States, Australia and New Zealand, $747.0
million, $97.0 million and $33.0 million, respectively. The adjustment has
been calculated as follows assuming an interest rate of 7.5% on
intercompany debt:
DEFERRED TAX
PRINCIPAL INTEREST TAX (EXPENSE) BENEFIT
($ MILLIONS) ($ MILLIONS) RATE ($ MILLIONS)
------------ ------------ ---- -----------------
Interest income
The Netherlands................... $ 877.0 $ 16.4 15% $ (2.4)
=======
Interest expense
United States..................... 747.0 13.9 40% 5.6
Australia......................... 97.0 1.8 36% 0.6
New Zealand....................... 33.0 0.6 33% 0.2
------- ------
$ 877.0 $ 4.0
======= ======
The actual amount of the intercompany debt at the date of the
Reorganization will vary from that noted above due to foreign exchange
movements and other movements on intercompany account balances.
The tax impact of the Debt Financing represents certain tax benefits that
the Company expects to realize as a result of the new intercompany debt
financing between the Finance Subsidiary and the Company's U.S.
subsidiary. In calculating this amount, the following income tax rates
have been assumed:
United States (anticipated federal and state taxes)... 40%
Australia............................................. 36%
New Zealand........................................... 33%
The Netherlands (Financial Risk Reserve Regime)....... 15%
This calculation assumes that current tax laws of all relevant
jurisdictions were in effect during the three months ended June 30, 1998,
and that any tax rulings which relevant companies have obtained in
connection with the Reorganization were also applicable and in effect
during such quarter.
The calculation further assumes that interest payable by the U.S.
subsidiary to the Finance Subsidiary will be taxed in The Netherlands at a
15% rate pursuant to a ruling issued by the Dutch tax authorities
applicable until 2008 based on certain conditions, including that all of
the group's treasury activities are conducted exclusively from The
Netherlands.
The calculation also assumes that the intercompany debt was in place
throughout the three months ended June 30, 1998, and further assumes that
(i) interest payments were fully deductible by the U.S. subsidiary in
fiscal year 1999, and (ii) that such payments were not subject to U.S.
withholding tax pursuant to the US-NL Treaty.
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Interest paid by the U.S. subsidiary to the Finance Subsidiary should be
currently deductible for U.S. tax purposes in any year provided that such
interest is actually paid in that year and provided that the U.S.
subsidiary has sufficient earnings to avoid limitations on the
deductibility of interest resulting from the application of the U.S.
"earnings stripping" rules. The Company does not anticipate that the U.S.
subsidiary will make interest payments with respect to the related parry
debt during fiscal year 1999 or fiscal year 2000. Accordingly, no current
U.S. tax deduction will be available for such years, although the
associated tax benefit will be treated as realized currently for financial
accounting purposes as the Company expects to ultimately realize the tax
benefit from such years in the future.
Interest paid by the U.S. subsidiary to the Finance Subsidiary would
likely not be subject to the US-NL Treaty and would be subject to a 30%
U.S. withholding tax in any year unless, among other conditions of
eligibility for benefits, the aggregate number of shares of Common Stock
traded on the applicable stock exchange during the previous taxable year
is at least 6% of the average number of shares outstanding during that
previous taxable year, in which case, 0% withholding tax would apply under
the US-NL Treaty. See "Risk Factors -- Tax Risks on Intercompany Interest
Payments."
Deductions in Australia and New Zealand for interest paid to the Finance
Subsidiary are subject to thin capitalization rules, which disallow
interest on related party loans in excess of a prescribed multiple of the
equity of the borrower. Withholding tax in Australia and New Zealand of
10% on interest paid to the Finance Subsidiary will be available as a
credit against Dutch tax payable by the Finance Subsidiary, subject to
certain limitations.
(8) Selling, general and administrative expenses include the current head
office expenses of the James Hardie Businesses. Management estimates that
head office expenses applicable to the Company would not vary
significantly from the current level of head office expenses incurred by
the James Hardie Businesses.
34